November 29, 2015

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First Mediaworks

Increased Mobility (07/21/08)

Few devices have had the transformational effect on society as cellphones. It wasn’t long ago that people questioned why they needed to carry around a phone when they had phones at home and at work, but these days you’d be hard pressed to find someone who isn’t carting around a cell. In fairly short order, they’ve evolved from heavy, brick-shaped analog behemoths to sleek, light devices that have added Internet, e-mail, and streaming audio and video capability to the core calling function. And if a group of broadcasters led by Emmis Chairman/CEO Jeff Smulyan has its way, more receivers will soon be featuring FM radio tuners.

Smulyan is the point man for an industry effort to convince cell carriers and manufacturers to expand the availability of FM-capable cellphones to U.S. users, and he’s guiding a multi-faceted effort to make it happen. In addition to planning a marketing campaign to stimulate consumer interest, Smulyan tells Radio Ink in this exclusive interview that he and other industry leaders are optimistic they can simply and economically address a congressional mandate requiring cell carriers to institute an emergency alert system.

The WARN Act of 2006 directed cell carriers to create some form of alert system for times of emergency. While a text-based solution is under development, Smulyan says radio’s current EAS system could address the mandate. All that’s required is inclusion of FM tuners in the phones.

Smulyan says discussions are ongoing with cell carriers about that plan, and based on mixed input from carriers and manufacturers about FM-capable cellphones, that may be the best angle to pursue. While AT&T Wireless says only that it’s interested in “a broad range of choices for our customers,” a Sprint spokesman says that from a consumer standpoint, demand for FM capability isn’t there. “Sprint Music and other satellite-like services support our and other carrier business models of delivering content,” says Sprint Senior Vice President Of Corporate Communications Bill White. “There is not huge demand for this feature.” However, he acknowledges that technical challenges could be overcome. “Presents technical issues with an additional antenna requirement in phones that already are dealing with quite a few radios — CDMA frequencies, Bluetooth, etc. — can be done, but demand for the feature didn’t seem to outweigh development efforts/costs.”

Smulyan is banking, however, that development costs associated with the emergency text service — combined with the argument against relying on cellphones in times of emergency — will sway that sentiment. “Our system is much cheaper,” he says. “Their system will require major upgrades. As I understand it, the entire cellular system in the country is on a one-to-one basis, and to do alerting, you have to do one-to-many. We’re having a study done by the NAB, but it will be in the hundreds of millions of dollars to do it their way. If they put in the chips, we’ll do the rest. It’s turn key.”

Only time will tell how it all plays out, but one thing is certain: Smulyan is focused on expanding radio’s reach and value, and he has a unified group of fellow radio leaders on his side. In this wide-ranging Q&A, he discusses why he believes radio can and must succeed in this effort to expand its availability in the devices that so many consumers own, and lead the industry into a transformation of its own.

RADIOINK: Talk about your efforts to get cell carriers to offer FM-capable handsets in the U.S. What is being done?
A number of us have been meeting with both the NAB and RAB to try to revitalize the industry, and one of the areas we must impact is portable appliances. Twenty years ago when you walked into a Radio Shack or Best Buy people were buying Walkmans. Today it’s cellphones and PDAs. Thirty-five percent or more of the phones manufactured outside of the United States have radio tuners. With that large of a number — you’re talking about millions and millions of phones — there has been demand. It just makes a lot of sense. Having FM tuners in cellphones would also comply with the 2006 WARN Act, which stipulates that the cellular industry must provide an emergency-alert system.

RI: Who is working with you?
Senior executives of the major companies in the radio industry, as well as the NAB and RAB. While I have been the point person, others have been very involved. Dan Mason helps on one thing, Mark Mays helps on another, David Field and Peter Smyth on others. David, Dan, and Peter have really been my subcommittee on this, but everybody is pitching in to help with certain areas, such as relations with wireless companies. And everybody has lent their technical people to it. David Rehr has also lent his technical people, and the NAB last month released a study on opportunities for FM-capable cellphones.

RI: Why don’t U.S. carriers offer these radio-capable cellphones here?
The nature of the U.S. system is more carrier-centric than manufacturer-centric. Here, you buy a phone through your wireless carrier. In the rest of the world, you buy a phone first and then hook up to a wireless carrier. The way it has evolved in the U.S., cell carriers had a little more control over the phones. We have not done a good job of saying to our customers, “How happy would you be if radios were in your phones?” We will do a better job of mobilizing that.

RI: How can radio accomplish this?
It will require a promotional campaign to make the point that the phones are available. We have learned with the Radio 2020 initiative that people don’t think about it. Radio is everywhere, and people don’t think about how they get it or how much they use it. By driving the point home, we will dramatically improve consumer awareness and demand. We’re doing the same with HD Radio. If people don’t understand something, it’s hard to get them jumping up and down. Sometimes you have to prime the pump.

RI: What kind of marketing campaign are you planning?
We’ve got one idea that ties in to the WARN Act about our ability to keep people informed in times of emergency. We’ve had great discussions with people in government — in Congress and at the FCC — about our ability to do that. The most important thing is just to say, “Now in partnership with Verizon and AT&T, all new cellphones will have radios,” and create campaigns around that idea. We have to do is drive that point home in a lot of different ways.

RI: How receptive have cell carriers been to this idea?
Progress has been made. Whenever you put something on their real estate there will be questions, but there are compelling answers and a good business case, as well as a big public service angle in doing emergency alerts. We’re in the early stages of the discussions, but I’m very encouraged.

RI: You mention the popularity of FM-capable phones around the world. Will U.S. consumers feel the same way?
I think they will. It’s our job to heighten their awareness and get them interested. In much of the rest of the world, the cellphone becomes the one-stop appliance. The ability of that device to do many things is very helpful.

RI: How will you energize consumers about FM tuners when there’s so much buzz about phones that have Internet, text, and e-mail capabilities?
Radio is still the way that people discover most of their music. Having the ability to get information, local data, as well as music is a tremendous benefit. That’s what we have seen elsewhere in the world.

RI: How important is this for radio’s future?
I have said for years that we have a cache problem, and this is one thing that will make radio hip again. It’s in the phones, it’s where people are, it catches them in other places where they live — wherever they are with their phones.

RI: What about the notion of getting tuners in MP3 players and even satellite radio receivers?
Those are issues we are working on. MP3 players are important, but I’m not sure satellite is. Our goal is to get radio tuners everywhere; wherever people are listening, wherever people are, we would love to have radio receivers.

RI: Are you talking specifically with Apple, since they wield so much control over the U.S. MP3 market?
We have had some industry people talk to them, and we want to make the case that there is sufficient demand. Radio 2020 data shows that one of the biggest-selling outboard iPod items is the clip-in tuner. We would prefer to have it be part of the iPod. The Zune people will tell you that one of their biggest sales attractions is built-in FM tuners.

RI: Is there an opportunity to integrate HD Radio chips into these devices?
There is, but we want to start with the analog chips because they are very inexpensive. We think we can put these in cellphones for less than 50 cents. Because we haven’t solved all of the power consumption issues and all of the cost issues with HD chips, that will be a little while. Clearly, they’ll migrate to HD chips down the road.

RI: Are you meeting with resistance from phone manufacturers that have deals with satellite radio carriers to install satellite receivers? Samsung recently announced a model that is satellite radio-ready.
All of those discussions are taking place. Our major challenge is working with cellphones and PDAs right now.

RI: Are you concerned that the manufacturer will choose satellite over broadcast?
I don’t think so. I think we have a better chance. There is a much easier technological hurdle with over-the-air broadcast versus satellite.

RI: Earlier you mentioned the public safety angle with the WARN Act…
The WARN Act requires the cellular industry to have an emergency alert system. The cellular industry conducted a study and has said that it can build a texting system. But why re-create the wheel? Radio’s emergency alert system has served the American public pretty darn well for 60 years. Putting radio tuners in cellphones could solve their problem. There are other inherent benefits: Our system is up and running, and it’s a much more elegant solution than a text message, which can be no more than 90 characters. They’ve got to create a whole new set of software to produce a text message that — if you read it — says “check with your local broadcaster.” In a true emergency, you’d really like to eliminate that step.

There is another issue: In a real disaster, the cell towers either go out or get jammed. I was in San Francisco for the earthquake in 1989 and in New York City on 9/11, and I was involved with our television station in New Orleans during Katrina. In each of those disasters, it was almost impossible to get a call in or out because the cell towers went down almost instantly. We all have back-up generators in case the electricity goes down. During an emergency if only one broadcaster survives, you can alert the entire community. From that standpoint we think this is a much better way to alert the public.

RI: What are cell carries saying about this proposal?
Some of our conversations with cell carriers have been pretty darn encouraging, but it’s early — and nobody wants to be told to do something somebody else’s way when they have come up with their own solution. Public policymakers think it’s a home run.

RI: How far along are cell carriers with development of the texting service?
It’s in the very early stages. They have to send it to FEMA, and several regulators have said that if it goes to FEMA, it will be a decade before it comes back out. We believe this is a much more efficient solution.

RI: Which is more cost efficient — launching the texting service, or integrating and expanding the availability of FM-capable handsets?
Our system is much cheaper. Their system will require major upgrades. As I understand it, the entire cellular system in the country is on a one-to-one basis, and to do alerting, you have to do one-to-many. We’re having a study done by the NAB, but it will be in the hundreds of millions of dollars to do it their way.
If they put in the chips, we’ll do the rest. It’s turn key.

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