Happy Birthday, Digital One

It was a difficult start, and the first year has been beset by problems. But digital radio is here to stay.

As commercial digital radio in the UK this week celebrates its first anniversary, interest in the medium is growing, from potential service providers and listeners alike. But it took last month's BBC confirmation of its plans for five, new national digital services to prove that digital radio is here to stay.

As commercial digital radio in the UK this week celebrates its first anniversary, interest in the medium is growing, from potential service providers and listeners alike. But it took last month's BBC confirmation of its plans for five, new national digital services to prove that digital radio is here to stay.

The reason is simple. While UK digital radio is expected to emulate the traditional radio market, with its full complement of commercially-backed national, regional and local stations and BBC-run public service offerings, digital radio is the one new media market that needs both to thrive. It's a question of confidence.

Just 12 months ago, digital radio went from test phase to actual launch with the arrival of the Digital One consortium. In November 1999 it launched the first national package of commercial digital radio services, comprising digital transmissions of existing stations Classic FM, Virgin and Talk Radio (now talkSPORT) and two new digital-only offerings: Core and Planet Rock.

Since then, Digital One has launched a further five national, commercial digital radio stations. Meanwhile, other commercial players from Capital Radio to Scottish Radio Holdings have developed a raft of local, commercial digital stations in metropolitan areas, including Birmingham and London.

Then last month came the BBC's long-awaited confirmation of a firm commitment to progressing its digital radio ambitions beyond test transmissions, and to consumer launch - just in time.

For after a period of co-operation between the BBC and its traditional commercial rivals to kick-start the UK digital radio market, all went quiet on the digital radio front, following the arrival of new the director general, Greg Dyke. "Inevitable, really", Quentin Howard, Digital One chief executive, now concedes. Even so, there were jitters.

This is because, despite the clear user benefits of digital radio (CD-quality sound - for all stations; reduced interference; push button retuning; the potential for text and images as part of the radio broadcast; and more stations), manufacturers of digital radio sets have been slow to develop the market.

It was a chicken and egg situation for a number of years, Howard says, with manufacturers waiting for broadcasters to commit to supplying the digital services needed to drive the market. Broadcasters, meanwhile, held back, wary of launching digital services before the digital radios needed to hear them were in high street shops.

That was still the situation when Digital One took the plunge a year ago. Twelve months on, however, much has changed - not least, broadcasters' expectations of what needs to be done to make the UK digital radio market grow.

"This isn't just about switching on a transmitter and letting it grow from there", Howard says. "We've learned the hard way that, as a broadcaster, you have to work closely with manufacturers and that includes asking how we can help."

The key challenge of the past year has been to balance digital radio's need for high quality programming against the disincentive to potential investors of there being only a small number of digital radio listeners. Even a year after Digital One's launch, industry estimates suggest total digital radio set sales of between 10,000 and 15,000 so far.

"Audience size remains small", Howard admits. "And a difficulty is that there is still no accurate means of measurement - either of listening, or of the total number of digital units on the market." But he insists the past year has been a success.

For a start, Howard says: "There has been a good level of dialogue with manufacturers." This time last year, the cheapest digital radio set was selling in the high street for £699; this year it's £299, and he is confident the price will fall to £99 by late 2001.

These prices are still way in excess of the cost of the cheapest traditional analogue radio set, but they are improving, as is the variety and range of digital radio set now being developed. As well as digital home hi-fi systems and in-car digital radios, digital radio is now also available via PC, thanks to new products such as the Psion Wavefinder and VideoLogic in-home tuner.

Another indicator of success has been a "massive shift" in industry support for digital radio over the past 12 months, he believes: "Companies who couldn't see the point 18 months ago are now running their own digital radio multiplexes. All now also have strategy."

Then came BBC endorsement, with radio and music director Jenny Abramsky announcing in October a £20m investment in five new national digital stations - one for a black music service and another for "the post-Beatles generation".

The importance of this for all digital radio players cannot be underplayed, Howard believes, because ultimately, content will make or break the fledgling market. Which is why digital radio is unique amongst other new media, in that its commercial players favour co-operation with the BBC's digital radio operation to develop joint consumer marketing initiatives.

Even so, Howard readily admits, several key challenges remain. "All of us within the [radio] industry must address a number of priorities for year two", he says. "For a start, manufacturers still view digital radio as a risk - we must encourage them to do more."

He's not joking. To Japanese giants like Sony and Panasonic, UK sales represent just two per cent of their market. Which is why Howard believes it will be necessary to develop not just a UK-wide approach to developing the market, uniting commercial players and BBC alike, but to build consensus among broadcasters throughout Europe.

It's quite a challenge, he admits, but an essential one if major manufacturers are to be convinced that European digital radio is a market worth developing. And it is all the more important given the thorny issue of the current lack of an internationally-agreed digital radio broadcasting standard. At present, three exist - one in the US, in Japan and in Europe. Convincing manufacturers to invest in developing products that are compatible with the European digital radio broadcasting standard is therefore key.

Other priorities for the year ahead will be to continue promotion of digital radio's user benefits, and encourage the development of new digital radio applications which demonstrate the potential of the medium - such as data services.

A tall order? Not so, according to Howard. The UK market is an estimated 18 months ahead of other European countries, and is more sophisticated, even than the US. "We've proved that we can create a demand for digital radio, even at a higher price. The next step is to drive it into the mass market, which can, and will, be done", he says.