BBC TRUST FREESAT CONCLUSION.

AS REPORTED BY THE BBC TRUST IN APRIL 2007.

suppliers in the market but, taking account of the scale of the new proposal, concluded that
these effects on competitors would be small.
The report also considered the potential impact on wider markets, including TV channels
and the supply of hardware. It concluded that the characteristics of the proposal meant that
there was unlikely to be a major impact on the overall distribution of advertising revenues
between channels (as the majority of channels that would be available on the new platform
also played-out on the other main digital TV retail services) and that the proposal might
benefit some manufacturing and service industries by expanding demand in these markets.
Overall, the review suggested that there may be some marginal positive impact on wider
markets and that the proposition was likely to make a contribution to the growth of digital
television take-up and its associated economic benefits.
(ii) The Fathom Partners' reportThe original Governance Unit report was forwarded to DCMS in support of the BBC’s
application in June 2006 (and a revised Governance Unit report which we published as part
of our consultation was provided on 18 November 200617) seeking the Secretary of State’sapproval to enter into a joint venture arrangement. DCMS commissioned Fathom Partners
to comment on the report. Whilst Fathom agreed with the Governance Unit view that theproposition would increase competition withconsequent benefits for consumers, it
contained a number of conclusions which differed from the Governance Unit's views.
Although the Fathom Partners report was not commissioned by the Governors or the Trust
Unit, we considered it was appropriate that we took the report into account in considering
the proposition. The full Fathom Partners report was published as part of our consultation.
The key conclusions are set out here.
•Fathom considered that the Governance Unit had not taken proper account of the
effect on the proposition that future decisions on the provision of HD services could
have. Fathom reviewed two separate scenarios – one without a strong HD channel
line up and one with a strong HD channel line up.
•Without a strong HD channel line up they concluded that the proposition would
have limited appeal (0.5m customers) and may fail because of insufficient interest
from potential manufacturers of the set top boxes. Fathom Partners also
considered that this same scenario could have a negative impact on BSkyB’s
subscription services as well as its free services because in their view the launch of
PSB “Freesat” would alert BSkyB's paying customers to consider a free-satellite
alternative potentially over time prompting a body of BSkyB customers to move from
BSkyB subscription services to “Freesat from Sky”, or to lapse their payingsubscription.
•With a strong HD channel line up they concluded that the proposition could be fairly
successful (2.5m customers). They asserted that the Governance Unit had not
17 We published both the 18 November 2006 Governance Unit report and also the later Trust Unit report that
amended and updated it.