iBiquity sale to DTS

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.

35mm film audio macro

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 says “Goodbye, FM”

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.

HD Radio development Stasis

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
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.

AM revitalization comments

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?