LOCAL DIGITAL RADIO MULTIPLEX SERVICE:

GREATER LONDON I

ASSESSMENT OF LICENCE AWARD

The first local digital radio multiplex service licence for Greater London was awarded to CE Digital Ltd on Thursday 2 September 1999, to run for twelve years from the date the service commences broadcasting.

Applications were invited on 19 January 1999. By the closing date of 11 May 1999, three applications were received, from:

Copies of the non-confidential section of the applications were made available for public inspection at the Authority’s office. A notice was issued on 11 May 1999 inviting public comments on the applications.

Under the terms of section 51(2) Broadcasting Act 1996, when considering whether, or to whom, to award a local digital radio multiplex licence, the Authority must have regard to the following specific matters:

    1. the extent of the coverage area as proposed by the applicant;
    2. the timetable relating to achievement of the proposed coverage area and the start of broadcast services;
    3. the ability of the applicant to establish the proposed service and to maintain it throughout the period for which the licence will be in force;
    4. the extent to which the digital programme services proposed to be included in the service would cater for the tastes and interests of persons living in the area and, where it is proposed to cater for particular tastes and interests, the extent to which those services would in fact cater for those tastes and interests;
    5. the extent to which any proposed digital sound programme services would broaden the range of programmes available by way of local digital programme services in that area and, in particular, the extent to which they would cater for tastes and interests different from those already catered for by local digital programme services already provided in that area;
    6. the extent to which the application is supported by persons living in the area; and
    7. whether, in contracting or offering to contract with persons providing digital programme services or digital additional services, the applicant has acted in a manner calculated to ensure fair and effective competition in the provision of such services.

The Authority is also required to take account of any representations made in respect of the applications.

Consideration of the application

This was the first time the Authority was presented with competing applications for a digital multiplex licence. All three applicants submitted impressive proposals and the Authority had no doubt that each applicant would, by itself, satisfy the statutory criteria set out in the Broadcasting Act 1996. When considering the Act, Members were aware that, unlike with the award of the national digital multiplex licence, there is no overriding requirement for the Authority to consider the extent to which the applicants would promote the development of digital audio broadcasting in the UK. Nor is there a requirement to consider the extent to which the proposed programmes would broaden choice in relation to existing analogue services, only in relation to other local digital services (which clearly is not a factor in the case of an initial digital multiplex licence award).

On assessing the three applications, Members concluded that where a first local multiplex is to be awarded in an area like London, with a large and healthy market for commercial radio services, and all other factors being equal, the Act favours applicants who propose a package of analogue services of proven appeal. This reflects the intention of Parliament when passing the Broadcasting Act 1996, namely to encourage the migration of existing broadcasting services to digital, with a view to the ultimate switch-off of analogue signals. A reliance on popular radio stations chosen from a broad range of existing services, whilst undoubtedly a cautious approach, does, under the terms of the Act, represent a relatively secure option for the first tier of local digital multiplexes.

1. Coverage area and timetable

Members were satisfied with CE Digital’s technical proposals which should provide robust coverage within its core transmission area. As eight of the nine proposed digital sound programme services will be simulcasts of existing services, Members saw no reason for concern about the ability of CE Digital to provide its services promptly in accordance with its launch schedule.

2. Ability to establish and maintain the service

CE Digital is a joint venture between the two largest operators, in terms of market capitalisation, in the commercial radio industry. The Authority had no doubt about the company’s ability to establish and maintain the service proposed in the application, nor about its commitment to the digital platform as it has already been awarded two other local multiplex licences. CE Digital will benefit from a relatively low cost base for the Greater London I multiplex, as a result of the economies of scale involved in running (currently two) other multiplexes alongside this one. Additionally, the ability to promote digital on the analogue simulcasts of the proposed digital sound programme services will lower marketing costs. Simulcasting existing services will also minimise the cost of supplying programming to the multiplex, which will bring greater security of longer-term income for the licensee.

3. Catering for tastes and interests of people in the area

The commercial programme services proposed by the applicant are as follows:

CE Digital proposed services with proven local appeal. As the eight simulcast services currently attract a 63% share of ILR listening in London, the applicant was able clearly to demonstrate the extent to which the programming would cater for the tastes and interests of people in the area.

4. Broadening the range of local digital programme services

Members considered that each applicant demonstrated a breadth of choice within its programming proposals which would appeal to a wide demographic within Greater London. However, this statutory criterion requires the Authority to judge applicants’ programming packages against existing local digital sound programme services. As there are no such services available in the London area, this criterion was effectively satisfied by default. But when the next Greater London multiplex licence is considered, the Authority will be in a position to place greater emphasis on this particular factor. The Authority has already stated that broadening range will not necessarily be best satisfied by proposals for niche services only. In line with the Authority’s duty to ensure fair and effective competition in the provision of services, it may prove to be in the best interests of listeners for some services, especially within the more mainstream areas of popular programming, to be broadly similar to some of those which will be carried on this first London multiplex.

5. Local support

CE Digital supplied a limited amount of evidence of local support for its application, mostly from business and political contacts. It argued that ‘local support’ for an application for a local multiplex licence is more meaningfully measured by evidence of audience demand for the proposed programme services. Research into drivers of such new technology cannot, in Members’ view, be conclusive but, in the absence of convincing research evidence to the contrary, potential buyers of digital receivers claim to be more motivated by the improved sound quality of their favourite services than by any other single factor. By offering existing local ILR services, CE Digital was able to demonstrate actual support for its programming package which includes some of London’s most popular radio stations.

6. Fair and effective competition

The Authority has no reason to believe that the applicant has not acted in a manner calculated to ensure fair and effective competition when contracting or offering to contract with potential or proposed service providers. In accordance with the licence conditions pursuant to the Broadcasting Act 1996, the Authority will keep matters of fair and effective competition and undue discrimination under regular review.

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