1. PERSPECTIVE Part of the Ingenious Consulting Network PERSPECTIVE Part of the Ingenious Consulting Network Tim Suter DTT and Programme Content 22 May 2008

2. PERSPECTIVE Agenda Progress towards Digital Switch-Over DTT: services and audiences Future content and service issues HD TV Mix of pay and free

3. PERSPECTIVE UK’s DSO Plan DSO phased over 4 years – Region by Region Border Region will be the first: 6 th November 2008: complete by June 2009 London will be among the last to switch in 2012 6 Mulitplexes: 3 public (2 x BBC, 1 x commercial PSBs) 3 commercial Requirement that coverage of the public muxes be the same as analogue terrestrial: 98.5% Commercial muxes to reach 90.0%

4. PERSPECTIVE Multi-channel take up by platform 1998 - 2007

5. PERSPECTIVE TV Platform Share: main sets, all sets Platform shares in main sets Platform shares in all sets

6. PERSPECTIVE DTT STBs and IDTV Sales

7. PERSPECTIVE 2. Services available on DTT Public muxes: Mux 1: BBC1,2,3/CBBC, BBC News 24, BBC data/text Mux 2: ITV1,2,3,4/CITV; C4, E4, More4, C4+1; Teletext; Radio x2 Mux B: BBC4/CBeebies, BBC Parliament; BBC interactive and text/data: BBC Radio x10 Commercial: Mux A: Five (PSB); Shopping x3; Top-up TV (pay: entertainment and sport); text/data; Radio x 2 Mux C: News x 2; Entertainment x 3: text/data; Radio x4 Mux D: Music x 2; Entertainment x 3; Shopping x 1; Radio x9

8. PERSPECTIVE Audience Profiles: DTT vs Pay Channels common to both platforms have higher share in DTT homes – driven in part by more limited choice of channels PSBs have highest comparative share Shared channels are also watched more in DTT homes than in satellite – with the exception of Sky’s own channels Audience for all shared channels is significantly older on DTT platform It is also slightly more female and slightly more upmarket

9. PERSPECTIVE Early experience from the first switch-over Homes (%)

10. PERSPECTIVE 3. Future Content Issues #1: HD Constraints in current system: MPEG 2 across all muxes – but MPEG 4 could double capacity DVB2 across all muxes – but DVB 2+ could increase capacity by 30% No HD on DTT – risks being stranded if / when HD becomes transmission standard of choice Opportunities provided by DSO Guarantee that 70% of cleared spectrum to be reserved for DTT Capacity of DTT system to increase, as a result of technical and transmission upgrade, by 20% - equivalent to one mux

11. PERSPECTIVE Ofcom’s Proposals Clear one PSB mux to be converted to MPEG 4 and DVB 2+ Redistribute services onto other PSB muxes where possible Comparative selection process restricted to PSBs 3 HD sized blocks of spectrum now – ready for use in 2009/early 2010 1 HD sized block awarded in 2010 – ready for use in 2012, on completion of DSO

12. PERSPECTIVE 3. Future Content Issues #2: Pay vs free DTT had a troubled start in the UK with On-Digital’s mix of pay and free services Lack of access to premium content Sky removed from original consortium by regulator Poor consumer experience Aggressive commercial response from Sky Following the demise of On-Digital, the platform was rescued by a distinctive platform proposition Clear consumer proposition No contract, no dish – plug and play STB Marketing and brand power of BBC behind it Reintroduction of pay services has been limited Top-up TV launched in 2004 – limited range of entertainment channels Setanta launched sports service within the last year BT Vision using DTT to launch limited pay TV

13. PERSPECTIVE BSkyB’s proposal Replace current 3 FTA Sky channels with 5 pay channels: Sky Sports 1 Sky Movies SD 1 Sky One Plus 2 third party pay channels retailed by Sky: 1 x children's, 1 x factual Consumers would need to purchase new set-top box: proposed service not compatible with existing pay-TV STBs

14. PERSPECTIVE Balance of arguments In favour Extends consumer choice – premium sport and movies available on DTT DTT now a well established platform Introduces competition between pay providers on DTT Against May result in Sky becoming the single pay provider on DTT – as well as on satellite Consumer confusion in needing more than one STB