Narrowcasters triumph in radio licence auction

While most people in Australia have been focused on the political hyper-activity in Canberra over the past week or so, in the wake on an historic election result, most would have been unaware of another contest that was played out in Canberra. The stakes are not nearly as great, but it is a race worthy of note nonetheless.

The Australian Communications and Media Authority held a radio licence auction recently to add some new High-Power Open Narrowcast (HPON) (PDF 1.14MB) licences that were released this year after a public consultation process. These five new licences and the groups who won them at the auction are listed below. (See media release.)

• FM 104.9 Network Pty Ltd - Chinese Radio International (CRI Beijing) allied organisation based in Perth, where they currently use an HPON on 104.9 MHz FM with 50W power on a leased basis.
• Tasradio Pty Ltd - Racing Radio (Tote Sport Radio) operate commercial broadcast stations in Tasmania, as well as more than a dozen LPONs and a couple of HPONs across the state. 7EXX is the callsign for Launceston on 90.1 MHz FM. They also own an 87.6 FM LPON in Launceston.
• Gumnut Nominees Pty Ltd - This company broadcasts under the name of the Melbourne-based groupe “Rete Italia”, a division of Italian Media Australia. Rete Italia own HPONs (all AM-band) in many capital cities, and dozens of Medium Frequency Narrowband Area Service (MF-NAS) licences between 1611 kHz and 1629 kHz in significant markets across Australia.
• Racing and Wagering WA (RWWA) - Racing Radio in WA is NOT a commercial broadcaster, unlike its counterparts such as Tasradio in Tasmania, 2KY in New South Wales and 3UZ in Victoria. RWWA only own and operate on narrowcast licences, including an HPON in Perth (1206 kHz) and several other HPONs and LPONs across the state. They currently own an 88 FM LPON in Kalgoorlie and nothing in Kambalda.

Narrowcasting is, as the name implies, the opposite of broadcasting, a term with which everyone is familiar. Broadcasters can, within a few essential rules, transmit anything they like, and make money out of selling advertising. Narrowcasters have much tighter rules governing a station’s format and style. But within those narrow definitions, a licence holder can transmit a signal freely and still sell commercial advertising on a frequency that is open to any normal consumer-grade radio.

Open narrowcasting is best defined as “niche” broadcasting. A narrowcast format is one which is limited in some way. The most commonly understood narrowcast formats are those that “narrowcast” in a language other than English, usually a single language like Italian or Greek or Chinese or Arabic. Another format is religion (Christian, Muslim etc). Racing Radio is considered narrowcasting, despite some racing radio services being broadcast on commercial radio stations. Some music formats are classed as narrowcasting within strict limits. Dance-trance club music, smooth jazz, and country music are often found being transmitted on narrowcast licences, both low-power (one watt) and high power (5 to 50,000 watts).

In this round of allocations, the genuine narrowcasters won the day, outbidding commercial broadcasters in every race. This is a welcome surprise. Commercial broadcasters with deep pockets were entered in every race and the prices did go high partly as a consequence of their participation.

Commercial radio station owners often fear the appearance of powerful HPON licences in their markets. They will often fight to secure these assets as a defensive measure, and in a sense neutralise the supposed threat to their market dominance. They cannot sit on an HPON licence (i.e. hoard the licence by not activating it): it must be activated within six months of being issued (although some do hoard LPONs, which is contrary to the rules). But in controlling the licence, they determine what format it will be, and they can derive some revenue from that.

However, as country music has developed as a viable commercial narrowcast format, commercial broadcasters are increasingly interested in securing HPONs in order to expand their own narrowcast networks and cash in on the popularity of this niche in the radio landscape.

Perth

The Chinese defeated the Italians, the Lebanese (Arabic - Radio 2Moro 1620) and Radio Perth 6iX and two other applicants in the contest for the Perth HPON. The Chinese will continue to use their 50W HPON until their new one is fully installed. Perhaps losing applicant Firebird Park Pty Ltd, also known previously as "Hype FM", will find an opportunity to lease this 104.9 MHz frequency in Perth when it becomes available. Perth now has five HPONs - more than any other capital city in the country!

The HPON licence offered for Perth has been permitted to operate at 5000 watts maximum power in a directional radiation pattern. With these parameters, the 90.5 MHz FM signal, broadcasting from a nominal site in Gosnells, has the potential to cover the metro area from Rockingham to Joondalup and east to Midland. This is a massively powerful city-wide narrowcast radio licence, arguably the most impressive configuration even offered for an HPON class licence in any Australian capital city to date.

Both of the linguistically-based narrowcasters aspired to get this licence in order to improve their coverage and audience in Perth. The 50W station currently being used by the Chinese group does not offer adequate coverage across Perth. And Rete Italia are probably responding to demographic changes in their Italian support base, attempting to transition from being an AM narrowcaster to an FM narrowcaster, and thereby attract and hold a younger audience who generally don’t listen to AM radio.

The Perth HPON did not break the long standing $400,000 record set in 2002 for an 531 kHz AM HPON in Adelaide (PDF 160KB), which was won by Radio Televisione Italiana (SA) inc. Nevertheless, $320,000 makes the Perth HPON the third most expensive HPON ever sold in Australia. Perhaps the price did not go higher in Perth because there are challenges in finding a viable transmitter site for a new HPON service in the Perth Hills, since the nominal site offered by ACMA is in fact already used and not available.

Commercial Broadcasters Radio Perth Pty Ltd (6iX) also applied for the Perth licence, and one would have thought they had the financial muscle to win the auction. 6iX 1080 kHz is part of the Grant Broadcasters group, which owns a string of HPONs across New South Wales, Victoria, South Australia and the Northern Territory that broadcast music under the “Hot Country” brand. Hot Country is available in Perth as a DAB+ only station - which is what it will remain for the foreseeable future. They'll have to wait for another HPON frequency to be offered in Perth before this format has a chance of getting onto the FM-band.

The most interesting feature of the Perth Race is the absence of Racing and Wagering WA, who actually lobbied ACMA to release 90.5 MHz as an HPON. In RWWA's submission to ACMA, they stated emphatically that they would be a contestant for this licence. Why would they withdraw from this race when they clearly wanted a better FM frequency to replace the AM frequency that affords them barely adequate coverage in the Perth metro area? Perhaps they got wind of 6iX’s intention to enter the race and decided that it was a fight they could no longer hope to win. Perhaps they decided that the AM licence they have in Perth will suffice, and that it was better to focus on the other licences in Kalgoorlie and Kambalda, which they did win.

Griffith

2KY and 2RG are commercial broadcasters that also own LPONs in Griffith, NSW, but it seems they both wanted to upgrade to a much superior HPON. Rete Italia actually lobbied ACMA for the Griffith HPON frequency. According to Wikipedia, “Approximately 60% of today's Griffith population claim Italian background”. It seems Rete Italia have been leasing a narrowband AM licence on 1611 kHz from Promo Radio, but they obviously wanted a better frequency that they could call their own. Well, despite going up against two formidable commercial radio owners and the Chinese, the Italian's have succeeded, although at a much higher price than expected. Rete Italia will soon cease using the 1611 AM narrowband licence in Griffith, which may then be available for one of the losing contestants to apply to use on a leased basis.

The Seventh-day Adventist church also applied for this licence. The Adventists have control over what amounts to the second largest Christian narrowcast network in Australia, well behind Queensland-based United Christian Broadcasters Australia Ltd, who own more open narrowcast licences than anybody (and were noticeably absent from the round of HPON auctions). But the loosely defined Adventist radio network is comprised almost entirely of LPONs, some owned by the church, many owned privately by individual members, and almost all using 3ABN Radio as a program source via satellite. The church aspired to get this HPON in an attempt to move beyond the obvious limits of low-power FM licenced stations, but despite lodging the first bid on the day, they were unable to go the distance - this time!

2RG are part of the Southern Cross Media group. Had they won the auction, they might have opted for a country music format for narrowcasting. But it would seem to me that their entry in this race was motivated more by a desire to protect their market from all would-be competitors. 2KY and 2RG will have to remain content to use their LPONs in Griffith, unless they want to apply to ACMA for another HPON in town.

Launceston

In Launceston, it was basically a contest between existing commercial leviathans. Tasradio previously owned this AM frequency as a commercial licence before converting to their current FM frequency. Now they have acquired the 1008 AM frequency as an HPON, allowing Tasradio to turn their FM station into something more mainstream. This is a clear threat to the other commercial broadcasters in Launceston.

LA FM 89.3 - part of the Grant Broadcasters group - were in the race, probably defending their turf against Tasradio’s bigger plans. Another contestant, Hobart-based Great Southern Land Broadcasters (Southern Cross Media), would probably have liked a slice of the Launceston market for themselves, potentially running a country music format. It will be interesting to see what format Tasradio adopt for their commercial FM frequency once the AM HPON is on the air. And they may venture to sell their 87.6 FM LPON, which has been used for racing radio narrowcasting for about four years.

The Chinese targeted the most potent licences on offer in this round of HPON allocations, and having won the auction for the HPON in their home city of Perth WA, I suspect that they either didn't have the funds or no longer felt the imperative to try and win the auction in Launceston. Perth represents a handsome home-base victory for them.

$260,000 is a lot of money to pay for a licence in Launceston - the fifth highest price in the history of HPON auctions and just $20,000 behind the price for an HPON in Hobart about a decade earlier.

Kalgoorlie and Kambalda

Since Racing and Wagering WA did not contest the HPON in Perth, they were in a much stronger financial position to secure the HPONs in these two regional towns. RWWA do not own a commercial broadcast licence. Nevertheless, they are still a significant broadcaster in their own right in Western Australia. $30,000 is a solid but not exorbitant price for the Kalgoorlie HPON.

RWWA may have not applied for the Perth HPON in order to save their money to secure a victory in Kalgoorlie, so that they can upgrade from their solitary LPON 88 FM, which would not afford them adequate coverage in that city. This LPON may be available to someone else in the future now that RWWA have won the 100W HPON in this famous mining town.

In Kalgoorlie and Kambalda, Radio West (Southern Cross Media group) were also apparently defending their turf, although perhaps they entered the HPON race in these towns fearing that somebody other than RWWA might emerge and threaten their own commercial radio interests, especially in Kalgoorlie, if they were to win the auction.

The Italians would have loved an FM licence in Kalgoorlie, but they may have exhausted their resources in securing the Griffith NSW HPON, and in an auction, it all comes down to who’s got enough money in their pocket. They may content themselves with using the decent AM narrowband frequency they already own in Kalgoorlie.

I understand that Radio West did not contest the Kambalda HPON on the day of the auction, which RWWA was then able to pick up at the reserve price. Maybe they figured that the licence wasn't worth fighting for once RWWA had beaten all contenders for the Kalgoorlie HPON.

A closing word about LPONS

While Kambalda is a modest-sized mining town in regional Western Australia, the important factor here is that low-power Open Narrowcast FM licences (LPONs) are not permitted in town, due to an exclusion zone around the existing Channel 3 TV station, whose analogue transmissions occupy the lower part of the FM band. So this HPON is the only Open narrowcast licence available in that town until the exclusion zones are lifted.

This is most likely to occur around 2014, once the TV stations have completed their switchover from analogue to digital broadcasting - an ingredient in what various analysts have called the “digital dividend”. There is a similar exclusion zone around Channel 3 TV in Bunbury WA, which extends for a 150km radius, almost reaching the Swan river in Perth. It comes as no surprise therefore that ACMA is releasing more new HPONs for the Bunbury region, where new LPONs are not permitted.

However, LPON operators like myself would hasten the day when these exclusion zones are lifted and LPON frequencies become available in these areas: Bunbury, Newcastle - Central Coast, Wollongong, Narooma, Renmark, Townsville. And we are also hoping the LPON system continues beyond the current expiry date of December 31, 2013. ACMA will hold a review into the LPON system next year to decide whether or not to continue with it. So for the moment, HPONs, which have permanent tenure, are a better and safer investment than LPONs. ACMA needs to release more HPONs in towns across the country.