Chris

There are all kinds of reasons why NTL can't compete with Sky on a like-for-like basis. Some of them I can think of, in no particular order, are the available bandwidth for suppying channels (Sky's is vastly greater), the fact that the big channels are owned by Sky (Sky One, Sky Sports, Sky Movies...) and therefore Sky doesn't charge itself for the privilege of carrying those channels on its platform, and as I said earlier, Sky's potential subscriber base is every household in the UK (35 million?) whereas NTL's is restricted to cabled streets in limited areas of the UK.

If Sky can reach 35 million homes, and its research shows that (for the sake of argument; I don't know the right figures) 10% of the UK population are interested enough in TV on demand to buy Sky+ within 2 years, that's 3.5 million subscribers. The cost of developing the service is therefore split 3.5 million ways and the unit cost of each STB is reasonable.

NTL, on the other hand, has 'marketable' access to just 7.6 million homes for its digital services. (source). Assuming again that 10% of the UK population are interested in TV on demand, and that all of them who could take it from NTL were to do so within 2 years, then by 2006 NTL could have a little over 750,000 'NTL+' subscribers.

You don't have to be a boffin to work out that if Sky can sell 3.5 million Sky+ boxes, and NTL can sell only 750,000 NTL+ boxes, the unit cost of an NTL box is necessarily going to be higher.

Now I don't know any of this for certain, but I do believe it's reasonable to assume that this is a big disincentive for NTL to bother developing such a service. Of course, you could then say this is another reason why NTL and Telewest should merge, in order to increase their potential market and make a wider range of services more viable.