What's the future of DAB radio in the UK?

Important people are now talking in back rooms about the future of DAB digital radio in the UK, and I'd love to know how the discussions are going. We're at a critical juncture, because it doesn't look as though DAB will meet the criteria for a switchover from FM in 2015, if ever. In fact, the wheels appear to be coming off the DAB bandwagon. Some radio stations refused to carry the Digital Radio UK advertising campaign that was meant to be the big push this Christmas, with The Guardian reporting that "it is not currently being carried by Heart, Capital and Classic FM parent Global Radio, Kiss and Magic owner Bauer Media, Smooth Radio parent GMG Radio or UKRD, which together make up the vast majority of commercial radio stations." The story says:

William Rogers, the UKRD chief executive, said it was "fundamentally immoral and dishonest" to run the campaign "knowing the DAB infrastructure is not good enough and knowing full well that when people buy a DAB radio it may not work when they get it home".

The problem is that a vast amount of money has been spent on DAB since the BBC started broadcasting digital radio in 1995, but to very little effect. Closing DAB down, or moving to DAB+, would involve a considerable loss of face, and it would make roughly 10m DAB radios in the UK obsolete. However, it would be even more expensive to step up investment to complete the DAB rollout, and the threat to an estimated 150m or so FM radios could lead to a consumer backlash.

Can the radio industry find a way out? What do you think is likely to happen?

The problems that must be solved in the UK are as follows:

First, the number of FM radios is still growing rapidly in the UK because they are included in many mobile phones, MP3 players, microsystem hi-fi's, cars, and almost all DAB radios. The number of DAB radios is therefore shrinking as a proportion of the total installed base. Also, the existing installed base includes many DAB radios that cannot be upgraded to DAB+ or the WorldDMB receiver standard suggested in the Digital Britain report.

Second, DAB's network coverage does not match FM's, and it will be expensive (£100m to £200m, or whatever) to build it out. Nobody wants to pay for this -- not commercial radio, not the BBC, and definitely not UK government. FM will not be turned off so there is no prospect of funding the build-out by selling off the FM spectrum.

Third, the world has changed in the 15-20 years since DAB was designed. We are clearly entering a world of multi-format radio with Internet, cable and satellite delivery of thousands of stations, many of them offering more choice of content and better sound quality than DAB. This includes "stations" such as Last.fm and Spotify.

Fourth, DAB is having a terrible financial impact on the British radio industry, because it is increasing the cost of broadcasting (most stations have to pay for both FM and DAB) without delivering a significant new audience or significant new revenues.

Fifth and last, no British government will have the guts to turn off FM in the sense of moving BBC Radios 1, 2 and 4 to DAB only, even if DAB radio listening reaches 50%. There was an outcry against removing cricket from Long Wave, and an outcry against removing 6Music from DAB. Both of these had very few listeners. The attempt to turn off major FM stations with millions of listeners would most likely lead to a far bigger revolt. The reply that you can just buy a new DAB kitchen radio, a new DAB radio alarm clock, and a new DAB car radio is not going to be met with politeness.