1. 1 The transition to DTT in Italy: economic model & regulatory aspects Lisa Di Feliciantonio AGCOM, Italian Authority for Communications Warsaw, 25 February 2004

2. 2 Summary The regulatory model Key features of the model The trasition to all digital The business model Pluralism and competition The Public service broadcaster

3. 3 Objectives to be achieved by the regulation Transition to be led by terrestrial incumbent operators: In order to support the transition they have to maintain their leadership role Create opportunities for alternative content providers: In order to strenhgten competition and pluralism Free-to-air to be the dominat business model: DTT to be complementary to other digital platform not an alternative to pay satellite or cable. The regulatory model

4. 4 Key features of the regulatory model ( Law 66 + AGCOM code) Trading of frequencies: as it is the only way to rapidly allow the start up of DTT; fragmentation of the value chain: distinction between network operator (manages the network and the frequencies) and content provider (the editor of the channels). It should encourage new editors to enter the TV business; capacity managed by network operators, free to establish their business model and the channels to carry on their multiplexes; very early switch off date: as it is the only real lever to push the broadcaster to start up DTT The regulatory model

5. 5 The transition to “ all digital ” The transition to be lead by existing broadcasters Until March 2004 analogue broadcasters, that have acquired frequencies through the trading, may apply for DTT provisional authorization as network operators The “experimental” authorization will be valid until July 2005 Applicants that hold more than one TV license must ensure, during the experimental phase that 40% of their DTT capacity will be given to independent content providers From March 2004 those who have been authorized for experimentation, as well as analogue broadcaster may apply for a long time network operator licence. Terrestrial analogue channels not applying for a licence as DTT network operator will lose their capacity After 2006 (switch-off) available capacity will be granted to existing licensees or other applicants. The regulatory model

6. 6 The business model Interaction between content providers and network operators left to market dynamics Capacity assigned by multiplex; network operators will negotiate with content providers and independent channels to put together an offer; no limitation to ownership of networks; national networks can carry local content and local networks can carry national content; no indications/obligation as far as the revenue model is concerned. The regulatory model

7. 7 Pluralism and competition Special attention on “access rules” and concentration issues Experimental phase (through July 2005) 40% of the capacity reserved to independent content provider After the licenses have been granted 1/3 of total capacity reserved to local broadcasters Media concentration threshold: Same content provider cannot be granted authorization to broadcast more than 20% of digital television programmes Rules for access to networks Access to be granted by network operator to independent content providers on FTND conditions Should available capacity be not adequate to guarantee access to all requests, AGCOM is issuing a new regulation to grant access to independent content providers of particular vlue The regulatory model

8. 8 Public Service Broadcaster Leading role for PSB but no financial resources for DTT Law 66 RAI has to acquire capacity through frequency trading as the other One multiplex is reserved for RAI after the switch off (Law 66) New Communication Act Obligation for the PBS (RAI) to invest and develop in digital terrestrial television developing two multiplex 50% of the population by January 2004 70% of the population by January 2005 Yet no additional financial resources are assigned to PSB for the development of DTT The regulatory model