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UK Market as a Model for Multichannel TV

The competitive United Kingdom multichannel TV market, where trends surface early, reflects the leveling impact advanced digital terrestrial television (DTT) systems can have on incumbent cable and satellite operators.

DTT platform 'Freeview' is fast growing with 10.5 million households receiving the service by the end of this year -- of which 7.5 million will use it for their sole means of TV reception. Meanwhile, Year-over-Year subscriber counts for incumbent cable have been mainly in negative growth patterns since Freeview arrived on the scene.

"Adding DTT to a relatively competitive multichannel market lays the foundation for hyper-competition," says Ben Reneker, senior analyst at Kagan Research. "Not only does DTT provide a low-cost video option for TV households, mixing DTT with broadband services creates a low-cost triple-play package." In this regard, DTT pressures both the service offerings and pricing structures of established cable and satellite operators.

In the U.K., the Freeview platform offers 30 DTT channels at no monthly subscription cost -- households merely invest in a DTT set-top-box for about $75. Incumbent telco BT plans to use Freeview as the programming backbone for a hybrid DTT/IP-video box in which linear channels are received free via broadcast and BT's video-on-demand content arrives through an IP-VOD system.

According to Kagan Research, the number of international territories positioned for hyper-competition will rise from 23 this year to 47 by 2011. Among the territories where hyper-competition may emerge by 2011 are Mexico, Turkey and Russia. Among the 23 already poised for hyper-competition are Australia, Spain, the U.K. and the U.S.

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