Sky TV have announced their intention to launch a free-to-air multi-channel satellite TV service. It means consumers will be able to buy a satellite dish and set top box for a one off fee (about £150) and then have free access to some 116 TV channels and 81 radio stations. Similar to the Freeview terrestrial digital TV model, the benefit of the Sky system, other than the higher number of channels available, is that Sky have 100% coverage of the UK, Freeview's signal covers just under 75% of the country.
There are various reasons why Sky would want to launch a free 'lite' service, despite the fact it will essentially compete with their own subscription satellite package. In particular it will give Sky access to a population of customers who might be persuaded to upgrade to a subscription service once they have their dish and set top box in place - especially as all the major sport and movie channels, and the premium US shows, will not be available on the free service. But the free service will also increase Sky's hold on the TV viewing population, which will enhance its bargaining position with sponsors, advertisers and other broadcasters.
There's also the added benefit that the new service will win brownie points with the government, who are still keen to turn off analogue TV signals in 2010, and for whom the limitation of Freeview's reach was a real issue.
Announcing the new package Sky boss James Murdoch told reporters: "This is another step in giving consumers a choice from Sky that suits their needs at the top and lower ends of the scale".
Sky also announced their intention to start broadcasting in the HDTV format in 2006. This is a new system, increasingly popular in the US, which offers a substantially superior picture quality than the current SDTV (standard definition) broadcasts. Such a system would, of course, be limited to subscription customers and give Sky another toy with which to upsell to all those new 'free-to-air' customers.