Written evidence jointly submitted by
BBC, ITV, Channel 4, Channel 5, S4C, Arqiva[48]
and SDN
1. INTRODUCTION AND
SUMMARY
The above-named organisations welcome the opportunity
to make a joint submission to the Committee's inquiry into Spectrum.
As public service broadcasters and multiplex operators on the
Digital Terrestrial Television (DTT) platform, we have a clear
interest in policy about future spectrum use.
As broadcasters and multiplex operators, we have
played a key role in delivering consumer and citizen value, and
have enabled the future roll out of fourth generation mobile services
by working to free up spectrum:
— Our
investments and efforts in driving Digital Switchover (DSO) and
the roll out of DTT have created a vibrant, free to air TV platform,
highly valued by viewers. This has incentivised consumers to take
up digital TV, thereby making the process of DSO much easier and
so helping to free up large amounts of analogue spectrum for new
uses.
— We
have also co-operated fully with Ofcom's process to amend the
post-DSO spectrum plan so as to clear DTT from the 800 MHz spectrum
band—thereby directly enabling the auction of the 800 MHz
spectrum for mobile uses on a harmonised basis.
— The
multiplex operators are investing hundreds of millions of pounds
to build out a universal DTT network, and the public service broadcasters
and multiplex operators have funded the management of the Digital
Switchover (DSO) programme by Digital UK.
— Consumers
have made significant investments in DTT reception equipment -
with more than 65 million digital TV Freeview devices sold in
the UK. Consumers have made these investments based on the Government's
promise to deliver universally available television via DTT—they
will therefore expect continuity of service.
At set out in Section 2 below, we have continued
to deliver on the viewer interest through services on the DTT
platform, and have evolved the platform to deliver new HD services
via existing spectrum. Looking to the future, we consider that
any spectrum release process—whether that carried out by
Ofcom in relation to the spectrum released by DSO, the Government's
public sector spectrum release process, or any future release
programmes—needs to take full account of the interests primarily
of DTT viewers (as well as of broadcasters and multiplex operators).
In this regard, Section 3 of this submission proposes a series
of principles that we believe should underpin the future of the
DTT platform.
However, and as we highlight in Section 4 below,
there is a significant risk that these principles will be undermined
by the planned 800 MHz auction process, as new 4G mobile services
in the 800 MHz spectrum are likely to create significant interference
for DTT viewers—with Ofcom's analysis suggesting that 760,000
UK households could be affected. Given the potentially significant
impact on DTT viewers, we believe that the Committee should urge
Government and Ofcom to ensure that interference is managed proactively—ie
before it affects consumers—and ideally by putting in place
guard bands to ensure that DTT is properly protected.
2. THE DTT PLATFORM
DELIVERS SIGNIFICANT
CONSUMER AND
CITIZEN BENEFITS
DTT is a highly successful broadcast platform, which
delivers very significant value to UK consumers. Importantly,
all indications are that DTT will remain highly important to UK
viewers for the foreseeable future:
— Take-up
of DTT: DTT is the most popular UK television
platform:[49]
— As
at the end of 2010, 92.5% of UK homes have digital TV on at least
the main TV set.
— DTT
is the most common digital TV platform, providing the primary
means of receiving TV for 39% of UK homes—and almost three
quarters of UK homes use DTT on a primary or secondary set.
— More
than 65 million digital TV Freeview devices have been sold in
the UK.
— Key
Driver of Platform Competition and Economic Value:
— DTT
has brought with it a huge expansion of choice (via both the PSB
and the Commercial multiplexes), with new services available for
free to virtually all of the UK. Indeed, we note that, prior to
DSO, DTT was considered so important that Parliament required
the PSBs to build out the DTT platform to 98.5% coverage (the
same as analogue television).
— DTT
drives significant consumer value and competition—particularly
for households unwilling or unable to pay for subscription TV,
and for the great majority of multi-set households.
— In
the absence of a DTT platform of scale, platform competition would
be weakened, to the detriment of UK consumers.
— DTT
is an open, gateway-free platform, offering both free and pay
services.
— DTT
has created wider economic benefits, by stimulating a horizontal
consumer equipment market. Further, in 2010, 40% or c.£1.3
billion of the TV advertising market was delivered via DTT (enabling
brands to reliably reach mass audiences and to drive product sales).[50]
— Efficiency
and Innovation:
— The
UK's DTT multiplex operators are committed to investing hundreds
of millions of pounds in the platform. The transmission contracts
with Arqiva run significantly beyond the current multiplex licence
periods, with the costs spread over a longer period in order to
reduce risk.
— The
broadcasters and multiplex operators' investment in the DTT platform
is creating a universally available free to air TV platform, and
in so doing has enabled the release of 156 MHz of spectrum freed
up by Digital Switchover.
— The
DTT multiplex operators have worked together and with Ofcom to
introduce HD services in the existing spectrum, using the most
advanced and efficient technologies (DVB-T2 and MPEG-4) to enhance
the platform in the interests of viewers.
— By
innovating in this way, DTT has continued to drive platform competition
- including helping to drive innovation by pay TV operators; has
brought new technology to everyone in the UK (thereby addressing
the digital divide); and has used new services to incentivise
consumers to take up digital TV thereby enabling the freeing up
of large amounts of analogue spectrum for new uses.
Looking to the future, all indications are that the
DTT platform will be of enduring significance for the next decade
and beyond:
— Future
DTT take up:
— Forecasts
suggest that DTT will account for c.40% of primary set homes in
2020 and, including secondary set connections, will remain the
single most popular TV platform (55% of all television sets).[51]
— Future
content preferences:
— We
expect that demand will continue to be strong for production and
broadcasting of live news and events—such as the Royal Wedding
and General Election debates - and other mass-audience event TV
that brings the nation together. Linear broadcast of such events
and programming will continue to be important, and DTT—as
the key free to air platform of scale—will be central to
enabling access to these events by viewers unwilling or unable
to pay for subscription TV.
— Future
technologies:
— HD
is likely to become even more important in the future—as
the standard for all TV sets and the norm for content production.
Consumers are likely to expect at least their main channels to
be broadcast in HD on a free to air basis, and so the role of
DTT will be critical here.
— Whilst
we expect only modest growth in demand for 3D TV, it has the potential
for unexpectedly high take-up. There will be some demand for major
events broadcast in 3D, requiring flexibility to enable it to
be offered on an ad-hoc basis.
3. KEY PRINCIPLES
FOR THE
FUTURE OF
THE DTT PLATFORM
In light of the very significant benefits delivered
by the DTT platform, we consider that any consideration of the
future of the platform and UK spectrum policy more generally needs
to be informed by the following five principles:
(i) Meeting consumer expectations: As
set out above, consumers do (and will continue to) place significant
value on DTT services, and indeed consumers have made significant
investments in DTT reception equipment. They will therefore expect
continuity of service, and it is in the public interest that these
expectations are met.
(ii) Securing platform competition: In
the absence of a DTT platform of scale, platform competition would
be significantly weakened - thereby creating consumer detriment.
DTT must retain the ability to compete with the other, predominately
pay-TV platforms.
(iii) Safeguarding infrastructure investment:
As set out above, the UK's DTT multiplex operators are investing
hundreds of millions in the platform. These investments are of
such a scale that the multiplex operators should have sufficient
certainty that the investments will be safeguarded in order to
enable an appropriate return on investment. This is line with
the Government's Principles for Economic Regulation, which state[52]:
— the
framework for economic regulation should provide a stable and
objective environment enabling all those affected to anticipate
the context for future decisions and to make long term investment
decisions with confidence; and
— the
framework of economic regulation should not unreasonably unravel
past decisions, and should allow efficient and necessary investments
to receive a reasonable return, subject to the normal risks inherent
in markets.
(iv) Enabling evolution of the platform:
We recognise that the DTT platform needs to evolve in order to
continue to deliver consumer benefit—in order to enhance
the platform going forward, this may involve improving spectrum
efficiency over time and harnessing new technologies to deliver
further HD and 3D services. .
(v) Supporting the delivery of public service
content: Public service content is of enduring value to UK
citizens. Therefore, any decisions about the future use of DTT
spectrum also need to consider the implications for the funding
of PSB content—we consider that Ofcom should ensure that
its recommendations seek to maintain and strengthen the quality
of PSB in the UK.
In summary, we expect the DTT platform to remain
very attractive to consumers - although it may need to evolve
to offer enough HD services, some 3D opportunities, and an interactive
complement. We therefore consider that UK spectrum policy needs
to take full account of the principles set out above.
4. INTERFERENCE
TO DTT FROM
NEW 4G MOBILE
SERVICES IN
THE 800 MHZ
BAND
It is possible, however, that Ofcom's process to
release the 800 MHz spectrum will undermine the above principles—due
to the fact that, as Ofcom's own analysis has demonstrated, new
4G mobile services in the 800 MHz spectrum will create significant
interference to DTT reception.
It is useful in this context to recap on Ofcom's
own policy position—as set out in Ofcom's statement on "Digital
Dividend: clearing the 800 MHz band", published on 30 June
2009—that disruption to DTT viewers must be minimised. Specifically,
Ofcom made clear (at paragraph 1.16 and elsewhere in that document)
that it is "very important to protect the integrity of
the DSO programme and ensure that any disruption to DTT viewers
is minimised".
In this regard, it is worth highlighting two of Ofcom's
DTT migration criteria, namely:
"existing authorised and planned users of
channels 61 and 62 should not bear extra costs that must reasonably
be incurred in order to clear the spectrum"
"any solution should be consistent with existing
policy objectives for DTT coverage after DSO, and the process
should aim to minimise the impact on viewers of broadcasts from
the existing DTT multiplexes"
These criteria mean that the existing DTT multiplex
operators should not bear additional costs as a result of this
process, and - arguably most importantly in the current context—that
DTT coverage should be maintained, and disruption to DTT viewers
should be minimised.
Ofcom stated (at paragraph 1.17 of the above-named
statement) that:
"We have therefore decided to adopt the DTT
migration criteria and we will develop plans for implementation [of
the 800 MHz clearance programme] with reference to these."
Given this commitment, it would be inappropriate
if Ofcom were now to implement the 800 MHz award in such a way
that would permit significant and harmful interference, and which
would therefore undermine the consumer benefits delivered by the
DTT platform.
However, Ofcom's consultation on co-existence of
new services in the 800 MHz band with DTT television (published
on 2 June 2011) set out Ofcom's own analysis that new 4G mobile
services could adversely affect DTT reception in 760,000 UK households.
As far as we are aware, the 800 MHz award represents the first
time in the UK that a regulator will license a new service knowing
in advance that the new service will adversely impact on an existing
service, and moreover that the regulator has expressed a view
in advance that it is acceptable for some users of the existing
service to have their access to that service either impaired or
completely removed.
In the past, conditions would have been placed on
the new licensee requiring it to protect existing services rather
than to adopt post-event mitigations as Ofcom is now exploring.
In contrast to Ofcom's apparent approach, we consider that the
appropriate starting point would be for Ofcom to put in place
effective intervention to prevent interference before it happens.
We consider that the ideal solution would be to put guard bands
in place to ensure that DTT is properly protected—and that
any deviation from this approach would have to be clearly justified.
It is also important to be clear that managing viewer
issues for DTT interference is likely to involve questions of
a significantly different kind to those that have arisen during
the DSO process. Whereas switchover concerns events on specific
dates, with any side issues arising primarily in the weeks and
months following the specific DSO date, DTT interference will
be much more complex and could happen over a period of many months
or even years. Therefore, if Ofcom decides not to implement guard
bands to minimise the interference risk, due to this complexity
we consider that the licences for new services in the 800 MHz
band should contain stringent information, notification and staggering
provisions around the roll-out of new services, so as to ensure
that there is sufficient time and scope for effective consumer
communication and remedial action.
Helpfully, Ofcom has expressed its intention to work
with DTT stakeholders, Government and new licensees in the 800
MHz band to ensure that DTT is properly protected, through the
appointment of a single organisation to manage the DTT interference
issues. Ofcom is currently consulting on its high-level approach,
and intends to issue a further more detailed consultation later
in 2011 regarding the DTT protection body. We hope that DTT interference
will be properly mitigated, and therefore that adverse consumer
impacts will be minimised. However, we would urge the Select Committee
to keep a watching brief on this issue, and to encourage Ofcom
and Government to ensure that new mobile services do not create
a threat to the very significant consumer and citizen value delivered
by the DTT platform.
June 2011
48 In addition to this joint response Arqiva has a
separate response that addresses specific matters relating directly
to the use of spectrum for the provision of mobile internet services. Back
49
All data in the sub-bullets which follow are from Ofcom Digital
TV Update, Q4 2010. Back
50
Based on an allocation of 2010 TV Net Advertising Revenues, by
platform according to the volume of adult commercial impacts delivered Back
51
3Reasons Limited 2011 Back
52
Page 7 of BIS, Principles for Economic Regulation, published
April 2011. Back
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