Opinion of the Committee of the Regions on the 'Report from the Commission to the Council, the European Parliament and the Economic and Social Committee Final Annual Report on progress in implementing the Action Plan for the Introduction of Advanced Television Services in Europe'
Date: 1999-09-16
Institutions: European Committee of the Regions, Provisional data
Subjects: European television, electrical industry, high-definition television, television

23.12.1999

EN

Official Journal of the European Communities

C 374/41

Opinion of the Committee of the Regions on the ‘Report from the Commission to the Council,
the European Parliament and the Economic and Social Committee Final Annual Report on
progress in implementing the Action Plan for the Introduction of Advanced Television Services
in Europe’

(1999/C 374/10)

THE COMMITTEE OF THE REGIONS,

having regard to the Report from the Commission to the Council, the European Parliament and the
Economic and Social Committee — Final Annual Report on progress in implementing the Action Plan
for the Introduction of Advanced Television Services in Europe (COM(1998) 441 final);

having regard to the decision taken by its Bureau on 15 July 1998, under the fourth paragraph of
Article 198c of the Treaty establishing the European Community, to draw up an opinion on the subject
and to direct Commission 3 for Trans-European Networks, Transport and Information Society to prepare
its work on the subject;

having regard to the draft opinion (CdR 61/99 rev. 1) adopted by Commission 3 on 15 April 1999
[rapporteur: Mr Pella (I-EPP)],

adopted the following opinion at its 30th plenary session of 15 and 16 September 1999 (meeting of
16 September).

1.

Introduction

Council Decision 93/424/EEC of 22 July 1993 (1) auth-
1.1.
orized an Action Plan designed to ensure the accelerated
development of the market for advanced television services
using the 16:9 format (16:9 being the screen width/height
ratio), from the date of adoption of the document up to
30 June 1997.

The main objective is to develop a critical mass of
1.2.
advanced television services using the 16:9 format and to
produce a sufficient and growing volume of high-quality 16:9
programmes,
in order to help achieve the best possible
audience figures.

1.3.
Initially only pay-TV subscribers could watch digital
programmes on 16:9 sets: now, however, due to sales of over
2 million sets, 16:9 is present in an increasing number of
households, replacing the old, inherently flawed TV screens
and providing pictures which come close to cinema quality.

1.5.
The Action Plan decision provides for an annual report
on the previous year’s activities to be submitted to the
European Parliament, the Council and the Economic and Social
Committee.

1.6.
The first report, for 1994, was presented on 16 June
1995 (2); the second, for 1995, was presented on 26 July
1996 (3), and the third report, the subject of the present
opinion, covering 1996 and 1997, was published last year.

1.7.
Community funds of up to 228 MECU were allocated
for the mid-1993 to mid-1997 period to contribute to the
additional costs of introducing the 16:9 format. Funds could
be applied for through calls for proposals. Of this sum,
116,2 MECU went to cofinance 25 422 hours of programmes
in 16:9: 105,2 MECU to produce 16 856 hours of new pro-
grammes, and 11 MECU for 8 565 hours of remastering.

1.8.
The Commission granted the final allocation under the
Action Plan on 31 July 1997 — 7,8 MECU to support
broadcasting TV programmes
in the new format, and
9,5 MECU to stimulate the production of 16:9 programmes.

1.4.
The 16:9 format therefore represents the major chal-
lenge of the decade, offering images far outstripping conven-
tional systems, together with digital stereo sound, ideal for
fiction, documentary, sports and cultural programmes.

1.9.
The document is the final annual report on the Action
Plan, which ended in December 1998 (end date for contracts
under Call 97/1).

(1) OJ L 196, 5.8.1993, p.48.

(2) COM(95) 263 final, 16.6.1995.
(3) COM(96) 346 final, 26.7.1996.

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Official Journal of the European Communities

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1.10.
An evaluation report will follow in the course of
1999, analysing the impact on the market and the sectors
concerned. The call for bids for the drafting of this report
should be published during the summer.

2. Content of the report

2.1.
The report sets out the results to date in attaining the
Action Plan’s objectives in broadcasting (Section A) and
programme production (Section B).

In particular, the results of Calls 96/1 and 97/1,

2.2.
covered by the present report, are given.

2.7.
Broadcasters’ and producers’ preferences could be
summarized as follows: 70 % of the programmes produced by
broadcasters were short-life programmes — live studio shows
or sports programmes — while the remaining 30 % can be
broken down into cultural programmes, documentaries and
fiction. 85 % of the independent producers’ programmes were
documentaries and fiction (i.e. catalogue works). Remaining
independent production consisted of broadcasts of cultural
events.

By far the most common format for analogue 16:9
2.8.
services was 625-line video with 11 780 hours, 80 % of which
were produced by broadcasters, while the high-definition
1250-line video accounted for only 2 779 hours of production
(falling by almost half since 1993), and given over principally
to high-profile sports events (Olympic Games or world
championships), cultural events and documentaries with a
creative content. These productions garner much prestige on
account of the aesthetic quality of high definition television
(HDTV) coupled with the 16:9 format.

2.3.
Call 97/1 saw the Italian public service broadcaster
using the funds available for the first time. The report indicates
that it would have been reasonable, on the basis of experience
in other countries, to expect the public broadcaster RAI to
launch 16:9 broadcasting in Italy, at an even earlier stage. In
fact, however, the first broadcasts were made by small regional
stations (Call 95/3), with funds under Call 96/1 being allocated
to six broadcasters including four regional ones and, for the
first time, two at national level (Cecchi Gori Group).

2.9.
Remastering entails the transfer, onto a master compat-
ible with 16:9 broadcasting, of programmes originally pro-
duced on another master (nearly always cinema film). Extensive
use was made of this process, particularly in the launch
phase of 16:9 broadcasting (8 565 programme hours). This
is because it enabled programming schedules to be filled
immediately much more cheaply than with new productions,
and could be done very rapidly using a good quality original.

2.4.
Both pay TV and public service operators gave strong
support to 16:9 broadcasting. Private broadcasters sounded
out the format’s commercial attractiveness in their existing
analogue services, and helped create a sufficient installed base
of 16:9 sets among subscribers for the subsequent launch of
digital services. In contrast, public broadcasters strengthened
the Commission’s initial concern that pay-TV broadcasters’
smaller audience might make them a less effective way of
promoting 16:9 services than free-to-air broadcasters with far
larger audiences.

The two categories receiving funds under the Action
2.5.
Plan for production were independent producers (45 % of
funds producing 31 % of programme hours) and broadcasters
(55 % of funds for 60 % of programme hours).

2.6.
A distinction must be made between new productions
and remastering in order to broadcast existing programmes in
16:9. Between 1993 and 1997, the Action Plan cofinanced the
production of 16 856 hours of new 16:9 programmes, 50 %
of which can be stored and repeatedly re-used (including
2 223 hours of fiction, 4 001 of documentaries and 2 515 of
cultural events), another 29 % of which were live studio
broadcasts (5 043 hours shared between games and live chat
shows, etc.), and the remaining 20 % of which were sports
events (3 445 hours), just 1 % (130 hours) were cartoons.

2.10. With the constant growth of the 16:9 market, the
European catalogue for the new format offers a growing
volume of programmes, and distribution will, in time, enable
supply to be expanded while reducing demand for programme
conversion. Conversions fell from 12 % of hours under Call
93/1 to 4 % under Call 97/1; demand for conversion is
consequently set to fall to negligible levels.

3. The Communication and future approaches

for 1997,

3.1.
The aim of the Action Plan was to boost the market
penetration of 16:9 sets, and with an installed base of some
two million sets forecast
the Commission is
convinced that the format has a commercial future. It considers
that the market has achieved major progress, and has therefore
not planned a sequel to the Action Plan. Now that wide-screen
exists in the home, it is no longer just an interesting technical
possibility: it is part of the market not only in Europe, but also
in Japan and the United States.

The European audiovisual industry will, over the next
3.2.
few years, be faced with increasing world competition in
producing both the technical hardware and 16:9 programmes.

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3.3.
Technological innovation will also pose a permanent
challenge as it represents the only way of keeping the European
industry in this sector competitive on world markets. The
on-going digital revolution is an aspect of considerable import-
ance: it is set to make a vital contribution to enhanced picture
quality for television production in the new format.

3.4.
Consequently, it is essential that the European states
strive to develop a system of partnership in the coming years,
with the aim of optimizing and combining research and
production work. This would give Europe a competitive edge
over similar US and Japanese productions.

3.5.
The Commission argues that the Action Plan was
effective in helping to introduce the new format and prepare
users, broadcasters and producers for the launch of digital
16:9 services.

3.6. Marketing of digital 16:9 screen sets boosted sales
significantly during 1998. Substantial growth is currently
taking place in Great Britain and to an even greater extent in
the Netherlands and Belgium. The highest rate of penetration
has been achieved with 6,5 % of the 6 500 000 Dutch users,
representing some 400 000 new sets.

3.7.
Pay-TV subscribers are in general the principal pur-
chasers of 16:9 sets. Pay broadcasters in France, Belgium
and the Netherlands are producing and broadcasting an
ever-increasing number of programmes in the new format.
The main British networks, including the BBC, expect to switch
rapidly to 16:9.

3.8.
16:9 programming will be best placed for the possible
introduction of high-definition TV in Europe: the United States
have already adopted special regulations to accelerate HDTV
production and broadcasting. It is likely that the choices made
across the Atlantic will also have an impact in Europe.

3.9.
If Europe is not simply to fall in line with choices made
elsewhere, it will have to take account of current guidelines in
non-European countries, and seek to become a leading, fully
informed player on the international scene. It must be equipped
with effective technological research and 16:9 programme
production tools.

It should be noted that

3.10.
the main European TV
manufacturers (Thomson and Philips) are also active in the
United States. According to the European Commission, the US
will focus more on small HDTV screens for the mass market,
while there will be a growing niche market for big screens
(‘home-theatre’).

4. Conclusions and recommendations

4.1.
The Committee congratulates the Commission on its
outstanding report, which offers a broad and comprehensive
picture of the results achieved in 16:9 broadcasting. It is full of
ideas, and puts forward a detailed picture of the future of
television broadcasting and the ancillary industry over the next
few years.

The Committee agrees with the Commission that
4.2.
adequate penetration of the European 16:9 format market has
been achieved, partly reflected in the number of sets: sales of
wide-screen sets rose from 220 000 in 1995 to 800 000 in
1997, with sales expected to rise to 3 500 000 in 2000.

The Committee endorses the Commission’s view that
4.3.
industry must cope with inter-
the European audiovisual
national competition by devising strategies and actions aimed
at constantly pushing forward with technological innovation
and reaching the level of development crucial to ensuring that
it can hold its own against this competition.

The Committee is pleased to note that

4.4.
in those
European countries where broadcasters have encouraged the
introduction of wide-screen sets ready for digital services, the
Action Plan has guaranteed the market availability of digital
services in this format. The overlap between the profile of
pay-TV subscribers and purchasers of 16:9 sets suggests
that market convergence between the two sectors is almost
complete: the new format is set to surf the crest of the digital
wave.

The Committee notes the speed with which 16:9
4.5.
broadcasting is spreading around the world, especially in Japan
— where 50 of sets are in the 16:9 format — and the United
States, where a ‘courageous’
initiative has been launched,
proposing its own, fully digital HDTV system which can be
broadcast on existing channels via signal compression, but
without the need for satellite distribution, which is significantly
more expensive and complicated to organize.

4.6.
Now that there is an installed base of wide-screen sets
in Europe, whose owners were initially able to take advantage
of the wave of digital programmes launched by pay broad-
casters via cable and satellite, the Committee believes that the
second phase should focus on free terrestrial broadcasts.
The COR feels that the introduction of digital terrestrial
broadcasting techniques (DAB, DVB-T) requires coordinated
transitional arrangements, taking particular account of con-
sumer protection considerations. Appropriate strategies must
therefore be developed in the Member States, in conjunction
with regional and local authorities and involving broadcasters,
associations and industry, to replace analogue broadcasting by
digital. Based on that, the Committee of the Regions would
like to see all Member States address this issue and give
considered backing to a joint European approach.

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4.7.
In the Committee’s view, given that the electronics
market has now reached saturation point (with a very high
people/TV set ratio) and prices are tending to stabilize, growth
can only come from technical innovation: competitiveness can
be based exclusively on offering enhanced services for the
same price. It is therefore important to note that if HDTV
advances are to trigger effective,
large-scale change, they
must involve the entire image production chain and commit
themselves to a fully digital
image, as US and Japanese
standards have done.

The Committee is convinced that if Europe hopes to
4.8.
obtain similar results, it must foster 16:9 services, especially
on the less mature markets.

4.9.
The Committee hopes that the Commission will sup-
port production and contribute in various ways to developing
European 16:9 audiovisual catalogues for documentaries,
cultural events or minority sports, as works of this kind can be
used over long periods of time, enabling millions of citizens to
become familiar with the local scene (regions and municipaliti-
es), ranging from customs and traditions, or history and
culture, to the local economy and tourism.

4.9.1.
In an effort to make local government information
more accessible to public, telephone call centres have been
developed in recent years. However, due to the recorded-
question/push-choice process it is often difficult or time-
consuming to retrieve the desired information. With the advent
of digital and interactive television, this is an appropriate
opportunity to call on the Commission to assist the production
of local programme content and interactive services.

4.10.
Following the final report on the level of penetration
of 16:9 programming to be published by the end of the year,
the Committee would urge the Commission to continue
supporting and encouraging the introduction of new tech-
nologies into the audiovisual sector, as well as the establish-
ment of new broadcasters — especially at regional and local
level — in view of the wealth of opportunities forecast for

Brussels, 16 September 1999.

Europe in this area. To this end, the strategy employed in
the United States, which offered valuable incentives to all
broadcasters who rapidly adopted the new digital transmission
standards, merits close examination.

4.11.
Since a range of wide-screen sets are now on the
market, the Committee would also urge broadcasters and
producers to work closely together in a genuine partnership
on the new format, working synergically to generate a viable
supply of programmes, thereby enabling 16:9 services to be
made generally available throughout Europe.

4.12.
The Committee hopes that the European audiovisual
industry will be able both to modernize and expand in the face
of international competition. If it is to succeed it must pass the
threshold beyond which an autonomous impetus resulting in
generalised 16:9 services in Europe can be generated.

4.13.
The Committee is convinced that the trickiest obstacle
to greater 16:9 penetration is predominantly economic: the
technology needed is very expensive, and the associated
applied research demands funds on a scale that even the
biggest private operators on the market do not have readily
available. Under these circumstances, it is imperative that every
effort be made to adjust to the future in a coordinated manner,
in order to achieve the European dimension that is essential if
the European audiovisual industry is to hold its own on the
world market.

The Committee considers

4.14.
the Commission
should assist the development of existing efforts by arranging
further funding calls as a sequel to the Action Plan — and not
only in the area of advanced television services, but also in the
radio sector, where private financial resources are very limited.

that

4.15.
The Committee agrees with broadcasters in consider-
ing the 16:9 format to be a key factor in identifying digital
broadcasting as the ‘television of the future’, since — as
the report shows — digitalisation is now an increasingly
widespread fact.

The President

of the Committee of the Regions

Manfred DAMMEYER