House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport Third Report

II. THE CONTEXT

Digital television, the Internet and technology in the home

4. Broadcasting is changing, and it is changing fast, in some measure as a result of the growth of digital television. Digital television is developing on three distinct platforms—satellite, terrestrial and cable—each with its own equipment and each promoted principally by different commercial operators. We have previously criticised the failure of those involved to provide a form of shared or compatible access to digital television through a common "set-top box".[21] This has contributed to the situation noted by the Davies Panel in which "many consumers remain confused and ignorant about what digital television offers".[22]

5. Digital television itself is in the early stages of development. During this inquiry we have examined the range of services available or proposed by the various commercial operators. The stress is still very much on new channels—though not all that many of these, considering the possibilities—rather than on other new services. Digital television is only very slowly being promoted as the simplest route to the Internet.[23] Each of the platforms for digital television is gradually developing ways of responding to demand for the Internet.[24] The operators are not yet exploiting the technology available to its full extent. Customers are not yet being provided with the full benefits of digital technology.

6. Despite the confusion between competing platforms and the disappointingly limited utilisation of the technological capabilities inherent in digital transmission, the take-up of digital television is growing at a remarkable rate. Figures given to our inquiry showed that BSkyB had had 1.8 million digital sales.[25] Ondigital had 411,000 subscribers.[26] There may be some overlap between these subscribers: Sir John Birt, the Director-General of the BBC, told us that he subscribed to both BSkyB and Ondigital and he is not alone.[27] The Davies Panel in July 1999 stated that "current subscriber numbers stand at around 1.2 million";[28] Mr Chris Smith referred on 29 October in the House of Commons to a figure of 1.8 million.[29] There are now probably many more than 2.2 million digital subscribers.

7. Over two million subscribers have been attracted on to the first two digital platforms to become available to consumers—satellite and terrestrial. The third platform—cable—is now entering the market. Telewest has just launched digital cable television to some of its 1.4 million analogue subscribers; it hopes to market digital to half its cable homes by the turn of the year and to almost all of its homes by the middle of the year 2000.[30] ntl expects to have a digital product available throughout most of its franchises—covering 1.2 million residential customers—by the middle of the same year.[31]

8. Technology is being developed to permit sufficient compression to enable a television signal to be transmitted to the home through the current copper wire telephone line. The likely launch of broadcasting services down the telephone line by BT using this technology during or after 2001 will add another new dimension to the digital revolution and has the potential to broaden access to new broadcasting services.[32]

9. Remarkable though the development of digital television has been, as we have noted before, it is overshadowed numerically by the growth of the Internet.[33] Up to 20 million people in this country may already be using the Internet.[34] The Internet has already had an even greater impact upon audio-visual communications than digital television.

10. The economics of the broadcasting market are also changing. New alliances, often bringing together organisations with different areas of expertise, are being formed on a regular basis. Even during the course of our short inquiry the prospect of two further alliances has been raised—between United News and Media and Carlton and between Telewest and Flextech. Such changes will have a considerable impact upon the development of the market and its regulation.[35]

11. It is possible to buy integrated digital television receivers to obtain free-to-air digital television. It is estimated that 20,000 such receivers may already have been sold.[36] The cost of sets is from £400 to £500 upwards, but the price is expected to fall. These sets are viewed by the television manufacturers as "the logical replacement for the analogue television set".[37] We are not convinced by this. There are already signs of a "blurring of functionality" between the technology of this early digital period—the set-top box, the television, the computer.[38] The future lies in equipment in the home which offers far more than digital television. Of the Internet and broadcasting, Mr Davies observed, "It may well be that in as little as five years' time the two things have become indistinguishable".[39] The range of uses of what is now a "television set" will expand greatly.[40] As the National Consumer Council noted, this will transform the services which "television" provides and the way we think of them: "Television will become more of a necessity".[41]

Analogue switch-off

12. We have argued previously that "analogue switch-off"—the end of analogue terrestrial transmission of free-to-air television services—should be pursued in the context of a new understanding of universal service provision. We have suggested that universal digital technology should be understood as an opportunity to extend the range of public services available to every home. We have recommended that, in the context of such a public policy objective, a date for analogue switch-off should be announced which is "no later than 2010".[42]

13. In the light of our previous analysis we welcome the two key tests established by Mr Chris Smith for analogue switch-off: affordability and availability.[43] He confirmed to us that the analogue signal would not be switched off until a digital signal, although possibly not the digital terrestrial signal, was available to everyone; no-one receiving the analogue signal would be unable to get any television signal at all.[44] We particularly welcome the Secretary of State's view that the meeting of the tests "could start to happen as early as 2006 and could be completed by 2010".[45] Analogue switch-off will have revenue value: money will come to the public purse from the sale of spectrum thereby released. Analogue switch-off will have economic value: business activity will develop on the spectrum which has new uses. Most importantly, analogue switch-off will have social value: universal, digital provision which is implicit in such switch-off has major public policy benefits since universal services, public as well as private, can be provided direct to the citizen in the home.[46] The public benefits of universal digital services and the welcome policy announcements by the Secretary of State for Culture, Media and Sport on analogue switch-off provide an essential part of the context for consideration of proposals by the Davies Panel.