Senator the Hon Helen Coonan
Minister for Communications, Information Technology and the Arts
Digital Radio
Commercial Radio Australia Conference
Sydney
Friday 14 October 2005
Introduction
Thank you Joan (Warner)
I am very pleased to be here at Commercial Radio Australia’s annual conference.
I note that I am to be followed by Barry Humphries. I’m not too sure what to make of this!
My friend Geoffrey Robertson QC – he of the ‘Hypotheticals’ - is fond of saying that you can tell how far Australia has come when Sir Les Patterson has been succeeded by Helen Coonan as the Minister for the Arts!
And, as this is the first time I have addressed a CRA conference, today I am particularly pleased to be able to elaborate on a topic I rather suspect a few of you might be interested in - the Government’s plan for digital radio in Australia.
But firstly, I think it would be useful to look at how we find ourselves in a position where convergence, digitisation and the relentless march of technology are challenging our traditional media industries – including radio broadcasters.
Why digitise?
I’m sure no-one in the audience today needs convincing of the importance of radio as a medium or its ubiquity in everyday Australian life.
Radio is the medium of easy-listening and love-song dedications, of hard-hitting news and current affairs, of robust opinion and talk-back, and it is the medium we turn to in cases of emergency. More than any other medium, Australians trust radio.
On average Australians listen to around two hours of radio per day and there are around 37 million radios in Australia which reflects its value to the consumer and therefore its commercial value.
So, if we enjoy radio, have made a substantial investment in kitting out our homes, boats, caravans and cars with radios, why is there a need to digitise?
Radio is the only significant broadcasting platform that remains analogue only. As such, the industry has limited capacity to respond to the challenges and opportunities posed by new, digital technologies.
And those challenges are here – now.
For example, subscription radio services are already available via pay-TV in Australia and ABC radio and SBS radio is available via free-to-air digital TV.
Broadband internet has been taken up by more than 5 million households in Australia enabling people to access a wide range of Internet radio services.
Sales of iPods, MP3 players and other handheld digital audio devices are increasing exponentially.
Industry estimates predict that 1.3 million MP3 players will be sold in Australia by the end of 2005.
In order to respond to these challenges, the commercial radio industry in Australia has lobbied strongly for the introduction of digital radio, including access to spectrum.
The challenge for Government has been to provide a suitable framework for the introduction of digital radio because it requires access to a significant but limited public resource – radio frequency spectrum.
This framework needs to provide certainty and enable the industry to plan for the introduction of digital radio and to increase consumer awareness of the benefits the digital platform can deliver.
I acknowledge that without a coordinated approach and the involvement of existing commercial radio broadcasters, the two national broadcasters and community broadcasters, digital radio is unlikely to be a viable consumer proposition.
In formulating the framework, the Government was also mindful that broader public policy objectives must be met.
As with digital television, with digital radio, the national interest is paramount. We must ensure that localism, access and diversity as well as general content standards, are safeguarded in the new digital medium.
The challenge of digitisation is one of the key drivers behind the Government’s continued push to reform the media industry in Australia and this has implications and benefits for the radio industry.
Digital Radio
There are obvious and undoubted synergies between the Government’s objectives of media reform, the key driver of which is to provide new and innovative services to consumers, and the provision of extra services through the introduction of digital radio.
Digital radio provides an opportunity to enhance a service that is cherished and used by millions of Australians.
Digital radio can offer more audio services in the same space as analogue, as well as additional functionality such as record and rewind.
It can also offer a range of ancillary services such as streamed text, news and weather updates, play list information and still pictures.
In fact, I understand attendees at the conference will be witnessing a world first with CRA’s showing of a digital radio capable of displaying pictures.
The groundbreaking prototype, called the DAB Picture Radio, will allow consumers to hear radio programs in CD-quality sound, while seeing images of their favourite artist, news reports or weather maps being broadcast on a colour screen.
If this catches on, no longer will you be able to claim a great face for radio! But this is an exciting development and a credit to the creativity and ingenuity of all involved.
So with a clear case for the potential that digital radio has to offer, the challenge for Government was to address the array of complex technical and policy questions relating to support its introduction.
Policy questions concerning use of an important public resource such as spectrum and a medium that is so valued by the Australian public, deserve careful calibration.
Consultations
The introduction of digital radio has been the subject of a long consultation timeframe that I know has caused some frustration.
A forum was convened in Sydney in late 2003 to gather the views of stakeholders. And a report was released by the Digital Radio Study Group examining technology and implementation options and looking at the international experience.
This work culminated in a discussion paper released late last year.
There are also trials of Eureka 147 digital radio technology being conducted in Sydney and Melbourne which include a broad range of participants.
These trials have produced some useful information for the participants, the regulator and the Government.
Trials of alternative technologies such as Digital Radio Mondiale, which might be more suitable for regional areas, are yet to be conducted. These will be important for the extension of digital radio to regional areas, and this is an issue I will return to later.
Many people here today have provided valuable input into the consultation process and I thank them for their contributions.
Election commitments
During last year’s election the Government committed to a moratorium on the issue of new commercial digital radio licences for an initial period of five years, to continue to work in partnership with industry to develop a framework for the introduction of digital radio in Australia and to the inclusion of community broadcasters in digital radio.
Today’s announcement provides the policy settings to move further along the path and give industry the certainty needed to get digital radio rolling.
Radio and Television – a comparison
A threshold issue for the Government is the extent to which the approach to the introduction of digital television in Australia should apply to the introduction of digital radio.
The Government clearly understands the radio industry’s desire to be treated in an equivalent manner to television and we agree that in principle, this is an appropriate objective.
However, there are some clear differences between the two sectors and the available technologies which have meant that the digital TV model needs to be partly differentiated for the introduction of digital radio.
Firstly, the industry structures are quite different. There is far greater diversity in radio services in comparison to television.
In addition to the 270-odd commercial services, there are some 300 community services, 200 High Powered and 1800 Low Powered Open Narrowcast licences.
Secondly, there are substantially more analogue radio sets in the community (37 million) than TV receivers (11 million) suggesting it would be unrealistic to proceed on the basis that the analogue signal could or should be switched off any time soon.
Finally, a key lesson of the digital TV framework is that a market driven model which does not actively require or at least encourage new, digital-only services will be a significant factor that inhibits consumer interest in the new platform.
But taking these differences into account, the Government has developed a policy framework to allow digital radio to move to the next stage whilst offering the industry equivalence of treatment with the TV industry, where this is appropriate.
Supplementary or replacement technology?
A second threshold question is whether digital radio should replace analogue or whether it should be viewed as a supplementary technology? Again, I am aware of the radio industry’s clear views on this issue.
While it is true that new technologies are emerging and starting to compete with traditional radio services, nothing is likely to completely replace traditional analogue radio in the near future in terms of reach or influence. There are many reasons as to why.
In the UK, long-considered to be at the forefront of digital radio, the take-up rate remains low – only around one or two per cent of total radio sets – some 10 years after digital radio services were introduced.
Critically, digital radio cannot currently provide the same level of coverage as analogue AM and FM services in regional areas.
There is also insufficient spectrum in the larger markets at present to convert all existing analogue services to digital, including high powered open narrowcasters.
Nor is there a clear technical solution (yet), to offer digital conversion (even if it was financially feasible) to the large number of localised services provided by community broadcasters and low powered open narrowcasters (such as tourist radio).
In fact, no country that has introduced any of the digital radio platforms has done so with a realistic expectation of analogue shutdown.
Analogue radio will therefore continue to play a vital role in the foreseeable future - unlike its television counterpart which is headed for switch-off.
Digital Radio Framework
The framework I am announcing today will deliver significant financial and competitive benefits to the commercial radio sector. It seeks to provide both certainty and a light touch to give the industry maximum flexibility in the move to digital.
It provides a staged pathway for the radio sector to take advantage of digital opportunities and encourage consumers to benefit from new services alongside our existing high quality analogue radio services.
Key features of the framework include:
Moratorium
A six year moratorium will apply to the issue of new BSB commercial digital radio licences from the commencement of rollout of digital services.
This is a significant benefit for incumbent commercial broadcasters and is consistent with the period of legislative protection provided for digital television.
The moratorium will be subject to the conditions set out in the 2003 Australian Broadcasting Authority Direction and subject to the commercial broadcasters in a licence area complying with the digital implementation framework to be developed, including rollout and coverage requirements.
Obviously a 6 year moratorium will disappoint those broadcasters operating outside the BSB who are also interested in providing digital radio services. I am referring here particularly to the section 40 broadcasters.
Section 40 licences are designed to encourage commercial services through new and emerging technologies.
Minimal restrictions are imposed on their allocation and commensurate with this, they come with no allocation of spectrum and no rights to consideration in the planning of spectrum by ACMA.
As such, it is appropriate that they are considered separately for the purposes of the introduction of digital radio.
While the moratorium will preclude new commercial entry in licence area planned digital radio space during the moratorium period, the Government is not seeking to preclude digital radio offerings outside the broadcasting spectrum.
The Government will continue to consider options for these broadcasters to deliver digital radio services outside the BSB. Indeed, some of them are already doing so via the Foxtel digital platform and satellite.
As it is expected that digital radio will be introduced over a considerable period of time, it is reasonable to expect that further opportunities for these operators to enter the market will arise once the moratorium period has ended.
Multiplex control and spectrum licences
The Government is aware of CRA members’ desire to manage the operation of the digital transmission infrastructure and to each have access to a full 1/5 of a multiplex, which is somewhere around 256 kbps of data capacity.
Being able to control the vital infrastructure on which their services are broadcast is a reasonable request from broadcasters.
Therefore, incumbent commercial and, if they choose, wide-coverage community broadcasters in a licence area, will have first right of refusal to elect to jointly manage the operations of multiplex ensembles and hold the associated spectrum licences. The allocation of the relevant spectrum licence will come with a small administrative charge only.
Clearly, any multiplex joint venture will need to have clear and transparent arrangements in its constitution to ensure that all providers using the multiplex are treated in a fair and reasonable manner.
Should commercial broadcasters decline to take up the right to manage the multiplex in any area, the Government, by default, may allocate transmission licences to third parties to operate digital radio multiplex ensembles.
Regardless of who controls the multiplex, access rules will be established for all platform users to ensure that multiplexes are operated in an open, fair and non-discriminatory way.
Provision will be made for regulatory intervention by the ACCC including to address access disputes and anti-competitive conduct. Spectrum allocation and licensing arrangements will continue to be managed by ACMA.
Current spectrum limitations, particularly in the major capital city markets, is one factor that has influenced decisions about how to accommodate incumbent commercial, national and wide-area community broadcasters in digital.
Technology choice
There are a range of technology standards for digital radio. Eureka 147 is the most widely deployed internationally and, importantly for a small market like Australia, there are a wide range of reasonably priced consumer receivers available.
On this basis, the Government has decided that Australia will implement terrestrial digital radio based upon Eureka 147.
There seems to be widespread agreement that VHF spectrum is the best spectrum for digital radio services using Eureka 147 technology. Its coverage is superior, and as a result, the cost of rollout is less than the key alternative, the L-Band.
There are also some outstanding technical issues relating to the interaction between VHF and L-Band spectrum for use in digital radio.
On this basis, where possible, VHF Band III spectrum will be used for primary digital radio transmitters of commercial, wide-coverage community and national broadcasting services.
L-Band is expected to be used for infill, localised services and where VHF Band III is unavailable, or insufficient.
From an equity perspective it is not appropriate to turn some broadcasters into “second class citizens” in digital by shifting them to inferior spectrum which achieves a lower level of coverage and is more complex and expensive to operate.
In most markets only one VHF Band III channel is available for digital radio purposes – Channel 9A. This channel can accommodate three digital multiplexes.
In our largest markets of Sydney and Melbourne, three digital multiplexes is simply not enough to enable all existing analogue commercial, national and wide-area community services to be allocated 1/5 th of a multiplex. The situation is a lot less difficult in other markets.
I am well aware that the core issue in sharing limited data capacity is to enable broadcasters to individually and collectively provide a range of services that will attract consumers to the digital platform and represent a viable business model.
International experience indicates that 128 kbps allows broadcasters to provide FM standard, or close to FM standard, audio quality using current standards.
These levels of quality are based on the current, mature platforms operated in markets such as the UK. But these platforms are close to ten years old. Compression technology has made many advances since they were first rolled out.
Other digital radio platforms, including DRM, DMB and the Satellite SDARS platforms, all now make use of more advanced compression standards such as AAC+ (Advanced audio coding).
With the work taking place in Europe to develop hybrid Eureka/DRM platforms and to enable existing Eureka networks to take advantage of the emergence of the DMB platform, there is now a real chance that the Eureka 147 platform will also move to include more advanced compression capabilities in its technical specifications.
More advanced standards are now being considered by international standards bodies for inclusion in the Eureka 147 standard. The adoption of more advanced compression standards would enable broadcasters to deliver CD quality services or multiple FM quality services in 128 kbps.
And we have some time to look carefully at these developments.
Realistically, it will take two or three years for the necessary legislative changes to be enacted, for the spectrum planning and allocation to be undertaken and for the practical requirements of infrastructure rollout to take place.
Given the real spectrum limitations we face in Australia, it is vital that we look to all options to achieve the most efficient use of what is available.
Let’s face it, adoption now of a standard that is already 10 years old and may well be superseded, for implementation in another 2 to 3 years, would, in my view, be irresponsible.
Markets like the UK do not have the luxury of contemplating these more advanced standards, given they have an existing platform and would therefore face legacy issues.
But Australia does not have those legacy issues. We need to be absolutely confident we are not adopting a platform that could shortly be considered a legacy problem.
We are not alone in being at this point. There are a number of other large markets yet to introduce digital radio, including France, that will also need to determine whether to adopt a mature and now inefficient standard, or take advantage of technological advances.
Therefore, doing the best we can within the existing capacity restraints, incumbent commercial broadcasters will have guaranteed minimum rights to 128 kbps per service, with the ability to be allocated additional capacity up to a maximum 256 kbps on the condition that the additional capacity is used to provide new services.
This will provide broadcasters with a guaranteed minimum amount of spectrum now to provide a service comparable to quality FM – which represents a real quality improvement for AM services – and the opportunity to acquire further spectrum to provide new services, which will assist in driving consumer interest in the platform.
It may be that some broadcasters will find 128 kbps sufficient for their purposes.
It may be that others will want limited amounts of additional capacity for the provision of data or text services which is more than 128 but less than 256. And it may be that others want a full 256.
Further technical work needs to be done on spectrum, and if we can agree on adopting more advanced compression technologies these constraints will potentially be eliminated.
But in the meantime, I believe it is important that we make a start. If we wait until we have better technical solutions it could be another couple of years before we can get the ball rolling. I don’t think that would be acceptable to industry and certainly would not be acceptable to the Government.
Rollout
The Government expects the initial rollout of digital radio to be driven by the major industry players in areas where it is most likely to be commercially viable.
For this reason, planning for the introduction of terrestrial digital radio will initially focus on state capitals.
Broadcasters who wish to go digital in those markets will be expected to commence their services within a specified, legislated period, and to achieve equivalent coverage to their analogue radio services by the end of the moratorium period.
Following planning for the introduction of digital radio in the state capitals, planning for the introduction of digital radio in other areas will be considered. This will be based on the level of broadcaster interest in delivering digital radio services in those areas.
There is currently a considerable level of interest from some broadcasters in providing digital radio in many areas around Australia outside the state capitals. So I expect that planning work will be undertaken by ACMA as quickly as possible to allow these services to commence.
Regional and rural areas
The technical solution for digital radio in regional areas is, however, not yet clear. But I want to assure you that the Government is committed to ensuring equitable access to new services in broadcasting for people living in rural, regional and remote Australia.
For example, we have made a substantial investment in ensuring the rollout of digital television across Australia including the conversion of the national broadcasters to digital.
However, in the case of digital radio, it is not a secret that Eureka 147 is unlikely to be a suitable platform to address the extended coverage requirements of some regional and remote services.
For this reason, the role of digital radio technologies such as DRM in regional markets needs to be considered further.
Technical trials of technologies such as DRM need to be undertaken.
Trials will determine which technologies, or combination of technologies, will best serve people living in regional and remote Australia.
Industry has an important role to play here and spectrum can be made available quickly to enable such trials to commence.
Digital radio is still relatively new and commercially unproven internationally, and we do not know how successful the platform will be in Australia. By the same token, it may be wildly successful and provide consumers with services they have only ever dreamed of.
We are, however, keen to support and encourage industry to make it a success.
Therefore the Government will consider providing some financial assistance for the capital costs associated with rollout of digital transmission facilities by commercial broadcasters in regional areas when the capital city rollout can be assessed and these regional coverage issues can be more clearly resolved.
Content regulation
To be successful, and attract audiences, I am well aware that digital needs to offer more than simply a simulcast of existing analogue services, even if these services have a higher audio quality.
In addition, given spectrum limitations, compulsory simulcasting would severely limit capacity for new content and discourage innovation on the new platform.
In light of this, there will be no requirement on broadcasters to simulcast their analogue service in digital. There will also be no limitations on the types of additional radio or data services that can be broadcast, subject to the current analogue radio general content regulations.
A substantial amount of simulcasting will likely occur in early stages since this content is already being produced, but there is no clear reason to mandate simulcasting. Nor indeed is there a rationale for forbidding digital-only content.
National broadcasters and community broadcasters
The digital radio picture would not be complete without mentioning the role of the national broadcasters and community broadcasters.
The national broadcasters have an important role to play in raising awareness of digital radio and providing services to promote take-up.
Spectrum will be reserved for the ABC and SBS to enable them to jointly manage single multiplex ensembles throughout metropolitan and regional Australia.
Unlike the commercial radio sector, the national broadcasters currently acquire their analogue transmission and distribution services from third party providers. The framework allows them to continue this arrangement.
It will also enable them to provide a common range of digital services throughout metropolitan and regional Australia.
The role and timing of national broadcaster involvement in digital radio will be considered further in the context of normal budget processes.
Consistent with the Government’s commitment at the last election, planning for the introduction of digital radio by wide-coverage community broadcasters will also be undertaken, first in state capitals and subsequently in other areas.
Provision will also be made for these broadcasters to have access to multiplex ensembles, with wide area community broadcasters, jointly having access rights to 128 kbps per analogue service, up to a maximum of 256 kbps per available multiplex, on the basis that they collectively determine how this is to be shared.
Consideration of additional funding for community broadcasters to assist them with the costs of digital broadcasting will be considered in the normal budget context.
Conclusion
I know that many of you here today have been keen to move forward to implementation of digital radio.
Many of you have been involved in discussions with the Government about how the implementation should proceed. I know you are aware of the practical, commercial and technical challenges that face us all in making digital radio the success we want it to be.
There are some who would argue that Australia should have adopted digital radio long before now. However, what we do have today is a real opportunity to reflect on the lessons internationally and to take advantage of the technological improvements that have taken place.
Clearly, the standards developments are yet to fully play out. And taking a leading edge approach does involve some risks. We need to be realistic about this.
But at the same time, going with the outmoded but safe option is not without its own risk.
What I have spoken about today is a high level framework that gives a clear commitment from government to digital radio.
It provides the industry with not only a clear direction but provides a number of important guarantees to give certainty for investors during what will be a period of significant change and investment for the sector.
Nevertheless, there is clearly a lot more work to be done. The Government needs to put detailed legislative flesh on the bones. ACMA will need to do spectrum planning. Trials need to be undertaken. Compression standards need to be further evaluated and final decisions made.
What I am saying is this is a starting point, not an end point.
You have my commitment, as does the broader radio industry, to continue to work with you and to work through the issues, to get the settings right for the introduction of digital radio in Australia.