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Radio – Preparing for the Future

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Radio – Preparing for the Future Radio – Preparing for the future Phase 1 developing a new framework Issued: 15 December 2004 Closing date for responses: 7 March 2005 Radio – Preparing for the future 2 Contents Section Page Foreword 2 1 Introduction 4 2 Executive summary 9 3 An overview of radio in the UK 23 4 Why do we intervene in the market for radio? 34 5 Towards a strategic framework for the regulation of 51 radio 6 The regulation of formats and local material on 59 analogue commercial radio 7 Facilitating the growth of digital radio 88 8 Future licensing 150 9 Questions for consultation 156 10 Glossary of terms and definitions 161 Appendices (published online at www.ofcom.org.uk) A The regulation of commercial radio in the UK B Results of audience research C Summary of representations made during the review of digital radio D The economic and social policy arguments for intervention in the radio market E Regulatory impact assessments F Ofcom’s consultation procedures 2 Radio – Preparing for the future Foreword The senior broadcaster – radio - is a vibrant and increasingly popular medium. Audiences are listening both to a wider range of stations and for longer in total than they were five years ago. Radio is also at the cutting edge of convergence. Audiences listen to radio not just over conventional sets but, increasingly, via digital television, mobile phones and the internet; and there is a growing range of data and multi-media services available over digital radio sets. Since Ofcom inherited regulation of commercial radio from the Radio Authority, we have taken a number of specific steps to help the industry develop and increase choice for audiences. We have confirmed spectrum for at least 30 additional local FM stations, simplified and streamlined the process for applying for a licence to run them, and have so far advertised nine licence areas. We have implemented a new tier of radio - community radio - which will complement local commercial radio and enhance audience choice locally. We have sustained the ongoing programme of temporary / special event licences (RSLs) while developing new processes to deal with recurring peaks of demand for such services, for example during Ramadan; and we have published interim guidance on localness for local commercial radio (which this report develops further). All these were things that needed to be done as soon as possible after Ofcom’s formation. The time has now come to take a wider look at the industry’s development. The starting point for this review has been the requirement to meet two specific statutory duties. The first is our statutory requirement to report to the Secretary of State on the take-up and future prospects for digital radio. The second was Parliament’s will that we should develop ways of protecting local programming and production on commercial local radio, in the light of the potential consolidation of the sector which the Communications Act makes possible. We make some initial proposals in these specific areas and also raise some broader questions about the shape and direction of the industry as a whole. The answers to these broader questions will help Ofcom to shape a strategic framework for regulation of the industry to help us meet our twin objectives in radio. Firstly, that it should remain a dynamic sector, with room to grow and to provide new services to audiences, increasing the range and extent of our choice as consumers. This is exemplified in the proposals in this report on additional spectrum for digital radio, more Medium Wave stations, and for a more flexible approach to new data and multi- media services via radio. Secondly, that radio, like television, has a wider role in support of social, cultural and democratic objectives; and that it has public purposes towards audiences in our capacity as citizens. The overall framework needs to allow the radio sector as a whole - BBC national and local radio, commercial national and local radio, community and RSL radio - to deliver those public purposes effectively in the digital age. As to Ofcom’s specific proposals for local commercial radio, we believe that the emphasis of regulation needs to move away from box-ticking measurement of inputs towards what audiences actually get to hear. Having local radio journalists with time to be on the beat, picking up, investigating and reporting local stories, is likely to be more important to local audiences than whether their radio station has met pre-dealt quotas of live as opposed to recorded programming from the studio. So we will place greater emphasis on radio stations’ compliance with the formats they have promised Radio – Preparing for the future 3 to meet when being awarded their licences and with new localness guidance. In return, it should be possible to move away from detailed input regulation in some areas. Regulation needs to move beyond a London-based regulator dealing centrally with 250-plus geographically dispersed radio stations. Local radio needs to be a genuinely local voice, locally accountable. Local audiences and citizens therefore should have a real say in the process. To that end, we are proposing a system of public files of output, which local residents can inspect, and which will demonstrate, in terms of programming and news output, that the radio station has met its format obligations, with Ofcom remaining vigilant as the back-stop regulator for those stations that do not. As regards digital radio, Digital Audio Broadcasting appears, after a long gestation, to be beginning to take off. Sales have exceeded 800,000 sets and are expected to pass the one million mark by Christmas. Ofcom’s research shows high levels of listener satisfaction among those who have already adopted Digital Radio. The demand is for more new services and better coverage. We have identified four and possibly five blocks of spectrum that could be available for DAB. These are subject to being able successfully to migrate a range of existing users of those blocks to elsewhere in the spectrum and to international clearance for DAB use. We propose to release up to three of these blocks of spectrum as multiplexes to complete the nationwide coverage of local DAB radio services; and we consult on the possibility of releasing one or possibly two blocks of spectrum for national coverage, each allowing a range of sound programming, data and multi-media services. We propose to license the local multiplexes under the traditional Broadcasting Act rules, since they will complete a consistent and coherent roll-out pattern that was set in place in 1996. If the eventual decision is to go ahead with the national multiplexes, however, we believe that it could be advantageous to take advantage of the flexibility created by last year’s Communications Act, which allows the market to decide the best combination of uses. We would welcome views on how these nationally available blocks of spectrum might best be used. This Report is, in the jargon, a Phase 1 Report: that is, a mixture of outline proposals and questions. In the light of your views, we will firm up our proposals in the next, Phase 2 Stage. We will then be able to go firm on the specifics on localness and on digital radio. We also hope, in the light of your views, to be able to move beyond questions to proposals for the public purposes of radio and the market structure best designed to deliver them. Many of these public purposes, we expect, will, as they have for much of the past 80 years, continue to be met by the BBC’s radio services. But commercial and community radio will also have a significant part to play in the total framework in giving all of us, as audiences, a wide range of services which meet our needs for imaginative, speech-based services, a wide range of music and other cultural programming, local news and information which allows us to participate effectively in the democratic process and to get the best out of our lives. We believe that radio matters. So do your views. We look forward to receiving them. David Currie Stephen A Carter Chairman Chief Executive 4 Radio – Preparing for the future Section 1 Introduction 1.1 What is radio? Radio is everywhere. It wakes us up in the morning and accompanies us around the house – in the bedroom, in the shower, in the kitchen – entertaining and informing us. It helps us get to work, advising us of traffic problems and calming our nerves as we commute, in the car or on public transport. For some of us, it keeps us going through the day, either at work or at home, providing company, entertaining us and making us think. At the end of the working day it helps us get home again. Only then does television, radio’s younger sibling, take over in the battle for our attention. Radio has been around for over 80 years and, despite the arrival of new technologies, from television to computers and the internet, radio still plays a major role in our lives today. Every week, 90% of the population tunes into radio for at least five minutes and listening is on the increase. On average, we each listen to 22.9 hours of radio a week – almost as much time as we spend watching television. But our relationship with radio is different from that with television. Radio is a secondary medium; we usually listen to it while we are doing other things – getting ready, commuting or working. That doesn’t mean, however, that we take it less seriously than television. Radio is a personal medium, which many of us feel very passionately about and we have a strong sense of ownership of the stations we listen to.
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