Greg Dyke: BBC has spent �30m on digital radio

Patrick Taylor, the new chief executive of one of the biggest radio companies, GWR, says his shareholders are cool about that: they understand, he says, that it's a strategic investment for the future.

But his investors might change their minds, especially if the current advertising slump shows no signs of ending.

What to do about digital radio remains an almost intractable problem for both the BBC and its commercial counterparts. No one is buying sets - the cheapest currently cost �300 - even when they can find them in the shops.

Illusion

At the Radio Festival the new Culture Secretary, Tessa Jowell, held out the prospect of a �99 digital portable in the shops by Christmas.

But that turned out to be an illusion. The national commercial multiplex operator, Digital One, says the best we can hope for is a �150 digital kitchen radio by Christmas, with that �99 portable possibly in the shops next year.

Tessa Jowell's decision on BBC digital services is imminent

But even when radios that cheap are available there's still no guarantee that people will buy them - and no-one in the industry, BBC or commercial, yet seems to have identified the killer programme service or application which will make digital radios a must-have.

My own theory is that take-up of digital will be driven by something unlikely and unexpected - perhaps like the availability nationwide of the BBC's Asian Network.

Hundreds of thousands of Asians, including many in London, live outside the transmission areas of the BBC local radio stations which currently broadcast the Asian network's programmes; many of these people are affluent enough to buy digital radios.

Transformed

If a significant proportion of that audience - or a similar special interest group - could be persuaded to go digital in order to listen to programmes targeted especially at them, the market for digital sets would be transformed.

If digital radio is ever to take off, public service and commercial broadcasters must bury the hatchet and co-operate

This might be a good reason for government approving the BBC's plans for new digital radio services - the Asian Network is one of five proposed new channels.

But the commercial sector isn't so sure.

At the Radio Festival Patrick Berry, boss of the south London black station Choice FM, mounted an eloquent attack on one of the BBC's proposed services, dubbed Network X.

Greg Dyke describes this as a station aimed predominantly at young blacks who now tune in to pirate radio.

Undercut

In Berry's view such a station would amount to unfair, subsidised competition for the digital version of his own station.

He may find a sympathetic hearing at the Department of Culture, where Tessa Jowell has promised to approve (or not) the BBC's planned digital services by late August or early September.

She insists the BBC's new channels must not duplicate or undercut commercial services.

Leaving aside the question of whether listeners to pirate radio are natural purchasers of expensive digital radios, the row is a reminder of just how difficult it is for the BBC to win universal support for its expansion plans.

Yet if digital radio is ever to take off, public service and commercial broadcasters must bury the hatchet and co-operate - as indeed they have done up until now - on developing new services, and hunting for something, anything which will kickstart the digital radio revolution.