Network Insight Institute

Rob Nicholls

Rob Nicolls, Gilbert and Tobin

We have an environment ripe for take-up of interactive services and of digital television generally. We have an amazingly high television penetration rate in excess of 99 per cent; higher than telephone take-up. On the other hand we have an environment where a television is something that needs a large discretionary spend, and is not replaced as frequently as, for example, the computer. Once every eight years on average is the television replacement. Clearly early adopters are going to be running on a much faster rate; this is an approximate replacement over time. Imagine by contrast trying to do any of the functions that you use your PC for now, including putting up a PowerPoint presentation, with a computer that is eight years old. That would probably have a 286 processor and might have as much as two or four MBs of RAM! And so we have a convergence issue that arises on expectation of hardware.

You have very separate sectors throughout the industry. That leads to a problem in putting together a value proposition for consumers, in that it wouldn't make sense for Channel Ten to subsidise a set-top box when the advertising revenue that comes through a subsidised set-top box is the same as if it came through on an analogue service. So we have this problem in the free-to-air environment of a horizontal market.

This contrasts with the issues in a vertical market, such as a pay TV operator, where all of the elements are under the control of the pay TV operator; from content billing, supply of the decoder, distribution, and marketing. They all fall into a single vertical solution. This is probably why we've seen the first stages of roll-out of interactive services coming from pay TV. Austar made the announcement in the second week of October 2001 that has 300,000 decoders in the field that could be interacted with, and of those about 150,000 are capable of having back channel. The real test will be whether people are actually prepared to pay a premium on, at least, their basic fare of pay television services in order to have a rather esoteric interactive TV experience of T-mail and interactive advertising. Time will tell, for Austar it will need to be in the fairly near term, as to whether this is appealing to the consumer market.

There is a reasonable proposition that perhaps MHP should be regarded almost in the same way that third generation mobile phone services are regarded. That is, this is where we want to get to, but in the meantime we should actually be looking to meet that nascent consumer need and demand, which we believe is there because otherwise we wouldn't be going down this step in the first place. A possible way to do that would be to look at operating with an interim standard based on HTML. This doesn't need to be proprietary. It could be open and could actually give a stepping stone into interactivity and into MHP over the longer term.

Click here to view Rob Nicholls' powerpoint presentation.

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