sou · GSB316 · 2005-01-01 00:00:00 — In chapter 4 an example is also given of distribution costs for commercial players if they were to start DAB broadcasts. SRs alternative 2 is the one of the three alternatives that is closest to RUs proposal, see table 4.17, chapter 4. The alternative implies that the national DAB network should be developed with a popu- lation coverage of 88 percent in 2005, 90 percent in 2012, 95 percent in 2015 and 99 percent in 2018. According to this alternative, the regional network is to be developed with population coverage of 75 percent in 2005, 80 percent in 2012, 86 percent in 2015 and 99 percent in 2020. The alternative is also based on a continual phase-out of the analogue FM networks; FM2 in January 2012, FM1 in January 2015, FM3 in January 2018 and FM4 in January 2020. RUs proposal implies that the regional multiplex is to be developed with a population coverage of 75 percent in 2005, 80 percent in 2007 and with at least 85 percent in 2013. RUs proposal also assumes that the analogue FM broadcasts can be phased out by 2020. As regards alternative 2, SRs increased distribution costs, compared with the distribution costs for the analogue FM broad- casts in 2002 are estimated to be about one billion including value added tax up to and including 2019. This assumes, however, full cost recovery in both DAB networks. Otherwise the costs will increase further. Financial conditions for development of Swedish radio The financial conditions for development of Swedish radio are presen- ted in chapter 5. The financial situation of public service companies, the commercial radio industry and local radio, which was presented in the interim report, has remained by and large unchanged in 2003. The public service companies are in a licence period that started on 1 January 2002 and extends until the end of 2005. During this period the companies financial conditions will remain the same. it is difficult to address SRs and URs financial conditions for investing in digital radio without at the same time taking into consideration the full range of the public service companies activi- ties. The costs of DAB broadcasts are great and a shift in techno- logy from FM to DAB can be counted on to continue for a long period. The costs for double broadcasting can thus be expected to reach considerable amounts. As regards commercial local radio, several commentators consider that a successful technology shift from FM to DAB assumes diver- sified programming and that at all events the commercial radio industry starts DAB broadcasts as soon as possible, alongside those of the public service companies. RU has, however, reported to the Committee that the commercial radio companies are in a difficult financial situation. This applies above all to the radio companies that were granted broadcasting licences on the basis of the now repealed Local Radio Act. RU is of the opinion that a change must be made in the concession fees so that these broadcasters will be able to start DAB broadcasts. As far as community radio is concerned the possibilities of contri- buting the investments needed to start digital radio are very small, since community radio has limited resources in general. The situa- tion for the commercial radio industry and community radio is, thus, that both operate under such financial conditions that they have difficulties in financing investments in new technology. Media policy and consumer policy aspects Chapter 6 presents the media policy and consumer policy aspects of digital radio broadcasts. It is noted that the goal for the govern- ment investments in the media field also applies to the choice of new technology. The question whether the advantages of digital broadcasting technology, compared with the analogue technology, also imply media policy advantages for consumers, broadcasters and the radio as a medium, shall thus be assessed in the light of such considerations as protection of freedom of speech, freedom of infor- mation, freedom of , diversity and availability. The significance for public service shall also be taken into consideration. A transition to digital broadcasting technology means that the radio companies can broadcast more channels and programmes and the consumers can enjoy a greater and wider selection. This makes increased diversity possible and benefits freedom of expression and freedom of information. The public service companies, through the use of digital broadcasting technology, are given the oppor- tunity to fulfil their public service mandate even better and to offer diversified services that meet shifting needs and interests within the countrys population. Digitalisation makes convergence possible between different media and between the media, sectors. If radio is not digitalised and remains analogue, there is therefore a risk that radio and what it offers will be marginalized. In the light of the great importance of public service radio it is, in the opinion of the Com- mittee, important that the public service companies and other players in the radio industry are given favourable conditions for using new technology to develop and renew their operations. As regards consumers a transition from analogue to digital radio mainly concerns the value added by a greater and wider selection of channels, programmes and services and the costs of replacing ana- logue receivers with digital receivers. According to the Committee, significant factors for whether consumers will be prepared to invest in new radio receivers include the programmes and services offered, sound quality, coverage of the broadcasts, information concerning DAB broadcasts and their contents and services, as well as a large selection of user-friendly receivers at reasonable prices. A further factor which, in the opinion of the Committee, will be of impor- tance to consumers willingness to invest is the degree of certainty in predicting that the new technology will in the long run replace FM broadcasts. Approaches to digitalisation of radio in The analysis of future for and consequences of digital radio is presented in chapter 7 Three alternative approaches to digitalisation of radio in . Under the Committees terms of reference the analysis shall be made on the basis of three alter- natives: the large-scale introduction of digital terrestrial radio, the continuation of trial broadcasts for a while longer or the disconti- nuation of broadcasts. By way of introduction the chapter starts with a description of how the Committee sees the three alterna- tives. As regards alternative one, introduction of DAB broadcasts on a large scale, the Committee believes that this alternative should include a concrete goal that FM broadcasts are to be replaced in the long term by DAB broadcasts. believes that what is crucial in the choice of alternative one is being able to predict now that the DAB standard, even in the longer term, will contribute to the fulfilment of media policy goals as well as creating conditions for competitive overall solutions, both technical and financial, for all players within radio, including the consumers. Alternative two, which the terms of reference calls continuation of trial broadcasts for a while longer, has been called by the Com- mittee development of DAB broadcasts in stages. The main reason is that the concept trial broadcasts can be understood to mean that there is uncertainty as to the technical properties of the DAB standard. In the opinion of the Committee there should no longer be any uncertainty as to the fact that the DAB standard has the technical capabilities required to distribute radio and other supple- mentary services. therefore believes that the alter- native should instead be called development of DAB broadcasts in stages. This designation should indicate that the approach does not imply a decision as to the of the DAB standard as the future distribution system for radio and other supplementary services in and that the approach assumes a later decision, which may imply that the broadcasting activities are extended or that they cease. Alternative two is understood by the Committee to be a natural choice if there are insufficient grounds either for the assessment that FM broadcasts will in the long term be replaced by DAB broadcasts or for the assessment that the reasons for dis- continuing DAB broadcasts outweigh the benefits of continuing the DAB broadcasts in some form. The purpose of developing DAB broadcasts in stages should be, according to the Committee, that the transmissions, within a relatively short period and at a limited cost, are to clarify whether the DAB standard has the potential required for as the future distribution system for radio and other supplementary services in . Alternative three, discontinuation of DAB broadcasts, should be chosen according to the Committee if it is already known now that the DAB standard does not have the potential required to be the main future method of distribution in the area of radio and replace FM broadcasts. According to the Committee it may also be rational to discontinue DAB broadcasts in the event that the costs of continued transmissions under alternative two are estimated to be greater than their expected benefit. The analysis of the future for and consequences of digital radio according to the three alternatives is made on the basis of nine different subject areas. These areas are the scope of the transmissions, the broadcasters, manufacturing industrys, retailers and consumers interest in implementing the respective alternatives, frequency considerations, the regulatory code, costs and financial consequences, technical developments and media policy and consumer policy consequences. Chapter 8 presents the Committees Considerations and proposals concerning the future of digital radio. The assessment of the Com- mittee is that digitalisation of radio in should continue, since there are a number of advantages to distributing radio also using digital technology. Digital standards utilise a given frequency space more effectively than analogue standards, which implies that more players can broadcast radio and broadcasters can increase and broaden their present services. This would make increased variety possible and benefit freedom of expression, information and . The possibility of broadcasting more channels and programmes gives the broadcasters greater scope to meet the various needs and interests of radio listeners. For the public service companies it would entail even better opportunities to satisfy the requirement to offer varied services that provide for changing con- ditions and needs among the countrys population. Digitalisation would probably, according to the Committee, also contribute to ensuring that the position of radio in the mass media field can be retained or strengthened. In a comparison between different standards for distribution of digital radio the DAB standard has stood out as being the superior existing standard in terms of technology. However, in the opinion of the Committee it is difficult to foresee which platform or plat- forms should be used in a technology shift from analogue to digital distribution of radio. A deciding factor should be which system can most cost-effectively promote radio listening in and satisfy the various requirements of the public as regards selection and availa- bility in different environments. The Committee considers that at present, instead of designating one standard for distribution of digital radio, the conditions should be created for broadcasters to distribute radio via various digital standards which in the future will have a corresponding coverage to todays FM networks, i.e. good and outdoor coverage as well as both portable and mobile coverage. In the opinion of the Committee the public service com- panies also in the future should be obliged to broadcast with the same coverage as at present. Phasing out FM broadcasts is dependent on a number of different factors, such as geographical coverage for terrestrial digital radio, the number of digital radio receivers sold, digital radio listening, costs of parallel analogue and digital radio transmissions and the savings that a closedown of analogue broadcasts would entail. Since digital radio is still at an introductory stage, the Committee believes there is no basis on which to determine a definite date when ana- logue radio broadcasts can cease. notes that DAB broadcasts constitute an im- portant link in the development of digital distribution of radio. A cessation of these broadcasts, pending the outcome of whether the DAB standard will be established as the main distribution system for radio in Europe, would mean many years delay of digitalisation of radio in . Therefore the Committee thinks that DAB broadcasts should continue in . To start with these broadcasts should take place from the perspective of innovation, i.e., the broad- casts should create scope for more diversity and better accessibility to more groups, in order to increase the attractiveness of the radio medium. When evaluating the broadcasts, which according to the Committee should be done in 2008, it should be possible to then decide if it is possible to go further with a technology shift and direct policy towards replacing the present analogue broadcasts with digital broadcasts. finds that at present there is uncertainty concer- ning the possibilities of DAB broadcasts to reach a larger number of radio listeners within a short period. As a consequence of this uncertainty, as well as of the substantial costs associated with rapid development, the Committee therefore proposes that continued broadcasting using the DAB standard should take place through creating conditions for development of DAB by stages. In the first stage, which the Committee proposes be started in 2005, the scope of investments in the DAB networks should be restricted. In the opinion of the Committee this decision does not prevent the broadcasters from themselves taking the initiative of increasing transmissions within the framework of available broadcasting space and available broadcasting licences. As regards the extent of transmissions in the first stage of con- tinued broadcasting the Committee considers that the investments should be restricted. has assumed that both SR and commercial players are to be given the opportunity to offer DAB services during the continued transmissions. In this, the public service companies and the commercial players should have approxi- the same population coverage during the first stage. proposes that the DAB networks already set up be used for DAB broadcasts in the first stage and that the broadcasts in each of the networks should have about 35 percent population coverage. This implies that it will be possible to broadcast in the , and areas as well as the region. After the first stage the Committee considers that the question of putting up further funds for increasing the DAB broadcasts should be put in relation to the degree of consumer demand for the broad- casts. However, during the stage by stage development of the DAB broadcasts the players in the radio market, in the opinion of the Committee, should themselves be able to initiate increased DAB broadcasts both in the regional and the national DAB network. The Committees assessment is that conditions should be created for diversified programming in the first stage of the continued DAB transmissions. proposes that SR be allocated in- creased resources to cover the added costs associated with the Committees proposed broadcasting in the first stage of the continued DAB transmissions. As no commercial market has as yet been established for DAB broadcasts, the Committee assumes that the participation of commercial players will require the provision of incentives to broadcast. As regards the allocation of capacity in the broadcasting networks, the Committees assessment is that SR, during the first stage of the continued transmissions, should have the entire capacity of the national DAB network at its disposal, as well as about one third of the capacity of the regionally divisible DAB network. Other capa- city in the regional DAB network should be let to commercial players. Broadcasts in the national DAB network are relatively costly and as no commercial market for DAB broadcasts has as yet been established, relatively extensive incentives would probably be needed to induce the commercial players to broadcast in the national DAB network. The Committees assessment is that at present it is not possible to propose such incentives. The transition to digital broadcasting technology, however, creates greater scope for national broadcasts and the Committee considers that commercial players should also be offered the opportunity to use this broad- casting space. In connection with the expiry of the present broad- casting licences for the public service companies consideration should therefore be given to whether there is a commercial demand for broadcasting on the national frequency. If such an interest exists the Committee believes that it should also be possible to grant licences to broadcast in the national DAB network to com- mercial players. As regards digital community radio broadcasts, the Committee considers that in the future it will be of the greatest importance that community radio can be provided with broadcasting space of at least the same proportions as community radio has at its disposal in the present analogue transmissions. The Committees assessment, however, is that at present there are neither financial nor technical solutions for the participation of community radio in the DAB broadcasts. proposes that the public service companies should continue even in the future to be granted broadcasting licences for both national and regional DAB broadcasts. In the first stage of the continued DAB transmissions, licences should be offered to com- mercial players to make both regional and national radio broadcasts in the regionally divisible DAB network. Licences to make digital radio broadcasts should, both for SR and the commercial players, be issued by the government under the present regulations. In the event of competition between commercial players for broadcasting licences, the Committee proposes that the licences be allocated in accordance with the basic principles applicable for allocation of licences to make analogue local radio broadcasts. Holding an ana- logue broadcasting licence in a certain broadcasting area shall not, however, constitute an obstacle to receiving a digital broadcasting licence in the same broadcasting area. The broadcasting licences to commercial players should be allocated in an open application pro- cedure. The licence period for public service companies in the opinion of the Committee should be the same both for the analogue and the digital broadcasts. The question of the licence periods length should be referred to and television in the public service (Ku 2003:01) for a decision. broadcasters the Committee proposes that the licences for DAB broadcasts should be issued for a period of eight years. The first period should be counted from 1 January 2005 inclusive, even if the transmissions are started at a later date. It is proposed that the incentives, which in the opinion of the Committee should be created to facilitate the operation of local digital radio broadcasts, consist of the possibility for the licence holders for analogue local radio broadcasts to enjoy less stringent requirements in the form of reduced concession fees or reduced obligations to broadcast a certain amount of own material and pro- grammes with a local connection. The incentives should be directed at all licence-holders for analogue local radio and aim to promote diversity of both the analogue and the digital radio broadcasts. The model for incentives advocated by the Committee is based on the existing licence-holders being given the opportunity to operate under conditions that are equal and do not affect competition. The model implies that a licence-holder who was granted a broadcasting licence before 1 2001 shall be able to obtain relief from the concession fees if the licence-holder is granted a licence for DAB broadcasts. Correspondingly, licence-holders who have received a broadcasting licence after 1 2001 shall be able to obtain relief with regard to the conditions applicable to the content of their analogue broadcasts. As regards concession fees, the Committee proposes that the concession fee for a licence to broadcast analogue local radio that is associated with corresponding conditions concer- ning the contents of broadcasts as stated in a licence to carry on digital radio broadcasts, should consist of a fixed component of with certain indexation, and a variable component. The variable component shall be dependent on the revenue that con- stitutes payment to the broadcaster for broadcasting advertisements in its analogue programmes and in the opinion of the Committee should be payable at the rate of four percent of the revenue. The continued DAB transmissions should be evaluated in 2008 according to the Committee. This evaluation should examine whether a step is to be taken from the perspective of innovation; to enable programming that is more diverse and more available to a greater number of groups in order to increase the attractiveness of the radio medium, to a technology shift perspective; to direct policy towards replacing the present analogue broadcasts by digital broadcasts. If the evaluation concludes that the continued transmissions should be based on the technology shift perspective a decision must be made on several questions, including the rate at which the DAB networks should be developed and the FM networks phased out, whether the legislation relating to radio should be neutrally formulated in terms of technology, which authority should issue licences for local digital radio broadcasts and the conditions for licensing of special multiplex operators. Further questions that will be of immediate interest will be investigating how community radio can be guaranteed digital broadcasting space of at least the same proportions as at present when FM broadcasts are being phased out, examining the conditions set up for commercial players digital radio broadcasts and examining whether there is a commercial interest among commercial players to broadcast radio in the national DAB network. The evaluation should also examine the possibilities of achieving an integrated assessment and examination for the of a mast system for electronic communication within the framework of the Environmental Code or the Planning and Act. The consequences of the Committees proposals are presented in Chapter 9. As regards the economic consequences the Committees proposal implies that SR should be allocated further funds to be able to carry out DAB broadcasts both in the national and regional DAB networks. During the first stage of the continued trans- missions the Committee considers that the increased resources should be equivalent to SRs costs for utilising the entire capacity of the national DAB network and on average a third of the capacity in the regionally divisible network. The costs should, according to the Committee, be calculated on the basis of the assumption that SRs broadcasts in the respective network will have about 35 percent population coverage. On the basis of the Committees proposal for broadcasting during the first stage, SRs distribution costs are calculated to be about million in- cluding value added tax per year for distribution of digital radio. In relation to the resources SR has used in 2002 and 2003 respectively to cover distribution costs for DAB broadcasts, SR should be allocated a further million per year.