Memorandum submitted by Five
Five believes that the Government's decision
to switch off analogue terrestrial television will result in extensive
changes to the ways television services are made available to
and received by viewers. Therefore we welcome the decision of
the Select Committee to enquire into the issue.
Five is one of the founders of Digital UK, and
we support its submission to the Select Committee. In this short
paper, Five intends to address the issues of particular interest
or concern to us, rather than go over all the ground covered by
Digital UK.
POLICY OBJECTIVES
AND ECONOMIC
BENEFITS OF
DIGITAL SWITCHOVER;
ROLES OF
DIFFERENT PLATFORMS
Five is in a different position to the other
public service broadcasters, in that digital switchover will mean
for the first time that we are received on all TV sets in virtually
all homes in the United Kingdom for the first time. Thus switchover
presents Five with the opportunity of universal coverage, and
not just the threat of fragmenting audiences faced by the other
public service broadcasters.
Five came on air in 1997 as the fifth public
service terrestrial channel, albeit in the knowledge that for
technical reasons our analogue signal would never reach the same
number of homes as the other four terrestrials (BBC1, BBC2, ITV1
and Channel 4/S4C). By the end of 1997, 58% of homes could get
our analogue signal; this grew over the following few years to
today's position, where our analogue signal can be received by
78% of homes.
The growth of digital television over the last
seven years has extended Five's range beyond our analogue reach,
as our service is available on all digital platforms. Our current
estimate is that over 93% of the population lives in homes with
televisions on which Five can be watched. We expect that proportion
to increase over the course of the next few years, even before
the switchover process starts, as a result of continuing strong
digital take-up, especially on the Freeview platform.
But Five will only be able to be watched on
the same number of actual television sets as the other main channels
when the switchover process is complete. This is because a third
of the population has still to adopt multi-channel television—and
because in many households, while the main set is digitally enabled,
second and subsequent sets are analogue only (and so do not receive
Five in 22% of cases).
Five welcomes the existence of different platforms
offering a range of digital options to consumers. Sky has pioneered
the growth of multi-channel television in the UK, while the cable
companies have provided an alternative to it in the more densely
populated parts of the country where they are available. But the
growth of Freeview over the last three years has demonstrated
that an alternative model—free-to-air rather than subscription
based and with a channel portfolio measured in the dozens rather
than the hundreds—has an appeal that pay TV on its own was
unlikely to be able to achieve.
Other platforms and business models have been
developed—for example, Top-Up TV has demonstrated how digital
terrestrial television can support a viable pay TV model; and
there appears to be a developing market for subscription-free
satellite television.
Although Five believes there should be a diversity
of platforms available to consumers, it is clear that Freeview
offers a better commercial environment for advertiser-funded,
free-to air television and its ability to deliver public service
broadcasting. For example, in the first eight months of this year,
Five's share of viewing on the Freeview platform was 8.2% while
on the satellite and cable platforms we averaged 3.9%.
ACHIEVING SWITCHOVER
TO THE
GOVERNMENT'S
TIMETABLE
Five believes that the Government's 2008-12
timetable for digital switchover represents a tough but achievable
target. Five does not hold a multiplex licence, but we are committed
to working with Digital UK to assist the process of digital conversion.
We will also satisfy the requirements of our Digital Replacement
Licence (DRL) to provide Five's digital signal to an equivalent
proportion of homes as currently receive the other four networks'
analogue services.
COSTS ASSOCIATED
WITH DIGITAL
SWITCHOVER
By the time of switchover Five (like S4C) expects
its service to be carried on one of the two multiplexes run by
the BBC. We are currently in discussions with the BBC over the
likely costs we will pay it for terrestrial carriage, which we
expect to be based on the costs of building out its digital transmission
network.
Five looks forward to playing our part, alongside
the other public service broadcasters, of informing viewers of
the onset of switchover and what actions they need to take to
ensure they continue to receive television services after switchover.
Much of this work will be co-ordinated by Digital UK.
The level of Five's commitment to the switchover
process is reflected in our DRL and licence payments. We believe
that care will need to be taken in managing the switchover process
to ensure that its costs are carefully controlled and it does
not become unreasonably onerous or burdensome on Five and the
other commercially funded broadcasters.
In its Green Paper on the BBC's Charter, the
government said it envisaged the BBC would "play a leading
role, both directly and through Switchco, in the delivery of a
programme of reliable and impartial information about switchover"[3].
We anticipate that the BBC's leading role will be reflected in
its licence fee settlement.
PROTECTION OF
VULNERABLE GROUPS
The Government recently[4]
set out its proposals for providing support for the elderly and
those with disabilities at switchover, and stated that the BBC
would pay for the cost of this scheme through the licence fee.
Five supports this approach. It is clear that
some people will need practical and/or financial help in switching
to digital, and it is sensible that some central provision is
made now to cover that requirement. The difficulty is in predicting
in advance exactly how much this will cost, and in working through
what will happen if there is either an overspend or an underspend
on it.
CONCLUSION
Five is fully committed to seeing through the
process of digital switchover and to meeting the challenge that
it poses for us. The process has been underway for some time already;
we are glad there is now real certainty about the way forward.
10 October 2005
3 Review of the BBC's Royal Charter: A strong BBC,
independent of government, DCMS, March 2005. Back
4
Keynote address by the Secretary of State for Culture, Media
& Sport to the Royal Television Society Cambridge Convention,
15 September 2005. Back
| 
