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It is widely recognised that the transition to digital
terrestrial TV will be an essential step of the digital revolution, as
it will extend the advantage of digital broadcasting to a much wider audience,
turning digital TV into a veritable "mass" media.
Although a bit late compared to countries such as UK where
digital terrestrial is already a commercial reality, Italy is planning
a digital transition with an analogue switch off date that will be soon
set by the Parliament. It is though still unclear when the first national
channels will start simulcasting their programs in digital, and exactly
how this will be achieved.
The Italian overcrowded spectrum and
the frequency plan
In order to understand why the digital transition in
Italy is so slow and painful we need to go back and understand the peculiar
situation that has been often referred to as the "Italian Far West".
Channel occupancy in the country is in fact very close to spectrum saturation,
due to the proliferation, during the past 20 years, of local commercial
channels without a frequency plan or any other kind of control.
It
is true that in the past few years a partial rationalisation has already
taken place and the number of channel has been reduced from over 1 thousand
to 7 hundreds. Nevertheless, the spectrum is still overcrowded and a
further and more effective action is strongly required.
Given the situation the Authority, established
in 1997, has been charged with the extremely difficult responsibility
to put some order in the chaotic spectrum situation and free up enough
frequencies to allow the launch of Digital Terrestrial Television.
The Authority has carried out its task and in
November 1998 issued a frequency plan(1), to re-arrange and
optimise the use of the spectrum.
(1) The Frequency Plan, required by the Law 249/July
'97, assigned 70% and 30% of the frequencies for analogue TV services
to national and local networks, respectively (11 national channels
and 6 local channels) Part of the overall spectrum (4 networks) is
kept free for the introduction of DTT and DAB-T. The plan also involves
moving the transmission sites and reducing the transmission power
in order to reduce the electromagnetic pollution and to optimise the
use of the spectrum.
The plan allocates four frequencies available nationwide
to digital terrestrial, in order to allow the launch of up to 16 digital
terrestrial programs. A part of these will be assigned to the main national
terrestrial channels for the analogue/digital simulcast of their programs.
The rest of the frequencies will be assigned through a public tender
to private operators in order to launch some additional services: thematic
channels, premium channels, PPV services and other programs which will
likely add value to the bouquet and encourage people to install the
digital receiver. The rules and criteria for this public tender, according
to the bill, have to be issued by the Authority.
As we said, the implementation of the plan is of paramount
importance to begin the transition to DTT, but there are two different
transition scenarios:
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According to the first one, originally supported
by the Authority, there should be a rapid implementation of the analogue
plan to free up 4 national frequencies so to start the digital simulcast
by 2002.
The implementation of the plan involves infrastructure
investments by the terrestrial operators: they have to move their
broadcasting equipment to new sites and adapt the networks to the
radioelectric plan. In a second stage they will have to add the equipment
for digital transmission.
As some point out, this approach involves higher
costs for the operators and also inconveniences for the viewers. Moving
the sites and "reshuffling" the frequencies means in fact
that most viewers will have to retune their TV-set and in some case
adapt their terrestrial antennas.
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The alternative transition scenario for which the
operators push is instead to keep the old installations and the old
frequencies for analogue broadcasting until the analogue switch-off,
which, in this case would be put forward to 2006.
The frequencies to launch digital channels would in this case be found
encouraging small local channels to free up frequencies, using the
exceeding frequencies held by some national channels and speeding
up the migration of pay-TV terrestrial channels to satellite as required
by the Communication Act.
This second transition scenario seems to have its advantages, but
will 4 years be enough for the digital migration? This solution, more
economical for the TV operators may have too strong an impact on viewers
who will have only few years to get used to the new technology and
adapt their receiving equipment.
And will there be, without the rationalisation, enough spectrum to
broadcast 16 digital channels as planned? If the digital terrestrial
bouquet will only carry few services and premium channels what will
push viewer to chose to install the digital terrestrial receiver or
the integrated TV set over the satellite equipment with its hundreds
of channels?
Incentives to the transition
For this reason the Authority has decided to encourage
terrestrial broadcasters to go digital, by envisaging special financial
incentives: analogue terrestrial operators that will switch to digital
within 36 months from the release of the licence will not pay their
annual fee for the use of the terrestrial frequency for a six years
period.
In the public tender for the release of
the national licences, held last year, none of the operators has taken
such a commitment. It is likely though that in the bid for local licenses
which will take place next year - when the whole picture will be much
clearer - there will be operators able to take this kind of commitment
and therefore enjoy the incentives.
On top of that, the Authority, which has the power to
suggest legislative measures to the Parliament, has indicated in the
frequency plan a number of suggestions in order to promote the technological
innovation:
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Incentives to the operators that join into consortium
for a more efficient and rational management of the transmission
site and the digital transmission equipment. The authority would
rather see the new technology managed by associations of operators
rather than a myriad of single broadcasters;
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financial aides to local broadcaster that, not
willing to face the cost of the transition, decide to cease their
activity and free up the spectrum;
- financial aides, to agree upon with the manufacturers
and the broadcasters, to subsidise the cost of the digital receivers
and the integrated TV-set in order to reduce their off-the shelf prices.
New services or just a new way of
broadcasting traditional channels?
To ease and speed up the transition the Authority has
also set up a working group with the specific task to single out the
issues and the problems that need to be faced, both on the offer and
on the demand sides.
The group, which involves the government, broadcasters,
manufacturers and content providers is evaluating the impact of the
transition and will give its advice as far as the timing and the different
steps to take are concerned.
The first documents issued by the group focused
on the specification of the digital terrestrial broadcasting defining
the additional services that will be carried along with the TV signal:
such as the EPG, the IPPV, the other interactive services, the possibility
to carry soundtracks in more than one language, and so on.
The authority is positive that these features
will be crucial in the take off of digital terrestrial as they will
in fact mark the paradigm shift between the traditional TV offer and
the new digital world. Consumers will not be encouraged to buy or lease
the receiver, even with financial incentives, if they perceive that
the service will be just a repetition of what they already get.
The
group has then suggested that the multiplex licensees should be required
to carry a minimum set of additional services. This approach will be
discussed by the Authority and likely reflected in the public tender
criteria, by giving more points to operator able to launch innovative
services.
Antitrust issues
To conclude, a few words on our antitrust legislation
and some possible developments. The Authority is in fact responsible
for the application of antitrust legislation in the media sector. Although
it's still early to evaluate exactly what kind of impact the existing
rules will have when the multiplexes will be awarded - as the government
and the Authority have not yet determined the criteria of the public
tender - we can outline some general guidelines.
The Communication Act singles out three different and
separate markets: the terrestrial television market, the radio market,
the cable and satellite channels market.
For each of these markets, no operator may collect
more than 30% of the financial resources of the market itself. This
means that a terrestrial broadcaster already collecting 30% of the financial
resources of the terrestrial television market is still allowed to operate
in the radio business or in the satellite TV business.
This should pose no obstacle to media enterprises operating
in one of the three markets to be awarded digital terrestrial multiplexes,
because - as we said - the Act doesn't consider the media market as
a whole, but terrestrial and satellite broadcasting as separate economic
environments.
This is partly due to the will of the government
to encourage the digital transition and the development of the new media
business. It is also true that at the moment, being the satellite/cable
business still at the very beginning, there are no "gatekeepers"
or dominant operators as such who could distort competition by translating
their market power from the satellite/cable business to the digital
terrestrial one.
A totally new approach has been introduced by
a project of law, the 1138, which introduces a cross-markets antitrust
criterion. If approved, the new legislation will forbid the creation
of dominant positions in the "communication market", which
is the result of the convergence between TV and telecom markets.
This will concern in the first place telecom operators
who have a participation in television business. Their revenues in the
two markets (voice telephony or mobile phones and satellite/cable/terrestrial
television) will be added up and considered as a whole.
But will this new convergent market which considers
carriers and media enterprises operating in the same economic environment
be compatible with the existing legislation and its separations? The
antitrust "convergent" approach shouldn't then be applied
also to media operators by adding up the resources collected in the
terrestrial, satellite and also radio markets?
Conclusions
The Italian migration to DTT is heavily dependent by
the solution of the spectrum problem. The transition scenario has not
yet been definitely set and might change according to the approach that
will be taken.
Nevertheless the objective and the priorities
have clearly been set: Digital Terrestrial Television, to which the
government is strongly committed, means technological innovation, development
of the new media businesses and connected industries, rational and efficient
management of the spectrum.
In this framework the task of the Authority is
to define the path, introduce incentives, suggest the timing and the
steps to take and eventually apply antitrust rules so to encourage the
development of the new technologies while assuring a competitive market.
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