Wednesday, May 5, 1999 Published at 14:06 GMT 15:06 UK
Business: The Company File
Digital television wars
BskyB is determined to win at any cost
The battle for control of the future of television is hotting up.
Digital television promises to transform our viewing habits - bringing a plethora of new channels and interactive services to our homes.
The UK's leading media moguls are fighting each other tooth and nail as they search for digital supremacy.
BBC News Online attempt to bring the television revolution into focus.
What is digital television?
Digital television was launched in the UK seven months ago with a blaze of publicity.
Much more information can also be beamed via these digital signals - which allows broadcasters to increase the number of channels on offer. New services such as home shopping, Internet access and banking will also be introduced.
These digital signals can be delivered in the same way as ordinary television - by cable, by satellite, or through an ordinary aerial.
The computer signals then have to be decoded via a special box. Customers can either buy a stand alone box or one of the new generation of television sets which will have the decoders already built in.
The battle for the digital viewers centres on the different ways in which customers can receive these new signals:
Via a satellite dish
Via a normal television aerial
ONdigital, a joint venture between ITV companies Granada and Carlton, was launched last December. Customers do not need a satellite dish - but can plug in the set top box to the TV aerial. Up to thirty channels are available via the service. At launch less than three quarters of the population could receive the service, although new transmitters are being installed.
Via television cables
Cable companies, lead by Cable & Wireless Communications, plans to launch a digital service later this year. CWC is investing £60m into the new service and following trials over the summer it will be introduced in London and Manchester in October. However, only customers that have cables laid near their house can use the service.
The costs involved
At the moment set top boxes cost around £200 if you agree to subscribe to BSkyB and ONdigital channels. The cost rises to £400 if you choose not to subscribe to these channels.
BSkyB has already announced it plans to give away these boxes to new customers and ONdigital is expected to follow suit.
Meanwhile television sets with built in decoders cost up to £1200 - although ONDigital has announced plans to cut the cost to £500.
Customers still have to pay a monthly subscription for digital channels which starts at £6.99 for BSkyB and £7.99 for ONdigital. However, costs rise sharply if customers want to receive the sports or film channels and BSkyB plans to raise its subscription fees to cover the cost of giving set top boxes away.
BSkyB is charging a £40 installation fee for the digital service. If customers do not have a satellite dish already they will also have to have one installed.
Who is winning the war?
It is too early to say who will emerge as the winner in the digital television war.
BSkyB has signed up more than half a million digital customers and claims it will have a million by October. However a majority of these subscribers were BSkyB customers already and have simply switched from its pre-digital service.
ONdigital meanwhile has signed up around 130,000 new subscribers - although it has been around for a shorter time.
Cable companies will also pose a serious threat to the two existing operators. Fibre optic cables can carry huge amounts of information - allowing faster access to the Internet and other interactive services.
The intense battle is likely to be good for consumers - with prices coming down as competition intensifies.
However, those companies involved in digital television are taking a huge gamble - investing hundreds of millions of pounds in a business that will not be profitable for some time.
There is all to play for. Digital television will ultimately replace all existing television signals, and digital systems could become the main channel for the Internet.
But the government has yet to announce a date when analogue television will be switched off, and the ensuing battle could prove costly.
The Company File Contents