AER (the Association of European Radios), representing the interests of commercial radios across Europe, welcomed the Commission’s initiative to carry out a study on “Digital Switchover in Broadcasting”. In this context, AER sent to the consultants in charge of the study a written contribution in May 2001 and held with them two interviews. We are happy now to submit our comments on the final results.

The study reflects well the existing situation of digital radio migration in the EU, the problems of commercial radios and analyses the issues at stake accurately. It is however disappointing to see that the annexe on “Country Profiles” does not include any information on radio but it is solely dedicated to TV. This is certainly regrettable because this analysis was required in the study’s terms of reference. From our point of view, country-per-country information on the radio situation would have been very useful for the Commission and Member States in their future work in the field of digital switchover.

We agree with the study when it recognises that a digital switchover for radio at European level is not realistic. As we have stressed in the past, European States are at different levels of digital radio development, thus, digital switchover should only occur, in our view, at national level when the right conditions are met (e.g. available receivers at affordable prices, good geographical coverage, availability of most analogue services via digital transmission, etc.). This should not prevent however the European Union and Member States from supporting aspects of licensing and regulatory policy that would contribute to digital radio’s success.

Please find below our comments on those concrete recommendations relevant to radio:

• (R1) Switchover roadmaps to help co-ordination of market forces. We believe switchover maps both at national and European level would help policy makers to assess the digital radio situation and evaluate actions needed.  For commercial radios, these would be important political signals that would add certainty to their investment plans.
• (R7) Tax on spectrum. We don’t believe that a tax based on the quantity of spectrum used would change the attitude of radio broadcasters to work for a faster digital switchover. A new tax on spectrum would only represent an extra burden for commercial radios that are already bearing the costs of a long simulcasting period. This tax would contribute to make governments richer and bring no benefits to operators. Spectrum efficiency through other mechanisms could be encouraged.
• (R2) Creation of a Digital Switchover Fund. Building the necessary networks for digital radio represents an enormous investment for the radio industry and, as we mentioned earlier, the period of simulcasting adds to the cost. This is particularly difficult for commercial radios, which have to bear these costs with existing advertising revenues since new revenues are not expected in many years to come. We welcome the initiative of creating digital switchover fund to help operators but only if the funds come from general national or European budget lines. Otherwise, if operators would have to financially contribute directly or indirectly (e.g. proposed tax on spectrum) to the fund, it would lose its value as support mechanism and would become a burden for operators. This fund, if fed by the right sources, could finance some of the measures needed to accelerate the digital switchover process and provide consumer incentives (see R12).
• (R12) Encourage consumer switchover by reducing their switchover cost. The high price of digital radio receivers is recognised to be as one of the major obstacles to the development of this technology. Thus, any measure to low the costs that need to be beard by consumers is positive. We support the proposal of having a general VAT reduction on all digital equipment. This would encourage consumers to buy digital receivers and, at the same time, it would mean that governments are assuming their share of responsibility in the digital transition.
• (R3) Surveys and information campaigns. We agree that in order to encourage the transition to digital, public and market players must have some degree of certainty and common information. Research on consumer behaviour and future expectations and information/awareness campaigns need to be done and, as suggested in the study, policymakers should participate in the process partly funding these efforts. Since digital technologies will bring benefits to the whole society, governments should assume their part of responsibility and not leave all weight on the operators’ side.
• (R9) Proportionate regulation on standards. Any regulation on standards should be co-ordinated at European level to avoid market distortions and to allow manufacturers to have a sufficient mass market for digital radio receivers. Following the approval of the “Telecom Package” the Commission will have to adopt a recommended list of standards for broadcasting. We believe the Eureka 147 DAB standard should be included in this list because so far it is the only digital radio transmission system working in the EU. It is an open, interoperable and non-discriminatory standard. Having said this, it is important though that the Commission remains vigilant to technological evolution and complement or amend this list as necessary to keep it up with technological developments.

ENDS
01/07/02

NOTES: 1. Brussels-based AER (the Association of European Radios) represents the interests of 12 national private radio associations in ten EU Member States and Switzerland, whose combined membership is approximately 4,500 private/commercial radio stations. The AER web site provides further information on membership www.aereurope.org