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The shift towards digital terrestrial TV has begun and yet no one can agree on how it should be handled. Only one thing is certain, Rupert Murdoch is in a strong position to make the digital revolution happen.

More channels, more choice, better quality. That’s the digital broadcasting promise, en-abling satellite services to grow exponentially and terrestrial broadcasters to run up to 18 new digital channels in every home in the country.

Some said it would never happen. Others still hope it will not. For, although the move towards digital is now underway, the advertising industry is worried and even broadcasters themselves cannot agree the best way forward.

Three months after the government published its White Paper on digital broadcasting, confusion and ignorance still reigns.

“It’s unbelievable how unaware people are about digital,” claims James Walker, media development director at J Walter Thompson. And that’s just those in the industry. Despite heavy media coverage, only four in ten of the population’s adults are aware of plans to expand the terrestrial TV airwaves, according to a recent Sensor survey by CIA MediaLab.

One reason is ignorance about what it actually is. TV and radio is currently broadcast via traditional “analogue” technology. Its replacement by digital will result in improved picture quality and allow more channels to be broadcast in the bandwidth now required for just one or two.

Three types of digital service are envisaged: digital satellite TV, which will enable satellite channels – notably BSkyB – to introduce hundreds of new channels; digital terrestrial TV, which will allow all existing terrestrial broadcasters, including the BBC and ITV, to introduce new services; and, finally, Video on Demand, which will mean that viewers can choose what they want to watch and when they want to watch it. All will require TV viewers to buy a digital decoder – or set-top “black box” – which will enable a traditional analogue TV to receive digital transmissions. These black boxes will cost up to 500.

Although digital satellite TV could be launched in the UK as early as next year, it is digital terrestrial TV (seen by terrestrial broadcasters as their last opportunity to get into the lucrative pay TV market) that is seen as the key to the broadcasting revolution. Digital terrestrial will be mass market, which is why National Heritage Secretary Virginia Bottomley caused such widespread debate when she unveiled the Government’s plans for it in August.

The Government intends to offer digital terrestrial licences to up to 15 new channels, as well as allocating frequencies to the four existing terrestrial channels and Channel 5. Already Granada Television has mooted a “Granada Gold” service and the BBC educational and self-selecting news channels. However, not all were convinced by the Government’s plans, since the full-scale introduction of digital broadcasting is expected to cost an estimated 500bn and it’s still unclear who will foot the bill.

When leading figures from the industry gathered for a heated debate at the Royal Television Society’s biennial conference in September, no one could agree on whether digital technology should be delivered through terrestrial, satellite or cable TV networks – a critical issue for manufacturers of digital decoders, and so for the consumer .

There is also concern over the Government’s failure to lay down a timetable for turning off existing analogue transmissions, the only guarantee of kick-starting the digital revolution, many believe. A likely scenario is that in 1998 the Government will announce that UK broadcasters have 12 years to switch to digital-only transmission (12 years being regarded as the natural lifetime of a traditional TV set and the point at which consumers would be prepared to trade up to a digital TV).

Yet pressure is on for it to do so before the legislators are overtaken by events, for on September 27 the BBC began its first digital transmissions, currently available only to the few with digital receivers. And, on October 18, Rupert Murdoch set terrestrial broadcasters’ pulses racing with News Corporation’s purchase of an obscure technology operation, the Advanced Products Division of National Transcommunications. In one fell swoop, Murdoch had bought himself a back-door route into digital terrestrial TV.

Through News International’s 40 per cent interest in BSkyB, Murdoch has been working on a digital satellite TV system to expand the number of channels he can offer. However, his latest acquisition also gives him control of state-of-the-art technology for delivering and decoding terrestrial signals. Already in control of the developing digital satellite delivery and decoding technology, he now also had direct access to all plans to date that have been made for digital terrestrial TV.

Shadow Media Minister Graham Allen has demanded assurances from NI that it would not use the deal to obstruct the development of digital terrestrial TV to the advantage of BSkyB’s digital satellite TV plans.

“The NI deal means Murdoch will control the technology needed to develop terrestrial digital TV, making it less worthwhile for others to develop rival systems. It also means he’s hedging his bets,” says Walker. Sky must soon decide whether to switch to all-digital broadcasting in 1996 and, if so, how? Will it, for instance, subsidise distribution of the decoder? Walker believes digital terrestrial offers the greatest potential in the long term. The issue for Sky is whether to apply for digital terrestrial licences when these become available, some time in the next four years, he says.

Advertising industry reaction to all of this remains cautious. In its response to Bottomley’s digital terrestrial TV plans, the Institute of Practitioners in Advertising voiced fears that digital TV could result in two nations of viewers: those able to afford access to the most sought-after programmes, and those effectively disenfranchised from them.

The obvious result would be that it would become more difficult for advertisers to reach their audiences. “We support licensing new digital services, but are concerned that some Government’s proposals may devalue the public service currency,” says the Media Centre’s chairman and chief executive Adrian Birchall. In short, more fragmented audiences.

The IPA therefore advocates retaining the status quo for as long as possible and is also recommending that all public-service analogue TV channels should simulcast on digital, and that any other BBC programming on digital should either be simulcast or have been previously broadcast on analogue.

Many within the industry agree. At Zenith, media information systems director Frank Harrison doubts that an explosion of new channels is inevitable: “The question is, how many can subscription and ad revenue support?”

Besides, is there enough programming to sustain the hundreds of new channels some envisage? While the BBC has much content, ITV companies and BSkyB have less. And cable operators have developed only limited cable-exclusive output.

In contrast, the ITC has called for the Government to make clear its commitment to the switch-over. The ITC also believes that conditional access and subscriber management systems should be licensed and regulated by the ITC – a concern is whether BSkyB’s subscriber management operation could handle all pay TV services, whether satellite or terrestrial.

Whatever the outcome, Murdoch is well-positioned to benefit. Digital broadcasting undoubtedly threatens “Superhighway” plans of cable operators and even BT, as households won’t need high-speed cabling to receive the new-generation digital services.

The threat is amplified by the speed with which BSkyB could launch digital satellite TV, as soon as 1996 some industry observers predict. Murdoch isn’t the only player who can make the digital revolution happen, but as ever he is the best positioned to do it first.

What the Radio Authority says

FM will remain necessary for local services for the foreseeable future as some areas may not receive local digital audio broadcasting initially.

Incentives in terms of longer analogue licence periods are needed for stations operating less profitable licences to encourage investment in digital audio broadcasting.

Guaranteed places for the three analogue national commercial stations (Virgin 1-15, Talk Radio UK and Classic FM) should be used for simulcasting for an initial proportion of 80 per cent of the time.

What the Independent Television Commission says …

Questions the “two-tier” system of licensing proposed by the Government for digital terrestrial TV (that is, a “multiplex provider” is to be responsible for transmission while broadcasters are only for programme services).

Government must fix a date for the turning off of analogue TV.

The ITC should have full and sole responsibility for administering the licensing system.

What the Institute of Practitioners in Advertising says

No government decision should be made on when to turn off traditional analogue signals.

Analogue public service output should be simulcast on digital.

Any other BBC programming on digital should either have been simulcast or have been previously broadcast on analogue.

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