Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions on reviewing the interoperability of digital interactive television services pursuant to Communication COM(2004) 541 of 30 July 2004
Date: 2006-02-02
Institutions: European Commission
Subjects: consumer protection, high-definition television, information technology, programmes industry, standardisation, systems interconnection, technical standard

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 02.02.2006 
COM(2006) 37 final 

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

on reviewing the interoperability of digital interactive television services 
pursuant to Communication COM(2004) 541 of 30 July 2004 

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

on reviewing the interoperability of digital interactive television services 
pursuant to Communication COM(2004) 541 of 30 July 2004 

EXECUTIVE SUMMARY 

In  July  2004,  the  Commission  published  a  Communication  setting  out  its  position  on  the 
interoperability of digital interactive television services pursuant to Article 18(3) of Directive 
2002/21/EC on a common regulatory framework for electronic communications networks and 
services (‘the Framework directive’). In that Communication, the Commission concluded that 
there was no clear case for mandating standards for interactive television, and indicated that 
the issue would be reviewed in 2005. The Communication also proposed the setting up of a 
working group to identify actions that could improve market take-up of the Multimedia Home 
Platform (MHP) standard. 

This review builds on that earlier assessment, and takes account of the market developments 
since July 2004. Over the past 18 months the Commission has held an intensive dialogue on 
digital TV interoperability with interested parties in both the public and private sector in the 
‘MHP Implementation Group’. This Group has been presented with reports of the situation in 
ten Member States, and has served as a forum for the exchange of ideas and best practice. 

Developments  in  the  market,  particularly  in  Italy,  have  shown  that  interoperability  can  be 
achieved  when  stakeholders  act  together  with  a  common  aim  to  implement  a  technical 
standard like MHP, but that this in itself is not sufficient to ensure the emergence and growth 
of  interactive  digital  television  services;  further  business  and  technical  developments  are 
needed. 

The  Commission’s  priorities  are  now  to  work  with  Member  States  to  ensure  the  successful 
switchover to digital TV, which is a pre-requisite for having interactive digital services, and to 
support open standards and the ongoing cooperation on interoperability and exchange of best 
practice between Member States and between stakeholders. 

The  Commission  seeks  to  ensure  that  European  citizens  enjoy  the  benefits  of  digital 
television,  including  a  growing  range  of  interactive  digital  TV  services,  available  on  an 
increasing number of transmission platforms. It considers that the market is best served at the 
present time by continuing to rely on industry-led voluntary standardisation initiatives. 

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1. 

BACKGROUND  

In May 2005, the Commission published a Communication on accelerating the transition from 
analogue to digital broadcasting1 proposing a target date of 2012 for Member States to make 
the  transition  to  digital  television  and  switch  off  analogue  TV  transmission.  One  of  the 
advantages of digital TV is the ability to have fully interactive applications, where the viewer 
is able to interact with the broadcaster via a ‘return channel’. Interactive applications require a 
software stack in the receiver called an ‘applications program interface’ or API. 

On  30  July  2004  the  Commission  published  a  Communication  on  interoperability  of  digital 
interactive  television  services2.  The  Communication  set  out  the  Commission’s  position  on 
interoperability  of  digital  interactive  television  services  pursuant  to  Article  18(3)  of  the 
Framework  directive3.  According  to  this  article,  the  Commission  may  take  steps  to  make 
certain  standards  mandatory,  if  adequate  interoperability  of  interactive  digital  television  has 
not been achieved. The Communication stated that there was no clear case to take action to 
mandate  any  API  standard  at  that  time,  but  the  issue  should  be  reviewed  in  2005.  In  the 
meantime,  a  range  of  promotional  and  associated  actions  were  proposed  to  promote  the 
deployment of interactive digital services using the MHP standard, which at the time was the 
only  open  standard  for  APIs  adopted  by  EU  standards  bodies.  These  actions  included  the 
creation of a working group on implementation of MHP, 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  underlying  analysis  was  contained  in  the  accompanying  Extended  Impact  Assessment 
issued as SEC(2004) 1028. This analysis indicated that, while the imposition of one or more 
mandatory standards at European level could offer legal certainty to the various players in the 
interactive  TV  value  chain  and  enable  economies  of  scale  at  European  level,  it  would  have 
negative  economic  impacts  with  respect  to  legacy  consumer  equipment,  and  could  stifle 
innovation and create a barrier to market entry. 

The present Communication assesses the developments in interactive digital television since 
July 2004. 

2. 

DEVELOPMENTS IN THE INTERVENING PERIOD (JULY 2004 – DECEMBER 2005) 

2.1. 

Conclusions of the Telecommunications Council 

On  9  December  2004  the  Transport,  Telecommunications  and  Energy  Council  adopted 
Council  Conclusions,  welcoming  the  Commission’s  Communication  and  its  proposed 
promotional  measures,  as  well  as  the  intention  of  the  Commission  to  review  the  situation 
regarding  the  interoperability  of  digital  interactive  television  services  in  the  second  half  of 
2005.  In  addition,  the  Council  invited  the  Commission  to  identify  actions  with  regard  to 
standards  other  than  MHP,  published  in  the  Official  Journal  of  the  European  Union  in 

1 
2 
3 

COM(2005) 204 
COM(2004) 541 
Directive 2002/21/EC on a common regulatory framework for electronic communications networks and 
services 

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accordance  with  Article  17(1)  of  the  Framework  Directive,  in  order  to  encourage  the 
development of interactive digital television. 

2.2. 

The MHP Implementation Group 

The MHP Implementation Group set up as a result of the 2004 Communication held its first 
meeting in Brussels in November 2004. The aims of the group were to exchange information, 
report on best practice and facilitate contacts between actors in the interactive television field. 
This  action  sought  to  help  MHP  build  critical  mass  and  achieve  economies  of  scale, 
overcoming  the  fragmentation  problem  that  new  broadcasting  products  face.  In  response  to 
the  Council  conclusions,  the  work  of  the  group  encompassed  issues  related  to  interactive 
digital television in general, including the use of standards other than MHP. 

The  group  held  five  meetings  between  November  2004  and  September  2005.  Players 
participating  in  the  Group  included  ministries  and  regulatory  authorities,  broadcasters, 
network  operators,  manufacturers,  industry  associations  and  research  projects.  Ten  country 
cases were presented (Italy, Finland, Sweden, Norway, Denmark, Hungary, the Netherlands, 
Spain,  Germany  and  Belgium)  along  with  other  industry  presentations,  demonstrating  the 
importance of the debate for European broadcasting. 

The work of the MHP Implementation group has served to demonstrate the value of having a 
forum for exchange of views between interested parties in a complex area like interoperability 
of interactive digital TV services. 

2.3. 

Developments in digital television 

Moving from analogue to digital television is a prerequisite for the introduction of interactive 
digital  television  services.  Digital  terrestrial  TV  in  Europe  suffered  from  a  number  of  false 
starts, but sustainable business models are now emerging and switchover is gaining pace. 

Table 1 shows the situation of digital television in the EU at the end of June 2005. 

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Digital TV 

Subscribers (000) 

Cable 

Satellite 

Terrestrial  

DSL 

Total 

penetration
% 

60 

146 

0 

0 

140 

0 

129 

1022 

2038 

0 

0 

170 

0 

10 

0 

1 

2 

190 

45 

380 

0 

2 

665 

230 

2600 

228

0

12

90

337

8

48

4402

2440

218

150

363

3318

8

8

0

0

555

1230

389

15

0

1776

608

7913

0

10

0

0

0

1

516

490

2200

0

4

0

0

3

4

0

0

0

0

750

0

0

0

0

288 

159 

16 

90 

8,8% 

3,7% 

6,5% 

2,2% 

477 

19,2% 

9 

1,5% 

693 

28,6% 

6664 

6678 

218 

154 

533 

25,3% 

17,1% 

5,6% 

3,9% 

38,1% 

2500

221

6039 

26,9% 

0

0

0

0

128

0

0

0

0

0

450

5178

0

0

0

0

0

0

0

0

5

57

12

26

18 

8 

1 

2 

2,0% 

0,6% 

0,6% 

1,5% 

873 

12,4% 

1275 

9,3% 

769 

15,1% 

15 

7 

2498 

1300 

0,8% 

1,0% 

17,3% 

28,9% 

15713 

63,5% 

7826 

24116

11477

982

44497 

23,7% 

Austria 

Belgium 

Cyprus 

Czech Rep. 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Ireland 

Italy 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

Poland 

Portugal 

Slovakia 

Slovenia 

Spain 

Sweden 

U.K. 

TOTAL  
EU 25 

Source: Dataxis 

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2.4.  MHP – market developments  

The  demand  for  interactive  TV  applications  has  proved  to  be  less  than  many  forecast  some 
years  ago,  and  the  commercial  success  of  interactive  television  remains  limited.  The  most 
successful  applications  have  been  in  the  area  of  quiz  shows,  sport,  gambling  and  reality 
television;  governments  have  yet  to  find  ways  to  exploit  the  technology  successfully  as  a 
means of communicating with citizens. 

The most extensive deployment of interactive set top boxes using the MHP standard has been 
in Italy. The successful introduction of MHP in Italy is closely linked to the consumer subsidy 
scheme  that  applies  there;  the  purchase  of  a  decoder  with  interactive  capabilities  and  return 
channel  has  been  subsidised  by  the  authorities.  The  subsidy  served  to  overcome  the  price 
differential between MHP products and cheaper products without interactive capabilities, and 
as a consequence the interactive decoder market has been dominated by MHP. As a result of 
the  increased  demand  and  competitive  supply,  prices  of  MHP  products  in  Italy  have  fallen 
considerably.  The  demand  has  allowed  MHP  equipment  to  attain  critical  mass,  leading  to 
economies of scale and considerable price reductions. 

The presence of a sufficiently large equipment base is a prerequisite for the successful launch 
of interactive services. In Italy, there are over 2 million MHP decoders but interactive services 
have  nevertheless  been  slow  to  develop.  One  difficulty  is  a  reluctance  of  consumers  with 
interactive decoders to connect and use the return channel via their telephone line, often for 
the  very  mundane  reason  that  the  TV  set  in  the  home  is  not  always  near  a  telephone 
connection4.  Furthermore,  the  Italian  MHP  decoder  population  concerns  the  terrestrial 
platform; during this simulcast (analogue-digital) period there is an extreme spectrum scarcity 
which impedes the deployment of interactive services, as such services also require spectrum. 
Nevertheless, the Italian authorities plan to establish interactive television as a main platform 
for services to the public. 

The  very  competitive  market  for  set  top  boxes  in  Italy  has  driven  down  the  price  of  MHP 
decoders  to  less  than  100  €,  but  these  reductions  have  not  spilled  over  into  other,  less 
competitive markets where prices of MHP equipment remains relatively high. In the Nordic 
markets  (Finland,  Sweden,  Denmark,  Norway)  and  in  Germany,  the  considerable  price 
differential  between  MHP  decoders  and  other  simpler  digital  decoders  has  led  the  vast 
majority of buyers not to choose MHP products. 

Even for a single standard like MHP, there can be a variety of implementation specifications. 
The Italian broadcasters worked closely together to develop a set of common implementation 
specifications. The successful take-up of MHP in Italy lies in a combination of the following 
factors: 

1) the voluntary agreement of Italian broadcasters to use MHP, 

2) the introduction of the subsidy scheme for interactive decoders by the authorities, and  

3) the definition of common implementation specifications. 

The developments on digital TV in Italy serve to demonstrate how flexibility and consensus 
among market players can achieve effective interoperability. 

4 

This may change with the introduction of home network systems. 

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In  the  Nordic  countries,  although  there  has  been  a  wide  consensus  among  broadcasters  and 
public  authorities  around  the  NorDig  agreements,  MHP  has  never  achieved  a  strong 
penetration, primarily because of its price differential compared with “zapper boxes”, i.e. set 
top  boxes  with  no  interactive  television  or  enhanced  broadcasting  functionalities.  Although 
prosperous, the Nordic countries are relatively small markets, and the price differential, in the 
absence of any subsidy scheme, has been the main handicap towards the successful take-up of 
MHP. 

In Germany there have been announcements of support for MHP from cable operators and the 
public  services  broadcasters,  but  there  has  not  been  the  same  degree  of  stakeholder 
coordination  as  in  Italy.  Commercial  broadcasters  and  pay-TV  operators  have  been  more 
reluctant  to  invest  in  interactive  television,  especially  in  the  absence  of  a  clear  business 
model, and consumer subsidies have not been generally available. 

In  the  region  of  Flanders,  in  Belgium,  launching  MHP  on  the  cable  network  appears  very 
promising,  as  cable  is,  by  essence,  a  two-way  interactivity  medium  and  users  can  really 
benefit  from  and  appreciate  interactive  services.  Furthermore,  the  cable  operator  has 
established partnerships with broadcasters and content providers. 

2.5. 

Other standards for Interactive digital television 

The  Commission  signalled  in  the  July  2004  Communication  its  intention  to  add  two  more 
interactive TV standards - namely MHEG-55 and WTVML6 - to the List of standards that is 
published in the Official Journal of the European Union in accordance with Article 17 of the 
Framework  Directive,  conditional  upon  their  adoption  by  ETSI.  These  standards  have  now 
been  adopted  by  ETSI,  and  the  Commission  is  in  the  process  of  amending  the  List  of 
standards accordingly7. These standards are widely used in the market. 

Other  standards  emerging  from  the  standardisation  work  programme  defined  in  mandate 
M331,  like  the  portable  content  format  (PCF)8,  will  also  be  considered  for  inclusion  in  the 
List  of  Standards  when  they  become  available.  PCF  enhances  interoperability  by  enabling 
content  providers  to  author  their  content  once  and  run  it  on  multiple  API  platforms.  PCF 
covers 80% of interactive television applications. PCF and other deliverables under mandate 
331  have  the  potential  to  facilitate  the  development  of  interactive  content  as  well  as  to 
improve interoperability. 

With  regard  to  proprietary  standards,  the  Framework  Directive  requires  Member States  to 
encourage  proprietors  of  APIs  to  make  available  on  fair,  reasonable  and  non-discriminatory 
terms,  and  against  appropriate  remuneration,  all  such  information  as  is  necessary  to  enable 
providers of digital interactive TV services to provide all services supported by the API in a 
fully  functional  form.  The  Commission  has  been  monitoring  the  situation  regarding  the 

5 

6 

7 
8 

MHEG-5  is  part  of  an  international  standard  developed  by  the  Multimedia  and  Hypermedia  Experts 
Group (MHEG). MHEG-5 is simpler than MHP. There are estimated to be more than 5 million set-top 
boxes using MHEG-5. 
WTVML is an extension of the Wireless Mark-up Language (WML) for TV. It is a micro-browser for 
interactive  television  applications.  There  are  estimated  to  be  more  than  7  million  set  top  boxes  using 
WTVML.  
This involves seeking the opinion of Member States via the Communications Committee.  
See SEC(2004) 346, p. 19 

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availability  of  proprietary  technologies  for  licensing  by  manufacturers,  and  has  received  no 
complaints concerning licensing arrangements. 

2.6. 

Roadmap on High Definition Television (HDTV) Technical Interoperability 

The  Commission  Services,  concerned  about  possible  market  fragmentation  arising  from 
different  -  albeit  standardised  -  technical  options  for  HDTV,  organised  a  workshop  on  21 
January  2005,  in  Brussels,  on  HDTV  interoperability.  The  workshop  was  attended  by 
European public and private broadcasters, manufacturers, infrastructure and service providers 
and national and European HDTV planning groups. 

A labelling scheme for display devices was agreed, according to which ‘HD ready’ consumer 
equipment will be able to support both the main approaches used internationally, for scanning 
formats, i.e. 720 lines progressive scanning and 1080 lines interlaced scanning. In the longer 
term use of the more costly, but very high quality 1080/50 progressive format is also foreseen. 
The  workshop  also  confirmed  that  all  HD  receiving  equipment  would  support  MPEG-2  as 
well  as  the  new  advanced  compression  coding  system  MPEG-4  AVC9.  This  leaves 
broadcasters free to make their own choices of scanning formats and coding systems, within 
the options provided by the ‘HD ready’ displays. 

The underlying approach of the European industry representatives present in the workshp is to 
promote flexibility and interoperability among HDTV specifications. This agreement, which 
is voluntary and open to all market players, provides certainty for the consumer contemplating 
the purchase of HDTV equipment, given that the purchase of a large panel display represents 
a  significant  investment  for  consumers.  The  HD  Ready  label  allows  the  consumer  to 
distinguish  between  standard  definition  and  high  definition  displays.  The  roadmap  has  been 
submitted  to  the  Communications  Committee  (COCOM)  and  is  available  on  the  COCOM 
register of public documents10. 

3. 

THE  COMMISSION’S  POSITION  ON  INTEROPERABILITY  OF  INTERACTIVE  DIGITAL 
TV 

Article 18(3) of the Framework Directive allows the Commission, if adequate interoperability 
has not been achieved, to invoke the procedure in Art. 17 of the Directive, by which certain 
standards  can  be  made  mandatory.  In  its  July  2004  Communication,  the  Commission  noted 
the different aspects that are covered by the term interoperability as set out in the Directive, 
and  concluded  that  the  real  decision  facing  the  Commission  was  not  so  much  whether 
interoperability had or had not been achieved, but whether there was a case to make one or 
more API standards mandatory for one or more segments of the market. 

Drawing  on  the  Extended  Impact  Assessment  set  out  in  SEC(2004)  1028,  the  Commission 
concluded that  there was no clear case to  take action to mandate standards at that time, but 
that  the  issue  should  be  reviewed  in  2005.  One  and  a  half  years  on,  the  decision  facing  the 
Commission remains the same, but the development of the market in the intervening period, 

9 

10 

Support of the compression coding system VC1 could also be foreseen when this becomes a European 
standard. 
COCOM05-37, available at 
http://forum.europa.eu.int/Public/irc/infso/cocom1/library 

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and the extensive discussions that have taken place with stakeholders, have brought to light a 
number of issues: 

•  A standard like MHP is a complex specification with a variety of implementation options. 
One reason for the success of MHP in Italy is that the broadcasters collectively agreed a 
common technical implementation specification for MHP, and developed appropriate test 
suites  to  verify  compliance  and  ensure  interoperability  of  equipment  from  different 
manufacturers.  

This  experience  demonstrates  that  interoperability  cannot  be  guaranteed  by  simply 
imposing in law a standard like MHP; it can be achieved when stakeholders act together to 
implement a standard with a common aim of securing interoperability. 

•  One  of  the  arguments  for  having  a  common  standard  is  that  it  allows  manufacturers  to 
achieve economies of scale and hence reduce the price or consumer equipment. Experience 
over  the  last  year  (for  example  when  comparing  prices  of  similar  MHP  products  in  Italy 
and Germany) shows that the price of equipment are governed to a large extent by market 
conditions,  and  low  prices  in  one  country  do  not  immediately  ‘spill  over’  into  other 
countries. 

•  The growth of interactive services has been slower that many expected. There is a need for 
business models to evolve further before major growth of on-line government services can 
be envisaged. 

•  A new paradigm of consensual approach and cooperation on technical interoperability has 
emerged  in  the  area  of  High  Definition  TV,  and  this  appears  as  a  promising  model  for 
solving other interoperability issues. 

The Commission considers that these developments lend support to its previous analysis and 
conclusions, namely that mandating EU-wide standards under Article 18(3) of the Framework 
Directive would not contribute significantly to the growth of interactive digital television in 
Europe, and could have significant negative effects. 

4. 

CONCLUSION 

The Commission’s priorities are to: 

•  Work with Member States to ensure the successful switchover to digital TV – as the 

facilitator for interactive digital services 

The Commission will follow up its Communication of May 2005 on switchover, and 
will  be  monitoring  closely  the  progress  in  Member  States.  Information  on  the 
switchover  plans  of  the  Member  States  will  be  published  regularly  on  the  Europa 
website.11 

•  Promote open standards and interoperability 

11 

http://europa.eu.int/information_society/policy/ecomm/todays_framework/digital_broadcasting 
/switchover/national_swo_plans/index_en.htm  

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In the context of digital switchover, interoperability of digital television services and 
technologies, the Commission will continue to promote open standards developed by 
European standards bodies. 

•  Support cooperation between Member States and between stakeholders 

The Commission will continue to bring together Member States in the Broadcasting 
subgroup  of  the  Communications  Committee,  as  a  forum  for  the  exchange  of 
experience and best practice on digital TV in  general, and interactive digital  TV in 
particular. 

The  MHP  Implementation  group  demonstrated  the  value  of  having  a  forum  for 
exchange of views between interested parties, and the industry is taking an initiative 
to  continue  stakeholder  coordination.  This  will  be  based  on  the  successful  model 
adopted for HDTV, where the European Broadcasting Union (EBU) and the Digital 
Interoperability Forum (DIF) have established a European HDTV forum. 

The  Commission  supports  such  industry-led  initiatives  and  will  ensure  cooperation 
between the above two activities as necessary. 

•  Promote international cooperation on digital TV open standards and interoperability 

Digital television has the potential to foster digital inclusion and social cohesion. The 
Commission  will  continue  to  promote  open,  interoperable  standards  for  digital 
television so that content can be exchanged  across the world. The Commission  has 
established  and  funded  a  series  of  actions  to  promote  international  co-operation  in 
research, development and standardisation on digital TV. This could be extended to 
international collaboration in implementation and production of digital TV. 

•  Monitor use of proprietary technologies 

The use of proprietary technologies will remain subject to competition law review. 

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