The UK Government has today published an interesting new report examining the ‘Future of TV distribution‘, which among other things looks at the changing viewing habits and platform choices of modern TV viewers and then attempts to predict what will happen by 2040. The report also delves into the related issue of broadband ISP speeds and take-up.
As most people will already be aware from their own experiences, there has been somewhat of a radical shift in how we all access and view TV content over the past decade. Such content is now increasingly being viewed online, via services like Netflix, Amazon (Prime Video), NOW TV, Sky Glass, Virgin Media (Stream Box), YouTube and so forth. Due to this, there has been a decline in those using traditional Digital Terrestrial TV (DTT) signals.
Context for today’s environment
In 2023, 87% of UK households had an internet-enabled primary TV and approximately 18% used the internet exclusively as their primary way to watch television. 17% of UK households were dependent on digital terrestrial television for their TV viewing.
● Homes that were dependent on digital terrestrial television included 13,000 homes in areas without fixed-line broadband, 1.7 million homes without broadband access for reasons of affordability or choice, 2.2 million homes with broadband where the TV is unconnected to the internet and 0.7 million with an internet-connected TV whose viewing is more than 80% linear.
● In 2023, 90% of those without a broadband connection were aged over 55. They were more likely to identify as female and to live on their own. 80% of those with no broadband connection were within the C2DE socioeconomic bands. They were also more likely to live in the north of England, Wales, Scotland and Northern Ireland and have a disability.
The ‘Future of TV Distribution‘ report projects, based on existing market dynamics, that by 2040 95% of households will have installed the capability to watch TV over the internet. The results expect 71% to rely exclusively on internet delivery and 24% to be hybrid homes combining internet-delivered TV with digital terrestrial television or digital satellite.
Similarly, superfast broadband is predicted to reach at least 99.65% of homes by 2030. However, without intervention, by 2040, some 5% of homes (1.5 million) will still rely on digital terrestrial television via the airwaves. This could be a problem because the government is increasingly looking to phase-out terrestrial TV signals in favour of a model based more on internet delivery.
The difficulty today is that broadcasters (e.g. BBC, ITV etc.) are now paying to distribute their content both online and via traditional infrastructures like DTT with costs rising. The less time people spend on DTT, the less cost-effective per viewer it is, and this will only grow as DTT declines.
Just to be clear. The 1.5 million figure above reflects 0.4 million homes that will opt not to connect to broadband and 1.1 million homes that will have broadband, but which will not connect their TVs in order to use an internet TV service. “These viewers are more likely to identify as female and to live on their own. They are also more likely to live in the north of England, Scotland and Northern Ireland, be on low incomes and have a disability,” said the report.
The past and present governments have of course made no secret of their desire to deliver “nationwide” coverage of gigabit broadband by 2030 under their £5bn Project Gigabit programme, although in practice this is more likely to mean a figure of c.99% as some premises are simply too expensive to reach via fixed lines. Equally, not everybody will actually choose to use broadband.
Modelling by 3 Reasons and MTM forecasts that by 2030, 90% of UK homes will be fixed-line broadband subscribers, while a further 6.1% of UK homes will access broadband but only via wireless technologies. Over 99% will live in places covered by ultrafast broadband (100Mbps+), with ultrafast uptake at 83.3% of homes.
However, by 2040, broadband penetration is forecast to have reached at least 98.6%, and ultrafast coverage will have reached all of these homes. “We forecast that, by 2040, 92.6% of homes will have at least superfast fixed-line broadband (30Mbps or above) connection, and an additional 4.9% will have a Video-on-Demand capable mobile connection. While a small proportion of homes will still be without broadband, this is forecast to be a small minority at 1.4%.”
Key Findings from the Report
➤ Most households in the UK already have the capability to watch internet-delivered TV on their main TV set. In 2023, 87% of TV households had an internet-enabled primary TV set and within this cohort, approximately 18% already used the internet exclusively as their TV delivery mechanism on their primary set. In 2023, 17% of households relied on digital terrestrial television.
➤ We project, based on existing market dynamics, that by 2040 95% of households will have installed the capability to watch TV over the internet. We expect 71% to rely exclusively on internet delivery and 24% to be hybrid homes combining internet-delivered TV with digital terrestrial television or digital satellite. Superfast broadband will reach at least 99.65% of homes by 2030. However, without intervention, by 2040, 5% of homes (1.5 million) will still rely on digital terrestrial television.
➤ There are strong supply and demand drivers of internet-delivered TV. On the demand side, new and augmented services are available over the internet that are not available on broadcast TV, such as TV series or subscription services like Netflix, as well as innovations in user experiences (e.g. start over, playlists, personalisation, etc.) that can drive viewer engagement. One of the most significant supply side drivers is TV set sales and 3 Reasons anticipates that 100% of TV sets sold will be internet-capable by 2025.
➤ The 17% of households that rely on digital terrestrial television for their TV services in 2023 tend to have lower incomes, are more likely to be disabled, older, living alone, female, and geographically in the north of England, Wales, Scotland and Northern Ireland. Our analysis of the barriers to uptake of internet-delivered TV suggests that in 2040 the 5% of households that remain reliant on digital terrestrial television will continue to share these characteristics. Future research should focus on understanding these barriers and, if there is a case for switching off digital terrestrial television, explore potential interventions to support these households to switch to internet-delivered television.
➤ Technology for internet television delivery is mature and will have the capacity to manage all television viewing via the internet by 2040, but lack of control by service providers over the access network and in-home network may create problems including reliability. Internet-delivered television would require more reliable end-to-end networks to match current digital terrestrial television networks’ performance.
➤ The UK’s digital terrestrial television network continues to use transmission and encoding technology from the 1990s – DVB-T and MPEG2 – for most of its services. More efficient second-generation technology – DVB-T2 and MPEG4 – is used for Freeview High-Definition channels. In Europe, most countries are retaining digital terrestrial television because of its reliability and the need to maintain access for vulnerable audiences, and are replacing DVB-T and MPEG2 with newer, more efficient technologies to offer higher resolution and/or a greater choice of services.
➤ Digital terrestrial television broadcasting will remain the only primary service in its allocated UHF spectrum until at least 2031 in International Telecommunication Union Region 1 which includes the UK. However, there is increasing pressure to release spectrum currently used for digital terrestrial television for mobile services and the World Radio Conference will consider co-primary use of the spectrum by digital terrestrial television and mobile in 2031.
➤ If digital terrestrial television has a long-term future, the UK should prepare for the potential implications of co-primary use of the spectrum. This would require modernisation of the digital terrestrial television network to mitigate the risk of some loss of spectrum after 2031 and to continue using the available spectrum effectively. The simpler, lower-cost way of achieving this would be to broadcast all channels using DVB-T2 and MPEG4. This technology was introduced for Freeview HD broadcasts in 2009 and most TV sets sold over the last 15 years are already compatible. By giving sufficient advance notice, all households could be ready well before 2031.
➤ Current research suggests digital terrestrial television results in lower emissions than internet-delivered TV, but lack of data on the impact of devices in the home including their embodied carbon makes it difficult to draw a comprehensive comparison. In any case, by 2040, as 5% of households will be reliant on digital terrestrial television without intervention and 24% of households will be hybrid viewers, watching both digital terrestrial and internet delivered television, the impact on emissions of continuing both means of distribution should be considered.
At present the UK Government have already committed to the future of DTT until 2034, which is in keeping with how some broadcasters have warned that existing DTT infrastructure is “unlikely to be commercially attractive after the mid-2030s“ (here); hence why it’s wise to be doing this research today and preparing a plan for the reality of tomorrow.
On this subject, Ofcom has previously and correctly noted that a speed of 10Mbps can be sufficient for both several Standard Definition (SD) and a single stream of High Definition (HD) viewing, although this will inevitably improve as new video standards emerge and compression improves (as it always does, alongside faster computer processors).
The very latest of cutting-edge video compression technologies can already squeeze a full HD video stream down to work over an average connection speed of 2.5Mbps (compared with about 5-6Mbps today) and rising to 12.5Mbps for 4K (UltraHD) quality. But this does tend to require a more powerful CPU and broadcasters often prefer kit with a wider degree of support.
In any case, the full report is worth a read, although it is 200 pages long and, in that sense, you have to have quite a big interest in all this to warrant going deeper.