This piece first appeared in The Daily Telegraph on 15 May 1999
The text here may not be identical to the published text

Make sure it all adds up on your digital options

special deals from digital TV providers

The cost of receiving digital television has fallen dramatically this month as both the companies which provide the digital television transmissions slashed the price of the electronic box needed to convert the digital signals before they enter the television set. Although both British Sky Broadcasting and ONdigital (one word, two caps correct) have exceeded their target figures for subscribers to the new digital services, both recognise that the £199.99 price tag on the set-top box is a barrier to expanding their market. Hence the price cuts announced this month.

Until the end of May ONdigital will refund the price of the set-top box to any customer who spends at least another £199 with the retailer on the same receipt. ONdigital spokesman Andrew Marre told Money-go-Round that the extra money does not have to be for a television or a related product at all.

"Our offer started last Saturday. And it has been going very well. It can be anything at all from the same retailer. At some department stores you could buy a set of saucepans, or an expensive pair of shoes. As long as it is on the same receipt. You buy the box and then send the receipt to us and we put a cheque for the cost of the set-top box in the post. You have to subscribe to ONdigital first to get the refund. It ends on Monday 31st but there will be offers to follow this. We have said we will be competitive, and we will always offer the best value for our subscribers."

The day after the ONdigital offer ends, BSkyB will also offer free set-top boxes to receive its service. However, there is a price to pay. The current cost for a new subscriber is £199.99 for the box and a £30 registration fee - total £229.99. From June 1 that total will be slashed to £40 - the box will be free and the £30 fee replaced by a £40 installation charge. However, the monthly fee to subscribe to SkyDigital (one word two caps correct) will also rise for new customers from that date by amounts ranging from 1p a month for those taking the basic £6.99 a month service to £2.01 a month for those who subscribe to the whole SkyDigital package - including films and sport - which will cost £32 a month in future. But overall the package is a big price cut - BSkyB claims it will cost around £450 million and it has suspended dividend payments to shareholders to help pay for it. Existing customers and those who pay £199.99 for the set-top box before the end of May will have their current monthly charges frozen until September 2001.

The BSkyB offer is designed to challenge the cable industry more than the tiny ONdigital. The three major cable companies - Cable & Wireless Communications, Telewest, and NTL - have not yet started their digital services. But digital television over a cable will start in the autumn and by April next year most of the country which has access to cable will be able to receive it. The three major cable operators have already said that there will be no charge for the set-top box to convert the digital signal. And they already offer a telephone service to all their customers which undercuts BT.

So BSkyB has got its defence in first by adding cheaper telephone calls to its digital television package. From July 1 every subscriber to SkyDigital who has a BT telephone line will be able to sign up with a new operator called Broadsystems (one word correct) which guarantees that every call made will be 40% cheaper than the standard tariff offered by BT. Broadsystems simply re-sells BT's own service but at a discount. So calls go through the normal BT route but the bill comes from Broadsystems. BSkyB spokesman Tim Allan told Money-go-Round

"Broadsystems buys BT calls and discounts them by 40pc. It's not costing us any money but not losing us any money either. Customers just tick a box when they get SkyDigital."

The new service will be available on more than one line in the same house and the discount of 40% off BT's standard tariff will apply to any call made, including calls to an Internet service provider, a mobile, or international calls. The customer does have to dial a four digit access code, though that inconvenience will go sometime next year.

Of course, many BT customers already get discounts off their calls through BT's own complex series of packages such as Friends and Family and PremierLine. But even at their best these do not cut 40% off the standard tariff and not for every call made. The cable companies will almost certainly hit back - already they make no charge for telephone line rental and some guarantee to be cheaper than BT for calls including all BT's discounts.

BSkyB will also be offering its customers free Internet access - apart from the telephone call - branded as SkyNow but provided through a separate company. It will be at least a year before cable companies make an offer to challenge that.

Digital television simply uses a new technology to transmit the picture from the studio to your television set. It brings genuine wide-screen (if you buy a wide-screen set) more choice, better sound, and less interference. Films will start every fifteen minutes, camera angles and action replays will be possible at your choice. In future, shopping, banking, e-mail, and even accessing the Internet, will all be available through a digital television signal.


15 May 1999

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