Ofcom UK examine future of TV distribution in a broadband world

The UK media and telecoms regulator, Ofcom, has today published an interesting new report for the Government that examines the future of TV distribution in an increasing broadband (internet) connected world and proposes how to address the inevitable tipping point – where Digital Terrestrial Television (DTT) services risk become too expensive to sustain.

As most people will already be aware from their own experiences, there has been somewhat of a radical shift in how we all access and view TV content over the past decade. Such content is now increasingly being viewed online, via services like Netflix, Amazon (Prime Video), NOW TV, Sky Glass, Virgin Media STREAM, YouTube and so forth.

NOTE: The current level of UK DTT coverage stands at 98.5% of households for the PSB multiplexes. In addition, Freesat Coverage is 98%, but overlaps with DTT such that many of the remaining homes who cannot receive DTT are able to receive Freesat (particularly important for rural Wales).
The average person now spends 25% fewer minutes per day watching broadcast TV in 2023 than in 2018 and this trend is expected to continue. As a result, watching scheduled TV channels through DTT and Satellite is forecast to drop from 67% of total long-form TV viewing in 2022, to 35% by 2034 and 27% by 2040. Many of those who remain (rely solely on DTT) include people who are older, less affluent or have a disability.

As indicated above, this change in trends is typically going at a different pace for different groups of people.

TV Viewing by Different Groups

• Some (especially younger) audiences now only watch content over the internet, and little linear TV. Around 5.3 million households solely access TV over the internet.
• Most audiences (around 17.9m households) are ‘hybrid viewers’ and enjoy the best of both worlds: supplementing viewing of traditional TV channels with on-demand and scheduled content over broadband.
• There are then audiences who solely rely on DTT or Freesat for their TV viewing – around 3.9 million households today. These households are more likely to include people who are older, less affluent, or have a disability.

The difficulty is that this means broadcasters (e.g. BBC, ITV etc.) are now paying to distribute their content both online and via traditional infrastructures like DTT with costs rising. The less time people spend on DTT, the less cost-effective per viewer it is. “For the first time, many broadcasters have told us that they foresee a tipping point at which it is no longer economically viable to support DTT in its current form,” said Ofcom’s report.

Digging deeper into the report, it’s noted that a “significant number of broadcasters voiced concerns” in their evidence that maintaining the existing DTT infrastructure is “unlikely to be commercially attractive after the mid-2030s“. This is relevant as the UK Government have already committed to the future of DTT until 2034.

Broadband coverage plays a role in all this, particularly if online viewing ultimately becomes the only means of accessing TV. At present 99.8% of the UK can access download speeds of at least 10Mbps (i.e. leaving around 0.2% or c.60,000 premises without access), while “superfast” speeds of 30Mbps+ are available to 97% and gigabit (1000Mbps+) speeds can be taken by 78%.

Ofcom correctly notes that a speed of 10Mbps can be sufficient for both several Standard Definition (SD) and a single stream of High Definition (HD) viewing, although they don’t mention that this will inevitably improve as new video standards emerge and compression improves (as it always does, alongside faster computer processors).

However, in practice, multiple users in a household can quickly put this sort of connection under strain, and a speed of 30Mbps+ is thus expected by most stakeholders to become the future minimum – something the new broadband USO review will need to consider.

On the other hand, given the current strong pace of full fibre (FTTP) deployment and the Government’s own Project Gigabit programme (i.e. aiming to achieve c.99% coverage of gigabit broadband by 2030), the issue may end up being more about take-up than network coverage by the mid-2030s.

Ofcom’s Statement
Without intervention, there will likely remain a cohort of people who do not take up broadband because they do not have the means, skills, or interest to do so. To ensure any partial or full managed switchover is as inclusive as possible, Government, industry, and Ofcom would need to work together to design a scheme which provides significant consumer support.

Designing this scheme would be complex but there would be wider societal and economic benefits to increased digital literacy and connection to the internet.

The report then goes on to propose several different approaches for delivering universal TV in the future, which is based on there currently being “widespread support across the sector for TV services continuing to be available to all, with a strong offering from public service broadcasters“.

Potential Approaches for Maintaining Universal TV Access

1. Investment in a more efficient DTT service – a more efficient, but full DTT service could be an option if audience scale and investment could be sustained over the 2030s. This option may well include supporting audiences with new equipment for more efficient broadcast signals.
2. Reducing DTT to a core service – the DTT platform could retain a minimum number of core channels – for example the main public service and news channels. This would mean viewers mainly using the internet to access TV services, while also maintaining infrastructure that could deliver radio or TV, including if there are internet outages. It could be done as a temporary transition to a fuller switch off or remain indefinitely as a provider of last resort.
3. Move towards DTT switch-off in the longer term – a planned campaign to ensure people are confident and connected with internet services, so DTT could be switched off. It would take careful planning to ensure universality of public service media, with support for people so that no-one is left behind. This could have wider benefits for digital inclusion in other areas of society.

Ofcom doesn’t signal a preference for any particular approach because that’s more a matter for the Government, broadband providers and the broadcasters to decide. But the regulator does note that any transition would “take 8-10 years“, which makes it important that the work on this is starting now. ISPreview