Q&A: Licensing Fee Waiver De-Mystified

This is one in a series in which Ibiquity Digital Corp. answers questions about how to implement HD Radio, the newly-trademarked name of what used to be called in-band, on-channel digital audio broadcasting. Director of Broadcast Business Development 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 HD Radio, the newly-trademarked name of what used to be called in-band, on-channel digital audio broadcasting. Director of Broadcast Business Development Scott Stull answers here.

Q: Ibiquity's licensing incentive requires stations to convert to IBOC by the end of 2002 in order for the fees to be waived. Is it reasonable to assume a station can convert that fast?

A: Ibiquity is offering the early-adopter incentive to accelerate the adoption of HD Radio technology in 2002. HD Radio-compatible receivers will launch at the Consumer Electronics Show in January and will be available to consumers shortly after.

It is in the best interest of the radio industry to have a critical mass of stations broadcasting by then with special attention on the rollout markets of New York, Los Angeles, Chicago, San Francisco, Miami and Seattle in order to drive receiver makers to introduce more digital products.

Ibiquity realizes that factors beyond the control of a station may impede its ability to broadcast HD Radio signals by the end of the year. Therefore, the fee waiver is contingent on a station using its best efforts to be on the air by the end of 2002.

The specific terms of the incentive require a broadcaster to 1) enter a licensing agreement with Ibiquity; 2) place orders for the equipment necessary for the transmission of HD Radio signals with a licensed manufacturer of such products by Dec. 15, 2002; 3) commence HD Radio broadcasts by the end of 2002 or within 21 days following delivery of the transmission equipment; and 4) use its best efforts to continue to transmit an HD Radio signal until at least Dec. 31, 2004.

In return, Ibiquity will waive the licensing fee for the perpetual license to broadcast audio with HD Radio technology.

In addition to waiving the fees for audio licensing, Ibiquity also has opted to waive the licensing fees for auxiliary data until 2005. Because the added revenue potential for wireless data applications that HD Radio will enable is unknown at this time, we felt it was more important to allow broadcasters to develop data business models without having to pay a licensee fee.

As applications mature, Ibiquity will work with broadcasters to develop a license fee model that is acceptable to both parties. This approach provides an extra incentive for broadcasters to experiment and develop datacasting business opportunities over the next several years.

Ibiquity has been working with a growing number of groups and stations that are budgeting and planning for HD Radio conversion in the coming months. We strongly believe that this incentive will help ensure a timely rollout of the technology and AM and FM radio's successful transition to digital.

Broadcasters interested in learning more about the requirements for the early-adopter incentive plan are encouraged to contact Scott Stull, Ibiquity's director of broadcast business development, toll free at (877) 501-3273 or via e-mail to stull@ibiquity.com.

Send your IBOC questions to radioworld@imaspub.com.

Radio World welcomes other points of view.

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