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Struble: Radio Is the Last Analog Medium Standing

'The stark reality after June 12 is every consumer medium that is being watched and every consumer device being used is digital — except radio.'

Alexandria, Va. — Bob Struble is pragmatic. He knows that while the number of U.S. radio stations on the air with HD Radio is approaching 2,000, the pace of station conversion has slowed remarkably. Still, he remains optimistic about the long view.

In the view of HD Radio proponents, a main cause of the slowdown is downward pressure on capital budgets due to the economy. To get through the downtime and keep the HD Radio rollout going, iBiquity Digital Corp. and Struble, its president and CEO, are focused on getting its technology on as many consumer devices as possible.

The downturn comes as manufacturers have begun releasing products in a new category for IBOC: portables. IBiquity and a core group of its radio group backers are lobbying strongly for an FM digital power increase in order to boost indoor reception for portables and better match digital coverage to stations’ analog footprints for mobile coverage.

The company considers the automotive product category a bright spot; more cars with HD Radios are due on lots this year, and associated navigation devices compatible with IBOC are due later this year. Navigation is one area iBiquity hopes will generate incremental IBOC income for stations.

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Nearly 100 HD Radio-enabled receivers are available at retail. Now Struble says a concerted effort to get on portables is yielding results.
Struble visited NewBay Media offices recently and talked with Video/Broadcast Group EVP Carmel King, Radio World U.S. Editor in Chief Paul McLane and Radio World News Editor/Washington Bureau Chief Leslie Stimson to discuss the state of the digital radio rollout, including what’s going well, what’s not going so well and where the company sees its greatest challenges. In a separate commentary on page 6 of this issue, Struble discusses progress in portable devices.

Here are selected comments from his visit.

The economy’s effect on the rollout — “We are as worried as anybody about what’s going on in the individual sectors and what’s going on in the broader economy. That being said, we are not displeased with where things are going. We, because of the difficulty on the broadcast side, have focused on getting more consumer devices out.

“That’s most evident with the success with cars but hopefully with portables coming as well, and that progress is encouraging. We understand that beyond the consumer rollout, we’ve got to move this into an economic equation for broadcasters and not just a science project. A lot of the stuff that we’re working on the broadcast side is focused on generating incremental revenue.

“But we can’t do it alone. The industry’s got a crucial role to play. We believe they’ve been doing that. We’d always like to see more — more stations, more promotion and more programming.”

The pace of station conversions — “[S]tation conversions are still positive, which I think is incredible in this environment. We had been running in ’04, ’05, ’06 sort of 300 to 400 stations a year. We’ll do probably a couple hundred this year, which in this environment is very good. But it’s not the pace we had been going at. …

“I don’t think we’ll see any relief in ’09 and in my plan 2010 either.”

HD Radio portables — “We think portables are a pretty important category, not only for HD Radio but for the industry broadly. No one’s buying a lot of transistor radios anymore. The headphone radios that people used to run around the park with are all gone, and if radio wants to continue to be a reach medium, they’ve got to be in the devices people carry, which increasingly are cell phones, MP3 players, personal navigation devices. We applaud the NAB/Jeff Smulyan initiative to try to get on devices because we think it’s critical. Our view is we’ve got to be there too. …

“We just came out with the new chipsets in December that enabled [the Insignia HD].”

Insignia HD — “I think this will be a nice little interim step for jogging or working out. It proves the viability [of the technology] and hopefully we’ll get sales; but no, this is not going to sell in the hundreds of thousands.

“Radio alone — the sad reality of where it is — as a standalone device, it just doesn’t exist anymore as a category. Nobody goes into Best Buy and says ‘Where’s the radio department?'”

IBOC chips in cell phones —”You will see them, with the Zune announcement, in [more] MP3 players in 2009. I think on the mobile phone side certainly not before next year, but we’re working hard on it.

“These devices … represent important stepping stones because you’re in the right form factor, you’re showing that [the technology] works.”

Radio’s competitors — “There are tons of new competitors to radio; there’s tons of new competitors for people’s time and attention. And 10 years ago, in automobiles for instance, radio basically had a monopoly position on information and entertainment. That couldn’t be farther from the truth now.

“The number of things people do with mobile phones, with iPods, DVDs in cars, mobile Internet, satellite radio… all the way down to gaming and anything else that anybody’s doing in a mobile environment. Those are true secular challenges, and true digital competitors to radio that we don’t believe are going to go away. If anything, they get worse because pretty soon you’re going to have mobile video.”

Sirius XM, digital media — “Satellite radio is the flea on the tail of the dog as far as the competitive dynamic that radio broadcasters face.

“The stark reality after June 12 is every consumer medium that is being watched and every consumer device being used is digital — except radio. Our company was essentially was set up to say that’s probably not a great long-term strategy to compete successfully against all of these other services you need to be able to do the things that digital will bring. …

“The competitive reality is you’re going to be in a dogfight for as long as you’re in this business. However we do believe at bare minimum, the switch to digital over time will slow the erosion, because you will have all this new capability. We believe that it can provide incremental revenue.”

Automotive — “The best story and the thing that gives me the most hope now is the automotive side. This has really taken off. …

“There are the 13 publicly announced car companies that either have product in the market — BMW, Honda, Jaguar — and more to come next year. …

“What you’re seeing now is either a standard application, like Volvo and a bunch of the BMWs and Mercedes in which 100 percent of the cars leaving the lot are leaving with HD Radio, and/or HD Radio inclusion in very high take rate option packages. … Assume there’s another six or seven prominent names [automakers] we’ll see some press releases on soon.”

IBOC Power Issue Explored in Philly Should the FCC approve a voluntary transmission power increase of up to 10 dB for FM IBOC? The pros and cons of the elevated power increase will be aired at the NAB Radio Show on Sept. 25, from 9 to 11 a.m., in a Broadcast Engineering Conference panel session titled “The IBOC Power Issue — You’ve Got Questions, We’ve Got Answers!”

NPR will report on a study developed and conducted by NPR Labs to determine the impact of elevated digital signal levels. Broadcast equipment manufacturers will weigh in with various methods to effectively increase digital power to desired levels.

Milford Smith, vice president, Radio Engineering, Greater Media, will moderate the panel. Panelists are Tim Bealor, vice president, RF Products, Broadcast Electronics; Jeff Detweiler, director of broadcast business development, iBiquity Digital; Gary Liebisch, regional sales manager, Nautel; Geoffrey Mendenhall, vice president, transmission research and technology, Harris Communications Division; Mike Starling, vice president and chief technology officer, National Public Radio; and Michael Troje, sales manager, Continental Electronics.Navigation — “Quietly there’ve been two national networks built out to deliver real-time traffic data over HD Radio. It’s not just traffic, gas prices, it’s weather, movie times, points of interest and other things. Clear Channel has got probably 60 to 70 markets lit up with HD Radio, and the Broadcast Traffic Coalition, which is essentially Navteq and [other major broadcast groups], also has an equally robust network.

“We’ve got now ‘chicken and egg.’ Chicken’s ready and we’ve got to get the devices out there, so you’ll see these later this year. The models have been developed. Either the manufacturer of the device will offer the consumer a lifetime traffic service and in return for providing that the station group will get a share of the device sale; and/or an ad-based model. An ad would be embedded in the traffic report or movie times or points of interest. …

“The car guys like it a lot. So it helps us with the auto manufacturers. This will be undoubtedly where you’ll see dollars begin to flow.”

Monetization with tagging — “ITunes Tagging is small dollars; but every time a [song] sells from a tag that came from a radio station, that station gets a check. It’s a small check … but it does begin to show you there are other things besides audio which are monetizable with digital technology.

“We’re in the process, working with the industry on expanding iTunes Tagging beyond Apple and iTunes — the broad name that is used is media-based tagging, but think of that as other music services and/or other products and services, so I can tag an ad.”

Digital power hike — “The uncertainty about the power increase has given people thinking about upgrading some pause because you want to buy the right equipment, and unless you know what that is, it’s another reason not to make a capital expenditure; so we’d like to get that one resolved. I’m hopeful that a compromise can be reached. …

“The industry’s frozen. We understand there’s concern. We do believe you’ll eventually go to 10 dB but let’s pick something in the middle, let’s get started. And we can all shake hands and say 6 dB is not going to hurt anybody. The FCC is going to have a special provision where if there is some interference then they’ll be able to deal with that. We think that’s an important interim step. I’m hopeful that the various parties can get their mind around that. But we need an increase.”

A 6 dB increase is an interim proposal — “You’re going to have testing and every engineer giving his view of how you should calculate and who gets to do what. … If you get 6 dB you get a bunch of stations going on. You get real-world experience. We see what the pros and cons are. I think it will mostly be positive and it will be fine. …

“We think 6 dB is an appropriate interim step. We think 10 dB is the ultimate, long-term solution but we recognize that some are desirous of more testing and we want to be respectful of that.”