Digital radio is coming to Canada, and with it a variety of new opportunities for advertising and reaching niche audiences that will revolutionize the medium. But although it is on the cusp of breaking into the mainstream, misconceptions regarding what digital radio is and what form it will take still abound.

First of all, unlike satellite digital radio, digital audio broadcasting (DAB) will not be a subscription service, and it will carry ads – in fact, the new technology will make it possible to run whole new types of ads. Secondly, it will not, in the short term, mean the proliferation of hundreds of new channels, as has happened in some parts of the U.S., because the CRTC is currently limiting the number of new licences granted.

At the moment, we don’t have an estimate on how many DAB listeners there are, as BBM doesn’t break out analogue versus digital tuning. It’s likely, however, that the number is not huge given that, up until now, receivers were fairly costly. That is about to change with reasonably priced receivers entering the market in October.

In the longer term, it is inevitable that AM and FM will give way to superior technology, and extensive research shows that the logical next step appears to be DAB.

Current broadcast licence holders are already being granted the new digital licences by the CRTC, and existing stations are being broadcast in digital with up to 14 hours per week of exclusive content, in addition to the regular programming. (In the future, the CRTC will also entertain applications for licences which have no FM or AM counterpart.)

DAB is now up and running on 57 stations in Toronto, Vancouver, Montreal and Windsor, making digital radio potentially available to over 10 million people. Ottawa will go digital shortly, and Halifax is in the planning stages, with the target of having 11 digital stations (seven private and four CBC) on air by December 2002.

A new engineering study has just been completed which lays the groundwork for new DAB stations to serve the major population corridors in Canada. Planned expansion will add a series of markets, including Hamilton, Kitchener, London, Guelph and Cornwall in Ontario; Calgary, Red Deer and Edmonton in Alberta; Québec City and Trois Rivières, Que. and Chilliwack, B.C.

Unlike satellite radio, which is strictly a U.S. entity, DAB is terrestrially based with centrally located pods and repeaters transmitting the signals. The coverage area of digital stations will be roughly comparable to their FM counterparts and will be regulated by the CRTC.

DAB has numerous advantages over both current analogue transmission and the more recent audio streaming via the World Wide Web. Digital offers both CD-quality sound and portability. It offers a host of data display services for the consumer, including traffic and weather information, advertising supplements, song credits and a good deal more.

All the while the listener is treated to interference-free reception. Moreover, DAB will afford media buyers and sellers an expanded choice of new advertising methods. Various datacasting opportunities and sponsorships, coupon printout for advertisers and LCD displays of retail phone numbers and locations are but a few of the things that will result in an incremental revenue stream.

DAB is in no way a subscription service and, like AM and FM, is completely free to any listener with a receiver. Until recently the only stumbling block has been the relatively high price of those receivers. But, as with any new technology, prices are expected to drop substantially.

Radio Shack Canada will soon become the first major retail chain to carry a full line of DAB products for the home and portable markets. Beginning in October 2002, 250 stores across the country will feature DAB units from a variety of manufacturers. Planned products include boomboxes, Walkman-style devices, and DAB computer attachments, which will retail for just over $200 and up. In the automotive sector, multi-featured new DAB units are already available from Blaupunkt and Pioneer.

In a striking display of co-operation, Canada’s radio broadcast competitors have banded together to form Digital Radio Roll-Out Inc. (DRRI). Its mandate is the introduction of digital audio broadcasting services across Canada. DRRI is a non-profit joint initiative supported by Astral Media, Chum, Corus Entertainment, Rogers Media, Standard Radio, Telemedia Radio, a number of smaller private broadcasters, public broadcasters (CBC, Radio-Canada) and the Canadian government.

DRRI has undertaken a comprehensive survey which will determine consumer response to DAB in Canada. The first phase of analysis covers the period Feb. 19, 2002 to Jul. 30, 2002 and boasts a robust sample size of 1,591 (adults 12+). The research seeks to determine propensity to purchase car or home systems, the viability of an under-$500 pricepoint, and the features consumers feel are most important to them.

Earlier this year, DRRI’s Programming Sub-Committee drafted and passed a set of suggested programming practices for the deployment of DAB in Canada. This major step should help to ensure that consumers are treated to a consistent and glitch-free set of program services across the digital dial.

Proposed features to date include an eight-character display for the station’s name, dynamic labels for information such as the song title or artist, and an emergency warning system for use during emergencies.

Within the available data capacity, stations could offer programming enhancements, interviews, breaking news, weather forecasts and simulcasts in different languages. For example, if a consumer is listening to a song on air, he could push the station’s sub-channel button to hear an interview with the artist. In the case of news stations, listeners could push the sub-channel button to hear a loop of the latest traffic update.

Running on all key stations across the country, a promotional radio campaign in support of digital audio broadcasting continues to drive both consumer awareness and traffic to the DAB Canada Web site, www.digitalradio.ca, which offers information on the burgeoning technology.

In the midst of increasing media fragmentation and an explosion of new digital TV channels, the current plan is to keep the overall number of radio stations fairly consistent. In that regard, DAB is a replacement technology, offering new and improved versions of existing stations. Credit the CRTC with this much: It has not allowed Canadian markets to be flooded with unprofitable radio stations like we have seen in some U.S. cities.

One thing is certain. The consumer continues to crave local radio regardless of increasing media fragmentation. As the Spring 2002 BBM report points out, radio has a 94% weekly reach of adults 18+ across Canada, with average hours tuned per capita of approximately 21.2 hours per week. Radio audience measurement is more detailed than ever with the availability of BBM’s single-source demographic/product usage diary data and the incomparable RTS study. These afford the medium precise niche targeting without audience dilution.

If you believe the numbers, put your money on digital radio. Give consumers DAB at a reasonable price point and they will clamour for it. When this happens, broadcasters and advertisers alike will enjoy the new opportunities brought about by a medium prepared to address the future.

David Bray is chairman of the Programming Sub-Committee and the Research Sub-Committee for DRRI. He is also SVP of Toronto’s Hennessy & Bray Communications. He can be reached at: davidbray@sympatico.ca.