Targets, David – not deadlines

Damian Tambini
1 October 2002

Can everyone in UK broadcasting policy, with the exception of one Mr David Elstein, really be so stupid? Can it really be true that the introduction of Digital Terrestrial Television (DTT) broadcasting (marketed as ON Digital, then ITV Digital) was a misguided political plot from the start?

For David Elstein, the construction of DTT was a conspiracy hatched by the BBC and the UK Government in order to undermine BskyB’s dominance in UK TV. While it is true that the last Conservative Government, which introduced DTT, had lost the support of Rupert Murdoch’s newspapers at the time the licences were developed, the notion of a concerted political plot is ingenuous and historically inaccurate. The debate about DTT was started neither by the BBC nor by the Government, but by LWT and Carlton who informed both the Government and regulators of their interest in using the existing licensed spectrum to broadcast digital signals.

The role of the state

UK broadcasting planners are not stupid. Most of them do, however, start with a fundamentally different set of assumptions about the role of the state and licensing in broadcasting than those held by David Elstein. David Elstein’s thinking is unfortunately cleaved by a Manichean chasm between Machiavellian conspiracy, where any government action should be disregarded as ‘politics’, and the spontaneous market and the sovereign (if ignorant) consumer. Thus, ‘DTT would not exist at all in the UK if it was not for political intervention.’ (This could, of course, be said about mobile phones, radio, television, minicabs and most things that need to use the scarce, and therefore politically managed airwaves.)

The Governments and broadcasters that David Elstein criticises start from a fundamentally different set of assumptions. They understand that the Government’s orientation to the digital transition will have to be sensitive and deft.

Policy can do a little here and there in terms of the management of spectrum, removing outmoded rules, cajoling through targets and standard setting. Government can neither predict nor much influence consumer behaviour, particularly in an uncertain and changing technological environment. Contrary to the impression given by both David Elstein’s and John Howkins’ contributions to openDemocracy, the UK Government has not acted as a lumbering buffoon going hell for leather to switch to digital. It has acted in a surprisingly hands–off manner, setting aspirational targets, developing a more liberal approach to licensing of spectrum, and outlining targets for switching broadcasting over to digital. Inaction was not an option and would have left governments open to the charge of leaving outmoded regulations in place.

Mistakes, but not fiasco

We should be grateful to David Elstein and to openDemocracy for setting out some of the complex policy questions that surround the switch to digital. The current British Government inherited a very uncertain communications market undergoing one of the most spectacular market fluctuations in economic history. They have made many mistakes in their approach to it, but neither their approach to the digital transition as a whole, nor the particular problem of digital terrestrial have been the fiasco outlined by Elstein and Howkins.

Elstein and Howkins are correct in saying that the Government views the shift to digital as a public policy goal in itself that they are committed to facilitating. Given the Elstein–Howkins broadside, however, it is worth reviewing just why the UK Government, like all forward thinking governments around the world, argues that shifting broadcasting to digital is in the public interest. They do so because digital uses the airwaves in a more efficient way, because digital broadcasting opens up choice, quality and new interactive services to the consumer, and because leading in digital television is likely to lead to new innovations that benefit UK plc. There are other reasons, but that is the nub of the issue.

It is important to note that these are not necessarily reasons to promote DTT, which is only one way of getting digital to consumers; but they are reasons to promote digital per se.

Of course, these general reasons for promoting digital television could be disputed. Many have pointed out that the price that service providers are willing to pay for spectrum fluctuates wildly. But the point is efficiency, not the likely, though unpredictable, dividend to the Treasury – more flexible and efficient use of spectrum is, of course, why Sky switched to digital so quickly. The fact remains that around four to six television channels can be broadcast digitally in the space that was taken by one analogue channel, and these channels can offer better basic picture as well as enhanced services.

The digital dividend

Aside from spectrum efficiency, what are the economic benefits to UK plc? It is correct that no significant research has been carried out on the economic impact of the transition to digital since the NERA (National Economic Research Associates) study mentioned by Elstein. But there are good reasons for this. First, there is general agreement that digital will bring benefits; and secondly, all projections on this macroeconomic level and timeframe will be uncertain, preliminary and based on too many market variables.

The UK Government, like others around the globe, has made the political judgement that digital broadcasting is in the public interest and has generally stuck by it. Government sees broadcasting in digital as a good thing because it will facilitate innovation across the convergent sectors. When production and consumption is being carried out on digital devices, and the most innovative new formats include interactive and enhanced elements such as voting and gaming, why translate the linear content into analogue form for the purpose of broadcasting it (particularly as the analogue broadcasts themselves are less efficient)? This will no doubt be dismissed as ‘digitopian’ twaddle by some established broadcasters, but it is the Government that is charged with taking a long–term view of the public interest.

Finally, digital offers new services. In its current market forms, digital television is not the gateway to the wonders of the Web that many once hoped. Like many people, I have read my email on televisions without too much trouble, but the current hardware is not very compatible with existing Internet software. Broadcasts available in digital do offer many entirely new benefits to consumers, as the BBC’s interactive sports coverage, available on digital satellite, bears witness.

So David’s claim that ‘interactivity is fun, but not in the same league as colour’ must be disputed. The interactivity and enhancements that are a direct result of the functionality and spectrum savings associated with digital broadcasting transform television experience in a way more than comparable with the addition of colour or even sound.

The British Government has made a judgement that the transition to digital television is broadly in the public interest. It is important, however, to note that this is conditional. The transition to digital television is only in the public interest if this does not lead to an overall reduction in quality, or the traditional broadcasting goods such as pluralism, quality and public service.

Digital is in the public interest, but not just any digital revolution. If switching to digital led to a reduction in standards, or gave one platform operator unchecked gatekeeper and market power, that would not be in the public interest. In this respect there is genuine and open concern about companies such as Sky, and the Government cannot simply stand back and let broadcasters slug it out.

Targets should be optimistic

Because the Government made the judgement that there is a broad public interest in digital television, it has used some of the potential tools in its armoury to promote the transition to digital. Chris Smith made a speech in 1999 in which he set out some optimistic, conditional and aspirational targets for the transition to digital. Note the three qualifying adjectives, and let’s not confuse targets with deadlines. If targets are not optimistic, then why have them?

Despite intense pressure from ITV Digital and others for a more aggressive Government stance (for example, to provide information to consumers at point–of–sale of television sets, to announce plans to subsidise set–top boxes or promote digital through a public awareness campaign), it has done none of these. It has outlined a Digital Action Plan, which is more about monitoring and reviewing the transition than promoting it, and it has appointed Barry Cox to convene the Digital Stakeholders Group to deal with the strategic and standards issues that are shared by the industry.

For these reasons, I think the Government is right in its general inclination to facilitate the transition to digital broadcasting, but not to attempt to lead or plan the transition. Where does that leave DTT? Is it the substandard technology that the critics argue?

Elstein claims that ‘politics’ thought that DTT was a technology comparable to cable and satellite. If that is true, it is unforgivable. Of course, it is clear that DTT would offer fewer channels and less of the new services, (less of the BBCi functionality for instance) but the research has shown, and some still shows, that there is a significant chunk of the market that wants this kind of service. People do want Rolls–Royces, but they will buy a Renault Clio if it is a fraction of the price, particularly if it promises to have running costs that are close to zero.

The points made by David Elstein about signal strength and reliability are valid concerns and the Independent Television Commission (ITC), who had the responsibility for reviewing the latest BBC–led bid, will be held responsible if technical failures continue to dog the service.

But the viability of DTT has to be seen in the light of current market developments, including the fact that Sky has in excess of five million digital customers. In order to undermine the argument that there are large numbers of potential consumers of DTT, Elstein and Howkins make a long series of assumptions about the motivations of consumers to take up new digital broadcasting services.

These assumptions have surely to be drawn into doubt by the sheer speed of DTT consumer take–up. When forced by competition to reduce consumer costs, and give boxes away, ITV Digital was piling on new consumers like no technology had done before – 1.2 million consumers, even as cable and satellite were rapidly expanding their consumer base. These customers, by and large, were satisfied, and paid their subscriptions.

It is also correct to say that the issue of the second, third and fourth television sets in the home has been all too often neglected. But it is easy to see a long–term outlook in which a BBC–dominated free–to–air platform serves mainly these sets and with widespread public support.

The Government Digital Technology Group will be reporting shortly on the issue from a technological standpoint. David’s logic is that people will not buy the boxes as they buy them for subscription channels, but his data predate the launch of the BBC new services. I, for one, remain convinced that there is a significant chunk of consumers that will be convinced by a small, one–off cost for a long–term set of services that will include BBC Four and new children’s channels.

And the BBC proposition casts the second–set problem in a new light. Parents now permit their children to use sets in their own bedrooms, and can only hope to maintain a responsible regulatory presence on the material they use. In the long term, a platform that is more intensely regulated and oriented to education and public service might be just the service that these parents want in their kids’ bedrooms. A cheap, plug and play decoder at £50–100 or an integrated set incorporating £50 worth of additional kit for free–to–air could look like an attractive prospect for families, though it is correct that it is the old sets that usually end up in the bedrooms.

The red herring in Elstein’s broadside is that somehow the Government has sanctioned the BBC bid. The bids were reviewed by the ITC in terms of criteria laid down in the 1996 Broadcasting Act. The Government has not gone rapidly for digital, aside from a little ‘digitopian’ rhetoric. What it has done is adopt a hands–off approach, setting aspirational targets in the full knowledge that they do not control consumer demand.

It may well be that the 2006–2010 analogue switch–off target is optimistic. That, surely, is the point of aspirational and motivational targets. Why have one that isn’t designed to focus minds and stretch? In this light, Elstein’s polemic would appear as little more than bad faith, mixed with some valid points, and we would be justified in asking who was doing the ‘politics’ now.

…and now?

There remains the problem of what to do. In relation to digital television more broadly, the Government’s position does not need to be changed. Just as it has done for the five Euro tests, the Government has set down the conditions to be met before switching to digital including levels of access to signal, access to kit and affordability. There seems to be little call for revision of these conditions, nor the target, at this point.

The ITC decision to award the digital terrestrial licence to the BBC–led consortium is a step forward, though it entails significant dangers. There is indeed uncertainty about just how many consumers will use DTT. For how long should the BBC support the service, and how can we be convinced that DTT will not cannibalise programme budgets?

Clearly, the Government’s Digital Action Plan needs to be revised following the award of the new digital terrestrial licences – the Government has a body that should be involved in reviewing these matters in the form of the Digital Television Group. In consultation with the regulator Ofcom, this body should be given the task of reviewing the BBC’s management of DTT and, crucially, marking out spending parameters and targets for access. These should include clear lower limits on the numbers of subscribers considered necessary to continue giving spectrum over for DTT broadcasts.

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