Business models for small scale digital audio broadasting services

1. Business Models for
Small Scale DAB
Steve Buckley
Managing Director, Community Media Solutions

2. Business models for SSDAB
 Costs – CapEx and OpEx
 Access to finance
 Revenue models
 Ownership models
 Lessons from Local TV
 Issues and takeaways

3. Capital Expenditure
 Planning and design
 Equipment and software
 Equipment installation
 Network installation
 Contribution – studio(s) > mux
 Distribution – mux > tx
 Licence application fees
 Pre-start operating costs

4. Operating Expenditure
 Transmission site costs
 Site rentals, rates, electricity
 Network charges
 Contribution – studio(s) > mux
 Distribution – mux > tx
 Multiplex system
 Monitoring, maintenance, updates
 Mux partnership management
 Broadcasting Act and WTA licences
 Finance costs

5. Scenario 1 – Single mux / single site
Item CapEx OpEx – Year 1
Planning and design 500
Equipment / software 9,000
Equipment install 1,500
Ofcom fees 1,000 1,000
Transmission site 1,000
Tx/mux management 6,000
Total 12000 8,000

6. Scenario 2 – SFN (2x tx), mux offsite
Item CapEx OpEx – Year 1
Planning and design 1,500
Equipment / software 17,000
Equipment install 4,500
Ofcom fees 2,000 2,000
Network costs 1,000 3,000
Transmission site 6,000
Tx/mux management 12,000
Total 27,000 23,000

7. Start-up finance
 Grant funding
 Repayable loans
 Share issue
 Hire purchase / transmission as a service
 Mixed model / blended finance

8. Social investment market
Wholesale
Equity
Loans
Grants
Public Intermediate Private
Private
investors
Private
foundations
Banks

9. Revenue models
 Charges to channels / content providers
 Administrative cost
 Fixed fee
 Market price
 Hybrid pricing
 Charges for additional services

10. Cost per channel – SSDAB trials
Ofcom (2016) Small Scale DAB trials, Annex 5

11. Ownership models and
mux management
 Single licence/ local ownership
 Content provider e.g. community radio licensee
 Local consortium of content providers
 Other local ownership – public/private?
 Multiple licence mux operator
 Technical provider
 Hybrid broadcaster / technical provider

12. Lessons from the Local TV Mux
(Comux UK Ltd)
 Single licence to operate the mux for all Local TV
 Local TV channels equal shareholders in Comux UK
 Charge administrative cost to local TV
 Sell spare capacity at market price (NVS x 3)
 Surplus applied as distributions and allowances to
local TV channels as shareholders/customers
 Net carriage cost to local TV channels = zero
 Revenue contribution to local TV c.£25k (2019)

13. Issues and questions
 How to assure community radio channels have an
ownership stake in their local SSDAB mux?
 What regulatory constraints will apply to setting
carriage fees for channels (fair competition)?
 How to define what is “a non-commercial basis” for
the provision of SSDAB radio multiplex services?
 What prospects to engage a major investor to
support a local ownership model for SSDAB?
 What services could best be organised on a national
basis to assure the viability of SSDAB?

14. Recommendations and takeaways
 Licensing framework must be responsive to the
wealth retention and sustainability benefits of
ownership by local not-for-profit consortia
 Community radio services seeking to be on SSDAB
should be planning, consulting and partnership
building now to develop credible local consortia,
business models and sources of investment
 CMA should explore with major social investors and
DCMS the possibility of establishing a national
funding scheme to support adoption of SSDAB

15. Thank you for tuning in!
Steve Buckley
steve@cmso.co.uk