Digital Radio War (of words)

Michael Hedges June 17, 2009 (Follow on Twitter)

A flurry of press statements shows the mounting tension between German public and private broadcasters. ARD, the network of public broadcasters, struck first, saying private sector broadcasters want “to gamble with radios’ future.”

Only rarely do German public and private sector broadcasters call a truce. The battleground, at the moment, is digital radio. A tense truce between the two warring parties over introducing – then re-introducing – a common digital radio strategy has existed for about a year. Fighting has resumed.

“VPRT gambles with radios’ future by rejecting DAB+,” said ARD radio committee chairman Bernhard Hermann, referring to the private broadcasters association. German public and private broadcasters had agreed to mount a joint campaign this summer promoting digital radio. Private broadcasters, again, have cold feet. DAB+ is the upgraded DAB digital radio transmission standard.

"Commercial radio broadcasters have earned good money for years,” continued ARD’s Hermann. “They don’t want that threatened as entry into digital radio would mean investment. This would, naturally, diminish shareholders profits.”

Ouch!

The ARD statement claims that private broadcasters aim to prevent the release of license fee funds - €30 million – for ARD’s digital trials, arguing abuse of market position by State aid. “This is pure political interest,” said Hermann. “Short-term shareholder value overcomes the future security of radio.”

And then ARD chairman Peter Boudgoust got personal, attacking VPRT vice president Hans-Dieter Hillmoth. “The assessment of Hillmoth that there are no viable business models is not true.” Just look at the successes in the UK, Denmark and Switzerland, said the ARD statement.

Two hours later came the return shot from VPRT.

"Unbelievable," said VPRT’s Hillmoth. “ARD wants the enormous sum of €30 million for digital radio trials even though neither VPRT nor the KEF is convinced of the system’s viability. The polemical language of the ARD statement shows that it’s the (license) fee payers money that will be gambled.” The KEF (Kommission zur Ermittlung des Finanzbedarfs der Rundfunkanstalten)bestows the license fee tax money on public broadcasters. In 2008 it decided DAB was a bad deal.

"The critical position of the VPRT regarding both the lack of marketability of the DAB+ system and the lack of funding options is thoroughly justified…”, said the VPRT statement.

“VPRT is happy to join with ARD in a substantive discussion on the arguments for and against DAB+. However, the association expects that colleagues are fully informed aware of the actual and current situation in the German market and in neighboring States. In the UK…apart from the tax-funded BBC…no private radio providers have a realistic chance of survival with DAB. In Switzerland DAB is ‘on-hold’ and in Denmark only 750,000 people listen to 18 DAB channels.”

Digital radio, particularly the DAB standard, has long been a minor but visible point of contention between public and private sector broadcasters. There is the appearance, real or not, that public broadcasters – particularly those who funded early DAB development – sought to freeze out private sector broadcasters. Uptake, largely bourn by public broadcasters, has been spotty; consumers generally unwilling to toss out 5 or more FM receivers per household for expensive digital receivers. At first, the battle between public and private broadcasters over digital radio – and everything else – has been about taking and holding competitive advantage. As economics turn dismal private sector broadcasters see justification in being skeptical. Both sides would do well to view DAB as a transitional technology, express gratitude for development efforts and move on to the truly interactive media that the public is clearly embracing.

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