Analysis: MBIE calls time on DAB Radio trial

Broadcasting Minister Clare Curran has a once-in-a-generation chance to shake up the radio market

Kordia must wrap up its digital audio broadcast radio (DAB) trial by June 30, MBIE policy and planning manager Len Starling says.

The government must now decide whether to green-light the technology.

It's a golden chance to crack the radio market open, boosting competition and providing more consumer choice — if the coalition is staunch enough to stand up to lobbying by incumbent radio station chains owned by NZME and MediaWorks.

On one level, the trial has been about nutting out the technicalities of DAB. But on another, it's been roiling with industry politics. As with most new technology spats, it will likely be decided by commercial arm-wrestling and who's got the best government connections, rather than which standard performs better on a technical level.

NBR understands Kordia has written to Broadcasting Minister Clare Curran asking for her to overrule MBIE and extend the trial.

But as things stand, the curtain is coming down on perhaps New Zealand's longest-running technology trial, which began in 2006, utilising a 22MHz slice of the so-called Band III spectrum (174-230 MHz) left over after the analogue TV switch-off and the attendant 4G auction (the DAB trial occupies frequencies between 184-206MHz; MBIE has reserved the balance for Internet of Things applications and the NZ Defence Force).

DAB can complement FM, or ultimately replace it to free up airwaves. Advocates say it offers better quality, especially mobile situations, and makes more efficient use of spectrum, creating room for more community stations as well as more commercial players.

MBIE oversaw the technical aspects of the trial.

It now falls on the Ministry for Culture and Heritage, which handles broadcasting policy, to make a recommendation to Ms Curran on whether DAB should be licensed for the commercial market.

There's no doubt that the trial, covering Auckland and Wellington, worked on a technical level. And it was no surprise, given DAB networks are already up and running in the UK and Australia, among many other countries.

NBR found out with its own ears as we put our NBR Radio stream on the trial last month, then heard it in our office on a DAB Radio. A lot of new cars, especially at the higher end of the market, support DAB. For cheap seats, you pick up a DAB (and FM) playing radio at K-Mart for $24. It was an easy process to get setup (no doubt in NZME and MediaWorks' view, too easy).

NBR Radio joined a host of others on the trial. The full line up:

  • Base FM
  • Radio Tarana
  • Radio Rhema
  • KDAB Mix
  • Brian FM
  • The Flea
  • NBR Radio
  • RNZ Concert
  • BBC World Service
  • RNZ National
  • George FM

Industry watchers will note that George FM is the only station from the NZME/MediaWorks commercial radio duopoly, and it's only on the trial because it joined while still an independent (George was bought by MediaWorks in 2009) 

NBR will ask NZME and MediaWorks (and the Radio Broadcasters Association), which represents their lobbying interests) for comment when the work week resumes (the trial news came through late Friday).

But don't hold your breath. Through the trial, the pair has only ever offered polite one-liners about being discussions with MBIE about DAB.

In any case, their actions — or non-actions, being absent from the trial — speak louder than words.

And NBR understands that, behind the scenes, the RBA told MBIE it wanted a "simulcast" trial, where only stations who had shelled out for an FM license would gain a spot.

The lobby group has apparently argued that by running its trial for so long, Kordia has effectively been operating an alternative commercial network; a backdoor way for newcomers to join the radio market (the terms of the trial only allowed Kordia to charge a cost-recovery fee; for NBR it was a nominal $1000, which was waived in the final event).

While NZME and MediaWorks have had to pay tens of millions for scarce FM spectrum, at least they now have the radio field more or less to themselves. Adding a wad of DAB spectrum to dramatically widen the field does not suit their agenda.

Yes, the Crown-owned Kordia is playing politics as well. NBR is well aware it probably only approached us, near what it knew was the death of the trial (June 30 was the latest of a number of extensions) to help bolster its case.

And it is correct that the company, which has lost its analogue TV broadcast cash cow, is looking for new work.

Still, given the way DAB has proved so successful in other markets, notably the UK, where it is now firmly in the mainstream, it's a debate worth having.

One Ministry for Culture and Heritage insider tells NBR that policy discussion around DAB is "way down the priority list," against a backdrop of overwork. 

A non-discussion due to overwork and overloading would be the worst possible outcome.

NBR understands a contractor might be brought to move things off the back-burner.

Once DAB does get on the table, discussion points will include assessment of Kordia's trial, alternative technologies (including streaming audio over the internet and, in the broadcast world, HD Radio, a rival standard to DAB that has gained some traction in the US), whether there should be a contestible auction for DAB spectrum — and whether FM incumbents get any advantage in that process.

From here, it's probably months (or longer) before Culture & Heritage makes a recommendation to the minister.

Then it will be a case of whether Ms Curran is willing to drive a policy change — and, if so, whether it will be one that allows the FM incumbents to extend their duopoly to DAB, or whether it helps encourage newcomers.

If the go button is eventually hit, Kordia says it could build a nationwide DAB network for as little as $10m — chump change, in broadcasting terms.

Competition advocates will be hoping for that.

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