The commercial radio industries in Germany and Switzerland have both rejected proposals that they should invest in developing the DAB digital radio system in their countries to replace existing FM/AM transmissions.
The German argument against DAB was that the significant investment required simply did not justify the lengthy wait for a financial return, based on evidence from other European countries that have already introduced DAB radio.
This news is a blow to UK broadcasters and technological companies who have long hoped that the DAB system would become the pan-European digital radio broadcast standard. In June 2009, the Digital Britain Final Report (pdf) had proposed the government would “work with our European partners, including the European Commission, to develop a common European approach to digital radio”. This proposal drew on the work of its predecessor, the Digital Radio Working Group, whose Final Report had noted in December 2008 that “Germany has plans to launch DAB+ across the country in 2009, while France will launch DMB audio services at around the same time”.
Not only do the German and Swiss announcements impact the prospects of UK consumers benefiting from economies of scale that could have reduced the retail prices of DAB receivers. They also cast doubt over the willingness of European car manufacturers to install DAB radios in new cars, if the broadcast technology is still only implemented in a handful of countries.
A week ago, UK technology company Imagination Technologies - whose processors are used in over 80 per cent of DAB radio receivers - had said that “recent announcements from France, Germany, Denmark and Eastern Europe... mean that the global market for digital radios and digital radio technology is due to take off”. Frontier Silicon, the UK’s leading supplier of DAB radio chips, had announced a US$10m investment in production of a new advanced DAB chip at the beginning of 2009 and had noted that “penetration of DAB radios in the year continues to rise, with ageing analogue broadcasting systems [due to be] switched off in Switzerland”. The profitability of both companies is very dependent upon the uptake of DAB technology more widely than only their home market.
In Germany, the association of private broadcasters (VPRT) issued a statement on Thursday which said:
The conditions required for a successful introduction, always a prerequisite, have not been met... For VPRT’s private radio companies, the significant initial and operating costs are too great. Against the backdrop of the economic crisis, such investments are a certain risk...
The VPRT member radio companies have, therefore, concluded that DAB+ has no economically viable future. Even with significant promotion of the system by public funds for at least the next five to ten years and under regulatory pressure, there is only a slim chance of partially recovering (the costs) within the market. Against this background, the VPRT speaks against the planned introduction of DAB+ in the autumn of 2009.