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From Freeview to Payview?

by User Not Found | Feb 19, 2007

Watching punch and counterpunch in the Murdoch/Branson battle is tremendous fun, but their private war is beginning to suck in reluctant bystanders. Sky's announcement of its own pay digital terrestrial service has serious implications of the potential of the UK's Freeview platform and its various partners. Sky plans to switch off its current three Freeview channels and use the capacity to launch four pay channels instead. To get the new channels viewers will have to install a Sky DTT box (based on different conditional access and codec technologies to those already deployed) - they will not be available through any existing Freeview box or IDTV, or through other Freeview-compatible devices like BT Vision. The UK's regulator, Ofcom, will investigate Sky's proposals to establish whether the variations in licences necessary for Sky to launch its new service should be permitted. One key concern is that the introduction of MPEG4 technology on the DTT platform will begin to make legacy DTT equipment redundant and could reduce consumer confidence in DTT in general. This is particularly important given that the switch-off of analogue terrestrial services begins in 2008. On balance we believe that the introduction of MPEG4 in itself will not be seen as a disadvantage, but that Ofcom should encourage a consensus approach from all DTT partners towards its introduction in order to minimise consumer concerns and ensure a smooth transition. The most contentious issue is likely to focus on establishing an appropriate balance between the number of free-to-air and pay channels across the DTT platform. The key to Freeview's success (apart from the massive investment of licence fee money in digital channels by the BBC) has been that it requires no contract between the viewer and a service provider. Plug-and-play access via a low-cost device, as well as confidence in platform stability, have ensured rapid consumer take-up. If "Freeview" in fact becomes dominated by pay services, this model is disrupted. Ofcom's challenge is to accurately predict the market impact of alternative packages of pay and free channels so that overall policy goals are achieved. It will face considerable pressure from vested interests on both sides of the "pay" and "free" divide and its perceived independence is likely to be severely tested by this dispute.
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