On Tuesday, BBC won a provisional approval to develop a free satellite television service that would give cut-throat competition to rival pay-television platforms from BSkyB and Virgin Media.
The corporation’s controlling body, the BBC Trust, said that BBC will most probably debut the service by 2008 with the expected support of fellow free-to-air broadcasters ITV and Channel 4.
Chitra Bharucha, the acting chairman of the BBC Trust, said, “For those seven million homes yet to make the switch [to digital television], it needs to be clear that the benefits of digital television do not need to equal ‘pay television’.”
Unlike FreeView, a free satellite service can carry hundreds of channels, and there are no capacity constraints on high definition (HD) content. Freeview is expected to be able to carry only five HD channels, handing a competitive advantage to cable and satellite.
BSkyB, 39.1 per cent owned by News Corporation, parent company of The Times, also provides its own free satellite service, called Freesat from Sky, for a one-off connection fee of £150. A BBC-backed service is likely to be priced at a similar level. The satellite broadcaster declined to comment yesterday, but was keen to ensure that any license fee-payers’ money was not used to subsidize an attack on its core revenues.
The BBC conducted only a limited analysis into the impact on pay-TV companies, but it did produce one forecast that showed that the new service could be used in 2.5 million homes if there was “a strong HD channel lineup”. Without such a service, the BBC’s own freesat proposition could be at risk of failure, with only 500,000 households buying the kit.
Earlier this year, Ofcom, the communications regulator, offered little comfort for broadcasters hoping to launch HD channels on Freeview when it said that it would refuse to reserve any spectrum for the purpose. With the frequencies now available to the highest bidder, the BBC will not be able to outbid commercial concerns to win the spectrum.
Though no material change is intended, the BBC Trust plans to hold a short 28-day consultation before reaching a final decision. The 28-day consultation period will end on 27 March, and a final decision will be made by the BBC Trust in April.