TVNZ & TelstraSaturn Finalise Digital TV Alliance

TVNZ And TelstraSaturn Finalise Digital Television Alliance

TVNZ and TelstraSaturn today announced the signing of the detailed agreements that form their digital television alliance, originally outlined in November 2000.

"This is the beginning of the national transition to digital broadcast in New Zealand. TVNZ is delighted to be making this significant step towards bringing these benefits to the country," TVNZ CEO Rick Ellis said.

"Today signals the beginning of greater choice and competition for quality convergent services, and that is great news for all New Zealanders, not just TelstraSaturn customers." TelstraSaturn CEO Jack Matthews said.

The partners have signed an interconnection agreement that provides for open access to each other's transmission networks and set-top boxes. The alliance also includes a satellite services agreement that sub-leases satellite capacity on the Optus B1 satellite to TelstraSaturn. The partners have also agreed to set up a joint venture to develop interactive television content and services.

Mr Ellis said "Both TelstraSaturn and TVNZ have talked previously with SKY in the hope of achieving a true open access approach to the New Zealand market. Now that TelstraSaturn and TVNZ have agreed an open access approach, we are hopeful that SKY will join us." Mr Matthews noted that the parties were in discussions with CanWest and were optimistic of reaching agreement soon to include TV3 and TV4 in both the free-to-air and pay services.

TelstraSaturn will launch a pay television service using a basic set-top-box provided by one of TelstraSaturn's parent companies, Austar Communications. The service will provide a highly competitive television content offering including a wide range of general entertainment and pay per view channels. The service will not initially provide for any interactivity or other broadcast enhancements but will provide a high quality digital picture. The TelstraSaturn satellite pay television service will be available in the third quarter, well in advance of the All Black tours later in the year. The service will be launched in regional stages and progressively rolled out to a complete nationwide service by December 31st.

TVNZ will launch a free-to-air digital broadcast service on October 1st 2001. This service will use an interactive capable set-top-box operating on well-established international standards for software and hardware. The set-top-box adopted by TVNZ will be capable of interoperability with both TelstraSaturn and Sky, although initially only TelstraSaturn interoperability will be enabled as Sky has yet to conclude an open access agreement.

The TVNZ box will be capable of delivering an increasing number of non-traditional services such as e-mail, Internet, home shopping, games and radio to enhance the viewer/user experience. Enhancements and interactivity around traditional television content will also be introduced. TVNZ is currently developing a number of these new services for launch. The service will follow the same pattern of regional rollout as TelstraSaturn and will be completed nationwide by December 31st.

Mr Matthews said that pricing details would be revealed closer to launch and that the TelstraSaturn service and bundled service extensions would be very competitive. The free-to-air service requires the consumer/viewer to purchase an unsubsidised set-top-box but does not require any ongoing subscription for free-to-air services (existing and new). TVNZ will make these boxes available for purchase at cost. The free-to-air service will also be available with TelstraSaturn bundled service extensions.

TVNZ and TelstraSaturn have also provided within the agreements the ability for government departments and agencies to access and deploy set-top-boxes to utilise the potential of the digital service. This will greatly assist initiatives such as government on-line, closing the digital divide and enabling a communication infrastructure for the knowledge economy.

The partners are also committed to developing their relationship in a number of other areas, particularly in the acquisition of programming as already evidenced by the joint acquisition of the end of year international All Blacks test matches.

For further information please contact: TelstraSaturn Deanne Weir Director Corporate Development Ph: 029 650 166

TVNZ Glen Sowry General Manager Public Affairs Ph: 09 916 7565 Mob: 021-461 775

ABOUT TELSTRASATURN TelstraSaturn Ltd is a company merging the New Zealand operations of Telstra Corporation and Austar United Communications, each of whom have 50 percent share holding. As a convergent company, TelstraSaturn offers voice, data, mobile, Internet and cable television services to a mix of business and residential customers in the New Zealand market. The company is currently planning and building residential and business networks in Christchurch and Auckland to complement its Wellington network.

The following are a selection of frequently asked questions relating to the digital broadcasting alliance:

What does Digital TV mean to me? Digital transmission means clearer pictures and sound for viewers. In comparison to analogue, a digital system provides broadcasters the capacity to bring to viewers a multiplicity of channels that cater to all tastes and demands. Enhanced and interactive programming to enrich the individual viewing experience can also be delivered, including services such as e-mail and Internet access through your television set.

Why have TelstraSaturn and TVNZ created the alliance? TelstraSaturn is expanding its network services into digital as part of its national expansion plans. TVNZ has been examining digital options over the last couple of years. Upgrading to digital infrastructure is a significant technical and economic exercise. Therefore, it makes sense for TVNZ and TelstraSaturn to work together to develop a broad and mutually beneficial partnership which shares costs and leverages the capabilities of both companies.

What's in it for TelstraSaturn? TelstraSaturn's investment plans focus on its broadband fibre optic network capabilities. It is spending NZ$1.2B over the next four years rolling out this network infrastructure in major population areas of the country. However, this type of network is slower to deploy and it is simply not economic to build it in some parts of New Zealand. The alliance with TVNZ allows the following: · Access to the satellite platform, which means a national presence ahead of its broadband fibre optic rollout and in areas where there are no network rollout plans. · TelstraSaturn will be able to deliver a bundle of subscription television channels, plus free-to-air channels, Internet and mobile phone services to customers all over New Zealand. If the fibre optic network later reaches these customers they will be able to upgrade to even more services over TelstraSaturn's broadband network. · Access to current and future local content via TVNZ.

What's in it for TVNZ? · A very low cost and effective establishment of a digital free-to-air service for the nation. · Opportunities to expand and enhance New Zealand content. · Commercial leverage of TVNZ's skills and resources in the infrastructure of broadcasting. · The development of a strategic relationship with a world class partner.

What about the other free to air Broadcasters? The companies are engaged in discussions with other free-to-air broadcasters and are optimistic of successfully concluding these discussions shortly.

What about SKY? The alliance is non-exclusive. Both TVNZ and TelstraSaturn have held discussions with Sky and it is hoped that this agreement may act as a catalyst to promote open access on commercial terms to all digital broadcast networks. TVNZ and TelstraSaturn believe that it is in the best interests of New Zealanders future access to entertainment and information services to be based on open access rather than controlled by any owner of a proprietary broadcast network.

What is the TVNZ/TelstraSaturn service? The alliance actually creates two services - the TVNZ digital free-to-air service and the TelstraSaturn digital subscription service. Both services are to be delivered to viewers via digital transmission.

The TVNZ service allows viewers who do not want to subscribe to pay television to migrate to a digital free-to-air service by purchasing their own set-top-box to receive a free-to-air satellite digital transmission.

The TelstraSaturn service will be available on both satellite and fibre optic network dependent on the availability of the fibre optic network in your area) and will offer those who wish to subscribe to pay television a competitive and alternative package to those currently available in the market. Both services will be able to be bundled with TelstraSaturn services for telephony, Internet access and mobile telephony and bundled rates will be very competitive. If you purchase your own free-to-air set-top-box from TVNZ you will also be able to subscribe to TelstraSaturn pay television through your box at a later date, should you so desire.

Why digital transmission? All around the world broadcasters are moving to digital transmission. Digital transmission means clearer pictures and sound for viewers. In comparison to analogue, a digital system provides broadcasters the capacity to bring to viewers a multiplicity of channels that cater to all tastes and demands.

Over the next decade analogue television will become increasingly redundant as the transmission systems will have been superseded by digital transmission systems and digital television sets will become more widely manufactured than analogue. New Zealand trails the developed world in not having publicly announced plans for digital migration. For TVNZ the launch of the digital free-to-air service represents the commencement of a long migration to digital.

When will the two services become available? The TelstraSaturn service will launch in the third quarter and will be available in time for the All Black rugby tests.

The TVNZ service will launch on October 1st. Both services will be rolled out nationally over a short period of time with full national deployment completed by December 31st. It is too early to confirm details of the regional roll out plans due to commercial reasons.

What TV programmes/channels will be available? At launch the TVNZ service will include TV ONE and TV2. It is hoped that New Zealand's other established national free-to-air channels will also be offered. Selected radio stations will be available and there will be a new range of enhanced and interactive services, such as e-mail and interactive information services. It is too early to confirm details of these new services due to commercial reasons. The expansion of broadcast capacity that a digital system brings will also allow for ease in the deployment of extensions to free-to-air services, such as the proposed Maori Channel.

The TelstraSaturn service will comprise a competitive package of subscription channels including Sports, News, General Entertainment, Kids, Lifestyle, Movies and the free-to-air channels. Again, it is too early to confirm details of these new services due to commercial reasons.

How will the new digital satellite services be delivered? The digital services will be beamed down from a satellite direct to your home. You will need to have a small dish antenna installed on the outside of your house and a set-top-box to receive the signals. A wire brings the signal from the antenna into the house and connects to the television set through the set-top-box. Selection of the channels and services will be by a supplied remote control. Why do I need a Set-Top-Box? A set top box is needed to decode the transmitted digital signal received by the antenna at your home. To gain the advantages that digital broadcast brings, a set-top-box is needed to convert the digital signal so it can be viewed on your analogue television set. This is far more efficient than asking anyone who wants to view the digital service to replace their television set.

The set top box is also the key to providing interactive services in the future.

Will I need to buy a new (digital) TV set to replace my present (analogue) set to enable perfect viewing? No. The set-top-box makes the digital signals compatible with existing analogue TV sets. Because digital signals are being delivered direct-to-home, the pictures will be much clearer, without any of the interference experienced by many viewers, and with enhanced sound quality even on existing analogue TV sets.

Will the services be available everywhere? Almost. No system is perfect but in the case of satellite transmission the only constraint to accessing the services would be not having line of sight to the satellite from your residence. This will only apply to a very small number of homes.

How much will the dish and the set-top-box cost? The TelstraSaturn service will provide you with a set-top-box and dish and install these at a subsidised rate when you subscribe to its pay television package. TelstraSaturn retain ownership of the set-top-box and dish. It is too early to confirm price details for installation and subscription rates due to commercial reasons but TelstraSaturn are planning for these to be very competitive with existing services currently in the market.

TVNZ are in the final stages of contracting for the supply of its interactive capable set-top-boxes. It is too early to confirm price details for consumer purchase and installation due to commercial reasons but TVNZ believes the service will be attractive to those who want to migrate to digital and access the new interactive services without having to subscribe to a pay television package.

Who will install the dishes and Set-Top-Boxes? TVNZ and TelstraSaturn will organise sub-contractors to visit homes on request to install the dishes and set-top-boxes and ensure subscribers are conversant with the new services and that they're satisfied with the quality of reception. Can the dish and Set-Top-Box also be used for Sky? No. Well, not initially, anyway. The technology to enable one company's set-top-box to be used to access another's channels is available now. However, Sky has not yet formed an agreement and commercial understanding with either TVNZ or TelstraSaturn to provide for this "open access." It is hoped that Sky's position will change as consumers take up the TVNZ/TelstraSaturn service in numbers, but this is a matter for Sky to decide.

Can a dish and Set-Top-Box used overseas and privately imported be used here for the new service? In the case of the dish, maybe. Many dishes are compatible with a number of different formats of transmission, and can be simply adjusted to receive signals from the TelstraSaturn/TVNZ services. But not all the different types of dishes used overseas are compatible with the model used in New Zealand.

In the case of the set-top-box, no. The transmission signals for the services will be encrypted to protect the integrity of the system (particularly relevant as enhanced and interactive services expand) and to ensure that other commercial organisations cannot add the signals to their services without an agreement between the parties.

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