IP on TV – The Channel Challenge
Sky Dominates Digital
As the dominant player in the digital and pay TV market, Sky has been herding its potential competitors – the free-to-air broadcasters – under its wing and signing them up to exclusive contracts.
It has CanWest and Prime locked into five-year contracts, and Telecom and TelstraClear are contracted to deliver mainly Sky content on their platforms. TV1 and TV2 run unencrypted but are in deep, collaborating and even considering joint programming and bidding on programmes. Their intimacy may increase should TVNZ be privatised.
Sky Network merged with Independent Newspapers this year, becoming the country's biggest media company. It had 619,000 subscribers at April 2005, about 87% of them on digital.
The My Sky PVR, to be launched in December, allows the recording of two channels at once; and its buffer technology lets subscribers pause and rewind "live TV". It can store about 60 hours of programming on a 160Gb hard drive. The electronic programme guide will make it simple to determine what to watch and when.
Sky is commissioning five new transponders on the Optus D satellite from mid-2006, giving it the capacity to double its channels to around 160. It already offers movies, news, sport, free-to-air, music, games, gambling, weather and pay-per-view movies served up from an nCube server at TelstraClear's data centre in Wellington.
The only competitive offering is from TelstraClear itself, which has finally upgraded its Saturn cable TV delivery to digital status, serving 40,000 customers in Wellington and Christchurch. Subscribers must have a TelstaClear phone line. With a cable modem and set-top box they can have up to 10Mbit/sec broadband plus free-to-air TV channels, traditional Sky packages and 27 payfor- view movie channels. Video-on-demand is a possibility. This bundling approach typifies the "triple play" (data, voice and video) standard that Telecom is working toward.
Digital dawdling
Free-to-air broadcasters have been digitising their internal systems for five years in preparation for the next logical step, but have been left in the dark for close on a decade, battling with bureaucrats over how much spectrum they can have and how much it will cost.
All the while the broadcasters, including TVNZ which has a public service charter, are watching the digital broadcasting potential being undermined by new Internet-based technologies and Sky's head start.
The broadcasters can't invest in transmission systems unless they have the spectrum, and an affordable deal with BCL to deliver digital terrestrial television on their behalf. No-one knows how much that will cost, or what investment in technology will be needed.
BCL will need to install new digital terrestrial microwave transmission equipment at many of its 400 locations. The fact that it invested $40 million upgrading its microwave backbone network to digital is old news. And it's not new to digital broadcasting, which it has been trialling for over a decade.
BCL has undertaken a thorough analysis of the technical and deployment options, but won't move unless it has a business arrangement with the broadcasters. It's reluctant to discuss its plans until a preliminary report is considered by the Transmission Holdings Ltd Group Board possibly in December.
William Earl, TVNZ's special adviser on policy and planning, says that unprecedented co operation will be needed to make digital television happen, with agreement on the operating platform, set-top boxes, satellite and transmission facilities.
The New Zealand Television Broadcasters Council (NZTBC) comprising free-to-air players CanWest TV Works, TVNZ, Sky, Prime and the TAB, has almost reached consensus to deliver digital terrestrially to most cities and towns and by satellite to outlying and difficult-to-reach areas.
