Tuesday, January 26th, 2021

Digital radio still the underdog

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Commercial Radio Australia (CRA) recently held workshops in Sydney and Melbourne on the future of digital radio in cars. The workshops were attended by nearly 100 representatives from the automotive industry, including vehicle product managers, engineering planning teams, industry association members, retailers and manufacturers. The workshops, according to CRA’s press release, focussed on the current status of digital radio in Australia, the rollout of digital radio regionally and how to get more Australians listening to digital radio in their cars.

Joan Warner, CRA CEO said in respect of the workshops,

“Ultimately, the radio industry objective is to have every car sold in Australia factory fitted with a digital radio. We’re very pleased with the response from the automotive industry to our workshops and look forward to continued communication.”

As it currently stands the availability of new cars with digital radios factory fitted in Australia is almost non-existent. Anyone wanting a digital radio in their car must look at after market products such as digital adaptors or installing a new head unit.

The exception is German luxury car manufacturer BMW, which in April this year announced they would be the first manufacturer in Australia to offer DAB+ (digital radio format in Australia) as a factory fitted option, with availability on 5 Series and 7 Series from May, and the new 6 Series upon launch for an additional cost of between AUD$900 and $950, depending on the model purchased. At the time of the announcement BMW Group Managing Director Phil Horton said BMW has built its reputation in Australia being the pioneer of exciting new infotainment technologies.

As noted, apart from BMW, the response in Australia from car manufacturers to factory fit digital radios has been slow. This is most likely due to the relative low penetration rate of digital radio within the market and the lack of digital coverage outside mainland metropolitan markets. The latest figures released in March by the CRA in its Digital Radio Industry Report 2011 showed digital radio listening in Australia at around 700,000 people per week. The report also found that from January 2010 to January 2011 there was a 185% increase in digital radio sales and a 5.6% increase in digital radio listening.

The future success of digital radio as a viable distribution medium, as noted by this website in an article published in May 2009, available here, rests on two key factors:

  1. Engagement with the car manufacturers to factory fit digital radios; and
  2. Overcome the threat from the growth of Internet radio streaming.

CRA have taken the rights steps by engaging with car manufacturers to follow BMW‘s lead of making digital radios available factory fitted.  This, however, is only one piece of the puzzle. The other piece to help convince car manufacturers that digital radio is the right solution for their product offering is the need to increase the audience reach of digital radio. This responsibility rests with the Australian Government.

At the moment digital signals are only available in the five main metropolitan markets, whilst Darwin and Canberra are currently in trials with only low powered signals available to listeners. To state the obvious people driving their cars often drive outside metropolitan areas, for example from Brisbane to the Gold Coast, yet on the Gold Coast digital radio is not available. Where then is the incentive for car manufacturers to install digital radios in cars, if the digital signal will cut out mid journey, meaning consumers will still need to have an AM/FM radio in-car?

Whilst the CRA has been vocal and active in marketing the benefits of digital radio, it is the automotive industry that holds the key to ensuring the growth and success of digital radio. This is especially the case given that the government has not implemented an AM/FM switch-off, unlike the analogue switch-off for television, which is forcing consumers to upgrade to digital television by 2013. Without a government-enforced AM/FM switch-off or a greater regional roll-out, the incentive for car manufacturers to introduce digital radios as standard in Australian sold cars is limited at best.

In response to the need for a regional roll-out of digital radio services, Minister for Broadband, Communications and the Digital Economy, Senator Stephen Conroy, at the 2010 CRA conference said that spectrum allocation for digital radio in regional areas had begun and the Government is looking for more. However any roll out timebtable is unlikely to be implemented until the findings of the ‘Technologies for digital radio services in regional Australia’ discussion paper are published.

The advantage of digital radio in cars is enormous as they enable a multitude of new information delivery services direct to the consumer. This includes the delivery of real-time traffic updates, radio stations broadcasting text based traffic messages or images to deliver traffic flow information snapshots directly to motorists’ digital radios and, according to the CRA in the future add information about road works, fuel prices and parking station capacities.

The problem is the consumer is unlikely to see any of these benefits until the regional issue is solved, which will then result in car manufacturers factory fitting DAB+ digital radios.

The second issue is the prevalence of Internet radio streaming. Currently there are up to 20 new DAB+ only stations on air in each market, plus an additional 13 short-term or pop-up stations, such as P!nk radio. As well as these stations being available on DAB+, the majority (if not all of these stations) are available via Internet radio streaming as well. Critically it is not just the computer which is driving the use of Internet radio, but the use of internet radio apps on smart phones such as Apple’s iPhone.

Tune in Radio iPhone App

The threat to digital radio is real. The growth in smart phone usage, which has seen streaming apps such as ‘Tune in Radio‘ become popular, combined with 3G mobile coverage that reaches 99% of the population (Telstra Next G Network - note: not 99% of the territory) as opposed to digital radio’s current metro-only coverage, and increased data plans (average streaming of a station via an iPhone is around 10mb-20mb per hour), may result in digital radio becoming redundant as a commercially viable distribution medium. The strength of Internet streaming radio as a distribution method was noted in a recent Mediaweek Podcast with 3AW Online Manager, Ben Wise who said in relation to the number of live streams that 3AW record daily is  between 5 and 15,000″.  James Manning, Editor and Publisher of Mediaweek in response to this noted that 3AW have “got more listeners outside of Melbourne than 3MTR has in Melbourne…” This evidences the growth and threat that online streaming poses to the success of digital radio, as an Internet stream in some instances can outrate another commercial radio station using a traditional broadcasting platform.

Fox FM iPhone App Projected Data Usage

The flexibility of Internet radio streaming is no more evident than in a car. For example a user might want to listen a Super Rugby game on a Saturday night but ABC local radio in the area is covering a rugby league game. That user could stream to their iPhone via the ‘Tune in Radio‘ app,  ABC Grandstand Digital’s online coverage of the Super Rugby match, which is then played throughout the car’s stereo via bluetooth audio streaming or an AUX connection, both of which are prevalent in new cars. Another example might be an ex-Victorian who is living in Sydney and enjoys listening to 3AW’s Ross & John breakfast show. Thanks to mobile internet radio streaming that individual can listen to their favourite program whilst driving to work, as if they were still living in Melbourne.

A two-hour car journey where radio is streamed for that whole period over 3G is unlikely to put a major dent into a person’s data usage, taking a 1GB data limit as standard for most current smart phone contracts. If an individual was to use mobile Internet radio streaming for 2 hours daily via a 3G network over a 30-day period their total data usage would be 423.1 MB – this is calculated using the ‘projected data usage/hr’ being 14mb/hr from Austereo’s FOX FM iPhone app, as seen in the screen shot above. Of course this example is based on the assumption that an individual is a contract customer with a telco and has an adequate data allowance, which would still allow for other Internet usages per month such as email or social networking.

The above examples may not be viable for all consumers, such as those with a limited data package or pre-paid customers. Nonetheless the introduction of LTE 4G mobile networks will enable telcos to enhance mobile download speeds (thereby reducing buffering issues), increase capacity on networks and ensure greater mobile signal reach. The by-product is that consumers will become more data hunger. The response from mobile network providers in this competitive environment will likely result in an increase offering of data for contract and pre-paid customers. This makes Internet radio streaming a real threat to digital radio’s viability long term.

Digital radio is a great product but its traction and long-term future very much depends on the response from the automotive industry, as to whether manufacturers will collectively introduce factory fitted digital radios in cars. There is also the real threat from Internet radio streaming, especially on mobile devices. These threats to digital radio are likely to grow rapidly if there is no timetable announced on the regional roll out of digital radio.

CRA have taken the right steps in engaging with the automotive industry, but a lot more needs to be done by all stakeholders involved to ensure the future survival and success of digital radio in Australia.

Sources:

Digital radio sales and listening rise – Commercial Radio Australia

Automotive Industry is Listening to Digital Radio - Commercial Radio Australia

The Australian

Department of Broadband, Communications and Digital Economy

Telstra

Mediaweek

Digital Radio Plus

Apple

FOX FM

BMW

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