1. ISN Conference, September 2005 Digital Terrestrial Television Progress toward ASO in Europe Alexander Shulzycki European Broadcasting Union

2. DTT is the fastest growing digital platform in Europe. All digital television Digital TV in Europe 2001-2007 35,000 200220032004200520062007 60% 50% 40% 30% 20% 10% 0% 30,000 25,000 20,000 15,000 10,000 5,000 0 2001 Digital TV households (000s) Digital cable Digital satellite Digital terrestrial Source: Datamonitor European digital TV uptake to 2007

3. Developments in Eastern Europe accelerating but no full launch is imminent. DTT Progress in Western Europe July 1996 May 1997 October 1998 May 1996 Spring 2002 1999 2001 August 2000 September 1998 April 1999 May 2000 August 2001 November 2002 April 2003 December 2003 March 2005 November 1998 September 1999 May 2000 October 2002 2004 4Q 2003 2Q 2004 September 2005 2012 2008 2010 2007 ongoing 2010 2007 2006 2010 2003 2002 2001 March 2002 2000 December 2002 March 2001 2001 July 2003 2005 2006 April 2006 2009 2012 2010 2008 2010 2009 2010 2012 Operational Platforms UK (October 2002 relaunch) Sweden Spain (2005 relaunch) Finland Germany Netherlands Italy France Next To Launch Switzerland Belgium Austria Norway Portugal Denmark Ireland Greece 2005 2006 2006 2007 Legislation in place Soft launch Full launch Switch off date

4. Continued growth expected in 2005  DTT launches in Germany, France and Spain combined with increased DTT coverage  Developments in technology have allowed an increase in available television services  Effective marketing campaigns have increased viewer awareness  Market for secondary television sets in highly cabled countries  Set-top box prices have reached mass market levels 2006 will also be a year of high growth.

5. DTT Penetration levels Launched countries by penetration and ASO year. UK Germany Netherlands Italy Sweden Finland France Spain

6. Digital TV Penetration Scenario in Europe DTT will accelerate digitalisation in Europe and radically alter the pay/free TV mix. 100% 50% 30% 20052006200720082009201020112012 Free TV Pay TV Complete digitalisation in Western Europe

7. Digital TV Penetration Scenario in Europe... 100% 50% 30% 20052006200720082009201020112012 Free TV Pay TV Complete digitalisation in Western Europe

8. Market driven growth may hit a natural ceiling. 100% 50% 30% 20052006200720082009201020112012 Free TV Pay TV Complete digitalisation in Western Europe How to spur last phase of growth ? Digital TV Penetration Scenario in Europe

9. ASO Strategies  Dominant model is a free-to-air platform with some pay elements  ASO date is determined arbitrarily in some cases  All countries are using MPEG-2 (except France for pay chanels)  Marketing and coordination have been recognized as crucial  Many countries have established economic incentives/support for consumers and broadcasters  Contingency plans are not well developed (publicized?)  Most countries are adopting a region-by-region appoach  need to free up frequencies to extend coverage  limited rate of digital build/upgrade  decentralised regulatory structures  limit risk  learning from mistakes...

10. ASO Economic Implications (short term)  Loss of revenue for transmission companies and network operators  For broadcasters, transmission cost savings, but increased programming costs and lower per channel revenue  Loss of potential business fot cable and satellite operators  mopping up costs: subsidies Long term effects depend on disposition of spectrum

11. The political dimension Benefits for policy makers, regulators, competition authorities  Promotes competition in the electronic communications area;  Contributes to Information Society objectives;  Stimulates content industry;  Gives prominence to public service broadcasters;  Improves enforcement regulation of broadcasting content;  Diversity and access for a wider range of the population;  “Digital Dividend”, the economic value of released prime spectrum But there are risks: the cost and bother to consumers; viewers left without TV reception

12.  The European Commission has urged EU Member States to accelerate switchover from analogue to digital broadcasting. The Commission expects transition to digital to be well advanced by 2010 and proposes a deadline of early 2012 for phasing out traditional analogue terrestrial broadcasting. (24 May 2005) European Commission’s Push for Digital Switch-over Strong political signal from Brussels.

13.  Absence of necessary political decisions  Lack of European approach  Need for consumer incentives  Reluctance from operators to make necessary investments Main Obstacles identified by EC... At the same time complaints are being raised throughout Europe (mainly from cable and satellite TV operators) concerning incentives and indirect support for the development of DTT and accelerating progress towards ASO May, 2005 « Switchover Process in Member States »

14. « The principle of technological neutrality...does not preclude a Member State from taking propotionate steps to promote specific technologies for transmission of digital television as a means for increasing spectrum efficiency. » «...digital TV switchover is a process encompassing various networks, business models and services, and any differentiated treatment of market players or platforms must be justfied. » EC Statement on Platform Neutrality May, 2005 « Switchover Process in Member States »

15. Financial incentives promoting ASO Government PSBs Commercial CHANNELS DTT platform Transmission company Consumers: High-end Refusniks Low-income Tax breaks Direct subsidies Loans New capital Privatisation proceeds « Platform neutrality » Marketing Call center Reduced « tax » Transmission subsidy Increased LF Ad market