Television storms satellite frontiers

As they were... Sky won the early digital TV battle

The BBC's new licences for digital terrestrial television mark another chapter in two decades of deals and decisions to bring satellite, cable and digital transmissions to the masses.

Small-scale cable services have been around for decades, but the best they could offer until the late 1980s were local channels, along with relays of BBC and ITV programmes.

But in 1979 former Prime Minister Sir Harold Wilson looked into the future when he warned the UK was about to be hit by "a foreign cultural invasion through the satellite".

Squarial: BSB's answer to the satellite dish

The government had long-known about the possibilities of satellite broadcasting - but plans to give five frequencies to the BBC, and then to the ITV companies, both failed.

In the mid-1980s the Independent Broadcasting Authority offered franchises to run the frequencies and the winning company, in 1986, was British Satellite Broadcasting (BSB).

BSB knew of the imminent launch of new, Luxembourg-based services from the rival Astra satellite, but was assured that anyone wanting to watch them would need a huge dish.

Sky draw: Derek Jameson hosted a chat show

But in stepped Rupert Murdoch, who in 1988 announced plans to launch his unlicensed Sky service on Astra within a year.

Viewers would need only small dishes to watch his channels, which would be transmitted on the traditional Pal system - unlike BSB's advanced D-Mac system.

BSB fought back by announcing its viewers would need only a small "squarial", and spent millions on producing new programmes and acquiring film rights - almost capturing the rights to the Football League.

Sky on time

But Sky launched first, in February 1989. BSB launched 10 months late in March 1990 - and even then it was only available to cable homes for the first month.

Sky's problems threatened Murdoch's empire

Both companies lost money at an alarming rate - Sky's losses were in danger of putting the whole News International operation in serious difficulty.

In November 1990 the two companies announced a merger to become British Sky Broadcasting - BSkyB.

But the new company traded as Sky, most BSB staff lost their jobs, the squarials were ditched and the majority of BSB programming was cancelled.

Premiership survival

But the sports channel survived - and it became the key to BSkyB's survival.

In 1992, Sky bought the rights to show the new FA Premier League for the next five seasons for £304m. The gamble paid off as the lure of twice-weekly Premier League games helped dish sales soar.

L!ve TV's News Bunny: Doomed cable effort

Even the BBC took a share in the market, as its UK Gold channel - jointly owned with Thames - made its debut in 1992, joining the likes of MTV on the growing family of Astra satellites.

Cable outfits, which also carried these services, tried to fight back - but the best they could come up with was L!ve TV with its News Bunny and topless darts.

Digital revolution

The revolution, however, had only just begun. Digital services became available in 1998, offering better reception for viewers of satellite and cable as well as regular terrestrial television.

Sky launched its digital services first, followed by the terrestrial operator, Ondigital - jointly owned by ITV companies Carlton and Granada. Cable giants Telewest and NTL also offered digital TV.

The jewel in Sky's crown: Premiership football

Digital services took a while to pick up momentum - but by spring 2001 it was in 30% of British homes, and was forecast to rise to 40% by the end of the year. Sky turned its analogue signals off in summer 2001.

The new technology allows for hundreds of channels, as well as interactive shopping, games, and even internet access.

Established broadcasters piled in with their own new channels as well, with the BBC offering BBC Choice, Knowledge and News 24, and ITV offering ITV2. Channel 4 - which had already entered pay-TV with FilmFour - launched its own E4 service.

A fierce battle for sales broke out between Sky and Ondigital - reminding many of the original war between Sky and BSB. Ironically, Ondigital occupied BSB's old headquarters in Battersea, south London.

Switching off

Ondigital was renamed ITV Digital in July 2001.

Carlton and Granada - who dominate the ITV network - hoped using the ITV name would give it the clout to challenge Sky in the digital market.

Five million homes have a Sky digital dish

At relaunch, Sky Digital had about five million subscribers, compared with ITV Digital's one million.

ITV Digital thought it could repeat Sky's success of the 1990s by buying up the rights to the Nationwide League for £315m, and showing them on its new ITV Sport Channel.

But the deal was a disaster - some matches were only seen by a few thousand viewers.

Wags noted ITV Digital might as well have taken their viewers to each game by limo, given them £500 spending money each and put them up in a luxury hotel for the night.

ITV Digital collapsed in May, and the ITV Sport Channel followed a few weeks later.

Football problems did not just affect ITV Digital - Sky also admitted it was reviewing its sports rights policy in 2002.

Angellica Bell appears on new digital channel CBBC

The government wants to turn analogue terrestrial signals off from between 2006 and 2010, but the ITV Digital fiasco and money problems at NTL and Telewest could put this at risk.

In July 2002, the BBC was awarded ITV Digital's old licences, for a series of new free-to-air channels. Cheap digital boxes were also hitting the shops, enabling people to watch channels like BBC Four and ITV2 for a single payment of £99.

But while millions now appreciate the capabilities of digital broadcasting, it may take a huge effort to persuade those who are happy with their existing five channels to make the switch.