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Wednesday, 8 May, 2002, 11:17 GMT 12:17 UK
Free way of stopping Sky
Al and Monkey
ITV Digital's failure means Sky dominates digital TV
test hello test
By Nick Higham
Media correspondent
line

Could a phoenix rise from the ashes of ITV Digital? We won't know for certain until 13 June - the date the Independent Television Commission has set for re-awarding the three digital terrestrial television (DTT) licences handed back by the collapsed company.

The commission says the new licences on offer will be "more flexible" than ITV Digital's. Anyone brave or foolhardy enough to try and make a go of DTT in the wake of Carlton and Granada's catastrophic failure can apply for any combination of the three licences, and propose any mixture of free-to-air or pay-TV services.

Stuart Prebble
ITV chief executive Stuart Prebble resigned after ITV Digital went bust
The commission has not, therefore, ruled out the kind of scenario advocated by the BBC.

Greg Dyke, its director-general, thinks the best prospect for DTT would be a reduction in the number of channels from 36 to 24, combined with an increase in transmitter power and a predominantly free-to-view package of services.

That way some four million more households would be able to receive DTT without having to get a new aerial.

A revived DTT platform - especially if it carries only free channels - is important to the BBC for several reasons.

It would make the BBC's heavy investment in new free-to-view digital channels like News 24 and BBC Four easier to justify.

It would reduce the tendency in the public mind to equate digital with pay-TV - something which slows down take-up among those unable or unwilling to take out subscriptions.

Rupert Mudoch
Without DTT, Rupert Murdoch's Sky would provide the de facto digital platform
And it would reduce the dependence of the BBC, ITV, Channel 4, Channel 5 and indeed the government on BSkyB and (to a much lesser extent) the cable companies.

Without ITV Digital, Sky - which later this week is expected to report that its digital subscribers have now increased to almost 5.9 million - so dominates the digital TV market that its system is the de facto standard.

Other broadcasters are dependent on Sky - which is also a competitor - to get their digital services to the consumer.

They must pay to use its encryption system and electronic programming guide. There are regulations to prevent Sky abusing this dominant market position, but enforcing them can be a slow and cumbersome process.

The Office of Fair Trading has been investigating claims that Sky overcharged rival platforms, including ITV Digital, for the supply of its own channels for over a year; ITV Digital has gone bust before the final outcome is known.

Sky digital control
Scores of different channels are handled by Sky's control centre
The government needs DTT as well as Sky if it is to have any hope of meeting its target for switching over entirely to digital television by 2006 to 2010. Sky is in the pay-TV business, and so has little interest in making digital services available to everyone, rather than just to paying subscribers.

As it is, the latest forecast from New Media Markets estimates that only 64 per cent of homes will have digital by 2010 - 14.4 million of them through Sky, 5.4 million via cable and just 1.8 million via DTT.

Failure to relaunch DTT could have another important consequence.

Barry Cox, deputy chairman of Channel 4 and chairman of the government's digital TV stakeholders' group (and no, he doesn't like being called the "digital tsar"), reckons it would also spell the end of Britain's long tradition of public service broadcasting.

BBC TV Centre
The BBC could be at risk without a digital terrestrial platform
In the analogue world, he argues, ITV, Channel 4 and Channel 5 have special privileges - exclusive access to three out of the five available channels - which justify government and regulators in imposing special public service obligations on them.

Likewise the BBC, which gets the greatest privilege of all (the licence fee) and accordingly has even heavier public service obligations laid upon it.

But on cable and satellite the commercial channels would have no special privileges. Each would be just another channel among scores of rivals. No special obligations could be imposed. In Cox's view, the BBC licence fee would become insupportable in an all-cable and satellite context.

So there are good practical and political reasons for keeping DTT alive. The problem - perhaps insuperable in the wake of ITV Digital's collapse - is finding some way to pay for it.

A version of this column appears in the BBC magazine Ariel.

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