A new report from analysts EY suggests a full switch over to using only the internet for TV distribution in the UK would incur significant one-off and ongoing costs.
According to EY’s report, the move would cost a one-off cost of £2.1 billion, as well as £1 billion of ongoing costs per year.
The analysts suggest the costs would include £130 million per annum which would need to be spent on incremental Content Delivery Network (CDN) costs for the additional traffic being broadcast over the internet.
The report adds that the benefits of switching to IP-only delivery are uncertain, adding that there would be limited savings for broadcasters as Digital Terrestrial Television (DTT) costs are substituted for Content Delivery Network costs.
It also states that dropping the current DTT delivery model would lose a universal service across all of the UK that already works well for consumers.
In the event of a full switch over to IP-only TV distribution, broadcasters would need to pay an estimated £130 million in costs related to the incremental data they must transmit across the CDNs in order to deliver all of the live TV that is set to be broadcast, added the report.
“We estimate that around 70 per cent of these incremental CDN costs (£89 million) would be incurred by PSBs,” said the analysts. “Even under the existing Net Neutrality regime, there may be additional costs imposed by internet service providers (ISPs) to offer ‘specialised services’ with improved service levels agreements (SLAs) required for a reliable live TV service — further increasing costs to broadcasters of IP-only distribution.
“In contrast, Ofcom’s proposition to support a more efficient DTT service (as part of a continued hybrid DTT/IP distribution system) would mean falling costs to broadcasters for DTT transmission, less incremental CDN traffic for broadcasters, more resilience at peak-times for viewers and less pressure on broadband networks.”
The report calls on the UK government to recognise the significant costs that would be incurred by a move to IP-only TV distribution, and suggests more needs to be done to assess the non-financial risks of IP-only TV distribution, including risks to universality and the resilience of communications infrastructure.
It suggests the government needs to undertake extensive consultation with industry, consumers and consumer groups to understand the role that an enhanced, efficient DTT service could play within an ongoing hybrid TV distribution environment.
The full report is available to read here.