The In-Vehicle Digital Radio Landscape

28 December 2009

Faced with the expanding number of global formats, the automotive industry has not yet identi?ed a clear winner for digital radio. To gain acceptance from the automotive industry, a digital radio format not only will need to be robust and suitable for mobile high-speed applications, but also must be backed by positive market signals from the entire digital-radio value chain.

As countries across the world struggle to establish viable digital terrestrial radio networks, some broadcast authorities may look at the relatively successful deployment of digital radio in the United Kingdom as a model. However, the factors that created a successful digital radio market in the United Kingdom are unlikely to be replicated anywhere else in the world for a number of reasons.

The U.K. government, in collaboration with the BBC, created an awareness campaign that commits the corporation to a digital future with the switch off of analog-TV broadcast by 2012. Further, BBC radio made a strategic decision to provide digital-only radio stations in an effort to entice users away from analog. These digital-only channels include music and premium sports events. Finally, there simply isn't any competition for DAB in the U.K. from satellite radio.

Broadcasts using the DAB+ format substantially increase the quality of service available to broadcasters as the original DAB format is relatively inefficient and forces broadcasters to sacrifice audio quality in order to output more stations. Another advantage is that DAB+ is based on the Eureka 147 standard. Eureka 147 allows both DAB and DAB+ to coexist on a single multiplex with no degradation in quality of service and with no adverse effects on the current listener base.

Ibiquity Digital Corp. is the licensee of the HD radio format. The company spoke to iSuppli about its position in the market and the challenges it has faced getting the HD radio message across to consumers, device vendors and vehicle OEMs. The company acknowledged that the future success of HD radio would be heavily dependent on the broadcast format being adopted in the mass market in the automotive space.

Although HD radio was available to car buyers in 2007 and 2008, it was typically considered part of a list of options available to consumers during the purchase of a new vehicle. This option status required consumers to check-the-box in order to have the feature in their vehicle, which resulted in relatively low take rates. However, the substantial increase in the number of manufacturers offering HD radio as standard or as part of an infotainment upgrade package has changed the perception of HD radio in the market from a niche product to a much more mainstream feature.

Meanwhile, iSuppli believes that the merger of Sirius and XM has removed much of the uncertainty that was felt by system planners, particularly in the automotive sector, as they would be able to proceed with roll-out strategies that may have been put on hold pending the decisions of regulatory authorities. However, a bigger issue facing the unified satellite provider is sustaining consumer interest after the initial free introductory period.

Both U.S. satellite radio providers, Sirius and XM, have subscription-based services models ranging from $8 to $13 per month depending on the subscription period and services purchased. Each company offers between 80 and 90 music channels and in excess of 160 radio channels. Since the merger, much of this content has been integrated into combined programming where XM and Sirius broadcast similar content on similarly named channels. Only premium content, such as Oprah, Howard Stern and Martha Stewart, have maintained their separation, largely due to contractual reasons.

As the Satellite Digital Audio Radio Service (SDARS) technology was designed to support data channels, both Sirius and XM have begun to broadcast value-added services supporting additional data and telematics platforms. These services involve capturing and sending data to the infotainment system ranging from stock-tickers and weather, to traffic flow and incident information, images, text and video. While Sirius XM's entertainment content still vastly outweighs its data content in terms of subscriptions and revenue, the data services have seen significant expansion in the market.

ONDAS Media is a satellite based, pan-European digital radio company that is very similar to Sirius XM. In common with its U.S. cousin, ONDAS has proposed a full subscription-based service with up to 150 channels of music, sports, news and entertainment. Proposed data and telematics services include vehicle functionality, such as CRM, fleet data and diagnostics. Services also include driver information, such as gaming, sports and news, and enhanced data applications such as traffic and navigation. Digital satellite programming offered by Worldspace includes a combination of news, sports, music, brand name content and education programming developed internally or provided through sources such as BBC and CNN International. However, Worldspace is currently in Chapter 11 bankruptcy.

For now, the company plans to continue operations to support its 170,000 subscribers in 10 countries across Europe, Asia and Africa. According to press reports, U.S. media and communication group Liberty Media could be interested in taking an active share in Worldspace. In 2009, Liberty Media stepped in to help Sirius XM avoid bankruptcy.

The agreement by broadcasters to adopt AM and FM as the two principal analog broadcast formats for radio almost certainly accounted for the huge success of these technologies worldwide. In stark contrast, digital radio is attempting to launch several incompatible formats, with little or no cross-border acceptance.

The ability to adhere to standards means less market fragmentation. However, confusion in the market and lack of any significant momentum towards one-or even two-standards, has led to significant delays as manufacturers wait for a shake-out in the market.

In the case of DAB radio, what concerns manufacturers most is that the hardware that is being installed in cars today is not future-proof, as it was probably specified at a time before the issues of audio quality and bandwidth inefficiency surfaced on mainland Europe. In contrast, receivers specified today can take advantage of the latest technologies making them backward compatible. However, from a vehicle manufacturer's point of view, picking the right time to jump-in and support a new technology while the specification is still not finalized could be extremely risky.

Read More, Digital Radio and Mobile TV in Automotive: Seeing, Hearing and Managing Future Demand >

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