06 April 2005

The Web

The digital revolution
Melita Cable’s Franco Degabriele tells MATTHEW VELLA that digital television will be the norm in five years’ times as analogue TV enters its twilight years. Wave goodbye to those black decoder boxes

Everyone is talking about digital television but does anyone have the foggiest about the latest contraption that to be added to your living room’s collection of TV boxes? It’s your television’s future, and that means that analogue TV, the black decoder box that goes by the now anachronistic and outdated term of ‘cable’, is being given short shrift. In a few words, cable is being given its redundancy pay-out and it will probably not even make it into a respectable pensionable twilight before it faces full extinction.
As Melita Cable’s Franco Degabriele says – at 35 a young face in the pioneering evolution of the digital market in Malta – digital is the future, adding with no qualms that analogue is about to die “slowly, but surely”.
Over the last 14 years or so, Melita Cable came to represent one of the island’s most ‘benign’ of corporate giants, saving the Maltese population from the mediocrity of local and Sicilian TV and giving them the rest of the world on a plate, or rather a remote control. That trusty Jerrold zapper has been the Maltese household’s best friend ever since Cadbury chocolate returned onto the market shelves. Now there was MTV and the trusty BBC, the madness of Jerry Springer’s white trash, fly-on-the-wall documentaries, and all the trappings of late-night viewing.
Now everybody’s talking about digital. It’s a revolution which, as Degabriele points out, is being hammered upon by the EU which wants a total phase-in of digital broadcasting by 2007. The Maltese government envisages a digital Malta by 2010. The European Council has stressed the importance of digital technology for the future of television. It says that common standards must be adopted to allow the harmonious introduction of digital television on the market. Conditional access is another important matter for the providers and consumers of pay-television services and for the rights holders of programmes. Fair and open competition has to be ensured in this area in order to protect the interests of the consumer and minimise the possibility of piracy.
Digital TV is basically a more efficient form of broadcasting. It’s like the microchip – all the power in the modern PC today was enough to send the first man in the moon back in 1969. Digital TV, on a lesser scale, carries more channels in the same amount of bandwidth. It is high definition programming. That means that digital will allow more bandwidths to be freed up, ergo more television channels, and more new corporations opening up and broadcasting. Broadcasters now fight cable and satellite operators through the use of digital technology, which offers more options for ‘video on demand’ (recording your favourite programme through the decoder box). Consumers are guaranteed to get more television channels at a not greater cost than what they already pay. Gone are the traditional noises of boring analogue such as static noise and ‘snow’. The digital signal eliminates all this.
So whilst elsewhere in the EU, everybody’s going digital, Malta is only just yet embarking on the digital venture. Degabriele says Melita Cable had already looked into the option around five years ago, but the investment required then was so big that it would have been unfeasible to recoup it. Today, cheaper technology has enabled the Lm1 million the company has so far poured in to go digital.
Degabriele is a recent addition to Melita Cable, taken on in October 2004 for the start of the digital project when most of the technical aspects had already been put into place. As CEO, his work has focused on ensuring the company’s product provided a value-for-money option to customers whilst maintaining it economically viable for the company. Apart from that, Degabriele is also new to the digital world.
Optimistic, he says that customer take-up for digital TV has been “pretty good”.
“It is certainly on target in terms of take-up from the people we expected to take on the offer. Melita Digital’s expected take-up is around 40 per cent of its top-end customers from Cable TV. It is a quite a big number for us, but we’re there, especially when you consider that January, February and March are not steady months in terms of television sales. Normally television picks up in a major way in autumn and over the summer fare. But there has been interest, especially from our top-end customers: that’s the family package subscribers from the Cable TV network.”
Degabriele says the digital TV offer was in fact positioned for its family package subscribers, who take on all or most of the 55 channels on offer on Cable TV. At least 90 per cent of their digital customers hail from this consumer segment.
Launching digital however has not been, unsurprisingly with all pioneering projects, free of problems. “There’s always room for improvement but problems will still occur. We had instances were programmes were not being seen on digital but cable, due to some glitch. So there we were with a superior product which also had to be stable. But that was only the start. We have been careful about offering a superior product that had to be stable. Analogue TV, or rather Cable, has been running for thirteen years: it has to be a stable product obviously after all these years. The only hiccups we have had were cases transmissions were interrupted from abroad or through a power failure, making it beyond our control.
“So we had this perception problem when phasing-in the superior quality of digital whilst people had the stability of Cable TV. Some problems are bound to happen at the start, but we are addressing them now.”
Degabriele says digital brings a whole new experience to customers. Firstly, there is the possibility for consumers to have more channels for them to watch due to the greater space afforded to channels in one bandwidth. “In television, content is king. Not only do you get stereo sound, but now subscribers can go up from 52 channels to 77, at an extra cost of Lm2. The jump from analogue to digital is already very substantial. We are talking about a better sound and picture element. Consumers can no enjoy stereo sound and a crisper picture.”
In assessing its consumers’ demand, Melita also embarked on an extensive survey of its customers based on a large sample through pseudo-decoders that showed the corporation what its consumers really wanted. According to Degabriele, more consumers wanted documentary-style channels and naturally sports. The new package includes additions such as Milan, Inter and Roma Channel, MUTV, ATP Master Series, ICC Cricket, and four programmes of wrestling, motorsports, sailing and also rugby. Other additions include three other Discovery Channels, A1 and the History Channel. Kids now have two more channels added, namely Boomerang and Toonami.
Still in its early stages, Degabriele envisages a new stream of opportunities with digital television. In the future it will be possible to add features which will make television more interactive. One of these is Video on Demand, a prospect which is expected to become feasible later on in the future. The decoder box for digital TV would make it even possible for a better survey of television viewership, something that is currently impossible in Malta.
Although as Degabriele says, the future is digital, the company is not forgetting its stable Cable TV customer base, which forms 95 per cent of the total. “The management team knows this very well. The rumours attributed to discriminatory treatment between analogue and digital subscribers have no foundation.” However, there is no ruling out that as more channel operators, such as RAI, start their switch onto digital, the ownership of analogue TV will become more problematic as more channels start switching on to the digital landscape, soon to become the norm in television.
Degabriele says the landscape has already turned more favourable for digital TV than for satellite TV. He points out that although satellites can be installed in Malta, there are no rights for owning decoders and TV cards from the operators.
“If you haven’t had these rights cleared with the TV companies, you don’t have the right to have these programmes transmitted because you are not paying for these channels. Melita had to compete with this for years. Not things are changing, because the piracy network is crumbling as more satellite operators are providing better and more secure encryption mechanisms. Before customers could have their cards ‘renewed’ through new codes without paying their real charges. But today, there is no reliable guarantee that a football match screened on satellite will suddenly not switch off. Digital TV makes viewing more reliable, and the picture and sound is very similar because the feed comes directly from satellite.”
Degabriele also says that analogue is now a dated system. The market forces have been pushing for more channels, people have been asking for more content. With the whole European market going digital, Melita would not allow itself to be pushed into a non-competitive alley. And it is more efficient to run, he points out, saying that the roll-out in digital is much easier than in analogue. “You find more help in terms of ancillary services. We know that analogue will die, slowly but surely.”
Degabriele says the company is also ready to embrace competition. “With satellite reception we consider it to be a pseudo-competitor because we cannot do much with it. There is either the pirate card system which has to be manipulated regularly to function, and there are those customers who purchase their satellite boxes from Italy or England and have an acquaintance mail them their satellite card every month. In the case of ‘subscribers’ to the Sky network, they are receiving transmissions because the Sky network spills over onto Malta, but the island has no cleared rights to receive transmission.
“The real competition in terms of local companies is happening however. They will offer their services not through a cable system like ours, but through an aerial system. We know this is going to happen this year, and a timeframe is already in the offing. We are not closing our eyes however. We knew we were never going to be on our own in this market. We will watch our competition and be ready to react when our competitors come out on the market. We don’t know the exact timing yet. It is a frame of mind that is different but this company has been embracing competition for years now. Take the case of internet service providers. There are 19 on this island, but Melita’s On-Vol has been one its market leaders. For us competition is normal. And we do have an advantage, and one that is not borne out of arrogance. It is the advantage of operating a television network and being able to deal with the problems that happen from time to time, and Melita has considerable experience in this business.”

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