Ahead of last Tuesday's release of Ofcom's Future of Radio consultation, radio owners were calling for a relaxation in regulation and a set of rules that account for the change in technology, audience demand and modern media. So has the regulator delivered what the people want?
Not quite, says Andrew Harrison, chief executive of the RadioCentre. While paying tribute to Ofcom's "foresight in undertaking the project", he is disappointed that many of the proposals appear to be "incremental small steps of deregulation, rather than a giant leap forward for the industry".
The regulator has relaxed the rules governing radio stations and provided more freedom in programming and ownership.
Peter Davies, head of market intelligence at Ofcom, admitted that the move had been prompted by regional radio owner UKRD handing back its licence for Stroud station Star 107.9 last September, claiming it was "simply uneconomic".
Deregulation decision
Findings included in the consultation support this, showing that smaller analogue stations in particular are "finding it hard to remain viable". On average, those covering a population of fewer than 100,000 are making an annual loss of £14,000.
"Some of the reason money is being lost is the radio industry's own fault and some of it is the way the industry has grown up," says Davies. "Radio was designed in a different time and things have moved on. We have made a conscious decision to deregulate, while ensuring we maintain what research shows audience expects."
But William Rogers, chief executive of UKRD, is disappointed that the document acknowledges many of the industry's problems, but fails to suggest sufficient solutions.
"It is full of contradictions and fails to grasp the speed and pace of change," he says. "It seems to reflect a desire by Ofcom to still manage, control and direct the industry in an overbearing way. My fear is that Ofcom is going to miss a genuine opportunity to make radical changes that are necessary.
Ofcom has, however, opened the door for future consolidation in the market, with a promise to revisit ownership rules and suggest to the Government, which has the final say, that firms should be allowed to own more than one radio station in a given area, as long as they do not have a monopoly.
The possibility of such changes has impressed Nathalie Schwarz, director of radio for Channel 4, who believes it will allow the industry to "build scale".
"Ofcom has updated some areas and relaxed others and given the radio industry some flexibility," she says. "It has paved the way for more innovation in programming and greater consolidation of radio assets. It has certainly started to build the framework, but it has to do it in stages. Broadly speaking, we're happy - it's enough for now."
Ofcom has outlined its stance on a third issue - the future use of the analogue spectrum. Current trends suggest that by 2017, 90% of all radio listening will be via digital platforms and there is talk of freeing up analogue spectrum for other services, such as mobile television, more digital radio, more community radio services or other new technologies.
The regulator will hold reviews to consider switching off the analogue service - the future of AM will be looked at in 2009 and FM in 2012 - but only if digital listening does not account for 50% of all listening before those dates.
Tough position
Paul Jackson is chief executive of Virgin Radio, which is aired on AM nationally, and he still values the spectrum. "Currently we are in the toughest of positions, paying for both expensive national AM transmission with a mature and slowly declining audience, as well as paying for the multiple national digital platforms that are a long way from becoming commercially viable," he says. "A growing number of people may have digital radio listening at home, but until it has become the norm, AM audiences will remain commercially valuable. At this stage, it is important that we have a review date, not a cut-off date."
Jackson believes the consultation is a "step in the right direction", but says the lighter touch regulation being suggested by Ofcom is "not nearly enough for the radio industry - less intervention is needed".
While Ofcom is keen to stress this is only a consultation document and not the final word, it seems there is a long way to go if it is to keep the industry sweet. It is certainly talking about the right things, but the overriding criticism from many camps is that it has not gone far enough.
Radio executives know this is the golden chance to drag radio regulation into the 21st century. Now they hope their message gets through.
OFCOM'S KEY PROPOSALS
Commercial radio content regulation: the regulation of content on analogue commercial radio and on DAB digital radio should be aligned when appropriate
- Commercial radio ownership regulation: there may be a case to consider bringing together the ownership rules regarding analogue commercial radio and DAB digital radio into a single set of rules as the proportion of listening accounted for by digital platforms increases
- The flexibility to free up spectrum in the long term: no date has been set for analogue switch-off, but Ofcom is aiming to maximise the flexibility of the licensing system to free up the spectrum for other uses
- New ways of licensing radio broadcasting: radio services should be able to be adopted on any spect-rum in a technology-neutral way
- DAB sound quality: Ofcom will generally approve a change from stereo to mono in circumstances when it considers the reduction in sound quality is outweighed by the benefits to citizens and consumers of the use to which the freed-up capacity is to be put
- Community radio: Ofcom suggests there is an argument for simplifying the statutory selection criteria and the regulation of funding and ownership without losing the essence of what community radio has been set up to achieve
Responses to Ofcom's Future of Radio consultation must be submitted by 29 June - www.ofcom.org.uk.