Communication from the Commission to the Council, the European Parliament, the European Economic and Social committee and the Committee of the Regions on interoperability of digital interactive television services [SEC(2004)1028]
Date: 2004-07-30
Institutions: European Commission
Subjects: broadcast videography, consumer protection, free movement of programmes, high-definition television, information technology, interactive videotex, interactivity, programmes industry, software, standardisation, systems interconnection, technical standard

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.7.2004 
COM(2004)541 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

on interoperability of digital interactive television services 

[SEC(2004)1028] 

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EXECUTIVE SUMMARY 

This  Communication  sets  out  the  Commission’s  position  on  interoperability  of  digital 
interactive television services pursuant to Art. 18(3) of Directive 2002/21/EC on a common 
regulatory framework for electronic communications networks and services (the Framework 
directive). 

The  Commission  has  undertaken  this  review  in  two  stages.  Stage  1  entailed  publication  for 
comment of a Commission Staff Working Paper on the interoperability of digital interactive 
television services SEC (2004) 346 in March 2004. 

This Communication draws upon the public consultation inputs. Underlying analysis for this 
Communication is contained in the accompanying Extended Impact Assessment (EIA) issued 
as SEC (2004) 1028. 

Art. 18(3) of the Framework directive requires the Commission to examine the effects of Art. 
18,  concerning  interactive  television  services.  If  interoperability  and  freedom  of  choice  for 
users have not been adequately achieved in one or more Member States, the Commission may 
act with the aim of making certain standards mandatory. 

Responses  to  the  public  consultation  paint  a  conflicting  picture  as  to  whether  adequate 
interoperability has been effectively achieved. The Commission considers that in view of the 
complexity  of  the  technological  and  market  environment,  the  very  different  perceptions  of 
interoperability held by market players, and late implementation of the Framework Directive 
in many Member States, the aim of the review is essentially to determine whether there is a 
case to propose making one or more standards mandatory. 

The Commission concludes that there is no clear case for mandating standards at present; the 
issue should be reviewed in 2005. Meanwhile, a range of promotional actions are proposed to 
promote the deployment of interactive digital services using the Multimedia Home Platform 
(MHP) standard, currently the only open standard for APIs adopted by EU standards bodies. 
These include the creation of a Member  State group on MHP implementation, confirmation 
that  Member  States  can  offer  consumer  subsidies  for  interactive  television  receiver 
equipment, subject to conformity with state aid rules, and monitoring of access to proprietary 
technologies. 

The  Commission  seeks  to  ensure  that  European  citizens  benefit  from  a  growing  range  of 
interactive television services, and considers that the market is best served at the present time 
by  continuing  to  apply  the  provisions  already  agreed  by  the  European  Parliament  and  the 
Council in the Framework Directive.  

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1. 

BACKGROUND  

Interactive TV adds another layer of functionality to digital television (DTV) beyond video. It 
consists of applications sent in the transmission alongside the video, processed by a software 
stack in the receiver called an applications program interface (API). Today there are over 32m 
digital receivers in use in Europe,1 of which at least 25m have interactive capability.2 

The  market  for  interactive  television  developed  without  a  European  API  standard.  Initially 
there  were  five  significant  APIs  in  Europe,  none  of  which  was  standardised  by  a  European 
standards body. Content or applications authored for one API could not be used by a receiver 
containing a different API.3 

This triggered concerns about lack of interoperability (covering both technical interoperability 
and access issues)  and  possible constraints on consumer choice, which could affect the free 
flow  of  information,  media  pluralism,  and  cultural  diversity.  These  concerns  could  be 
summarised as follows. Consumers would be unable to buy a standardised, universal receiver 
able to receive all free-to-air and pay television interactive services and could be locked into 
using more costly receivers containing proprietary APIs. Broadcasters would face obstacles in 
developing  and  delivering  interactive  services  because  they  would  have  to  negotiate  with 
vertically-integrated network operators, in control of proprietary API technologies. 

These  concerns  were  led  to  Art.  18  of  Directive  2002/21/EC  (the  ‘Framework  Directive’) 
entitled ‘Interoperability of digital interactive television services’. 

Art.  18(1)  requires  Member  States  to  encourage  providers  of  digital  interactive  television 
services and equipment providers to use an open API.  

Art. 18(2) requires Member States to encourage proprietors of APIs to make available all such 
information as is necessary to enable providers of digital interactive television to provide all 
services supported by their APIs in fully functional form.  

Art. 18(1) is consistent with general EU policy of encouraging open standards for the single 
market. Art. 18(2) accepts the market reality that proprietary API standards exist, and seeks to 
ensure transparency of technical specifications so that content providers can build interactive 
applications that function with these proprietary standards.  

Art.  18(3)  requires  the  Commission  to  examine  the  effects  of  Art.  18  by  24  July  2004, 
following  which  the  Commission  may  take  action  to  impose  a  standard  using  the  powers 
contained in Art. 17 of the Framework Directive.  

At  the  European  Parliament  Plenary  of  December  2001,  the  Commission  gave  an  oral 
undertaking  to  include  the  MHP  standards  on  the  list  of  standards  published  in  the  Official 
Journal  of  the  EU  to  be  encouraged  by  the  Member  States,  as  foreseen  in  Art.  17  of  the 
Framework Directive.  

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3 

ETSI TR 102 282, February 2004, p.11. 
Standardisation in digital interactive television, Contest consultancy for CENELEC, April 2003, p.13. 
Delivery  of  conventional  DTV  does  not  require  an  API  to  be  included  in  the  receiver.  An  API  is  an 
optional  extra.  Moreover,  DTV  transmission  is  fully  standardised,  with  only  ETSI  standards  used  in 
Europe. 

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Process 

The  Commission  began  preparing  for  this  review  as  soon  as  the  Framework  Directive  was 
adopted,  by  undertaking  a  study  through  an  independent  consultancy  on  possible  policy 
options  and  by  issuing  a  mandate  to  the  European  standardisation  bodies  in  order  to 
investigate how further standardisation could help interoperability.4 The MHP standards were 
included in the published list.5 The Commission also stated that the obvious way to achieve 
interoperability would be widespread adoption of MHP.6  

In  March  2004,  the  Commission  Services  launched  a  public  consultation,  based  on  a 
Commission  Staff  Working  Paper  SEC  (2004)346  (the  Working  Paper).  The  consultation 
included  a  public  hearing,  and  an  informal  seminar  organised  by  Members  of  the  European 
Parliament.  

2. 

THE VIEWS OF THE PLAYERS 

A  wide  range  of  players  responded  to  the  consultation,  notably  manufacturers,  network 
operators, broadcasters and API providers; also consumer associations and others dedicated to 
particular viewpoints. In total, 51 entities contributed over 350 pages of closely-argued views, 
strong testimony to the importance of the debate for industry. Responses fall into two main 
groups. 

2.1. 

Those in favour of the imposition of standards 

For  those  who  support  mandatory  imposition  of  open  standards  -  including  MHP  - 
interoperability  at  the  level  of  the  consumer  has  not  been  achieved.  They  argue  this  is  the 
most  empowering  form  of  interoperability  as  it  maximises  the  choice  of  services  and 
equipment  for  consumers.  Currently,  the  market  is  fragmented  and  unable  to  attain  the 
benefits linked to a single standard. 

Market  forces  are  unlikely  to  deliver  adequate  interoperability  without  public  authority 
intervention. Attaining a critical mass of sales at European level is still an important objective 
for manufacturers in order to achieve economies of scale. Solutions like the proposed Portable 
Content Format (PCF) - which enables content to be written once and to operate on multiple 
API  platforms  –  are  helpful,  but  are  not  a  solution  for  free-to-air  broadcasters.  For  these 
broadcasters, access rules are a compromise solution in respect of pluralism and freedom of 
choice.  Broadcasters  still  depend  on  network  operators  acting  as  gatekeepers  in  order  to 
deliver  their  services  to  viewers.  Public  authorities  should  take  a  more  interventionist  role, 
following the GSM example. 

The benefits of mandating open standards including MHP would include increased consumer 
choice  and  legal  certainty,  leading  to  lower  prices  for  receivers  and  acceleration  of  the 
switchover  from  analogue  to  digital  television.  If  broadcasters  did  not  have  to  confront  the 
unnecessary  obstacle  of  proprietary  APIs,  this  would  improve  the  flow  of  information  and 
therefore  help  pluralism.  Service  innovation  should  no  longer  depend  on  API  proprietors. 
Sub-segments argue either that Member States should have the possibility to require use of a 

4 
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6 

Referenced in SEC(2004) 346 at footnotes 31, 32, 40.  
OJ C 331, 31.12.2002, p.32. 
EP Oral question O/2002/40  

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single  API  within  their  territory  or  that  across  the  EU,  only  open  standard  APIs  should  be 
legal. Imposition of open standards should not be limited just to free-to-air terrestrial TV, as 
this  would  not  solve  the  gatekeeping  problem  caused  by  proprietary  APIs  on  cable  and 
satellite. Other standards should be listed if they do not overlap with already listed standards. 

General remarks focused on the potential for interactive television to contribute to the Lisbon 
agenda as underlined by the Seville Council, and criticised the Working Paper for neglecting 
the  social  role  of  free-to-air  television.  Market  players  supporting  this  position  were 
predominantly  free-to-air  broadcasters  from  Member  States  where  digital  television  is  less 
well-developed, and a major manufacturer. 

2.2. 

Those against imposition of standards  

This  group  argued  that  interoperability  had  already  been  achieved.  Their  view  of 
interoperability  is  different:  it  means  the  availability  of  the  same  interactive  services  on 
different  distribution  platforms.  Head-end  and  network  technologies  enable  content  to  be 
ported  between  different  API  systems.  These  include  authoring  systems  able  to  generate 
applications for several APIs - multiple authoring - or the proposed PCF.  

For  this  group,  interoperability  is  sensitive  to  market  demand.  Where  there  is  demand, 
interactive  applications  become  available  on  several  different  platforms.  Examples  include 
gambling,  video  games  and  weather  forecasting.  A  one  box  universal  receiver  is  unlikely 
because  of  high  costs,  and  unnecessary  because  of  simulcasting  on  different  networks; 
however  there  are  no  technical  barriers.  Regarding  public  authority  intervention,  they  argue 
that  the  European  DTV  market  is  more  dynamic  than  in  the  USA  because  of  regulatory 
forbearance by public authorities. Within the remit of communications regulation, access rules 
are  largely  sufficient  for  preserving  pluralism  and  user  choice.  Ex  post  imposition  of 
standards  to  the  detriment  of  substantial  investments  in  earlier,  proprietary  systems  would 
deter future investments in subsequent generations of innovative technologies. 

These players’ general remarks supported the line taken in the working paper, that the greater 
complexity  of  DTV  alters  many  factors  compared  with  the  simpler  analogue  model.  They 
favour the possibility to innovate on top of a standardised layer of transmission technologies, 
as in the internet model. No single technology is appropriate for the diverse market situations 
to  be  found  across  the  Member  States.  When  assessing  adequacy  of  implementation,  the 
Commission  should  take  into  account  the  current  level  of  market  acceptance  and 
interoperability  across  the  whole  value  chain.  No  definitive  future  decision  on  adequacy  of 
implementation should be reached before the passage of 3-5 years. 

For this group, the costs of imposing open standards would outweigh the benefits. Imposition 
of  MHP  would  provide  a  strong  incentive  for  the  market  to  promote  receivers  without 
interactive  capability,  given  the  additional  costs  of  MHP  receivers  and  the  lack  of  strong 
demand for interactive television services. 

The players supporting these views were predominantly satellite pay TV and cable operators, 
frequently  from  Member  States  where  DTV  is  well-developed,  containing  substantial 
populations  of  receivers  with  proprietary  APIs.  Other  members  of  this  constituency  were 
software and IT companies, including owners of proprietary APIs, and a major manufacturer.  

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2.3. 

Other views 

Public  authority  inputs  reflected  whether  their  DTV  markets  are  well-developed  –  and 
therefore contain a substantial population of receivers using proprietary APIs – or less well-
developed. Respondents from countries where interactive television is most advanced were in 
general satisfied that there was an adequate level of interoperability.  

Consumer organisations at national and European level favoured imposition of open standards 
in order to achieve interoperability. 

At  the  public  hearing,  several  major  Italian  players  strongly  supported  MHP,  but  were 
sceptical about imposing it. Government subsidies to Italian consumers for the purchase of an 
MHP  receiver  with  return  channel  functionality  reduce  the  additional  cost  of  MHP.  Such 
receivers sell for the same price as in other markets using cheaper API technologies. 

3. 

THE COMMISSION’S ANALYSIS AND POSITION 

3.1. 

The impact to date of Art. 18 

Delays in the transposition of the Framework Directive7 mean that it is premature to reach an 
overall assessment of the effects of Art. 18(3). Discussions in the broadcasting sub-group of 
the  Communications  Committee  (COCOM)  have  revealed  a  rich  seam  of  activity  regarding 
interoperability at working level in many Member States, frequently linked to implementation 
of digital terrestrial television. 

Regarding Art. 18(2), relatively few Member States have API providers based or represented 
in their territory; so this provision has limited application for the majority. The Commission is 
unaware  of  any  regulator  having  received  a  formal  complaint  regarding  failure  by  an  API 
owner to make available all information necessary to enable providers of interactive television 
services  to  provide  all  services  supported  by  the  API  in  a  fully-functional  form.  Owners  of 
proprietary  APIs  argue  that  they  have  incentives  to  ensure  that  all  users  obtain  maximum 
benefit  from  a  particular  system,  on  fair,  reasonable  non-discriminatory  terms  –  notably 
because there are competing APIs.  

In  the  Commission’s  view,  the  provision  of  Art.  18  that  has  had  the  most  impact  is  the 
requirement  to  review  interoperability  and its impact on user choice by July 2004. This has 
galvanised the market players to debate interoperability in considerable depth. The standards 
bodies received significant support from market players on both sides in developing their two 
reports on interoperability. Market players have given high priority to the issue, even if their 
views on the nature of the legal requirement and how best to fulfil it may differ. 

The consultation revealed no significant, substantiated threats to the free flow of information, 
media  pluralism  and  cultural  diversity.  The  Commission  notes  recent  political  concerns 
however expressed in the European Parliament8.  

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8 

On the date of application, 24 July 2003, 5 of the 15 Member States had transposed the Directive into 
national law. By the end of May 2004, 9 of the 25 Member States had not completed transposition. 
Resolution P5_TA(2004)0373 

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3.2. 

Central issues 

Responses to the consultation are sharply divided. Free-to-air broadcasters are ranged against 
satellite  and  cable  TV  operators  and  IT  players.  Both  sides  claim  support  from  a  major 
consumer electronics manufacturer.  

The crux of the dispute is the relationship between general interests and market forces. Free-
to-air  broadcasters  –  notably  public  service  broadcasters  –  are  charged  with  fulfilling 
important general interest objectives such as media pluralism and cultural diversity, achieved 
through  programming  and  distribution  obligations.  Network  operators  play  a  key  role  in 
achieving  the  Lisbon  agenda  through  the  investment  needed  to  roll  out  advanced 
communications networks. Each side seeks to champion their particular role in these policies 
when it finds some aspect of the other side’s behaviour constraining. 

Vertical  integration  of  the  delivery  of  broadcasting  services  with  digital  infrastructures  is  a 
particular  source  of  concern  among  free-to-air  public  service  broadcasters.  Vertical 
integration can for instance create the potential for proprietary technologies to lock consumers 
into  a  particular  digital  platform  or  leverage  market  power.  Use  of  proprietary  technologies 
needs  to  be  kept  under  competition  law  review.  In  some  instances,  vertical  integration  can 
lead to higher economic efficiency9. 

General interests like cultural diversity and media pluralism are central to the European social 
model, while economic success is essential to ensure that the Union retains competitiveness 
and the resources necessary to fund the achievement of general interest objectives and digital 
switchover.  In  the  EU,  these  dual  policy  objectives  are  implemented  by  separating  content 
regulation  -  which  targets  the  achievement  of  general  interests  -  from  communications 
regulation, aiming to promote a competitive market as the means of generating innovation and 
new investment. These two policies meet at the API, which is why this debate is so intense. 

3.3. 

Interoperability and Art. 18(3) of the Framework Directive 

Art. 18(3) of the Framework Directive requires the Commission to assess the effects of Art. 
18.  If  adequate  interoperability  has  not  been  achieved,  the  Commission  may  invoke  the 
procedure in Art. 17 by which certain standards can be made mandatory. 

Interoperability is not defined in the Framework Directive or in the associated directives. In 
addition to its use in Art. 17 and 18 of  the Framework Directive, interoperability is used in 
Art.  24  of  the  Universal  Service  directive10,  where  the  term  covers  provision  of  an  open 
interface socket for the connection of peripherals. 

Recital 31 - motivating Art. 18 - reflects different aspects of interoperability, stating: 

(1) 

(2) 

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interoperability of digital interactive television services, at the level of the consumer, 
should be encouraged in order to ensure the free flow of information, media pluralism 
and cultural diversity;  

open  APIs  facilitate  interoperability,  i.e  portability  of  interactive  content  between 
delivery mechanisms with full functionality of the content intact. 

e.g by eliminating double margins. 
Directive 2002/22/EC, OJ L 108, 24.4.2002, p.51. 

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The  Commission  concludes  that,  in  view  of  the  complex  environment  described  in  the 
Working  Paper,  and  differing  perceptions  revealed  by  the  public  consultation,  the  review’s 
aim is to determine whether there is now a case to propose making one or more API standards 
mandatory for one or more segments of the market.  

The  consequences  of  different  scenarios  under  which  standards  could  be  made  mandatory, 
have  been  examined  in  the  accompanying  EIA.  Proposals  that  individual  Member  States 
should be able to make one or more open API standards mandatory are incompatible with the 
single market. Such a policy would erect barriers to trade between Member States. 

Making  the  MHP  standard  mandatory  by  a  certain  date  at  EU  level  could  ensure  technical 
interoperability of equipment and services, but content providers would still have to negotiate 
access  to  the  networks  and  associated  services,  as  mentioned  above.  Most  commentators 
recognise the problems this policy would create for the estimated 25m set top boxes with API 
functionality  already  in  the  market,  and  in  fact  no  major  contributor  proposes  this  level  of 
intervention. In the light of the negotiating history of the Framework Directive, it is unlikely 
that such a proposal would find the necessary support from Member States. 

The  Commission  concludes  that  there  is  no  clear  case  to  mandate  EU  wide  standards 
generally  at  the  present  stage  of  market  evolution,  and  that  more  time  will  allow  the 
provisions of Art. 18 of the Framework Directive to take full effect. It will also be necessary 
to  see  whether  the  concerns  related  to  the  “gatekeeping”  role  of  operators  using  proprietary 
APIs materialise in the form of formal complaints to regulatory authorities.  

The  limited  commercial  success  of  interactive  television  so  far  has  not  provided  much 
incentive for market players to ensure that all services can be made available to all receivers, 
however  this  might  be  achieved.  As  the  market  grows,  interoperability  of  services  can  be 
expected to develop in parallel. The possibility to develop interactive content so that it can be 
adapted to different API platforms is the minimum requirement for service interoperability in 
a growing market. PCF and improved authoring techniques can facilitate portability of content 
between APIs.11 This does not rule out other forms of interoperability, including migration to 
open  standards  from  proprietary  standards  where  there  is  a  business  case.  Uncertainty 
regarding demand suggests that simpler, cheaper presentation engines should continue to be 
available  alongside  the  more  sophisticated  and  more  costly  execution  engine,  in  order  to 
provide consumer choice.  

The  Commission  will  review  this  issue  in  the  second  half  of  2005.  Meanwhile,  further 
promotion of the MHP standard could benefit European consumers. 

3.4. 

Promotional measures 

3.4.1. 

Improved co-ordination of Member States’ implementation of MHP 

The  Commission  will  constitute  a  working  group  of  Member  States  in  order  to  achieve  a 
clustering  effect.  Fragmentation  caused  inter  alia  by  widely  varying  rates  of  market 
development  in  different  Member  States  makes  it  hard  for  manufacturers  to  achieve 
economies  of  scale.  The  aim  would  be  to  identify  actions  that  would  help  MHP  achieve 
critical  mass  and  exploit  economies  of  scale,  leading  to  price  reductions  and  improved 

11 

PCF  could  cover  80%  of  the  interactive  television  application,  but  not  the  most  complex  ones,  e.g 
Electronic Programme guides 

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prospects  of  market  take-up.  Currently,  the  additional  costs  of  MHP  are  a  barrier  to  wide-
spread take up. This measure is intended to help smaller Member States in particular.  

3.4.2.  Consumer subsidies 

One way of reducing the additional costs to consumers of equipment incorporating standard 
execution  engines  such  as  MHP  is  to  subsidise  purchases  at  the  level  of  the  consumer. 
Consumer subsidies are already available in Italy, and MHP receivers with the subsidy now 
retail  for  the  same  price  as  a  digital  receiver  using  an  earlier,  cheaper  API  in  other,  more 
mature national markets. The conditions imposed also provide the public with an incentive to 
acquire a receiver with both interactivity and a return channel, rather than a simple receiver 
without  these  functionalities.  Member  States  may  therefore  offer  consumer  subsidies.  Such 
consumer  subsidies  need  to  be  technologically neutral  and  must  be  notified  and  conform  to 
State  Aid  rules.  They  should  be  temporary  and  reduce  in  proportion  to  the  falling  cost  of 
receivers, in order to avoid over compensation. Subsidies to undertakings are not included in 
this initiative and would need to be notified to the Commission in accordance with the normal 
procedure. 

3.4.3.  List of standards published in the Official Journal 

The  Commission  signals  its  intention  to  add  two  presentation  engines,  MHEG  5  and 
WTVML, when the list is next updated, conditional upon their adoption by ETSI. The revised 
list  would  be  submitted  for  opinion  to  COCOM  as  foreseen  in  Art.  17  of  the  Framework 
Directive. 

Other  standards  emerging  from  the  standardisation  work  programme  defined  in  phase  1  of 
mandate M331, will be considered for inclusion in the List of Standards when they become 
available. These deliverables have the potential to improve interoperability as described in the 
Working Paper.  

3.4.4.  Monitoring access to proprietary technologies 

The Commission – assisted by the Member States as appropriate – will continue to monitor 
the  availability  of  proprietary  technologies  for  licensing  by  manufacturers.  Combining 
multiple  complementary  technologies  into  receivers  is  one  way  of  achieving  a  “one  box” 
universal  receiver.  Where  these  functions  are  standardised  –  tuners  for  instance  –  the  only 
barrier  is  cost;  but  there  could  be  greater  clarity  regarding  the  availability  of  proprietary 
technologies  such  as  APIs.  Art.  6,  Annex  I  of  the  Access  and  Interconnection  Directive12 
already imposes a requirement on providers of conditional access systems to ensure that these 
are made available on fair, reasonable and non-discriminatory terms, when granting licences 
to manufacturers of consumer equipment. 

The  Commission  will  follow  up  through  its  regular  implementation  reports  on  the 
eCommunications package. 

12 

Directive 2002/19/EC, OJ L 108, 24.4.2002, p.12 

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4. 

CONCLUSION 

The  Commission  seeks  to  ensure  that  European  citizens  benefit  from  a  growing  range  of 
interactive  DTV  services,  available  on  an  increasing  number  of  transmission  platforms,  and 
considers  that  the  market  is  best  served  at  the  present  time  by  continuing  to  apply  the 
provisions  already  agreed  by  the  European  Parliament  and  the  Council  in  the  Framework 
Directive. Moreover, use of proprietary technologies will remain subject to competition law 
review.  

The Commission will take additional measure to promote the voluntary implementation of the 
MHP standard, which is currently the most advanced open API standard in Europe. 

The Commission will continue to pursue the aim of full and effective transposition of Art. 18 
by  all  Member  States,  but  in  view  of  the  complexity  of  the  environment,  the  different 
perceptions  held  by  market  players,  and  late  implementation  of  the  Framework  Directive  in 
many Member States concludes it is inappropriate to determine that interoperability has or has 
not  been  adequately  achieved  in  the  context  of  Art.  18(3).  However,  this  review  has  not 
substantiated  the  view  that  concerns  related  to  cultural  diversity  and  media  pluralism  could 
only be overcome by imposition of a single standard for APIs. More significant elements in 
the  media  pluralism  debate  lie  within  the  competence  of  Member  States,  notably  media 
ownership and control. 

The Commission will review the situation in the second half of 2005.  

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