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Business Models for SSDAB

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Steve Buckley
Steve Buckley

This document discusses business models for small scale digital audio broadcasting (SSDAB). It outlines the capital and operating costs associated with different SSDAB scenarios. It also discusses potential sources of start-up financing, revenue models through charging channels, and ownership models. Lessons are drawn from the Local TV multiplex, including having local TV channels as equal shareholders. Key issues addressed are how to assure community radio channels have ownership in the SSDAB multiplex and defining "non-commercial basis" for multiplex services.

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Business Models for Small Scale DAB Steve Buckley Managing Director, Community Media Solutions
Business models for SSDAB ? Costs – CapEx and OpEx ? Access to finance ? Revenue models ? Ownership models ? Lessons from Local TV ? Issues and takeaways
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
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
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
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
Start-up finance ? Grant funding ? Repayable loans ? Share issue ? Hire purchase / transmission as a service ? Mixed model / blended finance
Social investment market Wholesale Equity Loans Grants Public Intermediate Private Private investors Private foundations Banks
Revenue models ? Charges to channels / content providers ? Administrative cost ? Fixed fee ? Market price ? Hybrid pricing ? Charges for additional services
Cost per channel – SSDAB trials Ofcom (2016) Small Scale DAB trials, Annex 5
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
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)
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?
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
Thank you for tuning in! Steve Buckley steve@cmso.co.uk

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Business Models for SSDAB

  • 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