Struble Hopes for Summer Endorsement; NRSC Recommends AM for Day Only, and Ibiquity May Be Thawing on Station Fees
LAS VEGAS For Ibiquity Digital Corp., NAB2002 was the official launch of in-band, on-channel digital audio broadcasting.
Several RF manufacturers exhibited IBOC gear. Broadcast and consumer electronics organizations joined at a press conference to urge the technology forward. The head of Ibiquity said he was “confident” of an FCC endorsement this summer. Radio manufacturers hope to have receivers available at next winter’s CES show.
Some attendees heard encouraging news from Ibiquity that it is considering incentives for stations to make the transition this year.
The question of IBOC fees for broadcasters rankled with some, however. Meanwhile, AM station engineers and owners were disappointed that a standards-setting body has so far endorsed Ibiquity’s AM IBOC system for daytime use only. This revelation caused some AM attendees to wonder if they will ever see the full benefits of digital broadcasting on their band.
On the exhibit floor, Nautel, Harris and Broadcast Electronics exhibited IBOC transmitters and exciters for sale; managers said serious buyer prospects visited their booths. Suppliers could not give firm shipment dates, however, because the FCC has not yet given its blessing to IBOC or issued type certification to equipment.
BE was hopeful it could ship product by this summer.
Harris is hoping for an expedited certification of the FM standard, said Dale Mowry, vice president of transmission systems.
“We’re getting quality interactions. People are asking the right questions,” he said during the convention.
Manufacturers received many queries about AM IBOC. Attendees heard the news that the National Radio Systems Committee had, at the start of the show, endorsed only daytime use of Ibiquity’s IBOC system for AM stations.
Additional testing is needed before the NRSC can comment further on the nighttime performance and compatibility of AM IBOC.
“It’s not what we wanted to do,” said an NRSC source. “With the data in hand, it’s the best we can do. It would be reckless to do otherwise.”
None if by night
The NRSC has concerns about the potential interference to first- and second-adjacent channels and about how the system would affect stations heard on skywaves at night.
Ibiquity’s AM IBOC system “will allow AM broadcasters to provide listeners with two-channel stereo audio rivaling existing analog FM stereo in quality,” the standards-setting committee write after several months of reviewing test results.
The NRSC also noted in its report, approved by the membership on April 6, that IBOC will make it possible for AM stations to provide data services, and that this technology puts AM broadcasters “on an efficient path to an all-digital service.”
The NRSC, jointly sponsored by the National Association of Broadcasters and the Consumer Electronics Association, recommended that its staff submit the NRSC report promptly to the FCC for review.
As it did with Ibiquity’s FM system evaluation, the NRSC said the technology is complex and tradeoffs are required. Some listeners tuning to weaker adjacent-channel stations might experience interference under some circumstances, primarily those outside the stations’ FCC protected contour service areas.
But overall, the NRSC believes IBOC will improve the audio quality of AM stations dramatically.
The NRSC has asked Ibiquity to suggest criteria for nighttime tests. The NRSC would then develop a protocol for such tests. Those would include testing IBOC’s effect on high-powered AM clear channel stations operating on skywaves at night.
Given the variable and statistical nature of skywave propagation conditions, such tests are difficult and time-consuming, which is why they were not included in the original AM test protocol.
Ibiquity President and CEO Robert Struble said the company was pleased with the endorsement while the IBOC developer continues to look at nighttime issues and hoped to be ready to discuss those with the subgroup working on the NRSC test procedures by the end of April.
Asked whether the daytime-only endorsement could inhibit the planned transition of a substantial number of stations in six targeted markets by the end of the year, both Struble and an NRSC spokesman said no.
Struble predicted the additional tests could be completed by the end of this summer. Ibiquity did conduct nighttime tests of groundwave service and said that, due to interference, the digital system provided a more restrictive nighttime service area (RW April 10, page 12).
He said Ibiquity would conduct a combination of tests, including computer modeling and testing on 50-kW clear-channel stations that use skywaves.
Real-world testing of AM IBOC’s performance at night is important to many AM station owners. Several attendees wondered why the NRSC didn’t obtain more nighttime performance data before putting out its report, saying it would have made sense to delay a decision on AM until that was done. (Ibiquity did conduct groundwave tests at night. RW April 10, Page 12.)
NRSC officials said they wanted to move AM IBOC along in an orderly fashion and that splitting the day/night tests seemed a good way to do that.
Several manufacturers said privately they believe Ibiquity’s AM system will work at night. One said AM station owners have told him they might as well sell their stations now if that’s not the case.
One AM owner from upstate New York said, “The concept of having a digital signal during the daytime only is bizarre.”
Ibiquity said nighttime interference problems largely disappear once the AM system goes all-digital. But no one is sure how long stations will transmit both analog and digital signals in the transition phase, or indeed if stations will ever turn off their analog signals entirely.
Several AM station sources, both managers and engineers, said many AM stations power down as early as 4:30 p.m. in winter, right in the middle of afternoon drive, due to long-standing nighttime interference protections. To remain analog at that time, they said, is not preferable, especially if they’re trying to present themselves to advertisers as a digital station.
“It’s crazy. AM is where the biggest improvement is … or would have been,” said one manufacturer. He said big radio groups are telling him they want to see a return on their investment within 5 years or they won’t make the capital outlay for IBOC equipment.
Clear Channel Senior Vice President of Capital Management Bill Suffa echoed that kind of sentiment in a panel discussion. He said a daytime-only IBOC system “would be the death knell of AM.” Several attendees applauded.
NRSC Chairman Charles Morgan disagreed, but does anticipate that AM stations trying to make the digital transition “may be forced to follow FM by several years.”
Suffa and Morgan agreed stations now must think about the costs of implementing IBOC, both equipment prices and the fees Ibiquity plans to charge broadcasters for using the technology.
That’s especially important, said Suffa, because the first 100 or so stations expected to go digital this year will do so before IBOC receivers will be in the marketplace. Although Ibiquity’s receiver partners plan to have product for sale to retailers at the Consumer Electronics Show in January, those radios won’t get into consumers hands until the second and third quarters of 2003.
The fees that Ibiquity is speaking to radio groups about would be 15 times a station’s annual FCC regulatory fee (RW, April 10, page 1). They are licensing fees allowing stations to use the IBOC technology that is packaged as part of their new equipment.
Morgan called the fees “an impractical approach” that Ibiquity should rethink.
Suffa asked when stations would see a return on their investment to go digital. Acknowledging that Clear Channel is an investor in Ibiquity, he said he wasn’t sure this is the time to make the transition until it’s clear whether there will be consumer demand for IBOC radios – expected to cost about $50 more than analog models.
Suffa asked whether it made sense for Ibiquity to get some digital stations on the air and delay the fees for early adopters.
Struble said the suggestion has been made in talks with broadcasters about the fees. He said he “wouldn’t be surprised to see negotiations go in that direction.” This appeared to be a slight softening of Ibiquity’s earlier stance.
When asked by Radio World to clarify this point, Struble said there may be “enticements” for early adopters, but would not give specifics of whether that meant a fee delay, reduction or something else. He cited on-going negotiations with broadcasters.
Ibiquity executives would not comment on whether any broadcasters had yet signed the “memorandum of understanding” with Ibiquity about the licensing fees.
The company has tried to set fees as low as it can, Struble said, adding that the capital cost of the hardware dominates what broadcasters will spend on IBOC.
Eventually Ibiquity is expected to recover the bulk of its costs through its take on the volume of receivers sold.
Ibiquity has spent $100 million and likely will spend about $150 million total in order to get the technology in the marketplace, he said.
“We’ve got to get something back,” said Struble. He also said Ibiquity worked hard not to overburden any one industry sector, among them broadcasters, RF manufacturers, receiver manufacturers, component manufacturers and other interested parties.
As IBOC technology is licensed to more companies, more will pay Ibiquity for the right to use its intellectual property. Two manufacturing sources said the licensed transmitter manufacturers each paid Ibiquity $200,000 for the right to make IBOC exciters. Neither Ibiquity nor the licensed manufacturers would comment, saying their agreement is proprietary.
Ibiquity, NAB and the Consumer Electronics Association made a big splash to “launch” IBOC at this show.
“Get out your order book. I’ll deal today,” said John Dille, president of both the NAB Radio Board and Federated Media to manufacturers on the day the exhibit floor opened.
Ibiquity estimated the conversion cost for a typical station at $75,000. Most of that would go to transmission equipment manufacturers. A small slice, roughly $3,000 in this example, would go to Ibiquity as a software licensing fee.
NAB President/CEO Eddie Fritts said IBOC technology would not obsolete analog radios. The fact that stations will transmit both analog and digital signals at the start of the transition ensures an orderly transition, he said, one that can be made at the pace of consumers.
“We know the world is going digital. For radio to sit back and not have an avenue to step forward would be a tragedy,” said Fritts.
Fritts said NRSC’s endorsement was a good step and pledged NAB’s support at the FCC in the hopes of getting the agency to adopt IBOC as radio’s digital standard.
“It’s been a long haul,” said Consumer Electronics Association President/CEO Gary Shapiro, who noted that he and Fritts haven’t always sat on the same table on this issue, a reference to CEA’s early support of Eureka-147, and later for another technology that would also have used new spectrum.
Select receiver manufacturers are building IBOC radios for launch at the CES show this January, and Ibiquity has garnered support of major retailers.
“We believe retailers involved with Ibiquity have an opportunity to participate in a great new product category,” said Shapiro.
Ibiquity recently added Clarion to the list of receiver manufacturers that will license its technology to make IBOC radios. That list includes Alpine, Kenwood, Harmon Kardon and Visteon.
Kenwood Senior Vice President Bob Law said Kenwood would introduce home and auto IBOC radios at CES.
Ultimate Electronics President/COO David Workman said retailers would work with radio groups to promote digital radio.