Outlook: One runner in digital radio race

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The Independent Online
COMMERCIAL RADIO has always been the poor relation of commercial TV and no more so than in the race to turn digital. Not only are the numbers much smaller than with digital TV, but there's a real fear that digital radio isn't a commercial proposition at all.

Part of the reason for this is the very high cost of digital receivers, which at present can be as much as pounds 1,000 per set. While this might be passed off as a hidden extra in the cost of top of the line luxury cars, few ordinary radio purchasers are going to think the price worth the better quality sound. This is especially the case if digital fails to offer much in the way of enhanced service over what is already on offer with analogue radio.

All the same, it was perhaps somewhat disappointing to find that when the deadline came yesterday for submitting final proposals to the Radio Authority for the licence for digital radio, there was just one bidder, the only rival having dropped by the wayside some while back. Furthermore, the bidder's reasons for submitting a proposal at all seem to be mostly defensive. The bidder is a consortium of GWR, which owns Classic FM, Talk Radio and the cable operator NTL.

The two national radio stations involved get automatic renewal of their licences when they come up for review in the year 2000 if they bankroll the advance into digital, so they have an obvious incentive to fund the proposal regardless of whether they think it commercially viable. To be fair on the bidder, this is not an entirely spurious proposal. The consortium has come up with some genuine innovations to support its bid, including a dedicated sports channel. Even so, the suspicion must be that it has done the bare minimum to ensure it passes the Radio Authority's various quality of service thresholds.

The Government is keen to push ahead with the development of digital radio as quickly as possible. Britain leads the world in developing digital TV and ministers want us to do the same in radio. Furthermore, the BBC is independently already making the necessary investment regardless of the fact that there are so few sets out there that can receive the service. To boot, the timing of the licence renewal for Classic FM has the effect of tying the authorities into an early decision on digital radio.

Nonetheless, the Radio Authority might give serious consideration to turning this bid down so as to allow for the development of credible alternative proposals. A one-contestant race is no good to anyone. By awarding the licence now before developments in technology allow for steep reductions in the costs of digital sets and the full commercial potential of digital radio becomes apparent, the Radio Authority will be guaranteeing that the new platform is dominated by present national radio incumbents, rather in the way the ITC has with digital TV. This cannot be the best way forward for a service multiple possibilities.