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GENEVA — People in the radio industry have not always paid enough attention to spectrum availability, frequently taking it for granted. This is a risky assumption. Spectrum is not only the founding piece of the medium and the underlying element of its infrastructure but also a strategic asset for the industry’s future.
In strategic terms, spectrum should be managed considering both its current use and its long-term potential. You can apply a strategic framework such as McKinsey’s Three Horizons of Growth to do this. This model forces you to focus on three critical aspects: defending and developing your current brand; investing in upcoming businesses; and generating new ideas and opportunities for the longer term.
From current to future business
In the Three Horizons of Growth, Horizon 1 refers to the organization’s current core businesses. This includes the products and brands paying your staff salaries and keeping your business afloat. Most radio stations’ current business and revenue are in FM and/or AM and DAB/DAB+, depending on where they operate.
Horizon 2 relates to the organization’s emerging businesses or products. These are still in their early stages and require additional investments or research. However, they generate plenty of interest among investors, stakeholders and customers. Nowadays, this is the case with podcasts, but portfolio diversification and niche programming are also available, thanks to DAB/DAB+/HD Radio and online services.
The most advanced radio players are also exploring the potential of complementary revenue streams such as subscriptions, events linked to radio and audio content, branded content and IP exploitation by other media such as TV and cinema.
Spectrum is not only the founding piece of the medium and the underlying element of its infrastructure but also a strategic asset for the industry’s future.
Finally, Horizon 3 focuses on the organization’s seedling investments and ideas for future businesses. These could be research projects, early discussions with innovators, alliances to develop technologies or services still being prototyped. Horizon 3 is vague by definition and, as such, difficult to grasp from today’s perspective.
For radio, it could include online developments around artificial intelligence and augmented reality. More tangibly, radio distribution via 5G Broadcast emerges as a potential distribution tool on this horizon.
A well-balanced organization must invest time, energy and resources in exploring all three of these horizons simultaneously. Without the continuous innovation that this generates, growth eventually stagnates, and organizations decline.
Make decisions now to thrive later
As a key strategic asset, I advise radio leaders to consider the role of the spectrum in these three horizons.
In Horizon 1, spectrum must be managed to obtain and renew radio licenses and, more practically, manage the transmission sites directly or through a broadcast network operator. This is everyday business for many of you.
In parallel, managers need to invest time and resources in emerging businesses in Horizon 2.
Despite the focus in this medium-term horizon clearly shifting towards online development, the current and planned level of investments in DAB+ across Europe, Asia-Pacific and Africa suggests an expanded offer of linear radio broadcasting in this horizon that requires proper management.
Horizon 3 is often the forgotten one. It requires long-term thinking and posing questions such as: What could the market look like in 10 or 15 years? What skills and resources will we need to ensure that we thrive in any scenario?
When formulating these questions regarding the spectrum, a red flag should be raised: Radio risks losing the spectrum that it uses today. The global demand for spectrum is soaring, and its allocation to specific services is discussed every four years at the World Radiocommunication Conference.
In 2007, DAB lost band L to mobile broadband. Since then, those seeking more spectrum have not targeted radio frequencies. This is partly due to the small percentage of the spectrum radio uses, plus it would imply shutting down services globally that provide a widespread people-facing service. This political nightmare provides certain reassurance to radio.
However, the threat to radio could arrive indirectly, notably if digital terrestrial television (DTT) is expelled from its current position in the lower UHF band. This is a plausible scenario for the 2030s. Such a decision would make the maintenance of the infrastructure currently used to broadcast DTT untenable for any other users of such infrastructure. Among others, this is the case of terrestrial radio. A growing number of radio stations do not own their infrastructure but share it with DTT, effectively cross-subsidizing its costs by bearing most of them.
In parallel, such a scenario would jeopardize the rollout of 5G Broadcast services, which are expected to use the spectrum currently assigned to DTT at some point in the 2030s. This technology can deliver TV and radio linear services to mobile devices free of charge for consumers. Consequently, losing the lower UHF band may block this potential avenue of development that radio has sought for quite some time.
The author is a co-founder and research director at South 180.
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