Raymond Snoddy on media: Market forces risk Freeview allure

The sheer volume of consultations and decisions that stream out of Ofcom make it a full-time job just trying to keep up with the communications regulator's pronouncements. But two that oozed out last week are worthy of note.

Ofcom plans to crack down on the 0870 numbers racket, while going the other way on Freeview - liberalising the rules so that the platform could become Payview in future. One decision is long overdue while the other looks decidedly premature.

For years, organisations from companies to government departments have been making money out of providing essential information to citizens.

Not many viewers can have been aware that anyone who calls in to complain about a BBC programme is effectively charged a premium rate to do so.

The BBC denies making profit from its 0870 numbers - its phone systems are merely being 'subsidised'.

Many licence payers are not best pleased at the practice, or the lack of information on what calls will cost when viewers are urged to get in touch. The BBC has always argued that it is too complicated to give full details of the cost of such calls as there are so many tariffs. In fact, it is not all that hard to say that calls will cost, say, between 3p and 8p a minute, depending on the time of day.

At least when Ofcom's new call regime is implemented next year, greater transparency is promised on charges, and revenue sharing between the bodies involved will stop. It's a small step forward.

It is less clear whether Ofcom's decision to leave the market to find the future balance between pay-TV and free-to-air services on Freeview is such a great idea. The main public-service channels will continue to be protected on the platform. As for the rest, broadcasters will be free to decide whether to run advertising-funded or pay channels.

The great success of Freeview, which is in more than 6m homes, has come because it has lived up to its name. With the exception of basic pay service Top-Up TV, most Freeview channels have been funded either by the licence fee or advertising.

As a result, a clear, unambiguous marketing message has gone out: users pay about £40 for the set-top box and there are no subscription charges.

That clarity has been a vital factor in the platform's rapid growth. And Freeview is the government's strongest weapon in persuading the 30% of the population who are resistant to digital to take the plunge. It seems the wrong moment to muddy the waters.

Ofcom, on the other hand, believes that 'the current restriction is no longer a matter requiring regulatory intervention and that finding the right balance between pay and free-to-air services on the platform can better be left to the market'.

It will probably get away with this approach, as broadcasters including Channel 4 and ITV are committed to putting ad-funded channels on Freeview.

But it could shift the platform's balance and dilute the 'free' argument.

At least the Ofcom decision is a small sop to the original multi-channel players, which feel strongly about what they see as a digital land-grab by the terrestrials on Freeview. Members of the Satellite and Cable Broadcasters Group (SCBG) believe the commercial terrestrial broadcasters are abusing their position on issues from using their public-service platforms to roll out 'wholly commercial' digital channels to the extent of cross-promotion.

The SCBG feels Ofcom is doing little to redress the balance. And the group was even less amused recently to find out that the regulator accepts that everything ITV puts out counts as public-service broadcasting as long as it is made in the UK.

30 SECONDS ON ... FREEVIEW

- The digital terrestrial TV platform was relaunched under the Freeview banner in late 2002 following the collapse of ITV Digital. It currently carries more than 30 TV channels.

- The platform is run by DTV Services, whose shareholders are the BBC, BSkyB, National Grid Wireless, ITV and Channel 4.

- The BBC, ITV and Channel 4 have all extended their offerings with digital TV channels. ITV Play launched last week; C4's subscription channel FilmFour moves to Freeview in July.

- Five is the only one of the major terrestrial broadcasters yet to extend its brand into the digital arena, though it acquired a strategic stake - reported to be 20% for a £20m investment - in Freeview pay-TV service Top Up TV last November.

- Top Up TV chairman David Chance has predicted the service will reach its break-even target of 250,000 subscribers by mid-2006.

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