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OPINION: Get ready for a digital TV and radio disaster

This may sound like a somewhat pessimistic way to start the year, but here goes anyway.

2009 is supposed to be Australia’s year of digital TV and radio. Instead it’s going to be a massive money-loser for the networks providing the service, yet it will provide only negligible benefit for consumers.

Let’s start with why digital radio isn’t going to work.  

First, the cost. New transmitters have to be installed for the digital signal, while for the foreseeable future, radio stations will still have to maintain FM and AM transmitters too. That means that there will be significant extra cost on launch day, with only a small audience, and therefore little hope of serious revenues.

The slow take-up by Australian listeners of podcasts suggests that consumers have little real interest in new ways of listening, even to new material.

And indeed, digital radio is likely to be no more than an interim technology – wireless internet streaming to every device is likely to be a reality long before digital radio turns a profit.

And that’s one of the mistakes that radio stations have made. They’ve dragged their feet, and been virtually forced to do it as part of a political fix that keeps potential competitors locked out. But as a result they’ve got even less time to make back their money before this interim technology is overtaken.

The lesson from the UK is also a grim one (although admittedly the ownership of the transmission networks is a different model), with the economics failing to work for digital radio.

It then becomes a vicious circle. The incentives for stations to offer new and innovative services will be small  – which will then give listeners even fewer reasons to switch to digital anyway. Respect to Austereo though for putting an early stake in the ground with Radar Radio which does sound genuinely exciting and different.

The only potential model I can see is to use digital radio to establish brands that will have a future existence as online properties too. But if that’s the case, then it’s a bloody expensive ways of marketing things.

Which takes us on to free-to-air digital television, which also feels like a probable damp squib.

Each of the five free-to-air analogue stations are allowed two more channels – one in standard definition and one in high-def.

The first setback will come shortly, when Ten launches its sports channel, One. While it will offer a little more choice (and hopefully less of that irritating time shifted so-called-live sport), there are already punters out there who upgraded to see Ten’s existing shows in HD. They’ve been enjoying that for the last few months and they’re going to suddenly lose it when Ten switches to simulcasting One across its HD and standard def digital channels. Media buyer Harold Mitchell predicted as much in his column for AdNews at the end of November.

There was a revealing interview with Ten’s part owner, CanWest boss Leonard Asper, over the weekend. He told The Australian:

“The next channel may not be an over-the-air terrestrial digital channel; it might be a web channel.”

And that’s the point – soon the viewer may not even know or care where exactly their programming is coming from – it will all end up on their main TV screen.

With that going on, little wonder Seven and Nine haven’t announced their plans yet. They appear to be holding off until the government gives them some extra concessions about guaranteeing no more commercial competition. And who can blame them? How can they hope to do anything but cannibalise their existing audience while making few additional advertising dollars in revenue? It’s not much of an incentive to offer a stunning service is it?

Yet for the viewer, competition is what is needed. That’s what improves choice and the experience.

As Allan Fels and Fred Brenchley argued in the Herald on Saturday, the best hope of that had been Telstra, through the National Broadband Network. But now Telstra is out of that game.

Instead, the running is being made by pay TV. Foxtel beat ABC to the punch with its announcement of the new public affairs channel A-Span, or whatever it ends up being called. And it’s going to have further channel capacity this year with a new satellite in orbit.

But for free digital, in TV and radio flavours, 2009 is going to be a very expensive year.

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