The Association of European Radios (AER) is a Europe-wide trade-body of private and commercial radio broadcasters in France, Germany, Italy, the UK, Greece, Spain, Portugal, the Netherlands, Denmark, Finland, Sweden, Switzerland and Romania. As such, AER represents the interests of over 4.500 radio operators broadcasting to millions of listeners across Europe every day.

GENERAL OBSERVATION

AER welcomes the AEGIS / IDATE study on Spectrum Management in the Field of Broadcasting and the opportunity we were offered to express our views at the workshop organized by the Commission on this subject on June 30th in Brussels.

We understand the AEGIS / IDATE study to be part of the European Commission’s continued reflection and consultation following the Communication on Switch-over published in September 2003. The study focuses on the implications of digital switchover and technology / service convergence for radio spectrum management in broadcasting. It considers the “digital dividend” which might be realized in terms of spectrum released for other uses post switch-over and looks at potential roles for the EU in maximizing the benefits of this dividend.

Another part of the general consultation process engaged in by the European Commission includes numerous RSPG consultations on this and other related subjects as well as complementary work regarding conditions and options in introducing secondary trading of radio spectrum in the European Community.

The Communication on the transition from analogue to digital broadcasting – although focusing on TV - mentions radio on several occasions acknowledging some of the difficulties confronted by this medium with regard to switch-over. Furthermore, the November 2003 Telecom Council recognized “the importance of radio for European citizens and that radio may pursue its own digital migration with different timing from television”. It invited the Commission “within the limits of Community law and policy, to support Member States’ initiatives to promote digital broadcasting”:

This, in our view, provides an adequate framework in which some attention could be provided by the European Commission to Radio and its migration to digital.

While we commend the extensive and valuable consultation exercise engaged in by the Commission, we wonder why radio broadcasting is not considered in the AEGIS/IDATE study in spite of the fact that the terms of reference refer jointly to television and radio as “broadcasting”. We further regret that radio broadcasting and the specific concerns of this sector continue being left out from the general reflection process on the migration of radio to digital broadcasting.

Radio is close to the heart and (ears) of the huge majority of citizens across Europe. AER is convinced that the European Commission has an important role to play in facilitating the migration of radio from analogue to digital thus ensuring that radio continues to play its role in the European, digital audiovisual landscape and preventing radio becoming an obsolete, analogue medium.

COMMENTS TO THE RECOMMENDATIONS MADE IN THE STUDY

FACILITATING SWITCH-OVER

Recommendation 1: Benchmarking

AER fully supports this recommendation but would suggest that progress - and/or the reasons leading to lack of progress in the migration to digital radio in the different EU Member States - be monitored as well. This is particularly true now that ten new Member States have joined the EU with a wide diversity of levels of development in their radio markets. Comparison at EU level of national experiences and regular monitoring would provide useful information on policy and market status. This could feed into the EU policymaking process and help identify possible actions to develop internal market synergies.

A way forward could be a commitment by the Commission to gather data on the digital radio market in Europe on a yearly basis as part of its annual implementation reports on the Telecom Package.

Recommendation 2: Cost Benefit Analysis

AER underlines again that switch-over is an issue not only for TV but also for Radio.

As stated in the Telecom Council conclusions, radio should be allowed to pursue its own digital migration with different timing to television. Indeed, European States are at different stages of digital radio development with some countries at the fore-front (like the UK), others lagging behind (like France and Germany) and others still with no digital radio developments at all (most of the new EU Member States).

Switchover should only occur when the right conditions are met (e.g. regulatory framework clarifying conditions for migration to digital, receivers available at affordable prices, good geographical coverage, availability of most analogue services via digital transmission, additional, new content choice etc.). AER therefore argues against the setting of a switchover (or switch-off) date for radio broadcasting.

In order to guarantee a smooth transition towards digital radio broadcasters should be guaranteed access to enough radio spectrum to allow both for continuity and new services.

However, we agree that attention to the balance between the costs of switchover and the benefits of digitalization should be considered. We would further argue that it is the economic, social and cultural cost of radio not going digital that needs to be considered by national regulators, public authorities at national and EU-level as well as by broadcasters themselves in an increasingly digitalized and competitive environment.

Considering the experience of digital radio sales and number of services in the UK and the adoption of adapted regulatory frameworks in some countries (France and Italy for example), it is quite possible that transition towards digital radio in other countries could be faster than expected, as soon as the right momentum has built up. Below are some figures for the UK to illustrate the above. 

• Services: today in the UK there are 385 services on air with 202 in digital only and 183 in simulcast;
• Receivers: there are over a million digital receivers forecasted to be present in the market by the end of this year; they come in different shapes, colours, sizes and functionalities, are currently starting at £49.99 and are available at high-street shops throughout the UK.
• At the end of 2002, the number of receivers on the market was of 135.000 and 435.000 at the end of 2003.
• This represents an increase of 640% in 2 years.

Recommendation 3: Promoting (Consumer) Awareness

AER has always argued that encouraging the development of information / awareness / marketing campaigns for digital switch-over in which - similarly to the UK example – public authorities, public and private broadcasters and manufacturers work together, is crucial to ensure that all the parties understand the benefits of digitalisation and the potential drawbacks of not going digital. All the weight of the switch-over process cannot be left on the operators’ side alone.

AER would certainly agree that in addition to the above, it is crucial that consumer awareness and interest be promoted as well.

Unlike TV, there is little competition between digital radio broadcasting standards such as DAB to replace FM and DRM to replace AM. Furthermore, these standards (DAB in particular) are being constantly improved to allow for different functionalities - whether in mobile or fixed environments - such as data and image transmission in addition to sound transmission. At the same time, the organizations promoting these standards are cooperating to ensure that in the near future receivers available for purchase will have the capacity of receiving any radio broadcast signal by whatever means is used to transmit it (AM, FM, DAB, DRM) without the listener having to choose between standards.

Clear labelling of the products will certainly be of extreme importance for the switchover towards digital radio. The “DAB” and “DRM” logos will help the consumers in their choice when buying new equipment. Therefore we agree with Recommendation number 3.

Considering the fact that digital radio technology is a European product it might also be argued that some kind of public/European promotion might be of genuine European industrial value.

Recommendation 4: New Approaches to Spectrum Management

AER agrees with the study’s proposals regarding possible new procedures for spectrum management, like combinatory auctioning and bidding, but underlines once again the enormous differences which exist - and which must be respected - between broadcasting and telecommunication. We believe that in order to speed-up transition towards digital radio, access to radio spectrum must be guaranteed.  Whereas fair and transparent allocation mechanisms are essential – and flexibility in the broadcasting bands is desirable – in AER’s view, “technological neutrality” cannot be conducive to fair allocation to radio broadcasters when sharing the same bands with other spectrum users such as TV or telecommunications.

Technological neutrality can easily be supported as a general principle in accessing spectrum for radio-communications but cannot be an obvious choice when sharing the same bands with other spectrum users such as the ones mentioned above. Many examples of mutual interference can be reported generated along borders by the coexistence of different radio-communication services (e.g. broadcasting and fixed, broadcasting and aeronautical) and could only become more acute should broadcasting (high frequency) share bands with, for example, telecom operators (low frequency).

At this stage the most crucial issue for private and commercial radio broadcasters concerns fair access to spectrum for digital radio broadcasting in a highly competitive environment where spectrum could become a commodity like any other.

Radio broadcasting cannot compete at market level for spectrum with other spectrum users such as telecom operators because of the different kind of services it provides. Telecom operators charge for each connection set-up. The large majority of commercial broadcasters are free-to-air and revenues are generated by a mixture of advertisement and editorial content which itself is based on a complex system of audience measurement.

In AER’s view, European coordination of Member States’ spectrum policies is essential to ensure that policy-makers and regulators are aware of the value of keeping spectrum available for radio broadcasters and helping ensure equal rights access to spectrum for private and public radio broadcasters. Migration to digital radio cannot be sustained by one player alone – neither can it be market-driven.

MAXIMISING OPPORTUNITIES FROM SWITCHOVER AND CONVERGENCE

Recommendation 5: Access to Multiplex Transmission Capacity

In our view, reserving a part of the multiplex capacity for data services is important. Data services and experimental applications will undoubtedly create new interests and new uses. However, it is important to bear in mind that spectrum and therefore multiplex capacity will initially be limited so a proper balance needs to be maintained between the provision of nonbroadcast related data and radio channels. At present, AER believes the amount of multiplex space set aside for non-audio data should be confined to the minimum necessary.

Recommendation 6: Differentiating between “General Interest” and other broadcast services

All radios, public and private, digital or analogue, offer services of general interest and serve the public. They participate in the same way in the objectives of pluralism, ethics of information, respect for moral and democratic values, and protection of the individual, as well as the promotion of consumer interests. Private radio, no less than public radio, must satisfy listeners’ choice and information requirements. The vast majority of private and commercial radio stations in Europe are small, with a local or regional reach. They are an expression of cultural diversity and are close to the heart (and ears) of the huge majority of citizens who rely on them for news, weather, traffic information and entertainment.

The AEGIS / IDATE study questions whether it is necessary for general interest objectives to extend to transmission networks (as opposed to content already covered by the New Regulatory Framework) in a scenario where, for example, mobile reception would be included into the digital coverage obligations. Universal service in the telecommunications world does not currently extend to mobile provision and the study questions whether this should be the case for broadcasting. It further suggests that there is a case for the separate treatment of existing general interest broadcast services and purely commercial content provision and that the latter should have no greater claim to access limited spectrum resources than any other commercial application (mobile telephony or data casting).

Europe with an undisputable leading role has developed digital broadcasting techniques for international, national and local digital radio broadcasting. These standards are particularly well suited to radio broadcasting which is characterised by an essential “content” dimension and a “one-to-many” as opposed as to a “one-to-one” capacity which characterises telecommunications. DAB for example can provide “one-to-many” communications (audio and data) of all kinds, free-to-air, robustly, in the fixed, wireless and mobile environments.

In spite of these possibilities and unlike some television services, radio will to a very large extent remain free-to-air whatever additional services it might decide to offer to the listeners. Such services, which could include emergency services, travel, traffic and weather information or even interactive radio, are of general interest. For commercial broadcasters, revenues will continue to be generated by a mixture of advertisement and editorial content which itself is based on the evaluation of the audience in a complex process.

The enhancement of transmission quality should be considered as a natural evolution of the medium not as services exceeding the services of general interest concept.

Furthermore, there is a frequent misinterpretation that other telecommunication or even broadcasting systems can easily do what radio normally does. Yet radio broadcasters are the only ones to have the skills, experience and expertise, to create services and content which will be popular with their listeners as well as advertisers. In spite of this, radio broadcasters in their large majority will not have the market capacity to compete for spectrum with telecom operators whose business models are radically different from those of private / commercial broadcasters.

As radio broadcasters, we therefore believe that the content dimension is crucial and that service-based criteria should be favoured when awarding radio spectrum in opposition to a purely economic valuation of spectrum such as auctions. In other words, there should be no difference in allocating spectrum for analogue and for digital radio.

Recommendation 7: Spectrum Refarming

Refarming could an interesting opportunity allowing the implementation of new services in spectrum portions used before for other services. Discussion about refarming should therefore continue in as much as it is linked to switchover and that the specific concerns of radio broadcasters are taken into account.

CONCLUSION

AER agrees that the amount of spectrum that would be required to support the introduction of new services and applications is as yet unclear and will depend on the size of the market, the nature of the services that are to be provided and the length of the simulcasting period.

AER therefore argues that a coordinated position on the spectrum needs of radio broadcasters enshrined in favourable regulatory frameworks will help set the stage for a harmonized and simultaneous switch-over process in most Member States. European coordination of Member States’ spectrum policies is essential to achieve this as is EU support to ensure that public and private/commercial broadcasters are handled in the same way and without causing distortions in terms of competition in the move to allocate digital radio licences.

In conclusion, broadcasting is different from telecommunications and other types of spectrum use. Radio is different from television. Although some flexibility and in particular fairness and transparency in spectrum allocation mechanisms are necessary, frequencies should not become goods open to trade without some assurance regarding content. Service continuity as well as fair and balanced access to spectrum for private and commercial radio must be guaranteed. Otherwise confidence amongst radio broadcasters, receiver manufacturers, advertisers and listeners might be too weak for an efficient switchover.

ENDS
15/07/2004

NOTES: Brussels-based AER (the Association of European Radios) represents the interests of 14 national private and commercial radio associations in 11 EU Member States, Switzerland and Romania. The combined membership is of over 4,500 private/commercial radio stations broadcasting to millions of daily listeners across Europe. The AER web site provides further information on the association. www.aereurope.org  AER is a member of the World DAB Forum.