IBOC's real return
Apr 1, 2005 12:00 PM, By Kevin McNamara, CNE
When I was asked about the return on investment of IBOC, my initial reaction was skeptical; after all, how can we quantify the return in terms of hard dollars? Even if we could, would I expect the answer to be something like �profit�? Not really.
IBOC is still in its infancy and any startup technology takes time to work its way through the masses. Radio has a unique advantage, however, in that virtually everyone over the age of five already knows about it and, more importantly, which stations they prefer. One would think that a simple transition to a digital format would be easy, assuming that there are radios to pick it up--right?
Unfortunately, in the past five years a multitude of competitive technologies-webcasting, satellite, Wi-fi, digital wireless telephones--have hit the market, most of which offer technical capabilities at least as good as IBOC.
You can't help but notice that when it comes to virtually any form of data broadcasting there is an IP address (or some derivative) involved. Most devices that have the ability to transfer data to another destination have some form of unique digital address.
This is how connections get established from one source to the intended destination in our new IP-based society. While not currently using formal IP addresses, IBOC could presumably permit radio to implement selective addressing in the future. In my mind, this is what IBOC really brings to the table; not improved audio, not expanded data services and certainly not multichannel broadcast capabilities, but the possibility to become digitally compatible with the other emerging data services.
As subscriptions to satellite radio push the four million mark and well-established air personalities are considering (or already committed) to moving to the new medium, terrestrial radio operators are finally paying attention. Countless articles appear in the trades talking about creative methods to reposition terrestrial radio against the satellite operations and an on-air campaign has recently appeared with artists reminding us that they got their start on the radio. These are cute and might help preserve the erosion, and any attempt is definitely better than remaining silent, but the larger competitive issue doesn't lie exclusively with the satellite operators. Webcasting is all over the Internet; it seems like there is a broadcast for every taste.
Apple has done an excellent job of marketing the Ipod. To make the device more appealing, particularly to us older users, the company made deals with some high-end auto manufacturers to provide a plug-in interface to the auto sound system; smart move. There are countless other add-ons to appeal to just about everyone. Why does the Ipod present a challenge to radio? Enter the Podcast. Here is an idea that is so simple, but it needed a device like the Ipod (or any other digital device that can record and play the MP3 format) to take off.
Podcasting is downloading prepackaged programming content; instead of hearing a show in real-time, you can download programs that can be enjoyed when convenient. Of course, these could also be played from your PC as well, but the portable digital player gives the flexibility of using it anywhere. Think of this, it would be pretty easy to use IBOC data streams to provide this type of content to listeners. An argument could be made to abandon the push to provide multiple channels of audio content over IBOC in favor of maintaining a traditional audio channel and keeping the additional data bandwidth as large as possible.
The next big competitor
While the Internet provides a rich source of diverse program content, it's not always available wirelessly over large areas, until the deployment of digital mobile phones. Wireless mobile phone carriers have quietly been upgrading their networks and handsets to provide a wide variety of digital services including e-mail, Web browsing and video services. As most of us are aware, any handsets purchased in the past three years has at least one of these capabilities and most current phones offer the full array of features. What you might not be aware of the next generation of network enhancements enable the phones to take advantage of high-speed data services.
The enhancement is called high-speed circuit-switched data (HSCSD). Wireless carriers are implementing this service currently and it is already in operation by some carriers in the top markets. So what's the big deal? In December, Sprint signed a deal with Music Choice to provide programming content to its subscribers.
For a monthly fee its customers will be able to access the audio (and possibly video) content of their choice. Other carriers will follow as their network capabilities are upgraded. Cingular expects to completely cover at least the top 20 markets by end of this year. Consider that wireless networks reach nearly 100 percent of the top 100 markets, and if current wireless telephone use is an indicator, this adds up to 40 or 50 million potential listeners.
Also consider that mobile phones provide full-duplex capabilities, which in the future might open some interesting interactive applications. As wireless network operators complete the move into third-generation services and begin to rollout the fourth generation of services, their capabilities will be on par with high-speed wired connections.
Put a data port on the radio
Finally, if indeed the ability to broadcast streams of data to listeners is important, radio needs to have the ability to interface with other devices. I think this will ultimately be the key to integrating terrestrial radio to the mainstream devices that we are beginning to rely on as a society. It will be necessary for standards to be developed that permit porting ancillary data streams through a USB port or, even better, use a wireless scheme such as Bluetooth that will allow similarly enabled devices, located in close proximity, to communicate.
Perhaps the answer to the return on investment for IBOC lies in its ability to keep pace with the emerging services. Viewing IBOC as a platform that is capable of accommodating a variety of technologies rather than simply a method to broadcast information and entertainment is the key to radio's longevity. Our mobile society is becoming conditioned to access all of their information and entertainment on fewer devices that can be carried with them. It's not hard to imagine the demise of traditional AM/FM radios, not unlike what happened to AM-only radios. To ultimately realize that investment, terrestrial radio operators need to stop viewing themselves as a provider of readily available free entertainment, but as a digital content provider.
McNamara is president of Applied Wireless, Elkins Park, PA.