Television, but not as we know it.

This billboard ad gives a taste of the competition between Sky and Virgin Media. ©.

In the distant past, all television in the UK came through a terrestrial TV receiver. The big competition was between the BBC, iTV and Channel 4 – the big TV channel operators. Yet now, in this day and age, these same broadcasters are forming tight-knit partnerships that mean they will share resources ranging from technology to news reporting facilities. These same broadcasters are also the major partners that constitute Freeview, the venture that owns the digital terrestrial television platform. Has the basis for competition shifted? Rather competing TV channels, are we entering a world of competing TV platforms?

Two big pillars have emerged in the UK broadcasting landscape over the last 20 years. Struggling as independent satellite television operators, in November 1990 Rupert Murdoch's Sky Television and the BSB merged to form BSkyB. By February 2007, a series of mergers of numerous independent cable television companies starting as far back as in 1997 led to the formation of a single cable television operator, Virgin Media.

Currently iTV, Channel 4 and Channel 5, the commercial terrestrial television broadcasters in the UK, are starved of advertising revenue and struggling in stay afloat. The BBC is funded by a compulsory television license fee that the British public pay. Already a small portion of this license fee goes to the commercial terrestrial broadcasters. Facing bankruptcy, these broadcasters are now asking for a larger slice of the license fee. In response, the BBC has instead proposed a Public Service Broadcasting partnership between the terrestrial broadcasters. This partnership is designed to exploit the BBC's vast scale, providing the other broadcasters with some of its technology, television making facilities and other resources. However, is this the first step in the eventual merger between all the terrestrial television broadcasters?

In the same way that the UK has a dominant satellite television operator in BSkyB and a dominant cable television operator in Virgin Media, are we now seeing the emergence of a single dominant terrestrial television operator? The groundwork for such a merger is already in place. Following analogue switchoff, the terrestrial television platform will be entirely digital and entirely dominated by Freeview. The Freeview partnership consists of the BBC, iTV, Channel 4 as well as Sky and Crown Castle. Already the BBC, iTV and BT are working on developing the Freeview platform to exploit integration with the internet. This integration will make the Freeview platform competitive with BSkyB's satellite platform and Virgin Media's cable plaform.

The next five years promise to be interesting for the television landscape in the UK. Long gone are the days of competition on the single terrestrial platform between the BBC, iTV and Channel 4. The value chain for television broadcasting is changing. The competitive pressure in the chain is moving from the channels to the television platforms.

Updated, 2nd March

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