Freesat Poised To Launch In Britain After Two Years’ Schedule Delay

After a delay of approximately two years, a new Freesat service is likely to launch in the United Kingdom early next year. The BBC and ITV, two of the U.K.’s major broadcasters, are preparing to launch the service aimed at providing a Freeview digital terrestrial television (DTT)-type service in remote and rural areas.

As recently as two years ago, broadcast executives intended to launch the platform in 2006. Now two years behind schedule and with digital TV penetration now close to 80 percent, industry observers will be looking to gauge the new platform’s impact.

Despite any previous delay, Emma Scott, project director of Freesat, admitted that it was a now a race against time to launch the service next year. She said "we are awaiting on approval from the BBC Trust and regulators to allow us to go forward and start spending money on the proposition. The key challenges are getting the launch ready on time. We are confident that is going to happen. Obviously, it is launching into an interesting market, so we have to come up with a clear proposition which is going to be appealing to the target market we have in mind."

Much work waits to be done prior to launch. In terms of the set-top boxes which will be available to customers, a number of manufacturers have been involved in rigorous testing. While not able to name the players involved, Scott did reveal the numbers of players that are involved.

She said "we wanted to develop a technical specification, particularly around HD, which would allow us to ensure there was quality equipment on the market by the time we launched the service. That is something we are allowed to do which Freeview was not allowed to do. We need to make sure that consumers are aware that the equipment they are buying is endorsed by the Freeview JV even though we don’t make it. Following a lengthy assessment process we have now selected 6-7 manufacturers out of a possible 30 who will be onboard at the launch of Freesat and will make an announcement in due course. They will get a short period of exclusivity and then we will open up the specification and from then on in, we will be allowed to use our brand."

Importance of Satellite

While the platform, like Freeview, is not being run to make money, it could make an important contribution to the U.K.’s becoming an all-digital TV nation. Scott says it "will play an important, but small role on the digital landscape."

Scott continued, "We don’t think this will be anything like the scale of Freeview. It can’t be. But Freesat will have a very important role to play. At present 27 percent of the U.K. population are unable to receive Freeview. Therefore, Freesat will ensure consumers’ have another avenue in which to receive digital television, guaranteed subscription-free. And thus drive digital take-up in analog homes, particularly in those which are out of the digital terrestrial coverage. While it has taken us a while and there have been delays because of regulatory issues. in 12 months’ time we hope to have had a successful launch and proof of concept. I believe there will be some pent-up demand for this."

Paul Erickson, a media equity analyst at IMS Research said "I think [Freesat] is an important part of the picture in terms of digital switchover. The infrastructure-related significance of this is far greater than the commercial or revenue-generating significance of the platform. There are a certain number of people [who] are not going to be covered by an existing Freeview signal. With this switchover, there are going to be people left out in the cold. Freesat will help fill that niche."

In particular, one thing Freesat will potentially have over Freeview is its ability to provide households with stronger high-definition television (HDTV) services, for which Scott believes there could be a strong demand.

She said "we are offering HD capability, we believe there is an untapped demand from people who have been buying HD receiving equipment and then translate that to watch something on it. The only way you get HD is through Sky’s premium HD service. The BBC is committed to making sure as many people as possible get access to its services as possible. That underpins a desire to reach new digital homes and to ensure existing digital homes can have at expanded services on a receiver. As more people upgrade their TV set, we hope to see a burgeoning free HD market evolving."

Erickson added "I think HD down the road will be a factor. Right now, there are a substantial amount of people that do not have HD receiving equipment. But buying tastes for televisions are changing. People want flat-panel sets and they by their nature tend to be HD. But I am not sure that is going to be a strong draw for Freesat, given there are HD alternatives as well. It will also depend on the availability of HD programming to make it compelling, rather than just a feature type box. HD programming will be the key to make it more compelling than Freeview."

Scott is confident there will be a strong take-up for the service, and the marketing message will be very similar to what was seen with Freeview. She said "I think the marketing has been proven by Freeview. The simple one-off payment with no contract rings true with consumers. It is a bit like the mobile market. You have seen a move from expensive pricing plans through to pay-as-you-go, which has been jumped on by individuals. Obviously, that is different, but we believe there is interest out there for people who want to make a one-off payment and have no ties attached, and that will be part of the marketing mix."

Comparison with BSkyB’s Freesat Service

Scott refused to give targets in terms of the potential number of households who might take the Freesat service in the first year. Interestingly, BSkyB also offers a Freesat-type of service, but Scott is unsure how valuable the platform may be its particular section of the market. She said "Freesat from BSkyB has not been heavily promoted. The important thing about Freesat is that it will always guarantee viewing free from subscription via an Electronic Program Guide, and it will offer license fee-payers a trusted free-to-view digital upgrade path with [HD] capability. Freesat is guaranteed free from subscription, whereas Sky Freesat is not. People want a platform like Freeview, which is backed by public service broadcasters, who they feel they can trust. We will sit alongside Freesat from Sky. We will have free HD capability, which BSkyB doesn’t."

While the new Freesat offer will only occupy a small place on the U.K’s digital landscape, Scott believes it could mark the endpoint of the Freeview success story. She said, "Satellite delivers universality, which Freeview terrestrial doesn’t. In a digital world, satellite is very important. It is a strong platform. It has proven consumer interest and take-up. Freesat is filling in the gaps. It is very important for the BBC and ITV to finish off the job we started off with Freeview."

— Mark Holmes