Examination of Witnesses (Questions 333-339)
DIGITAL UK
13 DECEMBER 2005
Chairman: Can I welcome Barry Cox, Ford
Ennals and Mike Hughes from Digital UK. You have waited patiently
and heard a lot of the questions that have already been asked
and you will have heard a number of them were directed towards
you in order to seek further information. Can I invite Paul to
kick off?
Q333 Paul Farrelly: Clearly we are going
to ask you questions about Government policy and I hope that the
answers will not simply be "Ours is not to reason why, ours
is just to do or die". We kicked off the last session with
a discussion of the Government's cost benefit analysis and the
criticisms that have been made of this. How worthy and necessary
cost beneficial a goal is it for the UK to fix digital switchover
for a particular day by 2012 rather than let the markets determine
it?
Mr Cox: The Government's own analysis
gave you the net present value of between one and two billion
and they made it a few years ago. You heard Stephen Carter say
he thinks some costs have come down so that provision is more
towards the higher end of that. The switchover date has been set
back by two years from their original claim, so there is an offsetting
in there. We are happy with that analysis. It is rather economic
and slightly, not meaningless but not meaningful to most people.
As to your question as to why not leave it to the market, I think
here we start from the fact the spectrum is a public resource
and it is a Government decision inevitably in that respect. They
have led a four year action plan and spent a long time debating
this. You heard Ofcom answer on the balance of views that Ofcom
arrived at, and no doubt the Government themselves arrived at,
and in a slightly different way the public service broadcasters
also arrived at, that leaving it to the market was not a sensible
option. There are fairly obvious reasons for that. If you left
it to the market absolutely you would have the prospect of a very
small number of viewers clinging on to analogue for a decade or
more and that would put an absolute stop on the process as we
currently are at, digital terrestrial television would only reach
between 70 and 80% of the country and that is bad news for the
people who are paying their licence fee and would like the choice
of free-to-air BBC through their aerial. It is unfair on them
and it is wasteful because all the things that Stephen Carter
was describing could not be done with those frequencies, we would
have to use all the frequencies as we currently do. I think even
the people who were your first independent witnesses said switchover
is right, their criticisms were other. Those are essentially the
reasons; it is unfair, it is wasteful and it deprives choice to
the public.
Q334 Paul Farrelly: I am sure it
has not just occurred to me here listening to the evidence from
Ofcom that perhaps with the arrival of Freesat now, or the impending
arrival of Freesat, the world, and therefore the analysis of the
world, may have changed and although Ofcom has done its analysis
of the Government's case in June of this year it may be time for
some fresh thinking and for the cost benefit analysis to be reviewed
in that light. How sensible is it simply to concentrate just on
DTT? Would it not be better to promote free-to-view satellite
services now in this changed environment?
Mr Cox: You are right that if
it happens, when it happens, it will be very useful to have a
BBC/ITV Freesat which almost certainly Channels 4 and Five would
join in due course, that is true, and, speaking narrowly as Digital
UK, it would be enormously helpful to us because we do have the
problem of that 20-30% of the country which cannot get DTT until
switchover and if they all wait until the switchover that is a
big task for us to convert them. Anything that can alleviate that
is highly desirable and in that sense Freesat from the BBC and
others would be very good news. I am afraid you would have to
ask the Government why they have not pursued this one. I think
the broadcasters see it as an important addition. One of the residual
problems with satellite, which Ofcom did not mention, is the second
and third sets. They are much more expensive and more difficult
to deal with—not impossible—with the satellite option.
On top of all the complexity of the messages, which we absolutely
agree with, that is a real problem as well for viewers. It is
undoubtedly cheaper for them to get it through the aerial, it
is easier, they can do more things with it, and that is why the
choice should be made available.
Mr Ennals: If I might add, digital
terrestrial television today is maxed out and, as we know, some
27% of the population cannot get digital television via their
aerial, so to expand anything beyond where we are today, whether
it be to the 200 transmitters or any point beyond the 80 transmitters
today, would require you to switch the analogue signal off. I
absolutely agree with Stephen Carter, that it is necessary, it
is desirable and it will allow future digital benefits to come.
I think we need to start from that premise. In terms of what this
programme is about, it is allowing people to have a choice of
how they receive digital television. Whilst Mike will be leading
this programme on Digital UK's part and we will be building the
capability for everyone up to 98.5% to get digital television
by their aerial, in terms of how we manage the programme and how
we communicate we will be entirely platform-neutral and we think
it is in the best interests of the consumers to have a choice.
We know a lot of people want Freeview and DTT, and you have seen
the figures from Ofcom in the last week, but equally we recognise
that satellite and the LLU and DSL services, broadband services,
offer an excellent service as well. We think it is very much about
choice of digital options.
Paul Farrelly: You have already answered
my last question which was going to be about platform-neutrality.
Q335 Chairman: Can I press you on
the scale of the task. The Government say that 65% of households
are already digital but what they mean by that is they have one
digital set, but they almost certainly still have analogue sets.
Do you know what percentage of households are fully digital?
Mr Ennals: We have some statistics
which are drawn from a body the industry use called GFK. What
that would suggest at the moment is on average there are about
two and a half TVs in the home and, of those, about 38-40% of
TVs are now digitally connected. That scales the task. In terms
of how many homes are fully digital, ie every TV in the home has
digital reception, we would estimate that to be the order of 20%.
Q336 Chairman: You think 20% have
every television with either cable, set-top box or satellite?
Mr Ennals: Indeed, Chairman. We
have to recognise that 20% of households have one TV, 35-40% have
two TVs and a proportion of those people have got one TV connection,
but 20% of households are fully digital today.
Q337 Chairman: How many televisions
are there out there?
Mr Ennals: Once again, we would
estimate there are probably about 64 million.
Q338 Chairman: How many of those
are digital at the moment?
Mr Ennals: That is the 38-40%
of that number.
Q339 Chairman: So that is going to
be between 25 million and 28 million.
Mr Ennals: Yes. There is of the
order of 40 million TVs still to be connected. I think where we
would take heart, and you heard from Danny Churchill and the retail
and manufacture representatives, in terms of digital and TV equipment,
of the order of ten million units a year are sold. Of those, six
million are TVs and on top of that you have another four million
of digital boxes and receivers. We do believe over the life of
the seven year programme it is very, very possible indeed to actually
convert the 40 million TVs that are out there currently just focused
on analogue.
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