Memorandum submitted by NTL
ABOUT NTL
NTL is the UK's largest cable operator. Its
network passes some eight million homes—34% of UK households—and,
in most areas, supports a "triple play" of multi-channel
TV, high speed broadband and telephony services. The technical
specifications of the network make it ideally suited to delivering
the kind of next generation, highly interactive services that
will be the hallmark of digital Britain.
ntl's 3.8 million residential customers include
some 3.5 million pay TV subscribers. While most of these receive
a digital service, we also have some sum of 580 thousand analogue
subscribers. In addition, ntl has 1.6 million broadband customers
and operates 3.1 million residential telephone lines.
A NEW WORLD
OF ENTERTAINMENT
Digital TV offers consumers significant advantages
in terms of choice and functionality. We also recognise that spectrum
is a valuable asset in the UK's digital future. We therefore believe
a gradual migration to digital broadcasting is a sensible policy
objective.
Amid the technical, social and economic challenges
that this implies, we must not overlook the seismic shifts in
technology and consumer demand that—quite independently
of the Government's switchover ambitions—are taking place.
Demand for digital TV has grown strongly in
recent years and 63% of UK households now have some form of digital
service. For these households, this has meant a dramatic increase
in choice of programming and content. As they become accustomed
to this variety, many consumers" attention is now turning
to a new generation of more sophisticated digital applications,
including high definition TV (HDTV) and on-demand services that
enable consumers to watch what they want when they want. There
is also a growing appetite for access to audio-visual content
over devices other than the traditional TV set, notably the PC.
Some digital platforms are better suited than
others to this convergence and the delivery of next generation
digital TV services.
It is conceivable that, over time, the combination
of unlimited content, on-demand access and inter-operability will
bring about a fundamental shift in consumer expectations, dramatically
changing the relevance of the traditional TV channel and challenging
our existing concept of public service broadcasting.
Having decided to phase out analogue broadcasting,
it is appropriate that the Government's first priority should
be to ensure those households that currently do not have some
form of digital service are able to receive public service TV
channels. In doing so, however, it should bear in mind the strengths
and limitations of different platforms and avoid a "lowest
common denominator" approach that inadvertently creates a
digitally disadvantaged underclass, bound to an outmoded concept
of broadcast in an interactive, on-demand and "device-neutral"
world.
THE BROADBAND
DIVIDEND
This risk is magnified because some (but not
all) of the technology platforms that can be used to deliver digital
TV also support a range other advanced digital services, notably
high speed internet access. This technology has already had a
profound impact on our lives, both at home and at work. Not only
has it provided quick, convenient and affordable access to an
almost infinite range of information. As individuals and businesses,
it has also enabled us to communicate instantaneously on a one-to-one,
a one-to-many and, increasingly, a many-to-one basis, creating
in the process a new generation of "virtually-networked"
organisations and communities of interest.
As connection speeds increase, this digital
revolution will continue to change our lives as consumers, as
professionals and, provided we create the right conditions, as
citizens: a universal and affordable supply of bandwidth could
underpin a sweeping transformation in the delivery of many public
services, ranging from the distribution of public information
and the administration of bureaucratic processes to the provision
of on-line education and health advice. For individuals, organisations,
communities and the UK as a whole, this could help unlock new
worlds of efficiency, opportunity and productivity.
While the primary focus of switchover is rightly
TV, we believe the initiative provides an important opportunity
to encourage the widespread take up of the kind of high speed
interactive technologies that are needed to turn this vision of
a dynamic, digitally-inclusive nation into reality. Unless the
government grasps this opportunity decisively, it risks creating
a deep and entrenched "digital divide" the impact of
which will go far beyond digital TV, HDTV or advanced on-demand
entertainment services. In summary, we believe the greatest risk
to the switchover initiative is a lack of ambition.
NTL'S
SWITCHOVER COMMITMENT
Following the sale of its broadcast business
earlier this year,[6]
ntl has no technical role in switching off the analogue terrestrial
broadcast signal and lacks the technical insight to speculate
whether or not the Government's timetable is realistic.
We will, however, ensure that our remaining
analogue TV customers are upgraded to a digital service well in
advance of the Government's proposed timetable for switching off
the analogue spectrum. In any areas where, for technical reasons,
we are unable to provide a digital service we will advise our
customers to seek an alternative digital provider.
For those households without digital TV, switchover
will mean a choice between a number of competing digital platforms,
including cable, satellite, digital terrestrial [and, in some
areas, DSL]. Cable is a highly sophisticated technology designed
to support advanced interactive TV applications, as well high
speed internet and telephony services. For consumers who value
these capabilities, it may be a sensible choice. To help ensure
they are not denied the benefits of cable, we have recently launched
a new "entry level" package of basic TV channels for
£5.50 per month.
At the same time, we recognise that there will
be some consumers whose priority is merely to ensure they have
continued access to public service broadcast channels in the post-analogue
era, have no desire for HDTV or on-demand services and who do
not wish to pay a monthly subscription fee.
For such consumers, we accept that digital terrestrial
television (or BSkyB's new DSat service) offer a cheap and convenient
entry point to digital technology. However, the capacity of these
platforms to support interactive digital TV services—let
alone the kind of high speed, interactive broadband that will
underpin digital Britain—is currently limited. While over
time the capabilities of these platforms will almost certainly
improve, they are unlikely to match the performance and versatility
of cable. To allow these platforms to become, explicitly or otherwise,
the "preferred" technology for switchover would distort
the digital television market and have a significant impact on
the pace of Britain's digital evolution.
As a result we must ensure that, throughout
the switchover process, consumers have access to clear and unambiguous
information that enables them to understand the capabilities and
limitations of different platforms and, on this basis, make the
choice that's right for them. It is, in other words, essential
that the switchover process remains scrupulously "platform
neutral". We believe the establishment of DigitalUK, an independent
body dedicated to coordinate the switchover, represents a sensible
approach and will work closely with it to ensure consumers have
access to clear and impartial information about alternative digital
platforms.
Lastly, we will continue working with the Department
of Media Culture and Sport (DCMS) on transition arrangements for
the elderly, disabled and lower socio-economic groups, in the
belief that the kind of advanced services that cable offers will,
in some cases, represent a valuable benefit. We have reviewed
the proposed arrangements for such disadvantaged groups and believe
they are fair and workable.
10 October 2005
6 Our former broadcast business, ntl Broadcast, was
sold to a consortium led by Macquire Communications Infrastructure
Group (MCG) in December 2004. Back
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