Subsidies needed to meet digital deadline

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The government will have to provide "substantial public subsidies" if it is to meet its 2010 target for switching off analogue TV, according to a report published today.

Despite the surprise success of Freeview, the BBC/BSkyB joint venture service that allows viewers access to digital TV for a one-off fee, the government is still some way off its target of persuading the population to go digital by the end of the decade, the report claimed.

The research and consulting firm Strategy Analytics, which carried out the study, predicts the price of the adapters needed to receive digital TV services such as Freeview will fall to as little as £27 within four years.

But Strategy Analytics believes the government will have to plough large amounts of money into subsidising adapters and digital TV sets if it wants to convince viewers to make the switch.

The collapse in the price of adaptors, from their current levels of around £60-£80 to little more than the cost of three cinema tickets will help drive the take-up of homes watching digital TV through their existing aerials, the study added

It predicted the number of subscribers to digital terrestrial TV would double in Europe, hitting 3.5m by the end of this year.

"We still think that is a very aggressive target. People are getting very excited about the success of Freeview, but there's still a long way to go," said the principal analyst at Strategy Analytics, David Mercer.

However, Mr Mercer added there "was no way of knowing at this stage" just how big a bill the government was likely to face.

"It's not so much about getting the majority of households to take digital TV, it's converting all the second and third sets and video recorders." he added.

"Governments around the world are keen to recover analogue spectrum, but they should also note that substantial public subsidies will still be required in order to encourage universal digital adoption."

Around 44% of UK households now watch digital television. Ministers have said that at least 95% of the population must have digital TV before switch-off.

Earlier this year David Elstein, the former Channel Five chief executive and a vocal opponent of the government's digital policy, warned that Freeview could not carry the burden of reaching the switch-off target alone.

"Freeview would have to multiply its performance by 10 to have any significant impact on analogue switch-off. We are not talking about 24m homes; we are talking about 100m TV sets and videos. Even if they sold 1m boxes every year it would take 70 years to get to switch-off."