NEWS ANALYSIS: Internet radio could send its digital rival to an early grave - Digital radio may be killed at birth by mobile phones and the net

The auction of third-generation mobile phone licences by the

Department of Trade and Industry and the Radio Communications Agency has

highlighted a potential side effect of the convergence of telecoms and

the web: digital radio could be smothered at birth by the growth of

internet broadcasting.

While the licences ostensibly enable telecoms carriers to run

interactive services on phones, the potential for mobiles to become

internet radio receivers has not been lost on the industry.

The growth of internet radio has already been significant enough for

Radio Joint Audience Research to acknowledge its presence in its

quarterly survey this May - three years ahead of the date predicted by

analysts.

Lee Roberts, acting sales director at Virgin Radio, comments: ’The

popularity of internet radio is growing all the time because the

capacity to use bandwidth is also constantly expanding. Compression

technology for streaming the voice data is improving and there is more

physical space available.’

Add to that the fact that there are no cost barriers to entry - you

don’t need a studio; a software package can set you up in minutes - and

the advantages over digital seem clear.

The benefits to advertisers are also obvious - consumers can surf the

internet, see the advertisement and hear the radio campaign all at the

same time. All in all, it’s enough to make you wonder whether GWR,

Capital and the others have been wise to spend millions of pounds on

digital radio multiplex licences.

Steve Cray, head of GWR’s Opus Digital arm, insists that the greater

proliferation of stations, better sound quality and the possibility of

masthead advertising mean that digital radio has clear advantages. But

then again, Betamax was a better video format than VHS.

In the battle for ’ear share’, internet radio will come into its own

when wireless access becomes more widespread. But if manufacturers and

content providers are already developing systems allowing consumers to

access digital music from the web via WAP-equipped mobiles, it should be

no great leap to stream radio through the same medium.

The high cost of internet access currently limits the number of

potential listeners. But if Alta Vista’s gauntlet of free access -

thrown down to BT last week - is anything to go by, that restriction

could soon be lifted.

As far as sales opportunities go, internet radio is up and running, with

an audience of early adopters begging to have advertisements aimed at

them.

Digital radio, on the other hand, still has some way to go. With

receivers costing upwards of pounds 500 (the price of a web-ready PC)

and a lengthy wait before the analogue signal is switched off, it’s not

difficult to work out which option most people will take.

This article was first published on Campaign