DTS, Inc (NQ:DTSI) is to acquire iBiquity for $172M USD. This was the headline about the middle of last week. With that announcement, we get to see some of iBiquity’s financials; revenue of $40-50 million this year with a margin of 30-36%.
My question is, who or what is DTS? DTS was initially known as Digital Theater Systems, Inc. They specialize in digital surround sound technology, by developing or acquiring companies that created various CODECs and surround sound technology.
An image of 35 mm film showing four audio formats, from left to right: SDDS (blue area to the left of the sprocket holes), Dolby Digital (grey area between the sprocket holes with the Dolby “Double-D”), analog optical sound (the two white lines to the right of the sprocket holes), and the DTS time code (the dashed line to the far right). The DTS time code syncs picture to a CD-ROM that contains the surround sound sound track.
DTS continues to develop surround sound technology and makes money by licensing that technology to consumer and professional audio clients. According to their 2015 Q2 financials, they are on track to make $140-145 million this year with a 25-30% margin.
My next question is, what does this mean for HD Radio? It is much harder to answer this question, but here are some general observations:
- DTS is a publicly traded company. Financials and other information are a matter of public record. It seems likely that the operation will be more transparent.
- DTS operates with higher revenue and lower margins.
- DTS has a high interest in mobile markets; devices and dashboards.
- DTS has a history of continued development and marketing of technology it owns.
There are a couple of different scenarios possible; the first is business as usual. I think this is the least likely situation. IBiquity as a company and HD Radio as a technology basically flat lined ten years ago. A successful company like DTS would not likely purchase something that does not have growth potential.
Second possibility, DTS will keep the same licensing structure, but upgrade the HD Radio technology. From a audiophile’s perspective; HD-1 sounds good, HD-2, 3, and 4 channels not so much. This is especially true as more channels are added and the same size pie (aggregate digital bandwidth) gets divvied up into smaller and smaller pieces. One area where HD Radio could shine is to get rid of the HD2-4 channels and create an IP multicast system. IPv6 has greatly improved multicast performance which might enable a free data stream download, minimal data back haul via mobile data for an interactive, low data usage digital experience. That would free up a lot of translators.
Third possibility, DTS will reduce the licensing fees for broadcasters and consumers and accept a lower margin on existing technology. DTS will use HD Radio as a route to get their technology into dashboards, which is where they see their future profits. Remember, the self driving car is only a few years away and mobile entertainment will be all the next rage.
As far as AM HD Radio goes, I don’t see anything happening with that. Medium wave broadcast channels do not offer enough bandwidth to facilitate reliable digital transmission.
In any case, for better or for worse, change is coming to terrestrial radio.
Norway will switch off its national FM networks in 2017, according to the Ministry of Culture announcement. In the place of analog FM will be DAB. The aim is to have the migration to DAB completed by December of 2017. According to the article, approximately 54 percent of households and 20 percent of automobiles have DAB radios. What is left unsaid is the 46 percent of households and 80 percent of automobiles that do not have DAB capable receivers.
I am sure that in the ensuing year and a half to two years, those numbers will change somewhat. It still seems to me that there will be many people who will likely not have a DAB radio in their car before the analog switch off.
Judging by the comments on the Slash dot story, many are not happy with this decision. Perhaps the most telling comment is this:
This is just Norway going off on its own crusade urged on by commercial interests of 10+ new channels, fuck whether it makes sense to throw out millions of radios… I expect this to lead to a massive interest in building out 3G/4G coverage as ex-FMers give DAB the middle finger.
Yup, that sounds about right.
I don’t know much about radio in Norway, but it if is anything like radio here, good programming trumps technical do-dads and and fancy gimmickry.
I have been working on an HD Radio installation these last few days. This particular installation was manufactured by Broadcast Electronics. Some 13 years into the HD Radio development cycle and the implementation still seems like a kluge to me. To get some idea; to transmit a digital HD Radio with added sub-channels, the following equipment is needed:
- HD Data importer, off the shelf computer with a sound card and specific software from iBquity. This is used to import the audio for the HD-2 and HD-3/4 channels. Runs on Windows (Win 7), Linked to the exporter via IP ethernet
- HD Radio exporter, another specialized computer with a sound card. Frames the HD Radio data and adds PID, etc. Runs on Mandrake Linux, communicates with the exciter via data connection.
- HD Radio exciter; like other exciters, generates RF and modulates it.
- HD Radio transmitter; essentially an FM transmitter designed to run as a linear amplifier.
The HD Transmitter part can come in several configurations, including low level combining, high level combining or using a separate antenna for digital and analog signals.
Broadcast Electronics HD Radio transmission system
None of this is news, of course. My point is, after ten years, there does not seem to be any further development in HD Radio technology. In the mean time, competitors are not standing still. The mobile wireless industry has evolved several times during the same time period; 3G, 4G and LTE have been successfully deployed and widely adopted by mobile phone users. Truly, mobile data is the real competition to terrestrial broadcasting.
The HD Radio transmission process is an overly complicated patchwork of hardware and software. The importer in particular seems substandard. It’s function is to run a bunch of small programs, each doing some small part of the importing process. The web-admin used Internet Explorer, who uses Internet Explorer anymore?
Since the HD Radio inception, little or no further development seems to have taken place. There are features, such as album art, program data, traffic data, etc but the system interface is weak, the hardware clunky, the data paths fragile, the operating system outdated, the typical installation is a compromise between cost and available floor space at the transmitter site.
HD Radio is also expensive to deploy and proprietary. There is little compelling reason to listen to HD-1 channels because the programming is identical to the main analog channel. HD-2, 3 and 4 channels seem to be mostly used to generate translator feeds, which again, are available with an analog radio. This use of HD Radio actually damages uptake because, If all the HD Radio sub channels are available on FM analog frequencies, then why even bother with an HD Radio receiver?
Thus the forces at work in the development of HD Radio seem to have reached equilibrium:
Consumer apathy + expensive deployment = 16% uptake on FM and 6% uptake on AM1
The digital radio roll out has been stuck at those levels for many years. Unless something changes, FM HD Radio will be limited to translator program origination and distribution. AM HD Radio will go the way of AM Stereo.
1: FCC data on HD Radio deployment; 1,803 of 10,727 FM stations and 299 of 4,708 AM stations have installed HD Radio as of December 31, 2014.
I have been reading the comments regarding the FCC’s NPRM (13-249). Clearly, many people are interested in keeping the AM broadcasting band both active and relevant. Some of these suggestions have merit, but are unlikely to be adopted by the FCC. Others are viable and could alleviate at least a few of the technical shortcomings of the AM band. The rest fall along expected positions. Here is a brief rundown:
- Clear Channel, iBiquity: Allow stations to transmit in all digital mode. Likelihood: Possible. The hybrid version of AM HD Radio has been a failure on several fronts; added interference to adjacent channels, self interference, poor adoption, wonky CODECs, etc. However, letting stations choose to broadcast in all digital AM HD Radio may decide the issue once and for all. As long as the all digital carriers fall within the current analog channels, this would be fine. Actually, I would add that station transmitting in all digital be allowed to choose DRM as well as HD Radio
- REC Networks, MMTC: Move AM stations to former TV channels 5 and 6. Likelihood: Unlikely. It would be a neat solution, however, there are currently many full and low power TV stations still using those frequencies.
- Clear Channel, SBE, MMTC, Crawford, et al: Allow AM stations a special translator filing window. Likelihood: Almost assured. This has been broached by the FCC itself. I would add that Class D and Class C stations be given priority.
- SBE, du trial, Lundin and Rackely, MMTC et. al: Remove the “ratchet rule,” reduce antenna efficiency requirements and city of license contour requirements. Likelihood: probable. Over the years, the FCC’s rules and regulations designed to help AM broadcasting’s technical product have done the opposite in many cases. This is especially true of the “ratchet rule.”
- SBE, du Trial, Lundin and Rackely, MMTC: MDCL (Modulation Depended Carrier Level) Likelihood: Possible. MDCL does not do much to improve AM signal quality, but it can save the station owner some money on the electricity bill.
- Alabama Broadcaster’s Association, et al: Better FCC enforcement. Likelihood: Not very. This is another area were interference and AM noise problems can be fixed. Given Ajit Pai’s desire for “non-regulatory” relief, stepped up enforcement seems to be a non-starter.
- Hatfield and Dawson: Eliminate substandard AM stations. Likelihood: Not very. Getting rid of substandard stations and let the remaining AM stations enjoy a little breathing room is actually a big step in the right direction. H&D notes that the FCC should petition congress for tax relief for those stations that choose to surrender their licenses. Unfortunately, it does not appear likely that the FCC, congress and the current station owners would go for it.
- du Treil, Lundin and Rackely: Do away with skywave protection for class A stations Likelihood: Possible. The argument goes; skywave listening represents a very small number of mostly hobbyists (AM DXers) as other, better methods for program distribution exist for serious listeners. Sad but true.
- du Treil, Lundin and Rackely: No more new AM stations. Likelihood: Possible. There is a cogent argument to be made regarding the overcrowding of the AM band. Stopping any further crowding is a good idea.
- SBE, Cohen, Dippell and Everist, et al: Tighten regulations on electrical noise emitters. Likelihood: Unlikely. The FCC does not have the mettle to tighten regulations against powerful manufacturing and technology lobbies.
- iBiquity: Do not let anything get in the way of the HD Radio rollout. Likelihood: Is it possible to get in the way of something that is standing still?
Talking amongst engineers and AM broadcasters, many of these ideas have merit. The real question is, will any of this bring more listeners?
I have been busy of late, however, still keeping abreast of the news of the day. Along with that, CES 2014 wrapped up recently. No huge developments, especially when it comes to Broadcasting. However, there was one item of interest; the updated technical specifications of IEEE 802.11ac.
It is of interest here because of the implications of the mobile/portable data developments and their impact on traditional AM and FM broadcasting. The new specification calls for 1.2 Gbp/s per device in the initial release, increasing that throughput to 6 Gbp/s in later releases. These data rates are for overall transmission, including the WiFi overhead. Actual usable application data (layer 5-7) would be about 20 to 30 percent less. Even so, 900 Mbp/s is a phenomenal data rate. Truely I say to you; this is the future of digital broadcasting. HD Radio™; it may well prove that the “HD” stood for “Huge Distraction.”
The new 802.11ac specification uses MU-MIMO, high density modulation, larger channel bandwidths, and beamforming technology in the 5 GHz WiFi spectrum. Of course, the question is, at what distances will this system work? If it is like conventional WiFi, then 100-200 feet is about all that can be expected. However, there are also many people interested in wireless broadband (WiMAX) service as an alternative to traditional wired ISPs. For that application, having many outdoor 802.11ac nodes connected by a backbone could potentially blanket a city or campus with free high speed wireless data.
Example of cjdns network
Along the same lines, there are many people involved in creating mesh networks of various types; be they ad-hoc mobile networks, darknets, bitclouds, etc. Mesh networking is a very interesting topic, for me at least. The network protocols are getting better and more secure. WiFi hardware is becoming less expensive and more reliable. As more and more people put effort into developing protocols like cjdns, local mesh networks will become wide spread, unless they are outlawed. You know; because of teh terrorism!!1!!
As it stands today, I can drive for two hours in mostly rural upstate NY and CT streaming my favorite radio programs and have nearly seamless hand offs and very few dropouts. This is on my three year old, beat up 3G HTC android phone sitting in the passenger seat of my car.
Digital Radio is here, it is simply not the In Band On Channel system that legacy broadcaster’s have chosen.
UPDATE: I notice that Radio World has a little star rating system on their articles. According to the rating, twenty one people think I suck… That is okay, but when I started looking around at all of the other articles on the website, I noticed most have but one or two votes. It seems odd to me that my little opinion piece would have so many negative votes, especially in light of the e-mails, phone calls and personal interactions I have received supporting my position.
Perhaps a few of you could run over there, read the article then objectively decide what you think… Here is the link: AM Efforts Should Include Tech Solutions
I am deeply immersed in all things networking, yet again. I regret the sparse posts, but there are a few things of note:
- It appears the the WYFR shortwave site in Okeechobee has been sold to the operators of WRMI (Radio Miami International). This is a good turn of events for shortwave broadcasting. WRMI programmed mostly to the Caribbean and were difficult to hear in these parts.
- Nielsen Radio, formerly Arbitron, says it will increase the sample size for the PPM program. This is good, larger sample size means better accuracy and fewer extrapolation related errors and strange rating spikes.
- I published an commentary in Radio World Commentary: AM Efforts Should Include Tech Solutions. What do you think? Should the industry be looking at something other than HD Radio?
- Then, from across the pond there is this:
Which is a digital radio promotion from the BBC. It seems Great Brittan is trying to force an all digital transition. A glimpse of things to come?
- In spite of the lack of posts, the blog continues to grow, averaging 550 to 600 page views per day with about 180 RSS subscribers. As far as content goes, I can assume more of the same will suffice.
As time becomes available, I will post more.
In the putsch to revitalize AM, FCC Commissioner Ajit Pai advises that it would be best if we did not argue about solutions. Actually what was said was this:
On the other hand, if too many broadcasters allow the perfect to become the enemy of the good, our efforts could be doomed by infighting.
That is well and good, so long as the proposed solution does not make things worse. I would posit that worse is already the enemy of the good, so any proposal that would make things worse should be protested vigorously.
I have written quite a bit about AM, its relevance and possible revitalization. There is no one sized fits all solution to the problems facing AM broadcasters. In the final equation, stations should be judged on their viability as a business and service to the community. Those that fail to measure up should turn in their licenses.
Update: And so it begins. The narrative is already being shaped, as Darryl Parks (original post has been removed) has found out. After posting in his blog a few comments on the FCC’s revitalization efforts, he was excoriated by several high profile broadcasters calling his comments “Beyond not helpful.” For those not versed in double speak, that means it is harmful. While Parks may not have gotten all the technical jargon exactly right, his points are valid and are in agreement with the widely accepted laws of physics. I know, I know, quoting science is dull and boring, something that conspiracy theorists are well practiced with.
Now, SHUT UP AND GET BACK IN LINE
I am wondering what is going on with the HD Radio roll out these days. Particularly the all digital AM conversion scheme being bantered about so often last spring. Not much is being discussed publicly about that or the AM revitalization. I have found FCC Commissioner Clyburn’s remarks at this week’s NAB Confab interesting. HD Radio is paid lip service here:
There are hurdles: if broadcasters do not broadly embrace the HD technology and the multicasting and other enhancements that it makes possible, listeners will have few incentives to buy digital receivers. Likewise, if no consumers own digital receivers, then there is no reason to broadcast in digital.
But I’m not worried. More than 15 million digital receivers have been sold so far, and that number will only rise. Thirty-three auto manufacturers include or plan to include digital receivers in their cars, and those receivers are standard equipment in over 80 models. This will dramatically increase the number of digital receivers in the coming years.
But in the solutions for AM broadcasters, HD Radio is not mentioned at all. What is put forward as a six (actually five) step plan to revitalize AM radio turns out to be some rearranging of the deck chairs and little more. Cliff notes version for the FCC’s AM revitalization:
- Open a one time filing window for AM license holders to acquire an FM translator
- Relaxing community coverage rules for AM licensing allowing greater flexibility for transmitter siting
- Eliminating the “Ratchet Rule” used in night time allocation studies for new facilities
- Permitting more widespread use of MCDL technologies by eliminating STA requirements
- Reducing minimum field strength requirements by twenty five percent allowing the use of shorter towers
While those options may save an AM license holder some money, none of them do anything to improve the technical quality of AM broadcasting. Several of them (#2, 4 and 5) will, in fact if widely implemented, reduce signal levels over cities of license, making electrical noise and interference problems more prevalent. This is a step in the wrong direction.
These points are basically a rehash of some to the MMTC’s (Minority Media Telecommunication Council) ideas for a radio rescue first bantered about in 2009.
This demonstrates that the NAB and the FCC are not at all serious about revitalizing the AM band but merely marking time and making it look good until the final transmitter is switched off.
AM licensees are on their own, but all is not lost. I have noticed several successful stand alone AM station that are not only surviving but thriving. The common thread in these station is good local programming. On the technical side of things; a well maintained plant with good quality audio feeding a properly operating transmitter and antenna array will go a long way to providing good service to the city of license.
Alternative title: Who will really benefit from all digital AM HD Radio™?
Remember when, at license renewal time, radio and TV stations played this announcement:
On (date of the last renewal grant), (station’s call letters) was granted a license by the Federal Communications Commission to serve the public interest as a public trustee until (license expiration date)…
There seems to be a disassociation between those words and the actions of certain broadcasters who view their licenses as a matter of fact and have little regard for the public interest. The FCC exacerbates the situation with the attitude that everything, including the entire radio frequency spectrum, is for sale to the highest bidder. John Anderson (DIY Media) has a great article on how big business interests game federal regulators into doing what they want. This happens in all sectors; banking, agriculture, energy, health care, media, military and so on. There are many examples of shoddy regulators and big business gone wild over the last ten years to fully prove this theory. If you don’t believe me, do a little research. There is no reason to think that the FCC is different from any other federal regulatory agency.
The vast majority of mass media outlets in the US are owned by just six major corporations (see below). Radio remains the only piece of the mass media system that has not been completely rolled up in consolidation. Currently, there is a small number corporate radio owners who own a combined ~2,300 stations and one public broadcasting network that accounts for another ~900 stations. I include public radio here because the majority of those station’s upgrades were footed by the taxpayer though grants from the Corporation for Public Broadcasting. That leaves a majority of the approximately 8,500 radio stations that are still owned by a diversified collection of medium and small groups and individuals.
Forcing radio stations to adopt the proprietary, all digital HD Radio™ as the broadcasting standard would, in effect, drive many of those small owners and individuals out of business because of the exorbitant costs for equipment upgrades, antenna modifications, and licensing fees. This would create a new wave of consolidation as smaller groups and single station owners sold out. Any remaining small station owners will not have the legal wherewithal to fight against the coming waves of digital interference on both the AM (medium frequency) and FM (VHF) bands.
Therefore, the short answer to the question; who benefits from an all conversion to all digital HD Radio™ is iBquity and its investors, many of whom are found in the list of consolidated media corporations below. Who looses? Just about everyone else; small and medium group owners, independent radio owners, listeners, communities of license, radio employees, advertisers etc. For those sitting on the fence, thinking “I’ll just do my job any everything will be just fine.” Full implementation of HD Radio™ will destroy what is left of broadcasting in this country. Radio is already on shaky ground as a result of product dilution, staff cuts, mediocre programing and competing media systems. One more step backward, such as adopting a technically flawed digital system that works worse than its analog counterpart, and the remaining listeners may just say “screw this,” and abandon radio altogether. When the last radio station is turned off, what do you think will happen to your job then?
At the big NAB Las Vegas confab, FCC commissioner Ajit Pai and to a lesser extent, Commissioner Rosenworcel, encouraged people to write or email them with their ideas on how to revitalize AM radio. I suggest we take advantage of that invitation and tell them what HD Radio™ really is. There is a shrinking window of opportunity to join the discourse and be heard, now is the time.
Let not any one pacify his conscience by the delusion that he can do no harm if he takes no part, and forms no opinion. Bad men need nothing more to compass their ends, than that good men should look on and do nothing. ~John Stuart Mill
What is at stake? The future of diversified media and radio broadcasting in the US.
Sidebar: Mass Media Consolidation
Can the public trust a mass media that is owned mostly by six mega corporations to honestly and without bias report news, current events, investigate corruption, and be a government watch dog? History says no.
Who owns the media?
- Home Box Office (HBO)
- Time Inc.
- Turner Broadcasting System, Inc.
- Warner Bros. Entertainment Inc.
- CW Network (partial ownership)
- New Line Cinema
Time Warner Cable (spun off in 2009)
- Cartoon Network
- Castle Rock
- Sports Illustrated
- Marie Claire
- People Magazine
- ABC Television Network (8 stations owned, 200 affiliates)
- Disney Publishing
- ESPN Inc.
- Disney Channel
- Radio Disney (31 stations, 2 affiliates)
- Buena Vista Home Entertainment
- Buena Vista Theatrical Productions
- Buena Vista Records
- Disney Records
- Hollywood Records
- Miramax Films
- Touchstone Pictures
- Walt Disney Pictures
- Pixar Animation Studios
- Buena Vista Games
- Hyperion Books
- Paramount Pictures
- Paramount Home Entertainment
- Black Entertainment Television (BET)
- Comedy Central
- Country Music Television (CMT)
- MTV Canada
- Nick Magazine
- Nick at Nite
- Nick Jr.
- Spike TV
- The Movie Channel
- TV Land
- Dow Jones & Company, Inc.
- Fox Television Stations (25 stations)
- The New York Post
- Fox Searchlight Pictures
- Fox Business Network
- Fox Kids Europe
- Fox News Channel
- Fox News Radio
- Fox Sports Net
- Fox Television Network (175 affiliates)
- My Network TV
- News Limited News
- Phoenix InfoNews Channel
- Phoenix Movies Channel
- Sky PerfecTV
- Speed Channel
- STAR TV India
- STAR TV Taiwan
- STAR World
- Times Higher Education Supplement Magazine
- Times Literary Supplement Magazine
- Times of London
- 20th Century Fox Home Entertainment
- 20th Century Fox International
- 20th Century Fox Studios
- 20th Century Fox Television
- The Wall Street Journal
- Fox Broadcasting Company
- Fox Interactive Media
- HarperCollins Publishers
- The National Geographic Channel
- National Rugby League
- News Interactive
- News Outdoor
- Radio Veronica
- Sky Italia
- Sky Radio Denmark
- Sky Radio Germany
- Sky Radio Netherlands
- CBS News
- CBS Sports
- CBS Television Network (16 stations owned, 200 affiliates)
- CBS Radio Inc. (130 stations)
- CBS Consumer Products
- CBS Outdoor
- CW Network (50% ownership)
- Simon & Schuster (Pocket Books, Scribner)
- NBC News
- NBC Sports
- NBC Television Network (10 stations owned, 200 affiliates)
- SciFi Magazine
- Syfy (Sci Fi Channel)
- USA Network
- Weather Channel
- Focus Features
- NBC Universal Television Distribution
- NBC Universal Television Studio
- Paxson Communications (partial ownership)
- Universal Parks & Resorts
- Universal Pictures
- Universal Studio Home Video
Large and medium group radio owners:
Bain Capital Partners, LLC Thomas H Lee Partners, LLC
- Clear Channel Outdoor
- Clear Channel Broadcasting (800 stations)
- Premier Radio Networks
- Radio Computer Services (RCS)
Cumulus Media (public)
- Cumulus Broadcasting (550 stations)
- Cumulus networks (formerly ABC Radio networks)
- Broadcast Software International
Townsquare Media (220 stations)
Entercom (109 stations)
Salem Communications (97 stations)
Saga Communications (88 stations)
Univision (69 radio, 42 television stations)
Radio one (69 stations)
Family Broadcasting (63 stations)
Beasley Broadcast Group (47 stations)
Moody Radio (36 stations)
When I said the WBCN test data may not see the light of day, perhaps I spoke too soon. For your viewing pleasure, here are the results of the WBCN all digital HD Radio tests:
WBCN All-digital AM IBOC Field Test Project (link has been broken, this may have been released by accident)
Well, that will teach me, won’t it.
I have given it a summary read and my first impressions were correct; from a technical standpoint (antenna, ATU) this is a very favorable test configuration. The results look pretty good on the surface, although they appear to have had some night time interference problems, go figure. I’ll update this post when I have time to fully read the whole paper.
Update: The link I provided earlier has been taken down. It may be that the information was not supposed to be released to the general public. Several people have asked me to up load the report to my own server so that they can download it and read it themselves. This leaves me in a bit of a quandary; the report itself is important information and its implications on the future of broadcasting are huge. On the other hand, it is the work of a private organization and not public domain, thus if released by accident, then it should not be shared.
This story from Inside Radio is more or less accurate as to what report contains, although it paints a somewhat favorable picture. There appears to be some issues meeting the NRSC5C mask for the MA3 (all digital) mode. That seems to be fine, however, as the NRSC5C mask can be modified to meet field conditions. How convenient is that? The information about the number of AM HD Radio station seems a bit off, latest I have is 207 AM day time, 66 AM night time stations out of 4,659 transmitting hybrid digital analog HD Radio, or 4% daytime and 1% nighttime respectively.
When I have time, I will do some more analysis and post my own conclusions.