My Lords, the Government have a long-term objective to support a listener-led migration from analogue to digital radio. These regulations support the expansion of local digital audio broadcasting—DAB—network coverage, which has been identified as a key barrier to the uptake of digital radio. These regulations will allow the holders of a local radio multiplex licence to apply for a further renewal of their licence until 2030. They are an important step in supporting the Government’s commitment to expanding the coverage and reach of digital radio in the United Kingdom.
Digital radio continues to grow steadily: it accounted for 24.8% of all radio listening in the third quarter of 2010, but by the same quarter last year that had risen to 37.8%. The number of households with DAB radios has increased from 32% in 2009 to almost 50% now. More than 61% of new cars sold each year now have digital radio fitted as standard; figures for the fourth quarter of 2014 from the Society of Motor Manufacturers and Traders show it up from just 4% in 2010. The strides made are due to the efforts government has
made to support the radio sector through this transition, and by the radio industry itself and its growing partnership with the United Kingdom’s motor industry.
In July 2010, DCMS launched the Digital Radio Action Plan. While recognising that the future of radio was digital, we sought to tackle the key barriers facing the industry in support of a future decision on a timetable for switchover, when the 50% of radio listening was to digital and when DAB coverage had been built out to match FM coverage. I stress that 50% is a trigger to consider a possible switchover; it would not be an automatic trigger for switchover.
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A key barrier for digital radio identified in the action plan is the level of DAB coverage. This has been a major frustration for listeners. Funding was set aside in the last licence fee settlement to improve the coverage of the BBC’s national digital radio network. The BBC is around two-thirds of the way through its programme to extend the service to 162 additional transmitter sites, helping to increase its national coverage from 94% of UK households to more than 97% by the end of this year. There are also improvements in the coverage of the national commercial digital radio network, with investment by Arqiva, the transmission network operator for terrestrial television and radio, to extend its coverage from around 89% to more than 91% of UK homes, also by the end of 2015.
The real barrier on coverage has been the local DAB network. It consists of 55 licensed multiplexes around the UK and is the primary broadcasting network for local commercial radio services and the BBC’s local stations in England. It is also the network for the BBC’s nations’ services in Scotland, such as BBC Radio Scotland; in Wales, such as BBC Radio Wales and BBC Radio Cymru; and in Northern Ireland, such as BBC Radio Ulster. The rollout of this network has lagged far behind the expansion of the two national United Kingdom DAB networks and it has been much more challenging.
Between 2007 and 2012, the network’s coverage remained stuck at 65% of UK homes with little prospect of it being built out further, in part because the licence holders of 13 licensed local multiplexes across the country considered it unviable to launch them as there would be little or no take-up from broadcasters. The deadlock was broken through intervention by DCMS and an agreement was reached with the industry in 2012. This has resulted in the launch of 12 such local multiplexes, with the first in Oxfordshire in December 2012 and the most recent in north Yorkshire in December 2014. This has improved local DAB coverage from around 65% of homes to almost 75%.
In December 2013, DCMS announced a package of measures to support the next phase in the development of digital radio. The measures included a commitment by DCMS along with the BBC and commercial operators of local DAB radio multiplexes to support building out the coverage of those multiplexes to approach current commercial FM equivalence; that is, from around 75% of UK homes to more than 90% of households by late 2016—the 90% being those that are able to get FM at the moment.
Last month, the Minister of State for Culture and the Digital Economy announced the construction of 182 new local digital transmitters and modifications to a further 49 local DAB sites across the United Kingdom in partnership with the BBC and commercial multiplex operators, thus tackling a major barrier to better digital radio coverage in the UK.
DCMS is supporting this programme in two ways: first, by providing up to £7.75 million of capital funding to support the extension of local DAB services. The BBC is also supporting the programme financially in income terms and will meet one-third of the operating costs of additional sites for carriage of BBC local stations and BBC nations’ services. The commercial sector will meet two-thirds of the ongoing costs from 2015 to 2030.
These regulations are the second and crucial element of DCMS support for the build of better DAB coverage. The current local multiplex licences begin to expire in the early 2020s. The build of additional coverage being supported by government and the BBC will require long-term capital and service contracts to be signed between the local multiplex operator and Arqiva, which provides transmission services to the multiplex operators.
If these contracts are over a shorter period, that could push up the cost of the extension of coverage. Permitting multiplex operators to renew their licences so that they expire in 2030 will allow operators to spread the cost of that investment over a longer period, thus reducing the immediate costs to commercial broadcasters, local multiplex operators, the BBC and the Government. When completed in mid-2016, this programme will double the number of local digital transmitters and expand the level of local DAB coverage up to the same standard as FM currently. That amounts to raising coverage from around 75% of UK households currently to 91% of homes after the build-out is completed. It will mean that around 4 million more households will benefit by having access to their favourite stations on digital and a further 4,400 miles of major roads will be covered.
These regulations are crucial to supporting the investment in expanding local DAB and in giving commercial radio the security of tenure it needs to support the expansion of local DAB services. Under the changes in these regulations, local multiplex operators that have completed the programme of building all additional sites in accordance with Ofcom’s local DAB expansion plan will be able to apply to Ofcom to renew the licence to 2030. Local multiplex operators will be required to maintain the expanded coverage as a condition of their renewed licence, though Ofcom will have discretion to make changes to licence conditions—for example, if certain sites need to be replaced or if the multiplex operator wants to enhance coverage further. The DCMS has consulted both Ofcom and the multiplex licence holders on a draft of these regulations and they are supported by the radio industry and Ofcom. They will help to deliver expanded local DAB coverage at a level where a future Government would be in a position to consider a timetable for switchover, but the trigger for considering this decision will be the listener, as we have always said.
Although we have made good progress since 2010, the Government have always said that decisions about a future radio switchover or the timetable need to be listener-led and we will not consider setting any timescales for a future switchover until the majority of all radio listening is to digital. These regulations will help us increase coverage so that as many people as possible can enjoy the benefits of digital radio. I commend these regulations to the Committee.