Which infrastructure technology will emerge victorious in the escalating struggle to deliver digital TV to the nation's living rooms? Piers Ford assesses the rival claims of cable, terrestial and satellite
While cable, terrestrial and satellite prepare to do battle for control of the delivery of digital TV, standards are emerging that will help developers unleash interactive content across all three technologies.
In the US, cable and satellite operators, service providers, production studios and television manufacturers have rallied around the Advanced Television Enhancement Forum (ATVEF, which is trying to create common specifications for the delivery of HTML-based programming regardless of the delivery mechanism.
But in the UK, the rivals are battling to win the imagination of businesses and consumers. We are in a period of intense market-making in which content is less important than the construction of an infrastructure to let businesses fully exploit digital TV's potential as an interactive trading, marketing and communications medium.
Of the three contenders, satellite is generally seen as the pioneer. Sky's interactive shopping channel Open has whetted the public appetite for living room-based consumerism, having signed up over three million subscribers by April, compared with terrestrial competitor's ONdigital user base of 600,000.
But the technology war is heating up. Datamonitor says that by 2004 satellite pay-TV services will account for more than 50% of the European digital TV market, followed by cable (34%) and terrestrial (15%). In the long run, though, analysts expect cable to emerge as the strongest option, its 'always-on' bandwidth providing the ideal medium for delivering high-speed, data-intensive, interactive services.
The fly in the ointment is ADSL (Asymmetric Digital Subscriber Line), the eagerly awaited broadband telephone service. Satellite and terrestrial services are likely to seize on ADSL as the solution to their current lack of a backchannel, making them truly interactive. But they, and cable operators who already claim to have an interactive medium, will face competition from wannabe broadcasters among telcos desperately seeking new revenue streams in a deregulated world, and ASPs looking to offer more services.
"Assuming you're a service provider or a commercial organisation wishing to get your interactive Internet-based service out to TV audiences, there are currently three ways [see box] of getting into digital TV, all of which require negotiation and agreement with the platform 'owners'," says Sarah Harries, account director for broadcasting and film at new media strategies consultancy Eunite.
"These owners offer a 'walled garden' of hand-picked services. All service providers have had to pay the platform owner a combination of carriage fee and share of revenues. A service provider wishing to get into the homes of all these viewers may have to part with huge carriage fees and will also have to re-engineer its service for each platform as the technologies are all slightly different at the moment."
Harries points out that methods of carrying TV signals into the home will soon multiply: phone lines, power lines and wireless receivers can all be used to carry broadband signals. But the killer services will be those that allow the user to respond, via a backchannel.
"For cable TV companies this is easy as they use the same wire in and out," she says. "But Open relies on a phone line as the backchannel, as will ONdigital and Granada's new service."
Granada's recent announcement that it will offer free access to the Internet for any TV viewer via a set-top box is a potential leveller. Harries suggests it opens up the walled gardens offered by the other digital TV platform owners and allows the public to access any service with a www address from their televisions.
"At the same time, the increases in bandwidth on normal phone lines planned by the cable operators and BT will allow these people to receive broadcast-quality picture. It may also be possible to receive Internet signals through a power line or wirelessly, using broadcast receivers," she says.
Service providers and platform owners are in a frenzy of activity, looking at how they can protect their revenue models in the light of such rapid change. But for the average business, as much as for the average consumer, the wide choice of technologies and the lack of compatibility between them remain a real source of confusion.
Then there is the matter of complexity. Just because you have the technology to deliver volumes of highly interactive content into customers' homes, it doesn't mean that content will necessarily be welcome or used. Phil Swain, interactive communications head of practice at e-business and management consultancy Decipher, says the most successful sites are likely to be those operating at the simplest level. In reality, he says, there will be a substantial period of co-existence across all the contending platforms as they come to terms with a brand-new market.
Cable companies might be distracted by their own ability to deliver complex functionality with bells and whistles attached. And cable isn't as ubiquitous as its marketing material would suggest - there are swathes of urban and rural areas that for commercial reasons are unlikely to be embraced by the cable service providers in the foreseeable future. Satellite companies like Sky, on the other hand, have demonstrated they clearly understand their customer base and the level at which most consumers are likely to want interactive experiences in their living rooms, even if this doesn't necessarily mean a true two-way connection.
When it arrives, ADSL could be the medium of choice for the more sophisticated user and the much mooted explosion of video-on-demand. But here, too, service providers shouldn't get too carried away with their own vision of what they think customers will expect from digital TV.
"Everyone's saying digital TV is all about large bandwidth flooding downstream and small bandwidth trickling upstream," says Nico Macdonald, a consultant at Ascendant Partners. "But most ADSL users are more likely to be interested in using the technology to send their own video material to friends and relatives than for home shopping."
In any case, he adds, there is little evidence to suggest that service providers of any persuasion have yet moved beyond their own visions and demonstrated they have the infrastructure to match the promise of digital TV.
The Key Questions
What are the main delivery mechanisms for digital TV?
Satellite, cable and terrestrial.
Who are the service carriers?
In various stages of readiness: Sky (satellite), Telewest and NTL (cable), ONdigital and Granada (terrestrial).
What technologies are their services based on?
OpenTV (satellite), Liberate and Microsoft TV (cable), and MediaHighway (terrestrial).
How much compatibility is there?
What does this mean for anyone trying to develop a digital TV service of any kind?
To run your service on all the networks, you would have to rewrite it several times to tailor it to different systems. That would require careful asset management and design.
Is there any prospect of a standard?
"Despite the lack of a common platform there are signs that standards are becoming effective and a common European platform will achieve widespread distribution," says Stuart Nolan. "The chief standards here will be DVB MHP (Multimedia Home Platform) and ATVEF. This means that Java and HTML/XML will become increasingly important.
What about a winning platform?
You'd have more luck predicting which way the juries would vote in the Eurovision Song Contest. Nobody really knows. Cable looks solid on paper but satellite has all the force of Sky's marketing might behind it and satellite service providers Astra and Eutelsat are developing satellite-based backchannels. Then again, ADSL could dominate and will certainly create an influx of new, self-styled broadcasters.