ITV Digital - History

History

Digital terrestrial television (DTT) began in the United Kingdom in 1998. Six multiplexes were set up, with three of them allocated to the existing analogue broadcasters. The other three multiplexes were auctioned off. A consortium of Carlton Television, Granada Television and British Sky Broadcasting won the auction as British Digital Broadcasting (BDB). The brand ONdigital was adopted for launch. BSkyB was forced by the Independent Television Commission (ITC) to withdraw from the consortium on competition grounds; this effectively placed Sky in direct competition with the newly launched service (although BSkyB was still forced to provide key channels such as Sky Movies and Sky Sports to the service). In all ONdigital was given one year from being awarded the licence to launching the first DTT service. In addition to launching audio and video services, they also led the specification of an industry-wide advanced interactive engine (based on MHEG-5). This was an open standard that was then used by all broadcasters on DTT.

The new digital broadcaster was launched on 15 November 1998, with a lineup of 18 channels, including many channels developed in-house by Carlton and Granada. On 7 March 2000, Onmail was launched, followed closely on 18 September 2000, by ONdigital launching an Internet television service, ONnet, and in the same year a deal with multiplex operator SDN led to the launch of pay-per-view service ONrequest.

From the launch date, however, the service was quickly losing money. Aggressive marketing by BSkyB for their own digital service, Sky Digital, made the ONdigital offer look unattractive. The new digital satellite service provided a dish, Digibox, installation and around 200 channels for £159, a lower price than ONdigital at £199. ONdigital's subscription pricing had been set to compare with the older Sky analogue service of 20 channels. ONdigital also failed to realise that Sky had cast off its downmarket image and believed there was considerable public antipathy towards Sky (and Rupert Murdoch); but this appeared to matter much less than they had hoped.

The ONdigital management team hoped to obtain the upper hand by a series of 'free set top box' promotions (initially at retailers such as Currys and Dixons) when ONdigital receiving equipment was purchased at the same time as a television set or similarly priced piece of equipment. These offers eventually became permanent, with the set-top box 'loaned' to the customer at no charge for as long as they continued to subscribe to ONdigital. The offer was swiftly matched by Sky.

Additional problems for ONdigital were caused by the choice of 64QAM broadcast mode, coupled with far weaker than expected broadcast power, (meaning that the signal was weak in many areas), a complex pricing structure (comprising many menu options), a poor quality subscriber management system (badly adapted from Canal+), a paper magazine TV guide whereas BSkyB had provided an electronic programme guide (EPG), insufficient technical customer services, and much signal piracy. While there was a limited return path provided via an in-built 2400 baud modem, there was no requirement (as with BSkyB) to connect the set-top box's modem to a phone line.

Later problems occurred when ONdigital began to sell 'ONprepaid', a set-top box bundle sold in high street stores and supermarkets at a price that included - in theory - the set-top box on loan and the first year's subscription package. Thousands of these packages were also sold at well below retail price on auction sites such as the then-popular QXL. As the call to activate the viewing card did not require any bank details, many ONdigital boxes which were technically on loan were at unverifiable addresses. This was later changed so a customer could not walk away with a box without ONdigital verifying their address. Many customers did not activate the viewing card at all, although where the viewer's address was known, ONdigital would write informing them that they must activate before a certain deadline.

Additionally, the OnDigital pay-per-view channels had been encrypted using a system - SECA MediaGuard - which had been subsequently cracked. ITV Digital did not update this system, therefore it was very easy for people to produce and sell counterfeit subscription cards which would give access to all the channels. In 2002, Canal+ accused News Corp of extracting the UserROM code from the MediaGuard cards and leaking it onto the internet. Canal+ brought a lawsuit against News Corporation alleging that they, with the help of NDS, had been working on breaking the MediaGuard smartcards used by Canal+, ITV Digital and other non-Murdoch-owned TV companies throughout Europe. The action was later partially dropped after News Corporation agreed to buy Canal Plus's struggling Italian operation Telepiu. Other legal action by Echostar/NagraStar was being pursued as late as August 2005 accusing NDS of the same wrongdoing. In 2008, NDS was found to have broken piracy laws by hacking EchoStar Communications’ smart card system, however only $1,500 in statutory damages were awarded.

Finally, Carlton and Granada had chosen not to employ ONdigital management and staff directly, so many people were on short-term contracts and key people left with no notice.