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Last Updated: Wednesday, 7 September 2005, 17:00 GMT 18:00 UK
Free satellite service war begins
By Torin Douglas
BBC media correspondent

Ant and Dec
ITV hits like Ant and Dec will be seen on free satellite service
How significant is ITV's decision to join the BBC in launching a free satellite TV service?

At one level, little will change.

Thousands of viewers already receive digital satellite television without subscribing to the BSkyB channels.

Sky offers a service called "freesat from Sky" for a one-off installation charge of 150, delivering 120 free TV channels and 80 digital radio stations.

Viewers can also pick up BBC and other free-to-air channels through satellite receivers sold in specialist electrical shops.

But on another level, it makes a huge difference, making it easier for the Government to switch off the analogue TV system by the year 2012.

For Freesat will complement Freeview - the terrestrial service which reaches homes through TV aerials - in helping millions of viewers who want more channels but don't want pay-TV to switch to digital television.

Freeview has proved much more popular than anyone expected.

In three years, it has been installed in over 5 million homes - catching up with the 7.8 million who subscribe to Sky's pay-TV services.

Heavy promotion

But 25 per cent of UK homes cannot receive a Freeview signal and won't be able to do so until the analogue signal is switched off.

Freesat - which can be received in 98 per cent of homes - can help resolve this classic chicken-and-egg situation by making it almost as easy to receive a free satellite service as it is to receive a free terrestrial one.

Children watching TV
Ofcom says more than 60% of UK households now receive digital TV
Among other things, this means promoting it heavily, which Sky - perhaps understandably - has failed to do so far.

Both the BBC and ITV will market the Freesat service on-air and they will also work together on developing an electronic programme guide, to help viewers find their way through the channels.

If Freesat is such a good idea, why hasn't the BBC launched it already?

The corporation has been promoting the idea for well over a year now, not least in its charter renewal manifesto, entitled Building Public Value.

The Government endorsed the aim in its BBC Green Paper earlier this year.

The fact is, the BBC couldn't do it on its own.

It always acknowledged that the involvement of the other public service broadcasters would be critical, which is why ITV's decision to move its family of channels "into the clear" is so important.

They are now hoping to persuade the other public service broadcasters, Channel 4 and Five, to follow suit - and to screen many other free-to-air channels, including presumably Sky News.

More choice

It might be thought that Sky would oppose the creation of a rival satellite service.

In fact it has been surprisingly positive, for public consumption at least.

It points out that it already offers a free service and says it welcomes the increased promotion of digital satellite TV as analogue switch-off approaches.

Sky believes that as more people sample the extra choice brought by digital TV, more will want to upgrade to the pay-channels.

Sky Digital EPG
Nearly 8m households subscribe to Sky services
That seems to be borne out by a recent YouGov survey commissioned for the Edinburgh TV Festival, which showed that nine per cent of Freeview viewers were "likely or very likely" to trade up to satellite TV.

But there are differences. Sky is a commercial partner in Freeview, but it's a direct competitor of Freesat.

And while viewers might well trade up to Sky from Freeview, which requires a cheap and simple plug-and-play box, they are less likely to go to the trouble of installing one satellite system and then replacing it with another, particularly if it requires a new dish.

So when the BBC and ITV launch Freesat next year, we can expect a rival marketing campaign from Sky, telling viewers that if they want to keep open the option to trade up from the free channels to the pay ones, Sky is the service to go for.

No doubt there will be price competition too.

Together these two campaigns will give a huge boost to the free satellite market.

And that can only be good for the government's ambition of switching the whole nation to digital by 2012.

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