A total of 45 per cent of the population can now take cable television and other broadband services. Connections to these networks exceeded 3.5million homes, 2.5million of these for cable television. The first million broadband connections had taken the industry 10 years to achieve; the most recent million has taken only 21 months.
The ITC's role under the Broadcasting Act 1990 is to identify areas for new local delivery licensing, advertise those areas for competitive tender and, except in exceptional circumstances, to award the licence to the highest bidder whose confidential business plan indicates that he would be able to sustain the service throughout the 15-year initial licence period. Applications are also assessed for technical acceptability in conjunction with the Office of Telecommunications (OFTEL), the Radiocommunications Agency and the Communications and Information Industries Directorate of the Department of Trade and Industry. Once licences are awarded the ITC monitors franchise development and ensures services are rolled out in accordance with the timetable included in the licence.
The ITC has now advertised or licensed 39 local delivery franchises, five new areas being advertised in 1997. These were for Fife, Northumberland, Derwentside (Consett and Stanley), Dumfries and Galloway, and North Wales and South Cheshire. These new areas encompass some 647,000 homes.
Local delivery franchises are in addition to the 124 areas licensed by the Cable Authority before 1991. The final Cable Authority franchise to become operational, that for Great Yarmouth and Lowestoft, did so in 1997. The ITC is the successor to the Cable Authority in respect of these franchises and monitors the development of services in those areas in accordance with a statement appended to each licence.
As Cable Authority franchises come to the end of their first 15-year term, the ITC may renew them as local delivery franchises (in accordance with the procedures laid down in Schedule 12 to the Broadcasting Act 1990) and in 1997 considered the first of these renewals, for Swindon. The ITC set financial terms for the new local delivery licence (£70,000 as an equivalent to the annual cash bid, and percentages of qualifying revenue of 0 per cent for the first three years, 3 per cent for the next seven years and 7 per cent for the remaining five years of the 15 year licence, to be paid to the Treasury). The new licence will come into force in September 1999 on the expiry of the old.
The ITC's quarterly cable statistics continue to sustain their prominence both with researchers and in the media as the one authoritative source of UK cable data. They have been collected and analysed on a consistent basis by the Cable Authority and the ITC since 1986. Although stock-market-listed multiple systems operators (MSOs) now publish their own quarterly figures they do not yet provide information on long-term trends in the industry. Compilation of cable data by the ITC is supplemented by separate viewing research.
As well as its formal statutory regulatory duties the ITC's cable department, part of Programmes and Cable Division, deals directly with calls and letters from members of the public. Information is provided to those callers who wish to know if and when they will be able to connect to a cable network. A postcode database is used to speed up responses. Existing cable subscribers contact the department with their comments and complaints. Although the ITC has no formal power to intervene in contractual or customer service problems, nevertheless informal pressure on operators can help improve customer satisfaction. Where complaints are concerned with telecommunications service or the Telecommunications Code, reference is made to OFTEL. Most of the complaints received in 1997 were directly related to poor customer service or failure by operators to respond to customer queries. This was particularly evident after the second largest MSO made a significant number of staff redundant in the middle of the year and customer service levels fell.
The industry itself recognised its reputation for poor customer service. As many franchise build programmes were completed, more attention began to be paid by cable companies' management to the packaging, marketing and above all customer service aspects of their operations. The operators also experimented with smaller packages of four to 12 channels, in addition to the four terrestrial must-carry services, often sold together with telephone line rental. Initial results indicate that such packages reduce churn rates (the proportion of subscribers who disconnect for whatever reason during a year) and increase penetration rates (the proportion of those who could take a service, who actually do so).
The trend towards consolidation of ownership within the cable industry continued during 1997. Cable and Wireless Communications became the UK's largest MSO, formed by the merger of the UK cable interests of Nynex, Bell Cablemedia and Videotron with Mercury Communications. It is now ranked in size ahead of Telewest, Comcast, CableTel, Vision Networks, General Cable, Diamond, Eurobell, BT and Aberdeen Cable. These 10 now represent the only operational broadband cable operators. US Cable and Convergence have yet to launch services. CDA Media became the largest ITC licensed narrowband cable operator, acquiring systems from both Metro Cable and from Atlantic Telecom, Aberdeen Cable's parent company.
The provision of local programming and other local services is a requirement of most pre-1991 cable licences. ITC audience research indicates that it continues to get an increasing appreciation rating from cable viewers. Introduced to more areas during 1997, professional productions standards are more evident. But the costs of such provision have tempted one or two MSOs to cut back on local services, a move resisted by the ITC. Conversely, operators are expanding their support of education. Fixed rate Internet access for schools was launched at the beginning of the year and a number of operators are providing high speed paths for schools and other educational establishments to interconnect with each other and access on-line resources.
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