Live Issue/Digital TV: The digital revolution takes another step forward

The launch of BIB has led to some concern in the TV industry,

Claire Beale says.

The digital TV revolution took on a dramatic new dimension last week. As

if the prospect of 200 new digital channels wasn’t enough (and that’s

just digital satellite), a whole range of interactive services as well

as Internet access will all soon be available from the comfort of your

favourite armchair.

The company poised to transform TV into a two-way window on the world is

British Interactive Broadcasting - and its launch last week dragged the

TV industry into a new era (Campaign, 9 May).

Not that digital interactive services are a new concept. The major UK

cable operators all promise to deliver a digital interactive revolution

and one of the bidders for the digital terrestrial licences, DTN,

incorporated a range of interactive products into its application. So

why should last week’s news spark such enormous interest?

The calibre of the players is one clue. BIB is the creation of four

partners: BSkyB and BT each own 32.5 per cent, Midland Bank owns 20 per

cent and Matsushita Electric has 15 per cent. BSkyB and BT make

formidable allies. So formidable that the alliance has attracted the

interest of Oftel and prompted concern from rivals.

The reason for the concern centres on the control the new company will

have over the digital gateway.

BIB has announced that it is to subsidise the cost of digital satellite

set-top boxes, the gizmos that will allow your television to receive

digital TV and interactive services.

And it’s not just the door to digital satellite that the new technology

will throw open. The pounds 200 boxes are capable of being upgraded to

receive digital terrestrial and digital cable - effectively giving BIB

distribution power over the entire digital framework.

According to Rupert Gavin, BT’s director of multimedia services, ’the

functionality of the box means that customers will be able to use a

single device for all their services - satellite, terrestrial and

Internet’.

And that single device will be controlled by BIB.

Things get more complicated when you consider that BSkyB already has

satellite TV under its thumb, is now claiming the digital satellite high

ground, and is one of the lead members of the other consortium bidding

for the digital terrestrial licences. That consortium - British Digital

Broadcasting, which also includes Granada and Carlton - is considered by

some the favourite to take the DTT licences. If that happens, Rupert

Murdoch should have the future of TV in the UK in the palm of his

hand.

Jeremy Thorp, the chief executive of rival DTT bidder, Digital

Television Network, says BSkyB and BT have teamed up ’to try to dominate

and control access to the information superhighway’. It’s a valid point,

undermined only by Thorp’s self-interest: the Independent Television

Commission must, he says, award the digital terrestrial licence to ’an

operator committed to creating an independent and competitive digital

infrastructure’. DTN, of course.

Certainly, the launch of BIB presents the ITC with another thorny issue

to consider when mulling over the digital terrestrial bids. If it goes

for the BSkyB-backed application, then Murdoch’s influence will be

omnipresent.

Sam Chisholm, Sky’s chief executive, says, quite simply, ’Sky again is

at the forefront of these changes.’

Whatever happens with digital terrestrial, BIB’s interactive services

will launch next summer, a few months after BSkyB’s digital TV package

and probably before digital terrestrial has had a chance to get

going.

The interactive services will help make digital TV more attractive, and

vice-versa.

Interactive shopping will offer a wide range of retail brands, including

clothes shops, chemists, food stores, electrical goods retailers and

drinks companies, all providing an ordering and home delivery service.

Sainsbury’s, HMV and Great Universal Stores are among the companies

already talking to BIB about home shopping.

Home banking is also expected to be a key driver of uptake. Customers

will be able to use TV banking services to check account balances,

transfer funds, order statements and pay bills. Loans, insurance and

credit card quotations will also be available and, despite Midland

Bank’s status as a BIB shareholder, BIB hopes that other high street

banks will use its platform to offer such services.

For Keith Whitson, the chief executive of Midland Bank, the development

is the next logical step from telephone banking - a service Midland

pioneered with the launch of First Direct - and, like the phone, TV will

provide ’customer-friendly access through a familiar medium’.

All very exciting, for observers of the TV revolution, but what will the

punters make of it? Does BIB really have the sort of services people

will pay pounds 200-plus to access?

The shareholders are too cagey to reveal much about their market

research findings, other than to say that initial research has met with

’an enthusiastic response’.

Phil Gullen, the managing director of Carat Insight, takes a measured

view. ’It’s primarily a technology-led development and I feel the

products and services that will really make this work have not been

fully thought through yet. It’s bound to have small penetration for a

few years, but its users will probably be of high value to the content

providers.

’This is one of those things that we’ll look back on in five or ten

years’ time and realise how naive we were in the way we viewed it.’

This article was first published on Campaign