A revolution in radio, in which AM and FM radio are switched off in favour of digital, could begin in the next five years.

Ed Richards, the head of Ofcom, hinted yesterday for the first time at the possibility of making Britain’s 150 million analog radio sets obsolete within a decade. He said that it was time to consider end dates for the existing AM and FM licences, without which listeners would be “condemmed to a hotchpotch of analog and digital for decades to come”.

Until now, Ofcom has been cautious about hinting at analog switch-off, because digital take-up has been slow. Only 5 million sets, which cost from £50, have been sold. In addition, national digital services can be introduced without shutting FM stations. The challenge for Ofcom would be to find a way of protecting existing FM stations, because FM listening remains popular. By contrast, AM stations, such as Virgin Radio and TalkSport, are suffering from a collapse in audience because of the poor sound quality, and they have already begun to move to digital.

However, there is no longer any capacity for new FM stations – Ofcom licensed the last one, in South Wales, to XFM earlier this year – and FM is able to deliver a service only to a small local area. Where national FM services exist, they are delivered by many local transmitters, and the existing services are dominated by the BBC – which accounts for 56 per cent of all radio listening.

What has changed the regulators’ mind is the cost of dual transmission. GCap, which owns Classic FM and Capital Radio, spends about £8 million on duplicate transmission, money it believes could be freed to invest in programming. Mr Richards said the cost of dual transmission was “a very real burden”.

The remaining problem is the unwillingness of some car manufacturers to install digital radios, in the belief that the British standard is not sufficiently popular globally – although the DAB standard is being adopted gradually in France and Germany.

No firm timetable was given for the change, but Ofcom noted that it had plans to examine AM in 2009 and FM in 2012. Mr Richards said that that “may be too long to wait”, giving rise to hopes that a review and a new policy could be agreed in two years, although it would ultimately need the approval of ministers to go forward.

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