Examination of Witnesses (Questions 440-459)
NTL, VIDEO NETWORKS
LTD
20 DECEMBER 2005
Q440 Chairman: But if HDTV were made
available through Freeview, your view would be that it should
be done in MPEG-4?
Mr Lynch: Yes. HDTV, in our plans
for HDTV, in 2006 will be using about six megabits to deliver
it and that is about what DTT uses today for standard definition,
maybe four to five, so the efficiency gains from it are very,
very dramatic, whereas HD in MPEG-2 will probably use somewhere
between 12 to 15 megabits.
Q441 Chairman: So there is a very
strong likelihood that all of the people who will be required
to go out and buy set-top boxes in order to get DTT may in a few
years' time have to go out and buy new set-top boxes in order
to get MPEG-4 transmissions?
Mr Lynch: I think that, if HD
services are to be launched on digital terrestrial, there will
have to be new set-top boxes anyway because the current set-top
boxes also do not have HD connectors on them, so they could not
do HD in any event. I would expect that those HD services would
be launched in MPEG-4. What will be missed out on is the ability
to get efficient use of spectrum across all the channels because
you will not be able to turn off the MPEG-2 signals because this
will be six, eight, ten, however many, million Freeview boxes
that can only decode MPEG-2.
Q442 Chairman: That may be the case
certainly for a time, but there might come a moment when it will
make sense to switch off MPEG-2.
Mr Lynch: Yes, without doubt.
Q443 Mr Sanders: We have heard quite
a lot in all the evidence sessions we have had about the fantastic
increase in choice, services, support for vulnerable groups, communities,
et cetera, but can I come back to a problem that has been raised
with me by a deaf viewer who receives NTL and, working to choose
to go to Sky, would get subtitles, but when Sky programmes are
shown through NTL, there are no subtitles. Now, given all the
fantastic things we have heard about multi-channels and all the
wonderful things that can be done, why is something as simple
as that a problem today? Is it NTL or is it Sky? What is the problem?
Mr Monserrat: It is something
that we are working on with Sky because they provide us with the
feed and to put in the necessary subtitling requires a degree
of technical inter-working between the two companies. We have
made audio-visual descriptions and we have set the promise of
a date by which we will be able to do that.
Q444 Mr Sanders: What date is that?
Mr Monserrat: It is towards next
year.
Q445 Mr Sanders: That is only a couple
of weeks away.
Mr Monserrat: Absolutely correct,
but I was envisaging that it would perhaps be towards the middle
of next year. It is a technical issue because in the way the cable
world developed, we did not have one platform because of the nature
of the cable franchises, but we had a number of platforms. The
emphasis has been to integrate those platforms together and then
be able to try and meet the requirements of the hard-of-hearing
or the blind, so it is something that is on the cards and we will
deliver it in some areas, but we do not deliver it ubiquitously.
Q446 Mr Sanders: Going back to this
MPEG-4 business, the cable companies provide a box to the customer.
Mr Monserrat: Yes.
Q447 Mr Sanders: So will they be
upgrading boxes to ensure that the consumer is able to benefit
from the latest technology, whatever that happens to be?
Mr Monserrat: Yes, we have begun
to roll out our on-demand services, we have trialled HDTV already
and our boxes will be able to deliver those kinds of services
to our consumers.
Q448 Mr Sanders: Will that be with
Telewest or will there be any distinction?
Mr Monserrat: I cannot speak for
Telewest because we are still two separate companies, but I should
imagine that they will have similar plans to ours.
Q449 Mr Sanders: But possibly not
for much longer two separate companies?
Mr Monserrat: Your guess is as
good as mine.
Q450 Mr Sanders: Can you put a monetary
value on the main costs and benefits of actually switching off
analogue and switching to digital?
Mr Monserrat: As NTL?
Q451 Mr Sanders: Yes.
Mr Monserrat: We have done very
little work on the monetary costs of switch-off and the monetary
benefits of switch-off. When Arqiva was part of NTL, as NTL Broadcast,
we were intimately involved in the costings then, but, since they
departed and as a stand-alone company now, we cannot comment on
the benefits, the monetary benefits, as we have done very little
about it.
Q452 Mr Sanders: What about the costs
then of expanding or upgrading your own networks?
Mr Monserrat: We currently spend,
the cable industry spends, about £600 million a year to maintain
our networks and to upgrade them, and we will continue doing that,
so we will expect to maintain the service that we currently deliver
and increase its functionality and its capacity.
Q453 Mr Sanders: Does this mean that
there will not ever be any more expansion perhaps of the cable
network because what is the point if you can receive multi-channel
television after switchover through normal transmission? The great
advantage of cable was that they were in early on and it was either
that or satellite and now the market has gone. Am I right in thinking
you are not going to see an expansion of the cable network?
Mr Monserrat: I do not think we
will ever go back to the full-scale building that we saw way back
when there was the digging up the roads, but we cover 50% of the
UK, we cover all urban centres. The expansion of the network in
our context is not just to deliver digital television, it is to
expand the network and reach the broadband network reach that
I have highlighted. Currently, the cable networks drive fibre
out closer to the customer than anyone else, within 500 metres
of every home in our franchise areas, so the cable industry has
given the UK a state-of-the-art access network; "fibre to
the kerb" is the best way to describe it.
Q454 Mr Sanders: So it is still rolling
out?
Mr Monserrat: No, it is done already.
Q455 Mr Sanders: Are you still digging
up pavements?
Mr Monserrat: No, it is done already.
Q456 Mr Sanders: What about new housing
developments?
Mr Monserrat: That is something
that, as we go along, yes, you do roll that out within the franchise
area, but I think what you are trying to get at is whether there
is a major network build programme outside the franchise area
and the answer to that is no.
Q457 Chairman: Can I ask you specifically
about multiple-dwelling units which raise particular problems
obviously. I think in your evidence you suggested that the cost
of installing facility to receive DTT is considerable within some
multiple-dwelling units and it actually might be more sensible
to make provision for some kind of cable or DSL provision.
Mr Lynch: When we have spoken
to government about concerns about switchover and reach, the concerns
have been much more focused on MDUs than we initially had thought.
We thought it would be how do you get coverage from 75% to 100%
or 98%, or whatever the number is, but there are bigger issues
even about: where is coverage, is there wiring so that you can
get the signal in to the home? What we found is that there are
quite a large number of MDUs in London which, because of timing
restrictions and the lack of wiring, cannot have satellite dishes,
they do not have integrator reception systems installed to enable
them to get Freeview and they may or may not be cabled. Therefore,
when you think about how you switch over that MDU, you have to
make a capital investment, somebody has to make a capital investment,
to rewire the building for them to be able to get it. We would
argue that the building is already wired with the telephone network
and every flat in the building already has a phone line, therefore,
it can receive a service like ours. There is an example of how
DSL can contribute to switchover, and actually it would reduce
the costs of switchover relatively significantly. I think another
example, as we have talked about, is for places like Jersey where
there is a concern about interference of the digital signals with
France's. There is no cable there and it is a perfect market where
Jersey Telecom could roll out digital TV to all of the residents
on Jersey using services like ours.
Q458 Chairman: Keith, do you want
to say anything about MDUs?
Mr Monserrat: Merely to say that
we have looked at it and we have done enough costing work to approach
the problem with care. It needs a survey on a building-by-building
basis because it is very, very difficult to come up with a capital
cost for cable not to be able to use it, depending on the distance
away from the main core network, but it is a challenge and we
have done enough work to recognise that we need to do a heck of
a lot more.
Q459 Mr Hall: At video networks,
you have been quite critical of the Government's approach to analogue
switch-off and digital switch-on, but, in your evidence, your
written submission, you said that we ought to be concentrating
exclusively on digital switch-on, but if we are going to do that,
we should stick more tightly to having broadband accessible in
all households. Is that just the commercial view or would that
give you a commercial advantage if that was the case?
Mr Lynch: To start with the premise
of your question, we have concerns about digital switchover and
we are very supportive of digital switchover and freeing up the
analogue spectrum. We believe it is the right thing to do, but
our issue is: how do you go about doing it so that you do not
create more legacy issues in the future and how do you go about
doing it so that you create wide deployment of the latest services?
Certainly we have a commercial interest in doing that, but we
also have models that we are rolling out, like in Shoreditch and
there are others we will be announcing, where these are not commercial
activities, but they are pilots that we are doing to demonstrate
how this can be done. We are in fact funding part of these ourselves
rather than making any profits out of them and we are actually
helping to fund some of these activities. I would say that, if
I am critical, it is really to make sure that we all have our
eyes open about what type of services we think consumers will
want and that we are being platform-neutral at the moment to make
sure that the consumers have a choice of platforms that can enable
those types of services.
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