Introducing digital radio broadcasting to Hong Kong: policy issues

1
Introducing digital radio broadcasting to Hong
Kong policy issues

• MN Yan
• Department of Journalism
• Hong Kong Baptist University
• March 26, 2004

2
Introducing digital sound broadcasting to Hong
Kong
Facing a dilemma?
Any urgency? Yes - HK is lagging behind many
metropolitans - Radio in HK is lagging behind
other communications devices, e.g. mobile
phones
Delays? Yes, due to - Geographical and social
factors - Financial constraints - Political
constraints
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Introducing digital sound broadcasting to Hong
Kong
Experimenting
DAB (digital audio broadcasting/ Eureka 147)
DRM (digital radio mondiale)
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Introducing digital sound broadcasting to Hong
Kong
Is DAB Feasible and desirable?
Technology reality
Market reality
Political reality
Successful experiment in HK
Feasible and desirable?
A remote topic
Yes, widely used in western Europe and Canada
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Is DAB Feasible and desirable?
Market reality
DAB advantages
Hong Kong market
A small place Few radio operators A small and
quite homogenous population Private car
ownership- low Mobile phone ownership- high
Financially not viable? Possibility of pay
channels? Channels for different racial
groups? Non-commercial operations? Where comes
the money?
Developed technology Better sound quality AM and
FM More channels More efficient use
of spectrum Multi-media functions
Different operation/ business models?
Not simply a market issue
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Is DAB Feasible and desirable?
A bigger market incorporating Macau and Guangdong?
Not simply a market issue
Offering mobile multi-media information and
entertainment services on trains, coaches, and
passenger ships
lower costs in comparison to telecom
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Is DAB Feasible and desirable?
Political reality
Existing sound broadcasting sector Heavily
regulated Public broadcaster active (but not
independent) Commercial broadcasters relatively
small operations
Transition to digital Governments initiative
would be very important even if market-led
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Is DAB Feasible and desirable?
Actual government attitudes
as reflected in two consultation Papers of 2000
and 2003
No mentioning of simulcasting and switch-off
arrangements in 2 renewed licences of 12 years
RTHK asked to start DAB using trial equipment,
response from government?
Other new entrants? Need licensing but licensing
regime for digital sound broadcasting was left
out in the 2000 Broadcasting Ordinance
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Is DAB Feasible and desirable?
Factors HK government has to consider
Financial input Any market interest? New
channels what use, how to operate and by
whom? Require different regulatory regime? Role
of RTHK Introducing community radio? Role of
sound broadcasting versus other
communication devices Publics take up rate of
new receivers? (digital divide)
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Is DAB Feasible and desirable?
Politically, a remote topic
For the HK market Hard to overcome financial
difficulties Prefer not to touch sensitive
political/ media freedom issues
For the bigger market Unless multi-media
packages can be presented as solely
business ventures
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Introducing digital sound broadcasting to Hong
Kong
Is DRM Feasible and desirable?
Technology reality
Market reality
Political reality
Feasible and desirable?
Feasible and desirable?
Not too remote
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Is DRM Feasible and desirable?
Technology reality
Better sound quality Some data functions Lower
transition cost for operators
DRM advantages

• Technology still developing
• Receivers for consumers
• not available yet

DRM disadvantages
Only for AM stations - How about FM?
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Is DRM Feasible and desirable?
Same operation/business models as analogue?
More in line with HK market situation?
More suitable for places with smaller market or
fewer resources?

• Any downsides?
• Very limited changes
• Radios future (compared
• to other communications devices)
• limited also?
• HK lags behind other big
• western cities

• Any solution?
• Wait for joint research outcomes of
• DAB and DRM

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Is DRM Feasible and desirable?
Politically- DRM stands a bigger chance

• Less financial input
• Fewer changes to existing arrangements
• a) Operators
• b) Modes of operations
• c) Regulatory regime
• Therefore fewer foreseeable and unforeseeable
• troubles

15
Whether to introduce digital sound broadcasting
to Hong Kong?
Fundamental questions to be considered
Content and access
Technology
End of spectrum scarcity? Relative abundance of
channels
Keep up with times? Radios role in the age of
convergence?
Programme quality, choice and diversity
Opening up media access to the public? Community
radio?
Any need to maintain a robust, free-to-air broadca
sting sector catering for local needs?
Changes in operation and funding model, and
regulatory regime?
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End of presentationThank you
17
First consultation paper (Dec. 2001)

• We believe that the introduction of DA
  broadcasting services in Hong Kong should be
  driven by market forces.
• The role of the Government is to establish a
  conducive regulatory environment to facilitate
  the development of DA broadcasting.
• We believe that consumers interest would be best
  served when DA broadcasting service is introduced
  at a time when the service is commercially viable
  and DA broadcasting receiver is affordable to the
  general public.

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First consultation paper (Dec. 2001)

• It is also prudent that the ITBB would need to
  have a better grasp of the market potential of DA
  broadcasting services for the formulation of a
  long-term policy and regulatory framework
  conducive to the development of DA broadcasting.
  
• Against this background, we propose that the
  Government should consider inviting applications
  for DA broadcasting services when the following
  market situations materialise
• the market potential of DA broadcasting and
  associated non-broadcasting applications becomes
  clearer
• the price of DA broadcasting receivers comes down
  to an affordable level for consumers and
• the worldwide penetration of DA broadcasting
  services picks up momentum.

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First consultation paper (Dec. 2001)

• To pave the way for the launch of DA broadcasting
  services in future, we propose to amend the
  relevant legislation and licence conditions as
  soon as possible to enable radio broadcasting to
  take full advantage of convergence in
  technologies.
• We propose that the transmission and
  provision of sound programme services should be
  separately provided for under the
  Telecommunications Ordinance (Cap. 106) and the
  Broadcasting Ordinance (Cap. 562) respectively.

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Second consultation paper (Dec. 2003)

• appears that commercially viable models of DA
  broadcasting exploiting the full potential of the
  technology are not yet available.
• We maintain our recommendation in the first
  consultation that the launch of DA broadcasting
  services should be market-led.
• The existing sound broadcasters should be
  allowed, under their respective licence
  conditions, to continue to make use of the AM/FM
  frequencies for analogue broadcast.

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Second consultation paper (Dec. 2003)

• Nevertheless, we consider that there should be no
  regulatory obstacles to the deployment of new
  technologies and entrepreneurial ventures to
  launch innovative services including digital
  transmission of specialised info-data to
  specified user groups (e.g. transmission of
  information to buses).
• The Telecommunications Authority will consider,
  subject to spectrum availability, applications
  for using Band III frequencies for DA
  broadcasting.

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Commercial Radio

• Not yet handed in submission to second
  consultation paper
• Submission to the first consultation paper
• In complete agreement
• DAB not commercially viable in the short term
• Prospects uncertain in the longer term
• No urgency or rationale to extend TV regulatory
  regime to sound broadcasting (separate licensing
  for transmission and content provision)
• Welcome relaxation in investment restrictions on
  licensees

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RTHK submission on the second consultation paper

• Should not be solely market driven priority
  should be given to upgrading analog AM services
  in the territory
• Digital radio broadcasting technology is maturing
  and offers numerous advantages
• Hong Kong, as a leading technology centre in the
  region, should be prepared to embrace these new
  technologies
• The building of a converged platform among
  broadcasters to attain economy of scale through
  sharing of infrastructure and services

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RTHK submission on the second consultation paper

• RTHKs main concern how to make use of the
  opportunity to further enhance the value of
  Public Broadcasting Service
• The government could consider allocating
  additional frequencies for setting up specialized
  channels such as Education Channel, Arts Channel
  Youth Channel etc. to better serve special
  interest groups

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RTHK submission on the second consultation paper

• RTHK has no objection to the prudent policy of
  delaying licence applications until the market
  potential of DAB becomes clearer, the cost of DAB
  receivers is reduced, and penetration of DAB
  services picks up momentum. Pending this, we
  propose that the existing DAB multiplex and
  facilities be assigned to RTHK now
• The equipment of the DAB trial should be returned
  to RTHK and a DAB frequency be assigned to RTHK.
• We will co-operate with market driven content
  providers and equipment suppliers in evaluating
  and promoting innovative data services in an
  environment characterized by dense and high-rise
  buildings. Without such assistance from the
  government, new entrants may encounter practical
  difficulties in effectively testing and launching
  audio or data services in Hong Kong.

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Second consultation paper (Dec. 2003)

• In the first consultation, we took the
  opportunity to consult the public on the proposal
  to rationalize the regulatory regime for radio
  services by bringing it under the Broadcasting
  Ordinance. We received favourable responses in
  the submissions. Proposals in this respect will
  be included in the consultation paper on the
  review of the broadcasting regulatory regime to
  be published in 2004.

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Final consultancy report digital audio
broadcasting in HK (2000)

• Have to consider
• Technological perspective
• Conventional radios future?
• DAB overtaken by other superior technologies
  within a short time?
• Economic perspective
• Investment needed
• Share of advertising declining
• Market potential for non-programme applications?
• Into neighouring territories?

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Final consultancy report digital audio
broadcasting in HK (2000)

• Regulatory policy perspective
• Should the government promote DAB introduction?
• Mandate and require incumbent broadcasters to
  switch to digital?
• Should existing analogue services be protected?

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Final consultancy report digital audio
broadcasting in HK (2000)

• Findings and recommendations
• Radio stuck in a limited growth dynamic
• DAB technology potential to help to break out of
  this no-growth cycle
• Short term issues
• Receiver prices unlikely to come down
• Only potential in luxury cars
• Competition from satellite radio and DTT mobile
• Data advertising potential

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Final consultancy report digital audio
broadcasting in HK (2000)

• Long term uncertainties
• Home radio Competition from Broadband
• Mobile radio competition from DTT mobile and 3G
• Data competitions from DTT mobile
• As a result
• Potential new entrants wait and see
• Existing broadcasters? (relatively small
  investment capital of HK17 million)
• Recommendation
• Government should wait to license DAB technology
  while working the legislative process to separate
  content and transmission
• Downside of waiting is limited