Its Time to Liberate Free TV in the U.S.—We Need a FreeviewUSATM

Analog Shut-Off Should be Viewed as an Opportunity to Revitalize Broadcasting by Establishing a Free, Multichannel Wireless Broadcast Service

Broadcasters, Politicians and Consumers are rightly viewing the not-so-distant 2009 shut-off of analog TV service in the US with trepidation. But in Great Britain, digital television penetration is leaps and bounds ahead of the U.S. This is due largely to the introduction of Freeview—a freely available multichannel television and radio service that has been driving digital adoption at an incredible pace. This service, together with careful government planning and an active public education campaign, has enabled the Brits to be on the cusp of digital conversion like no other country.

In Great Britain, over-the-air DTV was initially introduced as a subscription service (ITV Digital), which subsequently failed to gain consumer acceptance due to a number of factors, including limited channels. Shortly afterwards, the government reclaimed spectrum from the failed subscription venture and reassigned it to a consortium of BBC, Sky and Crown Castle (a transmitter company), which engaged in a joint marketing effort, called Freeview, launched in October 2002. Through this service, homes with the ITV Digital boxes could receive a suite of TV and radio channels for free. Additional households could purchase inexpensive over-the-air digital set-top boxes to allow them to view digital signals on their analog sets. At present Freeview homes receive about 40 over-the-air channels, in addition to other services like music channels.

With prices for such equipment at about £50 per unit, the adoption of Freeview has been nothing short of phenomenal. One year after the introduction of Freeview, average sales of Freeview-compatible boxes were approaching 100,000 per month. In November of 2003, this increased to 100,000 units sold in a single week. By the end of the third quarter of 2005, Ofcom (the state telecommunications regulator) reports the number of Freeview households had increased to 5,775,768 -- effectively driving digital TV penetration in the UK to 65.9% of all UK households.

The UK plans on ceasing all analog television broadcasts by 2012, and Freeview has been instrumental in giving the government the level of comfort to establish this date. Led by the BBC and the national government, the planning process for analog switchover has been thorough and extensive. After numerous studies and commissions, the UK has established that it will shut off analog television broadcasts on a rolling geographic basis and has plans to conduct a large-scale switchover pilot to convert regions to digital-only broadcasting in the near future. Most recently, Ofcom has announced that it expects that the switchover process will be carried out over a period of four years between 2008 and 2012 on a region-by-region basis in six-month intervals. In fact, small scale pilots have already been conducted. On March 30, 2005, the UK government switched off analog television service in two small Welsh villages (totaling 450 homes), an initiative that has been met with apparent success. British authorities have also established an independent corporation, initially dubbed “SwitchCo” (later renamed DigitalUK) to coordinate a comprehensive publicity campaign and to manage the digital switchover process.

In this regard, the creation of a United States Freeview service --FreeviewUSATM-- could present a marketplace incentive to get over-the-air digital-to-analog converter equipment (or integrated sets with digital tuners) into the hands of consumers with a minimum of government intervention. In particular, it would better set the stage and prepare the ground for an eventual analog shut-off. Establishment of a United States Freeview service could also revitalize the over-the-air service by providing consumers with more free channels than are currently available. Moreover, if successful, it could also evolve into a competitive multichannel video service of its own, thus providing price competition to cable and satellite with the added benefit of reducing broadcasters’ reliance on cable and satellite for the distribution of their signals.

Broadcasters, consumer electronics manufacturers and others are already exploring the possibility of establishing something like this within the unique parameters of the United States market. However, most publicized efforts so far have focused on the creation of subscription-based services, rather than a free service (e.g. USDTV). This may be a mistake, as these initiatives have failed to attract significant numbers of subscribers.

Could an entirely free multichannel television service ignite consumer interest in the United States as it did in Britain? Or, alternatively, would an initial free service, later supplemented by a subscription-based tier (i.e. a hybrid free/pay service), make more sense to consumers and investors? Would consumers be willing to adopt this technology if it meant fewer channels as compared to cable but better price for a core of popular programming? While the uncertainties of introducing a new multichannel television service are numerous, the fact is that in Great Britain, Freeview has been an enormous consumer success. If something close to an equivalent can be established in the United States, those regions where United States Freeview is actively adopted – especially those regions with high broadcast reliance—may experience less of a disruptive digital switchover process than otherwise might occur.