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Platform Updates

Digital satellite - Pay TV homes

Pay digital satellite
	Q1, 2004	Q4, 2003
	Pay digital satellite
Pay-TV homes	6,956,000^*	6,893,000^*
ARPU (annualised)	£382	£369
Churn	9.4%	9.3%
Base package price	£13.50	£12.50

Sky's UK subscriber base reached 6,956,000 during the quarter with 66,000 net additions to its pay-TV service during the quarter. This was a decrease in the rate of take-up from Q4 2003, when 175,000 subscribers joined Sky.

Annualised average revenue per subscriber (ARPU) increased by £13 in the quarter to £382 - Sky aims to increase this to £400 by 2005. Churn increased slightly during the quarter from 9.3% to 9.4%. but has remained below 10% for more than a year.

Digital satellite - Free-to-view homes

Free-to-view digital satellite
	Q1, 2004	Q4, 2003
	Free-to-view digital satellite
Free-to-view homes	231,000	211,000

Following the BBC's decision to stop encrypting its services on satellite, the scheme run by the BBC to provide free-to-view "Solus" conditional access viewing cards came to an end. During 2003, Sky upgraded its conditional access system, replacing all old "P1" conditional access cards with new "P2" cards. Any "Solus" viewers left with old P1 cards lost access to the digital satellite services of ITV1,Channel 4, Five and S4C and therefore ceased to be digital homes, (although they can still receive BBC digital services). The same happened to viewers with P1 cards who had been subscribing to Sky pay services but had "churned off", becoming free-to-view homes.

Those viewers who had lost their free-to-view services had the opportunity to obtain a new "Solus" card under a scheme operated by Channel 4 between July 2003 and January 2004. Only 111,000 did so and this scheme has now come to an end.

A further 120,000 viewers are estimated to have churned-off Sky subscription services but have a P2 card and so for the time being still receive all of the free-to-view public service channels.

There is currently no scheme in place for viewers who wish to take-up free-to-view satellite. The only additional free-to-view satellite households in future will be those who churn-off Sky's subscription service.

Cable

The operating statistics for the key cable companies below are as for Q1 March 2004.

	Q1, 2004	Q4, 2003	Q1, 2004	Q4, 2003
	ntl		Telewest Broadband
Homes passed and marketed	7,861,100	7,779,755	4,678,182	4,674,764
Total residential subscribers	2,923,200	2,867,885	1,742,144	1,730,438
TV homes connected	2,048,900	2,022,055	1,285,797	1,272,064
Digital TV homes connected	1,371,000	1,329,213	1,029,759	987,873
TV penetration rate	26.1%	26.0%	27.5%	27.2%
ARPU (annualised)	£502.92	£503.52	£540.6	£533.04
Churn rate^*	12.4%	14.4%	14.4%	15.2%
Basic package price	£18	£18	£13.50	£14.50

By 31 March 2004, the total number of UK cable households was 3,325,275. Of these, 2,048,900 subscribed to ntl, 1,285,797 to Telewest Broadband, and the remainder to Omne Communications and Wightcable. Telewest Broadband subscribers showed an increase of 13,733 in the quarter, whilst ntl subscribers saw an increase of 26,845.

Overall, the industry saw an increase in total subscribers of 22,278. Digital subscribers also continued to grow, reaching 2,408,530 by the end of Q1 2004 - an increase of 3.6% from Q4 2003.

Digital terrestrial television (DTT)

	Q1, 2004	Q4, 2003^*
	DTT
ITV Digital STB	500,000	510,000
Freeview adapters	2,832,800	2,251,900
IDTV's	596,400	525,100
Digital terrestrial units in market	3,929,200	3,287,000
Adjustment for 2nd sets	-461,100	-363,300
Total DTT households	3,468,100	2,923,700

n adjustment has been made to account for the number of households which have digital on more than one set. Ofcom estimates that 15% of sales of Freeview adapters over the last two quarters were bought for use on second sets by people who already have digital (either Freeview or Sky or cable) on their main set. An adjustment has also been made for previous quarters of 12%, as it is estimated that a smaller proportion of adapters were used for second sets in earlier quarters. No adjustment has been made to the Sky or cable figures as these are already shown net of second receivers (e.g. a household with two Sky boxes is only recorded once).

DTT showed another strong quarter of growth, adding over 500,000 households during Q1, representing an increase of 18.6% on the previous quarter. Of these, Ofcom estimates that 2,968,000 use new Freeview adapters or IDTV sets, with the additional 500,000 using former ITV Digital set-top boxes.

Set-top boxes have recently reduced in price and a number are now available for around £50, compared with £99 since launch. It has also been possible to obtain free-to-air digital decoders at lower prices.

TV over ADSL

Source: Homechoice and Kingston Q1 2004 figures
	Q1, 2004	Q4, 2003	Q1, 2004	Q4, 2003
	Homechoice		Kingston Interactive
Homes passed	155,530	185,000	105,000	105,000
TV homes connected	3,300	3,550	5,364	5,337
TV penetration rate	2%	2%	5%	5%
Churn rate	9%	15%	6%	5%

The total number of subscribers to TV over ADSL declined by 2.5% in Q1 2004 to 8,664. Of those homes taking TV over ADSL, 5,364 subscribed to Kingston Interactive and 3,300 to Homechoice.

Footnotes:

* These figures are for the UK and exclude Sky's subscribers in the Republic of Ireland.
* Telewest Broadband and ntl churn rates relate to their total consumer division. ntl’s churn rates are based on the monthly average for the quarter.
* Some figures for Q4 2003 may have been restated since the previous publication. This is as a result of updated or revised figures being received from the operators.