Raymond Snoddy on media: Market forces risk Freeview allure

For years, organisations from companies to government departments have
been making money out of providing essential information to
citizens.

Not many viewers can have been aware that anyone who calls in to
complain about a BBC programme is effectively charged a premium rate to
do so.

The BBC denies making profit from its 0870 numbers - its phone systems
are merely being 'subsidised'.

Many licence payers are not best pleased at the practice, or the lack of
information on what calls will cost when viewers are urged to get in
touch. The BBC has always argued that it is too complicated to give full
details of the cost of such calls as there are so many tariffs. In fact,
it is not all that hard to say that calls will cost, say, between 3p and
8p a minute, depending on the time of day.

At least when Ofcom's new call regime is implemented next year, greater
transparency is promised on charges, and revenue sharing between the
bodies involved will stop. It's a small step forward.

It is less clear whether Ofcom's decision to leave the market to find
the future balance between pay-TV and free-to-air services on Freeview
is such a great idea. The main public-service channels will continue to
be protected on the platform. As for the rest, broadcasters will be free
to decide whether to run advertising-funded or pay channels.

The great success of Freeview, which is in more than 6m homes, has come
because it has lived up to its name. With the exception of basic pay
service Top-Up TV, most Freeview channels have been funded either by the
licence fee or advertising.

As a result, a clear, unambiguous marketing message has gone out: users
pay about £40 for the set-top box and there are no subscription
charges.

That clarity has been a vital factor in the platform's rapid growth. And
Freeview is the government's strongest weapon in persuading the 30% of
the population who are resistant to digital to take the plunge. It seems
the wrong moment to muddy the waters.

Ofcom, on the other hand, believes that 'the current restriction is no
longer a matter requiring regulatory intervention and that finding the
right balance between pay and free-to-air services on the platform can
better be left to the market'.

It will probably get away with this approach, as broadcasters including
Channel 4 and ITV are committed to putting ad-funded channels on
Freeview.

But it could shift the platform's balance and dilute the 'free'
argument.

At least the Ofcom decision is a small sop to the original multi-channel
players, which feel strongly about what they see as a digital land-grab
by the terrestrials on Freeview. Members of the Satellite and Cable
Broadcasters Group (SCBG) believe the commercial terrestrial
broadcasters are abusing their position on issues from using their
public-service platforms to roll out 'wholly commercial' digital
channels to the extent of cross-promotion.

The SCBG feels Ofcom is doing little to redress the balance. And the
group was even less amused recently to find out that the regulator
accepts that everything ITV puts out counts as public-service
broadcasting as long as it is made in the UK.

30 SECONDS ON ... FREEVIEW

- The digital terrestrial TV platform was relaunched under the Freeview
banner in late 2002 following the collapse of ITV Digital. It currently
carries more than 30 TV channels.

- The platform is run by DTV Services, whose shareholders are the BBC,
BSkyB, National Grid Wireless, ITV and Channel 4.

- The BBC, ITV and Channel 4 have all extended their offerings with
digital TV channels. ITV Play launched last week; C4's subscription
channel FilmFour moves to Freeview in July.

- Five is the only one of the major terrestrial broadcasters yet to
extend its brand into the digital arena, though it acquired a strategic
stake - reported to be 20% for a £20m investment - in Freeview
pay-TV service Top Up TV last November.

- Top Up TV chairman David Chance has predicted the service will reach
its break-even target of 250,000 subscribers by mid-2006.