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Home > Research and Market Data > Television research > Reports and Research > Digital Switchover > Driving Digital Switchover > Section 6
Section 6
Challenges confronting a market-led digital switchover
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Consumer issues |
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Broadcaster incentives and obligations |
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Free-to-view digital television |
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Timing issues |
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Implementation of switchover |
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International agreements |
6.1 The popularity and take-up of digital television has been so rapid that it is easy to understand the motivation behind the Government's current policy of being committed to switchover and preparing for it without actively pursuing its implementation.
6.2 Ofcom's digital TV projection suggests, however, that such a market-led approach is likely to hit natural limits. Pay TV penetration rates are unlikely to rise far above 50 per cent of households within the next decade and digital terrestrial coverage is limited to three-quarters of households before switchover. Therefore, high trigger levels for digital penetration are unlikely to be met, including the Government's 1999 indicator of affordability which was set at 95 per cent of households.
6.3 This section details the specific challenges confronting a market-led process of switchover.
Consumer issues
Attitudes to digital TV
6.4 Although half of households have digital TV, the other half are unlikely to get digital as quickly or as readily. And unless they can be persuaded to do so, switchover will be more difficult.
6.5 Ofcom has used research, commissioned by the DTI (-15-), to examine the attitudes and interests of the consumers who currently have only analogue TV. One encouraging conclusion from this research is that most of those without digital TV said that they were likely to convert to digital of their own accord over the next few years. This, however, leaves some 20 per cent of households who currently intend to remain analogue only. Independent of whether they could receive a DTT signal, three-quarters (15 per cent of all households) said that they would adopt digital if they knew switchover was imminent, while the remaining quarter (five per cent of all households) said that they would never be willing to convert.
6.6 The consumer research investigated the attitudes and interests of those who are least willing to adopt digital TV in greater depth. It showed that this group are not a coherent cluster with clearly defined socio-economic or demographic characteristics. Instead, the non-adopters seem to have a variety of different reasons for remaining with analogue TV.
6.7 Most important, a household's propensity to adopt digital TV often reflected its attitudes towards TV and multichannel TV in particular. Those least willing to adopt digital TV tended not to value TV as a medium or alternatively felt that more TV channels would have a negative impact on society. Some others believed digital TV to offer little of value over and above that offered by existing analogue services; while some mentioned practical problems including cost and difficulty of use.
6.8 Such deep-rooted attitudes will be difficult to overcome quickly. For example, the current marketing of digital TV - pushing the greater range of channels - may actually repel some people. Although attitudes may change over time and some consumers may receive digital TV as a gift, take-up will undoubtedly also be constrained by the negative attitudes of a minority.
Attitudes to switchover
6.9 Even if consumer take-up of digital were to increase, shutting down analogue TV services will only be a realistic possibility if there is support for the objective of switchover itself. Such support is currently limited. Research conducted for the DTI (-16-) has indicated that around fifty per cent of people objected to switchover and were suspicious of the Government's motives. This suspicion was not confined to those least willing to adopt digital TV - many of those consumers with digital TV already said they would resent the loss of their analogue service.
6.10 Public suspicion might not last long, especially if attitudes are addressed by an effective and well co-ordinated public information campaign. The same survey found that people accepted that technology advance was inevitable and that at some point digital TV would replace the analogue TV. Nevertheless, a successful implementation of switchover will require an improvement in public support for the goal itself. At present, there is very little public recognition or understanding of the underlying case for switchover.
Secondary sets
6.11 Although half of households have digital TV, only one in five have completed the conversion of all of their sets. This means that four out of five households still rely on analogue terrestrial TV for some of their sets (-17-). Most households own and watch an additional set in the kitchen or in bedrooms; some have numerous TVs.
6.12 By the end of 2003, only 3.5 per cent of non-primary TV sets had been converted, leaving over 35 million non-converted TV sets in the UK. Although the proportion of secondary set conversion is likely to increase in the coming years, Ofcom's projection is that only around 17 per cent of secondary sets will be converted to digital by 2010.
6.13 A further problem relating to secondary sets is that around half do not have the SCART sockets which increase the ease of connecting a set-top box. Some consumers are therefore likely to find converting secondary sets difficult and time consuming.
6.14 Previous unpublished research for the ITC in 2003 indicated that around 21 per cent of all TV sets and a higher proportion of secondary sets are dependent on portable aerials. It remains unclear how many of these would be able to receive acceptable digital reception after switchover on their current aerials because the adequacy of their analogue reception is not known. Ofcom is leading a project looking at reception using portable aerials for both analogue and digital services. The study will look at current and prospective coverage levels, portable set usage patterns and how technology development could contribute to improved reception.
6.15 The experience of Berlin shows that the lowest cost alternative to analogue is likely to dominate secondary set conversions around switchover and highlights the importance for households of being able to receive a digital terrestrial signal on a portable aerial after switchover. One encouraging lesson from Berlin, however, is that households seemed to accept a temporary loss of access to TV reception on secondary receivers for some time and were content to convert these receivers more gradually. Retailers found that the demand for set-top boxes remained strong for months after switchover had been completed.
Video recorders
6.16 Around 80 per cent of households have at least one video recorder, and research conducted for DTI (-18-), found that among this group approximately 60 per cent record programmes from the TV at least once a month. Each video recorder has its own analogue tuner, separate from that in the TV set, which allows it to receive and record TV programmes. In order to record a digital TV channel it is possible to plug in a digital TV set-top box into the video. But it is not possible to record one digital TV channel and watch a different one unless both the video recorder and the TV are connected to separate set-top boxes. Such an arrangement would be difficult for many consumers to master.
6.17 This means that, as well as converting their TV sets, people wishing to retain the existing functionality of their video recorders after switchover will either have to convert their video recorders or purchase new recording devices with integrated digital tuners.
6.18 Such devices are only currently available in limited numbers, although more models are being released and prices are falling. Another recent development has been the growing success of personal video recorders (PVRs) which use hard disks rather than video tapes or DVDs. BSkyB now has more than a quarter of a million users of their PVR (known as Sky+) and has found that nine out of ten users would recommend the product to others. If the market for these devices grows strongly, it could, over time, help to solve the problem of converting video recorders to digital. We expect a number of new DTT video recorders to be launched on the market this year and prices to fall over the next two years.
Broadcaster incentives and obligations
6.19 Analogue public service broadcasters - the BBC, the ITV network, Channel 4 and Five - can make a significant contribution to switchover in at least two distinct ways: by investing in extending digital TV coverage and by promoting digital TV take-up.
6.20 For analogue terrestrial broadcasters, switchover presents an opportunity to eliminate the current need and expense of dual transmission of both analogue and digital signals. They would also benefit from being able to extend the availability of their digital channels which have enabled them to appeal to new audiences, produce innovative programmes and launch further interactive services. In particular, the BBC would benefit if all licence fee payers could receive the new digital services, including BBC3, BBC4 and interactive services, which they pay for.
6.21 However, analogue terrestrial broadcasters will need to have a clear and unambiguous commercial incentive to drive switchover. In an all-digital world, the existing analogue broadcasters will face greater competition for viewers and the commercial channels are likely to lose advertising revenues as a result. The BBC could lose support for the licence fee if its viewing share fell significantly.
Chart 6.1: Share of viewing by channel in all homes and multichannel homes, Jan 2004
Source: BARB
6.22 The extent of the fall in viewers is uncertain: chart 6.1 shows that traditional analogue channels lose significant viewing in multichannel homes, although households adopting digital terrestrial TV show less inclination to change their viewing habits. Viewing patterns among later converters to digital TV are also likely to differ from existing subscribers to satellite and cable services although it is a reasonable assumption to expect the viewing share of the existing analogue channels will decline as digital penetration increases (-19-).
6.23 It is not clear therefore that under the existing policy framework, analogue broadcasters perceive a clear and unambiguous interest in driving switchover. Ofcom will develop appropriate incentives and obligations to encourage them to develop active strategies to drive switchover.
Free-to-view digital television
Coverage of DTT signals
6.24 Even if all consumers wanted to convert to digital, some would face a serious hurdle because coverage constraints currently limit digital terrestrial television. DTT provides the lowest cost access to digital television and is the most popular means of converting secondary TV sets. However, it cannot resolve its coverage limitations until some of the analogue networks are switched off. In particular:
- coverage of all DTT channels will remain limited to only 73.1 per cent of households (-20-) unless and until switchover happens;
- even where coverage is currently available, 34 per cent of households are likely to need an aerial upgrade before they can receive a reliable signal at a cost of £80 (GBP)-£300(GBP);
- the percentage of households that can buy a set-top box, plug it in and expect it to work is under 50 per cent;
- current DTT coverage for sets using portable aerials is much lower; and
- households which depend on a communal aerial for coverage may find that they are unable to get any aerial upgrade that might be required.
6.25 After switchover, it will be possible to increase the power levels and extend coverage of DTT signals without any danger of interference with analogue TV signals. Provided more transmitters are converted to broadcast a digital signal, it will be possible to extend DTT coverage throughout the country and, by increasing power levels, it will be possible to enable DTT to be received by the majority of existing aerials and on many portable TV sets.
6.26 However, since DTT is currently the digital TV platform favoured by most of the remaining analogue-only households (-21-), the coverage gap places a limit on the maximum penetration of digital TV prior to switchover. It thereby creates an intractable problem for any switchover plan which is wholly dependent on achieving a near-universal level of take-up: without an extension of DTT coverage it will not be possible to raise digital penetration above around 85 per cent of households; but it will be impossible to extend DTT coverage further without switching off the analogue signal. A carefully managed transition strategy will therefore be required in order to minimise viewer disruption while the coverage of digital services is increased.
Free-to-view satellite TV
6.27 Freeview is currently the only digital TV option available to consumers who want access to the existing analogue channels but do not wish to acquire pay TV or for some former BSkyB subscribers who no longer want pay TV. If a free-to-view satellite service were readily obtainable then this would significantly extend the availability of non-subscription digital TV. As discussed in section 3, such an option was available until relatively recently but it ended once a free-to-view satellite smartcard ceased to be offered by broadcasters. The reintroduction of such a scheme or greater use of non-encryption would help improve the situation as BSkyB continue to offer a full digital satellite installation plus set-top box for a one-off fee of £169(GBP) for non-subscribers.
6.28 Another problem which continues to limit the availability of digital satellite services concerns restrictions such as requirements for planning permission or landlord agreement which prevent satellite adoption in some areas and for inhabitants of some multiple dwelling units. The Government is consulting on this issue separately.
Timing issues
6.29 The Digital TV Action Plan currently foresees the process of digital switchover as a rolling programme of regional switchovers. It requires two years' preparation before the first analogue channel is switched off in the first region and a further four years until the process is completed. If the first region switched off the analogue signal in 2007, the process could be completed by the end of 2010. However, the timing of all parts of the process has yet to be decided, causing consumers, retailers, manufacturers and broadcasters to hesitate in investing in switchover.
6.30 If a firm date for switchover in any region existed, consumers could make better informed purchasing decisions. For example, consumers would be able to choose between a brand new analogue TV set or an integrated digital TV knowing the usable lifespan of the analogue option. For switchover, the threat is that continued uncertainty over timing is likely to reduce the number of integrated digital TVs bought and could increase public resistance.
6.31 Retailers also suffer from the problems of a lack of information about the timing of switchover. Ofcom conducted a mystery shopping exercise in February 2004 to investigate the information consumers were receiving from retailers. Researchers visited over 300 shops, including both high-street chains and independent retailers, and found that only 19 per cent of retail outlets mentioned switchover as a relevant issue for the purchase of digital TV equipment. In around half of these cases a specific date was given ranging from 12 months' time to 2010.
6.32 Manufacturers of equipment complain that the lack of a firm date complicates forecasting the likely level of demand for their digital TV products. For switchover to happen, many tens of millions of digital receivers will have to be manufactured and sold in a relatively short space of time. Without a firm date for planning, manufacturers will not know when they should aim to gear up production and retailers will not know when they should increase stock levels. Unless the timetable and final deadline for switchover is made known well in advance, therefore, there is a significant risk of a shortage of digital receivers.
6.33 The lack of certainty over the switchover timetable has a negative impact on broadcasters and transmission companies. Many of the existing analogue transmitters will need replacing within the next decade. Without a firm timetable for switchover, broadcasters and transmission companies will not be able to decide if and when the obsolete analogue equipment should be replaced. It would not be in anyone's interests to spend money on replacing analogue transmitters shortly before switchover.
Implementation of switchover
6.34 The Digital TV Action Plan has been effective in delivering the pre-conditions for a Government decision on switchover: understanding the interests of all the interested parties and ensuring that the early stages of planning have been completed. It is, however, much less suited to the role of an implementation vehicle with the simple goal of achieving switchover.
6.35 As we move from planning to implementation, the lack of an effective implementation body would begin to hamper progress towards switchover. In areas where the interests of various parties were not in alignment with the goal of switchover, progress could quickly stall if the project was managed by a loose confederation of broadcasters, transmission companies, Government, the regulator, manufacturers and retailers.
6.36 A loose confederation is also unlikely to be able to deliver simple and clear information to the public regarding switchover. It is likely that more active management will be required to encourage the remaining households to adopt digital TV and to complete the process effectively.
International agreements
6.37 Many of the wider benefits of switchover come in the possible use of the cleared spectrum for other uses. Though not a barrier to market-led digital adoption, it is important for the UK to be successful in achieving efficient and flexible use of the spectrum at forthcoming regional radiocommunication conferences in 2004 and 2006 and world radiocommunication conferences in 2007 and 2010. For more details of efforts to secure spectrum efficiency, see Box 6.1.
6.38 Convincing the public of the wider benefits of switchover will depend to some degree on imaginative and popular alternative uses for the cleared spectrum. Initial analysis suggests the fourteen released channels and the spectrum interleaved among the DTT services could be used to carry a number of different services; either additional DTT broadcasting, or for services aimed at mobile portable receivers, possibly to be used in conjunction with other telecommunication networks to deliver on-demand content to users' handsets.
Box 6.1: Efforts to securing spectrum efficiency in international negotiations The purpose of international agreements on spectrum use The current international rules of TV broadcasting The need for greater flexibility The UK's agenda in forthcoming international negotiations |
Footnotes
15:- Attitudes to Digital Switchover, March 2004 http://www.digitaltelevision.gov.uk/pdf_documents/publications/AttitudestoSwitchover_300304.pdf
16:- Attitudes to Digital Switchover, March 2004
17:- Attitudes to Digital Switchover, March 2004
18:- Attitudes to Digital Switchover, March 2004 http://www.digitaltelevision.gov.uk/pdf_documents/publications/AttitudestoSwitchover_300304.pdf
19:- Five might be an exception because it will benefit from improved strength and coverage of its signal after switchover.
20:- This coverage refers to the availability of all six multiplexes. A higher coverage figure - 80 per cent - applies to the availability of the three public service carrying multiplexes only
21:- Attitudes to Digital Switchover,
March 2004 http://www.digitaltelevision.gov.uk/pdf_documents/publications/AttitudestoSwitchover_300304.pdf
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