Torin Douglas: Pace of change to digital TV looks set to quicken

Affordable digital TV is not far away, with the launch of a £99 adapter – but it’s up to broadcasters and manufacturers to ensure cheap TV is a reality, says Torin Douglas

So, the digital dream is becoming a reality. The once-mythical concept of a small, low-cost gizmo that would turn all analogue television sets into digital ones has been achieved – and it’s due in the shops by April.

It’s not yet as cheap as it will be, but make no mistake Pace Micro Technology’s &£99.99 Digital TV Adapter is a breakthrough in the campaign to switch UK TV from analogue to digital – making the Government’s target period of 2006 to 2010 look distinctly more achievable. Now it’s up to the broadcasters to deliver more free-to-air channels. And to come up with a marketing concept that will make it clear that digital TV doesn’t have to be pay-TV.

Last week’s launch announcement by Pace took most people by surprise, not least the broadcasters, partly because of a widespread misunderstanding about the efforts being made to market a &£99 “free-to-air” digital box.

It’s true that broadcasters have been talking to set-top box manufacturers about how to deliver a low-cost box for digital viewers who want only free channels. This is particularly important to the BBC, which is about to launch a portfolio of new licence-fee-funded channels, starting with two for children, CBBC and Cbeebies, on February 11. The conundrum has been how to find a way for viewers to receive the free channels without having to subscribe to pay-services.

Until now it’s been possible, but not easy. You could buy an integrated digital TV set with built-in receiver equipment, but those are still &£700 or &£800. BSkyB would let you have a SkyDigital box for an installation charge of &£100, if you did not want to subscribe to any of its pay-services. But ITV Digital and the cable companies would only supply boxes to subscribers. Now it’s even harder. Anticipating an increase in demand for the free channels, BSkyB has whacked up the price to non-subscribers to &£220 plus the &£100 installation charge. Hence the need for a quick, cheap solution.

The misunderstanding arose over a belief that, to bring the price of the box below &£100, broadcasters would have to subsidise it (as Sky Digital and ITV Digital do with their set-top boxes). That seemed to be a stumbling block. The BBC insisted it couldn’t use licence-payers’ money to subsidise a receiver box. Its financial contribution, it argued, lay in its investment in half a dozen free-to-air digital channels and a heavy marketing campaign for them, on and off-air.

Commercial channels weren’t falling over themselves to put up more money either. ITV Digital’s owners – Carlton and Granada – are trying to cut their existing box subsidies, not offer new ones, and Channel 4 and Channel 5 see no great incentive in subsiding a box for the free channels.

But Pace has produced its &£99.99 adapter without any subsidy. What’s emerged is that there have been two separate initiatives developing alongside each other. The manufacturers – not just Pace, but Nokia, Philips and others – have been developing low-cost boxes, in the strong belief that the broadcasters would be delivering a package of some 15 free-to-air channels. And the broadcasters have been trying to thrash out just what that package might be.

The current “free” offering is not yet strong enough to attract all the millions of households that must switch to digital before the analogue signals can be switched off. It’s to be hoped that the BBC channels will prove popular – particularly if culture secretary Tessa Jowell approves the revised BBC3 proposal. There is also ITV2, which is being heavily promoted on ITV1; the ITN news channel; the Granada shopping channel Shop!; and, of course, the digital versions of BBC1, BBC2, ITV1, Channel 4 and Channel 5, in widescreen and with interactivity. But more will be required.

It’s been suggested that Sky’s ambitions to get into terrestrial TV might persuade it to offer Sky One as a free channel. (After all, Sky was originally part of the British Digital Broadcasting consortium that became ITV Digital.) And that the BBC as part-owner of UK Television, might agree to UK Gold being part of the free-to-air package. And how about some of the Turner Broadcasting channels like CNN which are also free-to-air? All these channels would benefit from increased advertising revenue if they reached a wider audience. The BBC radio networks could also be added.

Agreement remains some way off, but with the Pace Adapter due on sale at the end of March, there is a stronger incentive to sort matters out quickly. Almost as important is agreement on the marketing of free-to-air digital TV. At present, there is a choice between SkyDigital and ITV Digital, both of which have invested millions in marketing. The cable companies NTL and Telewest Broadband also offer a digital proposition, though less clearly branded. But surely there must be a campaign, a name and a logo to get across the message that digital TV doesn’t just mean pay-TV? The box manufacturers will market their equipment under their own brand names, but they are also hoping there’ll be a strong, combined marketing push by the broadcasters.

As it happens, Pace has already pulled off one marketing trick. The word “adapter” – as distinct from “set-top box” – is clever, suggesting something small, low-cost and easy. It also looks very different from a set-top box and you could imagine having one on each TV set when the price comes down further.

It may not be a giant leap for mankind but it’s a step in the right direction.

Torin Douglas is media correspondent for BBC News

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