Europe should join the US along the "pure" digital TV route, says Roger Eglin.
In May, the European Community's telecommunications ministers will be meeting to review the future of the EC's high definition television (HDTV) programme. When originally scheduled, the meeting was seen as an opportunity for most of the 12, particularly the Dutch, French and Germans, to overcome British opposition and push through a £404-million "action plan" to develop HDTV. That hope now looks increasingly vain. Since ministers last met in December 1992 the ground has shifted dramatically, perhaps irrevocably, in Britain's favour.
Philips, the Dutch electronics giant and one of the main investors in the European HDTV project, announced in January that it had dropped its plans to manufacture television sets based on the EC's preferred transmission technology. Philips' decision, apparently precipitated by dismay at the political wrangling, has in turn fuelled doubts as to the entire viability of the EC's stance.
Though no one disputes the commercial potential of HDTV, a clear strategy on how to harness the Community's broadcasting and research resources in support of this technology still appears elusive. And if the EC cannot get its act together, European industry may well be in danger of being swamped by the massed ranks of the Japanese and American electronics industries.
At its simplest, digital television offers consumers crystal-clear, cinema-quality pictures in the home. On a more important level, its most enthusiastic advocates say it is the key to the electronic revolution of the '90s in which communications, television and computers will become one seamless technology serving both home and business. The first country to develop a winning technology and set a global standard will scoop the pool of jobs, exports and technical leadership, they argue and, if necessary, public money should be used to achieve this.
Cynics will say that they have heard all this before and that every time a new technological breakthrough occurs similar arguments are trotted out, accompanied by the same old begging bowl. Yet the counter-arguments are just as good on this occasion as on earlier ones. Who is to decide that the money will be supporting the right technology or appropriate technical standard? Can the application of large amounts of public money accelerate the development of a product for which the consumer market is still limited?
Though many technical issues have to be resolved, digital television's advantages are considerable. Unlike existing analogue TV, digital signals can he "compressed", bringing a high increase in TV transmission capacity. Computers can read digital signals: the TV-computer terminal - whether in the office or home - will become the all-powerful communications hub. Producing all the hardware and software for this will result in a massive industry. Some estimates suggest the equipment market alone 20e will be worth almost £3 billion by the end of the decade.
The Japanese have been quick off the mark. After using consumer products like transistor radios, VCRs, TVs, cassette and TV players to build a powerful electronics industry, they see HDTV as a similar but even bigger opportunity. Sony has been buying its way into Hollywood's studios to acquire film stock suitable for HDTV transmission. The Japanese National Broadcasting Corporation, NHK, has already begun "Hi-Vision" broadcasts. HDTV sets are on sale at just over £6,000. JVC has just unveiled cheaper ones and there are plans for satellite transmissions.
However, the Japanese system, Muse, is a digital-analogue system developed years ago. By the time digital television takes off later in the decade, many Europeans believe the Japanese system will be out of date though there are secret fears that the early start with Muse will win an unassailable lead for the Japanese.
The Americans are now pushing the development of "pure" digital TV. There are four contending groups - General Instruments, Massachusetts Institute of Technology, Zenith (America's last TV maker) and Thomson and Philips acting in partnership. But bringing digital television to US viewers without making all existing sets obsolete means creating a separate transmission network at a cost of something like $10 million a station. The Federal Communications Commission (FCC) hopes to overcome resistance to this by offering stations an extra channel for each one they already have. It is a lot of cash to demand of modestly profitable local stations. But competitive pressure from digital cable companies may force their hands anyway.
Common sense suggests that rather than trying to create a Fortress Europe with a different standard from Japan or America, Europe should take a pure digital route, preferably in partnership with the US. If public money is to be invested, it should be used to lever Europe in this direction. Harnessing Europe's resources behind its own standard may seem superfically attractive to some but past experience says that only too often this has proved to be an expensive trap.
Roger Eglin is associate business editor of The Sunday Times.