To Look Ahead, Try Looking Back

A Historical Analysis of the Transition to FM Sheds Some Light on the Prospects for HD Radio
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A Historical Analysis of the Transition to FM Sheds Some Light on the Prospects for HD Radio

Now that digital radio has become a regulatory reality in the United States, it's time to consider its prognosis in the marketplace with a new point of view.

No longer a future possibility, HD Radio's deployment and penetration targets are being set. Although every new technology introduction is different, history can provide helpful background to predict the road ahead for U.S. digital radio. Although George Santayana's oft-quoted maxim has become clichéd, it aptly applies in this case: those who don't know broadcast history are condemned to repeat it.

Consider the AM-to-FM transition.

Similar to today's situation with HD Radio, all existing (AM) broadcasters were given the opportunity to provide an FM service after the 88-108 MHz band was introduced for such broadcasting in 1941. Also like HD Radio, new receivers were required, and the new service's signals were simulcasts of the older service, at least for the first 30 years of FM's existence.

During those three decades, FM was not considered a success. After 30 years, FM had barely reached 20 percent of the listening audience, and although it was widely considered to be technically superior to AM, it still lagged far behind AM's commanding 85 percent receiver penetration.

Some broadcasters gave up on the service, donating their FM stations to non-profit organizations as tax write-offs.

FM grows up

But most broadcasters stuck with their FM service through these lean years, and their tenacity began to pay off in the fourth decade. This was the result of a fortuitous confluence of events, but perhaps most influential was the FCC's landmark decision in 1965 to require the phase-out of AM-FM simulcasting.

Other contributing factors were the approval of the FM stereo multiplex in 1961, the saturation of the AM band in major markets around the same time (leading all new applicants to the FM band), and the FCC's new FM allocation and assignment processes of 1962-63, which provided more stations in some areas and reduced interference in others. Congress subsequently chipped in with its all-band legislation, which mandated that most radios sold in the United States had to include both AM and FM tuners.

By the 1970s there were more FM stations, able to be heard by more listeners, over more and cheaper receivers, and in stereo. All of these components helped, but what many analysts feel most powerfully drove the transition was the existence of the compelling new radio services required by the non-simulcast rule.

Because most broadcasters weren't willing to spend good money after bad on their poorly performing FM service, the cheapest methods possible were used to fill the hours required for unique FM programming. For some stations this involved installation of early automation systems or playing long classical sides, but for others it meant hiring young, hungry DJs to spin records during late-night hours, and thus the progressive or "underground" FM radio movement was almost unintentionally born.

Following this environmental change, it wasn't long before the long-dormant FM band became the predominant radio medium, transformed from loss leader to killer app in a few short years. Specifically, the years 1973 to 1985 marked the core of the transition, with FM's audience share rising from under 30 percent at the beginning of the period to over 70 percent at its end. A similar reversal in receiver penetration took place from 1965, when 85 percent of radios sold were AM-only, to 1984, when 86 percent were AM/FM or FM only.

Looking back, and forward

Interestingly, in 1986, the FCC repealed the simulcast prohibition, and commonly owned AM and FM stations in the same market were once again allowed to simulcast 100 percent of their programming. This was testimony to the strong dominance enjoyed by FM at that (pre-consolidation) time, which had begun to threaten many AM stations' continuing viability as discrete services. By then the rule had served its purpose; yet were it not for its establishment in 1965, such an inversion of listener preferences may never have happened.

Retrospectively, the FM transition serves as a good laboratory, because the new broadcast service existed for extended periods both as a purely qualitative advance, and then as a qualitative-plus-quantitative expansion, with significantly different results in each case. While the qual/quan variable was not held in total isolation over this period, it was arguably a dominant influence in the transition.

The lesson: without the right confluence of circumstances, including plentiful new and desirable broadcast services, HD Radio may also fail to reach critical mass in an ever-more diversified media marketplace. It remains unclear whether or to what extent such new services will develop in the HD Radio transition, and as a result, the new service's success remains in doubt.

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