Licensing Fees To Be Levied - Radio World

Licensing Fees To Be Levied

This is one in a series in which Ibiquity Digital Corp. answers questions about how to implement in-band, on-channel digital audio broadcasting. Broadcast Business Development Director Scott Stull answers here.
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This is one in a series in which Ibiquity Digital Corp. answers questions about how to implement in-band, on-channel digital audio broadcasting. Broadcast Business Development Director Scott Stull answers here. Past answers are posted at www.rwonline.com under the tab "IBOC DAB."

Q: I read in Radio World that Ibiquity is basing its IBOC licensing fee on a station's FCC annual regulatory fee. How do the licensing fees and FCC fees compare? A: Ibiquity Digital is basing its IBOC software license fee on a multiple of a station's FCC regulatory fee. A station would pay a one-time license fee of 15 times its annual FCC regulatory fee for a perpetual license to Ibiquity's IBOC software.

This software would come pre-installed in exciters manufactured by Ibiquity's licensed development partners, including Broadcast Electronics, Harris and Nautel, with others to follow.

Ibiquity adopted this tiered pricing model to be equitable to all broadcasters, both large and small, in all markets across the United States. Lower power stations and stations in smaller markets would pay less for software licenses than those stations able to reach more listeners and thereby reap greater reward from the transition to IBOC.

Currently, the annual FCC regulatory fees range from $250 to $4,550. This corresponds to a license fee range of $3,750 to $68,250 for a perpetual license. Non-Commercial Educational stations, or NCEs, that do not pay a regulatory fee would pay the lowest amount in the range.

The median licensing fee for all U.S. stations would be about $12,900.

Ibiquity also plans to offer broadcasters a payment plan for license fees to distribute the cost over a number of years. This payment option would allow a broadcaster to pay yearly an amount equal to 2.8 times their station's FCC fee for 10 years. Under this option, yearly payments would range from $700 to $12,740 with a median payment of $2,400.

Station licenses also include terms whereby Ibiquity would share in the revenue generated through IBOC's auxiliary data capabilities over and above the revenues generated from a station's primary audio programming.

Ibiquity would receive 3 percent of additional revenues, if any, generated from new revenue sources that IBOC would enable, such as on-screen or scrolling advertisements; on-demand weather, traffic or news; subscription services; e-commerce applications such as "buy" buttons; and from leasing data capacity to third-party content or applications providers.

Ibiquity elected to use a percentage-of-revenue model to ensure that stations only pay a data royalty if the stations increase revenues through exploiting the wireless data opportunities that IBOC affords.

This licensing model is consistent with those of other high-end, low-volume software applications and reflects a much smaller component of the licensing revenues Ibiquity will receive compared to those from manufacturers.

To put it in perspective, the yearly software license cost is equivalent to about 1/60th of a share point for a station. Increasing listenership by that amount - or preventing that many listeners from choosing other digital mediums - would offset the cost of licensing. Ibiquity's technology will bring great value to the broadcast industry through increased quality and reliability of service, listener retention, new programming opportunities and the promise of additional revenues from wireless data.

Any questions concerning licensing Ibiquity Digital's IBOC software may be addressed by phone at 877-501-EASE (3273) or by e-mail at ease@ibiquity.com.

Send your IBOC questions to radioworld@imaspub.com.

Radio World welcomes other points of view.

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