Examination of Witnesses (Questions 220
- 230)
TUESDAY 6 JUNE 2006
BT
Q220 Mr Evans: Have you announced
a pay structure for Movio yet; how much a month will it cost subscribers?
I know you said what they were prepared to pay; have you worked
out what you are prepared to charge?
Ms Lloyd: We set our wholesale
tariff and we offer that to the mobile operators. They then set
the retail tariff, and indeed they could either add a margin to
that or they could absorb that cost as part of a bundle, so we
will have to wait and see what Virgin come out with this summer,
and other operators.
Q221 Chairman: Do you expect, in
due course, all the mobile operators to take up the BT Movio service?
Ms Lloyd: We would like them all
to; we do not expect, in the short term, that they all will.
Q222 Chairman: Are they all expressing
interest, or are some more enthusiastic than others?
Ms Lloyd: Some are more enthusiastic
than others.
Q223 Chairman: Would you like to
elaborate?
Ms Lloyd: I think it is fair to
say that there is still some debate in the industry about whether
a broadcast technology is required, and you clearly heard some
of that earlier today. Other countries, Italy, for example, have
gone down a broadcast route, Korea has; certainly we believe very
strongly that this hybrid, it is not either broadcast or 3G, you
have got to use the most appropriate technology for delivering
the most appropriate services, and broadcast makes sense. Why
would you send a simulcast TV programme to millions of people
over their own little bit of spectrum; it just does not make sense
commercially, and indeed practically. There is a limitation, whether
it is 3G, HSDPA, they are point-to-point networks. Cell broadcast
has huge constraints and is still essentially a cell-based structure.
Q224 Chairman: So you do not agree
with what was said about the opportunity to expand 3G, which said
that will not be a problem?
Ms Lloyd: Obviously, 3G operators
are moving from 3G to HSDPA; the technical input, which is in
the public domain, is that 3G can support around seven simultaneous
TV or video users per cell, HSDPA potentially would double that.
There is the possibility, which is still under development, of
technical standards which could add true broadcast to the unpaired
spectrum which some of the operators have in their existing 3G
area. That will be a very expensive operation, so our argument
is, why would you spend a billion pounds enhancing your network
to build broadcast capability to run the same channels that Orange,
Vodafone, O2, Virgin, are all going to want; why do you not take
a shared infrastructure model from a third party. I expect there
to be competition, but BT at the moment has entered that wholesale
space, so we have invested heavily in one broadcast network to
bring on the popular TV channels and make those available on a
white label, wholesale basis to all the operators. If you believe
that there is a lot of differentiation needed in TV then potentially
you could be in a scenario where it makes commercial sense for
each operator to build their own broadcast network. Our argument
is very much that is at the fringes and maybe 3G is going to be
more than capable of delivering that, but the mainstream TV channels
are going to be common across all the operators; all consumers
are going to want the big programmes and the big channels.
Q225 Chairman: The big live channels
will be on DAB and the niche ones will be on 3G?
Ms Lloyd: Yes, and also catch-up,
so if you missed last night's EastEnders then, depending on the
rights situation, you could download that whenever you wanted
over 3G, or side-load it from your PC.
Q226 Mr Evans: How many channels
do they have on DAB in Italy?
Ms Lloyd: Actually, Italy is using
another broadcast technology that is using DVB-H. They have got
around eight channels at the moment. They have done it with quite
a different model, so they are actually selling capacity on that
network rather than the model that BT Movio has done, which was
to say, actually, we will put all of the mainstream TV channels
on it and then sell the channels. They are actually allowing the
operators to take capacity and put what they want on it, so the
number of channels still is not clear, because all of their services
still have not rolled out. The Korean service is based on DAB,
so these are the two options that are dependent on spectrum. DVB-H
is suitable in some countries from today, DAB is suitable in some
countries from today; in the future we see that you are going
to need both because you are never going to put a fantastic array
of DAB digital radio stations on a DVB-H network, it is not cost-effective.
Technology has developed to the extent that there is already a
range of silicon providers that have one chip, it does DAB and
DVB-H, that can go into a mobile `phone at a very low incremental
cost. I think that issue is going to go away and then it is down
to spectrum availability, and these technologies will co-exist.
Q227 Chairman: How important is it
that the 20% ceiling is lifted in the immediate future?
Ms Lloyd: We would like very much
to be able to run five channels for launch. We have two constraints
for that. One is securing that additional capacity from Digital
One; the second then is the regulatory constraint. The regulatory
constraint is, on average, over a 24-hour period, so one of our
options, if we do not secure the change to 30%, will be to run
five channels but for less than 24 hours a day, so to have dark
time overnight, in the middle of the night. That is a possibility.
As you will see from our response to the current consultation,
we believe that because you can maintain the same number of digital
radio stations and have 30% allocated for multimedia that enables
the UK to continue down this path of leading DAB, digital radio
and this mobile TV revolution.
Q228 Chairman: And you would like
that change to have taken place before Parliament rises for the
summer recess?
Ms Lloyd: We would. The one which
is more critical for us is the legal technicality, which is absolutely,
I cannot stress enough how important that is for us. There is
a huge amount of investment that has gone into making this service
available for this summer, not only by BT but by all those parties
involved, and Ofcom, DCMS and DTI have committed to this over
the last 12 months, and now we are very, very tight, as you know.
Q229 Chairman: Ofcom would not allow
you to proceed unless that change in the law had actually taken
place?
Ms Lloyd: They cannot technically,
because of this legal issue, the Digital One multiplex would become
a TV multiplex and that cannot happen because then they would
have to turn off the radio stations. Unfortunately, it has to
happen.
Q230 Chairman: We will see what we
can do.
Ms Lloyd: Thank you very much.
Chairman: Thank you very much.
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