SEATTLE At many NAB Radio Shows, the industry has heard that IBOC digital radio was almost ready. Not at this one.
Based on interviews with group owners, engineers and Ibiquity Digital Corp. during the convention in September, it’s clear the major radio group investors with stations in large markets plan to transition some stations in key rollout markets this year.
Radio One Inc. became the first group owner to sign on the dotted line and plans to convert stations in five markets this year. Director of Engineering John Mathews said, “The company has a lot of confidence in the technology. Radio One is in radio for the long haul. We know that the next step for broadcasting is digital.”
Ibiquity and some additional large groups confirmed they were in the final stages of negotiations about which stations to transition. Citing proprietary concerns, they did not disclose details.
To light a fire under the effort, IBOC developer Ibiquity has waived licensing fees for those who commit to the transition this calendar year. Ibiquity wants to see proof of commitment, such as an equipment order.
The waiver is only for those stations that an owner plans to convert in 2002, not for all the stations an entity may own.
Some engineers expressed concerned about having to purchase, take delivery on and install equipment for multiple stations by Dec. 31. But Ibiquity said an owner would not miss out on the waiver if a station cannot actually get all of the equipment installed by then.
“It’s a function of what delivery date they have from their equipment manufacturer,” said Ibiquity Senior Vice President Jeffrey Jury. “It’s got to be a reasonable attempt to get it on this year. That may flow to the first few weeks of next year.”
But an owner who says it plans to commit yet doesn’t actually purchase equipment until next year would not qualify.
“The waiver is not for people who say, ‘I’m going digital someday,'” Jury said.
Those who do get a fee waiver from the licensing agreement still must sign such a document with Ibiquity, the company said. The licensing fees are separate from the money broadcasters must pay suppliers to purchase IBOC equipment. The fees are calculated as a multiple of a station’s annual FCC regulatory fee.
Budgeting
It remained to be seen whether the promise of a waiver is enough to spur other groups into purchasing IBOC equipment this year. One major radio group owner said privately the waiver was not enough; he only intends to convert one station this year.
Radio One ordered new digital equipment – Harris Z-HD solid-state digital DAB transmitters and Dexstar AM/FM IBOC exciters – for KKBT(FM) in Los Angeles, KBFB(FM) in Dallas, WBOT(FM) in Boston, WDMK(FM) in Detroit and WHTA(FM) in Atlanta.
Mathews said the Los Angeles and Detroit stations would be transmitting analog and digital signals by the end of the year and the remaining three markets would be ready in January. He estimates the waiver saved his company $300,000.
Another major radio group engineer expects to shave roughly $1 million off his conversion price due to the waiver. He termed the waiver “a good start,” and said his company was close to coming to terms with Ibiquity.
IBOC vendors were pleased about Ibiquity’s waiver. Fees were prominent among broadcaster concerns at the spring NAB convention, along with possible nighttime AM interference.
“The amount of money they can save in royalties will help them pay for IBOC within two years,” said Harris Corp.’s Geoff Mendenhall.
One vendor said, “The licensing issue was more of an impediment than we thought.”
Harris, Nautel and Broadcast Electronics representatives were upbeat about the IBOC interest shown on the exhibit floor. BE’s Tim Bealor said the company has definite conversion timeframes, including specific power levels, from some customers.
Harris said it could build and ship 80 IBOC systems by the end of the year. The company also introduced an IBOC-ready, low-power AM transmitter line called DAX. This family of 1 kW AM transmitters joins the 3DX AM and Z-HD FM lines. Harris also announced an IBOC certification program. Training programs, consisting of five days, are due to begin in November.
Mendenhall said broadcasters don’t seem too worried that the FCC has not yet set an IBOC standard. At a Harris-sponsored IBOC implementation seminar in Seattle two days before the show, Harris staffers said, many attendees were focused on the return on investment from IBOC’s data possibilities.
Ibiquity was low-key about a second fee waiver it’s offering. The company is waiving its portion of the revenues stations would make off IBOC data services until 2005.
“We re-thought that and will come up with a different model,” said Broadcast Business Manager Scott Stull. He said broadcasters do not want a formula based on a percentage of revenue, and Ibiquity doesn’t think a flat fee would be fair.
Originally, the company planned to take a small portion of the revenue broadcasters make from the data services. Language in the agreement would have given Ibiquity the right to inspect broadcasters’ accounting books twice a year to make sure they were not hiding revenue. This aspect of the original plan galled some groups who did not plan to open their books to Ibiquity, especially on a long-term basis.
A Clear Channel executive, in a previous interview, raised the possibility of not doing data at all, to make its point.
Several engineering and business sources said Ibiquity is charging the licensing fees on its software only to recover its research and development costs; backing off on this aspect won’t hurt Ibiquity financially that much, they said. Ibiquity has stated it expects to make the bulk of its money on its portion of receiver sales but wanted to recoup some costs in the meantime.
While Ibiquity is talking to owners of all sizes, it wants to get on 76 stations to reach its goal of covering at least 50 percent of listeners in early rollout markets. The goal is to make consumers aware of HD Radio, the brand name they will encounter for terrestrial digital radio, and entice them to buy receivers.
Several small-market attendees at the Radio Show expressed anxiety about this aspect, fearing the waiver will expire before they can afford to commit to HD Radio. Some other attendees predicted the fees eventually would go away altogether.
For example, three attendees approached by Radio World during the show said digital is not yet a priority for them. Based in Montana and Colorado, they said their agriculturally based economies have seen a tough year, with crop prices down and farm operating prices up.
“Only one TV station in town is digital and he’s the only one who can receive the signal,” said one.
Yet others say beginning in the large markets is a natural progression for introduction of a new technology.
“Ibiquity’s not wrong to target the big guys,” said Bud Walters, president of the Cromwell Group. He believes IBOC will succeed and the industry will embrace it, because it meets radio’s long-term needs.
Commission hints
Where does the FCC stand in radio’s digital transition?
FCC Commissioner Kathleen Abernathy said she hoped colleagues soon would approve an initial endorsement of IBOC as the digital radio standard in the United States. She told attendees a Report and Order is likely to come out this fall.
The timing of the endorsement and a mechanism for allowing early adopters to go on the air may be approved in October or November, with final rules in early 2003. Audio Division Chief Engineer Keith Larson said the commission could approve “interim permits” so transmissions could be on air for the introduction of the first receivers by the 2003 Consumer Electronics Show in January.
Some engineers expected the commission would approve some form of blanket Special Temporary Authorizations for this purpose.
Audio Service Division Chief Peter Doyle, however, cautioned that the commission would be hesitant to take any shortcuts. “Technical waivers will face a high hurdle,” he said.
While the FCC has data in hand from the National Radio Systems Committee on FM and daytime AM digital transmissions, work on nighttime AM still has to be undertaken, Associate Chief Edward De La Hunt said. Reports are expected from Ibiquity this fall.
“We’re not going to do anything to undermine the technical integrity of the service,” De La Hunt said.
Several regulatory sources told Radio World before the convention that they expect the IBOC proceeding to be handled publicly, rather than voted on privately by the commissioners. They hoped IBOC could be voted on at the commission’s Oct. 10 public meeting.
Before any stations begin broadcasting digital signals, the FCC must decide how to authorize AM. A dispute has emerged between some owners of clear-channel stations operating on skywaves at night and those that don’t.
The owners of clear-channel stations fear that implementing AM IBOC at night at full power may cause interference to some stations; they have lobbied for AM to be operated initially at lower power. Some regulatory sources indicated this would be a conservative approach for the agency to take, before all the AM nighttime test results are evaluated.
Opponents fear that if AM IBOC were implemented in this fashion, AM stations would face resistance to returning to full power at night and may never get it back.
Ibiquity has begun AM nighttime tests including subjective listening tests and a comprehensive AM propagation study of all AMs in the country.
Ibiquity conducted groundwave tests on WOR in New York and skywave tests on WLW in Cincinnati. WLW is at 700 kHz and WOR is at 710. While WLW turned its digital signal on and off, testers listened to WOR to see if there was interference. Ibiquity Vice President Broadcast Engineering Glynn Walden said no one listening in the test group could hear interference. Ibiquity plans to reverse the test this fall and compare the results to previous tests.
For the first time, Ibiquity showed an in-dash HD Radio. Previously, it has displayed prototype receivers and chipsets.
Meanwhile, Lincoln Mercury, Visteon Corp. and Ibiquity developed and equipped a 2003 Lincoln Navigator with a Visteon prototype HD Radio receiver in the dash for the convention. Visteon is developing HD Radio-capable OEM receivers for the 2004 model year.
At an HD Radio listening event at a Good Guys retail store near Seattle, 75 to 100 people came to hear a live HD Radio signal on Infinity station KBKS(FM).
“People expect digital technology in this day and age,” said Mark McDougall of Good Guys. “HD Radio will provide the listener with an improved listening experience, just as XM and Sirius do, while keeping the familiar station that the consumer is attuned to.”
Sandusky’s KIXI(AM) and Entercom’s KISW(FM) also aired digital signals during the show.
