Before Long the UKs TV Magazines Will Need to List Broadband TV Programming From Several Vendors, But There Will Be No Schedules – Welcome to Watch What You Like When You Want

Philip M. Stone November 3, 2005

BT, the largest British telephone company, is teaming with Philips and Microsoft, to turn itself also into a television company next year offering 30 digital terrestrial channels via aerial reception plus a video on demand library and a “catch-up” service covering the past seven days delivered via broadband. Not to be outdone, satellite broadcaster BSkyB is paying £211 million for broadband supplier Easynet that puts the company, 37.2% owned by News Corporation, into the telecom and broadband business.

The lines are ever more blurring between telephone operator and entertainment provider as each converges into the other’s traditional territory. There are currently about 8 million homes in the UK connected to broadband with another 250,000 added each month, and the race is on in full earnest to sign those users to television broadband.

Meanwhile, ITV, the country’s main commercial broadcaster, has launched a trial of seven local broadband channels in the seaside cities of Brighton and Hastings (where King Harold took it in the eye in 1066) and reports thousands of people are tuning in daily for an average 20 –25 minutes.

That in turn is getting everyone excited about establishing local broadband stations across the UK which in turn has gotten the attention of local newspapers across Britain who fear yet another Internet competitor for local information and particularly for their lucrative classified advertising (one of the channels in the Brighton/Hastings test is for classified advertising).

Not to be outdone the BBC wants to make its TV programming available via broadband at the same time as they are broadcast terrestrially and for up to seven days after broadcast.

BT has signed with Phillips to produce a set top box that includes a personal video recorder (pvr) capable of storing 80 hours of programming and which can deliver High Definition content. The box will include a Freeview receiver that is behind the tremendous success of digital television in the UK. BT will sell special on-demand programming via pay per view (no subscriptions) and will sell the set top box, but as of yet it has not announced pricing although the box is expected to cost less than £160. The service is based on Microsoft TV IPTV Edition software.

Ian Livingston, head of BT Retail, the division running the TV service, said, “No longer will BT customers be reliant on TV schedules. From next year, they will be able to watch what they like when they like.”

BT considers itself a carrier of programming rather than as an originator. That may be good news for Sky whose success has relied on its exclusivity showing British football. The EC wants to break that monopoly but BT has indicated it is not interested in bidding for those rights and being a content provider.

BskyB, via its Easynet purchase gets itself into broadband, IP telephony and video-on-demand services. The company’s satellite services have about 7.8 million subscribers, and 48% of them are said to have broadband ability already. Although Sky’s satellite signal reaches most of the UK’s 24 million households, there are about two million it cannot reach and having a broadband provider solves that problem.

Gerry O’Sullivan, BSkyB’s director of product management, summed it up recently at a recent conference,  “To have a combination of satellite distribution and broadband connectivity solves all problems”.

Easynet is important to Sky because it is heavily involved in local loop unbundling (LLU). By placing its own equipment within BT exchanges Easynet is able to control the telephone line into the home, offering its own range of programming, such as Sky. Currently Easynet is in just 232 BT exchanges, plans to be in 350 next year (giving access to some 5.8 million households), with growth plans and investment calling to be eventually in at least 1,000 exchanges. Clearly until that is done BT will have an edge.

Even so, Sky has an ambitious target of having an overall 10 million customers by 2010. Broadband, because it is an easier “sell” than satellite, should help make reaching that target easier. And Sky can also sell regular telephone services through Easynet. A marketer’s dream package   -- telephone and television combined.

And flexing its wings even more Sky has signed a deal with Vodaphone, launching the UK’s first mobile TV service. Vodaphone 3G customers will be able to access the service for no charge until February when a £5 monthly charge begins for each of two packages. Vodaphone has about 250,000 3G subscribers.

Telecoms are still trying to figure out how to retrieve the fortunes they paid for their 3G mobile licenses and they are looking to broadcast of television programs as a major revenue source.

Meanwhile, the Digital Video Broadcast-Handheld (DVB-H) system being tested in 40 pilots worldwide could go live by June, 2006, according to Nokia, but licensing and regulatory approvals could delay availability until 2008. DVB-H technology allows users to watch programs transmitted directly from TV towers rather than on relay from the local telecom.  Nokia says it will make the technology available across its multimedia phones in 2006.

The first countries in Europe expected to use DVB-H are Italy, Switzerland, Germany and the CIS.

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