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Beyond the digital TV switchover

The downs: ONdigital/ITV Digital is a lame duck from the start, showing off all the bad points of digital TV – over-compressed images and unreliable cheapo receivers. It's crushed by a combination of Sky's ruthless marketing, rampant piracy, and a poor reputation. It's pretty obvious that government, regulators, and ITV Digital's management don't get digital TV.

Broadband TV-by-phone suffers from the high price of using BT's network for consumer services. Once again, regulators are slow to deal with BT's monopoly. Kingston's TV service is ultimately closed down, while Homechoice barely struggles along.

Feedhunters have a harder time as broadcasters move onto MPEG 4:2:2, MPEG-4 and HD in search of improved quality – for brief periods these are effectively encrypted until commercially available receivers catch up. It's almost a relief when the military transmits its UAV downlinks in the clear!

Look and sound: Sky's picture quality is initially very impressive, with the first widescreen movie channel. However, it's not long before channels squeeze into too little space and we start to see compression artefacts frequently. Compression technology improves in leaps and bounds, but demand to for bandwidth is always ahead. MPEG-4 on-demand services start off poorly but soon show hugely improved picture quality.

Dolby Digital surround audio arrives on Sky, showing that the full home cinema experience isn't exclusive to DVD. We get a first look at big-screen, high- definition video demonstrations and go looking for our socks, which have been blown off.

Digital TV 3.0: digital switchover
Compression: MPEG-2 HD & SD; MPEG-4 HD/SD
Broadcast: DVB-S & S2; DVB-T (8K); DVB-H (mobile)
Platforms: Satellite, terrestrial, cable, broadband, mobile

The ups: The runaway success of Freeview and Sky opens a window of opportunity to switch from analogue TV systems to digital. A once-in-a-lifetime release of valuable UHF spectrum becomes possible – the Digital Dividend. The question is, what to do with it?

Governments catch the heady whiff of cash from a spectrum auction; public service broadcasters want to launch high-definition channels; commercial broadcasters are keen for subscription services and mobile TV; other industries see the chance for faster wireless broadband; and community groups want local TV.

Meanwhile, consumers are enjoying more choice than ever, with two free digital services and five subscription services – plus more to come. There are channels to fit every taste (and if not, there's always the internet), equipment to suit every home and prices for every pocket.

Hi-def gets a good reception, and TV services are quickly divided between the HD haves and have-nots. The cutting edge, though, is in mobile TV. Do people want to watch live TV channels on a phone or portable player, or are they happy to download at home to play back at leisure? The first streaming trials are inconclusive; sport is the only thing people are really willing to pay for live – but downloading to watch on the move is a hit.

The downs: As one observer puts it: "Spectrum auctions are the crack cocaine of public policy for politicians." Neither Ofcom nor the government can be convinced to leave any of the Digital Dividend in the public domain, to the disappointment of public service broadcasters and community groups.

The choice of digital TV providers doesn't result in a price war. Instead, we're offered confusing bundles that tease us with 'added value' from free phone calls, broadband or TV channels.

Broadcasters aren't all happy about the rush to HD: it's too expensive and there's no extra advertising money to be won. Yet it's soon obvious they'll lose eyeballs without HD, so ITV and Channel 4 begin a slow transition to HD anyway, with Five somewhere behind.

Look and sound: Hi-def in 720p or 1080i is a major step forward from standard definition. Even better, Dolby Digital surround sound becomes the standard audio format for HD.