BT Vision to tackle slow take-up

The Telegraph says that Dan Marks, chief executive of BT Vision is convinced that BT Vision, a service that pipes on-demand television programmes through telephone lines, will “revolutionise” our relationship with TV.

“It is a fantastically compelling service that gives you instant access to 5,000 hours worth of quality programming, including Hollywood films,” he says.

Yet Mr Marks and his boss Gavin Patterson, the head of BT Retail, both have satellite dishes attached to their homes. Mr Patterson, a diehard Liverpool fan, cannot cope without Sky’s live football coverage and Mr Marks’ wife watches Iranian soap operas.

If the executives who live and breathe BT Vision are not satisfied with its programming, it should come as little surprise that as the service celebrates its second anniversary it has just 350,000 users. “What do you mean it isn’t catching on?” exclaims Mr Marks. “We’ve had extremely rapid growth compared to other platforms, look at the early days of cable or Sky”. He claims it took BSkyB two years to sign up its first 300,000 customers.

According to the latest figures released by Ofcom, the communications regulator, BSkyB now has more than 9m pay-TV subscribers and Virgin Media is also streaks ahead with 3.6m households signed up.

Mr Marks finally concedes that 350,000 is “not that many customers”, but “I don’t know of any way of getting to half a million without first going through the 350,000 mark first. I feel the criticism of our growth is unjustified”. The BT Vision logo recently graced the front cover of advertising magazine sprayed on the side of a snail. “I’m glad they [Marketing Week] feel frustrated, I feel frustrated, we should use that frustration to be compelled to do better for our customers.”

At the launch of BT Vision in December 2006 Mr Marks set himself the target of building a subscriber base of two to three million in three to five years, and last year Mr Patterson said the service will hit three million by 2010. “We still feel we can stick by those projections,” he says, once again citing BSkyB’s rapid growth after a faltering start.

BSkyB’s success was built on live sport, specifically Premiership football. Legions of fans who are prepared to pay £5 for a soggy burger at Arsenal’s Emirates stadium will happily pay £36 a month for SkySports, which shows 92 live games a season, including all matches between the “big four” – Arsenal, Chelsea, Manchester United and Liverpool. BT Vision customers only have access to 46 live Premiership games via Setanta sports (for an additional fee) and the ability to watch old games “as live”.

Mr Marks is adamant that pay TV does not begin and end with football. “About 50pc of UK TV households have rejected Sky and cable,” he says. “It’s not that they didn’t know it was there, it has been marketed at them very heavily for 15 or so years. But, they have proved absolutely resistant to a high-priced long-term commitment to an entertainment service – 12m people do not want it.”

He says BT has no intention of scaling back its investment in BT Vision despite the telecoms giant recently announcing plans to axe 10,000 jobs and slash costs in response to plummeting profits at its Global Services division. Other European telecoms companies are reviewing their TV-over-broadband services and Tiscali has recently closed down its Italian IPTV service, which had just 50,000 subscribers.

BT now gives away BT Vision set-top boxes with its broadband packages, allowing customers to pause, rewind and record live TV and access its vast library of programmes on a pay-per-view basis. Mr Marks says 80pc of customers have chosen to subscribe to one of the service’s packages, which start from £7.

He refuses to say how much money BT collects from each user, but says it is “obviously less than Sky” makes from each of its 9m customers. “The economics of our business are quite different to the economics of Sky,” he says but refuses to elaborate.

Demystifying how BT Vision works may be half the battle in bringing the service to the mass market. Internet Protocol TV (IPTV), in essence streaming TV programmes over broadband, brings to mind long download times and hours of frustration.

But Mr Marks says customers will fall in love with the ease and simplicity of the service. “All you do is press a button and it comes on instantly, there’s no waiting and no buffering,” he says. “Broadcast channels, DSL-delivered signals and programming stored on a PVR (personal video recorder) all sounds like a lot technological stuff. But, for the customer it is a television experience, it does not feel like watching stuff via computer.”

While poor quality YouTube videos may take an age to download to your laptop, BT is able to provide high quality television pictures in an instant by prioritising traffic over the internet. “Anyone can do it,” he says. “You can buy the same product from BT Wholesale. But I warn you it is very complicated.”

The service, which has signed content deals with six Hollywood studios and all five terrestrial broadcast channels, is set to evolve again with BT’s promised £1.5bn investment in next-generation broadband.

The replacement of Britain’s creaking copper-wire infrastructure with a fibre-optic network will “dramatically” increase capacity, which Marks intends to use to give customers even more choice. “We will provide live-streaming channels, including high-definition channels, there will be sport, movies and channels from around the world. We are building a new version of television.”

Mr Marks’ vision took a giant leap forward last month when the BBC and ITV joined BT in the creation of Project Canvas, a service that will enable all television companies to broadcast their programmes over the internet from 2010, subject to the approval of the BBC Trust.

The project, dubbed the “son of Freeview”, could provide a massive windfall for BT as it plans to charge broadcasters for delivering their programmes. In return BT will use its extensive knowledge of its broadband customers’ interests to deliver highly targeted advertising. Revenue from advertising will be split between the content provider and the ISP. “We are converging TV and the internet – they will be the same thing,” he says. “Trying to stop it would be like trying to stop rain.”

Visit the BT Vision website

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