Faultline: TDF presents its credentials for winning the pay radio bid in France May 31, 2012 – Rethink Research
Three weeks ago Faultline carried the fact that the CSA regulator in France had chosen two bids for pay digital radio in France, and featured an interview with the CEO of Onde Numérique, one of the two bidders.
This week rival bidder TDF has detailed its own bid, and far from simply being “a traffic” service with a bit of rehashed radio, it looks to us like a viable candidate.
The Onde Numerique bid is to offer a bouquet of 56 brand new radio channels plus 7 public service channels and its initial focus was on home based pay radio. The TDF based bid, under the name “La Radio Numérique en Bande L” will harness another one of its subsidiaries Mediamobile, which has built real time traffic systems around Europe, as well as 30 high definition Radio Channels
The offering breaks into two segments, the first being the media bundle, with the 30 radio stations, at a higher listening quality than FM radio, which will use many of the features that have been established in previous satellite radio systems such as catch-up radio, time shift, searching for programs by topic. As far as we can see the “download” and acquire buttons have not been put into this bid, in the way that Onde Numerique has laid them out.
However the media bundle also offers a “read while you drive” package, with digitized articles from hardcopy newspapers and digital books using text-to-speech to read them to you over the radio – something we have not come across before.
But the Mobility bundle, the second offering which offers the traffic system is very similar to the one that was used to drive T-DMB to such immense success in South Korea, especially around the capital in Seoul. The system there used TPEG designed features (Transport Protocol Expert Group) – which includes the idea of real time traffic updates being broadcast to devices, either so they can be fed into a Personal Navigation System, or so drivers can plan their own routes to bypass busy areas. In Seoul the traffic reduction by this traffic system, launched with the Mobile TV service, was substantial and entirely the reason why 20 million people decided to buy into it. So there is method in the apparent madness of the TDF bid.
The system will offer real-time information on driving conditions, traffic alerts, road weather forecasts, fuel prices, and so on.
As we understand it the French system will be awarded this Summer, but red tape will make the spectrum unusable until late 2012 or early 2013. To us these two rival offers represent totally different business models – one focuses on people who are driving and puts the cost of the installation on motor manufacturers, in the same way that XM Sirius Satellite Radio did in the US, which it says will add “the price of a full tank of petrol” to the service cost; while the other is targeting home use.
It is obvious to us that given that this is a beauty contest style set of bids, that the two approaches could easily be merged, with the result that both sets of benefits are felt by both home radio enthusiasts and drivers alike. It is entirely possible that the CSA will tell the two protagonists to get together and come up with a single system, where they both benefit.
If Onde Numerique wins, it has signed up 15 radio and content partners to create the 56 original channels advert free. The CSSA has specified that the system will initially be broadcast in 140 French cities. Onde Numerique’s bid relies on content from the 4 key commercial French broadcasters RTL, Lagardere, NEXT and NRJ, with additional French independent stations. But this formula has not been seen to work anywhere else, and for the most part the US is the testbed, where commercial radio hotly contested the launch of the satellite stations, through fear that it would suffer. Although it has suffered, commercial radio on the US has continued to be popular in spite of the growth of Pay radio – in much the same way that pay TV has not killed off free to air TV broadcasting.
Mediamobile will run the TDF bid and will join forces with non-profit organisation “La Radio Numérique en Bande L” both of which are associate companies to TDF.
Mediamobile also has other stakeholders, including Renault and Vinci, and operates traffic services on FM radio in France, Sweden, Finland, Norway, Denmark and Poland. If Renault immediately agrees to put pay radios in all of its cars, that will get the system off to a great start with an over 21% market share in French car sales.
Mediamobile first offered Visionaute 2000, since in 1997, a specialist handheld computer offering pan-European urban traffic information and calculating the fastest route, given real time traffic conditions. Mediamobile today provides traffic information to navigation systems and car manufacturers, bringing real time traffic information to drivers via radio broadcasts. It relies on traffic data fed back by more than 700,000 tracer vehicles spanning a network of over 320,000 kilometers.
According to TDF a recent survey by Médiamétrie/CSA revealed that for a sizeable majority of listeners, 26% of radio listening time occurs in a vehicle. Compared to the US, that’s not a high percentage. Hence our thought that both approaches are valid.
Mediamobile said in a statement this week that “Existing proposals place the burden of financial risk and network costs on radio broadcasters, without giving them any prospect of additional revenue. This has acted as a brake on any further expansion of the medium to date.” That’s hardly fair since it was clear that in the rival bid service was to be paid for by consumers, so assuming it takes off, could easily offer them a good return.
The “La Radio Numérique en Bande L” submission adopts a business model which places the responsibility for funding and network deployment on the distributor – in this case, Mediamobile, who in turn offloads it to the car maker. TDF says the decision of CSA will come this autumn, rather later than Onde Numerique thought.
The Onde Numerique service was to cost well under €10 a month when delivered at home, and well over €10 a month, perhaps €15 or €17, for vehicular service, which would come much later. The Onde Numerquie effort acquired the rights in France to European pay radio service Worldspace – which has just filed for bankruptcy.
The recent emergence of Sirius XM once again as a profitable force in US satellite radio is shedding light on the idea of a paid radio bouquet in Europe once again. If this does take off in France, it could easily spread to other countries in Europe, especially where there are no high quality public service channels, like the UK’s BBC, and even there it might take off, because those services cannot boast 63 channels and are thin in demographic coverage.