Free to view future 

1 July 2002 tbs.pm/1828

A fundamental error was made when the ITC awarded a franchise to ONdigital for the rights to several digital television multiplexes and thus the lions’ share of the publicity involved in a new television platform.

The mistake was – in retrospect – an obvious one. The ITC expected ONdigital to compete head on with Sky Digital for an audience.

For a number of reasons this was a blunder. Above all, BSkyB’s marketing experience is vastly greater than anything that Carlton and Granada – ONdigital’s shareholders – could come up with themselves.

Sky had previously seen off the threat posed by the official but inferior BSB by shrewd marketing. That they should see off another contender from a similar set of parent companies should be no surprise.

ONdigital thought there was a market in competing with Sky, offering higher-income viewers a way of obtaining multichannel television without a dish or the taint of Mr Murdoch.

But the market wasn’t there – those who already had Sky were assimilated to the brand and simply ‘upgraded’ to Sky Digital, whilst those without didn’t want a dish or didn’t want Murdoch – hardly a way of building a market.

The management at ONdigital failed to realise they were competing in an area where the rival had already won. When the initial attempt to win over viewers failed, they took the step most logical to television executive everywhere by plunging downmarket.

Too late. Sky had already grabbed those viewers who could afford the service they offered and had turned to the middle class viewers that ONdigital – absurdly renamed ITV Digital to capture those people it had already lost – had spurned in the hope of gaining the quick buck Sky had first spotted in the late 1980s. And there endeth the tale of ITV Digital and, by implication, Digital Terrestrial Television.

Actually, the death of ITV Digital opens up a new horizon for digital television that the government should welcome. The Treasury has looked longingly at the existing analogue UHF frequencies that could all be sold off for vast amounts of cash if only the existing broadcasters would get out of the way.

To that end, the Culture Department has tried to convince us all to ‘go digital’. But this has meant asking people who have previously thought television to be free – and the vast majority ignores the licence fee as a consideration in this – to start paying up to £40 a month for a flickering picture in the corner of the room.

There is another alternative, and the failure of ITV Digital provides the perfect opportunity to supply it. Of the ITV Digital services, a large number are free at the point of use. Thus those with a compatible digibox are able to receive them without any payment.

The five existing terrestrial channels, plus BBC Choice, BBC4, BBC News 24, BBC Parliament, ITV2 and ITN are present from the moment the digibox is connected. The entire ITV Digital offer is a subsidised box and several expensive premium channels, nothing more.

The government – in the guise of the ITC – could choose to dump ITV Digital and switch to a new form of digital television.

This would mean admitting defeat against Sky Digital, but then Sky’s wireless cable could be cut free from worries about competition. Quite simply, Digital Terrestrial could go Free to Air.

Coupled with the new Pace Digital TV adapter at only £100, the majority of people would be in reach of digital choice.

The ‘plug n’ play’ characteristics of boxes like those from Pace would mean that the unsophisticated and the elderly could convert without fear. At £100 and falling, all but the lowest paid families could convert to digital in 18 months.

The spectrum abandoned by ITV Digital could go to public service providers. The BBC could offer an Asian service on TV to rival its own radio version.

ITV regions could be postcoded so those in the far northeast of England or the southwest of Scotland could get local news thanks to duplicating transmissions of ITV1 and the BBC, rather than a ‘Borders’ service as they currently have to put up with.

The ITC could start Channel Six, based on the idea of City TV, offering local programming and peak-time networking to a new group of affiliated stations broadcasting from each main transmitter.

An S4C-style co-produced Channel Seven could offer programming for the UK’s minorities on a Dutch shared-time pattern.

The lowest-powered multiplexes could still be offered as pay television, but with a new wrinkle. The ITC should locally licence each station that wants spaces on the former ITV Digital multiplexes where such space exists.

These new contractors – Channel Eight ultra-local providers or such established names as Sky One and UKGold – could gain channel space based on the lowest subscription-per-household they could offer.

Families with a free-to-air box could decide on a case-by-case basis which channels they wanted above the ones they get free.

With a low cost box, each television in a household could be converted one-by-one, and the children of a house could choose to subscribe to a cartoon channel whilst the parents choose FilmFour for the main set.

Each additional channel could be offered at under 50p per month – vastly more than the existing pennies-per-viewer available to the previous pay channels.

The government could take over ITV Digital’s subscriber management system and create a wholly owned subsidiary of the ITC, the Television Subscription Authority.

The TSA could manage a further refinement to the plan, which would see the Post Office offering cards that could be filled with stamps for subscription television.

When the viewer has 12 of the 50p stamps, they write their unique TSA subscription number on the card and have it stamped by the Post Office. A few hours later, the channel they requested – Sky One, E4, UK Horizons – is activated for a year.

Those with higher incomes continue to subscribe by Direct Debit or credit card. Those on limited incomes lose little, as they have access to the Free to Air channels.

If they want more, each extra channel is within reach thanks to the TSA and the Post Office. Even those without bank accounts can benefit. Thus a child with a converted TV set in his bedroom can ask for E4 for his birthday – and all but the poorest of families can pool resources to buy stamps to pay for it.

An enterprising teenager can do a summer job to earn money to buy the stamps that pay for Sky One in his bedroom.

The government could use this plan to get everyone on to digital in less than five years.

If there are people without the service after that time, they can be given subsidised boxes or access to a TSA-controlled subscription to Sky Digital under the same terms.

Even those in non-DTT reception areas can then benefit just before the signal is cut. The Treasury would make the money back instantly from selling the vacated frequencies on – possibly to channels eager to be licensed for 50p a month to FTA digital homes.

Above all, Sky Digital wouldn’t be threatened. The reverse would be true – Sky would find itself back in the days where it was the only competition was from a limited terrestrial service with limited channels.

The vast majority would have more than now – but they would have less than Sky, allowing Sky’s wireless cable operation to continue as it always did before digital television first appeared.

They could even market the cheap DTT box as a way of tasting digital TV and Sky’s own channels before making the leap to a dish.

The beauty of this plan for the government lies in three places.

First, it costs almost nothing, as ITV Digital’s subscriber management call centres can be set up for a song by a company such as Centrica or NPower and licensed by the TSA.

Second, it requires little or no primary legislation. The Broadcasting Acts could be modified by a short Private Member’s Bill or the ITC given the appropriate powers under the Regulations to form the Television Subscribers Authority Corporation and licence the new providers.

Third, the ultimate result would be to shift television off conventional analogue UHF far before the government’s target date.

As more people buy FTA boxes that can also use cards supplied by the Post Office to get further channels, the price of the boxes would fall. And thus more people would buy the boxes.

From the fall of ITV Digital comes something very rare – a virtuous circle. But only if Tessa Jowell has the imagination to make the leap.

[Since this article was written, ITV Digital has been replaced by a free service called Freeview and a small pay service called Top Up TV]