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Our recommendations for a successful switchover

We believe the Government's ambition to switch off the analogue TV signal and to replace it with a digital signal is desirable, practical and achievable. But the challenges are considerable. Everyone involved in achieving a successful switchover - Government, us, broadcasters, manufacturers, retailers and consumers - needs to move up a gear and get ready to put switchover into practice. It will not happen, and the UK will not gain the benefits of greater TV choice and freed-up spectrum, if important decisions are avoided and action is not taken.

The most important hurdle to jump is one of co-ordination. The people who will benefit from switchover are spread more widely than those most likely to pay the costs of making the change.

In this report, our 30 main findings and recommendations are as follows.

Timing

1 We recommend a gradual switchover process so that TV screens do not go blank overnight. One or two analogue TV channels should be switched off first to allow the digital signal to be boosted before the other analogue TV channels are switched off. This would reduce, as far as possible, the disruption in UK homes.

2 Without a firm timetable for switchover, broadcasters and transmission companies will not be able to decide if and when the existing analogue equipment should be replaced. We recommend that switchover is not delayed too long. It should not come after the existing analogue transmission equipment's useful life has ended.

3 The most serious risk of an early announcement of the timescale is the possibility of making consumer attitudes worse towards switchover before the public see digital TV as a technological certainty.

4 However, the benefits of an early announcement of a precise timetable are:

that consumers will know they have to buy equipment for the changeover;
broadcasters, transmission companies, manufacturers and retailers will be able to make investment decisions; and
we will be able to manage the regulatory framework.

5 An announcement of a timetable would encourage many households to buy digital TV equipment and would help digital switchover to be achieved between 2007 and the end of 2010. Consumer research shows that many current analogue households are prepared to buy digital TV receivers as long as they know that digital switchover is near. With most households already having bought digital television, the foundations for announcing a timetable have already been laid.

Our regulations

6 We have a big role to play in creating incentives to encourage people to buy digital TV and in removing some of the obstacles in the path of switchover.

7 Although broadcasters should not have to manage the process of switching over, it is reasonable to expect them to make a significant contribution, particularly by extending digital terrestrial coverage and by making sure viewers are properly informed about switchover. We will consider including the extra appropriate obligations in new broadcasting licences, due to be issued by the end of 2004.

8 We are already considering whether competition is effective in the broadcasting transmission market. We will try to make sure that if broadcasters agree to invest in new digital-transmission equipment, an agreement to roll out DTT does not result in broadcasters being charged too much.

9 We will consider charging companies who use the spectrum from 2006. This would give broadcasters an incentive to use as little as possible. If we decide to go ahead, charges could apply for the first time to the BBC, Channel 4 and S4C in 2006. ITV and Five already pay for their licences to broadcast, which automatically include a charge for using the spectrum. We will ensure they do not pay twice for the use of the same spectrum.

10 Some of the extra obligations could raise costs for commercial broadcasters. Where appropriate, we will try to take account of the investments that they have made to achieve switchover.

11 We recommend that as part of the BBC's Royal Charter review, the Government adds new and specific obligations to the BBC's current general obligations to promote digital TV. These obligations should include building a full digital transmission network, providing public information, continuing to provide its channels on free-to-view satellite and providing on-air marketing of digital TV without any bias in favour of Freeview.

Free-to-view digital TV

12 Even if all consumers wanted to change over to digital, some would face a serious hurdle because around a quarter of households cannot receive Freeview.

13 Until switchover, free-to-view digital satellite could play an important role in increasing digital take-up among those who do not want to pay monthly subscriptions for TV. In areas not covered by Freeview, it is the only option. But free-to-view access to ITV, Channel 4 and Five is currently not possible on digital satellite. We will consider whether we need to impose regulations to make free-to-view satellite a more realistic option before switchover.

14 Depending on the actual coverage of the digital signal after switchover, we may need to consider further measures to make sure that all households can receive BBC1, BBC2, ITV, Channel 4 and Five on a free-to-view satellite system. We have the power to make certain broadcasters provide a way of receiving these services when households cannot otherwise receive them to an acceptable standard.

15 The Government should continue to try and remove the barriers which prevent progress towards switchover, for example, planning restrictions which prevent placing satellite dishes on certain buildings.

Consumer information and advice

16 Although half of households have digital TV, the other half are unlikely to go digital as quickly. Switchover will simply not be possible unless consumers believe in its benefits.

17 Well before switchover, a national advertising campaign should explain to all households that switchover is coming and should try to build up public support. We should also introduce a new consumer-labelling scheme to warn consumers that unconverted analogue equipment will not function past a set date. This needs to be put in place with the support of manufacturers and retailers.

18 Around the switchover date consumers will need further information and support. The promotion drive should not just include on-air advertising, but also direct marketing, helplines and clear product labelling. We will need to see a regional communications campaign in the immediate run-up to analogue switch-off. Advice must be tailored to households who cannot receive the digital signal until switchover starts.

19 After switchover is completed, we will also need to offer continuing support to consumers who are still not sure or confused about changing to digital.

A move from planning to putting into practice

20 The Digital TV Action Plan has been effective in helping the Government make a decision on switchover. However, it is not aimed at dealing with the process of making switchover happen. We need to see active management to complete switchover effectively.

21 Once agreement has been reached between broadcasters, the Government, us and others, we recommend that an organisation is set up (SwitchCo), to be responsible for the switchover. They should have a set date to complete the task.

22 SwitchCo should:

highlight the benefits of switchover;
provide public information;
provide support when switchover starts;
make sure products are clearly labelled;
work with all the interested parties;
report on their progress; and
make sure that information to consumers is not biased in favour of one form of receiving digital TV.

23 Many interested parties - the Government, the broadcasters, us manufacturers and retailers - will continue to have important roles to play in delivering switchover and must agree to the process. However, none of those mentioned should run SwitchCo because their interests are too wide-ranging. Instead, SwitchCo should be independent enough so it can represent the consumer effectively and avoid conflicts of interest.

24 The Government should make sure SwitchCo has enough resources to achieve its tasks. It will need funding for running costs, spending on marketing and consumer support around switchover. Funding could come from a number of possible sources including direct public spending, part of the BBC licence fee, or private finance which comes from the money made from charging for using the spectrum. Since the economy as a whole will receive the biggest benefit from switchover, the funding mechanism should not put too heavy a burden on any one group, organisation or company.

Affordability

25 Even if digital take-up is very high, the cost of digital conversion may still be a significant barrier for some households. It risks leaving a few households without TV after switchover. Households with high incomes are currently more likely to have digital TV than poorer households, so the costs of switchover would currently fall mostly on the poor.

26 These costs do not need to be a great barrier to switchover. The price of a basic converter box in 2004 is already less than half the cost of the annual TV licence fee. Prices are likely to fall over time, and many consumers will buy converters of their own accord in coming years.

27 By the time switchover takes place there is still likely to be a small affordability problem. Any financial support would reduce some of the resistance to switchover. However, decisions on financial support do not need to be taken immediately.

28 At a later date, the Government should consider the costs and benefits of offering limited financial help to particular groups, similar to the free BBC licence fee scheme for over-75s. To avoid the danger that some households might wait until the last minute in the hope of receiving financial support, any scheme should be available to all households in a certain group rather than just the households that have not changed their TV sets to digital.

International issues

29 The benefits of switchover depend on using the spectrum flexibly. The UK's strategy should be to try and make sure the UK's current plan for digital TV is fully protected. It should also aim to protect future UK use of the released spectrum.

30 In the 2004 and 2006 international conferences, the UK will aim to protect its digital broadcasting plans and keep options open for any cleared spectrum made available after switchover. In the 2007 and 2010 international conferences, the UK will try to gain the maximum flexibility for the freed-up spectrum for broadcasting and other uses.