The arrival of digital broadcasting will cause a significant shake-up in the way telcos and cable companies do business.
They are likely to have to start operating in areas for which they are not currently planning, suggests 'Digital Broadcasting: the competitive challenge for telcos and cable companies', the latest report from UK research company Ovum.
As UK broadcasters are required to begin digital transmissions by July 1998, Ovum believes the medium will cover 70 per cent of the country by the end of next year and will become a significant market force by 2001. Between 2001 and 2005 existing structures for broadcasters, service providers, telcos and cable operators will be torn apart and new entrants will start up, says the report.
For telcos, digital broadcasting could present more opportunities than those promised by broadband interactive services, trials of which were disappointing in the UK, the analysts believe. But the new medium will allow telcos to bring Web access to the masses via television as well as being the carrier.
?Competitive pressure from digital broadcasting will further reduce the telcos? prospective return on investment from interactive services and will greatly reduce the business case for broadband investment,? suggests the report.
For cable companies, digital broadcasting will seriously threaten the development of interactive cable services, while the number of analogue cable subscribers will drop from a peak of 3.5 million in 2001 to around 1.5 million 2008.
Ovum suggests they must either compete head to head with telcos for the carriage market; upgrade their networks to offer better programming; or develop their own satellite and terrestrial services.
The appearance of digital broadcasting will also change the market for home PC suppliers as digital television will overlap with multimedia PCs designed for Internet access for consumers. However, PC vendors themselves are targeting their products at the broadcasting and consumer electronics markets.
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