ASEAN DIGITAL BROADCASTING MEETING 15th 16th March 2004

1
ASEAN DIGITAL BROADCASTING MEETING15th 16th
March 2004

• Ken McCann
• ZetaCast

2
Who are ZetaCast?

• Independent technology consultancy company
• Specialising in digital TV
• ZetaCast directors have each had over 15 years
  experience of digital TV, including
• Leading design team for the worlds first
  real-time MPEG-2 encoding system
• Chairing DVB standardisation group responsible
  for Audio-Visual Content (DVB-AVC)
• Project management and system integration for
  STAR-TV digital satellite TV in Hong Kong
• Project management and design authority for NTL
  digital cable TV in UK

3
Overview of European Experience

• About 25 of European households have digital TV
  today
• 14 via satellite
• 8 via cable
• 3 via terrestrial
• Forrester predicts 44 will have digital TV by
  2007
• 24 via satellite
• 15 via cable
• 5 via terrestrial
• Probably pessimistic for terrestrial

Source Forrester, April 2002
4
European Experience

• Different environments in different countries
• Different analogue legacy for terrestrial, cable
  and satellite
• Different regulatory and political environment
• Different digital launch dates
• Cable penetration levels vary enormously
• 97.2 in the Netherlands
• 0.3 in Italy
• Satellite reception varies
• 98 of households in the UK
• More difficult in northern Scandinavia
• No single European Experience

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3 Case Studies

• Experience in UK
• Focus on digital growth
• First country with over 50 digital households
• Experience in Germany
• Focus on analogue switch-off
• First analogue-free city
• Experience in Finland
• Focus on interactive services
• First market experience of MHP

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Different Starting Points for Digital TV
The primary source of TV signals in 1998 was
Analogue terrestrial was free-to-air in all 3
cases Analogue cable and satellite were mostly
free-to-air in Germany, but almost purely pay TV
in the UK
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UK TV Market

• 24.6 million TV households
• Over 50 digital
• About 48 interactive (Open TV, Liberate
  MHEG-5)
• Terrestrial dominates for analogue free-to-air
  services
• digital terrestrial was originally launched as
  pay TV
• Subsequently re-launched as free-to-air
• Satellite dominates for Pay TV
• All digital since Q4 2001
• Cable is split between ntl and Telewest for Pay
  TV
• Originally many smaller cable companies
• Consolidated to 2 soon to be 1 ?
• About 2/3 digital, 1/3 analogue

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Digital TV Milestones in the UK

• 1998 Q4 Digital Satellite launched
• Sky Digital pay TV service
• 1998 Q4 Digital Terrestrial launched nationally
• ONdigital (later renamed ITV Digital) pay TV
  service
• 1999 Q2 Digital Cable launched
• ntl and Telewest pay TV services
• 2002 Q1 ITV Digital collapse
• 2002 Q2 First sub 100 (lt150) terrestrial STB
  on sale
• 2002 Q4 Re-launch of digital terrestrial
• Freeview free-to-air services

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What went wrong for ITV Digital ?

• Business Model
• Competing directly with cable and satellite
• Same customer proposition, fewer channels
• Poor mans Pay TV
• Technical
• More people than expected needed a new aerial
• Average home aerial installation was worse than
  expected
• Predicted coverage was 68, only about 54 in
  practice
• Digital signal level was too low
• Excessive fear of interference with analogue
• DVB-T parameters chosen to maximise bit-rate, not
  coverage
• Impulse noise problems with early implementations
  of receivers
• Financial
• Paid too much for content
• 498 million for Football League for 3 years
• Trying to compete with Sky Sports

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Digital Terrestrial Coverage Today

• 74 households receive all 6 multiplexes
• from 80 transmitter sites
• Compare with analogue coverage of 99.4 from over
  1000 sites
• Transmission parameters
• 2K carriers
• 2 muxes 64QAM, Rc2/3, Tu1/32
• 4 muxes 16QAM Rc3/4, Tu1/32
• Tx power 17dB below analogue
• Double earlier levels

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Programming

• Terrestrial
• 28 TV programmes
• 12 digital radio
• 4 interactive services
• Satellite
• 331 TV programmes
• 67 digital radio
• 182 interactive services

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Addressable Market for Digital TV

• 24.6 million TV households
• Households in coverage area
• 98 for satellite
• Sky and free-to-air satellite
• OpenTV for interactive services
• 74 for terrestrial (all 6 multiplexes)
• Freeview
• MHEG-5 for interactive services
• 53 for cable
• ntl and Telewest
• LIberate for interactive services
• 1 for ADSL
• Homechoice and Kingston Interactive

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Digital TV Households

• 50.2 of UK households received digital TV by end
  2003

• Notes
• Source Ofcom
• Numbers refer to primary source of digital TV -
  it is estimated that 390,000 of these households
  can receive digital on more than one TV

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Share of UK Digital Market, Q4 2003
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Growth rates during Q4 2003

• 866,500 growth in digital terrestrial households
  in Q4 2003
• 41 growth in three months, overtaking cable

• Notes
• Source Ofcom
• Large decline in number of FTA satellite viewers
  due to withdrawal of Solus CA card scheme by
  BBC and a subsequent upgrading of BSkyB CA
  system, which required new cards.

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Number of Viewers by Platform
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What went right for Freeview ?

• Business Model
• Complementary to cable and satellite
• Clear customer proposition
• 30 channels, one-off STB purchase, no contract
• Technical
• Coverage increased to 74
• Digital signal power doubled
• DVB-T parameters changed on 4 out of 6
  multiplexes
• Impulse noise problems solved with latest
  receivers
• Financial
• Mostly funded though BBC licence fee
• Infrastructure inherited from ITV Digital
• Not trying to compete with Sky for high-value
  content

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UK Analogue Terrestrial Switch-off

• Government criteria for switch-off
• Availability everyone who can currently get the
  main public service broadcasting channels in
  analogue form must be able to receive them on
  digital systems
• Affordability switching to digital must be an
  affordable option for the vast majority of people
• Planned for 2007 2010
• Although digital switch-on was national, analogue
  switch-off is likely to be region-by-region
• Final 26 of households wont be able to receive
  all 6 digital terrestrial multiplexes until after
  analogue switch-off

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German TV Market

• 36.2 million TV households
• 11 digital
• About 1 interactive
• MHP for terrestrial and satellite, but not cable
• Free-to-air services dominate
• Less than 3 million Pay TV households
• Analogue multi-channel (over 30 channels) is the
  norm
• Cable delivery still dominates
• 57 in 2002
• Complex ownership delays digital roll-out
• Satellite delivery is rising steadily
• 33 in 2002
• Terrestrial market share is small and declining
• 10 in 2002

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Digital Terrestrial Switchover Strategy

• Strategy Based on
• Region-by-region digital switch-on
• Short transition period in each region before
  analogue switch-off
• Creation of a series of digital islands
• Very different from UKs national launch
• First region was Berlin
• Focus on portable indoor reception
• STB specification from EICTA E-book
• Software update to allow future extensions

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Digital TV Milestones in Berlin

• 31 Oct 2002
• two digital multiplexes turned on to verify STBs
• 8 programmes
• 28 Feb 2003
• analogue transmission turned off for commercial
  TV channels
• 20 digital programmes on 5 multiplexes
• 4 Aug 2003
• analogue transmission turned off completely
• 28 digital programmes on 7 multiplexes

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28 programmes on 7 multiplexes
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What can be learnt from Berlin ?

• Accelerated switch-off is possible
• At least once less than 10 of population rely on
  analogue terrestrial
• Public outcry in Berlin (predicted by some) never
  materialised
• Clear public communication was a key success
  factor
• Common approach from government, broadcasters and
  industry
• Adhered to a well publicised switch-off schedule
• No STB no picture adverts
• Low cost simple zapper boxes are essential for
  the analogue to digital transition
• Second step is to enhance with interactive
  services

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Next Steps in Germany

• Further digital islands are planned for 2004
• Cologne/Bonn and Hanover/Bremen will be next
• National switch-off is planned to complete by
  2010

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Finnish TV Market

• 2.1 million TV households
• 11 digital via terrestrial, cable and satellite
• Nov 2003
• 1 interactive (MHP on terrestrial)
• Digital terrestrial coverage area
• 74 of households
• 3 terrestrial multiplexes
• 14 digital programmes
• Mostly free-to-air
• some pay TV content from Canal
• Interactive services via MHP

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Digital TV Milestones in Finland

• 1st Sept 1999
• Operational transmissions began
• 39 population coverage
• 8K, 64QAM, code rate 2/3 and guard interval 1/8
• 27th August 2001
• Official launch
• Delayed until MHP standard was finalised
• November 2002
• First commercial MHP receivers available

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EPG from Finland using MHP
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Information Service from Finland, using MHP
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Interactive Services

• MHP services on all programmes
• YLE Superteletext, Games, eGovernment, news
• MTV3 Superteletext, Banking, Real estate, Score
  ticker, etc.
• Nelonen Superteletext
• Digita Digital services portal
• Public Response to interactive services
• Nice to have, but not the main reason for wanting
  digital TV
• About 10 times more basic zapper boxes than MHP
  boxes have been sold

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Next Steps

• Increase Terrestrial Coverage
• 94 by August 2004
• 100 by end of 2005
• 4th multiplex may be used for IP Datacasting
• Interest in combining mobile phone and TV
• Analogue switch-off planned for August 2007

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Conclusions from Experience to Date

• Pure Pay TV via terrestrial has not yet succeeded
• Tried to compete head-to-head with satellite and
  cable
• ITV Digital (UK) and Quiero (Spain) went bankrupt
  
• But it may work as an additional enhancement
• Free-to-air via terrestrial has succeeded in some
  countries
• Differentiated from satellite and cable offering
• Addressed different market segment
• Freeview (UK) experienced over 40 growth in Q4
  2003
• Critical success factors
• Coordinated actions from broadcasters, industry
  and government
• Clear communications to end customer
• Low cost STBs
• Programming that offers something more than
  analogue terrestrial

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Thoughts for the future

• Grow the interactive service offerings
• Can make digital TV more attractive
• Particularly services linked to broadcast content
• But has not yet been a major market driver
• Introduce PVR to the horizontal market
• Reliable EPG is critical
• Difficult to sell until people get used to it
• Make more of terrestrials unique selling point
• Mobile and portable reception
• Services targeted at in-vehicle entertainment
  systems
• Personalised services to portable terminals with
  lower resolution (e.g. PDAs)