Commission staff working document - Executive Summary of the impact assessment - Accompanying document to the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Transforming the digital dividend into social benefits and economic growth and the Commission Recommendation Facilitating the release of the digital dividend in the European Union {COM(2009) 586 final} {C(2009) 8287 final} {SEC(2009) 1436}
Date: 2009-10-28
Institutions: European Commission
Subjects: broadcasting, communications policy, digital technology, high-definition television, impact study, radio telecommunications, transmission network, waveband

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 28.10.2009 
SEC(2009) 1437 

COMMISSION STAFF WORKING DOCUMENT 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying document to the 

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

Transforming the digital dividend into social benefits and economic growth 

and the  

COMMISSION RECOMMENDATION 

Facilitating the release of the digital dividend in the European Union 

{COM(2009) 586 final} 
{C(2009) 8287 final} 
{SEC(2009) 1436} 

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EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

The  ‘digital  dividend’,  i.e.  the  radio  spectrum  freed  up  by  the  switchover  of  terrestrial  TV 
transmission  from  analogue  to  digital  format  (Digital  Terrestrial  Television,  or  DTT), 
represents  a  significant  amount  of  high-quality  radio  frequencies  becoming  available  in  all 
Member  States.  A  coordinated  approach  to  the  digital  dividend  can  contribute  to  two 
important EU policy goals, namely: 

1. 

2. 

To ensure that there will be sufficient spectrum available in Europe to address 
the issue of rural access to broadband services (where a wireless infrastructure is 
often the only workable solution) and to reduce the broadband gap arising from the 
lack of such services.  

In addition, to pave the way for future developments in terrestrial broadcasting 
(e.g.  high-definition  television)  by  increasing  the  average  efficiency  of  television 
transmission infrastructures. This will also enhance the ability of Member States to 
exercise their competences in the field of audiovisual policy. 

1. 

PROBLEM DEFINITION 

In  the  absence  of  appropriate  coordination  between  Member  States,  the  potential  social  and 
economic benefits of the digital dividend will be significantly lower.  

1.1. 

Inconsistencies  between  national  approaches  would  reduce  the  usability  of  the 
spectrum due to the effect of interference 

It  is  technically  inefficient  to  use  the  same  spectrum  for  wireless  services  that  have 
fundamentally different technical characteristics, such as traditional high power broadcasting 
and  low  to  medium  power  wireless  broadband.  This  issue  also  has  cross-border  effects,  as 
residual interference in this part of spectrum can travel up to 100 kilometres. 

1.2. 

A  lack  of  EU  coordination  will  prevent  Member  States  allocating  the  digital 
dividend to uses with the highest social and economic impact 

In the absence of a coordinated approach to minimise the negative impact of interference in 
the  EU,  national  spectrum  authorities  may  have  to  give  preference  to  DTT,  whereas,  if 
coordination was implemented, they could allow other uses providing higher overall benefits. 

1.3. 

Lack of economies of scale and pan-European coverage of services may hurt the 
European economy and deter investment 

Virtually  all  of  the  expected  potential  uses  of  the  digital  dividend  rely  on  the  possibility  to 
achieve critical mass and economies of scale. For example, the Commission study found that 
manufacturers of mobile communications equipment expect a potential market of at least 100 
million  inhabitants  before  investing  in  new  production  lines  for  the  fourth  generation  of 
mobile  communications  equipment.  Economies  of  scale  are  also  imperative  to  ensure  the 
successful take-up of newer generations of broadcasting equipment and networks. 

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1.4. 

Risk of disruption of important services already making use of part of the UHF 
band where the digital dividend spectrum is located 

Existing wireless microphones and similar applications use particular frequencies in the UHF 
band  (known  as  ‘interleaved  spectrum’  or  ‘white  spaces’).  These  services  are  essential  to  a 
number  of  sectors,  particularly  broadcasting  and  event  organisation.  In  the  absence  of  EU 
coordination,  there  is  a  risk  that  these  important  uses  will,  at  some  point  in  time,  lack 
frequencies  to  ensure  their  continued  operation.  The  number  of  devices  involved  (4  to  5 
million in the EU1) suggests a clear internal market dimension. 

1.5. 

A  sizeable  part  of  the  benefits  could  be  lost  in  the  absence  of  proper 
coordination with third countries  

Cross-border interference from non-EU countries can prevent specific services from operating 
in large EU geographical areas. In turn, this may prevent nationwide deployment since not all 
regions  can  be  covered.  Negotiations  between  Member  States  and  third  countries  on  the 
digital  dividend  frequencies  are  conducted  on  a  bilateral  basis  under  the  ITU  mechanisms. 
However,  they  have  reportedly  often  been  disappointing.  A  common  approach  would  allow 
an  EU-wide  strategy  to  be  established,  and  strengthen  the  Community  and  Member  States' 
position in the negotiations with third countries. 

2. 

ANALYSIS OF SUBSIDIARITY 

Most of the issues arising from the use of the digital dividend cannot be dealt with efficiently 
by the action of individual Member States, given the fact that radio transmissions do not stop 
at  borders.  Because  of  this,  the  actions  of  one  Member  State  could  significantly  affect  the 
interests  of  others.  In  addition,  the  large  amount  of  mobile  equipment  that  can  make  use  of 
that spectrum presents a clear internal market dimension. 

Action  at  Community  level  would  produce  clear  benefits  compared  to  action  by  individual 
Member States. The main areas of potential added value for the EU are: 

•  leadership (coordinated EU action is more likely to be emulated by neighbouring countries 
than action by individual Member States, which in turn can lead to the wider availability of 
the spectrum in the EU itself); 

•  more efficient use of spectrum and economies of scale (if a common band plan emerges); 

•  the general benefits of fostering the internal market (including through interoperability and 

roaming if mass market uses, such as wireless broadband, emerge). 

3. 

OBJECTIVES 

The  first  objective  is  to  maximise  benefits  from  the  digital  dividend  and  to  act  sufficiently 
rapidly to avoid fragmented national legacy situations, which would hamper the establishment 
of a single market for future services and equipment. 

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Source: APWPT. 

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Secondly,  this  initiative  seeks  to  ensure  sufficient  consistency  between  national  approaches 
and  foster  convergence  over  time,  with  a  view  to  supporting  innovation  and  long-term 
benefits for consumers, strengthening the single market, and increasing EU competitiveness. 

Thirdly, the Commission’s action should aim to facilitate the early efforts by several Member 
States to open up the 790-862 MHz sub-band to new services such as wireless broadband and 
to  help  avoid  fragmentation  in  the  internal  market  (i.e.  different  Member  States  imposing 
different technical or functional restrictions). 

4. 

POLICY OPTIONS 

The  Communication,  complemented  on  specific  aspects  by  the  Recommendation,  puts 
forward proposals in four main areas: 

–  Timely  switch-off  of  analogue  terrestrial  TV  as  a  prerequisite  to  exploit  the  digital 

dividend; 

–  Coordination of Member State action to ensure a coherent approach to the 790-862 MHz 

sub-band; 

–  Common  initiatives  to  ensure  the  optimal  use  of  spectrum  in  all  parts  of  the  UHF  band 

(470-862 MHz); 

–  Technical  harmonisation  of  the  790-862  MHz  sub-band  (under  the  Radio  Spectrum 

Decision mechanism). 

5. 

ASSESSMENT OF IMPACTS 

5.1. 

Impact of options regarding the timely switch-off of analogue terrestrial TV  

5.1.1.  No further EU action 

Ten or eleven Member States are likely to continue some analogue broadcasting throughout 
2012, and some even until 2013, creating the risk of further delays.  

5.1.2.  Recommendation that Member States take all necessary steps to switch off analogue 

signals by 1 January 2012  

The Commission study estimated that avoiding a one-year delay in the availability of the 790-
862 MHz sub-band across the EU due to a few Member States could generate a total benefit 
of  several  billion  euros  in  net  present  value  (min.  EUR  1  billion  in  consumer  and  supplier 
surplus only, accumulated over 15 years2). 

Since all Member States are already committed to digital TV, the cost is limited to advancing 
the procedure by typically a few months in 10 or 11 Member States.  

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Ofcom UK estimated the benefit for the UK alone, under similar conditions, at GBP 100 to 400 million. 

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There  are  social  costs,  in  particular  due  to  bringing  forward  the  purchase  of  digital-to-
analogue  converters  by  consumers  who  continue  to  use  an  existing  analogue  TV3.  The 
analogue  switch-off  experience  in  the  five  Member  States  that  have  already  gone  to  digital 
(and in the US) indicates, however, that this social impact is limited and can be mitigated by 
specific subsidies targeting disadvantaged groups.  

5.1.3.  Mandating analogue switch-off by 1 January 2012 (a Community legal measure) 

The  benefits  and  costs,  including  the  social  impact,  would  be  of  the  same  nature  as  for  the 
previous  option  (recommended  switch-off),  but  with  the  highest  probability  to  realise  the 
greatest overall benefit. 

5.2. 

Common  initiatives  to  ensure  the  optimal  use  of  spectrum  in  the  whole  UHF 
band (470-862 MHz) 

This concerns possible coordination actions to facilitate the freeing up of additional spectrum 
capacity,  mainly  concerning  spectrum  below  790MHz,  thereby  enhancing  the  digital 
dividend. The detailed quantitative impacts have not been assessed, as these measures are at 
present only preliminary proposals for discussion at EU level. 

5.2.1.  No further EU action on coordination activities 

The main benefit of this option is the absence of compulsory additional costs for upgrading 
receivers or transmission networks.  

5.2.2. 

Impact of further coordination activities in sub-bands below 790 MHz 

These  are  some  of  the  identified  areas  where  further  coordination  activities  could  be 
envisaged:  

–  Ensuring  minimum  transmission  compression  and  quality  standards  for  broadcasting 

networks, including for new DTT receivers.  

–  Wider use of Single Frequency Networks (SFNs). 

–  Promoting frequency-agile systems, possibly using Community funding. 

–  Assisting existing users of wireless microphones to migrate to new frequencies, as well as 

considering the use of ‘white spaces’ for cognitive technologies4. 

–  Improving  cross-border  coordination  of  spectrum  both  between  Member  States  and  with 

non-EU countries. 

Each type of initiative has a potentially positive effect, but it is difficult to perform a reliable 
sensitivity  analysis  at  this  stage.  One  negative  social  impact  could  be  that  not  all  television 
viewers would have access to the new equipment, but this could be offset by a period during 
which the signals would be broadcast in both the old and new standards to allow reception by 
first-generation DTT equipment. 

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The cost of most digital-to-analogue converter boxes does not exceed 50 euros. 
Cognitive radio technologies allow radio equipment to identify frequencies which are not occupied by a 
primary user at a given moment, and to exploit them temporarily. 

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5.2.3. 

Impact  of  mandatory  requirements  to  improve  spectrum  efficiency  linked  to  the 
digital dividend 

The  further  impact  of  mandatory  requirements  is  generally  incremental  for  each  of  the 
specific measures. 

5.3. 

Impact  of  options  regarding  the  coordination  of  Member  State  actions  in  the 
790-862 MHz sub-band 

5.3.1.  No further EU action 

A number of Member States5 are, or will be shortly, in a position to decide to open this band 
to  electronic  communications  services.  This  option  could  result  in  regulatory  measures  at 
national level which could be in contradiction with those in other countries, jeopardising the 
technical harmonisation of this sub-band to enable new broadband uses.  

5.3.2.  Recommendation  that  Member  States  take  no  action  that  would  interfere  with  the 
technical  harmonisation  measure  being  planned  at  EU  level  in  the  790-862  MHz 
band 

In practice, this should only concern (temporarily) those Member States envisaging new uses 
in this sub-band. Therefore, virtually no costs would arise while efforts focus on facilitating 
the emergence of a rapid and stable consensus on harmonised technical conditions. 

5.4. 

Impact  of  options  regarding  the  technical  harmonisation  of  the  790–862  MHz 
sub-band 

One of the main conclusions of the Commission study is that the ‘private value’6 that could be 
created  if  all  Member  States  were  to  adopt  the  790-862  MHz  sub-band  for  electronic 
communications services under consistent conditions of use would be between at least EUR 
17 billion  and  up  to EUR  44 billion in the most optimistic case, depending on the assumed 
level of demand for different services7.  

A significant social benefit would be generated by greater access to broadband services, and 
the possibility to ensure the pan-European interoperability of services. 

There should be no overall negative distributional impact on broadcasting services since any 
loss  of  broadcasting  capacity  in  the  790-862  MHz  band  would  be  offset  by  network  re-
planning and/or improved transmission technology.  The  associated  costs  will  depend  on  the 
number  of  DTT  transmitters  located  in  the  sub-band  for  each  Member  State  (distributive 
impact).  However,  the  Community  action  should  facilitate  rather  than  complicate  the  re-
planning of broadcasting networks.  

5.4.1.  Guidelines (non mandatory) for harmonisation of the 790–862 MHz sub-band  

The  related  costs  are  likely  to  be  very  modest,  but  would  not  significantly  increase  the 
likelihood of achieving the major benefits of harmonisation. 

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At  the  last  count:  Austria,  the  Czech  Republic,  Finland,  France,  Germany,  Spain,  Sweden,  the 
Netherlands and the United Kingdom. 
Consumer and producer surplus. 
Net present value over 15 years, compared to no EU coordination. 

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5.4.2.  Commission Decision setting the technical parameters for the 790-862 MHz band  

This policy option is likely to yield the vast bulk of the expected benefits, as evaluated by the 
Commission study, mentioned in the introduction to section 5.4 above, because the increased 
level of harmonisation will produce economies of scale and facilitate interoperability. In turn, 
this  will  facilitate  the  achievement  of  important  EU  social  objectives  such  as  ensuring 
‘broadband access for all’.  

5.4.3.  Commission Decision setting the technical parameters and setting a mandatory end-
date for clearing the 790-862 MHz sub-band of broadcasting (high-power) services 

This  option  would  ensure  maximum  benefits  as  it  would  remove  any  uncertainty  for 
stakeholders. However, such a decision should be subject to the agreement of the European 
Parliament and the Council due to the potential impact, in particular on the development of 
broadcasting services. 

6. 

COMPARISON OF OPTIONS 

6.1. 

Comparison of options regarding the timely completion of analogue switch-off 

A mandatory Community measure would tend to be opposed by several Member States, citing 
major issues of public interest. 

Therefore,  the  option  to  issue  a  ‘Recommendation’  (option  in  5.1.2)  seems  the  most 
appropriate.  It  should  help  reinforce  previous  political  commitments,  which  in  turn  would 
have a positive ‘psychological’ effect on stakeholders. If this option helps accelerate adoption 
of  the  790–862  MHz  sub-band  by  a  few  months  across  the  EU,  it  could  yield  significant 
benefits as explained, and reduce the cost for broadcasters to ‘simulcast’ (transmit the same 
programmes in both analogue and digital format). 

6.2. 

Comparison  of  options  regarding  optimal  use  of  spectrum  in  the  UHF  band 
(470-862 MHz) 

The option ‘further coordination activities’ opens the way for a further digital dividend in the 
long term without creating major costs. It appears to be a justified and proportionate option as, 
at  present,  none  of  the  measures  considered  can  show  a  clear  advantage  for  a  compulsory 
approach at EU level. 

6.3. 

Comparison  of  options  regarding  the  coordination  of  Member  State  action  in 
the 790-862 MHz sub-band 

The Member States presently considering national regulatory action concerning this sub-band 
are under increasing pressure to take action, so failure to provide a Community template for a 
coordinated approach as a matter of urgency would risk fragmentation in the internal market 
and  loss  of  the  economies  of  scale  that  might  otherwise  be  obtained.  The  proposed 
recommendation (in 5.3.2.) therefore seems the preferable option. 

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6.4. 

Comparison of options regarding technical harmonisation of the 790-862 MHz 
sub-band 

While  the  absence  of  an  end-date  for  clearing  the  790-862  MHz  sub-band  in  this  option 
(5.4.2.)  could  lead  to  uncertainty  in  the  EU  single  market  due  to  different  rates  of 
implementation  and  take-up  in  different  Member States,  it  is  important  to  take  into  account 
the  sensitivities  of  Member  States,  mainly  due  to  different  switch-off  speeds  and  different 
legacy situations regarding broadcasting.  

In  consequence,  the  best  option  at  this  point  in  time,  which  also  satisfies  proportionality 
requirements,  appears  to  be  requiring  all  Member  States  to  apply  the  same  technical 
conditions  when  changing  the  designation  of  the  790-862  MHz  sub-band  from  the  current 
designation for broadcasting, and recommending that awards be made on a technology- and 
service-neutral basis with common technological conditions and a common band plan.  

If the Commission were to set an end-date, it is not certain whether all Member States would 
support  such  a  measure.  The  option  selected  means  that,  while  allowing  flexibility  for 
Member States in the choice and timing of any move to wireless broadband use, the technical 
conditions that will apply once this choice is made are clear and coordinated, thus removing 
the principal risk of fragmentation. 

7. 

MONITORING AND EVALUATION 

It is proposed to base evaluation and monitoring on operational objectives in the specific areas 
of concern, in particular: 

•  The timeliness of measures taken by Member States to ensure the complete switch-off of 

analogue TV by 1 January 2012; 

•  Progress  in  making  the  790-862  MHz  sub-band  available  for  electronic  communications 

under harmonised technical conditions; 

•  Progress in migrating to ‘best in class’ technologies for transmission networks. 

The Commission should be assisted by relevant advisory committees. 

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