On a trip to Paris on Singapore Airlines earlier this year I gained a first hand insight into the capabilities of on-demand media with an in-flight entertainment system delivering a smorgasbord of content.

It soon dawned on me that this I was no longer at the mercy of a programmer. I could stop, rewind, fast forward or pause any of the 60 movies, many of them still at the box office in New Zealand, and a host of other content at my leisure. And that was all on 6-year old technology.

Now Air New Zealand is about to deliver a similar service on its yet to be delivered 777 aircraft promising 50 blockbuster, classic and children’s movies and as many TV shows and documentaries plus a wide selection of music and games. So how come you have to leave the country to experience what technology has obviously been able to deliver for some time?

We’ve been digital ditherers. We’ve remained in the bottom quarter of the OECD Broadband Statistics, with only 4.5% penetration for the year to December 2004 and are unlikely to have grown much beyond 10% by the end of this year despite government promises we’ll all be getting 50Mbit/sec by 2010.

Meanwhile Sky TV has had the digital market to itself for seven years while free-to-air broadcasters are not even at the starting gate. Without visionary leadership to advance core infrastructure we’ve been left with piles of studies and reports that have gone little further than the in-tray.

Meanwhile competition for that prime space in the lounge is the focus of some fierce marketing as the walls between computing, telecommunications and broadcasting come crashing down. All indications are that if the broadcasters don’t lift their game within the next two years Telecom, TelstraClear and the internet service providers (ISPs) will start delivering on-demand or downloadable video.

The main action is with the new software that allows you to control your entertainment options, the evolution of the personal video recorder (PVR) and the IPTV platform which all the big telcos are beginning to drool over that threatens to reshape the entire viewing experience.

Battle of the boxes

New generation DVD recorders can easily double as TV tuners recording over 100 of hours of programming to play back at your leisure. X-Box and PlayStation gaming machines not only play DVDs and deliver on-line gaming they also have hard disk storage.

Last year New Zealand saw an important step toward tighter PC and TV integration when Hewlett Packard bundled the first version of Microsoft’s Media Centre software. From October 2005 the latest OEM version of XP Media Centre was offered to all PC assemblers.

Typically you’ll get a box or that looks at home alongside the DVD or component hi-fi system, or in fact replaces some of those devices. It comes with a remote control unit that allows you to switch between normal computing functions and Media Centre mode for music, video viewing, photo manipulation or web browsing. Through a wi-fi or Ethernet connection you can play a music or video file on another computer.

Like the new generation of DVD recorders and set-top boxes Media Centre gives you a 30 minute buffer to rewind to the beginning of a programme while it’s still recording, fast forward through the ads, and synchronise content for use on a portable devices.

The full functionality of the electronic programming guide (EPG) will be unavailable here as local broadcasters have denied access to the Microsoft system. Sky uses this for its new decoder and it will become invaluable if and when the other broadcasters venture into the digital arena.

Local users will however get a small taste of what’s to come with limited access to Discovery Channel and Reuters live news feed over fast Internet. There are also plans for a couple of local ‘consumer-related’ channels, possibly catalogue-based, via a US-based server.

Meanwhile Microsoft has just released the latest version of its IPTV (Internet Protocol TV) platform, which is designed to turn phone and internet companies into distributors of content. The software which works with high end servers and management software is expected to drive video-on-demand (VoD), interactivity and on-line programming into a new era.

Unlike Media Centre which is a consumer product using the Internet IPTV runs in a managed end-to-end environment over telco networks into the home. Telecom is a serious contender and it is known that TelstraClear and state-owned transmission company Broadcast Communications (BCL) are taking a long look.

Telecom dipped into this arena previously, discovering during a three month trial in 2003 what we all knew anyway. It found people prefer to watch movies on their TV sets not their PCs, and that viewers want a wide variety of on-demand content and interactivity.

The trial proved Telecom had the technology to deliver good enough quality down its DSL lines. However there was a long way to go before a commercial service could be considered. Billing for example would require a serious rethink; 2Gb for an average movie would blow the data cap off most Jetstream accounts.

Screens better for Windows

In the meantime technology moved on with TVs shifting away from cathode ray tube (CRT) to liquid crystal display (LCD) and Plasma screens which are more compatible with computer and video content. This means Windows Media Centre, in particular opens up a direct line to the TV screen.

Now Telecom is engaged in small trials with Microsoft's IPTV platform to test its ability to deliver video to the TV across its copper digital subscriber line (DSL) lines and its fibre optic network. It has also committed to delivering DVD quality video over fibre optic cable to 500 homes in the new Manukau suburb of Flatbush, once those houses are built. It’s already rolling out cable and roadside cabinets for the $10 million Flatbush trials which will help it decide on how to approach future fibre roll out to customer premises.

The timing of any commercial offerings will depend on next generation supercharged subscriber line technology (ADSL2+) and Telecom’s ‘triple play’ Next Generation Network (NGN) network now being rolled out by Alcatel. All new DSL cards installed will be ADSL2+ compatible by the end of this year, enabling speeds of up to 15Mbit/sec for users within 1km of the cabinet.

But before we jump to any conclusions about imminent IPTV roll out or even mainstream services for Media Centre Telecom remains cautious. Ralph Brayham who’s head of the new media business development group has been playing with a high speed Jetstream connection and a set top box in an attempt to learn from what Microsoft, TiVo and DirectTV are doing overseas. "Its fantastic if but its not ready for prime time, the number of users is still relatively small and it’s still too expensive for most Kiwi households."

So what will change that? Mass production of highly capable PCs at extremely cheap prices. You still need a 200Gb hard drive, high end video and TV capture cards, lots of RAM, a remote control and a copy of Microsoft Media Centre or something similar plus a digital TV or plasma projector. "It still requires a big home entertainment swap out. You wouldn’t be using a $1000 PC, you still need the Porsche or Mercedes Benz of the PC industry and you can’t use your 15-year old Sony 21 inch TV."

Brayham has just moved across into a special projects role at Telecom where he’s hoping to help take "some cool stuff to market but wouldn’t be drawn on specifics.

Internet for the TV

Internet service provider Iconz intended to be a player in the digital video-on-demand business but was forced to back off by Telecom’s Internet access charges despite being confident the technology and the business case are there. "If the market had opted for unbundling the local loop Iconz would probably be delivering a service by now," says Iconz research and development manager John Russell.

The recent Commerce Commission decision requiring Telecom to deliver 2Mbit/sec streams to ISPs is a step in the right direction but "it’s still absurdly expensive and hard to get a great deal of data to a customer’s home".

It’s the old case of the incumbent carriers not wanting anyone else to play in their sandpit until they’ve worked out how to win the game first. While ISPs and customers keep pushing for faster Internet connections at lower cost without the data cap, they’re typically told there’s already more than enough bandwidth available for web browsing.

"As long as it stays that way web browsing is all we’ll get. No-one’s going to develop interesting, new and innovative content when they can’t push it out to the customers or let the customers interact with it at a reasonable speed," says Russell.

While the free-to-air broadcasters are keen to make themselves available on as many outlets as possible their own delivery platforms are currently at risk and they may end up becoming glorified content providers for Sky or Telecom unless they move quickly. Sky has shown only token interest in creating local shows over the past 15-years, preferring to operate as a digital distribution channel for other parties.

Sky dominates digital

As the dominant player in the digital and pay TV market Sky has been steadily herding all its potential competitors – the free-to-air broadcasters - under its wing and signing them up to exclusive contracts.

It currently has CanWest and Prime locked into 5-year contracts and Telecom and TelstraClear are contracted to deliver mainly Sky content on their platforms. TV1 and TV2 run unencrypted but are in deep, collaborating and even considering joint programming and bidding on programmes. That intimacy may escalate should TVNZ be privatised.

Sky Network merged with Independent Newspapers this year becoming the country’s biggest media company. It has 619,000 subscribers as at April 2005 - about 87 per cent of them on digital.

Its My Sky PVR (personal video recorder) to be launched in December enables the recording of two channels at once and through its buffer technology, subscribers can pause and rewind ‘live TV’. It’ll store about 60 hours of programming on a 160Gb hard drive. The electronic programme guide will make it simpler to determine what to watch and when.

Sky is commissioning five new transponders on the Optus D satellite from mid-2006, giving it the capability of doubling its channels to around 160. It’s already movies, news, sport, free-to-air, music, games, gambling, weather and pay-per-view movies served up from an nCube server at TelstraClear’s data centre in Wellington.

The only competing offering is from TelstraClear itself which has finally upgraded its Saturn cable TV delivery to digital status delivering to 40,000 customers in Wellington and Christchurch. Subscribers must have a phone line with TelstaClear. With a cable modem and set-top box they can have up to 10Mbit/sec broadband plus free-to-air TV channels, traditional Sky packages and 27 pay-for-view movie channels. Video-on-demand is a future possibility. It’s that bundling approach that typifies the ‘triple play’ (data, voice and video) buzz word that Telecom is building toward.

Digital dawdling

Free-to-air broadcasters have been digitising their internal systems over the past five years in preparation for the next logical step but have been left in the dark for close on a decade, battling with bureaucrats over how much spectrum they can have and how much it’ll cost.

All the while the broadcasters, including TVNZ which has a public service charter, are watching the digital space undermined by new Internet-based technologies and Sky’s head start.

The broadcasters can’t invest in transmission systems unless they have the spectrum and an affordable deal with BCL to deliver digital terrestrial television (DTT) on their behalf. No-one knows how much that’ll cost yet or the investment in technology necessary to work with that.

BCL will need to install new digital terrestrial microwave transmission equipment across many of its 400 nationwide locations to move the industry along. The fact that it invested $40 million upgrading its microwave backbone network to digital is old news. And it’s not new to digital broadcasting, having been involved in trials for over a decade.

BCL has undertaken a thorough analysis of the technical and deployment options in line with the DTT technical standards adopted in 2001 but won’t move unless it has a business arrangement with the broadcasters. It’s reluctant to discuss its plans until a preliminary report is considered by the THL Group Board possibly in December.

""The amount of co-operation required to make digital television happen is quite unprecedented. The sooner we hear the full story the better. A high degree of agreement on the operating platform, set top boxes, satellite and transmission facilities is essential," says William Earl, TVNZ’s special advisor on policy and planning.

The New Zealand Television Broadcasters Council (NZTBC) comprising free-to-air players CanWest TV Works, TVNZ, Sky, Prime and the TAB, almost has a consensus to deliver digital terrestrially to most cities and towns and by satellite to outlying and difficult to reach areas.

No spectrum shortage

Currently there’s only one satellite that covers New Zealand effectively and that’s the one Sky uses. Unless they want additional dishes pointing in another direction they’ll each have to strike a deal with satellite owner Optus. If they want terrestrial they’ll all have to be in agreement when they work out the details with BCL.

Bruce Wallace, executive director of the NZTBC says the Government’s own report shows there’s a large amount of unused UHF spectrum, so it’s not as if there’s a shortage. "The government has struggled to engage on the issue of spectrum and when it has engaged it has come up with conclusions that are different from the industry."

‘Proper’ digital terrestrial TV needs to offer new content and technical features. "It is illogical and confusing if we have to buy that extra frequency. As well investing in internal equipment to broadcast to transmitters there’s the cost of distributing analogue and digital signals concurrently with the same advertising revenue stream."

So where will the cash come from to make that investment? The only option seems to be from budgets set aside for the development of local content and interactive services.

Wallace insists the transition is in the public interest. "We need a sophisticated digital platform. It only requires the government to allocate free spectrum which is nothing more than has happened in other countries". Currently he says there’s no incentive for the broadcasters to invest.

TVNZ has been running technical and operational digital TV trials for a year using BCL’s Waiatarua site in the Waitakere Ranges to broadcast to 150 staff members in different parts of Auckland. The outcome of the trial, currently being escalated, is shared with Prime and CanWest.

There’s talk of a deadline for digital but no specifics. William Earl says there’s no point if analogue is not going to be switched off, or there’s no clear return to free-to-air broadcasters. The questions that still need answering are: can the broadcasters identify really good reasons for converting to digital, do they agree to do so, and by what transmission approach? No-one is ready to pull out their fountain pens yet.

Analogue nears use by date

John Allen director of operations with CanWest has looked at all the options and even considered pay TV or webcasting but remains convinced there’s still a strong place for digital free-to-air broadcast television.

The lack of any concession from the Government on frequencies is a concern and as the months tick by he’s worried the old analogue networks and transmitters are nearing their use-by date. "No-one’s making that technology anymore".

While interactivity may bring in additional revenue it remains a niche activity. "Extra transponder space and massive back office and transmission infrastructure are required if people are downloading different things at different times. We’re keeping it in the back of our mind," says Allen.

Meanwhile the conclusions the May 2005 report Public Broadcasting in the Digital Age, continue to echo around the industry suggesting the only way the "pervasive air of paralysis" can be overcome is through government incentives and "the stick of regulation".

Paul Norris and Brian Pauling of the New Zealand Broadcasting School and Christchurch Polytech Institute of Technology in the update to their 2001 report commissioned by New Zealand on Air, warn that without government leadership and public funding free-to-air television will decline.

With broadcasters likely to be competing directly with telecommunications companies in the new converged space the authors believe it may be time to follow the UK and Australia with a regulator responsible for both.

Broadband blocks progress

The report says TVNZ in particular must maintain significant enough impact to fulfill its role as a public broadcaster. Stronger leadership is necessary to transition to digital and ensure programming is accessible to audiences anywhere, anytime and anyhow, regardless of device or delivery platform.

But the most striking thing, the report says, is the failure of broadband, the cornerstone of an effective digital communications environment. "The evidence is well documented, as is the pattern of incremental creep only when the Government threatens action or regulation. Competition is essential if new services are to emerge and flourish."

The authors say the Government’s ideal of establishing nationwide 50Mbit/sec broadband access by 2010 is a long way from current reality and may require further intervention.

Meanwhile NZ on Air CEO Jo Tyndall, on secondment to the Ministry of Culture and Heritage as its Digital Project manager, has the hard task of trying to pull all the loose ends together and make digital TV happen.

It’s hoped Tyndall who signed off on the Norris-Pauling report will be the mover and shaker the industry needs. She admits some balancing of interests is required as she looks at the different roles the government has to play from spectrum management to its shareholder interests in TVNZ and BCL; the policies it has developed as part of its digital strategy and the wider public policy interests.

Since 2003 when Cabinet reserved spectrum there’s been some technical and commercial policy work done but she says it’s now the right time to engage with the free-to-air channels so the country can move to a reliance ‘solely on digital’.

In order to have a successful transition there needs to be a partnership approach between industry and government and she’s hoping to facilitate that. "There needs to be a clear identification of what is causing the blockage, what is preventing digital television becoming a reality and getting past that."

Elsewhere around the world she says the drivers for household investment in equipment have been the content on offer, the quality of reception and further down the track an analogue switch off date has created a compulsion to move. "From everyone’s point of view it is obviously desirable to minimize compulsion," says Tyndall

Create your own TV

Meanwhile the video stores are fighting back, offering box sets of TV series that are only a season behind the air date and in some cases pre-empting the on-air plans of some channels. Sky TV is also hedging its bets with ‘no-late fees’ DVD hire.

And technology continues to march to its own pace. The Internet has opened up an on-demand world for information and entertainment which has raised expectations. The tolerance level of people to set aside three months of Thursday nights to watch the latest series of 24, interrupted by the highest ratio of ad breaks in the world, is being sorely tested.

There’s more incentive than ever to pre-record selected TV and skip the ads, a task made easier with new DVD recorders and set-top boxes. While there are sites around the world where movies can be downloaded there are still legal and logistical issues to work through before we see a local offering. Meanwhile piracy, the bane of the audio industry but shifted it into next gear, has turned focus to DVD copying and downloading of movies and TV series.

The battle is on for the 99 per cent of homes who now have two or more TV sets. While we wait for free-to-air to convert to zeros and ones and Pay TV or IPTV to ramp up to the next level, New Zealanders are increasingly becoming their own programme directors, compiling audio and video content for playback at their leisure. Ask them what channel they prefer, they’ll probably tell you Channel Me.