Supplementary memorandum submitted by
the Department for Culture, Media and Sport and the Department
for Business, Enterprise and Regulatory Reform
Question 77 (Geraldine Smith): Details
of the government consultation on the role of integrated digital
television sets in achieving digital switchover
In February 2001, ITV Digital (then ONdigital)
convened a meeting of all the major manufacturers of integrated
digital televisions (iDTVs) to which Patricia Hewitt, the then
Minister, was invited. The manufacturers collectively pressed
for legislation to require that from a date, such as 1 January
2004, all new tv sets sold in the UK should be iDTVs. They argued
that this would shift the costs of digital receiving equipment
from the broadcaster (through set top boxes provided as part of
the subscription package) to the viewer.
Our legal advisers told us that the UK could
not restrict the sales of television sets that comply with European
standards and therefore it was not possible for the UK unilaterally
to forbid the sale of analogue-only sets. However it would be
possible for the European Commission to bring forward such a proposal
if it were considered to be proportionate and non-discriminatory
to achieving common European goals. We raised this issue informally
with the Commission and succeeded in securing a discussion of
the role that idtvs might play in achieving switchover at the
meeting in January 2002 of the Digital Broadcasting Experts Group.
On that occasion only France expressed interest. We also encouraged
ITV Digital and the manufacturers to explore the level of support
which such a measure might secure from their European counterparts.
In January 2002 the first Digital Television
Action Plan owned jointly by Government and industry stakeholders
included a commitment to "Comprehensively investigate with
industry and European Commission issues surrounding the transition
to exclusive sales of integrated digital TVs". The demise
of ITV Digital in late March 2002 caused us to hold back on the
launching the formal consultation so that the revised state of
the market could be taken into account. The consultation was published
on 27 June 2002, and 15 responses were received by the closing
date of 27 September 2002. The consultation document and the non-confidential
responses continue to be available at http://www.digitaltelevision.gov.uk/consultations/con—role—integrated—dtv.html
Stephen Timms announced the conclusions in a
press release of 27 February 2003 which said:
"The majority of responses did not support
enforcing the sole production and sale of iDTVs but reflected
the idea that consumers should have clear, explanatory information.
The Government, with industry and stakeholders, is considering
a number of measures, including:
— clear labelling of TV sets setting
out what equipment consumers will need to receive digital signals;
and
— a consumer information initiative.
The Digital TV Market Preparation Group, a task
group of the Digital TV Action Plan, in consultation with the
industry and other stakeholders, has already looked at the need
for an information initiative.
The aim of any future information will be to
set out clearly the choices for consumers, either to buy a digital
adaptor or an integrated digital TV, in preparation for the digital
switchover.
It will inform consumers that analogue TV sets
will require a digital adaptor to receive TV broadcasts after
the analogue signal is switched off."
The work on clear labelling and a consumer information
initiative was taken forward primarily through the "digital
tick" logo, launched in September 2004 and registered by
the Secretary of State for Trade and Industry as a Certification
Mark. The "digital tick" is promoted extensively by
Digital UK as part of its seven year £200 million campaign
to inform consumers about switchover. Over 1,000 products are
now accredited under the "digital tick" scheme as being
designed to work through switchover, and consumer awareness of
it has reached 65%. In addition, we welcome the package of measures
announced by leading manufacturers and retailers in September
2007 following their meeting with Stephen Timms to address issues
of analogue TV sales. These measures include accelerating conversion
of all TV product lines to digital; moving to all-digital product
lines of televisions and recorders in each region in the 12 months
leading up to switchover in that area; and greater use of clear
consumer information in stores. There has significant movement
in the TV sales market over the past year from analogue to digital.
In January 2007 less than half (45%) of all TVs sold were digital,
but by January 2008 that had improved to 80% of all TVs sold being
digital.
Question 102 (Dr John Pugh): The Departments'
calculations used to reach the £5.1 billion customer benefit
figure
There are two main areas of benefits to consumers
used in the Cost Benefit Analysis:
1. Benefits to consumers living in areas not
served by Digital Terrestrial Television (DTT) before switchover—£2.72
billion
This is based on the willingness of consumers
to pay for new television channels, estimated by survey in 2004.
Before switchover 80% of households can, if they choose, receive
through an aerial the digital versions of those public services
that are available nationwide to analogue viewers—BBC1,
BBC2, ITV1, Channel 4 (S4C in Wales), Teletext. Switchover will
allow 98.5% of households to receive these services through an
aerial, together with other services carried on the two multiplexes
carrying these services.
2. Benefits to consumers from new services provided
in the spectrum freed up by switchover—£1.67 billion
Again this is based on the willingness of consumers
to pay for new television channels. The actual services provided
in the spectrum may well not be television of any kind, but this
was taken as the service with which consumers were most familiar
and could most readily indicate a monetary value.
There are two elements:
— Services to be provided in the
interleaved spectrum—£0.66 billion.
This is the 32 frequency channels that are retained
nationally to support the six DTT multiplexes, but of which only
six frequency channels will be needed at any given transmitter
leaving the other 26 available to support services (provided they
do not interfere with the DTT services).
— services to be provided in the
14 frequency channels cleared nationwide—£1.01 billion.
This is the spectrum that will be the subject
of the main digital dividend auction. Because the frequencies
will be available across the UK they can readily support national
services. For the purposes of the CBA these were conservatively
assumed to be more television channels.
In addition, the cost benefit analysis made
the assumption that those consumers who make the switch to digital
television because of switchover, rather than as a normal response
to the market, nevertheless perceive a benefit. So for those consumers
who make the switch to digital in the two years before switchover
in their region (and who therefore cannot be in those areas who
only get access to DTT at switchover, counted in Item 1 above),
we have calculated a benefit of half the price of a set top box.
This value contributes £0.66 billion to the cost benefit
analysis.
The total benefits to consumers in Net Present
Value terms using 2004 prices for completion of switchover in
2012 is £5.05 billion
Question 129 (Mr Richard Bacon): Details of any available
analysis of consumer choices in the TV retail market
There has significant movement in the TV sales
market over the past year. In January 2007 less than half (45%)
of all TVs sold were digital, but by January 2008 that had improved
to 80% of all TVs sold being digital. We welcome the efforts of
the supply chain to achieve this, and their voluntary commitment
to accelerate conversion of their sales lines to digital, including
DSGi's recent announcement that it will not purchase any more
analogue televisions to sell. The leading electrical multiples
and supermarkets have also committed to seeing that analogue stock
is moved out of regions around one year before switchover, or
is bundled with a digital converter box. Any analogue TV can be
converted with a digital box, but it is of course important that
consumers are aware when buying an analogue TV that it will require
a box at switchover. Digital UK is working with retailers to ensure
that analogue TVs are clearly labelled as such, and that store
staff explain switchover to customers. The imminent introduction
of the Consumer Protection Regulations implementing the Unfair
Commercial Practices Directive, which include an offence of misselling
by omission, will assist in this.
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