Everyone knows digital television technology has the potential to
offer viewers a higher quality of broadcast signal including HDTV and
CD-quality sound. But it also gives broadcasters the chance to offer
viewers a vast choice of programming.
Because digital signals can be compressed, up to 200 channels can be
received by a viewer with a single dish. This has important implications
for programme makers. The extra ’bandwidth’ created by digital
technology is likely to reduce the cost of owning bandwidth, enabling
marginal players to broadcast to small audiences - including small
geographical areas - and to special interest groups, such as
In addition, digital technology potentially allows for the development
of interactive services: this is because the signal from a digital
broadcast is in effect a computer program which can be interpreted and
manipulated by the viewer.
Digital television services are now becoming available to viewers around
the world. Digital TV can be received in three ways: via cable, via
terrestrial broadcast and by satellite (DTH or DBS). In addition,
microwave and ISDN services are also being developed. Satellite is the
easiest way to transmit a large number of services but is, obviously,
limited by the number of homes with receiving dishes. Conversely,
digital terrestrial is potentially universally available (given
appropriate television sets) but is restricted in terms of its spectrum.
Digital cable is positioned somewhere between these two extremes.
Programming on the early digital offerings generally includes major
cable services, sports, pay-per-view (PPV) movies, audio services as
well as niche programming aimed at smaller audiences. PPV movies in a
’near video on demand’ mode (where movies are offered on several
channels with start times staggered at, say, 30-minute intervals) is
already a popular service with DirecTV in the US, achieving average buy
rates of two movies a month.
As well as conventional programming, digital TV has the potential to
provide data services and this is perhaps the most exciting element.
Because the signals are sent as digital packets, like computer software,
the systems can broadcast video, audio, and computer data in any
Most decoders contain a high-speed data port which can be connected to a
computer. A huge amount of information can be sent this way: at least 23
MBits of data per second, which is a thousand times the speed of the
average Internet modem. This facility will be of special interest to
advertisers, who could use it to send extra information packaged within
a traditional television or ’linear’ commercial.
There are some problems with digital satellite. Because of the broadcast
frequencies used by digital satellite TV providers, severe rainy weather
can affect output. Digital ’noise’ is sometimes visible which some
viewers find objectionable. The digital decoders are about three times
the price ofanalogue decoders, largely because of the memory chips
Although digital TV services still have far fewer subscribers than the
cable TV industry, they are adding subscribers rapidly and the medium
has strong growth potential.
United States of America
There are approximately five million homes in the US that subscribe to
digital satellite TV services. They are offered by four main groupings:
Primestar; DirecTV/USSB; EchoStar (DISH Network)/Sky Angel; and
DirecTV, a subsidiary of Hughes Communications, is considered the
premier digital satellite TV service in the US and has signed up more
than 2.5 million subscribers since starting in June 1994 - more than
half of the digital satellite TV market. The United States Satellite
Broadcasting Company (USSB) delivers a 25-channel service which uses the
same satellites and reception systems as DirecTV and a merged programme
guide makes their offerings appear as a single service. In conjunction
with Microsoft, DirecTV has created a Windows 95-based PC system which
can receive their programming in combination with data services. Launch
is expected in late 1997 or early 1998.
The oldest service in the US is Primestar, offered by a group of cable
TV companies. It has captured more than 1.8 million subscribers (more
than 30 per cent of the digital satellite TV market) since its launch
two years ago.
The DISH Network, from EchoStar Communications, launched in April 1996
and, so far, has captured about 505,000 subscribers. DISH entered the
market with inexpensive hardware and programming; this has proved to be
very popular with subscribers and its strategy has forced other
providers to lower prices. A six-to-ten channel niche Christian
religious service, called SkyAngel. is offered by Dominion which appears
as part of the EchoStar service. In addition, EchoStar has announced a
data service, called AgCast, aimed at the rural farm markets;
subscription will be about dollars 35 per month.
AlphaStar from Tee-Comm started in late 1996 and has added subscribers
very slowly: so far only 52,000. In the US, the service is the only one
available to residents of Alaska and Hawaii and it appears to be more
popular outside the US.
Unsurprisingly, Rupert Murdoch’s News Corporation is also on the
Together with MCI, NewsCorp has purchased significant transponder rights
and has recently announced plans to merge with EchoStar to provide a
single 500-channel digital satellite service, called Sky. If it
overcomes regulatory hurdles, Sky will probably become the foremost US
digital satellite service and a significant competitor to cable TV.
Digital cable has been pioneered in the the US by TCI, one of the
world’s largest cable operators, which ordered digital decoders back in
However, the service had trailed in just three US cities by 1996. TCI
recently announced a roll-out of its service across metropolitan Denver
and plans to have five million digital subscribers by the end of
Eventually, 90 per cent of its subscribers will be able to receive
digital signals. Other cable operators are now getting involved in this
area, but it will be the end of 1997 before serious commercial numbers
When Margaret Thatcher was prime minister, she took a dim view of the
lack of competition in the commercial TV market. She wanted to introduce
viewer choice - and was sympathetic to the launch of two (which soon
became one) satellite operations. Irrespective of a change in political
complexion, the UK is still determined to act positively to encourage
competition in broadcasting.
With digital technology providing the opportunity to split the available
terrestrial bandwidth into up to 36 channels in place of the existing
five, new technology can serve this competitive ideology.
The Government is to introduce six new frequencies, known as
multiplexes, for broadcasting digitally. One of the multiplexes will be
allocated to the BBC. Two more multiplexes will be divided between ITV,
Channel 4, S4C, and Channel 5, which will get half a multiplex each
(roughly another three channels each).
The Independent Television Commission is expected to announce the
results of the auction for the allocation of the remaining three
multiplexes in May. An indication of its commitment to digital is that,
unlike terrestrial licences that are sold to the highest bidder, the
digital licence does not require a fee to be paid to the Government for
12 years. The licence will be awarded to the service that will best
establish digital in the UK, with services due to start in July
Two bidders have emerged: the first is British Digital Broadcasting, a
consortium owned by the terrestrial franchise holders, Carlton and
Granada, and the satellite operator, BSkyB; the second is the Digital
Television Network, owned by the cable franchise operator, International
As well as being part of British Digital Broadcasting, BSkyB has its own
digital plans. Towards the end of the year another huge satellite will
be flung into orbit, with half the capacity leased by BSkyB to
accommodate 160 or so digital channels.
It is not fully clear what kind of services will be available on all
this additional channel capacity. What is certain is that it will not
simply be used to provide more of what we presently see and it will
definitely provide a range of interactive facilities. But until digital
television gets into its stride, the exact nature of the offering will
Near-video-on-demand, pay per view and exclusive coverage of major
sporting events will form a core, while British Interactive Broadcasting
(a consortium comprising BSkyB, BT, Midland Bank and Matsushita
Electric) will help subsidise the introduction of the set-top boxes that
will be needed to decode the digital signals. The shareholders aim to
introduce the first set-top boxes at a retail price of about pounds 200.
It is hoped that this will be an acceptable price to viewers who appear
to have been put off by the high cost of boxes in other countries. BIB’s
shareholders all stand to gain from a share of the profits in the
interactive services that the decoders will facilitate.
In 1995, plans to launch three digital TV services were announced by
Club RTL (IP Group), PRO7 Digital and DF1 (Kirch Group). By mid-1996,
only the Kirch proposal remained. The problem for the other two, as will
often happen in the world of interactive television, was that they were
unable to find enough good content. Most of the digital broadcasting
licences for sports and films were owned by Kirch.
Kirch’s DF1 service began with 15 different channels and this has now
been expanded to 20. A wide range of programming is available including
sports, documentaries, movies, children’s programmes and music.
Independent programmes will also be delivered, including output from MTV
Kirch has been quick to respond to digital’s potential. For instance,
Formula One races are broadcast with five different camera feeds,
enabling viewers to choose their favourite shots by using their remote
DF1 has also developed near-video-on-demand programming with four
box-office hits delivered simultaneously with start times at 30-minute
In addition, DF1 plans a partnership with the pay TV channel, Premiere,
to exchange films and sports programming and enhance the content of both
Advertising has not been forgotten and advertiser-funded channels,
Website downloading and interactive ads are being developed.
Despite such innovations, the numbers of subscribers remains low at
This is partly because Deutsche Telekom, which controls German cable,
has failed to agree with DF1 on access to cable and aims to have an
active role in deciding content and subscriber administration. As a
result, about 16 million cabled homes in Germany are unable to receive
Forecasts of up to 200,000 subscribers by the end of the year are being
mooted, but these depend on Kirch reaching an agreement with Deutsche
Telekom. Legal conflicts with Premiere, Germany’s analogue pay TV
service, have also paralysed marketing efforts: Premiere, with about 1.5
million subscribers, is also testing digital packages. Moreover, at
about dollars 500 each, the cost of set-top decoders is perceived to be
a barrier to mass adoption. There are plans to reduce this price to
nearer dollars 300 and this may well be the catalyst that enables
digital television to take off in Germany, as would the possible merger
of Premiere and DF1.
In France, three digital programme packages are available for
subscription and their take-up is increasing rapidly. The first pack was
launched in April 1996 by Canal Plus. Already, 300,000 households have
subscribed to it. Meanwhile, a consortium of French national stations
(with the exception of Canal Plus), CLT and two cable operators created
TPS (television par satellite), which opened to subscribers in December
1996. Three months later, 116,000 households had already reserved their
decoder. At the same time, AB Production, a French production company,
launched its digital package at the low price of FF49 per month. So far
only 4,600 homes have subscribed.
Interactive television services are being planned in France. Canal Plus
aims to launch an interactive facility - including Internet access,
e-mail and home shopping - this summer. The company has established a
subsidiary, CanalPro, to sell digital services and it is expected to
generate revenues of about dollars 2.5 million in its first,
In January 1996, Italy became the first European country to launch a
digital television service. Telepiu’, through its division Telepiu’ Sat,
is still the only real player operating in the medium. Telepiu’
broadcasts the following digital satellite channels: Telepiu’ 1
(movies), Telepiu’ 2 (sport), Telepiu’ 3 (culture), Telepiu’ calcio
(football live), some thematic channels, a Disney channel and some
Telepiu’ had expected about 150,000 subscribers by the start of 1997 but
at the end of January 1997 it had captured only 60,000. The slow take-up
is probably because of the expense of the digital decoder and antenna
and the fact that Italian TV carries plenty of free football. Telepiu’ 2
continues to broadcast live football games for its 700,000 analogue
The main shareholder, Canal Plus, is preparing a new marketing and
selling strategy, based on renting the digital kit and a discounted
Digital cable television is being investigated by Stream, a company
owned by the state-controlled Telecom Italia. It has completed a
14-month video-on-demand trial with 1,000 families, but has postponed
further VOD developments on the grounds of cost. Now Stream has started
selling digital cable TV subscriptions with an offer similar to that of
Telepiu’. The progress of cable in Italy is likely to be very slow,
whereas satellite digital TV is expected to develop more rapidly, at the
rate of 2,500,000 subscriptions within the next six to eight years.
The future structure of the TV system is uncertain - the Italian
parliament is now discussing new laws to regulate it. An important part
of the debate concerns digital TV. One possible outcome is a joint
venture among Telepiu’ (ie Canal Plus), RAI and Stream.
The development of digital television in the Netherlands is still at an
exploratory stage, even though cable penetration is at 93.6 per cent and
4.6 per cent of Dutch households own a satellite dish. The biggest
problem is that Dutch viewers are not used to paying for TV and they
don’t want more of the same programmes. At the moment, they pay about
Fl15 per month for their cable connection and Fl360 viewer tax to
receive 25 channels on average. This is more than enough for the Dutch.
About half of Dutch viewers prefer the ’old situation’: a basic package
of ten channels for 70 per cent of the price.
Beside the small pay-per-view market, few interactive products have been
introduced: most of these are still being tested. KPN multimedia has
developed products that integrate TV, PC, cable and telephone including
a digital TV guide and interactive teletext. Nethold/Multichoice will
introduce an interactive service by satellite at the end of 1997 and the
service will include channels for video on demand and computer
In Asia, digital broadcasting is set to have a huge impact and all new
satellites are fully compatible with digital signals. At present, Star
leads the way in providing digital programming. It was Star that
heralded the start of regional programming in the Far East at its launch
The digital platform, with its potential for multiple channels, may well
drive the further development of regional programming in the Far
The Asia/Pacific markets are expected to adopt digital broadcasting much
faster than the more established European TV industry. Until recently,
for example, Australia had little direct-to-home satellite take-up but
it is now passing analogue technology by.
More than 40 million households in the Asia/Pacific region will
subscribe to digital TV services by 2005, according to a recent report
by CIT Research, and it could be available to 95 per cent of all homes
with a satellite dish in less than a decade. This will make the
Asia/Pacific region the world’s biggest market for digital television.
However, the speed of development will depend on the level of
co-operation between broadcasters and equipment manufacturers. As in all
markets, unless they can map out a clear path for subscribers to upgrade
to digital technology, it could take another 20 years for analogue
receivers to become redundant.