sou · GKB325d2 · 1997-01-01 00:00:00 — If not, could the introduction of new technology for TV broadcasting be completely transferred to market forces without the involvement of the Government ? I assume that the contrary will apply i.e. that the Government will henceforth wish to assert public, civil interests concerning television. This assumption is of crucial importance for my considerations and proposals. In order to implement media policy within the area of television, the Government uses three instruments. Access to and control over distribution networks, legislation and other forms of regulation for TV broadcasting, as well as providing support and promotion for various types of programmes to be shown through public service companies. The effectiveness of regulations have decreased as a result of satellite TV and increasing internationalisation. A breakthrough in digital transmission will change the extent to which the Government is able to run media policy with the same instruments as before. Surveys on media viewing habits of the general public and the TV audiences choice of channel and types of programmes mean that public service activities do not have the same significance in terms of media policy as they did a decade ago. This increases the relative importance of what public control can and cannot do as regards distribution. This leads on to the following technical considerations. Developments concerning TV broadcasting and other technological facts on which my proposals are based have been extensively dealt with. A decision was made in 1994 on international standards for the compression of pictures and sound as well as multiplexing. The following year a European standard was established for satellite and cable broadcasting technology. A proposal on standards for digital terrestrial TV was formally adopted this year. An American standard for terrestrial TV broadcasting and high definition TV (HDTV) is also expected to be adopted this year. Digital TV broadcasting is continuing on a regular experimental basis in a number of countries. In regular digital satellite broadcasting has been started. Experimental tests using terrestrial broadcasting were implemented for the first time in . In a number of other countries, including the UK and the , some definitive steps have been taken to develop the terrestrial network for digital broadcasting. It is thus evident that digital television stands on the verge of a breakthrough. The arrival of standards accelerates development on a broad front. The issue for the authorities in this area is not whether to adopt the new broadcasting technology or not. The issue is whether digital development should be steered by market forces, or whether the authorities should influence the where, how and the purpose for which the technology has been developed. Digital broadcasting in comparison to analogue broadcasting, means the following for TV viewers: –A greater supply of programmes since a larger number of TV channels can be broadcast within the frequency range required for broadcasting a single channel using current analogue technology. –Better picture and sound quality. –The opportunity for individuals to choose programmes and products, choose viewing , take part in quizzes, and quickly navigate between numerous channels. –Interactive possibilities. –Better conditions for developing multimedia terminals in the home for TV, radio, computer and telephony. The transition from analogue to digital television assumes that households in the initial stages need what are called set-top boxes for converting digital signals for reception in to-days analogue TV receivers. The socio-economic costs of this are considered below. Within the framework of what is technically and economically feasible, my proposals for a system for expanding digital terrestrial broadcasting are based on factors related to the consumer s freedom of choice, breadth in the supply of programmes and the preconditions for public service channels to compete for the viewing public. Consumer Freedom of Choice The need for technical equipment in the home can have an influence on the supply of programmes and the viewers freedom of choice. There is a difference between open and closed set-up boxes . From a technical viewpoint, an open system is in principle com- petitively transparent in the sense that consumers are able to choose channels and individual programs as and when convenient. Open systems thus contribute to a more consumer oriented market. Closed systems on the other hand limit the consumers freedom of choice. Broadcasting companies and network operators who have succeeded in placing their systems in a household, attain a gate- keeper role which gives them the opportunity of determining to a certain extent the conditions for accessing channels, thereby making it more difficult for competing broadcasting companies to enter the market . It would in my view be a great disadvantage for the whole of society and for consumers, if individual players were to establish such a dominating gate-keeper role on the Swedish TV market. It is important that households are offered a system that is open and technically neutral from a competition viewpoint. In such a system commercial players should be able to charge for their services over a specific period (subscription) or for individual programmes (pay TV). This is entirely possible. Technically each operator can deter- mine the accessibility of its channel without limiting the consumers freedom of choice in the overall supply of programmes. The Supply of Programmes As stated above, the public should be offered a multifaceted, high quality supply of TV programmes to satisfy varying needs and interests. Digital broadcasting technology by expanding the frequency limits for the number of channels contributes to this development. It is economic factors rather than the availability of frequencies that set the limits to the supply of programmes. The first precondition for a wide supply of programmes is, of course, that all households in the country can receive the programmes that are broadcast. In practise, the ambition is to achieve a coverage factor equivalent to to-days analogue channels in the terrestrial ground net, i.e. approximately of households as SVT1, SVT2 and TV4 have. The supply of programmes should be financially and technically accessible to the public. It should be possible for viewers to choose programmes at their convenience, i.e. they should not be locked for a lengthy period into an agreement with a network providing limited programme packets. It should be easy for viewers from the con- venience of their arm-chairs to move between different program channels. The Position of Public service Channels It might have been thought that the need for public service TV would decline as a result of the number of different channels more than doubling during the last decade. It might also have been thought that the expansion of broadcasting opportunities as a consequence of digi- tal TV would marginalise the significance of public service pro- grammes. New commercial channels have in the first instance resulted in an increased supply of entertainment and sports programmes. The goal of media policy to offer the general public a balanced supply of pro- grammes (diversity) emphasises the need for channels which safe- guard the supply of news, debates and culture etc, all of which con- stitute the core of public service TV. Experience from different countries shows that the conditions for maintaining public service activities are crucial when determining the approach to be taken to the new broadcasting technology. This is true of where the Commissioner emphasised the need for balance between the public service channels and purely commercial channels. This is also true of the U.K. where the government proposed that the BBC should be offered its own multiplex for its channels. It is also true of many other countries that have a TV and media structure which is comparable to that of . Given this, I assume that the Government will also in the future wish to safeguard the special position of public service activities. For this reason, it is in my view desirable that the SVT channels remain in the same technological reception environment as the majority of other programmes. This will help to ensure that viewers will find these channels. An overview of the models for digital distribution of television deals with the conditions for terrestrial broadcasting, broadcasting via satellite and broadcasting via cable and the network. These different models usually assume a certain degree of co-operation between different types of networks feeding each other before the final step of linking into the home. My proposals apply, however, above all to this last stage which is vital if consumers themselves or the players on the TV market are going to control the choice of channel and individual programmes. Transfer via cable and the network in the future will correspond to the high demands placed on coverage, supply of programmes, freedom of choice, interactivity, technical reception quality etc. A possible strategy for the Government is thus to stimu- late the development of such distribution systems and until otherwise decided continue with both present and additional analogue terrestrial broadcasting systems. However such distribution systems due to technical and economic factors will not be possible within the next 10–20 years. This would in the meantime leave the field free for the players in the market to develop digital TV on purely commercial grounds. In my view given such a development, it is not possible to ensure consumer freedom of choice, a wide supply of programmes and public service activities. The main opportunity for the Government to counteract this lies, as I see it in providing the players with alternative broadcasting opportunities in a common network in i.e. a terrestrial net- work. My proposal elaborated on further in section 10.2.1 means that the terrestrial network should be built up for digital broadcasting. This should begin at the latest by 1997, if the first stage is to be completed within two years at the latest . In order to ensure that the requirement of achieving almost total market coverage is fulfilled, analogue broadcasting of present terrestrial channels should proceed during the period households start acquiring the necessary equipment for receiving digital signals. This transitional period should, however, not be more than 10 years. My view is that the aims of to-days media policy can be maintained in a new technological TV environment, provided the Government decides on a rapid development of the digital terrestrial broadcasting network. A key question is thus what will be the financial conditions during the transition from analogue to digital broadcasting. My assessments are based on the three quantitative models pre- sented . I emphasise once again that these examples are based on a number of assumptions, amongst others, the households willingness to invest and on price changes regarding equipment for receiving programmes. Household demand is affected by price trends, with the converse being true, that price trends are affected by household demand. In addition household demand is affected by the supply of new TV channels, which in their turn are influenced by the number of viewers the broadcasting companies can be expected to reach through this network. Developments regarding financial results from the broad- casting system are thus difficult to assess. The transition to digital TV will have cost implications on the pro- duction of programmes, broadcasting, and reception. And these will change during the transition from analogue to digital TV, and also when analogue TV has been phased out. In my assessments I have assumed a transition period of around 10 years. The Government can influence developments by means of different economic stimulation measures that will facilitate the transition to digital TV distribution. In the report I have not presented any basis for calculating the cost consequences for the broadcasting companies and independent pro- gram producers in the production phase. The views that I have examined show that the new technology should, however, result in significant savings through above all increased accessibility and reusing material produced earlier. In addi- tion, there should be a reduction in costs of processing and finalising (editing) recorded programme material. My calculations do not, how- ever, cover the profits arising from SVTs activities. The transition to digital TV broadcasting calls for considerable investments in receiving equipment, especially on the part of house- holds. In the alternatives presented, these costs are expected to ap- proach between to 10 billion, irrespective of whether the transition is to digital satellite/cable distribution, or digital, terrestrial TV distribution. As regards broadcasting costs, which make up a small part of total TV costs, there are, however, some differences between these alternatives. While the costs of a program broadcast via digital satellite/cable are annually –10 million, the costs of such a programme broadcast through a digital terrestrial network are –50 million. However, in both cases the broadcasting costs are sig- nificantly lower than the distribution costs of analogue TV channels. A digital terrestrial network with scope for a much larger number of broadcasting companies than there are to-day in the analogue network, provides the network owner, ultimately the state, with new sources of income. For franchise owners, terrestrial broadcasting can lead to better financial results compared to the alternative of broad- casting via satellite, assuming that terrestrial broadcasting covers almost of households. Financing digitalisation is a political issue that requires more secure underpinning than can be presented at this juncture. Interest amongst prospective franchise holders should be gauged after the Government has taken the first decision in principle to develop the digital terrest- rial network. Such a decision can be assumed to create new conditions for preliminary discussions between net owners and the commercial players on the market. Public regulation of television is widespread. , however differs somewhat from the international pattern. In contrast to the situation in many other countries, TV broadcasting via satellite and cable is regulated to a very limited extent. Similarly our constitutionally protected Freedom of Expression Act does not permit detailed regulation as can occur in other countries. Relative openness in Swedish society symbolised by and achieved through the principle of public access and the Freedom of Expression Act, also characterise the mass media area. In there are also laws on what may and may not be said and shown on TV. In some respects, domestic rules require greater restraint on the part of broadcasting companies and distributors than what is required by the minimum rules laid down in the EU directive. New distribution forms and an increase in the supply of TV have extended societys influence over programme contents. This influence varies with the licensing requirements of different types of broad- casting networks. The impact is greatest in the control of terrestrial television, and least in the telephone network and videograms. In broad terms, there are two levels regulating contents. A lower level for broadcasting via satellite, and cable networks not requiring a li- cence, and then a higher level which is required for terrestrial broad- casting via . However, not even the fulfilment of the limited requirements im- posed on satellite and cable broadcasting can be monitored and maintained satisfactorily. Broadcasting companies can, for example, choose a base elsewhere and link their programmes to satellite broad- casting from countries with low requirements on contents. Another problem is the issue of the relationship between the parties involved in the event of a legal dispute. On occasion it has been difficult to determine who is responsible for specific transmissions since satellite and cable broadcasting does not require a licence. The new Radio and TV Act should not lead to any major change in this respect. The influence of the Government over TV broadcasting via satellite and cable networks will remain limited. For society to be able to intervene against violence, pornography, slander etc in TV programmes, totally different measures would be required in the long term. The starting point should be technological development where different media are provided in a common multi- media structure. The basis for such steps should be developed by the expert group on multimedia issues, which I proposed should be established. In the short-term, the strategy should attempt to increase supply in the terrestrial network and thus reduce the importance of broad- casting by satellite and cable. Broadcasting over the terrestrial net- work provides better opportunities to determine conditions regulating programme content and to ensure that the rules are applied. For the digital terrestrial network to be an effective tool of media policy, the Government must be able to make stratetgic exemp- tions concerning regulations. On the one hand, far-reaching regula- tion could reduce the interest of programme producing companies and other players in broadcasting over the terrestrial network. On the other hand less regulation might well mean far too great a divergence from media policy. It should be noted that it is very difficult to re- regulate what has once been de-regulated. In a digital terrestrial network, where there is much greater scope for a much larger number of programmes than in the analogue net- work, EU legislation sets limits on the extent to which national rules determining content can exceed the minimum levels laid down by the EU Directive. Given this I consider that the principles and conditions for having access to broadcasting in the new network should be drawn up. This would lead to increased interest in broadcasting via the terrestrial network. As a result of the factors mentioned above, I propose the following. –The Government should in Spring 1996 make a decision in principle on the transition to digital terrestrial TV broadcasting in . –Development of the terrestrial network for digital broadcasting should begin by 1997 at the latest, and the first stage should be concluded within two years after this decision. This first phase should provide broadcasting opportunities for eight nation-wide channels, i.e. five new channels, in addition to SVT1, SVT2 and TV4. In the second phase the broadcasting network should be able to accommodate 24 channels. After the analogue network has been closed down, an additional 50 channels could be broadcast. –Current analogue terrestrial TV broadcasting should cease as soon as possible, however, at the latest within ten years after digital terrestrial broadcasting has been started. –An expert group should be set up to carry out an in-depth analysis of the issues remaining to be solved. The expert group can also monitor and help contribute to the introduction of digital multi- media technology as well as put forward proposals on regulation, and suggest other relevant measures reflecting the interest of society arising as a result of developments within this area. Digital developments mean essentially that previous plans for a fourth and probably a fifth analogue terrestrial network, should be shelved, and that the frequency wave length thereby relinquished be used in- stead for digital broadcasting. The reason for starting digital broadcasting as soon as there is scope for eight nation-wide channels, is to provide the general public with terrestrial digital broadcasting as an alternative to digital broad- casting by satellite or cable. To justify the acquisition of set-top boxes, the alternative must, of course, contain more channels than the three that can currently be received without additional equipment. I consider that eight channels would be sufficient to provide a compe- titive alternative in the first phase. The digital network can be gradually expanded. As long as ana- logue broadcasting continues (see below), the number of channels possible in the view of the Commission is limited to a maximum of 24. If and when the analogue network is phased out, it will be possible to expand the network by an additional 50 channels. In the very first phase of development, conditions for regional and local broadcasting will be created and after an additional two years further opportunities will exist for greater local usage of the terrest- rial network. If any of the nation-wide channels are reserved for regional and local channels, there could well be a hundred or more franchises available within a few years. Parallel with digital broadcasting of to-days terrestrial channels, analogue broadcasting should continue as before to provide house- holds who do not acquire in the early phases set-up boxes for digital reception. Given that TV receivers are normally changed within an eight to ten year period, I believe households would have sufficient time to change if analogue broadcasting were to stop within ten years of the start of the terrestrial network. The expert group proposed should be given the task of monitoring developments and making pro- posals as to when the time would be ripe to discontinue analogue broadcasting. It is important to get many channels quickly into the terrestrial network which, it is intended, should become a super digital high- way, supplied by numerous broadcasting companies and which is accessible to the general public via the open set-top box. What should attract commercial players to choose the terrestrial network is nation- wide coverage, low broadcasting costs, reasonable rules regarding content, the right to send commercials and the opportunity, in a technically simple way and without onerous administrative costs, to charge and receive payment for the programmes they broadcast. In addition to this, there are the opportunities for broadcasting in the same environment as the Swedish public service channels. Domestic programmes in Swedish involving well-known Swedish participants and produced with an understanding of the Swedish temperament have until now been successful in competition with foreign TV productions. Commercial suppliers with programmes that are primarily international could also be interested in a technical environment where the majority of households are able to select their programmes. In the UK reference is increasingly being made to digital terrestrial broadcasting as a Window of Opportunity. If the state does not take and maintain the initiative in TV broadcasting in this area, it would be forfeiting a major opportunity I consider this is also true of the Swedish TV market. This is the reason for the proposal that the Government should as early as Spring 1996, make a decision in principle on the development of the network, and that this development should be started the following year and be completed within a two to four year period. A prerequisite for this timetable is that frequencies be co-ordinated on the international level. Development of digital TV broadcasting creates preconditions for digital broadcasting within other areas, and would link into global information superhighways. In a narrower perspective ad- justing to international trends is of importance. This should make it easy for the Swedish electronics industry to compete more effectively in new markets where digital broadcasting technologies are in the process of being created.