IF THE British government gets serious about preventing any one
broadcaster from dominating the digital television revolution, it could find
itself in the ironic position of slowing down the transition from analogue to
digital TV.
The government has asked its telecoms regulator, Oftel, to outlaw
鈥渁nticompetitive鈥� subsidies that would give a discount to consumers purchasing
the technology needed to view digital broadcasts. But without some subsidies to
consumers, say industry observers, the technology could prove so expensive that
the market would fail to take off.
Last week, the Departments of Trade and Industry and National Heritage
published draft regulations designed to promote fair competition in digital TV.
They are supposed to prevent one company dominating the industry by controlling
the 鈥渄igital gateway鈥濃�攖he hardware needed to receive digital
transmissions.
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In digital TV, programmes are transmitted as streams of digits, rather than
signals varying continuously in amplitude. Digital signals pack in much more
information, allowing broadcasters to air many more channels. But a new set-top
box of electronics is needed to decode the signals.
The government says its aim is to stop any one digital broadcaster making its
set-top box the standard for digital TV, and then holding other broadcasters to
ransom when they need to use the same technology. That is a prospect because
Rupert Murdoch鈥檚 News Corporation is poised to market a set-top box ahead of its
competitors. Murdoch acquired the technology in November 1995, when News
Corporation bought the advanced products division of a company called
NTL鈥攚hich until its sale into the private sector was the research arm of
the Independent Broadcasting Authority.
Murdoch鈥檚 competitors, including the BBC, had urged the government to oblige
him to design his set-top boxes with room for the 鈥渟mart cards鈥� of other digital
broadcasters. The government has rejected this option, demanding instead that
any company which owns technology needed to view digital TV must license it to
others on 鈥渇air, reasonable and non-discriminatory terms鈥�. Companies running a
digital service must also allow rival broadcasters to use the service.
Oftel will be left to decide what constitutes an anticompetitive practice.
Oftel鈥檚 most difficult job will be preventing anticompetitive subsidies of the
digital gateway hardware.
It was by heavily subsidising hardware that Murdoch made his BSkyB the
dominant player in British satellite TV. The same could well happen again,
because set-top boxes for digital TV will cost at least 拢500鈥攁t
least until mass demand stimulates mass production. 鈥淲e don鈥檛 expect a rapid
take-up of set-top boxes at 拢500,鈥� says Fred Round, chief executive of
RETRA, the Radio, Electrical and Television Retailers鈥� Association. Even Ian
Taylor, the science and technology minister, has argued that some subsidies may
be needed.
鈥淚t will be extremely difficult to balance the need for subsidies to
stimulate sales against the risk of someone using subsidies to create a de facto
standard,鈥� says Round.
Taylor and Oftel director-general Don Cruickshank are providing few clues
about how the balance will be struck. 鈥淚t will not necessarily be
anticompetitive to subsidise the hardware,鈥� says Taylor. 鈥淚t will depend on the
level of subsidy,鈥� adds Cruickshank.