In a years-long battle that just won’t go away, two of America’s largest trade groups, the National Association of Broadcasters (NAB) and CTIA-The Wireless Association, continue to argue over whether cellphones should have chips to enable built-in FM radios.

At stake are potentially huge revenue streams. For NAB members, the dream is of an increased radio audience and the money that represents in increased advertising dollars. Emmis Communications CEO Jeff Smulyan, in his company’s 1Q12 earnings call on July 12, estimated that FM chips in every U.S. cellphone “could add 10-percent to 15-percent more” listeners to FM radio. Emmis has stations in New York City, Los Angeles and several other major cities.

In contrast, for the wireless industry, the alternative is music and other information (and even radio programming) delivered as an app via wireless data services – and thus a source of revenue both to the wireless carriers and those that provide the backhaul for wireless data networks — including telcos and cablecos. Indeed, the NAB, in a one-page white paper, points out that a built-in FM radio “does not use data that eats into a pay-by-the-bit cellphone plan."

What Do Consumers Really Want?

If you listen to CTIA, which represents wireless carriers and their suppliers, Americans are happy to use their cellphones as cameras, as MP players, as GPS units and even as mini-computer substitutes. But Americans don’t want to turn them into FM radios, according to studies cited by Chris Guttman-McCabe, CTIA’s vice president/Regulatory Affairs.

Guttman-McCabe details a survey in which, he says, “out of 33 possible features (in cellphones), FM radio came in 31st in the United States.” In contrast, he notes, “in Brazil, it came in second.”

The NAB, which represents the nation’s radio and television stations, begs to differ. It thinks such results are the product of misinformation or the lack of information.

“Recent research indicates that a significant percentage of consumers view radio as an attractive feature and would choose to purchase a radio-enabled device if they were more aware of this option,” the NAB insisted in a recent letter to the Federal Communications Commission penned by NAB Executive Vice President/General Counsel Jane Mago.

There Oughta Be A Law

One emerging issue are charges by CTIA that the NAB is promoting legislation that would force FM radios in all cellphones. The NAB steadfastly insists that’s not the case. “They continue to suggest they don’t want a mandate,” says Guttman-McCabe, “yet we’ve been in front of the FCC, we’ve been in front of Congress, they’ve proposed legislation in many states.”

Rather, Guttman-McCabe argues, it should be up to the marketplace: “If consumers want something, it’s there.”

Recently, the NAB cried foul, saying CTIA’s claims that “it’s there” are overblown. In testimony by CTIA in June during a hearing on the future of audio before the House Subcommittee on Communications and Technology, CTIA listed 59 cellphones available in the United States that can receive FM radio, including 26 listed from Best Buy. But “12 of the 26 mobile devices in the Best Buy guide you referenced are not equipped to receive free, over-the-air radio,” Mago wrote last week (July 13) in a letter to Guttman-McCabe.

Stuart Zipper

The Daily

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