DTT Dead?
This week the Broadcasting Authority (BAI) announced their contract negotiations with all three potential operators of digital terrestrial television (DTT) have now failed.
The process started over two years ago with the award of the licence in principal to Boxer, the combined Denis O’Brien Communicorp and Swedish Boxer group. After a year they withdrew from the process citing the economy and breakdown of negotiations with RTÉ as reasons.
The licence was then offered to the runners-up, OneVision, the Eircom/TV3 consortium. After another year they too withdrew also citing breakdown of negotiations with RTÉ as reasons.
Last month the licence was then offered to the sole remaining candidate Easy TV, the RTÉ/UPC consortium, who decided not to pursue negotiations at all.
Is this the end of DTT in Ireland? We think not.
RTÉ, as the public service broadcaster, are obliged under legislation to provide Ireland with one basic digital television multiplex carrying the four existing free-to-air “must carry” Irish channels; RTÉ One, RTÉ Two, TV3 and TG4.
Currently they are rolling out the new transmission network and Ireland will be well placed to meet the EU deadline of 2012 for Analogue Switch-Off.
What happens on the commercial front remains to be seen. The issue will be discussed at the next BAI board meeting at the end of the month and a statement will issue thereafter.
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I could see this happening a few years ago for a number of reasons.
1. The delay in rolling out this out commercially whilst at the same time RTE agreeing to roll out on Sky (encrypted) meant that those who didn’t have cable (or access to it) could then get Sky.
2. The decision to use MPEG4 rather than MPEG2 (which the UK uses) meant that people couldn’t buy televisions with it built in already – this might seem trivial, but Freeview for example runs off MPEG2.
Once it was clear that UPC were going to be the preferred provider (third comes right after second!) I knew it was dead, there would be (no doubt) competition authority issues about a firm with their own networks using the national broadcasters for a competing semi-commercial service.
If I was RTE, I’d be considering taking on the rollout myself and enter commercial arrangements with broadcasters to pay a fee to promote the service, once it’s commercially viable (and yes, the risk here is massive, thus three players have already run away) it could be sold off.
The blame here lies fully with the BCI and Department of Communications for this mess.
What needs to happen now is for RTE to either go it alone and do this (and do it right) and emulate what the BBC did in taking On Digital (if anyone remembers that ITV Digital stuff) and turning it into Freeview or it needs to cut it’s losses and consider a system using Freesat.
The problem always was, and always will be, how a commercial DTT operator will pay their costs and turn a profit.
I find it interesting that the first two contenders both cited the breakdown of negotiation for transmission with RTÉ as a factor for their withdrawl. The third contender, being RTÉ themselves, not even negotiating with the BAI is also interesting. Watch this space perhaps?
DTT is a challenging business. You’re entering a market where 75% of homes already have a multi-channel/digital product. The remaining 25% are perhaps just not willing to pay for TV and these are the people who are your main target base for new custom!
The technical side is not an issue. MPEG4 is becoming more commonplace across the world and TV’s/STB’s are relatively cheap. Yes it would be great to have the same standard as the UK but not essential.
As for blaming the BAI my only concern is that the process has taken this long already. I don’t however think they can be blamed for the state of the economy or lack of parties ability to agree transmission costs.
My feeling is that when it comes to DTT people expect a free-to-air service to include a free/cheap box and reception of RTE, TV3, TG4 AND other extra stations. They may be RTE+1, an Irish rolling news station, TV3 Expose or perhaps City Channel/Setanta etc The inclusion of BBC, ITV & C4 would make it a no-brainer.
However how to do that and be commercially viable is the, not unsurmountable, question.
One of the main cited blockers to the first two potential service providers going ahead was the costs required by RTE Netorks for the provision of capacity. RTE were somewhat understandably looking for contracts that would allow them to recoup some of their considerable costs in building the network and guarantees on this revenue for a sensible period of time. The prospective service providers thought they were asking too much!
With regard to the costs of set top boxes, MPEG4/H264 STBs need better procesors than MPEG2 and are still quite expensive, even the cheapest non HD version would still retail at well over €50. A full NorDig 2.0 HD box with Conditional Access for premium channels would be well over €100, though would probably be subsidised by the provider to make the offer more compelling.
Using the back of an envelope, if there are 1.6 million households in the country and 25% don’t have an existing solution then that’s 400,000 possibles. I’d reckon that at least half of those either can’t afford or are not interested in extra channels or they would have taken one of the existing options leaving us with 200,000 possibles. If you get €25 a month /€300 a year from each of these that gives you 60M to play with. Seems like a good number but maybe it’s optimistic.
If Boxer walked away then it musn’t add up, Lucy Gaffney wouldn’t exactly be short on brains or determination.
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