BSkyB jittery over Commission’s interactive TV standards ruling

By Peter Chapman

Date: 22/04/04

RUPERT Murdoch's television giant BSkyB has admitted that its multi-billion euro business model for digital TV hangs in the balance as the European Commission prepares to issue a ruling on the standards that the market ought to use for new interactive services.

Sheila Cassells, Sky's head of economic policy, was speaking to European Voice after the Commission held hearings designed to help it decide whether to impose a single standard for the computer software and electronics underneath the so-called set-top boxes for interactive TV.

The Commission is weighing the arguments in favour of mandating an open standard known as "MHP" or multimedia home platform, which has been approved by European standards bodies and published in the Official Journal of the European Communities.

Supporters of MHP, used by public broadcasters in Germany, claim it would help nurture a single market for digital TV and content by ensuring all programmes can work on any set-top box without having to be "re-authored".

Cassells pointed out that most content could easily be adapted to work on different TV systems.

But she said that a decision forcing the sector to adopt a specific standard would be disastrous for her company, which has plunged billions into its own system, found in seven million UK households.

"For digital TV as a whole we have invested €3.5 billion - that is a lot of money. We have just made a profit after being going for five-and-a-half years - and we have a big hole to fill in [before paying back the investments]."

She said Sky's system is not compatible with MHP, which does not have advanced video-recording capabilities.

That would mean an EU imposed standard would force the scrapping of millions of set-top boxes with an expected life of ten years.

"If we find a whole set of boxes that cannot be used in a few years time we would have to think long and hard about what to do next. That is not a hit that you want to take twice."

A TV ruling is likely to be one of the parting shots of Enterprise and Information Society Commissioner Erkki Liikanen, expected to take up a post at the Finnish Central Bank.

Officials at this week's meeting refused to reveal their hand to the industry groups in attendance.

Despite her warning, Cassells said she is hopeful the Finn will not jeopardise her company's €3.5 billion investment in digital television technology.

She said officials had already hinted that they would not promise to "do anything highly interventionist" because they felt this could "compromise the position of the next Commission" due to take office on 1 November.

Meanwhile, Cassells said the issue has not yet registered with big institutional investors because analysts cannot imagine policymakers choosing the worst case scenario. "They are saying 'how could you take this type of decision?'"