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Insurance Telematics Europe 2014

06/05/2014 - 07/05/2014, Novotel London West, UK

Telematics, Insurers and the Consumer Collide: Harness ‘Big Data’ to Create Product Differentiation, Engage & Empower the End-User

Will digitization save American AM radio?

In six years, American AM radio will turn 100. But at the rate it’s losing ground to online, digital infotainment, there may be little to celebrate when the time comes. Could AM’s salvation be digital? Brendan McNally reports.

A last-ditch fight for the survival of AM radio is taking shape in the United States. It centers on a number of proposed Federal Communications Commission (FCC) rule changes that, among other things, would result in making AM broadcasting accessible via smartphone and other infotainment devices, including connected automobiles.

Among the rule changes generating the most buzz is one that would provide a one-time filing window whereby AM broadcasters could acquire empty FM translators (repeaters) in their service areas. Another important rule change calls for continuing testing of digital AM broadcasting, something which people in the business believe points to a real future for AM.

The rise and fall of AM

American broadcast radio is now nearly a hundred years old, and, during the first half of its existence, AM was its uncontested ruler. Even though FM had been around since the late 1930s, until the 1970s, it was marginal, and almost no one listened to it. To reach large listening audiences, you simply had to be on AM. Nearly any small or middle-sized town boasted at least one AM station, which everyone relied on for music, news and entertainment.

That started to change in the early 1970s, when rock music stations began popping up on FM. These stations immediately became popular. Stations with other niche formats soon followed: country, jazz, urban, religious. Because FM operated on a wider bandwidth, it provided better sound quality than AM. Component stereo systems featuring AM/FM receivers also gave FM a push, and so did the fact that people started ditching their AM-only, factory-installed car radios in favor of aftermarket AM/FM stereo cassette players.

By 1978, AM lost half its listenership to FM. And, today, AM radio claims only 15% of all radio listeners in North America. Surveys indicate that the average AM listener is 57 years old, conservative and lives outside urban areas.

To make matters worse, the clarity of the AM radio signal in its current analog state has suffered marked degradation in recent years from interference coming from everything including steel high-rise buildings, smartphones, laptops, even light bulbs. Now, even FM is under pressure as listeners flee to satellite and Internet-based providers like Pandora and Spotify.

Down but not out

Still, according to Bayard “Bud” Walters, president of The Cromwell Group, which owns 23 radio stations (six of them AM) in the South and Midwest, the future of broadcast radio is not altogether bleak. “AM radio is especially important for emergency information,” he says. “In the last couple years, we’ve had Hurricane Sandy and Katrina and that tornado in Joplin, Missouri. There was an ice storm in central Tennessee where you had people without power or cable for a week. Where did they turn to for emergency information? The answer is AM radio.”

But to maintain a larger relevance, AM needs to grow up. “Sprint is putting in an FM receiver called NextRadio inside its smartphones,” Walters says. “When you hit the app, wherever you are, it brings up the local radio stations that you can listen to over the air on your phone. It’s got promise for the radio industry as a whole. It receives radio stations even if the Internet is down. The problem is there’s no AM in the deal.”

Pai to the rescue

Enter Ajit Pai, the lone Republican commissioner on the FCC and AM radio’s champion. The child of Indian immigrants and a Harvard-trained lawyer whose career has been spent practicing communications law, Pai often talks about the strong impression AM radio made on him while he was growing up in rural Iowa. He calls AM “the audible core of our national culture” and says its survival is especially vital for rural areas.

“If you care about localism, you should care about AM radio,” he told attendees at the 2013 Radio Show, a September event jointly produced by the National Association of Broadcasters (NAB) and Radio Advertising Bureau (RAB), in Orlando, Florida.

In a speech at the Orlando show, Pai presented his two-stage “AM Radio Revitalization Initiative,” which he calls the first comprehensive review of AM radio operating rules in two decades. The first stage involves loosening rules governing nighttime AM broadcasting and continuing testing of digital AM technologies, which AM stations would eventually switchover to.

Currently, AM stations are required to reduce their signals at night to avoid interfering with other broadcasting. Under the new rules, they would be allowed to maintain signal strength at the same levels.

But, more importantly, Pai’s plan would make empty FM translators available to AM stations and open a one-time filing window to allow AM operators to acquire them. Translators are low-powered, auxiliary FM transmitters that would carry the exact same audio signal being transmitted from the AM station. Walters says that by using the FM translators, the AM stations would start appearing on FM-only apps like NextRadio.

This, at least theoretically, would put broadcast radio on a par with web-based music services like Pandora and Spotify.  This way, drivers traveling long distances on interstates could select local AM stations even though their smartphone NextRadio app lists them as FM. With these changes in place, Pai hopes AM broadcasters could continue holding on and reconfigure their offering so that listeners would stay with them until the time comes to switch over to digital along with the FM stations. 

Although people in the broadcasting industry generally agree that switching to digital is inevitable, the fact is the FCC still has no actual plans for it. One reason is that it has already adopted HD Radio as its digital format. The problem with HD Radio is that it is a proprietary format belonging to the iBiquity Digital Corporation, and any station wanting to use it will be required to pay iBiquity licensing fees.

Pai has not publicly taken a position on the FCC’s decision to select HD Radio for the American digital format, which took place years before he joined the commission. Currently, Australia is the only place where AM radio is being broadcast digitally and, according to articles in the local trade press, it’s getting high marks.

(For more on digital broadcasting see, SiriusXM: Ready for prime time?,Telematics and the rise of in-car Internet radio, part I and Telematics and the rise of in-car Internet radio, part II.)

Brendan McNally is a regular contributor to Telematics Update.

For all the latest telematics trends, check out Telematics for Fleet Management Europe 2014 on March 12-13 in Amsterdam, The Netherlands, Content and Apps for Automotive Europe 2014 on April 8-9 in Munich, Germany, Telematics Detroit 2014 on June 4-5 in Novi, Michigan, and V2X and Auto Safety USA 2014 on July 8-9 in Novi, Michigan.

For exclusive telematics business analysis and insight, check out TU’s reports: Telematics Connectivity Strategies Report 2013The Automotive HMI Report 2013Insurance Telematics Report 2013 and Fleet & Asset Management Report 2012

 

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Insurance Telematics Europe 2014

06/05/2014 - 07/05/2014, Novotel London West, UK

Telematics, Insurers and the Consumer Collide: Harness ‘Big Data’ to Create Product Differentiation, Engage & Empower the End-User