CELEX: 51992PC0154
Language: en
Date: 1992-05-05
Title: Proposal for a COUNCIL DECISION ON AN ACTION PLAN FOR THE INTRODUCTION OF ADVANCED TELEVISION SERVICES IN EUROPE

COMMISSION OF THE EUROPEAN COMMUNITIES
                                         COM(92) 154 final
                                         Brussels, 5 May 1992
                      Proposal for a
                     COUNCIL DECISION
           ON AN ACTION PLAN FOR THE INTRODUCTION
               OF ADVANCED TELEVISION SERVICES
                          IN EUROPE
             (presented by the Commission)
 ---pagebreak---                                     CONTENTS
A. Explanatory Memorandum
   1)    Background and Strategic Context.
   2)    The aim of the Proposal for a Decision and the Approach taken.
   3)    Conclusion.
B. Draft Proposal for a Council Decision on an Action Plan for the Introduction of
   Advanced Television Services in Europe
C. Annex - Action Plan Objective and Summary
   1)    Objective
   2)    Approach adopted
   3)    Outline Description of the Service Chain and Preliminary Identification of
         Potential Sources of Costs
   4)    Targets to be Achieved
   5)    The Funding Approach to be Adopted
   6)    Indicative Internal Allocation of Funds
   7)    Principles and Criteria for Implementation
 ---pagebreak---  ---pagebreak---                                                -2-
 A.   EXPLANATORY MEMORANDUM
 1.   BACKGROUND AND STRATEGIC CONTEXT
      On the lOth February 1991, the Council unanimously adopted a Common Position on
      a Council Directive on Standards for Satellite Broadcasting of Television Signals <*>
      following a proposal from the Commission.
      The main points of the Directive may be summarized as follows:
      i)     only HD-MAC may be used for HDTV transmissions which are not fully digital;
      ii)    only D2-MAC may be used for non-fully digital 625 line television transmissions
             by satellite in the 16:9 format;
      iii)   all 16:9 television receivers must incorporate a D2-MAC decoder and all other
             television receiving equipment must incorporate at least a standardized socket;
      iv)    provision is also made for the obligatory use of D2-MAC by 4:3 services starting
             after 1 January 1995, subject to the adoption by Council of a Commission
             proposal on financial support for such services.
     This Directive, which sets the regulatory environment of standards for satellite
     television broadcasting in Europe is one part of a two pronged approach by the
     Community to encourage the orderly transition in Europe to advanced television
     services including HDTV.
     The other element is an agreement, enshrined in a Memorandum of Understanding
     (MOU) between the involved economic actors in this field - broadcasters, equipment
     makers and cable and satellite operators - with a view to the provision in Europe of a
     wide range of advanced television services in the D2-MAC standard, particularly in its
      16:9 format, in the period to 1996.
     The strategic context is set by the recognition by the Community that it is in the best
     interests of the European consumers to follow a path toward HDTV based on the
     criteria of compatibility and evolution, together with the recognition that HD-MAC is
     the appropriate HDTV transmission standard in this regard and that D2-MAC offers
     the best available path towards the development of HDTV, with wide screen 16:9 D2-
     MAC as the main step in this direction.
     During its meeting of 18 and 19 December 1991, the Council of Telecommunications
     Ministers, in giving its assent to the common position on the Directive, expressed its
     conviction that only a global strategy including accompanying measures together with
     appropriate financial means, will assure the success of European advanced television.
     In this connection the Council took note of the intention of the Commission to submit
     to it and to the European Parliament, at the latest by 30th of April 1992, a set of
     measures, financial and otherwise, on the basis of an appropriate article of the Treaty
     in order to attain the objectives announced in articles 2 and 8 of the Directive.
<»  OJ.
 ---pagebreak---                                                 -3-
     At the same meeting the Council invited the Commission to intensify its negotiations
     in relation to the MOU with a view to having its signature simultaneously with the
     final adoption of the Directive.
     Also, at the above meeting the Council invited the Commission to take, without delay,
     the necessary measures to facilitate the immediate implementation of the numerous
     initiatives which had already been announced for the satellite broadcasting of
     television programmes using D2-MAC 16:9.
     The European Parliament, in its deliberations on the proposal of the Commission for
     the Directive also expressed its clear conviction that accompanying financial measures
     would be required for the successful achievement of the objective.
     This present document incorporates a proposal for such a financial measure.
2.  THE AIM OF THE PROPOSAL FOR A DECISION AND THE APPROACH
    TAKEN
     Exhaustive consultations over an extended period of time with the concerned
    economic actors: the broadcasters, the equipment makers, the operators of cable and
    satellite infrastructure, and the programme makers, have identified a clear interest by
    many parties to move at the earliest time to the provision of advanced television
    services by satellite and cable in Europe using the D2-MAC standard, particularly in
    its 16:9 format, and the HD-MAC standard.
    The television service chain begins with origination and ends with reception by
    consumers on their receivers. It is a complicated chain involving many creative and
    technical operations and several different industries. The approach must treat the
    whole chain of operations, not individual functions out of context, because the
    consumer commits to the outcome of the whole process, rather than any individual
    aspect. This has led to the adoption of a service perspective, since services embody the
    sum of operations. A television service consists of a schedule of individual
    programmes under the editorial control of a broadcaster.
2.1 Additional Costs
    The above mentioned consultations have identified the additional costs to the parties
    which would be involved in the provision of these advanced services particularly in the
    start-up phase. These costs include:
    i)      Costs of Broadcaster's Operations including Studio Upgrading and Satellite
            Transmission.
            Broadcasters, who have not already done so, may need to upgrade their studio
            equipment to the requirements of the new service.
            Many operators, for commercial reasons, and in order to continue to serve their
            existing customers who have equipment working on another standard, will wish,
            at least for an initial period, to simulcast the advanced service in parallel with
            the conventional service. This will involve additional costs associated with
            satellite transmission. Other sources of additional costs include D2-MAC
            encoding and encryption, conditional access and subscriber management for
            subscription services.
 ---pagebreak---      ii)    Costs for Cable Redistribution.
            Operators of cable TV networks may wish to have the capability to offer
            advanced television services to their customers. In order for cable systems to
            use satellite received signals in this connection, the cable head-end must have
            additional equipment (per channel) which is capable of receiving the MAC
            satellite signal and transforming it in such a way as to be suitable for
            transmission through the cable network. Special facilities for decrypting,
            encrypting conditional access and subscriber management may also be required
            at the head-end. In addition certain upgrading of the cable network itself may
            be necessary in order to allow the 16:9 D2-MAC signals to be distributed to
           viewers.
           There may therefore be additional capital costs for cable operators wishing to
            offer the advanced television services to their subscribers.
     iii)   Cost of Programme Production and Conversion.
           The advanced services are capable of offering enhanced picture and sound
            quality compared with conventional services as well as the new wide-screen 16:9
           format. In order to ensure that the full potential of the new system is realized
            therefore the advanced services will require to be fed with programme material
           of a higher quality in both picture and sound and in the new wide screen formal.
           In order to achieve this higher quality both for D2-MAC but more particularly
           for HD-MAC transmissions, both in-house and independent production will
           have to progressively upgrade, technically, over the coming decade, and
           programme production techniques will have to develop to take full advantage of
           the potential of the new technical possibilities.
           Programme makers and as a consequence broadcasters will therefore face
           increased costs, at least in the early stages, for original programme production
           or the conversion of existing material from another format.
2.2 Proposed Approach
    The conclusion reached, following the above mentioned consultations, is that (Aim to
    the fact that the European television service provision industry is suffering significant
    financial pressures at the present time, the transition from conventional to advanced
    services is likely to happen only slowly in the absence of a measure of financial
    incentive to cushion the start-up costs.
    The proposal now made therefore in to adopt an Action Plan covering the period up
    to the end of 1996 and having the objective of accelerating the development of the
    market for advanced television services by satellite and cable based on the D2-MAC
    standard, particularly in its 16:9 format and the HD-MAC standard. Community
    funds, in the amount of 850 million ECU, would be made available to provide
    incentives for the achievement of this objective.
    The funds would be directed towards covering part of the costs identified above,
    namely:
    i)     costs relating to broadcasters's operations including studio upgrading and
           satellite transmission
    ii)    costs relating to cable redistribution
    iii)   costs relating to programme production and conversion, and
 ---pagebreak---                                             -5-
The allocation of these funds will be governed by the principle of double degressivity in
 the following sense:
 a)     In order to encourage the early start-up of the targeted advanced services, those
        projects starting earliest will receive the greatest levels of funding.
b)      In line with the policy that Community funding is to cushion the economic
        consequences in the start-up phase, the funding allocated to projects will be
        progressively reduced each year the incentive is in place.
The Commission will be responsible for the execution of the Action Plan and for
ensuring that Community funds are correctly spent and are directed effectively and
efficiently towards the stated objective.
In this connection the Commission will establish close collaboration with the structure
resulting from the signing by the market actors of the Memorandum of
Understanding.
A set of general principles and criteria which must govern the implementation of the
Action Plan are included in the Annex to ensure that relevant Community policies are
followed.
It has also been considered appropriate to specify, in advance, indicative targets for
the impact of Community funds as a guide-line for the implementation. These targets
which require the achievement by the end of 1996 of:
i)      a critical mass of satellite television services, using the D2-MAC standard,
        particularly in its 16:9 format, or the HD-MAC standard;
ii)     a significant and constantly increasing number of cable TV networks carrying
        high quality 16:9 D2-MAC services to their customers;
iii)    a significant and increasing volume of programming in the 16:9 format and with
        high technical quality both in picture and sound. Such programming to be
       broadcast in the above mentioned services;
are considered to be achievable following the detailed consultations already
conducted.
CONCLUSION
The attached Decision aims to prepare the way for the Europe-wide introduction of
advanced television services during the next five years. The proposals are based on
extensive dialogue with all the relevant actors in this field. The Council is invited to
adopt the attached Proposal for a Decision.
 ---pagebreak---                     6-
 B. PROPOSAL FOR A COUNCIL DECISION
ON AN ACTION PLAN FOR THE INTRODUCTION
    OF ADVANCED TELEVISION SERVICES
               IN EUROPE
 ---pagebreak---  ---pagebreak---                                              PROPOSAL FOR A
                                     COUNCIL          DECISION
                                  on an Action Plan for the Introduction
                                     of Advanced Television Services
                                                in Europe
 The Council of the European Communities,
 Having regard to the Treaty establishing the European Economic Community and in
 particular Article 235 thereof;
 Having regard to the proposal from the Commission;
 Having regard to the opinion of the European Parliament (*>;
 Having regard to the opinion of the Economic and Social Committee <2>;
 Whereas the Community, through Council Decision 89/337/EEC <3>, Council Decision
 89/630/EEC <4> and Council Directive <5> recognized the strategic importance of High
 Definition Television (HDTV) for the European Consumer Electronics Industry and for
the European Television and film industries, and established the strategy framework for
the introduction of European HDTV;
Whereas Council Directive P> set a regulatory framework of standards for satellite
television broadcasting including HDTV.
Whereas it is in the best interest of European consumers to follow a path to HDTV, based
on the criteria of compatibility and evolution, in order to avoid discontinuities and
duplication of investments;
Whereas HD-MAC, which has been chosen as the European transmission standard for non
fully digital HDTV, conforms to those criteria of compatibility and evolution and D2-MAC
offers the best available path towards the development of HDTV, with wide screen 16:9
D2-MAC as the main step in that direction;
Whereas article 8 of Council Directive  requires that that Directive be accompanied by
commercial measures based on the signing, by the parties concerned, of a Memorandum of
Understanding (MOU) coordinating the actions of the various signatories and where
<» O.J.
<2>  OJ.
<3>  O J. N° L 142,25.5.89, p. 1
<4>  O J. N° L 363,13.12.89, p. 30
<5>  OJ.
 ---pagebreak---                                              -8-
 appropriate by simultaneous measures designed to support the creation of a European
 market for the D2-MAC and HD-MAC standards;
 Whereas, following the widest possible consultation, a number of economic actors in the
 television service provision market intend to sign a Memorandum of Understanding in
which they make commitments to offer advanced television services throughout Europe
using D2-MAC in its 16:9 format;
Whereas the objectives of the strategy for the introduction of HDTV in Europe are an
integral part of the Community audiovisual policy and whereas they must take into account
other objectives of this policy within the perspective of the development of Europe's
audiovisual capacity, which comprise structural objectives such as the development of the
independent production sector or the development of production in countries or regions
with more limited audiovisual capacity;
Whereas in order to ensure the introduction of European advanced television articles 2 and
8 of Council Directive         require a global strategy including accompaning measures
together with appropriate financial means and measures to encourage the production of
programmes;
Whereas financial incentives are initially required to ensure the accelerated development
of the advanced television service market in conformity with the strategy indicated above,
by contributing to the reduction of the additional start-up costs involved;
Whereas it is appropriate to set targets for the impact of Community funding of the early
market development of advanced television services;
Whereas it is appropriate to specify certain basic principles which must underlie the
implementation of the Action Plan including criteria to be used in the selection of projects;
Whereas the Treaty does not provide, for the action concerned, powers other than those of
Article 235;
 ---pagebreak---                                                  -9-
  HAS DECIDED AS FOLLOWS:
                                              Article 1
 An Action Plan to ensure the accelerated development of the market for advanced
 television services by satellite and cable based on the D2-MAC standard, particularly in its
  16:9 format, and the HD-MAC standard, is adopted for a period commencing on the date
 of adoption of this decision and concluding on 31st December 1996.
 The targets set for the Action Plan are the achievement during the period mentioned above
 of:
 i)    A critical mass of satellite television services, using the D2-MAC standard,
       particularly in its 16:9 format, or the HD-MAC standard.
 ii)   A significant and constantly increasing number of cable TV networks carrying high
       quality 16:9 D2-MAC services to their customers.
 iii) A significant and increasing volume of programming in the 16:9 format and with high
       technical quality both in picture and sound. Such programming to be broadcast in the
       above mentioned services.
Community funds will be directed towards the achievement of these targets by means of
incentives covering parts of the additional costs incurred by broadcasters, programme
makers and cable TV network operators, in the provision of the above mentioned advanced
television services.
A summary of the Action Plan and its implementation procedures is set out in the Annex
which forms an integral part of this Decision.
                                              Article 2
1.     The execution of the Action Plan will be undertaken by the Commission. In this
       connection the Commission will establish close collaboration with the mechanisms
       resulting from the implementation of Article 8 of Council Directive <n.
2.     Basic principles which must govern the implementation of the Action Plan including
       criteria to be used in the selection of projects are given in the Annex which forms an
       integral part of this Decision.
3.     The Commission shall ensure, by means of appropriate control mechanisms, that the
       Community funds are properly allocated and are used to achieve Community
       objectives as specified in this Action Plan.
<»   OJ.
 ---pagebreak---                                           - 10-
                                        Article 3
An annual report will be submitted by the Commission to the European Parliament, to the
Council and to the Economic and Social Committee, evaluating the implementation of the
Action Plan and the allocation of Community funds.
A final report, in the same terms, will be submitted to the above institutions at the
conclusion of the Action Plan.
Done in Brussels, (date)
                                                  For the Council
                                                  The President
 ---pagebreak---                                           -11 -
C. ANNEX - SUMMARY OF THE ACTION PLAN AND ITS IMPLEMENTATION
   PROCEDURES
1.  OBJECTIVE
   The objective of the Action Plan is to ensure the accelerated development of the
   market for advanced satellite and cable television services in Europe using the D2-
   MAC standard, particularly in its 16:9 format, and the HD-MAC standard.
2. APPROACH ADOPTED
   i)   Accelerated development of the market for advanced satellite and cable
        television services requires that all the elements necessary to bring those
        services into consumers' or viewers' homes be in place. Television is a
        complicated medium, encompassing and merging many technical and creative
        functions, with both and cultural and commercial outcomes. Its functions are
        controlled by different sectors within the audiovisual, telecommunications or
        electronics industries. Their endeavours form a service chain stretching from
        origination to the receiver in the home.
        Consumer commitment - whether of time or financial resources - is not to any
        of these individual functions or to the industries that support them, but to the
        end result, the services that are made possible by the chain of operations. These
        will be of different types, in the case of a general interest service, or of similar
        type if the service is a specialised, thematic one. They may be funded in
        different ways: by licence fee, advertising or by subscription.
        The approach for accelerating the development of the market for advanced
        satellite and cable television services must therefore have a service focus. It
        would be misguided to adopt a piecemeal approach, addressing individual parts
        of the television service chain independently in ad hoc style. They must all be
        addressed within a service perspective; this will condition the approach adopted
        in the Action Plan.
   ii)  Proposals will be sought for offers to provide on the market television services
        in the D2-MAC standard, especially its 16:9 format, or the HD-MAC standard.
        To validate the service approach, proposals must include all the elements in the
        service chain necessary to reach the consumer. They should embrace the
        following: satellite distribution means; cable distribution means (if necessary);
        access to suitable programme material and receiver availability in the target
        market. Proposals will therefore be integral service projects where all these
        aspects have been taken into account.
        It is expected that each service proposal would be presented by a project
        consortium and led by a broadcaster, since broadcasters have editorial control
        over services. Consortia would include some or all of the following actors:
        satellite operators; cable television network operators;                 equipment
        manufacturers.
        Members of a consortium would be expected to have signed a project contract
        between themselves to provide the proposed service, subject to the availability
        of Community funds. The acquisition or commissioning of programmes from
 ---pagebreak---                                                - 12-
              sources independent of the project broadcaster will be the object of separate
              contracts between that broadcaster and the programme maker or rights holder.
3.   OUTLINE DESCRIPTION O F THE SERVICE CHAIN AND PRELIMINARY
     IDENTIFICATION OF POTENTIAL SOURCES O F COSTS
     The introduction of advanced satellite and cable television services will impose
     additional costs upon participants along the Service Chain. Many of these costs relate
     to transition. For instance, broadcasters may for commercial reasons need to
     simulcast the advanced service in parallel with the conventional 4:3 PAL or SECAM
     service in the early stages of market development. Programme production may
     initially take longer or become more complicated, until staff adjust and improved
     equipment reaches the market. Despite their transitory nature, these costs are
     significant because they hold back market development. The costs have a collective
     dimension because of the complexity and interdependence implicit in the Service
     Chain.
    The Service Chain and potential sources of additional costs are described under three
    general headings:
     1. Broadcaster's operations including studio upgrading and satellite transmission
    2. Cable redistribution
    3. Programme production and conversion.
3.1 Broadcaster's Operations including studio upgrading and satellite transmission
    In order to provide a broadcast service, the broadcaster needs to put together a
    schedule of programmes. These programmes may be produced in-house or
    commissioned or acquired externally (see section 3.3 below). For in-house production,
    the broadcaster may decide (if it has not already been done) to upgrade his studio to
    work in components (either analogue or digital). Furthermore he may wish to upgrade
    his equipment including cameras, recorders, telecines, etc., to cope with 16:9 D2-MAC
    requirements.
    He may in addition wish to upgrade, to a dual aspect ratio environment, his signal
    processing and post production equipment such as vision mixing, special effects,
    editing equipment, "pan and scan" facilities (to derive 4:3 from 16:9), standards
    conversion equipment, etc..
    Although there may well be "learning" costs due to the change of production practices
    in the transition from a 4:3 to a 16:9 environment, the broadcaster may find that once
    the necessary capital investment has been made, his actual costs per programme for
    in-house production are no higher than for a PAL 4:3 service. This situation is
    however unlike to remain valid for HD-MAC services where the much higher picture
    quality levels will impose additional production costs.
    Assuming the existence of a programme, either live or recorded, this section describes
    the additional processes the broadcaster and other relevant actor must employ in
    delivering it to the viewer.
    i)      The signal must be encoded in D2-MAC using a dedicated encoder before
             transmission.
    ii)      If necessary, for instance in the case of a subscription service, the signal is to be
            encrypted. This will occur at the encoder.
 ---pagebreak---                                    - 13-
This encoder/encrypter may be located either adjacent to the broadcaster's
studios or at the satellite uplink station depending on practice.
 ---pagebreak---                                             - 14-
          The acquisition of an encoder/encrypter (per channel) is a necessary cost
          entailed in the broadcasting of D2-MAC services.
          For HD-MAC services HD-MAC encoders/encrypters will similarly be
          required.
    iii)   Regardless of where the encoder is located, in the case of distribution by
          satellite, there will be costs incurred by the broadcaster in transporting the
          signal from the studio to the satellite uplinking station and for uplinking it to
          the satellite. Where the signal is to be distributed directly to the viewer by cable
          without the intermediate use of a satellite, these costs are for the transport
          between the studio and the cable head-end.
    iv)   In the case of satellite distribution the next step is the access to a satellite
          transponder capable of delivering the uplinked signal either direct to the
          viewer's home for a DTH (direct to the home) service and/or to the cable head-
          ends for cable redistribution to the viewer's home. The cost incurred is the
          rental of a satellite transponder.
    v)    Assuming that he is not already equipped to receive satellite television, the
          viewer will have to acquire a suitable dish antenna to receive the 16:9 D2-MAC
          services. He will also require either an add-on satellite tuner to convert the
          signals into a form that his existing 4:3 TV set can display or a new 16:9 TV set
          that is already suitable for DTH satellite reception. In both cases, decryption
          facilities and possibly other new consumer equipment (e.g. a VCR) may also be
          needed.
3.2 Cable Re-distribution
    Cable systems can receive D2-MAC signals at their head-ends either from satellites or
    in some cases directly from the broadcasters' studios.
    i)    In order for a cable system to distribute a signal broadcast by satellite to its
          subscribers, the satellite signal will have to be received by a satellite dish at the
          cable head-end and normally demodulated from F.M., which is the modulation
          system used in the satellite links, and subsequently remodulated to A.M. which
          is normally used on cable networks. In addition, depending on practice, it may
          be necessary to decrypt and reencrypt a received encrypted signal prior to
          transmission through the cable. There may also be a requirement for
          conditional access/subscriber management system at the cable head-end. The
          acquisition of the necessary head-end equipment required to perform the above
          tasks will be a cost to the cable operator.
    ii)   Even when the television signals at the head-end (whether they come directly
          from the studio or via satellite), are prepared for distribution through the cable,
          there may be a requirement for reconfiguring the cable system itself in order to
          distribute the signals. This requirement, if any, will vary from cable system to
          cable system depending on the practices in operation and the technology used
          in the system. The costs of such reconfiguration, necessarily incurred in order to
          distribute the D2-MAC signal, will correspondingly vary.
    iii)  The subscribers to cable TV networks distributing D2-MAC 16:9 signals will
          have to acquire either an add-on adapter to convert these signals into a form
          that their existing 4:3 TV set can display or a new 16:9 TV set that already has
          an input suitable for these signals. In both cases, decryption facilities and
          possibly other new consumer equipment (e.g. a VCR) may also be needed.
 ---pagebreak---                                             - 15-
3.3 Programme Production and Conversion
    The broadcaster assembles a schedule of programmes to provide a service. This will
    consist of programmes produced in-house, using the broadcaster's own facilities and
    programmes sourced externally. Externally produced programmes may be simple
     acquisitions of finished programmes or new programmes commissioned by the
    broadcaster.
    All broadcasters will draw on these programme sources, with wide variation in the
    balance between internal and external sources. Completing a programme schedule
    suitable for a 16:9 D2-MAC service will present different cost implications to the
    broadcaster, depending on whether the programme is produced in-house or sourced
    externally.
    3.3.1 Existing Programmes
    Broadcasters will have access to certain existing programmes which are already in a
    form suitable for a high quality 16:9 D2-MAC (e.g. post-1952 feature films made after
    effective introduction of wide screen aspect ratios in the cinema).
    The additional costs relate to copying the production in the 16:9 format on to video
    tape using a telecine machine (this is known as the "re-mastering" process).
    3.3.2 New Programmes from External Sources
    Where a broadcaster commissions an external (independent) programme maker to
    produce a programme, there will initially be some additional costs incurred by
    producing that programme in 16:9 and to a higher technical quality specifications.
    These will be transitional and relate to production techniques and practices, currently
    adapted to 4:3 production and exploitation.
    3.3.3 New Programmes Produced In-house
    A broadcaster wanting to produce programmes in-house may, depending on the
    sophistication of his studio equipment, incur additional costs as above, on a
    programme by programme basis.
3.4 Framework Conditions
    It should be emphasized at this point that nothing in the above description of the
    Service Chain, including its production element, should be taken as implying a prior
    preference, in the context of the Action Plan, between options available to
    broadcasters. Broadcasters must themselves, in preparing projects to be incorporated
    into the Action Plan, take their own decisions on the matter in the light of their own
    perception of requirements. There will, of course, be requirements of the Action Plan
    itself, apart from the overriding objective of launching a significant number of new
    advanced services. These include: a high and growing amount of 16:9 programmes per
    service, and high technical quality of picture and sound. But how the broadcasters
    achieve this is left to them.
 ---pagebreak---                                              - 16-
   TARGETS TO BE ACHIEVED
    In the context of the objective stated in paragraph 1 above, it is appropriate to set
   indicative targets for the impact of the Community funding which will be used to
   accelerate the market development, as follows:
   the achievement during the life of the Action Plan of:
   i)     A critical mass of satellite television services, using the D2-MAC standard,
          particularly in its 16:9 format, or the HD-MAC standard.
   ii)    A significant and constantly increasing number of cable TV networks carrying
          high quality 16:9 D2-MAC services to their customers.
   iii)   A significant and increasing volume of programming in the 16:9 format and with
          high technical quality both in picture and sound. Such programming to be
          broadcast in the above mentioned services.
5. T H E FUNDING APPROACH TO BE ADOPTED
   i)     The funding will go to projects which will provide a complete service as
          described in section 2 above. In other words, it is not intended to fund,
          separately, individual elements of the Service Chain in the case where such
          elements are not an integral part of the complete chain.
   ii)    No funding will be made available for consumer equipment, either for satellite
          or cable reception. This is a matter for the market and it will be in the interests
          of equipment makers themselves to price their offerings sufficiently attractively
          to stimulate consumer demand.
   iii)   In relation to cable TV networks, the most obviously fundable element is the
          necessary head-end equipment as described in section 3.2 above. Certain other
          elements of cost in the reconfiguring of networks may also be included in the
          scope of the Action Plan provided that such investments are :
          a) cost effective
          b) specifically required for the targeted advanced service, and
          c) where the impact of such investments is judged to be of major importance to
          the achievement of the Action Plan objective
   iv)    Broadcaster's costs as indicated in section 3.1 above and including
          encoding/encryption, signal transport and up-linking and satellite transponder
          rental, are, in principle, included in the scope of the Action Plan. The amounts
          paid will be a portion of the costs, additionally incurred by broadcasters
          providing the advanced services.
 ---pagebreak---                                         - 17-
v)     In the case of in-house programme production it should be emphasized that
      whereas the complete re-equipping of television studios is not included in the
      objectives of the Action Plan, nevertheless, certain studio investments could be
      within its scope provided that they are :
      a) cost effective
      b) specifically required by the broadcaster providing the advanced services for
      the purpose of such service provision.
      c) where the impact of such investment is judged to be of major importance to
      the achievement of the Action Plan objectives.
      Broadcasters with plans for in-house production who choose to seek
      Community funds for the upgrading of their studio facilities to 16:9 working
      must recognize that this choice will limit their scope to be funded for making
      individual programmes.
vi)   Concerning independent producers, the aim is to ensure they can respond
      adequately to broadcasters' requirements for a wide range of attractive
      programmes in adequate volume, made to the appropriate technical quality.
      Independent producers will in many cases incur additional costs to meet the
      broadcasters' requirements for quality and format. These additional costs are
      within the scope of the Action Plan and a portion of such costs may be
      reimbursed.
      Some existing television programmes and most feature films are exploitable in
      16:9 but are currently available only in 4:3 versions. These must be converted to
      16:9 if they are to be acquired for widescreen D2-MAC transmissions by
      broadcasters. These additional costs are within the scope of the Action Plan and
      a portion of such costs may be reimbursed either to the rights holder, if he
      undertakes the task, or to the broadcaster.
vii)  Summarizing the above, the broad areas at which Community funding will be
      targeted are identified to be:
      a) Broadcaster's       operations   including    studio   upgrading    and    satellite
      transmission
      b) Cable Redistribution
      c) Programme Production and Conversion
viii) The allocation of these funds will be governed by the principle of double
      degressivity in the following sense:
      a) In order to encourage the early start-up of the targeted advanced services,
      those projects starting earliest will receive the greatest levels of funding.
      b) In line with the policy that Community funding is to cushion the economic
      consequences in the start-up phase, the funding allocated to projects will be
      progressively reduced each year the incentive is in place.
 ---pagebreak---                                                 - 18-
6.    INDICATIVE INTERNAL ALLOCATION OF FUNDS
      The indicative percentage breakdown of Community funding is as follows:
      i)       Broadcaster's operations including
               studio upgrading and satellite transmission                       60 - 70 %
      ii)      Cable Redistribution                                       5 -15 %
      iii) Programme Production and Conversion                            25 %
      It is intended to retain a certain level offlexibilityto vary these percentages should the
      requirements of the Action Plan, as it evolves, dictate it.
7.    PRINCIPLES AND CRITERIA FOR IMPLEMENTATION
     Project proposals will be evaluated using procedures with an independent element
     which will take account, inter alia, of the following general and specific conditions.
7.1. General Principles - Equitable Distribution
     The set of successful projects must:
     i)       show a spread of projects between entities to avoid undue concentration or the
              creation of monopolies or cartels;
     ii)      have a wide geographic distribution in order to ensure the Community
              dimension;
     iii)     involve, to a reasonable degree, programme producers independent of the
              broadcasters in the projects;
     iv)      comply with Community competition rules.
7.2. Specific Criteria for Selection
     Other things being equal, priority for Community funds should be given to
     commercially viable projects which fulfil the following criteria:
     i)       a high percentage of 16:9 content;
     ii)      a large audience;
     iii)     high technical quality levels;
     iv)      scope for transfrontier services;
     v)       scope for the reasonable involvement of programme producers independent of
              the broadcasters.
 ---pagebreak---                                              - 19-
7.3 Criteria for Programme Support
    Both in-house production by broadcasters and external production are within the
    scope of the Action Plan.
    Community support for programme production and conversion will be closely linked
    to the new 16:9 services, but able to benefit the whole sector.
    To qualify for Community support on a programme by programme basis, producers of
    new programmes, and rights holders of certain existing programmes exploitable in
    16:9 but requiring re-mastering, must have an order for the programme from at least
    one of the broadcasters involved in implementing the Action Plan, who undertakes to
    broadcast the programme in 16:9 D2-MAC or HD-MAC. The technical quality of
    these programmes must be such as to allow their exploitation in 16:9 D2-MAC
    services in the short term and also in HD-MAC services in the medium term.
    Flexible mechanisms will be set up to respond to the specific needs of different kinds
    of programmes, including additional production costs for "stock" programmes with an
    extended life (e.g. drama series; cultural events etc.) and conversion or remastering of
    existing programmes exploitable in 16:9.
    These will be open mechanisms which will operate on the general criteria set out
    above together with specialised selection and funding criteria for each mechanism.
    The detail of these specialist criteria remains to be developed and will be published in
    the Official Journal within three months of the adoption of the present decision. They
    will function automatically and without any value judgements on the creative
    approach. Nothing in this Action Plan shall interfere with normal relationships
    prevailing between broadcasters and external rights holders on these matters.
 ---pagebreak---                                           FINANCIAL STATEMENT
                                              FINANCIAL IMPLICATIONS
     Hlk:             HDTV - Action Plan for the introduction of
                      advanced television services in Europe.
     Budget article          B6-8105 (part of)
                             B6-8106
                             B3-3
                             Part A
3.   Legal basis:            Article 235 of EEC Treaty
4.   Description
4.1. Objectives
     The objective of the Action Plan is to ensure the accelerated development of the market for advanced TV
     services by satellite and cable based on the D2-MAC standard, particularly in its 16:9 format and the
     HD-MAC standard. Community funds will contribute within the period up to the end of 1996 to
     achieve the rapid transition from conventional services to a fully functioning market for advanced TV
     services by covering parts of the additional costs incurred by broadcasters, programme makers and cable
     TV network operators in the provision of these advanced TV services.
     The general targets set for the Action Plan are the achievement during the above-mentioned period of:
     i)     A critical mass of satellite television services, using the D2-MAC standard, particularly in its
            16:9 format, or the HD-MAC standard.
     ii)    A significant and constantly increasing number of cable TV networks carrying high quality 16:9
            D2-MAC services to their customers.
     iii)   A significant and increasing volume of programming in the 16:9 format and with high technical
            quality both in picture and sound. Such programming to be broadcast in the above mentioned
            services.
 ---pagebreak--- The quantitative targets set per annum are
                                                                      1993        1994        1995        1996
  1. Cumulative number of services                                      15           20        25           30
        by the end of each year
  2. Cumulative hours of supported programming                        8,000       15,500    22,000    26,000
        by the end of each year
The notion of a critical mass of services as mentioned above relates to the point in the market development
from which one may expect rapid self sustaining growth. It is estimated that 15 services with wide audience
potential could provide such a critical mass.
4.2. Duration : From adoption of the present Decision to end of 1996.
4.3. Economic operators (to whom the funds are directed)
       Exhaustive consultations over an extended period of time with a number of economic actors in the
      television service provision market - broadcasters, equipment and programme makers, cable and satellite
      operators - have identified additional costs to those parties which could be involved in the provision of
      these advanced services based on D2-MAC, particularly in its 16:9 format and HD-MAC.
5.    Classification of expenditure
5.1. Non compulsory expenditure (NCE)
5.2. Dissociated appropriations (DA)
6.    Nature of expenditure
6.1. Cofinancing
      Community financial incentives are intended to ensure the accelerated development of the advanced
      television service market in conformity with the strategy set out in the Council Decision, by contributing
      to the reduction of the additional start-up costs involved. In other words, Community funding will
      compensate a part of the additional costs incurred by the concerned economic actors to achieve this rapid
      transition from conventional services to the advanced television services, using D2-MAC, particularly in
      its 16:9 format and HD-MAC.
      The economic operators launching new services will make large investments and will carry the entire
      commercial risks associated. The philosophy governing Community financial involvement relates to
      covering part of the additional costs incurred in connection with the new services, up to a ceiling per
      area of expenditure (see 7.2 below). Ceilings are judged to be more appropriate than percentages due to
     the wide variation of potential costs which in many cases could greatly exceed the Community resources
      available. Furthermore, the principle of double degressivity (see 7.1. below) will ensure that these
     ceilings will progressively be reduced each year.
     It will be ensured that in each contract covering a project the amount of Community fundings will be
     clearly established together with the contribution of the project members in order to provide an adequate
     basis for effective financial control.
 ---pagebreak---                                                           -3-
7.    Estimate of financial implications and method of calculation
7.1. The Action Plan governing the allocation of Community funding is set for a period commencing on the
      date of adoption of this Decision and concluding on 31st December 1996. Community funds during this
      period amount to 850 MECUS.
      Broad areas at which Community funding will be targeted are identified to be :
      (a)    Broadcasters operations including studio upgrading and satellite transmission
      (b)     Cable redistribution
      (c)     Programme production and conversion
     The allocation of the funding will be governed by the principle of double degressivity in the following
      sense :
      a)     In order to encourage the early start-up of the targeted advanced services, these projects starting
             earliest will receive the greatest level of funding.
      b)     In line with the policy that Community funding is to cushion the economic consequences in the
             start-up phase, the funding allocated to projects will be progressively reduced each year the
              incentive is in place.
7.2. Indicative internal allocation of funds
a)    Because of the expected great variation in requirements from project to project it is impossible to be
      definitive as to the necessary Community contribution required to meet the objective. The following
      table provides an estimate of the ceilings for the Commission contribution to each element of cost
      identified.
 AVERAGE UNIT COSTS FOR COMMUNITY                               1992   1993       1994       1995         1996
                      FINANCE
 Studio upgrading (MECU)                                          3      3         3          2           2
 Transponder cost/year (MECU)                                     2,5    6         5          5           4
 Cable network upgrading (KECU)                                   50/    50/       40/        40/         30/
                                                                  500    500       400        400         300
The wide range indicated with respect to cable is a reflection of the very large variation between different
cable systems.
 ---pagebreak---                                                               -4
 For the programming element the following average lump sum support is relevant.
                                                                     1992     1993         1994        1995            1996
   KEY FOR COMMUNITY FINANCE
   16:9 Production/hour (KECU)                                         40        35         25           22             18
   Programme conversion/hour (KECU)                                    2.2        1.9       1.5          1              1
       b)      Taking into account the quantitative targets set out in section 4.1. above and the ceilings identified
               in 7.2 a), together with the operation of the double degressivity principle the indicative
               breakdown of the Community funding for the period of the Action Plan, in MECUS is :
                          1992 : 33 (B6-8105 part of) presently in reserve BO-40
                          1993 : 145 (B6-8106) + 32.5 (B3-3) » 177.5
                          1994 : 175 (Bo-8106)^ + 70 (B3-3) =           245
                          1995 : 150 (Bo-SlOep + 59.5 (B3-3) = 209.5
                          1996 : 131 (B6-8106y) + 54 (B3-3) =            185
               A detailed breakdown is given in Tables 1 and 2 below.
       c)      Indicative percentage breakdown of Community funding between the areas :
               i)        Broadcasters operations including studio upgrading
                         and satellite transmission : 60 - 70 %
               ii)       Cable redistribution : 5 - 15 %
               iii)      Programme acquisition and production : 25 %
<*> This activity must clearly be integrated into the Fourth Framework Programme in principle from 1994 as laid down in the
     communication from the Commission to the Council and the European Parliament : "Research after Maastricht : an Assessment.
     A Strategy" (DOC.SEC.(92)682 final, para 155).
 ---pagebreak---                          ACTION PLAN FOR THE INTRODUCTION OF ADVANCED TELEVISION SERVICES IN EUROPE
                                                    Detailed quantitative targets and Community Support
                                                                    1992        1993       1994         1995      1996      Subtotal      Total
Broadcasting
1. Transmission
    Cumulative number of        Channels                           10            15        20          25         30
                                    MECU                               25           90        100         125        120      460
2. Studio upgrades
                                Studios                                          8         10          2          ~                          520
                                    MECU                                            24        30          6                     60
Production (Hours supported)                                        1820         6150      7580        6520       3950
3. Production of programmes                                                        630     2580        2520       2950        193
4. Conversion of programmes                                         1820         5520      5000        4000       1000         27
                                    MECU                                4           32.5      70          59.5       54                      220
Retransmission
5. Cable networks
                                    MECU                               4            30        45          19         12                      110
TOTAL                                                                 33         176.5      245          209.5      186                      850
                                                                            Table 1
This table shows the result of a scenario developed in order to evaluate the financial needs for the Action Plan. Most of the figures represent average
estimations and forecasts that may vary widely depending on the type of project and the evolution of the market. For this reason these figures are to be seen
as purely indicative and should not be interpreted as constituting a commitment of the Commission.
 ---pagebreak---                                                       -6-
                                 DETAILED BREAKDOWN OF PROGRAMME ELEMENT
                                    1st year   2nd year     3rd year 4th year 5th year Total
REFORMATTING :
Standard amount (ECU/hr)               2200      1900          1500     1000     1000
 Hours supported                       1820      5520          5000     4000     1000   17390
 Hours required (15 services)          4250      8000          7000     4900     1600   25750
 Percentage requirements covered        43        70            71       82       62       67
 Budget expenditure (MECU)                4        10,5         7,5      4          1      27
NEW PRODUCTS:
Standard amount (KECU/hr)                          35           25       22        18
 Hours supported                                  630          2580     2520     2950     8680
 Hours required (15 services)           700      3400          7770    11600    13800   37270
                                                                                              >
 Percentage requirements covered          0         19           33        22       21       23
 Budget expenditure (MECU)                0         22          62,5     55,5       53     193
TOTALS :
 Hours supported                       1820      6150          7580     6520     3950   26070
 Hours required (15 services)          4950     11400         14770    16500    15400   63020
 Percentage requirements covered          37        54           51        40       26       41
 Budget expenditure                         4      32,5          70      59,5       54     220
                                                    Table 2
 ---pagebreak---                                                         -7-
 7.3. Commitments of the Economic Operators (as entered into in the Memorandum of Understanding)
       i)    Commitments of Broadcasters
                      To launch on the market one or more television services using the D2-MAC standard,
                      particularly in its 16:9 format, or the HD-MAC standard, in conformity with
                      Community policy.
                      Ensure that where software is available in 16:9 (tape or film), broadcasts of this software
                      shall, to the greatest extent practicable, be in 16:9 D2-MAC format.
                      Ensure full exploitation in 16:9 D2-MAC of suitable existing programme material.
                      Produce programmes or have programmes produced suitable for 16:9 D2-MAC
                      broadcasts.
      ii)    Commitments of Industrial Manufacturing Companies
                      Ensure the availability in the market of 16:9 D2-MAC receivers at such times and in
                      sufficient quantities in order to meet the requirements of the new services.
                      Ensure continued compatibility with existing transmission standards of the 16:9 D2-
                      MAC receivers distributed.
                      Ensure improved availability of programme production equipment suitable for 16:9 D2-
                      MAC format.
      iii)   Commitments of Satellite Operators
             Make available, on an equitable basis, transponder capacity according to the needs of the
             Broadcasters for their 16:9 D2-MAC services.
      iv)   Commitments of Cable Network Operators
            Retransmit to subscribers 16:9 D2-MAC originated programmes in the 16:9 D2-MAC format.
8.    Type of Control
The Commission will be responsible for the execution of the Action Plan. It will be assisted in this regard on
the technical aspects by the experts group mentioned in part 3 section 3.2 ii). The administrative aspects will
be controlled by the administration departments of DG XIII and DG X.
 ---pagebreak---  ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM(92) 154 final
                                                      DOCUMENTS
EN                                                                              15
                                 Catalogue number: CB-CO-92-210-EN-C
                                                             ISBN 92-77-44006-6
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