[BC] Interest in/Availibility of HD gear

[Davis, Steve - SVP]

> Date: Sat, 14 Jan 2006 21:44:32 EST
> From: WFIFeng at aol.com
> Subject: Re: [BC] A bit disappointed.
> To: broadcast at radiolists.net
> Message-ID: <d8.34978276.30fb1110 at aol.com>
> Content-Type: text/plain; charset="US-ASCII"
> 
> When Rich Wood makes regular visits to the local retailers 
> (and has many 
> connections in the automotive sales industry) and *all* of 
> them are telling us 
> that these units are either totally unfamiliar, or are 
> ignored by the customers, 
> then that speaks volumes. 

Yes it does.  It speaks volumes to the need to create content, a REASON
to listen, and then PROMOTE the CONTENT.  Just a digital version of
analog radio isn't going to cut it.  We learned that in Europe with
Eureka 147.

I'm hearing that Sirius and XM are doing great jobs promoting their
programming whereas digital terrestrial radio is doing next to nothing.
THIS IS BY DESIGN.  With Satellite today we're looking at the end result
of 6 years of development, marketing and rollout and comparing it to the
nascent first steps of terrestrial digital radio.  Hardly a fair
comparison.  The IBOC TECHNOLOGY was originally developed by
BROADCASTERS, such as Mike Callaghan and Glynn Walden, both of whom I
know and admire.  USADR (which later became iBiquity) was initially
formed by radio group owners including CBS, Gannett and Westinghouse,
who donated their top engineers to come up with a system for what they
saw as an inevitable move to digital transmission.   However
broadcasters didn't begin to adopt it on any sort of methodical basis
until 2004 (when the codec was changed).  The FIRST AM AND FM DIGITAL
BROADCASTS DIDN'T OCCUR UNTIL 2003!  (see
http://www.ibiquity.com/about/history.htm  )  Plus XM and Sirius, being
single companies, can each unilaterally get 100 channels on the air as
soon as they get the financing.  Getting hundreds of independent radio
stations to do this all together so there are many terrestrial digital
radio choices in each market is a lot more challenging.  Which is really
what the Alliance is all about.

Right now, there are only around 600 radio stations on the air with IBOC
digital.  Even fewer (around 90) with second audio channels.  You want
to talk about disappointment and fizzle?  Watch us start hyping how
"great" digital radio is, and the listeners spend $199 - $599 for a
digital-capable radio and have hardly any stations they can listen to in
digital, and little if any new, unique or different content, and the
"groans" will be heard around the country.  At this point I'd prefer
folks NOT buy terrestrial digital radios, unless they understand that
they will need to wait for the content.

So we need to get the CONTENT out there FIRST.  Enter the value of the
Alliance.  Who is going to bother providing content for a medium that
admittedly has very few listeners?  We in broadcasting need to do as the
satellite providers have done: put the content out there first, even
before we have listeners, then promote it heavily.  We are investing
tens of millions in the equipment and programming (I can speak to this
as fact, I've seen the invoices), taking a chance even though we KNOW
the listeners and radios aren't yet out there, so we can then promote
the content.  Then the listeners will want the radios, which will drive
radio sales and bring down costs.  Even if today we decided to throw up
"My favorite HD channel is.." in front of Olympic competitors as Sirius
is doing, what channel would we promote?  There might be a channel in
Chicago but not one in Des Moines.  Yep -- another reason we need an
Alliance.  Otherwise a nationwide marketing campaign can't work.  And
without nationwide marketing, automakers and consumer electronics
manufacturers won't have any interest whatsoever.  The Alliance hasn't
even ANNOUNCED the new formats, the stations haven't started
broadcasting them, so what is there to promote?  Promoting now would be
WORSE than not promoting at all because then when we DID have the
content ready nobody would buy into our promotion.  It would be "I
bought one of those radios, there wasn't anything good on it."  Sort of
like crying wolf.

Same thing goes for the cost of the radios.  Yes it's high.  Do any of
you remember paying $1,000, even $2,000, for a CD player?  VCR?  I once
had a cellular bag phone for which my station proudly paid $1100.  Now
smaller, much better phones are almost throwaways to get you to sign the
service agreement (sound familiar?)  I was in meetings with Texas
Instruments at the CES and they are working on a single chip solution
for digital radio that when implemented will bring the cost of HD radios
down dramatically.  We all wish the design would go more quickly --
again though having an Alliance which represents hundreds of stations
has really helped convince manufacturers like TI, and automakers, to
take this seriously.  Why invest millions in a chip if it's not even
clear whether radio stations will broadcast using that technology on any
sort of wide scale? 

You say Best Buy and other electronics and big box stores don't know
much about HD radio?  No, they don't.  We don't want to push them to
sell these aggressively until someone buying such a radio will actually
have unique, different DIGITAL content to listen to.  This is all about
timing.

Until the alliance, this has been a "chicken and the egg" sort of issue:
manufacturers wouldn't invest in creating the technology if broadcasters
weren't transmitting it; broadcasters weren't willing to invest in
transmitting without radios available to listener -- so we ended up in a
vicious circle, going nowhere.   Someone had to break the stalemate.
Broadcasters decided to "blink" first and formed an alliance to do this.

Those who really dislike the idea of an HD Alliance can take some
comfort in this: it is a temporary solution, designed to get normally
competitive broadcasters not known for cooperation, to launch together
and maximize the offerings to the listeners until there is sufficient
receiver penetration and consumer acceptance for the HD and HD2 channels
to be self-sustaining.  Projections are that this will take 18 - 24
months, but that may be optimistic.

--Steve Davis