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18|09|07

Ofcom says BBC’s High Definition channel is unlikely to have significant negative market impacts

Ofcom’s Market Impact Assessment (MIA) published today, finds that the BBC’s plans to introduce a new mixed genre digital TV channel in high definition format, available free-to-view without advertising is unlikely to have significant negative market impacts.

Audiences would have the opportunity to access the BBC’s proposed High Definition television (HDTV) channel on all digital television platforms – digital satellite, digital cable and digital terrestrial. The channel would also be available on the internet when technical and financial considerations make it possible.

The BBC’s proposed HDTV service

The channel would begin by broadcasting a selection of material from BBC1, BBC2 and other BBC channels. At launch the channel would offer a schedule of three to four hours per day building to nine hours in late 2008.

For digital terrestrial television (DTT) the BBC has proposed two options: the full nine-hour schedule, if sufficient spectrum capacity is available after digital switchover; or a four-hour overnight service between 0200 and 0600 if insufficient spectrum capacity is available for peak hours transmission. Under either option, the four-hour overnight service would begin ahead of digital switchover.

Ofcom concluded that:

• The BBC’s HD channel is likely to deliver consumer benefit through increased take-up of HD. This is likely to be spread across all the major TV platforms including DTT, satellite and cable. The impact on the DTT platform depends on whether the BBC is able to launch the full nine-hour HD service on DTT.
• There may be a negative impact on internet protocol TV (IPTV) platform operators if there is significant consumer demand for HD services, as the current broadband infrastructure does not allow HD services to be delivered via broadband to a significant number of consumers.
• There may be some negative impact on viewing shares of commercial broadcasters (channel substitution from commercial TV channels to the BBC HD channel), and therefore on their revenues. However, Ofcom’s assessment is that this is likely to be modest.

On balance, Ofcom’s analysis has found some positive impacts are possible, and that there are unlikely to be significant adverse effects. Therefore, Ofcom has not proposed significant modifications to the BBC’s HD service.

However, Ofcom made three main recommendations to the BBC Trust:

1. It is important that the BBC is held to the agreed service description, including the genre mix of the channel - a mixed genre BBC HD service is less likely to result in a significant impact on the amount of viewing to commercial services, than is a service focused on particular genres such as movies.
2. Delivery of BBC HD content on the internet. Ofcom recognises that it may not be possible to deliver the streamed HD channel on IPTV in the near future, but Ofcom recommends that the BBC should work to the objective of delivering the channel on IPTV as soon as it is technically feasible to do so. Also, the Trust should take into account the costs associated with the delivery of HD on-demand content.
3. The Trust should work to ensure that the BBC HD launch takes full account of wider technological developments in DTT – including the development of consumer equipment compatible with the anticipated DVB-T2 transmission technology.

Ends.

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