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EY Report: Cost of switching from broadcast TV to Internet based distribution

The Broadcast 2040+ campaign was launched two years ago by five organisations which shared a concern that there was no government commitment to guarantee broadcast TV and radio services would be available beyond 2034. It now counts over 35 groups including the Digital Poverty Alliance, Age UK, the Campaign to End Loneliness and Silver Voices as partners. In particular, it believes that changes to distribution may disenfranchise the vulnerable.

In a previous report, EY concluded that 18% of UK premises are set to remain without high speed broadband in 2040, however, it’s important to note this is not the gap for availability, but for take-up. The report argues that this exacerbates the digital divide with greater inequality around access to information, entertainment and live events and that vulnerable groups such as the elderly, low income households and people with disabilities are less likely to take up high-speed broadband.

Its report published this month talks about the costs and risks of switching to Internet distribution for all broadcast TV and argues that the current hybrid model of free-to-air broadcast TV and online streaming is working well. It claims that a full switchover to using IPTV would incur £2.1bn in one off costs (additional broadband network upgrades of £1.5bn, £129m of in-home equipment upgrades to support IPTV and £412m for consumer awareness campaigns) and £1bn per year in terms of increased broadband rental costs, content distribution online and supporting the vulnerable.

“Using only the internet for TV distribution could shift the burden of broadcasting costs onto households, many of whom are unwilling or unable to pay more”

EY Report for Broadband 2040+

The pattern of companies cutting support costs and outsourcing more work to their customers by use of complex systems needed to contact them, having to jump through hoops like knowledgebases first (or these days AI) is well known. The issue here, is that those most affected are likely to be the most vulnerable.

Obviously, this report has been written for a campaign group (and appears to be paid for by Arqiva, a company which owns broadcast distribution infrastructure; which to be fair is clearly disclosed in the report), so we should view its conclusions with a degree of caution, however, the report correctly highlights challenges in switching to IPTV infrastructure which needs to be addressed in one way or another.

Does this make the case for Social Tariffs even more important? Do we need a new type of social tariff which provides unlimited fast access to certain services like broadcast television? Whilst there will no doubt be a generation of pensioners today who don’t use the Internet, this will no doubt reduce and the pensioners of the 2040s are far more likely to need to be connected at some level or another to access services, keep in touch and probably to ensure they are kept safe in their own homes. We’re therefore not sure the challenges are unique to television broadcasting, and society will need to ensure universal broadband access is established in any case.

Reply to “EY Report: Cost of switching from broadcast TV to Internet based distribution”

  1. The TV licence fee should include a basic internet connection for Streaming TV only for households who don’t want to use the rest of the internet.

  2. There would be significant saving for many in not having to contribute towards the GBP 3.4bn collected annually from the TV License for services they do not use.

  3. @xack Interesting idea! Perhaps combine with basic Internet access though as it’s not just TV which matters.

    @Fara82Light Indeed, although the license fee does fund other services beyond broadcast infrastructure. BBC News, etc.

  4. As well as subscription TV being delivered over broadband, why not encrypt broadcast TV watchable only by subscribers who purchase decryption cards? Such a service used to exist – Top Up TV.

  5. I remember, in the early days of cellular telephony (if not before then!), thinking how crazy it was that 40% of the bandwidth from DC to 1GHz was dedicated to TV transmission. That’s the most useful frequency range in many ways, as was soon demonstrated when the PCN networks (One to One and Orange) launched at 1800MHz rather than 800-odd MHz and had far worse building penetration.
    Switching from analogue to digital has liberated some of it (“digital dividend”), but the net cost of switching to IPTV absolutely must also include the economic benefit delivered by reuse of the frequencies.

  6. The freely IP service feels like it will solve most of the issues here and is likely to be available on plenty of TVs by the demise of broadcast TV.

    Also by then the number of homes without an existing internet connection is also likely to be much lower.

    Overall it feels like a big fuss over nothing from people with an interest in continuing to broadcast TV.

  7. So OAPs who have lost the winter fuel allowance and simply cannot afford an internet service will be deprived of TV?

  8. Looking at the report itself, EY is suggesting that the extra GBP 1.5bn required for investment in the broadband network is to fund the “final drop” of FTTP to the home. This would seem to represent double accounting given that (in the case of Openreach at least) providers are now intent on installing FTTP by default.

  9. All the ‘new shiny’ is always improving the lives of the people that make it, support it, and use it. And for some reason if you’re not on this bandwagon, you’re simply marginalized. This is endemic and world-wide. It’s not a technology or a regulation issue–it’s a human nature issue. ‘No one left behind’ is an ideology that pretty much no one follows or cares about–until they are the one left behind.

  10. @SamirD: Sorry, but that simply is not true. Switching to IPTV from broadcast over wireless will free airwaves for reallocation. It would facilitate the abolition of the TV License fee and would allow users to just subscribe to the services they want rather than fund a service that many do not use.

  11. ? Have we collectively lost the plot?

    What happened to diversity of choice fostering healthy competition?

    Not to mention a vital factor of comms resilience, awareness of which should be heightened given global conflicts.

    Be very careful what you wish for..

    Sometimes, unless there is an absolutely compelling reason to ditch something, if it ain’t broken, don’t fix it.

  12. @optimist1 Yes Top Up TV did exist & it failed remember?

    @Webbas You took words out of my mouth with some of what you said. Yes Comms Resilience is something too many ignore (usually because they don’t know/understand/have the technical knowledge). Broadcast is still & will continue to be one of the most effective ways of communicating in emergency situations etc.

    @Fara82Light switching to IPTV will not facilitate the abolition of the licence fee. You may have forgotten the BBC was proposing adding it the broadband charges or even regressive council tax. Funding should come from Income Tax.

  13. Diversity of choice only exists so long as the alternatives are financially viable. To date, the networks used by the broadcast networks have been funded – as far as I am aware – by the linear TV broadcasters themselves, but they will find this increasingly difficult as their viewership continues to fall away with the shift to on-demand services offered over IPTV.

  14. @ChrisAO:
    “Communications in emergencies” has largely shifted to IP technology already.

    Any proposals to fund the BBC via taxation would undermine its independence and is unlikely to be a suitable option. The TV License is archaic and will inevitably be replaced, most likely by subscription services of one form or another – possibly including subsidies from a data tax for the less well-off.

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