Digital, Interactive and Web TV

Delivery Channels

[Satellite] [Terrestrial] [Cable] [Telephone] [Web-TV] [Interactive Services]

There are currently over 3m digital TV households (Click here to see to see the graph). Most UK viewers now have a choice of at least 3 delivery channels, a 4th is on the horizon and a 5th is a possibility:

1. Satellite

SkyDigital, backed by BSkyB and others, is the provider of this delivery channel and is now available to 90% of the UK. SkyDigital is offering over 200 channels with monthly subscriptions from £10 to £34 (January 2001 prices). There are also movies on-near-demand at £2.99 (previous price) each as well as pay per access to special events such as boxing matches. SkyDigital said their prices would increase in late 2001.
As of May 1999, BSkyB are loaning the set-top decoders and dish (previously £200) to those that take the subscription services (as opposed to the free BBC channels). However, the installation fee doubles to £40 and subscribers must also have a second telephone line to connect the set top box which must be left on at all times. Subscribers who don't take the subscription services must pay a £100 installation fee.
On 22 August 1999 BSkyB launched its first interactive service for subscribers to its Premier League football service.
In November 1999 BSkyB's Open interactive information and shopping services plus email were open for business - the first nationwide.
Of the 3 delivery systems, BSkyB is by far the strongest. Backed by the very determined Rupert Murdoch, he has invested heavily in technology, content and marketing. One of its weakest points is that for interactive services it relies on the telephony operator for the return path. That usually means BT, a company that has a reputation for poor service, slow copper-wire lines and a reluctance to unbundle the local loop and role out high speed links.

Actual Digital TV Subscribers

No. of Homes

July 2001

Satellite
5.3m

Terrestrial
1.1m

Cable
1.6m

Total
8.0m

Source: Industry published figures.
Click here to see a graph

2. Terrestrial

The BBC in mid 1999 launched its free digital services though it is proposing to the government that there should be an increase in the licence fee for digital subscribers (see controversy). The BBC's services will initially reach 90% of the population. Its 2 digital channels, BBC Choice and BBC Knowledge are to be renamed to BBC3 and BBC4.
The commercial ITV companies including Channel 5 have launched Digital 3 and 4. These and the existing ITV channels are free services funded by advertising but there are also subscription services.
Channel 4 is actually government owned by operates as a commercial station. It has 2 digital subscription channels: E4 and Film Four.
ITV Digital, backed by the commercial TV companies Carlton Communications and Granada Media, is the commercial provider of this delivery channel. As at November 1998, it is available to approx. 70% of the UK population with 90% planned by the end of 1999. ONdigital is offering over 30 channels with monthly subscriptions from £9.99 to £18.
A consumers existing aerial should work but digital TV does need a good signal. A good signal gives an excellent picture but a poor signal gives no picture whereas with analogue the view can still see a degraded picture. The decoder is on free loan from ONdigital in return for a subscription to its services. Currently it is loaning a decoder and 12 months subscription to 6 of its channels for £119. Subscribers install themselves. It will also subsidise new digital TVs that have an in-built ONdigital decoder.
Many viewers do not realise that they can receive the free to air channels on digital. To do this they need to purchase their own set-top box or buy an expensive and rare to find digital TV. They may need to change their aerial.
Terrestrial television is effectively 3rd in the role out of digital TV and has a lot of catching up. Reception in many parts of the country is non existent - with digital TV there is no such thing as a poor signal - a consumer either receives a signal or none. Commercial digital TV has suffered from being jointly owned by two companies that are otherwise rivals and who in 2000 fought a bitter battle for dominance alongside the 3rd main commercial television company. The BBC has digital channels but its launch advertising campaign was pathetic. They used the metaphor of "passing the salt cellar" to represent interactive TV and also they talked about wide screen TV with stereo sound - something that is available on the analogue system.

Forecast Digital TV Subscribers

No. of Homes

2002

2005

Satellite
4.9m

6.0m

Terrestrial
1.8m

2.7m

Cable
2.4m

5.1m

Total
9.2m

13.8m

Source: Average of 9 forecasts from Listed banks and Analysts/EIP published by IBC 1999

Internet Access from
Digital TVs by 2003

3.3m

By 2010

14m

Source: BT

3. Cable

There are now just 2 cable companies, Telewest and NTL, the latter taking over Cable and Wireless (C&W) in mid 1999 just after it had launched its digital services. They are both typically offering over 200 channels with monthly subscriptions from £9 to £40 (early 2001 prices) plus with additional telephony options. In Febuary 2000 cable passed 12m UK homes of which about 3m plus were connected.
Consumers will need to live in a road with cable but there will be no need to buy a set-top decoder. There is a £40 installation fee.
Cable in the UK is commercially very weak. Both NTL and Telewest have huge debts (Telewest's is £4bn and NTL's is £10bn), they are more technically and engineering focussed, not marketing orientated. Until recently the industry and the infrastructure was very fragmented, and they produce little of their own content, but mostly deliver the channels of their rival BSkyB.
One of its strength should be the fact that cable has both fast uplinks and downlinks and it can deliver additional services such as telephony and video-on-demand. Broadband cable has been talked about since 1982 when the government announced that it intended to encourage the private sector to develop the service. In fact it was August 2001, almost 20 years later, that the industry started to advertise broadband. Nether-the-less, most of the advertising was about the future!

Worldwide Digital TVs forecast

Interactive Users
DTVs

2001
12.6

64.8

2002
27.3

2003
52.3

2004
173.8

2005
239.6

2006
359.7

359.7

Source: NOETICA as reported in Information Age December 2000

4. Telephone

BT is trialing video-on-demand in West London using ADSL technology. 900 households are involved, paying £30 per month. With ADSL the telephone line is always on and whilst not in use, BT can push information to the TV. In 2001 BT will be allowed to transmit television broadcast signals.
In mid 1999 BT announced that ADSL would start to be available from 2000 with a first year coverage of 6m homes and businesses in 10 cities (London, Cardiff, Belfast, Birmingham, Manchester, Glasgow, and Edinburgh). Unfortunately, and as expected, at a minimum of £40 per month for a 512K connection, it is priced beyond the reach of many consumers. It will be sold via service providers.
Kingston Interactive Television of Hull went live in October 1999. It offers true video on demand under the brand name Yes Television as well as interactive services. It is owned by Kingston Communications, the UK's only telecommunications company owned by a local authority. Recently it was floated and plans to offer the service nationwide when ADSL becomes available. In February 2000, Kingston announced a joint venture with BSkyB to distribute it's entertainment and multi-media services using ADSL. BSkyB will also provide management and marketing. When BT's monopoly on the local loop ends in July 2001 then the service could be offered nationwide.
Delivery of digital TV, especially video-on-demand, via the telephony system has been talked about for years but has never moved beyond the experimental stage. With an effective monopoly for most of its life, except the most recent past, the failure of cable, again until recently, to be a viable alternative, a technology orientation, a weak regulator, and a focus on mobile operations, these have all contributed to make BT a non runner.

Internet Becomes Like TV

The Press Association, the UK's main national news agency, has put its new media division, Ananova Media up for sale. The division is named after its star Ananova. She is a virtual newscaster with life-like appearance and mannerisms.
Ananova picture (11K)
Ananova Media provides news and weather services to Yahoo!, Freeserve and AOL, generating 500m page hits per month.
Many PCs are equipped with TV cards allowing users to watch TV as they surf the Net.

5. Web-TV

WebTV is a consumer device that provides both television and internet access but without the complexities of PCs. No UK services have been announced, but Microsoft has purchase the WebTV Networks company and is working with BT on a UK pilot. Web-TV has been quite successful in the US.
For video on demand, Internet access is hampered by the slow speed of today's modems. It really requires either cable modems and modern cable systems, or the next generation of telephony modems based on ADSL - see next item.
Web-TV has suffered from the lack of a low cost consumer web-tv appliance. Just recently Bush has launched a model but it has had little marketing. It may well be too late. Over 50% of UK homes now have PC internet access and many of the other non PC owning consumers will have a free set-top box from either BSkyB or a cable company.

Interactive Services

All the providers are promising interactive services in the future. These interactive services will necessitate some means of having two way communications. The satellite and terrestrial delivery channels will require that the decoder is linked to the consumer's telephone line, although in Eire they plan a service where terrestrial viewers can link back via their TV aerial. The more modern cable systems can already provide two way communications (many cable providers also offer telephony services) but only the latest fibre optic cable systems with local high speed switches will be able to offer true video on demand and ultra high speed (broadband) internet access. Never-the-less, the planned ADSL services over normal telephone lines will provide an order of magnitude performance increase for those without cable access.
Surveys have shown that consumers connected with broadband access spend an average of 52 hours a month online whereas those with narrowband access only spend around 15 hours. Providing interactivity and fast response provides an incentive for subscribers to stay online.

Childrens' TypoToons
Interactive TV

In the Netherlands, the Dutch VPRO company has developed a TV programme that allows children to collaborate in the programme's making by using the Internet as the programme is broadcast.
The programme sets out to create a story with the children using the Internet for voting which letters to use. The author has to turn the letters into words, sometimes making up new words, and weave the words into a story. At the end of the programme children are invited to submit pictures and the following week the pictures and the letters are animated and used to illustrate the story as it read out. There are even jellybean sweets called TypoTums which are formed in the shape of the letters. Children are encouraged to make them into word before eating them.
From: Homer, Steve, Surfing on the wave of the future, The Independent, 21 February 2000.

Next is Number of Digital Customers

External Resources

Continental Research, 1998, Digital Television, The Pre-Launch Market Report, Continental Research, London, UK.
Cope, Nigel, 2000, Cable firms struggle to carve out a market, The Independent, 8 August 2000.
Also see the full list of resources for this web site for other related resources.

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