Examination of Witnesses (Questions 460-472)
NTL, VIDEO NETWORKS
LTD
20 DECEMBER 2005
Q460 Mr Hall: So that is why it is
important to have every household with broadband because that
again is part of your business?
Mr Lynch: If you think about digital
switchover, digital divide and broadband Britain, I think they
are all the same thing. It really is about bringing in the latest
services and making sure that consumers across the UK have access
to the latest services and if you pick one platform and heavily
promote that platform which does not provide all of the services,
you end up with a large percentage of the population which does
not have access to latest services. Therefore, from our standpoint,
I think we would like to see the debate being broadened to look
at all the different types of digital services and not just, "How
do I switch off these analogue signals?", but "How do
I also bring interactivity, on-demand services and broadband?",
whether the broadband is delivered through the television set
or through the PC, but services that are enabled by broadband
into the homes.
Q461 Mr Hall: Also in part of your
evidence and you have referred to it this morning is the Shoreditch
project which is low-cost access to the services that you provide.
Mr Lynch: Yes.
Q462 Mr Hall: How important is that?
Do you see that being as far as you can go or do you see that
there is a possibility that you might be providing a free service
as well which matches the other free-to-view services?
Mr Lynch: I think where there
is an opportunity to provide a free service is that people have
to have a phone line to get our service, so today people pay BT
£10.50 a month for the phone line and that price is about
to go up on 1 January to £11. There are models where it makes
sense for us to provide a phone line because the equipment that
we are putting in the exchange can do that and then, as part of
your phone line, you actually get a digital TV package that actually
gives you access to all of these on-demand services. Is there
a charge for the digital TV in that case? No, I would say there
is not. It is a replacement of the £11 that you are paying
to BT instead to another service provider, who, for the same price,
is giving you much more and much greater value which is I think
the purpose of competition.
Q463 Mr Hall: Did you run that idea
past BT?
Mr Lynch: Yes.
Q464 Mr Hall: What was their response?
Mr Lynch: BT is looking at a similar
thing by providing Freeview boxes. The interesting thing is that
they have decided not to use their own network to deliver digital
television.
Q465 Mr Hall: When we were in Berlin,
one of the things that I was quite interested in is what they
have actually done to what they describe as "economically
weak families" where they have made available, I think through
their social security system, payments to enable everybody to
have access. Have you come across that?
Mr Lynch: I have not in Berlin,
but we have had discussions with councils and even property managers
about bundling in, as part of the service that they provide, digital
TV and broadband into every unit that they represent or manage.
Q466 Mr Hall: Basically the one concern
we have is that there will not be universal access and, where
there is access, you might have a digital underclass and that
would be one way of overcoming this particular problem. The point
in your evidence is that the more we can look at, the wider the
coverage will be.
Mr Lynch: Yes, but the digital
underclass could come from people who only can receive digital
broadcast channels and cannot have access to on-demand services
and interactivity that other platforms can help bring.
Q467 Mr Hall: Because that is your
pitch, is it not, that you actually do far more than just provide
access to television, but you have gone interactive?
Mr Lynch: Yes.
Q468 Adam Price: Another dimension,
I suppose, to this potential digital divide is age-related. For
instance, in the Bolton trial, the aspect looking at switchover,
the over-75s and cable, it was the least popular option or a very
unpopular option. Help the Aged, in their evidence, have raised
the question of whether the elderly could be excluded particularly
from the sort of higher-end, interactive services that cable and
other platforms can offer. What are you doing to make your services
more accessible to the elderly?
Mr Monserrat: With the elderly,
there is always the fear of technology and the more technology
you get, the more complex it is, trying to wire all of this up
together. In the US, for example, there is a growing business
where you have people, I do not know what they are called, "Nerds
United" or something like that, where you actually can buy
the services and they come into the house and set this up for
you. I think the problem is something that the industry recognises
in spades and the issue behind it is, therefore, to make sure
that the application that you buy from a cable supplier or from
anyone is almost self-installing. A great deal of development
is going on to make the installation an easy process, almost where
you get something, you plug it in and it self-installs, and that
is the development of the user interface, the application interface.
It is a problem we are aware of, it is the recognition that people
over 75 perhaps have some difficulty with installing new technology,
and it is incumbent on the industry to try and make that a lot
easier.
Q469 Adam Price: Do you think that
there are potential impediments, apart from installation, cost,
for example? We have free TV licences for the elderly, so perhaps
different tariffs may be possible as an option for the industry
for the elderly?
Mr Monserrat: In one of our packages
now, you are getting a base pack, a special pack for about £5.99,
so the cost is coming down and it speaks to the point that Roger
made earlier, that, as you go forward, there will be a lot of
change and there will be a lot of rebundling of the packages.
We are probably reaching the limit of how many people will want
to buy something at £40 or £50-odd for the total package
and also it is going to come down as you begin to recast the service
bundles and you will find that there will be affordable packages
for all sectors of the community. That is on the TV side.
Q470 Mr Evans: Does the BBC actually
receive any money from you for the programming that you put out
on NTL?
Mr Monserrat: Sorry, the public
sector?
Q471 Mr Evans: Yes.
Mr Monserrat: No, we are under
an obligation to carry that.
Q472 Janet Anderson: I wonder if
I could go back to the question of a digital underclass. In the
Bolton trial which Digital UK are doing at the moment which is
next door to my constituency, it is interesting that cable has
been unpopular and only two recipients of a £100 grant chose
cable, the vast majority preferring Freeview. Could I just take
you back to a number of comments you have made. In being concerned
about the digital underclass, are we in fact talking about people
who are going to miss out on interactivity and all the potential,
the possibilities that will present, and do you think the Government
needs to be more ambitious and perhaps, through Digital UK, explain
to people the potential, and that people are very unaware of this
at the moment, so they think solely in terms of digital TV and
not in terms of all the other services you have mentioned?
Mr Lynch: If you had it presented
to you by the BBC or through some other form of advertising, a
digital world, and in effect what Digital UK is trying to do is
to raise awareness, but also to sell them on digital, what the
benefits are of digital. If you are trying to sell it to people
who so far have decided that five channels is enough, "I
don't need more than five channels", and you say, "It's
great. You can have 30 channels, and you can get these shopping
channels", from many people, the response may be, "Five
is fine. I get everything I want to watch on five. I have already
decided not to many times and I have gotten all the fliers from
Sky or from cable" or from us or whoever, "and I have
chosen to stay with the five channels, so that is not compelling
to me so that I have to go and do it, but, yes, I am starting
to understand that at some point you are going to shut that off
and I will have to do something, so I'll do it out of desperation
at the last minute, but really it is not a compelling proposition
to me". That is one side. If you tried something else which
is, "All the programmes that you like on these five channels
are available any time you want to watch them through your television
set, so it is the same five channels, but any programme you want,
you can just sit down and watch it right now", that is a
different proposition. "Wow! All the content I like and I
don't have to think about getting home from work on time or staying
up late to watch this programme. It's just always there, always
available", that would appeal, I think, to a lot of people
who would otherwise say, "Five channels is enough".
Therefore, when we think about how to sell digital switchover
into the population, we need to look at a broad range of services
because you will have to have different horses for different courses.
Some people will like more channels, some people will like broadband,
some people will like just the simple idea of getting access to
the content they already watch, but in a much more convenient
way. The problem with what I believe is happening right now is
that it really is down to the lowest common denominator; it is,
"Pay £30, get a box and you'll get more channels".
Mr Monserrat: I agree with the
proposition which is that it is much more about digital literacy,
about broadband interactivity and the aspirations on broadband,
but I agree entirely with you.
Chairman: I do not think there are any
more questions, so thank you very much.
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