Digital radio reception still fuzzy

John Patkin says the key challenge for digital radio development is the same in Hong Kong as it is elsewhere - developing a large-enough audience

The alleged political interference at Digital Broadcasting Corporation (DBC) has raised questions about the future of digital radio in Hong Kong.

When the government issued licences, DBC was the only organisation that planned to use digital audio broadcasting as a primary source of revenue. The two other successful bidders, Metro Broadcast Corporation and Phoenix U Radio, would complement their media operations with digital radio. DBC was licensed to operate seven channels while Metro and Phoenix each received three. Government broadcaster RTHK took another five channels while Commercial Radio withdrew its application to focus on its internet programmes.

In order for DBC to attract advertisers, it has to show that its programmes reach potential consumers and can compete with the popular FM channels run by Commercial Radio, Metro and RTHK. Research figures from Australia show that digital radio listenership has yet to hit its stride since its launch. It has also already failed in Singapore, with MediaCorp closing its stations last year.

DBC's founder Albert Cheng King-hon has criticised the government for not doing enough to promote digital radio. In reality, the government has done little to develop radio in general. Prior to the launch of digital, three organisations controlled 13 channels.

Development of the industry should have seen the government limit the number of licences per organisation to promote greater competition, variety and creativity. Digital radio licensing was similar. The government happily accepted licence fees and investors' funds for the development of infrastructure, yet failed to realise that a company such as DBC would struggle to build a large enough listenership to generate revenue to cover the costs of its operations, let alone make a profit.

Commercial Radio has a chosen a different business model by developing smartphone apps and internet delivery that complement its stations. As new technologies emerge, there is potential for telcoms and broadcasters to share advertising revenue, meaning users can listen without paying extra data fees. One benefit of smartphone apps is the choice it gives listeners. For example, there are more than a dozen Hong Kong channels and these are just one touch away from recommended stations elsewhere.

Another problem is the size and cost of digital radios. One strength of radio is portability. Lightweight pocket AM/FM radios cost less than HK$50 while digital versions are over HK$300 and are mostly powered by a custom-built internal battery charged through a computer. The full features of digital audio broadcasting , including pictures and text, are available on heavier receivers costing around HK$1,000. Digital radio is touted as sounding better, but bad reception problems are similar to those experienced with FM stations.

Cheng has capitalised on the mood of the city to promote DBC as a beacon of free speech. However, it's clear that the corporation will need more than a gimmick to ensure a revenue stream that can sustain its operations and satisfy its shareholders.

This article appeared in the South China Morning Post print edition as: Weak signal