Podium: Sky's the limit in the digital lift-off

From a speech given to the Edinburgh Television Festival by the managing director of Sky Networks

WHAT EXACTLY is digital? How should we define it? Conventional wisdom is that it's an expensive cure for no known disease; a theoretician's delight and a practitioner's nightmare.

However it's now critical that we as an industry are clear about the value of digital in all of our lives. Because digital could well be the saviour of television. But this new technology will not mean, as some fear-mongers would have us believe, that television is dead.

TV will continue to be the dominant medium for "lean-back" leisure rather than "lean forward" interaction. Yet both pieces of technology will happily sit together in the home of the future, fulfilling different needs for their owners. Which makes the PC and the Internet very serious competitors.

Given that British people spend the majority of their leisure time watching TV, it should come as no surprise that we do have the most to lose. So the $6.4bn question is: how do we remain relevant in a market-place that we haven't been able to adapt to? The answer lies in optimising a technology that will allow us to reinvent television, for the first time since its inception.

Digital is a technology that enables us to compete in a world that demands extensive choice and added value. Digital allows you to manage choice. But not by limiting that choice, as others have suggested. The answer cannot be to "dumb down" or provide less. The answer is to use the technology to provide context as well as content.

You could say that "Electronic Programme Guides" are to digital TV what Apple was to computing. Digital will enable us to give added value to people's viewing by providing them with their own personal "television navigation system", transforming the TV experience just as Apple and Windows made computers viable.

So digital allows for more content and the digital "EPG" will give context. But digital will also do to television what unfettered choice has done to other markets. It will make us all better. The fact is, in the UK, sooner rather than later, the digital multi-channel household is going to be the norm.

The EPG is the greatest leveller of all. It guarantees that all programmes are treated equally in the eyes of the beholder at the touch of a button.

So are we ready for the Big Bang in the TV universe? If we haven't got the message yet, we have to recognise that the days when any one of us was able to secure a majority audience is at an end.

All of us have to face up to the irreversible fragmentation into countless personal audiences - niche audiences all wanting and needing different "fare", It happened in magazines, and it's happening to us.

In all British TV households, television viewing has declined over the past five years, while reading, eating out and holidays are on the increase and far preferred to watching TV.

In the UK, nearly half of Internet users claim that their use is at the expense of watching TV. This means that the PC will be a growing competitor for people's attention. Most UK research groups agree that by the end of next year - within just 18 months - UK Internet penetration will be close to that of multi-channel TV today.

What is interesting, however, is that digital television has destroyed the convergence theory: PCs may compete with us, but they're not going to become us.

For years now, the word "convergence" has gone side by side with digital. TVs and PCs would get married and live happily ever after. I'm sorry to be the bearer of bad news, but there's been a divorce.

It's clear that people's use of TVs and PCs are hugely differing experiences. The Internet is succeeding because it is adding real value to people's lives.

With big events at one end and niches at the other, what is going to happen to the middle? The answer is that choice and fragmentation may well kill off the middle, unless we respond quickly and decisively to what's already happening. Although I'd be the first to acknowledge that the current system has produced some fantastic television, it cannot be denied that some broadcasters have reacted to competition and fragmentation by putting out "least objectionable programmes" - blander rather than better - to appeal to the widest possible audience.

Most of us have worked for so long in a three- or four-channel environment, that it may seem impossible to move out of our comfort zone. In tomorrow's TV world, where multi-channel TV homes are every home, blandness will be anathema. Content will have to be innovative, ambitious and competitive. We have to leap forward with confidence. Because the most dangerous thing will be to play it safe.