November 13, 2002 Vol. 5 No. 23

www.telecomweb.com

incorporating

INTELLIGENCE ON NEW TECHNOLOGIES IN THE INTERNATIONAL BROADCASTING BUSINESS Freeview’s Moment Of Truth contents Mark Holmes senior editor integrated digital TV sets (IDTVs), which com- bine a widescreen monitor with a digital TV The Freeview service, launched in the UK set-top box. The failed ITV Digital pay-based on Oct. 30 with over 30 free radio and TV service whose frequencies Freeview has inher- 2 Cable Players Cry channels and backed by an aggressive mar- ited made much of the potential of IDTVs to Foul in Austria keting campaign, will attempt to persuade the boost its subscriber numbers. The idea was millions of people who don’t want pay-TV that consumers would trade in their existing that there is now a legitimate and compelling analogue receivers for IDTVs when they came 4 Singer: Speed Is alternative. If it works, it could represent a to upgrade. However, the devices were expen- Essential For UK Cable pivotal point in the fortunes of DTT, and a sive, and sales of IDTVs in the UK have thus possible model for DTT services elsewhere. far proved disappointing. As reported in 5 TFI Sees Advertising While the channel line-up offers an inter- Inside Digital TV (Volume 5, No. 2), only Revenues Increase esting blend of mainly entertainment-focused 120,000 of these sets were sold in 2001. services, it will certainly not give pay-TV Will the launch of Freeview (which has operators any sleepless nights. But, it does been based thus far on the availability of 6 VOD Strategies Will offer an intriguing proposition. cheap plug-in adapters) do anything to boost Prove Far From Easy Peter Davies, director of distribution and IDTV take-up? On the face of it, it seems strategy at the BBC, believes the market unlikely: The majority of adapters available at opportunity is considerable. He told Inside retail range in price from £85 to £130 (133.5 7 BBCi Looks North Digital TV in an exclusive interview: “The euros to 204.2 euros), a far cheaper way of research we have done shows that there are accessing Freeview than buying an expensive 8 Briefs about 10 million households who don’t want IDTV which start at around £400 (628.3 euros) pay-TV services. So, 10 million out of 25 mil- and rise to several thousand pounds. Despite lion is a huge number of people. We think it these harsh economics, Davies believes IDTVs is going to be really big.” will have a significant role to play in DTT The launch of Freeview raises a number of take-up in the UK. He said: “Once we get over intriguing questions. One of them concerns continued page 3 TVcompass Ditches £29 STB Barry Flynn Editor sidise the set-top box, but has a staff of around 23 per- reveal it yet, but he expected recoup the subsidy from sonnel, and its “convergent” to have them on board “cer- TVcompass, which was shopping, travel, gambling remote appear to have sur- tainly before Christmas.” planning to bring a free-to- and advertising revenues. vived Voller’s departure. John From what Roberts says, air adapter to the UK DTT These would derive from Roberts, TVcompass’ chief TVcompass’s abandonment of market for just £29 (45.5 transactional services software architect, told Inside the 29-pound set-top box euros) in Spring 2003, has accessed via the ‘wireless’- Digital TV: “TVcompass is strategy (which was greeted now abandoned the idea, fol- enabled remote control. looking for a replacement with a certain amount of deri- lowing CEO Stephen Voller’s When the notion was CEO at the moment. (While) sion by the industry) has poaching by a rival DTT tech- revealed, Inside Digital TV we are not planning to devel- proved key to its financial nology outfit. was sceptical about the op the set-top box and the survival. “We were unable to Voller was the brains implied level of transactional remote control together, we get funding based on that behind the unusual project, revenues, but thought there are working on a standalone business plan,” conceded which involved an innovative were lots of good reasons for remote control device.” He Roberts, describing it as combination of set-top box adding mobile phone capabil- added that it looked as if the “basically Stephen’s baby”. and mobile-enabled remote ity to a remote control device, company had now secured But “we always had a busi- control. Voller’s idea (see particularly in a DTT environ- “significant funding.” Asked ness plan in place for just the Inside Digital TV Vol.5 ment lacking a return-path. for the identity of the new remote control.” While he No.16) was to heavily sub- Both the company, which investor, he said he could not continued page 2 TVcompass Ditches £29 STB continued from cover

recognized that the set-top box strategy “Obviously that would have to depend represented one possible way of getting on how it’s sold, whether or not it is sub- SUBSCRIPTION ORDER FORM the remote into homes, “of course the sidised by ourselves or by anybody else, Inside Digital TV is published fortnightly and costs are much higher – and also the which retail channel it goes through and is available on subscription only. Annual subsidy model of selling it for 29 pounds then of course the cost of materials at subscription is £547/$797 (25 issues). actually is riskier than the alternative.” that point. So there’s no indication of Roberts was unwilling to be drawn on what it would be.” Surname a precise date for the launch of the While Inside Digital TV is aware of First Name mobile-enabled remote control. “It’s very the identity of the company, which Job Title unlikely to be ready by Spring (2003),” Voller has moved to, that information Company he said. “I mean we don’t actually have has been embargoed until after this edi- Address a date set, but it won’t be then.” tion goes to press. It will therefore be As for the likely price of the remote (it announced in the next issue. sports a colour display and is Bluetooth- >>TVcompass on +44 (0)20 7716 enabled), Roberts was equally vague: 5805.<< Country Tel Fax Cable Players Cry Foul In Austria e-mail I enclose payment of £547/$797 Mark Holmes senior editor ORF programming).” Cheques to be made payable to Despite objections by Austrian cable PBI-UK Ltd Cable operators in Austria believe the players, the RTR is determined to make or charge my credit card government is poised to use public TV DTT a success in Austria. It is preparing Mastercard Visa Amex licence fees to implement DTT there. While a pilot project in Graz, Austria’s second Card Number ____/____/____/____ nothing has been decided, they believe largest city, which is located in the south, Exp. Date __/__ Please invoice my company: Order No.______such a plan would be inherently unfair. for launch in 2003. This project will go a For prices in Euros please call the number below. René Tritscher, deputy managing long way to determining the main tech- director, Association of Telecoms and nical issues surrounding the implemen- Please send to: Client Relations Broadcasting Companies in Austria told PBI Media, tation of DTT in Austria. 1201 Seven Locks Road, Suite 300 Inside Digital TV: “The problem is that The results are likely to be known by Potomac, MD 20854 the cable operators have to pay their the end of next year, said Grinschgl, Tel: +1 (301) 354-2100 own money to build up their own infra- adding: “This project in Graz will be the e-mail: [email protected] structure and now a second infrastruc- first to be open to private households. In The Team ture will be built, which will be financed the past, we have had only technical by the government. We think this isn’t projects. Five hundred households will be fair, as cable players have to had to build selected for the project. We want to find Editor Barry Flynn infrastructure with their own money.” how interested consumers are in digital e-mail: [email protected] However, in an exclusive interview, TV, and different applications such as Senior Editor Mark Holmes Alfred Grinschgl, managing director of the interactivity. The digital TV project will e-mail: [email protected] Rundfunk & Telekom Regulierung (RTR), also be open to other households in Graz. Production Editor Tracey Lilly the Austrian Broadcasting Authority, told Other people will have the opportunity to Senior Marketer Patrick Landis Inside Digital TV that he believed using buy a STB and to be part of this project.” Senior Managing Editor Jim Rogers licence fees was a valid approach. He said: In terms of the transition from analogue e-mail: [email protected] “We have suggested setting up a digitiza- to digital in Austria, Grinschgl admits he Publisher Diane Schwartz tion fund supported by Austrian state can’t give a definitive time on how long it broadcasting fees. I feel that using those will take, although he is optimistic it could Published by PBI Media funds for this purpose is justified, as a be done within five years. He says: “We Editorial and Subscriptions Office: large part (33 per cent) of the fees collect- can assume that DVB-T coverage will PBI Media, 1201 Seven Locks Road, Suite 300 ed have not been used for broadcasting reach 70 per cent of Austrian viewers five Potomac, MD 20854 purposes in the past, but rather for gener- years after the start of the project, in 2008. Tel: +1 (301) 354-2000 al federal and provincial budgets. Using The greatest challenge is that the resources e-mail: [email protected] the fees in this way would not reduce the (frequencies) available for digital broad- programming fees allocated to the casting are highly limited. This will be Website: www.telecomweb.com Austrian Broadcasting Corporation (ORF), especially true of the simulcast phase, in ISSN: 1464-603X and for the first time our citizens would which analogue and digital broadcasting receive a broadcasting-related service in will be carried out in parallel. The costs of © PBI-UK Ltd 2001 return for paying the fees (in addition to continued page 6

2 Inside Digital TV | November 13, 2002 Freeview’s Moment Of Truth continued from cover the initial hurdle of getting people used of ITV’s Digital’s demise can be put down the quality of service. A lot of these to digital, I think it will become the nat- to poor decisions (such as paying exces- improvements depend on reaching a crit- ural thing to do … When you replace sively for Nationwide Football League ical mass of the UK population. If this your TV, you buy an IDTV.” rights), it was also plagued by reception happens, then Freeview becomes an Although the BBC’s initial marketing issues as well as low coverage levels. attractive proposition to channel campaign will not focus on IDTVs, this is Davies believes Freeview won’t suffer providers as a reach of millions increas- likely to change early next year. Davies from such problems. He said: “We are es the opportunities for advertising rev- adds: “We are thinking for our next wave doing something known as a mode enue. Davies says: “You have got to wait of marketing in the first quarter next change. We basically changed from 64- until the number of people accessing year to incorporate IDTVs. Certainly, the QAM, to 16-QAM. What it does is elimi- Freeview is sufficiently high for it to BBC digital guide will also include a ref- nate all of the interference problems that make economic sense to go FTA (Free-to- erence to IDTVs as well. I think the prices ITV Digital had.” Air). What a lot of these channels are for IDTVs will come down. I think once He added: “A lot of the interference doing is buying shelf-space for the the (IDTV) manufacturers see there is a problems have gone because we have future. There are big companies behind market for the Freeview adapters, they doubled the power at the biggest 30 the channels. I think in time I wouldn’t will increasingly be competing for that transmitters. That combined with the be surprised if Sky Travel turned into market and it will force the price down.” mode change means, in effect, we have Sky One, for example. We are probably increased the power by four times. It talking about 3-5 years away.” How many users? means the signal is a lot more robust. We Improving the EPG and generating But the biggest question facing have got rid of the interference in most and developing PVR capabilities are also Freeview will be how many users it will cases. It means it works a lot better with priorities next year. Davies says: “The be able to attract. If Davies is to be existing aerials, and it has boosted the EPG is fairly basic. We hope to improve believed, there are 10 million households number of people that can get it.” that next year. Now, we only do ‘now- that could potentially use Freeview, and-next’ data, but I think longer-term excluding coverage issues. A figure of Kite-marking Scheme we want to do seven-day data if we can. 50,000 new users a month might seem An effective kite-marking scheme is I think the other thing we will see hap- conservative in view of the numbers of not yet implemented, despite it being pen is PVRs being combined with adapters being sold so far. Certainly, a stipulated by the ITC (Independent Freeview receivers as well. I think that is figure less than that would have to be Television Commission) when awarding going to be quite a big market.” considered disappointing. While not the NNC/Crown Consortium the multi- >>John Ashworth, BBC, Tel: +44 207 offering any projections, Davies said: plexes to run the Freeview service. The 765 5828<< “Our job is to make sure the services are theory behind the scheme is that new out there and people can get them. The subscribers buying a digital adapter or levels of take-up are as much down to an IDTV would be guaranteed some min- the manufacturers and retailers. We think imum level of functionality, or perhaps it is going to be big. We know they have just that the set does indeed do what it been selling at around 30,000 a month says it does. Such a scheme is not cur- TelecomWeb creates in depth since launch at Easter, and that is with rently in place. The association of multi- special reports (micro-sites) to no marketing. Once our marketing cam- plex operators, TDN (The Digital explore technologies and issues that paign starts, we don’t know whether it Network) has been given the responsibil- are important to service providers, will be double that or five times that. We ity for running this kite-marking scheme carriers and manufacturers from really don’t have any clue at the by the ITC. On this issue, Davies says: across the communications industry. moment.” “That is a decision for TDN to make. Some analysts certainly believe that What we want to do as Freeview is These reports combine news, Freeview could add well over 600,000 licence the Freeview logo to be included analysis, market research, case stud- subscribers in 2003. James Healey, a on at least the packaging, if not a kite- ies and other resources to help media equity analyst at Dresdner mark on the box. But we want to work industry decision-makers gauge Kleinwort Wasserstein, said in a research with manufacturers to put a logo on their business opportunities, stay ahead of note: “Our forecasts call for Freeview to cardboard boxes saying that the receiver market trends and avoid pitfalls. add 770,000 new subscribers during will pick up all the Freeview channels. It 2003 and 841,000 in 2004. We believe should be fairly soon. I would hope by To learn more, visit http://www. our forecasts to be conservative.” These early in the new year, it would all be telecomweb.com/reports/ or email figures would be equivalent to Freeview sorted.” Tony Napolitano at anapolitano@pbi- adding around 64,000 new households a media.com. month in 2003. Service Improvements Freeview also hopes to learn from the Once the service is up and running, ITV Digital experience. While a large part the challenge will be to keep improving

November 13, 2002 | Inside Digital TV 3 executive q&a Singer: Speed Is Essential For UK Cable In his first interview since leaving Finally, the other issue, of course, is to say, “Well, what choices do we have?” Telewest this summer, ex-CEO Adam that the really savvy consumer is going So, cable certainly gets a benefit from Singer talks exclusively to Barry Flynn to get his multichannel television from BT’s marketing. on the challenges facing the UK cable Sky, because Sky probably provides you But it’s a little like owning one of the industry. with the best choice of multichannel TV utilities on a Monopoly board: You know at probably the best price. They’re going that you can never get that wonderful Inside Digital TV: The UK cable to get their broadband high-speed con- situation when you own all four of them. industry seems to be in a state of ongo- nection from whoever’s going to give The issue cable faces is it can be an OK ing crisis. What are your views on its them the most speed at the best price. business, but it’s going to be very tough future prospects? And at the moment, cable wins that, no to be a great business, especially while question. And then telephone will be it’s split and especially given the nature Singer: The great thing that UK cable with whomever is most convenient … of the competition. It’s become a very has got is a terrific state-of-the-art net- More and more the voice telephony mar- mature market very fast. work. That’s the good news. The prob- ket is moving towards the mobile. lems are that so much money has gone Inside Digital TV: Given those diffi- into building the network and has gone The issue cable faces culties, what can the UK cable industry into transitioning the network from ana- do to turn the current situation logue to digital that it’s probably left is it can be an OK busi- around? insufficient capital in the UK cable ness, but it’s going to be industry for really being able to provide Singer: First, it needs a range of rela- the levels of service to customers that very tough to be a great tively new and sexy products, so that they ought to be able to provide. How do business, especially people actually understand that buying you find the capital to make sure you while it’s split and espe- cable is buying a hi-tech product. It can have the appropriate state-of-the-art needs the capital for that. Second, it call centres, the appropriate conditions cially given the nature of really needs to significantly improve its for your employees, and the appropriate the competition. service level, which is one of the things marketing? So that (a) the world knows it’s easy to say but very hard to do, the product’s there and (b) when they do —Adam Singer because it really does need a significant get through on the phone they get the Former CEO, Telewest amount of money. And then the thing it service that they want? Because if you’re really needs is a single national cohesive selling yourself on newness and techni- message so everybody in the country cal capability, then you have to provide Inside Digital TV: What you say knows that cable is a national choice. a service commensurate with that, and suggests that out of those three areas, And then it needs to become totally dig- the industry’s always found that hard. cable can only beat the others on the ital, because it’s hard to compete on tel- And it is a capital issue. broadband Internet front. evision against Sky while a large hunk The next problem the industry faces of your bandwidth is still analogue. as a totality is, because the cost of the Singer: Yes, the battle gets fought on But on the other hand, the margins network has been high, no single prod- the broadband product. You’re seeing you’re making on your analogue cus- uct makes money. So therefore you have virtually no growth in cable take-up, in tomers are much better than the margins to sell as a bundle, and that’s quite a subscription take-up. But you are seeing you’re making on your digital ones. That tough proposition. growth in those taking more services, or really puts you in a conundrum, espe- Another issue — which we should those who are taking broadband servic- cially at the moment. You know you’ve have addressed, but because of the es. And here cable can win because cable got to go digital, but it’s hard to let go of nature of funding that the two protago- can actually provide more speed at a today’s banana for tomorrow’s banana nists need, it’s been hard to do this — is better price. Cable can provide a 1Mbit/s harvest. that it’s very hard for two regional busi- service. Cable could provide higher But once cable can totally transition nesses, which is what the UK cable speeds to domestic customers if the mar- across to digital, it ought to be able to industry is, to compete against a series ket wanted, and BT would find it very offer a programming line-up as good as of national businesses. All their competi- hard to compete in that area. And that’s Sky’s, which it currently can’t do. And tors — BT, Vodafone, Orange, Sky — are the advantage. then it really needs to offer a basic national competitors. And if you’re a But the disadvantage for them is just Internet service, which NTL is doing at national competitor, you have tremen- the sheer size of BT’s marketing cam- 128 Kbts, which eradicates 56 Kbts, and dous efficiency in terms of getting your paign. Now cable gets a collateral bene- then it should eradicate 512 Kbts and message across to the consumer. And fit from that because it makes the market offer 1 Megabit — just to really get that’s one of the issues that cable cer- aware. And, of course, once the market across the message that cable can do all tainly lacks. becomes aware of broadband, they start of this stuff much faster than BT can.

4 Inside Digital TV | November 13, 2002 The problem with me saying these TV pilot Telewest ran in its Birmingham bution system. things is that everyone will say why did- franchise], or the stuff that David But that is a game that BT will at n’t you do it … That is exactly what it is Docherty and his team are developing. some point start to get into with Sky. It’s we were trying to do. The problem that cable faces is really not quite as elegant as cable’s single quite simple. It is becoming the tele- pipe, but it will happen. Inside Digital TV: Do you think the phone equivalent of a water utility. And So, cable’s running out of time. If you things that are actually happening in it’s only things like interactive television cannot get that single powerful cohesive the cable market, in terms of restruc- which will carbonate that water and national message out there relatively turing, debt for equity swaps, etc., are make it sparkle. soon, too much of the market will sufficient to deliver that promise? already have gone. The problem cable Inside Digital TV: So it’s not just really faces is how does it get itself out Singer: I can’t really comment on that broadband cable can use to differenti- of the current position quickly enough because I’m not au fait with the latest ate itself with; it’s also because it can so that there is still enough of a market details of either Telewest’s or NTL’s posi- mount the most sophisticated interac- left by the time they turn up again to be tion on that. But I can say that to be an tive TV offer. exciting. If they don’t move quickly, a effective business, you need a number of large chunk of the market that they need, things. UK cable could be a highly effec- Singer: Yes, and there needs to be a will have gone to BT. tive business if it can transition to digi- TV offer that takes one outside of con- As a piece of technology, it’s still the tal quickly, if it can offer more speed, if ventional linear TV. Health is highly rel- best. But being the best technology – it can offer better customer service. And evant because you can pull down the Concord, the Channel Tunnel or to do that, it needs two things: It needs health information you want at the time Betamax being good examples – is not to be a single national business, and it that you want it. You can provide direct the best position necessarily. The ques- needs significantly more capital. connections to paramedics whereby you tion is can they move quickly enough to can see them on the screen. They can’t sort out the financial side? Inside Digital TV: You haven’t men- see you, but you can absolutely relate to The UK cable industry needs time and tioned the interactive TV dimension of them. You can do that for medicine. You money: Both are in short supply. If they digital cable. can do that for education. You could do don’t move quickly, BT will have their that for further education. You could do lunch. And to move quickly and succeed Singer: That can make a huge differ- that for vets, pets. You could do it for requires more capital than the current ence, too. If cable could use the box as a citizen’s advice, and so on. And then you assorted financial conversation and basis for a domestic wireless hub, if cable start to be able to get these new broad- restructurings envisage.The danger cable could offer a range of significant inter- band services into all homes, not just faces is that it is on the cusp of being the active programmes like “Living Health” privileged multi-PC homes. So, on that best communications infrastructure the [the NHS-funded NHS Direct interactive level, it starts to become a default distri- UK never had. TF1 Sees Advertising Revenues Increase Mark Holmes senior editor cent stake in the pay-TV satellite player. edge on TPS. In the first nine months of this year, TPS Football rights are also at the top of the French broadcasting giant TF1 saw a contributed 206 million euros in rev- agenda at the moment. Operators had small increase in advertising revenues in enues to TF1. TPS had 1.385 million sub- until Nov. 12 to bid for the rights to first the third quarter to 270.9 million euros, scribers at the end of June 2002. These and second division championship an increase of 5.6 million euros from the results were largely in line with most matches in France between 2004-2007, as third quarter in 2001. The results confirm analysts’ expectations. well as league cup matches between 2003 a flat trend in the advertising sector. The The performance of TPS is critical for and 2006. Currently, TPS and Canal company’s net advertising revenues for TF1. Both TPS and its pay-TV satellite Satelite own the rights to screen matches the first nine months of this year were rival, Canal Satelite, have aggressive live. There has been some talk that TF1 down 0.9 per cent. TF1 expects little price promotions in the market during and M6 (a 34 per cent shareholder in TPS) growth for 2002 as a whole. period before Christmas. The launch of may look to bid for all of the rights, and In its results, announced on Nov. 6, Sport+ by Vivendi Universal (VU) is also thus leave Canal+ out in the cold, TF1 said its overall revenues had likely to put the pressure on TPS. Sport+ although due to the high costs involved, increased to 540.2 million euros in the is a new premium sports channel with a this would seem a very risky strategy. But, nine months to Sept. 31, a 25.1 per cent variety of popular sports (football, bas- it cannot be ruled out as the French increase from the same period last year. ketball, golf) etc. The channel represents Professional League (LFP) has structured This increase was mainly fuelled by the a major attempt by VU to try and gain a the tender in a way that will make it dif- consolidation of its stake in digital satel- competitive advantage in terms of sports ficult for TPS and Canal+ to team up to lite platform TPS. TF1 now has a 66 per broadcasting and give Canal Satelite the try and keep the costs for the rights down.

November 13, 2002 | Inside Digital TV 5 VOD Strategies Will Prove Far From Easy Video-on-demand (VOD) is the holy ancing over IP networks affect ADSL satellite, incumbent and standalone oper- grail of digital broadcasters, allowing VOD cost-base negatively. More impor- ators. Government subsidization will them to generate higher average rev- tantly, however, operational costs will be give a boost to VOD deployments by enues per user (ARPUs) and reduce cus- high due to the disadvantage ADSL has making it economically feasible to gain tomer churn in a competitive pay-TV over cable in terms of bandwidth use ROI in the medium term through fast net- environment. However, according to and distribution of content. It is not only work upgrade and low pricing. Italy will Datamonitor’s report “Return on that the high data rate of ADSL is only generate relatively high VOD revenues Investment for Video-on-Demand: Cable deliverable to subscribers within a max- considering the low penetration of VOD- and ADSL VOD in Europe,” ADSL VOD imum of 5.5km of the exchange, mean- enabled households. Whereas large parts providers in Europe will struggle to make ing that there will be an issue with dis- of the pan-European cable user base are VOD profitable accumulating negative tributing centralized content to a base of forecast to be VOD-enabled Datamonitor returns of $2.5 billion (2.4 billion euros) geographically dispersed subscribers. expects only a minority of them to by 2006. By the end of 2002, costs to Additionally, load balancing over IP net- become VOD subscribers who actively deploy VOD will have reached $44 mil- works is still at an immature stage and use the service, as cable VOD will be an lion (43.6 million euros) and this will run therefore expensive bandwidth cannot add-on functionality, much like PPV into $3.6 billion (3.57 billion euros) in be used in an optimal way. today which pay-TV users may or may 2006. ADSL VOD in Europe faces a pro- With the exception of only Germany, not activate. However, on the ADSL side hibitive cost base resulting from decreas- European cable VOD operators, on the VOD-enabled households are likely to be ing, but still significant, network access other hand, will benefit from two-way dig- active users due to VOD’s positioning as charges and from higher technology itized cable networks and will be able to a differentiated service, which will also costs, relating to bandwidth utilization position VOD as part of their high-speed be heavily marketed to the user base. and load balancing over IP networks. The Internet, telephony, and TV triple-play As ADSL VOD operators do not benefit Nordics will be the only region where strategy, targeting an existing user base. from the incremental pay-TV revenues of ADSL VOD will be profitable. Datamonitor therefore expects European cable operators they will charge a sub- VOD on ADSL will experience strong cable operators to achieve a slight positive scription fee in addition to the PPV charge revenue growth, but will not make it into ROI of $176 million (174.4 million euros), or SVOD subscription. Therefore, they profitability by 2006. It is mainly the after the 3rd year of service launch. need to focus initially on building their excessive operational expenses that push There is a polarization between cable content portfolios fast by negotiating pre- up costs on the ADSL side. Satellite and and ADSL VOD countries. Current cable mium content with pay-TV content standalone providers will have to pay strongholds such as Benelux and providers. ADSL VOD will be to a large network operators access charges for the Germany will develop sizeable cable degree reliant on movie and also music leased ADSL lines that they use. Even as VOD revenues by 2006. However, in content rather than the provision of local loop unbundling slowly progresses Germany’s case, due to the slow two- ‘broadcast television-like’ series or sitcom in Europe and regulation forces further way digitization upgrade of cable net- packages. Considering this, ADSL VOD decreases in pricing and these costs works and the complicated structure of providers need other ways of differentiat- reduce in significance, they still contin- Level 3 and 4 operators, ADSL will also ing their service, for example by innova- ue to represent an important extra bur- gain considerable ground, mainly driven tively packaging themed movie content den for non-incumbent ADSL VOD by incumbent and standalone VOD. and focusing on promotional offers. providers in competition with cable. The Nordic’s ADSL VOD will be strong >>Krishna Rao, e: mail: krao@data- Bandwidth utilization and load bal- due to deployments from all parties: monitor.com<<

Cable Players Cry Foul In Austria continued from page 2 introducing DVB-T in Austria will be cal- areas, and no large expansion plans have the RTR and the cable players, Tritscher culated in the coming year.” been announced at the moment. The only is optimistic the situation can be Tritscher is not so optimistic about alternative would be satellite TV.” resolved. He said: “We think there should this timeframe. He says: “I think a The RTR has a target of having 12-16 be a co-operation between the new and national rollout can be achieved by channels on DTT. In terms of the channel cable operators concerning digital TV. 2010. I think this is realistic.” line-up, Grinschgl says: “The digitally We think we can find some common The need for a compelling DTT alterna- broadcast channels will largely be free ground between all parties.” tive in Austria is seen as vital due to lim- TV channels. It will also be necessary to >>Daniela.Andreasch, RTR (Austrian its on cable penetration. Grinschgl argues: broadcast more than that which the Broadcasting Authority), e:mail: Daniela. “Alternatives to terrestrial broadcasting in Austrian channels offer (ORF and private [email protected]; René Tritscher, Austria are not feasible, as less than 40 per television), as 80 per cent of Austrian Association of Telecommunications and cent of all households are equipped for households also view German channels.” Broadcasting Companies, E:mail: Rene. cable TV. This mainly applies to urban Despite the potential dispute between [email protected]<<

6 Inside Digital TV | November 13, 2002 news in view BBCi Looks North The BBC has launched two new interactive services on Kingston Communications’ Hull-based ADSL network. Barry Flynn has been talking to the key executives involved. The obligation to serve local audi- portal, calls video “mockumentaries.” It’s too early to say how the local ences is part of the public service remit These, she says, enable viewers to “go audience will react to these new initia- of both the BBC and its commercial rival, behind the scenes, and see how the dif- tives, but six months of providing a the ITV network, and it’s always been a ferent characters feel about the events in broadband band TV service in Hull have thorny issue in the UK. The problem, in the drama.” Viewers are even able to provided some generic lessons for the general, has been that it’s economically post questions to the characters, receiv- BBC. According to Scott, “We originally much less efficient to make programmes ing their “replies” via the TV screen. thought putting up a lot of online con- for small regional audiences than for Thomas describes this process as one, tent, a lot of web-on-TV content, would large national ones – particularly when which allows the audience to “find their be a great way of putting things up it comes to expensive genres such as own path through the drama.” quickly and people would love it. In fact, drama. However, what’s probably just as sig- what we discovered is that people do not The other issue is the perceived south- nificant as these technical innovations is like looking at text in a sort of Web-on- ern, metropolitan bias of the BBC’s out- the fact that Thunder Road has been TV visually presented format. They like put, which means, confesses Emma made by the distinguished local play- lots and lots of video and they like lots Scott, project leader of what the BBC has wright John Godber, using local people and lots of local content. The over-riding dubbed “Project Hull,” that “we’re not as actors, and it’s been made cheaply. winner on the site is the local weather, reaching the Northern audiences that One reason for this is the avoidance of the local news and the local sport.” well.” a multiple-ending format, which would Another finding is to do with the way This indicates that perhaps the most have involved shooting expensive extra the audience prefers to navigate around interesting aspect of the BBC’s new footage. But another reason, notes the various choices available in an inter- interactive TV initiatives in Hull and Thomas, is that the TV drama was shot active TV environment. “We’ve discov- East Yorkshire (which bring together the using high-definition techniques but on ered that, certainly, the audience in Hull BBC’s New Media, Nations & Regions, low-cost cameras. “So it’s not using big likes very, very clear navigation and News and Drama & Entertainment divi- 35-mm cameras, but has a network pro- don’t like a lot of hierarchy and depth in sions as well as Kingston interactive duction quality to it. So the cost of pro- it.” Television (KiT)), is that they’re less duction is less”, even though additional Finally, they’ve discovered that user- about testing the technology and the footage did have to be shot for the generated content is very popular. audience’s reaction to it than they are to ‘mockumentaries.” Thomas’ unit has given local people do with experimenting with new forms The other interactive TV initiative is cameras to make films about their life in of local television. As Scott says, “we perhaps more straightforward. BBCi Hull Hull, and so far, she says, they’ve accu- really want to test how local people want viewers can now access BBC News in on- mulated an archive of over 300 video their content.” demand mode, too. As well as the usual diaries which are available on-demand There are certainly innovative aspects live news service, they can call up any to viewers. to the way in which viewers are expect- one of six headline stories in VOD mode, What this has meant, according to ed to access Thunder Road, the BBC’s as well as news, sports and weather Scott, is that “reach on the trial service first interactive drama. First, although it round-ups. This means that by using the (in Hull) is greater than our interactive will eventually be transmitted on the arrow keys on their remote controls, services on D-SAT and DTT. We’re up BBC’s national network as a linear 90- viewers are able not only to choose the around 26 per cent weekly reach, which minute drama, it is in fact composed of order of the stories they want to watch, means that 60 per cent of the audience discrete 3-5 minute chunks, each of but can also re-play the story, pause dur- on the KIT service access the BBCi Hull which is accessible to its local, Hull- ing a bulletin or fast forward and service, and that actually shows a greater based ADSL customers on a ‘true’ on- rewind. level of engagement with the content demand basis. According to Richard Deverell, head than we have with other platforms. Second, rather than interpreting inter- of BBC News Interactive, “The BBC News Bearing in mind this is a more down- active drama in the conventional way as video-on-demand service recognises that market C2DE audience who are not tra- a genre which allows the audience to opt people are leading busy lives and not ditional BBC heartland, we see that as for alternative endings, in this case local everyone has an opportunity to sit down quite an achievement. We’re clearly viewers are offered the choice of ampli- and watch news at the same time. It offering something that they’re interest- fying each of these ‘chunks’ with back- gives viewers the chance to select the ed in and that they go back to.” ground information. Some of this takes stories they want to watch at a time that >>Charlton, Communications the form of what Helen Thomas, execu- is convenient to them, using technology Manager, BBC New Media. Tel: +44 020 tive editor of BBC Humberside, whose that is potentially the most advanced of 7557 3280, email: chris.charlton@ team created and manages the BBCi Hull its kind in the country.” bbc.co.uk<<

November 13, 2002 | Inside Digital TV 7 briefly... Vol. 5 No. 23

UK digital satellite operator BSkyB video content. This will follow in the increasing dramatically, user abilities says it added 217,000 subscribers in the first half of 2003. The “richest” content were not. The greatest impact of this quarter ended Sept. 30, 2002, bringing will be priced around the 1.50 euro to 3 trend, the report suggest, would be on the total to 6,318,000 DTH subscribers euro range, with more than half the pro- the ageing population, the group most across the UK and Ireland. The press ceeds going to Sony. likely to face the biggest usability barri- release detailing these figures claimed ers. Consumers interviewed for the this performance broke two records: UK telco BT’s latest results show that it research fell into three distinct clusters First, in that it represented “record first now has in excess of 450,000 broadband regarding digital TV, the research noted. quarter growth” since the launch of Sky ADSL end-users. With 235,000 cable Forty-two per cent felt they could not Digital in October 1998; second, in that modem subscribers from Telewest (see deal with it if there’s content they want- it represented the “highest first quarter below) and 380,000-plus from NTL, the ed; 33 per cent felt it’s too complicated DTH subscriber growth for nine years.” UK now has a total 1,065,000 broadband for them; and 25 per cent felt it’s too Both claims are correct if one interprets subscribers. BT also announced a 55 per slow and clunky. BSkyB’s claims to relate to overall DTH cent increase in profit before tax in its growth — that is, by combining ana- second quarter compared with the same BT has become one of US software logue and digital subs, since Sky added period last year, with turnover up 2 per giant Microsoft’s key European telecoms 290,000 subscribers in the three months cent to £4,661 million (7,314 million partners after signing a new strategic to Sept. 30, 1993, the quarter during euros). However, CEO Ben Verwaayen alliance that will see the two companies which it launched its analogue BSkyB conceded that the three-year revenue collaborating on bringing new broad- Multichannel package). However, it is target of 6-8 per cent compound annual band applications to the market for resi- relevant to note that the latest quarter’s growth for BT was unlikely to be dential and business customers. The performance is by no means BSkyB’s achieved in the present market condi- agreement moves Microsoft’s relation- best Q1 performance in terms of digital tions. ship with BT onto the same footing as its subs, which is arguably a more relevant other alliances in the global telecom sec- measure in this context. Sky Digital Korea passed the 10-million broad- tor — Korea Telecom in Asia and Verizon added about 530,000 digital subs in Q1 band subscriber mark during October, in the US. Microsoft and BT say they will 1999 and 500,000 in Q1 2000. Each of equivalent to achieving a household now focus their joint efforts on five key those previous Q1 numbers more than penetration rate of around 70 per cent, programmes, developing applications for double Sky Digital’s Q1 2002 posting. In the highest in the world. Korea only multi-media home computing; increas- fact, the Q1 2002 is Sky Digital’s second- launched high-speed Internet four years ing the productivity and flexibility of worst Q1 performance in terms of digital ago, June 1998, when Korea Thrunet, a large organisations; the new generation subscriber additions since the digital broadband carrier, launched a cable- of mobile computing, and .Internet and service launched in autumn 1998. based service. ADSL service was intro- web services portals. Around 30 separate Indeed, if one looks at the rate of digital duced in April 1999 by Hanaro Telecom, projects are included within the five pro- subscriber growth quarter-on-quarter, the country’s second largest telco, with grammes, the latest of which involves BSkyB is back to where it was a year the incumbent, Korea Telecom (KT) only discussions with Microsoft about becom- ago. In the equivalent quarter in 2001, entering the market two months later. ing the software and digital content part- growth was 3.58 per cent, against 3.56 KT is now the dominant broadband ner for BT Home Computing, the one- per cent today. If BSkyB can maintain provider, with 4.58 million subscribers. stop service which aims to “take the has- this level of growth (and it has been Hanaro has 2.86 million users and sle out of going online.” oscillating above and below that figure Thrunet around 1.3 million. The Korean for the past year), it stands a chance of telecoms ministry says it will invest 13.3 UK cable MSO Telewest’s latest quar- making its 7 million by 2003. But if the trillion won [10.9 billion euros] in terly financials show EBITDA up by 25 next pre-Christmas quarter falls short, it broadband over the next four years with per cent to £281 million (441 million may narrowly miss its target. a view to increasing the average broad- euros) year-on-year and capital expen- band speed from 3Mbps to 20Mbps. diture down by 30 per cent over the The German mobile telephony compa- same period. Charles Burdick, managing ny T-Mobile, a division of Deutsche New research unveiled by UK TV reg- director of Telewest Communications, Telekom, has struck a deal with Sony ulator the ITC has recommended that a said that with 235,000 high-speed Pictures Entertainment which will allow more user-centred design approach is Internet subscribers he believed the its customers to download film-clips to required for digital TV products in order company now had “over 80 per cent of their handsets. The agreement, which is to ensure that everyone is able to partic- the broadband market in our addressable not exclusive, also covers Sony content ipate in and benefit from the digital tel- areas.” Burdick conceded, however, that in the form of screen-savers, MMS pic- evision revolution. The ‘Easy TV 2002’ the company was continuing to lose tures, ring-tones and Java games. The research (conducted for the Consumers’ subscribers while it concentrated on service will begin in December in Europe Association and ITC at the ITS Research cash, cost controls and reducing its and the US, 9where T-Mobile owns and and Training Centre and at i2 media overhead. Meanwhile, the company’s operates cellular networks) but will ini- research ltd.) said that while the func- balance sheet restructuring was “pro- tially not include the bandwidth-heavy tionality of digital TV equipment was gressing well,” he said.

8 Inside Digital TV | November 13, 2002