KEY POINTS:
Would the Sky fall if the box opened?
Storm clouds loom on the horizon for Sky TV if ideas mooted in Government discussion papers examining digital media regulation are anything to go by.
It's about time the Government looked at the pay TV operator's monopoly in this country
and what it will mean as Kiwi consumers seek to employ new ways of accessing content.
Sky has done extremely well in getting to a stage where it transmits to four out of 10 households, all of which pay a monthly subscription fee to access its content.
Sky's locked-down set-top box and electronic programming guide (EPG) are the keys to its success. No one else is allowed into the box and Sky's content can't be received on other consumer electronics devices. This contrasts the model underpinning Freeview, the free-to-air TV platform that can be received on pretty much any device with an MPEG-2 digital satellite receiver.
Sky's proprietary system has meant that stand-alone hard-drive video recorders can't tap into the Sky programming guide.
Sky's MySky DVR is a neat little device. But it shouldn't be the only way to tap the official Sky programming guide. With the Sky decoder sitting in hundreds of thousands of households, it is becoming clear that it should be opened up to other operators.
One of the mooted proposals in the document, a good bit of research assembled by the Ministry of Culture and Heritage is to: "Develop a formal open access regime that ensures that EPG, platform and network owners provide access to third parties on a fair and equitable basis."
When Sky releases its next generation of set-top boxes, which will connect to the internet via broadband, the game will change again and that little box will become even more important as it allows Sky users to surf the high-speed web from their TV screens, access video-on-demand services and interactive TV channels streamed over the internet.
Imagine it - one device that gives you access to free-to-air channels, Sky's 80-plus pay TV channels, video-on-demand, maybe streaming services like YouTube, web-surfing and email.
It's the device everyone from Apple to Sony is trying to perfect but in this country anyway, the gateway to the one box that does all of that will be guarded by one company - Sky.
Regulators worldwide have begun to promote open-access platforms as a way of encouraging competition in broadcasting, though some of the early efforts have been slightly abortive.
In July, the United States Federal Communications Commission introduced rules that force cable TV providers and set-top box makers to unbundle their devices so they can be used to access any cable content provider. A standard access card guards access to the set-top box, so if you want to change provider you can simply change cards.
Take-up of CableCard in the US hasn't been great - partly because there's a lot of competition in the US cable TV market.
But the concept has better chances of working here where Sky runs a monopoly on pay TV. Numerous players have considered getting into our pay TV market, but Sky's entrenched position puts them off.
Competition has always driven innovation in the broadcasting space. It wasn't until TiVo introduced its personal video recorder in the US that cable TV providers offered similar devices. I'm already using my PlayStation 3 to view content streamed and downloaded from the internet and this year, Sony, desperate to make its gaming console the multimedia hub of the home, will release a Freeview-compatible digital TV tuner for the PS3. But without access to Sky, it is still not the ideal set-up.
Ironically, forcing Sky to unbundle its set-top boxes and programming guide may have some positive spin-offs for the pay TV operator. Sky and its free-to-air channel Prime commanded roughly 22 per cent of peak viewership in the second quarter of 2007. I'm sure it would be higher if Sky subscribers had the option of viewing that content on a range of devices.
It seems the world's largest cable TV operator ComCast has also come to that view. At the CES show in Las Vegas this month, its chief executive Brian Roberts announced the beginning of an open cable services platform called Tru2way. It allows cable services to be integrated into consumer devices and partners onboard with the venture include Motorola, TiVo, Intel, Samsung, Microsoft, LG, Panasonic, Cisco Systems, and Sun Microsystems. The system is based on the Java programming language, which allows developers to design applications that work across all cable operators and devices. It could blow a hole in the walled-garden approach Sky currently takes to pay TV. That's a good thing, but the regulator will need to breathe a little fire to make it happen here.
ON THE WEB
http://www.mch.govt.nz/publications/digital-tv
