Revolution is televised

The Irish television market is undergoing one of its most significant changes ever as viewers begin to expend and demand the same kind of tailor-made experience they are already finding online. For companies like UPC and Sky this shift presents an opportunity if they are prepared and a crisis if they are not.

Dutch company UPC bought into the Irish market with its acquisition of Chorus Digital in 2004 and followed this with the purchase of NTL in 2005, uniting the cable and MMDS services of the two former rivals.

By the time UPC acquired the networks they were suffering from under-investment and had fallen behind European equivalents. Most importantly, perhaps, it had fallen behind its local rival Sky.

“The network did fall behind many European countries during that time as the priority wasn’t on upgrading the network,” says Simon Kelehan, head of TV/Radio at UPC Ireland. “You can look at the previous owners of the network and come to your own conclusion on the reasons for that.”

UPC has been investing in upgrades ever since then and is spending €90m this year alone. By the time its work is finished its current investments it expects to have spent €1bn in the Irish market, including the money spent on acquisitions.

The fruits of the investment so far are now beginning to show for the company, with services like broadband coming on stream as a result of the network upgrade. The company is now also able to deal with its recent security problems which allowed people to use so-called ‘dodgyboxes’ access the company’s TV service without paying for it.

One of the major advancements in television that UPC has not yet caught up with Sky on is in the area of High Definition broadcasts – something that the company has been working on and promising for some time now.

Kelehan says, however, that the HD system is being trailed internally at the moment and is due for launch in the Summer.

“We’re currently in the process of working out what content we will have and aiming to have the most popular channels available in HD at the moment,” he says. “We’re looking at a very competitive model that has a relatively small up-front fee with a very competitive monthly rental model for HD content and we’re convinced it will be a very valuable proposition for people.”

Developing HD services is somewhat easier for a company like UPC than it would have been for an independent Chorus or NTL, given the fact that the Dutch company has a large presence across many European companies and is ultimately a part of John Malone’s Liberty Global Group, which also owns DirectTV in the US.

UPC Ireland has been able to learn from the mistakes of other UPC companies in the rolling out of new services before it does so itself, making things that little bit easier to develop.

One of the services that has come out of this system already in Ireland is the digital video recorder (DVR) service, dubbed Digital+ by UPC and known as Sky+ on its rival’s network Put simply this device allows people to record programming via their set top box without any separate recorders necessary; it also allows you to pause and rewind the television you are watching at the time.

“We have been pushing this very aggressively lately and a lot of new customers are going straight for it as they see value in it – we’ve had a very strong take up,” says Simon.

This kind of technology is having a huge effect on the way people watch television and is fast making the TV listings somewhat irrelevant.

Sky have complimented their DVR service with online and mobile services which allow users watch content on their computer and set the box to record something from their phone. The company also has a system called Sky Anytime, which automatically downloads a selection of programming to the set top box.

One thing Sky cannot offer, due to the limitations of satellite broadcasts, is a true Video on Demand (VoD) service, which could allow people to catch-up with programming they have missed or even purchase or rent premium content like films. Cable companies like UPC can roll this out but Kelehan says it is not a priority, even if it is on the way:

“VoD is most definitely on our road map and all of the set top boxes we’ve deployed in the last year have an in-built modem and are capable of achieving VoD,” he says. “We are working on a number of content deals with major studios and channels… but we need to reach a critical mass of possible users before we can make the switch.”

Kelehan adds that the company is looking in the mobile and online space to try to tie all of these areas together, all as a natural step forward from its triple-play offering that has been heavily marketed lately.

“The system we use allows us to factor in some kind of ‘red button’ interactivity and we hope to be able to start rolling that out in the near future,” he says. “This could be on-demand local news and weather bulletins or even games and interactive services like that.”

Ultimately, though, content is king, be it in HD or not. UPC’s investment in the City Channel group suggests the company wants to get into the world of Irish content and the Chellomedia company, which is part of the Liberty Global Group is already running a large number of channels across Europe.

“We are always looking for content that we feel will work well in Ireland and if any of the Chello stations seem attractive we are always willing to make them available,” Kelehan says. “We’ve just rolled out the RTÉ DAB radio stations on the network and we are supporting City Channel as we think cable is the right place for localised services like that.”

An edited version of this article was published in Business & Finance magazine on the 23rd April 2009.

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