1.
PLANNED RE-LAUNCH OF
NATIONAL DAB RADIO
SERVICES IN GERMANY
"SOLVED A PROBLEM THAT DID
NOT EXIST"
by
GRANT GODDARD
www.grantgoddard.co.uk
December 2010

2.
On 15 December 2010, five commercial radio stations in Germany – 'New Wave Radio',
'Lounge.fm', 'ERF Medien', 'Radio Energy' in Hamburg and 'Regiocast Digital' – signed
contracts with transmission provider Media Broadcast to broadcast on the new national DAB+
platform, scheduled for launch in 2011.
One week earlier, British company Frontier Silicon, “market leading supplier of digital radio
technology worldwide”, had announced that, in order to persuade four commercial radio
broadcasters in Germany to persevere with DAB, it had promised them it would purchase an
unspecified amount of their advertising airtime for the next four years.
Anthony Sethill, Frontier Silicon CEO, put a positive spin on an act that some might perceive
as little more than legalised bribery in the face of desperation to sell DAB hardware in
Germany: “We are delighted that our innovative approach to supporting the roll out will help
everyone working on this new radio service to bring their efforts to fruition.”
For years, German transmission provider Media Broadcast has been eager to put into action
its masterplan to lock new DAB+ broadcasters into minimum 10-year contracts, for which it will
be charging €2m per annum per station by 2021. The combination of Media Broadcast’s
enthusiasm for the financial returns from DAB transmission contracts, and Frontier Silicon’s
enthusiasm for the potential sales in Germany of DAB receivers that incorporate its
technology, plus the offer of an amount of cash, persuaded a few commercial broadcasters to
take on the risk of using the DAB+ platform.
Helmut Egenbauer, CEO of Media Broadcast, said: “Having introduced Frontier Silicon to the
commercial broadcasters, we are delighted to see that their discussions have led to this
important commitment to DAB+ radio services.”
Those five German commercial broadcasters should understand that even Frontier Silcon’s
subsidy might not prevent them losing money hand over fist for the entire ten years of their
transmission contract with Media Broadcast. The evidence is already there from the UK
market. Not one commercial digital-only radio station has yet made an annual operating profit
from the DAB platform in the UK, even after eleven years, let alone come close to recouping
its investment.
Research commissioned by RadioCentre in 2009 found that the average annual revenues of a
digital radio station were around £130,000 per annum. By then, 10m DAB receivers had been
sold in the UK. Yet Germany is still at Year Zero with DAB+ radio penetration. The same report
for RadioCentre had noted that the “annual negative cash flow impact of DAB” on the UK
commercial radio industry was around £27m per annum, or 5% of sector revenues. Can
German commercial radio afford to deplete its profitability by that sort of amount, year-on-year,
for the next decade?
Planned Re-Launch Of National DAB Radio Services In Germany "Solved A Problem That Did Not Exist" page 2
©2010 Grant Goddard

3.
Planned Re-Launch Of National DAB Radio Services In Germany "Solved A Problem That Did Not Exist" page 3
©2010 Grant Goddard
Frontier Silicon’s press release quoted Helmut G. Bauer as a “representative of the
commercial broadcasters,” saying what a fantastic deal it was and promising that “2011 will be
year that DAB+ is successfully launched in Germany.” However, Bauer is not associated with
the German commercial broadcasting trade body, VPRT, which has been outspoken in its
condemnation of plans for digital radio switchover in Germany. Bauer is a Cologne-based
lawyer who has long made pro-DAB presentations at media conferences, and pro-DAB
statements to the press, as a ”consultant.”
In fact, VPRT had commented: “As we know, DAB failed in the market. Against this
background, plans for the closure of FM – originally scheduled for as early as 2015, but now
postponed – are absurd from an economic and social perspective and are therefore
unacceptable.”
Noting the developments in Germany this week, Berlin-based Christoph Lemmer wrote in
'Radioszene' magazine:
“With this decision, DAB will now actually be introduced by those who have
succeeded, smelling a quick buck, in selling Germans a new sort of equipment, with
millions to be sunk into to a new transmission network. Our old radios will be useless
for DAB. Those who want to continue listening to the radio will need a new receiver.“
“It does not take a prophet to suspect that the private radio industry has shot itself in
the foot by agreeing to sign the DAB contracts. A few shekels subsidy from a chip
manufacturer who wants to install as many of its chips in DAB receivers – that is what
has led to this. You, dear people, were not considered in the end. Do you really
believe that devices with DAB will ever be as numerous as FM radios are today?”
“No one will understand what [DAB] is and why it is good. Because, with DAB, you
have solved a problem that did not exist. The existing technological distribution of
radio programmes is excellent and widely used. You did not have to change anything.
The argument that DAB will create new radio channels with lower entry barriers is
specious, as long as media regulators continue not to award licences for technically
available [analogue] frequencies because they do not want additional competition in
the market.”
This week, World DMB, the body marketing DAB radio globally, was so excited by
developments in Germany that its web site posted seven news stories about it on 15th, nine on
16th and a further four on 17th. The overkill speaks volumes. Lacking any upturn in DAB
receiver sales, the only positive news that DAB lobbyists can muster is this second attempt in
Germany to launch a DAB technology that was first developed in 1981.
It is hard to recall a comparable technology whose proponents were still pushing for its launch
three decades after its invention. DAB proponents argue that, simply because DAB is ‘digital’,
it is inevitable that it will replace analogue radio. History indicates otherwise:
 Digital Audio Tape. Introduced 1987. Abandoned 2005.
 Digital Compact Cassettes. Introduced 1992. Abandoned 1996.
[First published by Grant Goddard: Radio Blog as 'Germany: Planned 2011 Re-Launch Of National DAB "Solved A
Problem That Did Not Exist"', 19 December 2010.]
Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of
experience in the broadcasting industry, having held senior management and consultancy
roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at
http://www.grantgoddard.co.uk