Comment: Everyone gains, but Murdoch gains the most

The battle of the set-top box is over, at least for now. Yesterday's announcement that BSkyB is joining forces with Granada, Carlton and the BBC to launch a digital terrestrial television service ensures for the time being that Rupert Murdoch will not be the sole gatekeeper to the new age of broadcast entertainment and information.

Mr Murdoch did not need to climb into bed with three of his biggest rivals to create British Digital Broadcasting. BSkyB is pressing ahead with its own plans to launch 200 digital satellite television channels this autumn - more than enough to swamp the 30 that will be available on its smaller terrestrial brother.

But by sharing the set-top box with Gerry Robinson at Granada and Carlton's Michael Green and then inviting the world's best public service broadcaster to supply programming, he has neatly side-stepped the accusation that BSkyB wanted to hold everyone else to ransom by controlling access to a mass infotainment market.

The sighs of relief from Whitehall were almost audible, not least from the Science and Technology Minister, Ian Taylor. The Jeremiahs who said digital would be monopolised by one company and one platform had been proved wrong, he declared.

Well, perhaps. But it is certain that, if not a monopoly, then digital television will remain the province of an oligopoly for the foreseeable future. Even that requires some heroic assumptions. One is that the creative, commercial and financial tensions that have brought BDB together will not just as easily tear it apart, leaving Mr Murdoch still holding the encryption technology fast to his breast when everyone else has departed.

A second is that there will be more than one provider in the "commercial" sector of the digital market. When bids closed at noon yesterday for the four "multiplexes" or blocks of frequency being offered by the Independent Television Commission, there was only one other taker. International CableTel may be a reputable player but it is on its own, erstwhile partners like Lord Hollick's United News having pulled out as word spread that Mr Murdoch was in town.

A third assumption is that public service broadcasters like the BBC will attack the market with gusto, perhaps by launching pay channels in their own right.

Finally, we have to rely on BDB's set-top boxes being accessible on open, fair and reasonable terms to other broadcasters, and the regulatory system being capable of preventing any abuse of this conditional access.

What will digital terrestrial television actually mean for the viewer and the provider? For the viewer it will bring forward the day when subscription television enters every living room in the country. Television sets will come fitted with the technology that allows sport or films to be viewed on a pay-as-you-go basis. Just plug in and watch, and all without that ugly dish on the outside wall.

The market is huge and untapped - barely a quarter of homes have subscription TV. BSkyB must calculate that once viewers have tasted digital terrestrial they will migrate to its own digital satellite service where the real killing is to be made. Why, you ask, would anyone want another 200 channels at their disposal when they have already got 30 to chose from, half of which will be free? The answer lies in how that satellite capacity will be used. Forget about imported US sitcoms, drama repeats and game shows. Those 200 channels will be used to pump Hollywood blockbusters or live action sport into the home on a pay-per-view basis. An easier option than a trip to the video store or local stadium and a big money spinner for BSkyB.

Of course, everyone else stands to gain as well. Carlton and Granada get another outlet for their pay channels and the BBC and Flextech get paid handsomely for the new channels they are jointly developing. But, as ever, the biggest winner will be Mr Murdoch. He will neutralise the political and commercial opposition and form a bridgehead between the two halves of his digital empire. And all for an outlay of pounds 100m - small change by BSkyB's standards.

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