BBC Trust approves Freesat

The BBC Trust has given the final thumbs-up to launching Freesat, a free-to-view digital satellite TV service.

After a public consultation, the corporation's regulatory body has confirmed a provisional decision it made in February to give the new venture the go-ahead.

The BBC Trust received around 700 responses to the Freesat consultation and said today that "an overwhelming majority of respondents, 93%, considered that the BBC should be taking action to improve access to its digital services in the lead-up to digital switchover".

Despite the existence of Freeview and BSkyB's own offering of free satellite services to customers who pay an installation free of £150, the BBC Trust found that 62% of people said the current access to BBC digital channels was "unacceptable".

In addition, 92% thought the proposals would "benefit consumers" and 90% thought it unlikely that Freesat would dramatically damage the existing ways of receiving digital TV.

However, the approval does come with some strings attached.

The BBC Trust said Freesat would be required to show that other broadcasters who signed up to distribute TV and radio channels via the new satellite service were not being subsidised by the licence fee.

In addition, Freeview should be kept "operationally separate from its involvement with Freesat to minimise any potential effect on competition".

Also, the BBC "must retain sufficient control over the decisions taken by the [Freesat] joint venture to ensure that the BBC's public service objectives are not undermined" and ensure "there is always an ability to access Freesat on a subscription-free basis".

Freesat is expected to offer up to 300 TV and radio channels - compared with around 75 that are currently available through Freeview.

It is due to launch by the time the Borders region switches off its analogue signal in 2008-2009 and will operate on a not-for-profit basis.

The trust wants Freesat to be "future-proofed" by ensuring it could offer high-definition TV and personal video recorder compatibility.

The BBC said the likely potential cost would be "modest - very substantially below the levels at which we would need to give our authority to BBC management to invest and comparable with what the BBC contributes to the Freeview joint venture and associated technical infrastructure".

The trust said it hoped that other public service broadcasters will sign up to Freesat and will share the costs of the new joint venture.

However, it admitted that commercial rivals had issues with Freesat.

"Of course not all responses were favourable. Virgin Media and BSkyB both questioned the general proposition that it should be the role of a public sector organisation to provide competition in a free market," the trust said.

"BSkyB welcomed the new competition and thought increased choice for consumers was positive, but took issue with the fact that, in its view, the trust appeared to accept without reservation that it was appropriate 'for state-owned entities to be used as instruments of industrial or competition policy'.

"Virgin Media made a similar point that they have a 'natural bias against public intervention'."

However, the trust said it decided to go ahead with Freesat as it would "be of significant public value" for licence fee payers, by addressing "inadequate access to the BBC's digital services in the lead-up to switchover".

The trust also pointed out: "BSkyB is under no regulatory obligation to provide subscription-free access and we think it reasonable to conclude that it does so as a commercial choice.

"So there is no guarantee that there would remain a subscription-free route to access BBC services in the future. As with any commercial proposition, BSkyB could at any point choose to withdraw or change the terms of this service subject to normal notice provisions."

The acting chair of the BBC Trust, Chitra Bharucha, said: "The BBC Trust has decided to approve the proposition that the BBC invests in a joint venture to offer a national satellite based free-to-view digital service.

"In reaching this decision we have considered the likely benefits to the licence fee payer, the public value created and the potential market impact."

The trust admitted it was "unfortunate" it has taken so long for Freesat to be approved, saying the BBC had originally planned to launch the service before digital switchover begins in the Cumbrian town of Whitehaven this autumn.

Freesat was first proposed in 2003 and then outlined formally by the BBC and ITV in September 2005, when it was envisaged it would launch in the first half of 2006.

At the moment Freeview, the digital terrestrial service that does not require subscription, reaches only three-quarters of UK homes, though its penetration will increase as digital transmission signals are strengthened in coming years with the region by region switch-off of analogue terrestrial TV.

With 7m households, mainly in rural areas, still watching analogue TV just one year before the region-by-region switch-off begins, Freesat is one way of helping to speed up the transition.

Meanwhile, the BBC Trust has also decided to conduct a full public value test on a new high definition TV channel.



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