Pubcasters Press for Standardized New Services and Elimination of License Fees
At the recent Public Radio Conference in Washington, Ibiquity Digital Corp.’s plans for IBOC digital radio received a thorough pummeling.
The public radio constituency has been most vocal in its preference for new services in IBOC, including second audio channels. They have also been as expressive as any broadcasters in their discomfort with Ibiquity’s software licensing plans, even though they will receive a price break over most commercial stations.
(Currently, Ibiquity plans to charge all public radio operators a one-time, $3,750 fee per full-service transmitter, regardless of market size or class of service, plus the same 3 percent on datacasting revenues levied on commercial broadcasters.)
Despite PRC host NPR’s attempt to put the best face on things, public radio station representatives repeatedly voiced their objection to the licensing fees, and stressed their desire for the standardized ability to offer multiple services via IBOC.
They cited not only the value of new secondary audio services, but also the preference for programming the primary digital service separately from the analog service on the hybrid IBOC channel. The example given was classical music on the digital service and news/info on the analog, while on-demand voice services were provided via the secondary audio feature of digital auxiliary data.
One questioner noted that such a separate primary service suite had been demonstrated at Ibiquity’s NAB2002 on-air demonstration, which an Ibiquity representative acknowledged was true and possible, but Ibiquity has steadfastly refused to support this approach in its proposals.
The discussion was a profound indication of how Ibiquity’s approach is skewed to the particular private interest of its commercial radio backers, and how the interests of the listening public (of which public broadcasters are the prime bellwethers) seem to be of secondary consideration at best.
Meanwhile, an FCC representative at the PRC emphasized that the commission had made no decisions regarding Ibiquity’s proposals, nor even whether IBOC would be the approach taken for U.S. digital radio.
Rethinking license fees
Background discussions at NAB and the PRC indicated that Ibiquity’s software licensing proposals are not completely set in stone. Interestingly, there were hints that Ibiquity’s management would have preferred a more traditional approach in which all licensing revenues were derived from transmission and receiving hardware royalties. However, the voice of transmission hardware manufacturers – one of which holds an equity position in Ibiquity – apparently influenced Ibiquity to adopt its current position that includes broadcasters directly in the licensing regime.
At the PRC, Ibiquity stressed that the proposed fees to be paid by broadcasters are the smallest relative to those levied on transmitter and receiver manufacturers. While this may be true in a direct fashion, it is clearly evident that a broadcaster will pay these fees along with buying transmission equipment, and the latter will most likely include a pass-along of licensing fees levied on the transmitter manufacturer.
So ultimately the broadcaster pays twice, once at a flat rate (on transmission hardware), and once at a graduated rate (for Ibiquity’s unique software licensing, except for public broadcasters, who would pay the flat fee noted above. In fact, this double standard can be interpreted as discriminatory in multiple ways: either the large-market commercial broadcasters or small-market public broadcasters are paying unfairly high royalties.
Given such inequities and resistance, and the FCC’s so-far tacit monitoring of the debate, it seems possible that Ibiquity’s licensing proposal for broadcasters ultimately may be substantially modified or even abandoned. This is not to say that the company will not or should not be compensated for its considerable development work, but that the compensation should instead come via more traditional routes.
Another element of the discussion acknowledges that Ibiquity’s broadcast investors did not develop the format as a purely speculative venture. The company is acting as if it is some sort of VC-backed developer that has proposed a new technology to broadcasters, for which it should be rightfully compensated, when in fact it was largely a subsidiary of corporate broadcast interests that developed a format to protect those interests’ migration into a friendly digital environment.
While this has been a sensible and laudably successful process from the perspective of incumbent commercial broadcasters, for this process to now attempt to take on the attitude of a third-party speculative software developer is disingenuous at best. The $100+ million spent to date on Ibiquity’s work was expended primarily as a prophylactic investment by commercial broadcasters to ensure that their passage to the digital world would be made on their own terms.
The success of this endeavor to date is its own reward. To expect additional financial remuneration for such protectionist efforts on the backs of fellow broadcasters (including non-profit brethren) seems excessive.
Moving to purely technical assessments, the on-air demonstrations at the PRC were far more successful than those at NAB2002.
Using the signal of NPR member WETA(FM), PRC attendees were offered 20-minute rides in one of Ibiquity’s test vehicles in which the analog and digital signals were alternately auditioned on the roads of Washington, while riders watched the video output of a spectrum analyzer tuned to the channel.
The route taken by the demo van was nearly free from multipath effects, but it showed at the very least that the host analog signal was not deleteriously affected by the presence of the IBOC subcarriers. On the other hand, it also indicated to demonstration subjects that there was little perceptible difference on a high-quality FM station between the analog and digital signal quality.
In a related development at the PRC, public radio broadcasters began to realize that they may have backed the wrong horse in the satellite radio marketplace. NPR and Public Radio International both provide news/talk services on Sirius Satellite Radio exclusively.
At the time these deals were drawn up, this seemed like an appropriate choice. In the meantime, however, Sirius’s deployment was delayed and concerns about the audio quality of their channels began to circulate among some public broadcasters during service tests.
At the PRC, both Sirius and XM Satellite Radio were demonstrated in side-by-side kiosks (XM also offered mobile demos), and it was obvious that these qualitative concerns were well founded.
Both the news and music channels on Sirius seemed severely impaired with quite obvious coding artifacts (as reported by other listeners in areas were the service already has been commercially launched). Some PRC listeners equated Sirius’s subjective audio quality to below that of many streaming Internet audio services.
In contrast, the same listeners considered XM’s quality adequate and roughly equivalent to downloaded MP3 files. Given XM’s lead in time-to-market and its lower cost ($9.95/month compared to Sirius’s $12.95/month), this qualitative difference adds to the growing concern of some public broadcasters that they were blindsided by an improper choice of partners.
Meanwhile, XM representatives at the PRC emphasized that they would welcome the addition of public radio content to their service offerings in the future.
Data standard development
Deeper discussions at the PRC indicated the need to incorporate standardized functionality in the auxiliary data elements of IBOC. Representatives from Impulse Radio, the proponent of an auxiliary data service for IBOC, were at the PRC in force, and their presentations were welcomed by most public radio attendees.
Impulse Radio showed that its developments would allow text, graphic and secondary audio (both streaming and on-demand) service to be added to Ibiquity’s IBOC service. PRC attendees seemed pleased with the potential, but were concerned that Impulse’s contributions must be included in the IBOC standard. Impulse Radio’s representatives agreed to the importance of this, but acknowledged that at present this is not assured.
There was broad support for the IBOC specifications to include a scalable auxiliary data standard, which would allow differentiation in receiver product under specified profiles (e.g., text-only, advanced GUI or interactive system with return channel). This implied that broadcast data should be parsable by all of these receiver types (with elements ignored if they could not be displayed), and it should be a standardized yet extensible element of the national IBOC specification.
Ibiquity representatives at the PRC indicated that it was their intention to include Impulse Radio’s vision in their specification – hopefully this was not just lip service before the public radio audience – but that it would not be seen in the first-generation IBOC receivers that will be presented at CES 2003. Ibiquity’s view is that such auxiliary data features would be included in second-generation receivers offered later in 2003 or beyond.
If this process comes to fruition, it bodes well for the prospects if IBOC. As has been duly noted in this column, and confirmed in other venues, early adopters may be interested in IBOC’s audio quality improvements, but mainstream audiences will only convert if additional services are offered. Public radio stations will be motivated to provide such content if a universally standardized receiver is available.
Meanwhile, the public radio discussion seemed to conclude that the FCC should adjust the specific commercial radio-friendly elements of Ibiquity’s proposal to provide greater flexibility for serving the public interest with the format that is ultimately selected. Only then will IBOC have a hope for real success in the marketplace.