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Renting a Slice of Your Bandwidth

Innovators are looking to digital, but use of SCAs continues to be part of radio's landscape.

Innovators are looking to digital, but use of SCAs continues to be part of radio’s landscape.

FM subcarriers or SCAs have been a cash cow for many broadcasters over the years. In many instances the revenue from monthly rental of the subcarrier could pay the rent for a transmitter site, or offset other engineering costs.

The subcarrier landscape has changed considerably in the past 15 years, and today there seem to be more stations trying to rent subcarriers than there are potential subscribers. What types of services are left for broadcasters seeking to rent out a slice of their bandwidth? How much money can your station make? How will the situation change with the advent of data channels on HD Radio?

For many years, Muzak was almost synonymous with FM SCAs, using a nationwide network of subcarriers to distribute its well-known elevator music. Specialized news and information services such as the Physician’s Radio Network (PRN) and Quotron also were widely distributed. Differential GPS services used FM subcarriers. Other music, paging and radio reading services blossomed, particularly around medium and large markets.

The situation began to change as satellite distribution systems became affordable. Muzak and PRN were among the first to switch to the birds; others soon followed. More recently, the Internet has provided a cost-effective vehicle to deliver data and content globally. However, a few services are still consumers of FM SCAs.

Foreign language providers are an option for broadcasters in markets with a sizable ethnic population. Tom McGinley, director of engineering for Infinity Seattle and Radio World technical adviser, called this a good fit.

“Ethnic programming via subcarrier has a strong appeal for non-English speaking individuals over 40 who are not computer-savvy.”

While ethnic subcarriers can be a lucrative proposition, McGinley said that there are a few precautions that broadcasters need to take before signing a contract.

“Management needs to understand that the station is legally responsible for program content on its subcarriers, even if they cannot understand the language.”

McGinley said broadcasters can protect themselves by adding clauses to the subcarrier lease; for instance, the contract might stipulate that the lessee must provide an outside independent translator who can monitor the SCA and advise the station at any time 24/7. The cost of the translator is added to the monthly rent.

Reading services, telemetry

Microsoft is another major consumer of subcarrier bandwidth. The Smart Watch delivers targeted information from the Internet to a subscriber’s wristwatch display using FM SCAs. To ensure optimal coverage, Microsoft is using subcarriers from two stations in most markets. Plans are to provide nationwide coverage, and stations in medium and small markets have been signed up. To date, the service has few subscribers, and sightings of Microsoft watches are rare.

(We asked a Microsoft spokesman for statistics on the rollout; he replied, “I don’t have exact numbers on the radio station front, but I do know that the team has worked to create redundancy in most markets so that if there’s a problem with one tower, people still get data; MSN Direct is in the top 100 markets in the U.S. and the biggest cities in Canada. As for subscribers, we’ve been pleased with the initial response to Smart Watches and MSN Direct, but I don’t have specific numbers at this time.”)

Radio reading services for the blind are another major consumer of subcarriers. They sometimes are run by state agencies and typically are set up as non-profit organizations. They frequently use SCAs on public broadcasting stations.

Lyle Henry, a specialist in leasing subcarriers, urges medium- and small-market broadcasters to consider adding a radio reading service if coverage from the noncommercial station is poor or nonexistent. While it may not generate revenue, the cash equivalent may be used for tax purposes. Henry cautions that this must be cleared with a tax lawyer on a state-by-state basis before proceeding.

In instances where the subcarrier is not leased, creative engineers can find other uses for the bandwidth.

Dave Supplee, Northeast regional engineering coordinator for Cumulus Media, notes that some stations in the group use their subcarriers for remote control return telemetry. One station broadcasts an AM air monitor feed over the subcarrier, so that it can be used for live sports remotes in areas where the night time AM signal is poor.

Bottom line

How much money stations can make from subcarriers depends both on market size and demand.

McGinley said that in the largest markets, New York and Los Angeles, rent might approach or even exceed $10,000 per month from data customers like Microsoft. Traditional analog SCA renters such as ethnic broadcasters typically pay less. Henry said rents can vary considerably from market to market, with Las Vegas fetching $1,000 per month, Boston $3,600, Washington $3,000, and Houston $4,000.

While adding to the bottom line is important, Henry urges broadcasters not to be greedy.

“Many ethnic broadcasters operate on tight budgets and can’t afford to pay much more than $50,000 per year in the largest markets. Pushing them for more may result in the station walking away with nothing.”

Henry fields a number of technical questions about FM subcarriers One frequent inquiry concerns whether analog subcarriers can coexist with HD Radio.

“I’ve measured both 67 and 92 Khz subcarriers on professional monitors for noise, and noted only a 2-4 dB difference with HD switched on, so the difference is negligible,” he said. His own real-world listening tests with receivers showed no noticable increase in noise.

Mixing analog and digital subcarriers can lead to problems, and Henry suggests using no more that 2 percent injection for the RDS subcarrier if the 67 kHz channel is used for analog. The best plan is to place analog signals on the 92 kHz subcarrier, and use the 57 and 67 kHz chanels for data.

Finally, some broadcasters are reluctant to lease subcarriers in large markets due to potential loss of modulation and loudness, but Henry said this loss is neglibible.

While there has been a lot of enthusiasm for using HD Radio’s data channel to generate revenue, skeptics point out that there are still miles of dark fiber that was pulled during the Internet’s boom years, and that a broadcaster’s data channel can only work in one direction. McGinley said this last limitation can largely be circumvented by having stations partner with satellite, cellphone or other technologies, as is done with OnStar vehicle communications.