1 Switchover from Analogue to Digital Terrestrial Television Broadcasting in Central and Eastern Europe Case study of Germany (based on MABB reports) Péter Vári Belgrade, 28th April 2009

2 Policy and regulatory aspects The German planned multiphase switchover, generally by states. The country has 16 states and the licensing process is a little bit different because every state has its own Media Authority. Analogue terrestrial TV broadcasting in Berlin was switched off completely on 4th August Other German regions followed the Berlin example: Commercial broadcasters ceased analogue terrestrial transmission in 2005, and the last public service broadcaster transmitted over analogue capacities stopped at the end of 2008.

3 Policy and regulatory aspects If markets do not support digitalization Necessary intervention by State: Regulation (e.g. switchover rules and deadline, limiting licenses), Financial instruments, (e.g. support to consumers), Information, Subsidies to solve the market failure to ensure social or regional cohesion. The intervention is potential conflict with the EU rules Promotion of digitalization is not an automatic justification for distortions of competition.

4 Supporting the Digital Switchover Funding in Germany: 3 x State support for Digital Switchover 3 x Support was declared illegal. DVB-T funding in Berlin & Brandenburg The Leading Case on how NOT to do it.

5 The Berlin-Brandenburg case The media agency support for DVB-T (only): ProSiebenSat.1 and RTL to broadcast via DVB-T for 5 years, irrespective of coverage. Contribution to transmission costs for five years (approx. EUR 4 million): ProSiebenSat.1: EUR 330,000/a = EUR 82,500/channel; RTL: EUR 265,000/a = EUR 66,250/channel; Local TV FAB & BBC World: EUR 65,000/a each. Eurosport, Viva Plus and DSF (not broadcasted terrestrially before): EUR 65,000 each (one year license only). Half of the EUR 4 million was paid back due to the EU rules.

6 The Commissions guidance Market Failure may be addressed by public intervention. Coordination problem: Market players must agree on timetable to ensure short switchover period; Onus is on Member States to show: financial aid is the most appropriate instrument to address such market failure (Incentive); financial aid is limited to the minimum necessary; Positive overall balance (Proportionality): No undue distortion of competition.

7 Supporting the Digital Switchover Avoid: Discrimination: DTT is not more equal than other platform. Operating Costs: Do not relieve companies from their operating costs, i.e. from their transmission costs. Do not forget to notify EU. Technology Neutrality; Support pilot projects, R&D, roll-out of network in areas with insufficient coverage, development of new digital services (e.g. EPG, mobile applications); Grants to consumers, e.g. to buy Set-Top-Boxes/decoders; Compensate private broadcasters for additional transmission costs during simulcast or early expiry of their analogue licenses; Grants to public broadcasters to promote universal coverage on all transmission platforms.

8 Spectrum planning Digital dividend: The Federal Ministry of Economics has proposed opening the band, currently used for broadcasting, for mobile services and / or radio systems for providing Internet access. The government wants to ensure at least 1 Mbits/s access (broadband connection) to all households by the end of 2010, with speeds of 50 Mbits/s or higher in 75 percent of homes by the end of The initial proposal unveiled last summer has been disputed by broadcasters – a revised version is due to be published shortly.

9 Timeline for introduction of DVB-T Completed

10 Mobile TV DTT was not designed for mobile reception. During the DTT project, DVB-H was coordinated which offers two major improvements over DTT: It features a more robust reception requiring less power It was devised to make TV available on handhelds.

11 Mobile TV Consumer problems: As with digital cable and digital satellite, it is quite difficult to get consumers to pay for contents which are also available free of charge.

12 Business model and plan DTTV in Germany has been developed exclusively on the basis of FTA. Business models for commercial mobile TV hold the attraction of addressable receivers. This means that it is no longer the service providers who pay for transmission but consumers, and new sources of revenue can be opened up for the broadcasters.

13 Consumer support issues In rural areas, DTT is as a rule available for stationary reception via a rooftop antenna. The benefits of mobile reception and portable indoor reception of the public service broadcasting are also concentrated on the densely populated areas.

14

15 Consumer support issues Acceptance for DTTV in regions where commercial channels are not available via DTTV is clearly lower:

16

17 Switchover involving commercial broad­casters has been centered on the major urban areas while the regions of Leipzig- Halle and Stuttgart are not supplied with commercial services via DTT. Public-service broadcasting scaled back its supply target to around 90–95 per cent of households.

18 Thank you for your attention

19 The Commissions assessment Economic Advantage Support for Operating Costs, not compensation for loss of analogue license: Aid for broadcasters that did not even broadcast terrestrially before; Aid even for broadcasters whose analogue license was due to expire anyway; Aid even to broadcasters with new digital licenses (P7S1, RTL even got extra channels); Payment exceeded switchover period. State Resources Grant by Regulator; Selective Aid Funding for DVB-T only; Grant without (!) prior notification to Commission Automatic infringement.

20