Network Insight Institute

Ian McGarrity

Ian McGarrity, Chairman, Digital Broadcasting Australia

What I would like to do is provide you with a snapshot of where the digital free-to-view television platform stands at the moment.

Digital Broadcasting Australia has 65 members and they fall across four different horizontal lines of the overall digital television industry.  It is interesting to note that the Digital Reviews covered in the First Session this morning don't concentrate much on the consumer electronics installer, manufacturer or retailer side of the industry. They mostly deal with the act of broadcasting and what comprises or might comprise the various transport streams.

Because we do cover the four horizontal levels, Digital Broadcasting Australia is a fairly unusual, if not unique, organisation in this country. Our mission is to make the transition to free-to-air digital television as seamless as possible for the consumer.

In relation to this role, today there are 5 areas I want to cover:

• who can get digital free-to-view television now;
• what digital free-to-view television services, or extra services - over and above analog - have been provided so far;
• Expenditure so far on the digital free-to-view platform;
• what the viewers are doing; and
• what equipment choices are available right now to those viewers.

So, let's look at the roll out in the first instance.

About 330 digital transmitters will have been installed and working by the end of this financial year, which is around 2 every week since the first test transmissions of digital free-to-view television began in late 2000 and formal transmissions commenced on 1 January 2001.

About 80% of the population now has all their existing analog services in digital and so in that sense there's a full simulcast operating in those coverage areas.

By the end of June, about 91% of Australians will have at least one digital free-to-view service available. In the foreseeable future the transmitter roll out will continue, in the regional areas, at about 1 to 2 every week. 

To give you an idea of the relentless nature of the engineering project this represents the ABC has to roll out one new transmitter facility every week for the 8 years between 2001 and 2009 in order to complete its roll out.

So what enhanced or new services have been provided as a result of this roll out of free-to-view digital television?

You may be aware of the Digital Broadcasting Australia slogan: "sharper pictures, clearer sound, wide screen and extra channels".  Received picture and sound quality is better than analog. High definition is available for 1,040 hours a year in certain areas now and in many regional areas that quota will commence on April 1 2005.  And, of course, you have widescreen television with an aspect ratio of 16 x 9, instead of 4 x 3. Finally there is CD quality sound.

While not necessarily across the board, so far as extra channels and information are concerned there are EPGs  (electronic programme guides) and extra television and or radio services from the ABC and SBS.  There's a "digital only" commercial TV channel already operating in Hobart. This will be available in Launceston by August.

There are closed captions for the hearing impaired which aren't available in analog and all closed captions are able to be received by sets that do not have teletext decoders.

Extra sound tracks have sometimes been a feature.  In particular, during the World Cup Rugby, extra sound tracks were used to allow commentary in different languages to be received.  Interactive applications have commenced and we have the datacasting trial in the Sydney area.

It's important to note the investment that's gone into the digital free-to-view platform. Because there are so many people who spend money in this area (around 11 broadcasters and 3 transmission service providers are involved), the aggregate is rarely estimated.  The investment covers many functions: upgraded transmission sites and common site equipment; the digital transmitters, of which there are about 330 so far; new distribution systems from the studios or central presentation points out to the digital transmitter sites; new HD capable television production equipment; and new centralised digital presentation centres.

The extra operational costs associated with dual networks, analog and digital networks, are considerable. 

In total I estimate that around $600 million has been spent to date, and when you consider that there are probably in the order of 1400 to1600 transmitters still to be rolled out, then it's obvious the estimate of $600 million will grow quickly and significantly.

So what are viewers doing?

At the moment over 350,000 digital free-to-view receivers have been sold and 250,000 of those were sold in the year to the end of March.  For some of the consumer electronics figures I am about to relate, you may not see the relevance to free-to-view digital television at first. I hope I can tie the connecting cords for you.

There are, in my view, well over 3.6 million DVD replay machines in Australian homes at the moment, and 1.5 million were sold in the year to the end of March.

There are over 400,000 widescreen TV sets in homes around Australia, of which 238,000 were sold in the same period.

Finally, there were 1.4 million television sets sold in the year to the end of March and the average price of those television sets was $860. Of course, high end sets that cost $5,000 to $6,000 bump up that average but, nevertheless, the point is that people are paying a high average price and roughly 1 in 5 TV homes in Australia went out and bought a new television set in the 12 months to the end of March.

So let me try to connect some of those statistics. Both DVDs and digital free-to-view television set-top boxes were in 5% of TV homes about 3.5 years after the products launched.  Obviously DVDs launched much earlier so I am not suggesting that there is only 5% penetration for that particular product now.  Indeed, I believe current penetration is over 50% and, if you take games consoles into account, probably 60% of Australian homes have some capability of replaying DVDs.

However, the remarkable thing is that about 3.6 million of those homes are watching DVDs on 4 x 3 television sets.  So they are either watching with the letterbox format or they are stretching the picture and losing some material on either side because DVDs tend to come out in 16 x 9, 18 x 9 and sometimes in 21 x 9 aspect ratios.

In the widescreen television set marketplace, if you look at the very smallest of cathode ray tube widescreen sets, you can buy a basic 66cm model  for $699, and a slightly more advanced one for $799.  The point is that this amount is below the $860 average spent on TV sets by 1.4 million Australian homes last year.

I believe when you look at the future of the digital free-to-view television platform there is a link between what's happened with DVDs, what is happening with widescreen sets and what will happen with digital free-to-view television. I believe the overall penetration of DVDs will lead to the greater penetration of widescreen sets and the fact that widescreen sets can be purchased for around $699 and $799, means that they are within the reach of very many Australian homes because those homes are already paying $860, on average, for new TV sets each year.

I also believe when you have representatives of 1.5 million homes walking in to retail shops and buying DVD replay devices in the year to the end of March, it seems there must be a fairly positive selling line in suggesting to the purchaser, "Do you want your television reception to look just the same?"

Finally, in terms of the latest snapshot of free-to-air digital television consumer equipment available, you can see there are 20 providers and 39 models of set top boxes ranging in price from $199 to $1,099. There are 6 providers and 8 models of digital set-top boxes that have hard disc storage of between 40 and 80 gigabytes, and my guess is that probably means you can record somewhere between 12 and 24 or 30 hours of television.  In this respect the personal video recorder is already out there in the free-to-view digital marketplace for people who want to part with between $549 and $1,099.

To me there is an especially interesting set-top box from 1 provider (2 models), that combines a digital free-to-view decoder with DVD replay. I find that interesting because it would provide me as a salesman with an ability to say to the purchaser, "Do you want a machine that just replays DVDs, or do you want this one for slightly more that will make your television reception look just the same, for $599?".  That particular manufacturer, as I understand it from the weekend papers, is now providing a digital set-top box with VCR and DVD combo for the same price - $599.

Finally, there are 3 providers of ID TVs - integrated television sets - and there are 5 models available for around $2,999 to $4,179.

All the above relates to DBA member products only, and do not include PC DTTB tuner cards.

So I hope you have a current snapshot of what is available now and what is becoming available on the free-to-view digital television platform.

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