Battle For The Second DAB Multiplex

After months of waiting, last Friday Ofcom finally announced the winner of the 12-year licence for the second national digital multiplex, with 4 Digital Group coming out on top in a two-horse race. NewsLine takes a look at the build up to the announcement and what might happen next…

4 Digital Group, a consortium led by Channel 4 Radio – with shareholders including Emap, UTV, Chrysalis/Sky, Carphone Warehouse and UBC Media Group – went head to head for the licence with National Grid Wireless, whose partners included GCap, the BBC and Digital One.

The second national digital multiplex was first advertised by Ofcom in December 2006 and initially drew criticism from GCap – one of the backers of Digital One, which runs the first national multiplex – as it had been told by the Radio Authority that there would only ever be one multiplex.

However, GCap did not go through with its initial threat of legal action after reassurances from Ofcom that none of the stations on the new multiplex would compete with existing DAB stations.

After several months of rumours as to who might bid for the multiplex, an expectant industry was put out of its misery in March this year when the two groups tabled their bids and each handed their £50,000 application fee to Ofcom.

National Grid Wireless’ bid saw it offer 12 stations, with two of them supposedly to be Channel 4 Radio offerings, although whether or not Channel 4 Radio was aware of this when the bid was made is another matter (see National Grid Wireless Bids On Multiplex). The bid from 4 Digital Group outlined plans for 10 stations, as well as other services, such as podcasts (see 4 Digital Group Reveals Digital Multiplex Bid).

From the outside, Ofcom’s choice appeared to be between experience, as provided by National Grid Wireless (it currently provides transmission services for nine out of 11 of the national analogue radio networks and holds two of the six licenses for the digital TV multiplexes, as well as being a founding shareholder in Freeview), and the fresh ideas of 4 Digital Group, which stated that it would use the DAB+ format to broadcast its podcasts if its bid was successful.

DAB+ is supposedly three to four times more efficient than DAB, which means that it could carry more radio stations than regular DAB.

However, consumers would be required to purchase new receivers capable of picking up DAB+, with Ofcom saying that although it is likely that the UK will eventually switch from DAB to DAB+, it will not do so until the majority of radio sets are compatible with the format.

The regulator was obviously impressed by the brave new world of 4 Digital Group, awarding it the licence on Friday. Following the announcement, NewsLine spoke exclusively to Simon Cole, chief executive of UBC Media and one of the directors of the consortium (see Multiplex Win Signals New Era For Radio).

It was perhaps the lure of new ways of thinking about DAB that helped Ofcom arrive at its decision. “The future of radio is about Electronic Programme Guides, about being able to download podcasts, to purchase music, to interact with your radio in a way that hasn’t been possible before,” said Cole.

In another exclusive, NewsLine also spoke to Phil Riley, chief executive of Chrysalis Radio, and a director of the consortium.

Although not as sure as Cole that the innovations proposed by 4 Digital Group signal a break with the old radio paradigm, it was clear that Riley sees the offerings from the successful bid as great ways of pushing digital radio forward, which is no doubt a major reason Ofcom awarded it the licence.

Riley said: “I think [they are] interesting, innovative experiments that are peppered throughout the application and we’ll have to suck it and see.

“Just like many of the things that digital radio promises, some of them will work fantastically well, some of them won’t work so well. These are all new services that digital radio offers, but ultimately the market will decide. You’ve got to offer them in the first place and see whether people will take them up. It’s fantastically exciting and at least we’re offering them – it’s great.”

In terms of nationwide coverage, both bids offered similar levels of estimated performance, although the National Grid Wireless offering would have taken longer to come to fruition.

4 Digital will use a network of 174 transmitters, estimating that these will provide ‘outdoor’ coverage of 86.6% of the adult (15+) population of the UK.

The 4 Digital consortium plans to spend £4.5 million on marketing in the first three years of the licence, together with over £25 million marketing spend to support the launch of individual new radio services.

The licence award comes at a time when digital radio is more popular than ever, with the Digital Radio Development Bureau announcing in June that more than five million DAB digital radios have been sold in the UK, equating to almost 10 million listeners (see DAB Radio Sales Reach Record Five Million).

Speaking about the winning bid last Friday, Ed Richards, Ofcom chief executive, said: “Today’s licence award is an important development for radio listeners who will benefit from a greater variety of commercial national radio services.

“The award will give a real boost to the DAB platform, which we believe will form the cornerstone of radio provision in the future.”