Fibre-to-the-House-of-Lords

I've been invited to give oral evidence to the House of Lords inquiry into Superfast. This is sporting of the Committee, since one of their key questions is whether the UK government "is being ambitious enough in its plans" for Superfast. I of course believe the government is being too ambitious.

I've already submitted written evidence to the Committee, so at least they're aware they've invited a dog into the manger.

The instructions for witnesses tell them to find the committee room by turning right at the statue of Joseph Chamberlain. I'm reviewing mug shots of 19th century politicians to be sure I recognise him when I see him.

Do consumers care about HDTV?

This might seem like a silly question. In the UK retailers don't even try to sell standard definition TVs any more - all 9.5m sets sold in 2010 were HD ready. Moreover, 3.5m households, or about 14% of the UK total, were paying for HD TV subscriptions from Sky by the end of that year. On top of this, all cable households were getting HD for free, as were at least some Freeview (digital terrestrial) households. However, as we will see, ability to view is not quite the same as actually choosing to view.

Ofcom consumer research suggests that 32% of households have HD TV channels. As Ofcom says, this may be an overestimate, since not all consumers distinguish between having an HD TV and getting HD channels. However, we know that at least 28% of households receive HD channels, given the Sky HD households mentioned above, plus the 3.8m cable customers (though a few of the latter may not have HD sets). Freeview HD households are on top of this. For the purposes of discussion, let's say a round 30% of households can watch HD.

Several UK channels broadcast in both SD (standard definition) and HD. In HD households, it is a simple manner of selecting the HD version of the channel to get the higher video quality. The interesting thing is, audiences generally don't bother.

ITV1 is the largest UK commercial channel (and second only to BBC1 overall), and broadcasts in both modes. The average person watched 5 hours, 46 minutes of ITV1 (SD+HD) per week in December 2010. Of this, 14 minutes was of ITV1 HD. Of course all this HD viewing came in HD households, so that implies the average ITV1 HD viewing was 46 minutes in those households.

However, this means that in households with the option to watch ITV1 in HD, viewers chose to do so for just 46 minutes out of their 5 hours 46 minutes of ITV1 viewing in both modes, or 13% of their viewing.

This is a striking result. Even in these HD households situation, where consuming exactly the same programme in HD rather than SD is simply a matter of clicking a few buttons on the remote, 87% of the time audiences simply don't bother.

This doesn't prove HD is irrelevant, but it does suggest it has limited general value for audiences. It is, for instance, likely more valuable for films or sports than for quiz shows.

Which brings us to superfast broadband. HD is regularly cited as one of the strong arguments for superfast, and often features heavily in proposed 'app stacking' (multiple activities in a single home using one broadband connection). However, if consumers see HD as irrelevant to most of their viewing, then it's hard to justify spending large sums on superfast to bring it to them.

Moreover, the strength of the internet for TV is in on-demand programming (since broadcast works perfectly well for linear TV). But sports are very heavily consumed live. Most countries already have infrastructure to deliver HD TV versions of sports channels and programmes, be it via terrestrial, satellite or cable. Superfast therefore adds very little to HD live sports.

This leaves movies as the key remaining TV content that might have substantial value as on-demand HD, and therefore contribute to the case for superfast (though cable VOD is also capable of this). This is a limited use, and certainly not used heavily enough to contribute regularly to an 'app stack'.

Thus those building the case for superfast on the back of HD need to explain why they expect consumers both to become much more interested in high definition and on-demand services than they have been to date.



[Note that for the purposes of this simple analysis I have ignored issues of secondary sets and different channel shares in HD/non-HD households, though these are unlikely to change the outcome materially]

Chancellor offers you £17 to upgrade your broadband

In today's UK budget the Chancellor announced ten cities that will "share £100m to introduce ultra-fast broadband". The cities are Belfast, Birmingham, Bradford, Bristol, Cardiff, Edinburgh, Leeds, London, Manchester and Newcastle. You will have spotted that there are some big cities in this list - their combined population is 14.6m.

At 2.5 people per household (the rough UK average) this is equivalent to 5.9m households. So, the £100m works out to £17 per household in the relevant cities. Given average civils (construction) costs of £50-60 per metre, this would get the duct carrying your fibre roughly 30cm down your front path / driveway.

My point is not of course that the government should be throwing more money at superfast - they certainly shouldn't, particularly in cities where existing broadband is likely to be of a reasonable standard. Rather the fact that £100m gets you 30cm of duct per household just shows how expensive fibre-to-the-home is.