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Home > Radio > Information about stations and licensing > Radio Broadcast Licensing > Analogue Commercial Radio > Application Process > Licensing of FM Commercial Radio > Strategy
Strategy
Our objectives for radio
1. In the consultation document we asked respondents (Question 1) to indicate whether they agreed with our broad objectives for the radio sector, as set out below:
2. Ofcom's broad objectives for radio, as guided by our statutory obligations, are to further the interests of citizens-consumers, especially through:
- balancing promotion of choice and competition with the fostering of plurality and diversity;
- supporting the need for innovators, creators and investors to flourish within markets driven by increased levels of fair and effective competition.
- facilitating the provision of a wide range of services which, taken as a whole, are of high quality.
3. In respect of local FM licensing in particular, the criteria of section 105 of the 1990 Broadcasting Act lead us to the conclusion that we should focus on maximising choice for listeners and catering for the tastes and interests of local people. It will, however, always remain important that applicants can demonstrate their ability to maintain the service they propose.
4. Taken together, it is our hope that the strategy and procedures we propose to adopt will help to facilitate a thriving, competitive, commercial radio industry which serves the interests of listeners and continues to be of growing importance to advertisers, as reflected by rising revenues and an increasing share of total display advertising. We recognise that the presence of the BBC has a significant effect on the workings of the market, but believe that the potential for continued growth in commercial radio remains.
5. The reaction to Ofcom's broad objectives for the radio sector has been overwhelmingly positive although, naturally, many respondents have raised specific points for consideration. Two areas of concern were raised repeatedly. The first was the position of the BBC in the radio market, and the second was Community Radio, specifically the impact that it is likely to have upon smaller commercial stations.
6. With regard to the first concern, we have stated our belief that there remains potential for commercial radio to grow its share of total listening. The matter of the BBC's radio services is the subject of a wide-ranging review by the DCMS during 2004. Issues regarding Community Radio, and its potential impact on commercial radio, will be discussed in our statement regarding future licensing policy for the new sector, due for publication in the early Summer. Our overall view remains that there can be three flourishing tiers of radio in the UK, and that it is possible to balance the needs of the commercial, community and BBC sectors.
Allocation of FM spectrum
7. Question 2 in the consultation asked respondents whether they agreed with our proposed policy for allocating FM spectrum for commercial radio, community radio and restricted service licences (RSLs).
8. Generally speaking, most respondents were happy with the proposed allocation of FM spectrum. The main issues of concern were the same as those expressed in response to Question 1, and are discussed in paragraph 6 above.
New licences
9. As part of our assessment of potential future licensing opportunities, we highlighted the results of a study of the financial performance of different types of ILR stations broadcasting on the FM waveband which indicated that, in general, and without taking account of non-financial factors, larger licences are more likely to be profitable than smaller ones. We also noted that the development of commercial radio to date has suggested that larger licences are better able to support more specialised programme formats than smaller licences. Question 3 of the consultation asked respondents to indicate whether advertising larger or smaller licences best serves the interests of citizen-consumers.
10. There was a range of responses to this question, with some respondents arguing that large licences would broaden choice and are more likely to be viable and well resourced while others contended that each area should have access to the type of locally focused service generally provided by smaller scale stations. The one consensus that can perhaps be traced is the belief that simply opposing large versus small licences oversimplifies the matter and that the decision as to size of licence should be determined by the characteristics of the area in question and the level and type of services already available.
11. Question 4 of the consultation sought views on whether we should seek to aggregate any or all of the previously-identified potential licence areas within four broad regions, and what would be the costs and benefits attached to adopting such a policy. The regions are:
- North-East England
- South-West England
- South Wales
- Solent
North-East England
12. There were very few respondents who made specific reference to the licensing options in this region. Two suggested that we should advertise separate licences for Durham, Tyne & Wear and Teesside, but a significant majority of respondents appeared to favour aggregation of the latter two areas into what would be a third North-East 'regional' licence. Ofcom's engineers believe that, subject to frequency clearance and co-ordination, we will be able to offer a regional licence to satisfy the clear demand for such a licence expressed in response to the consultation. In addition, we believe that we will also be able to advertise a licence which offers coverage of the city of Durham and the surrounding area (including Chester-le-Street and, depending on the transmitter site selected, possibly Bishop Auckland also), as well as some other small-scale services in the region.
South-West England
13. Given the established interest in a licence specifically for Cornwall and the widespread perception in the county that it is a distinct entity within the South-West region, it is perhaps unsurprising that the wide, although not universal, approval given to the proposal to aggregate licences in other regions does not extend to respondents from the South-West, and Cornwall in particular. In fact, the response from people living in Cornwall (and some Devon residents) to the idea of aggregating licence areas in the South West was almost entirely negative. All five of the MPs representing Cornish constituencies wrote to express in the strongest terms their belief that Cornwall has a unique identity which should be reflected in the advertisement of a discrete licence for the county as opposed to a region-wide service. Seven prospective applicant groups from different areas in the South-West - Atlantic Broadcasting (Newquay), Kernow FM (St. Austell), CKFM (Cambourne), Exeter Local Radio, Radio Plymouth, Regatta Radio (Plymouth) and Your Radio (Torbay) - also expressed their dismay at the idea of a regional licence that they felt would not adequately reflect local identities and interests. A further 17 members of the public resident in Cornwall and Devon wrote to express their resentment at the idea of aggregation as did the Plymouth Chamber of Commerce and a Truro-based media research company, Ryan Research. Several of the larger radio groups that favoured aggregation in other areas noted that the South-West should be regarded as an exception.
14. In addition to seeking direct responses to the question as to whether or not to aggregate potential licences in the South-West region, and to help us to make the most informed decision possible, we commissioned some primary research into attitudes to radio in Devon and Cornwall. A summary of the findings from this study are appended to this statement. The research shows a clear split in terms of age and location regarding the choice between local versus regional service(s), with older Cornish residents strongly favouring a Cornwall-only service while younger people from Cornwall and Devonians from all age groups appear to welcome the idea of a pan-regional licence on the basis that this would be more likely to offer a broader outlook and/or a more appealing music mix. However, respondents in Devon would appear to prefer localised city-based services as an alternative to a pan-regional (i.e. Devon and Cornwall) service, rather than the Plymouth + Exeter/Torbay option also presented to them.
| Attitudes to radio in Devon and Cornwall |
15. Ofcom considers that the evidence from the market research does not make a compelling case for rejecting the overwhelming response to the consultation. As a result, we believe that the most appropriate strategy for us to pursue is to advertise separate licences for each of Cornwall, Plymouth and Exeter (subject to frequency clearance and co-ordination).
South Wales
16. As with North-East England, there were very few responses which made specific reference to the licensing options in this region. GMG Radio suggested that we should advertise a licence which offers coverage of all of Wales (mixing FM and AM if necessary), rather than one for South Wales only, in order to provide a commercial alternative to the BBC. However, there was a broad consensus that a licence which offered coverage of Swansea and Cardiff would be most likely to facilitate a broadening of choice in the region, and would offer a greater prospect of financial viability than separate licences for each of the two cities. We therefore intend to add to a future licensing timetable (subject to frequency clearance and co-ordination) a licence which offers coverage of Swansea and Cardiff. The lack of spectrum available currently means that it will not be possible to include coverage of Newport in this licence.
Solent
17. Respondents expressed widespread support for the aggregation of the frequency which would deliver coverage of Southampton and Portsmouth with the one for Bournemouth to create a second 'Solent' regional licence, albeit that this would offer less extensive coverage than the existing such licence. In moving towards advertising a larger licence in this region, we note that each of these three cities is already served by its own small-scale service.
Other licence areas
18. As was noted in the consultation document, the advertisement of all of the areas we have identified will effectively exhaust the supply of FM frequencies usable for further ILR services in the metropolitan areas of the UK, save for a very limited amount of possible future small-scale development. This will also be the case in most of the non-metropolitan areas around London, the West and East Midlands, North-West England and Yorkshire, the South and West of England, South Wales, and the central belt of Scotland. Elsewhere, further development of smaller, or in some cases medium-scale, services remains technically feasible.
19. Several of the respondents to the consultation identified areas where they would like Ofcom to advertise new licences which were not included within the lists published in the document. We will investigate frequency availability in each of these areas, and seek to advertise licences where this proves practicable.
Pace of licensing
20. In the consultation document, we proposed advertising one 'large' licence and one small-scale licence each month, on the basis that there are unlikely to be any applicants who wish to apply for both, but also suggested that we could advertise a larger number of licences but at intervals greater than one month. Question 5 sought views on this issue, and asked respondents to gauge the impact that either option would have for resource management among prospective applicants.
21. Most respondents welcomed our wish to resume licensing as soon as possible and to institute a reliable timetable, but many were concerned that an acceleration in the pace of licensing could result in a potential 'resource squeeze' which in turn would result in poorer quality applications. In addition, some respondents contested the premise that one company would be unlikely to apply for large and small licences. There was also concern that a three-month period between licence advertisement and closing-date for applications would be insufficient, particularly in the first year of a new licensing regime with which applicants are not yet familiar.
22. We have given full consideration to the responses to this question, and acknowledge that there are many respondents who take the view that the pace of licensing proposed could have considerable resource implications for applicants, and could lead to a reduction in the quality of applications. We have also noted the demand for a longer period between a licence being advertised and the date by which applications must be submitted. However, we believe that the streamlining of the process and, in particular, the reduction in the amount of information required in an application help to counteract the fact that applicants will not be familiar with the details of the new system.
23. We therefore propose that, during the first year after advertising recommences, we will maintain our original intention to advertise one smaller licence each month, but will advertise larger licences every two to three months instead of monthly, to reflect the demand expressed in response to the consultation. However, we will maintain our original intention of allowing a period of three months between a licence advertisement and the closing-date for applications. These policies will be reviewed in mid-2005.
24. This revision to the pace of licensing has implications for the timetable of the first six licences that were announced in March, which was prepared on the basis of the proposal in the consultation document.
25. The new timetable for these first six licences is as follows:
| Month | 'Larger' licence | 'Smaller' licence |
|---|---|---|
| June 2004 | Edinburgh | Blackburn |
| July 2004 | Ashford | |
| August 2004 | Kidderminster | |
| September 2004 | Belfast | |
| October 2004 | ||
| November 2004 | Manchester |
26. A further three 'smaller', non-metropolitan, licences, for advertisement between September and November of this year, and a full timetable of licence advertisements for the period December 2004 - May 2005, will be published in June.
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