BBC TRUST FREESAT CONCLUSION.

AS REPORTED BY THE BBC TRUST IN APRIL 2007.

the effect on consumers and on other participants in the market might be, and whether the
proposals went far enough to minimise the impact of the proposition on the market.
Overall, 93% of respondents considered that we had correctly identified the markets likely
to be affected, although taking just the responses from organisations this figure fell to 69%.
One respondent considered the precise distribution mechanism (i.e. which satellite
“Freesat” uses) relevant. A small number of others suggested that not all future markets had
been identified.
The market review notes the difficulty of accurately defining future markets and impacts in
sectors where technology is fast-changing and future consumer behaviour is highly
unpredictable. The review does attempt to define such markets where possible, in particular
identifying the major telcos/ISPs as potential future competitors, but the analysis suggests
that at present it is reasonable to assume that such other products may not form part of the
relevant market at this stage.
In terms of the distribution mechanism it should be noted that “Freesat” is intended to offer
consumers an improved viewer experience basedlargely around free to view content that isalready in existence, not to create a new satellite broadcasting system. Therefore any large
scale acquisition of satellite transponder capacity for the broadcast of channels and services
is not within the remit of the proposal.
The outcome in terms of the competitive effect for consumers was clear-cut. 92% overall
(and 93% of organisations responding) agreed that launching “Freesat” would benefit
consumers by increasing choice and introducingcompetition in the subscription-free satellite
TV market. Comments included “Yes as Sky is the only company offering such a service at
present. Equipment can be costly [to] purchase through them. Some competition will helpbring prices down” and “It will definitely make the market known and accessible.”
BSkyB welcomed the new competition and thought increased choice for consumers was
positive, but took issue with the fact that, in its view, the Trust appeared to accept without
reservation that it was appropriate “for state-owned entities to be used as instruments of
industrial or competition policy.” Virgin Media made a similar point that they have a “natural
bias against public intervention.”
In addressing these points we have considered the stated objectives of the proposition and
how the proposition fits with the BBC’s public service remit. The public policy issue that the
BBC is seeking to address through this proposal is inadequate access to the BBC’s digital
services in the lead up to switchover. The Trust is satisfied that this is an issue that the BBC
should address. It recognises that the proposals might also benefit competition and
consumers but, whilst welcoming this, the Trust is clear that this is not the main driving
force for the intervention.
BSkyB raised a concern in their response that in marketing “Freesat” the BBC, which is not
subject to Ofcom’s Cross Promotion Code, might not promote digital services on a
platform-neutral basis. The BBC Trust is currently consulting on a draft Competitive Impact
Code on Cross and Digital TV Promotion, which will establish key principles for the cross-

BBC TRUST DECIDE FREESAT FUTURE.

AS REPORTED BY THE BBC TRUST IN APRIL 2007.

Pie chart showing that 93% of respondents answered "Yes" and 7% answered "No" to the proposition "Are the proposals valuable to licence fee payers who cannot access Freeview?"Again we can see that this is of particular significance in Northern Ireland, Scotland and
Wales, with higher than average responses in favour of 100%, 98% and 96% respectively.

The proposal is valuable to Licence Fee payerswho cannot access Freeview50%
60%
70%
80%
90%
100%
NorthernIrelandScotlandWalesEnglandOverallNo location
Sample of comments from those who believe the proposals will13
be valuable to
those Licence Fee payers who cannot currently access Freeview
“It would be valuable to those withpoor reception and no reception.”
“PSB Freesat will enable licence fee payers outside Freeview coverage areas to switch to
digital TV without having to wait for DTT coverage to expand. They will be able to enjoy the
same benefits now as those living in Freeview areas. Without it, they pay the same licence

Breakdown by location of those agreeing that: "The proposal is valuable to licence fee payers who cannot access Freeview". Northern Irelan: 100%; Scotland: 98%; Wales:96%; England:94%; Overall: 93%; No location: 84%.
fee, but without digital channels. The BSkyB offering is confusing because of the proliferation
of unavailable subscription channels which cannot be removed from their EPG and does not
allow non-subscription PVR use.”
“Those unable to receive Freeview will find this an attractive solution to the Sky option.”
“I think it will be only those who cannot receive Freeview. But it does depend upon the free
package on offer.”
“We recognise that because Freeview is currently unavailable to over one quarter ofhouseholds, for many people the only digital option they have is Sky. A Freesat offering
would provide a valuable alternative route to digital for people who are unwilling for
whatever reason to take up Sky’s subscription or “Freesat from Sky” offerings.”
“It is worthwhile to offer the same freeview channels to those who cannot receive freeviewby whatever means necessary, however I would not like to see a massive increase in satellite
dishes that would result if more material was made available through freesat than through
freeview.”
“I receive Freeview and value the additional programmes available. Licence fee payers who
can not receive Freeview would find the alternative Freesat valuable.”
“Yes - as it would give me coverage when freeview is lost during high pressure in summer.”
“PSB Freesat will enable licence fee payers outside Freeview coverage areas to switch to
digital TV without having to wait for DTT coverage to expand. They will be able to enjoy the
same benefits now as those living in Freeview areas. Without it, they pay the same licence
fee, but without digital channels. The BSkyB offering is confusing because of the proliferation
of unavailable subscription channels which cannot be removed from their EPG and does not
allow non-subscription PVR use.”
Sample of comments from those who believe the proposals will not be valuable
to those Licence Fee payers who cannot currently access Freeview
“The BBC "Freesat" proposals do not offer anything substantially different to services
available elsewhere, e.g. "Freesat from Sky" and "Freeview".”
Question 4 – Should the BBC seek to future-proof the "Freesat" proposition by
offering a range of set-top boxes so that users can choose either standard
definition (the standard that BBC channels are currently broadcast in) or a box
that would be capable of receiving high definition broadcasts in the future?
Of the 587 responses to question 4, 91% consider that the BBC should seek to future-proof
the ‘Freesat’ proposition, while only 9% do not.