Opposition grows to FM chip mandate for mobiles

Six tech trade groups call on Congress to reject the proposal from broadcasters

A proposal by the National Association of Broadcasters (NAB) to require all mobile devices sold in the U.S. to include FM radio chips is meeting growing opposition from IT and mobile trade groups.

Six trade groups, including the Consumer Electronics Association (CEA) and mobile organization CTIA, sent a letter to congressional representatives Monday, asking them to reject the proposal, part of long-term negotiations between the NAB and representatives of the U.S. music industry on payments to performers for songs played over the radio.

The NAB proposal, made public Aug. 6, could harm the tech and mobile industries, even though they have stayed largely on the sidelines in the debate over so-called performance royalties, the letter said.

"It is simply wrong for two entrenched industries to resolve their differences by agreeing to burden a third industry -- which has no relationship to or other interest in the performance royalty dispute -- with a costly, ill-considered, and unnecessary new mandate," said the letter, sent to leaders of the U.S. House and Senate judiciary committees. "The proposed imposition of an FM chip mandate is not necessary for resolution of the dispute between performance artists and broadcasters."

Adding an FM chip to mobile devices would raise production costs and give consumers functionality they haven't demanded, said the letter, also signed by executives at TechAmerica, the Telecommunications Industry Association, the Information Technology Industry Council, and the Rural Cellular Association. Mobile devices that contain FM chips aren't top sellers in the U.S., the letter said.

The likely outcome is that "consumers would pay more for functionality they may not desire or ever use," the letter added.

CEA and CTIA have pledged to fight the NAB FM chip proposal. Monday's letter includes new trade groups opposed to the NAB plan.

The NAB and representatives of the music industry have been sparring for years about performance royalty payments, with the NAB suggesting payments aren't justified because radio play represents free advertising for performers. But negotiations kicked into high gear after the judiciary committees in both the House and Senate approved performance rights bills last year, even though the full Congress didn't pass the legislation.

The NAB and the MusicFirst Coalition, representing the Recording Industry Association of America and other groups, have been negotiating since then, and NAB released the proposed compromise this month. In exchange of about US $100 million in payments a year to the music industry, the NAB wants an FM chip mandate.

The NAB won't accept a performance rights compromise without the FM chip mandate, officials there said.

There would be several benefits to requiring FM chips in mobile devices, NAB officials said. The public could get timely emergency updates not available on most other music services available on mobile phones, and they receive a free, new music service, an NAB official said. Radio stations could grow their ratings, and mobile carriers could share in the profits from song tagging services, the NAB said.

In addition, an FM chip in mobile phones would free up network capacity for the mobile providers, since many users might opt for radio rather than Web-based music services such as Pandora, the NAB said. The cost of an FM chip when mass produced, would likely be "pennies" per mobile device, the trade group said.

"Countries around the globe have added radio-enabled cell phones that are increasingly popular with consumers," Dennis Wharton, executive vice president for communications at NAB, said in an e-mail. "Day in and day out, local radio stations serve as a reliable lifeline in times of crisis and weather emergencies. In an increasingly mobile society, it would be unfortunate if telco gatekeepers blocked access to public safety information offered by free and local radio."

The NAB's proposal isn't about public safety, the trade groups' letter said. Instead, it's about "propping up a business which consumers are abandoning as they avail themselves of new, more consumer-friendly options," the letter said.

NAB officials note that the nationwide radio audience increased over the past year, according to Arbitron.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantusG. Grant's e-mail address is grant_gross@idg.com.

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