Outlook: Battle is joined in digital television

THE GLOVES are off. After months of shadow boxing, battle proper for Britain's digital TV future has commenced. Perhaps predictably, it was Rupert Murdoch's BSkyB that struck the first blow, and though there is a fair degree of marketing hype in its initiative, it was none the less quite a punch. Other similarly timed announcements from the two main rival digital platforms, ONdigital and Cable & Wireless Communications, were left looking limp by comparison.

ONdigital is getting in before Sky by offering free set top boxes too, but only to those who buy a new TV. Cable already offers a free box, but the digital release doesn't begin until June and won't be fully national until March next year.

As it happens, cable is Sky's main target here, not ONdigital, but Carlton and Granada's terrestrial platform is badly caught in the cross fire. There is no option but to match Sky's costly promotions blow for blow. Neither of its shareholders are short of a bob or two; whether or not this is predatory pricing by Sky, Carlton and Granada are big boys, both used to and presumably prepared for the rough and tumble of a long business fight. They both have direct experience of Mr Murdoch and know he doesn't take prisoners.

But as the stock market correctly surmised by marking Carlton's shares down so heavily, the fledgling ONdigital is going to find the cost of a prolonged price war more difficult to absorb than Sky, with its existing substantial subscriber base.

Sky is a focused pay TV business with an existing and considerable vested interest in migrating its analogue subscriber base to digital. Carlton and Granada are new to the business, and both have other calls on their time and money. Sky's initiative has to mean the cost of the ONdigital experiment will escalate quite substantially; at this stage we can only guess at by how much.

None of this necessarily means we are faced with a replay of the head to head battle between Sky and British Satellite Broadcasting in the 1980s, which ended with Sky absorbing BSB. ONdigital is still a different enough pay TV offering, in terms of access if not product, for it to be able to coexist with Sky. Even so, breakeven and payback are plainly delayed, possibly by some years.

The bigger threat to Sky was always going to be cable, which after years of shambolic management and marketing, looks finally like getting its act together. Able to offer both TV and broadband telecommunications, its digital offering ought to be superior to Sky's - more, faster and better in interactive functions. Furthermore, to the extent that Sky continues to add conventional subscribers, they tend to come almost wholly through cable. Long term, this cannot be good for Sky, whose present pay TV monopoly depends on a stranglehold on both product and distribution.

So Sky's move looks as much defensive as aggressive. Its digital satellite platform needs to find some way of heading off the threat from cable. Price wars are usually quite damaging to shareholder value, but they are plainly good news for consumers, especially when conducted among three players all determined to stay the course. This is how competition is meant to work. Maybe we should be thanking Mr Murdoch for finally giving us a taste of it in pay TV.

Life and Style
food + drink
Life and Style
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvSeries 5 opening episode attracts lowest ratings since drama began
Arts and Entertainment
Ben Affleck stars as prime suspect Nick Dunne in the film adaptation of Gone Girl
filmBen Affleck and Rosamund Pike excel in David Fincher's film, says Geoffrey Macnab
Life and Style
ebooksAn unforgettable anthology of contemporary reportage
Warner Bros released a mock-up of what the new Central Perk will look like
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

COO / Chief Operating Officer

£80 - 100k + Bonus: Guru Careers: A COO / Chief Operating Officer is needed to...

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments