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1 THE TRANSITION TO DIGI TAL TERRESTRIAL TELEVISION: A COMPARISON OF THE EUROPEAN UNION AND THE UNITED STATES By KATHERINE P. MCAULIFFE A THESIS PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLOR IDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS IN MASS COMMUNICATION UNIVERSITY OF FLORIDA 2010
2 2010 Katherine P. McAuliffe
3 To Betty and Gary McAuliffe
4 ACKNOWLEDGMENTS I am very grateful for the opportunity to pur sue my masters degree at the University of Florida. I have been give n many wonderful scholarship oppo rtunities and gained valuable research and life experience. First, I would like to thank my thesis chair, Dr. David Ostroff for his guidance and support during the re search and writing of this thesis I would also like to thank him for presenting me with the opportunity to study and work in Budapest, Hungary. This opportunity fueled my interest in the similarities and differe nces between the US and the European Union in terms of telecommunicati ons policy, and was the source of one of my conference papers. Second, I would like to th ank Dr. Amy Jo Coffey for her meticulous comments and guidance for my research design, and her continuous encouragement and support throughout the thesis writing pro cess. Next, I would like to th ank Dr. Petia Kostadinova for directing me to the appropriate sources for unders tanding the legislative a nd historical processes of the European Union. I like to thank Jason for his continued support and help proof reading my thesis. I would also like to thank Cezar and Star bucks for many long days, nights, w eekends and lots of coffee. Finally and most importantly, I would like to th ank my parents, Betty and Gary McAuliffe for their love and support throughout th is process, and for encourag ing me to pursue my masters degree. I would also like to thank my brothers, Will and Neal, and my sister, Merrily, for being awesome.
5 TABLE OF CONTENTS page ACKNOWLEDGMENTS...............................................................................................................4 LIST OF TABLES................................................................................................................. ..........8 ABSTRACT.....................................................................................................................................9 CHAP TER 1 INTRODUCTION..................................................................................................................11 The Rationale behind Intervention......................................................................................... 11 Analog versus Digital Television........................................................................................... 13 The Invention of DTV.....................................................................................................16 The American Path to DTV............................................................................................. 18 The European Path to DTV.............................................................................................20 American and European Television Markets......................................................................... 22 The Players.................................................................................................................... .........27 2 LITERATURE REVIEW.......................................................................................................30 Basic Regulatory Philosophies in the Eu ropean Union and the United States .......................31 EU Regulatory Philosophy: Dirigisme and Deregulation ...............................................32 US Regulatory Philosophy: Libertarian, Public Interest and the Liberal Market ........... 33 EU Media Policy Goals...................................................................................................33 US Media Policy Goals...................................................................................................34 Broadcast Televisions Market Failure................................................................................... 36 Consumer DTV Adoption....................................................................................................... 38 3 METHOD......................................................................................................................... ......43 4 EU AND US GOVERNANCE............................................................................................... 49 Introduction................................................................................................................... ..........49 European Union......................................................................................................................49 History.............................................................................................................................49 Governance......................................................................................................................51 Institutional Organization................................................................................................ 53 EU Legislation.................................................................................................................56 United States...........................................................................................................................58 History.............................................................................................................................59 United States Government Organization.........................................................................60 Legislation.......................................................................................................................62 Summary.................................................................................................................................64
6 5 EU AND US MEDIA POLICY.............................................................................................. 68 Introduction................................................................................................................... ..........68 EU: Audiovisual Media Services Directive................................................................... 68 EU: Spectrum Policy...................................................................................................... 69 EU: Digital Television Policy........................................................................................ 71 US: Spectrum Policy......................................................................................................74 US: Digital Television Policy......................................................................................... 75 Comparison of Regulatory Frameworks................................................................................. 76 6 CASE STUDIES.....................................................................................................................79 Reasons for Transition......................................................................................................... ...79 EU and US Transition Periods................................................................................................ 82 Regional Approach..........................................................................................................82 Island Approach...............................................................................................................83 The Snap or Big Bang Approach..................................................................................... 84 Other Approaches............................................................................................................86 European Union Digital Television Subsidies........................................................................ 88 Germany..........................................................................................................................94 Italy..................................................................................................................................96 England............................................................................................................................97 France..............................................................................................................................98 Hungary...........................................................................................................................99 United States Digital Television Subsidies............................................................................. 99 European Union Consumer Education Plans........................................................................ 101 UK.................................................................................................................................101 Hungary.........................................................................................................................102 Germany........................................................................................................................102 France............................................................................................................................103 United States Consumer Education...................................................................................... 104 New Services: European Union...........................................................................................106 France............................................................................................................................107 Germany........................................................................................................................109 United Kingdom............................................................................................................109 New Services: United States................................................................................................ 110 Summary...............................................................................................................................112 7 DISCUSSION AND CONCLUSION.................................................................................. 114 Research Question 1A: What Needs to be Acco mplished for the Digital Transition to Take Place?.......................................................................................................................118 Broadcaster Participation............................................................................................... 119 Consumer Informati on and Tim etables......................................................................... 119 Consumer Subsidies...................................................................................................... 120 Research Question 1B: How has the Transi tion Progressed in the EU and the US Com paratively?.................................................................................................................120
7 Legislative Process........................................................................................................ 121 Transition Periods.......................................................................................................... 122 Consumer E ducation ..................................................................................................... 125 Subsidies........................................................................................................................126 Research Question 2: What Policy Lessons from the Digital Television Transition can be Applied to the Introduction or Expansion of New Communications T echnologies?...129 Limitations and Future Research.......................................................................................... 131 Early Indications of Effective Practices........................................................................131 Conclusion............................................................................................................................134 APPENDIX DIGITAL TELEVISION TRANSIT ION HELP W EBSITES........................... 136 LIST OF REFERENCES.............................................................................................................140 BIOGRAPHICAL SKETCH.......................................................................................................155
8 LIST OF TABLES Table page 1-1 Comparison of analog and digital television transm ission capabilities.............................14 1-2 Platform availability and percen tage of television household users .................................. 24 1-3 Number of channels......................................................................................................... ..26 3-1 Variables comparing the European Union and the United States as single political entities................................................................................................................................45 3-2 EU member state im plementation cases............................................................................ 46 3-3 National digital television im plementation variables........................................................ 46 4-1 Differences between EU and US governance.................................................................... 66 6-1 Reasons for participating in the digital television transition ............................................. 82 6-2 Completed analog to digital switchovers........................................................................... 89 6-3 Incomplete digital terrestrial transitions............................................................................ 91 7-1 Comparison of the regional and snap appr oaches: Characterizations, advantages and disadvantages. ..................................................................................................................125 A-1 US digital transition help website.................................................................................... 136 A-2 Hungarian digital transition help website........................................................................ 137 A-3 UK digital television transition help website ................................................................... 138 A-4 French digital televisi on transition help website ............................................................. 139
9 Abstract of Thesis Presen ted to the Graduate School of the University of Florida in Partial Fulfillment of the Requirements for the Master of Arts in Mass Communication THE TRANSITION TO DIGI TAL TERRESTRIAL TELEVISION: A COMPARISON OF THE EUROPEAN UNION AND THE UNITED STATES By Katherine P. McAuliffe May 2010 Chair: David Ostroff Major: Mass Communication The transition from analog to digital tele vision is viewed as a method for sustaining national economies through new co mmunications technology mark ets. Converting analog to digital transmissions also provides consumers with better pict ure and sound quality. Most transitions, such as the VCR to the DVD player, have been industry and consumer led; even the transition from black and white television to colo r television was largely consumer and industry led. However, governments around the world requi re the transition from analog to digital television transmission. Many of the governments requiring this transition are categorized as free market economies, like the United States and the European Union. This study examines the digital television transition in the US and the EU through a comparative case study to determine differences in their approaches to the introduction of digital te levision, and report best practices for government introductions of comm unication based technologies. The EU and US are analyzed in terms of their respective histories, governance, institutional organization and legi slative process. The comparison of the EU and the US focuses on specific policy variables such as overridi ng media and telecommunications legislation, spectrum policy, and digital television policy. In terms of digital television implementation, EU and US cases are compared across transition periods, subsidies, and consumer education plans.
10 The purpose of this research is to describe the DTV approaches and report the relative successes and failures of each tran sition process. The account of successes and failures will help other governments intending to transition at a later date streamline their own process, be a useful reference point if governments should choose to introduce another communications technology, and serve as a basis for future evaluative research.
11 CHAPTER 1 INTRODUCTION The process of upgrading television picture quality through digital technologies has been in the works for well over a decad e in the US and the EU, but only sinc e 2007 has the general public really become aware of the impending di gital changes. During the conduct of this research, the US postponed the switchover twice and finally shut off analog broadcasts in June 2009. Meanwhile the EU has progressed significantly in transitioning all of its member nations to digital distribution; the first to switchover being Luxe mbourg followed closely by the Netherlands in 2006. The switch to digital ope ns the way for enhancements to traditional television and a burgeoning industry of innovative services, including enhanced wireless capabilities, faster cell phone networks and mobile television capabilities. While these new services are a boon to cons umers and to the media and electronics industry, the transition was actually initiated by government actors. This study compares the EU and the USs transition process, because both polit ical entities chose to intervene in liberal markets to influence consumer adoption of new technologies to pursue the goal of being the most competitive market for knowledge based and technology products in the world. However, though they have very similar media goals, their political structure and their implementation of the transition differs signifi cantly. By comparing the two different political systems and implementation processes, best practices can be gleaned for countries, which have not yet set a course for digital television. In addition, best practices can be applied to the introduction of future technologies. The Rationale behind Intervention The EU and the US are both free-m arket, capitalist economies, and generally in these types of systems, governments do not in terfere in the consumer or i ndustry adaptation and the use of
12 new technologies or products. However, in th e uptake of digital broa dcast television, both political entities have found it necessary to intervene through regulation and consumer incentives. Governing bodies inte rvened in this transition because they view digital distribution as a positive development for industry, consumers and government, but do not believe that the switch to digital television w ould happen without government intervention. This is because broadcasters, operators and hard ware manufacturers will not conve rt while there is insufficient consumer demand, and consumers will not convert if th ere is little content or perceived value. In this situation, government is th e catalyst for a new technolog ical era of media, because consumers and industry are alrea dy significantly invested, established and therefore resistant to change. Another factor behind government involvement in the digital tele vision transition is desirability of additional spectrum space for technological innovation that could revitalize economies. Through digital television, broadcasters can enhance their services and open up new revenue streams by offering high definition progr ams or multicasting. Multicasting allows the broadcaster to send multiple channels to consum er television sets in the same amount of spectrum required for one analog channel. In addition, once analog television broadcasts have been terminated, there will be a considerable am ount of spectrum available that was previously unusable because of interference concerns. This new space, often referre d to as the digital dividend, might be used to expa nd or create new oppor tunities for communicat ion services. One new technology believed by industry and government to have great poten tial in the digital dividend is mobile television. While there has been marked uncertainty about technological standards and business models, mo bile television remains appea ling to consumers and business interests.
13 Analog versus Digital Television To begin to understand why governm ent, industr y and consumers might be interested in digital television, one must firs t understand the difference betw een digital television and its predecessor, analog television. Since the 1940s, te levision broadcasts were analog, meaning the entire picture was broadcast over the air in each frame. Through enhanced compression capabilities, DTV offers three main improve ments over the US analog National Television Standards Committee (NTSC) system and the European analog standards SECAM and PAL: (1) higher resolution, (2) wider pictures, and (3) compact-disc quality sound (Dupagne, 1999). In terms of resolution, to transmit an analog signal, a video camera takes pictures of a scene at about 30 frames per second. The camer a then converts the picture into rows of individual pixels with a specifi ed color and intensity; the rows of pixels are synchronized and produce a final signal, known as a composite vide o signal. The number of pixels displayed on the screen determines the detail, or resolution, of the picture. The composite analog signal interlaces the lines of pixels, meaning that the television picture is updated in halves. Half of the line s contained in the pictur e are displayed every 60th of a second, and the other half of the pi cture is displayed in the following 60th of a second, so every 30th of a second the audience sees a ne w picture (Brain, 2001; FCC, 1996). Different analog standards were employed ar ound the world. The US and Japan used the 525 line NTSC standard established in 1941, which di splays 525 interlaced lines of resolution at a rate of 30 frames per second, while Western Europe used two incompatible standards, SECAM and PAL. Both systems display 625 interlaced lin es of resolution at a rate of 25 frames per second. France and the Soviet bloc used SECAM, while the rest of Western Europe used PAL, which was developed in Germany in the 1960s. Both the US and European standards projected a picture on a square screen (Hart, 1994; Huff, 200 1). Broadcasters in th e US and Europe were
14 given 6-megahertz (MHz) or 8 MHz, respectivel y, for broadcasting these programs (Brinkley, 1997). Table 1-1. Comparison of analog and digi tal television transmission capabilities Analog transmission Digital Transmission Transmission Full picture delivered in rows of individual pixels Picture compress into bits, 1s and 0s US Standard US NTSC standard: 525 interlaced lines of resolution at a rate of 30 frames per second US ATSC standard uses MPEG-2 compression European Standard European PAL and SECAM standards: 625 interlaced lines of resolution at a rate of 25 frames per second European DVB standard uses MPEG-2 compression Picture definition Allows standard definition picture quality Allows standard definition formats: 480i and 480p, equivalent to the look of analog pictures with an aspect ratio of 3:4 Allows High Definition formats: 720p, 1080i, 1080p, allowing wide screen pictures with an aspect ratio of 9:16 Size Uses all of the US 6MHz of frequency space. Uses all of the European 8MHz of space One standard definition program uses a fraction of the 6Mhz or 8MHz of frequency space Digital Television Advantages for Broadcasters Ability to offer more programs Value added services like data casting, interactive programming and High Definition pictures Decreased transmission costs over time Digital Television Advantages for Audiences Clearer and crisper pictures Better sound Lager pictures More programming channels for music, data, and television
15 By contrast, instead of sending lines of a picture, lik e analog, digital images are compressed into bits, typically with the MPEG-2 compression standard for audio and video. The 1995 MPEG-2 compression standard encodes moving pictures and sound into bits that support interlacing and high definition te levision signals. For this reason the MPEG-2 standard is used for over-the-air digital televisi on in the ATSC and DVB standards (ATSC, 2007; Brinkley, 1997; Huff, 2001; Watkinson, 2001).1 In terms of picture resolution, digital TV standards allow se veral different formats: 480i (interlaced), 480p (progressive), 720p, 1080i and 1080p. Both 480i and 480p provide a resolution similar to analog pictures, while the 720p, 1080i and 1080p provide high definition pictures. Whereas interlaced pictures update half of the picture every 60th of a second, the progressive format updates the entire picture every 60th of a second. High definition (HD) formats also have a different aspect ratio, allowing for a wide screen picture and a more rectangular shaped tele vision set (Brain, 2001).2 Analog TV is 4 units wide by 3 units high, with an aspect ratio of 4:3 and projects a square pi cture onto a square scree n. HDTV is 16 units wide by 9 units high, with an aspect ra tio of 16:9 and projects a rectangular picture on a rectangular screen. Even with all of the added information, digi tal compression does not require any additional frequency space for broadcasting. In fact, within 6MHz of frequency, or channel space, a US broadcaster has 19.39 megabits-per-second. With analog transmission, broa dcasters only had the capacity to send one program at a time; howev er, digital compression reduces the amount of space a program uses, so broadcasters can offer more options to audiences. One of the major 1 The MPEG-4 standard advances television compression to be closer to that of computer graphics and some EU countries are considering upgrading to this technology. 2 Analog TV is 4 units wide by 3 units high, an aspect ratio of 4:3, while HDTV is 16 units wide by 9 units high, an aspect ratio of 16:9.
16 advantages of the digital signal is that broadcasters can crea te sub-channels within the 19.39 Mbps stream and multicast several standard de finition programs or transmit a high definition program (Brain, 2001). With analog transmission, the sound is sent through a separate signal; however, with digital, the sound is sent at the same time as the picture. While, MPEG-2 is currently the most popular compression standard, MPEG-1 was develope d in 1993 as the first compression standard for audio and video and was designed to encode audio and video to the bit-rate required for compact discs. In addition, the MPEG-4 compressi on standard is also available. MPEG-4 brings television compression closer to the quality of computer graphics. Some EU countries are considering upgrading to this technology. The Invention of DTV The inventio n of digital televisi on actually evolved out of an international race to create a worldwide standard for High Definition televi sion. High definition television was first demonstrated in the US in 1981, and was develo ped by Japanese engineer Masao Sugimoto, who worked for the NHK broadcasting company (Brink ley, 1997; Davies, 1996; Hart, 1994). This system, known as Muse in the US, for multiple sub-nyquist sampling encoding system, was still analog, but used 1,125 lines projected on to a wide screen television set (Brinkley, 1997). While Muse was still an analog system, the picture appe ared clearer and more lifelike than conventional television pictures. At the tim e, digital transmission capabiliti es were unavailable, so high definition television meant broadc asting a picture with at least twice the number of lines of resolution as the NTSC 525 line standard (Brinkley, 1997; Davi es, 1996; Hart, 1994). At first, High Definition was thought to be a novelty, but NHK announced plans to propose the Muse system as the world standard for te levision broadcasts before the International Telecommunications Union (ITU) (Brinkley, 199 7; Davies, 1996; Hart, 1994). The US and
17 European nations were soon to follow. During the international standards competitions, one of the American competitors, Woo Paik of General Instrument, developed a fully digital method for transmitting HDTV (Brinkley, 1997). In tracing the development of digital television, many st udies found that government involvement was a key aspect in both the EU and the US introduction of digital television (Brinkley, 1997; Davies, 1996; Ha rt, 1994; Huff, 2001). During the transition from black-andwhite to color TV, the industry was vertically integrated; co ntent producers, broadcasters, equipment makers, etc. may have all been under the same company roof. However, with less vertical integration, the transi tion to digital TV requires coor dination among a complex network of related industries (Bar, Borrus, & Steinberg, 1995). Technical standards are necessary for achieving coordination in the markets. The governance of industry standards comes in thre e different methods. Policymakers can allow markets to set standards, which has usually occurred within the computer industry. Policymakers can decide to impose standards, which was typical in the old US te lecommunications regime and is still common practice in the EU. Regulators can endorse standards created through private industry collaboration (David & Shurmer, 1996). In the development and introduction of digital TV, both American and European regulators have delegated the development of standards for digital TV to industr y consortia, though EU regulators have been more proactive in digital television standard deve lopment and in mandating the chosen standard. In the US, the government held a standards competition and offered industry no financial support. On the other ha nd, in what was to become the EU, European nations financially sponsored research and advances in televisi on standards creation.
18 The American Path to DTV To m aintain competitiveness and prevent a Japanese takeover of the consumer electronics industry, the US advanced an industry competition and the European nations sponsored a government-industry consortium, which resulted in the current US ATSC and European DVB standards for digital television transmission. The FCC, under the direction of Chairman La rry Patrick, created the Advisory Committee on Advanced Television Services and named Ri chard Wiley head of the committee (Brinkley, 1987; Hart, 1994; Huff, 2001). The first formal policy statement on HDTV came from the FCC in 1988 stating it would evaluate proposals from national and internat ional companies on an HDTV standard. However, the US government w ould not provide assistance for research and development, and the HDTV transmission system had to be compatible with conventional television sets (Brinkley, 1997; Davies, 1996; Hart, 1994; Huff, 2001). As proposals came in, Muse was still the only sy stem capable of high definition pictures; the rest of the contenders were merely enhan ced definition (ACTV). Proponents of ACTV said that while not high definition, it was a step in the right direct ion. Sarnoff Labs ACTV design was favored by many business interests because it did not require broadcasters to update equipment, but it required consumers to purchas e new TVs, and with HD coming in the future, another round of TV purchases would be required along with broadcaster system updates (Brinkley, 1997). The major problem for the original Muse system was that, as an analog signal with a widescreen picture and twice the resolution as the co nventional broadcasting systems of the time, the signal was larger than the 6MHz or 8MHz allotte d to American and European broadcasters. The Japanese system was originally intended for satellite transmission, b ecause there was more spectrum available to transmit the pi cture than in terrestrial bands. In order for the Muse system
19 to use terrestrial transmission, one channel a nd some of an additional channel would be necessary to broadcast the pi cture terrestrially (Brinkle y, 1997). To comply with FCC requirements, NHK developed a modified version to fit in within the 6MHz parameters known as Narrow Muse (Brinkley, 1997; Hart, 1994; Huff, 2001). At the time, nearly everyone believed that di gital transmission of broadcast TV signals was impossible. However, General Instrument Co rporation submitted a fully digital method for transmitting HDTV developed by Woo Paik (Brinkley, 1997). As a result, in 1990, FCC Chairman Al Sikes introduced new rules into the HDTV standard competition. Only true HDTV entries that were at l east partly digital would be considered for the US standard. In addition, these entries had to allow for simulcasting. Simulcasting is the use of one TV channel (6Mhz) for HD broadcasts and the use of another chan nel for conventional NTSC standard definition television broadcasts with the same programming during the transition period (Flaherty, 1995). The new digital requirements resulted in four viable designs: Gene ral Instrument (digital HDTV simulcast system); Sarnoff, Thompson, NBC, and Philips (digital HDTV simulcast system); Zenith and AT&T (HDTV simulcast analog/ digital hybrid system); and MIT and General Instrument (HDTV simulcast analog/ digital hybr id system). The digital requirements and poor performances knocked the original frontrunners, NHKs Narrow-Muse3 (HDTV analog simulcast system) and Sarnoff Labs ACTV (enhanced definition analog system), out of consideration (Brinkley, 1997; Fl aherty, 1995; Huff, 2001). The four remaining systems were tested again in 1992. Again all systems needed improvements and all competitors said the needed improvements would be made (Flaherty, 1995). 3 Japan went on to implement the original Muse system for satellite broadcasting and in 2003 it was replaced by ISDB (Integrated Services Digital Broadcasting) standard for digital broadcasting.
20 In 1993, when the Advisory Committee on Advanced Television Services, still headed by Wiley, called for another round of testing, General Instrument proposed an alliance among the remaining competitors to develop the design togeth er and split profits and royalties evenly. All parties including the FCC eventually agree d, and the Grand Alliance was formed in 1993 (Scully, 1993). The Grand Alliance HDTV system agreed to include progressive and interlace scanning capabilities, Video Compression base d on MPEG-2, packetization of data in transmission, and Dolby AC-3 5.1 channel s ound (Brinkley, 1997; Huff, 2001). In 1995, the ATSC incorporated the Grand Alliance System and published Standard A/53. The FCC adopted standard A/53, for the transmission of digital television, in 1996 (FCC, 1996). The European Path to DTV In 1986, when Japan proposed its system as an international standard at the International Radio Consultative Committee (CCIR), European officials expressed concern for their own consumer electronic industry falling to Japane se and US companies, delayed the CCIR decision and called for more studies in order to find a European alternative (H art, 1994). In 1989, the European Council passed two Decisions ( 89/337 and 89/630 concer ning high definition television) stating that member states woul d adopt a common standard for HDTV and that European development of a standard was cruc ial to European economic competition. Europe responded to Japans initiative by investing around $2 billion in to a Europe-wide governmentindustry consortium to develop a competing HD st andard. The consortium included Europes top consumer electronics companies Phillips, Thomson, and Nokia. The consortium developed HD-MAC (high defi nition multiplexed analog components), which is an analog signal using 1250 lines, but re quires 36MHz to transmit the signal. Because the number of broadcast frequencies are so limite d and the HDMAC broadcast signal is so large, it was more suitable for cable or satellite networks than for terrestrial broadcasting. Even so, the
21 HD-MAC system was proposed as the analog sta ndard for European broadcast HDTV, with transmissions to begin in 1995. The EU hoped th at a European standa rd could protect its consumer electronics industry from Japanese and US competitors (Davies, 1996; Hart, 1994). When Paiks digital discovery came about, so mu ch time and money had been invested that the HD-MAC consortium of government, industry and engineers had little inte rest in starting over and continued working on the HD-MAC system. The first major broadcast test of HD-MAC wa s at the 1992 Winter Olympic Games; it had negligible success. Due to scarce bandwidth and un certain performance in the broadcast arena, it was only usable in standard resolution by cable and satellite operators (Brinkley, 1997; Huff 2001). Originally, government offi cials thought digital technologi es for broadcasting were 15-20 years in the future, but officials realized in late 1992, that digital technologies could be only five years away. At this time, ministers denied an additional $39 million in funding for HD-MAC development, and began discussing opening up funding for a digital HD standard (Lineback & De Bony, 1992). After the unsuccessful 1992 trials and the realization that digi tal technologies were closer than expected, Europe abandoned the HD-MAC fo rmat in 1995 to focus on a digital system (Brinkley, 1997; Huff 2001). The Council passed Decision 93/424/EEC on an action plan for the introduction of advanced television services which appropriated funding for research and development and promoted the creation of programming capable of HD quality. The 1993 Decision was updated in 1995, by Dir ective 95/47/EC, which included more specifics about the new digital European standard development a nd member state participation (European Union Directive, 1995). Since then, the EU focuse d its efforts on the Digital Video Broadcasting system, DVB, as a set of open st andards for digital television.
22 The US and EU approaches took about 15 year s to establish a digita l television broadcast standard. However, the US preference for i ndustry competition produced a usable, competitive High Definition standard faster than the EUs singular approach. American and European Television Markets In 2009, the United States term inated over-the-a ir analog broadcasts in favor of over-theair digital broadcasts. The European Union, as a whole, will switchover to digital broadcasting by 2015, and individual member states will establish their own deadlines.4 Government control of the choice to provide content in digital format in both areas is restricted to broadcasters who use frequencies licensed by the government. In both Europe and the United States, broadcasts of this nature can be received free of charge through antenna receptio n; this is known as terrestrial transmission or broadcasting. In the United States, one can receive the four major commercial broadcast networks, ABC, CBS, NBC and FOX, the one national public broadcasting station, PBS, and any local broadcasters free of charge via antenna reception. Free-to-Air broadcasts from terrestrial and satellite sources have tradit ionally been more popular than the pay TV model in European countries. The deadline to provide content via digital methods does not apply to cable or satellite operators. Once the switc hover occurs, antenna reception will be digital terrestrial television (DTT) rather than analog te rrestrial television. In the EU, terrestrial transmi ssion is still the most popular method for receiving television programming. As late as 2003, 46% of the Europ ean population still relied on analog television broadcasts as their primary mode of recepti on. That number has been slowly changing with consumers migrating to new free services from di gital terrestrial and satellite providers, or choosing a multichannel subscription based servi ce from satellite, cable and IPTV providers. 4 The date of 2012 has been recalled, however count ries with dates proposed after 2012 are working to meet the 2012 deadline (COCOM07-06 REV1).
23 Also, once consumers begin receiving free digital terrestrial television they can choose to add more channels through subscription packages. For example, in the UK viewing options for c onsumers include paid subscriptions to cable or satellite, and free-to-air terrestrial television and satellite broadcasts. Currently, terrestrial analog services are available to 98.5% of the population, digital satellite is available to 98%, digital terrestrial services are available to 73%, and cable service is available to 49% of consumers. Of the 25.5 million TV households in the UK, 38% subscribe to digital terrestrial service, 34% to pay Satellite, 13 % to analog terrestrial, 13% to cable and 3% to free satellite (Ofcom, 2008). In the U.S., TV viewing is quite the oppos ite. The majority of consumers receive television via cable transmission (60%), while 20 % rely on satellite transmissions, and 19% rely on terrestrial television (GAO, 2006) Multi-channel television, via cab le and to a lesser extent satellite, is very popular and is the typical met hod of television reception. Free-to-air TV as the primary reception method has waned considerab ly since the introducti on of unique cable TV programming in 1972 and late r the satellite television option in 1994 (GAO, 2006). Table 1-2 describes the television market in selected EU member states and the US to give a clear picture of the availabili ty of different platforms to consumers; coverage numbers for analog, digital and cable platforms were provided where available. It also shows the total number of television households in each state and the percentage of those households that subscribe to either digital terrestrial, analog terrestrial, cable or satellite programming; some countries did not distinguish between analog and digital terrestrial and only provided numbers for total terrestrial viewers.
24 Table 1-2. Platform availability and pe rcentage of television household users5 Country Signal Availability TV HouseHolds (in millions) DTT ATT Cable Satellite Austria ATT: 99% DTT: 90% Cable: 58% 3.4 10% 2% 39% 49% Czech Republic DTT: 42% Cable: 37% 3.8 51% 28% 21% Estonia DTT: 93% 0.6 45% 39% 5% Finland ATT: N/A DTT: 99.9% Cable: 90% 2.3 47% N/A 45% 8% France DTT: 89% 26.3 41% 30% 13% 15% Germany ATT: N/A DTT: 99% Cable: 22% 36.9 5% N/A 60% 35% Hungary DTT: 56% Cable: 77% 3.9 30% 54% 16% Italy ATT: 99% DTT: 70% 23.2 37% 34% 1% 26% 5 Percentages are estimates as there is some overl ap in subscribership and IPTV was not included.
25 Table 1-2. Continued Country Signal Availability TV HouseHolds (in millions) DTT ATT Cable Satellite Netherlands Cable: 98% 7.0 .02% N/A 92% .07% Norway DTT: 70% Cable: 60% 2.1 15% 50% 35% Poland Cable: 43% 13.4 N/A 10% 60% 30% Romania6 DTT: 0% 7.6 18% 49% 27% Spain Cable: 59% 16.0 32% 39% 13% 16% Sweden (2008) ATT: N/A DTT: 99% Cable: 55% 4.4 25% N/A 50% 15% UK (2008) ATT: 98.5% DTT: 73% Cable: 50% 25.5 38% 13% 13% 37% US 2008 DTT: 98% ATT: 98% Cable: 96% 114.5 1% 19% 60% 20% Sources: DVB worldwide 2008 data, OECD 2009 data Table 1-3 shows the number of analog free to ai r channels before the introduction of digital television and the number of free to air channels available after the introduction of the digital terrestrial platform. Also, some countries chose to add subscription-based services on the digital 6 Six percent are unable to receive television at all.
26 terrestrial platform as well. Table 1-3 al so shows the number of channels available by subscription. Table 1-3. Number of channels Country # of national Free-toair analog channels # of digital channels Additional Digital terrestrial pay channels Austria 3 6 -* Belgium (Flemish) 4 11 Belgium (French) 2 6 Czech Republic 4 2 Estonia 3 Finland 5 7 France 7 18 11 Germany 0 24 0 Hungary 3 6 2 Italy 9 30 11 Netherlands 3 3 Poland 7 0 0 Spain 5 20 0 UK 5 >30 12 US 9 >15 0 Sources: DVB worldwide, OECD 2009 Dashes represent unknown values. The number of channels received by television households in the EU has traditionally been low, ranging between 6 and 20 via the most popu lar method, terrestrial. In addition, public service broadcasters, rather than commercial broadcasters, play a major role in the television market. To fund the public service broadcaste rs most European nations employ a television license fee. For example in Germany, public broadcasters are financed through a mandatory television and radio license fee of 192 Euro ($236.19) per househol d per year, totaling about 6 Billion Euro ($7.38 billion) per year. In the UK, viewers must pay a license fee of .50 for a color television license, or .50 for a black and white television li cense, regardless of television service subscription.
27 Though the number of U.S. broadcast television channels is low, between 4-10 regionally,7 the typical number of channels received by Am erican viewers exceeds 25 because the majority of Americans subscribe to multichannel TV (80%). There is no license fee for having a television set, but there are of course subscription costs, ranging anywhere from $25 to $100 per month depending on the number of channels selected in the subscription package. The Players In both the EU and the US, there are key pl ayers from public and private sectors that helped develop and influence the DTV developmen t and policy. While these key players will be discussed in more detail in chapters 2 and 3, here I will provide a brief overview. In the EU, the major governing body overseeing and implementing legislation is the European Commission. European Commissioners are each assigned a policy area with a support staff known as Directorates-General (DGs). The DGs actually formulate and draft legislative proposals, which must be accepted by the Commission before be ing sent to the European Parliament for consideration (Europa, n.d.). Du ring much of the first deca de of the century, the DG of Information and Technology was Commissioner Vi viane Reding, who oversaw much of the transition to digital television. With the instal lation of a new cabinet in 2010, Neelie Kroes now holds the position. For the development of a European digital television standard, th e European Commission endorsed the Digital Video Broadcasting group (DVB). The DVB is a consortium of European equipment manufacturers, broadcasters, pr ogrammers, application developers, and representatives of natio nal regulatory bodies, which was esta blished in 1993 (Galpernin, 2002). The DVB standard is the basis for all digi tal transmissions in the European Union. 7 There are four national networks, at least one public service network, and a varying number of local broadcasts available via broadcast.
28 In addition to the government industry consorti um, Europe puts a great deal of emphasis on corporations considered national champi ons. These companies are often the premier company in their industry and bring in direct foreign investment, jobs and prestige to a particular country, and by exte nsion, Europe as a whole. So metimes the government holds a stake in the company as well (CEPS, 2006). Ph ilips, Thomson, and Siemens have been major players in the development of digital television standards both in Europe and in the United States. Often policies developed by the EU in the DTV arena take into account how well it will protect a particular company from economic losses increase its gains, or acquire prestige for the particular country and the EU as a whole. For example, French national champions Canal+ and TPS, in which the French government and its public service broadcas ters hold a 25% stake through France Telecom and France Television, were both effectively protected from new market entrants by delays in the introduction of a DTT licensing plan and the inclusion of Directive 95/47/EC (Galperin, 2002). Public service broadcasters and telecommunications operators were also delegated a significant amount of responsibility during the transition, such as the United Kingdoms British Broadcasting Cor poration (BBC) and Germanys Deutsche Telecom. In the US, when Congress passes legislation, it often assigns duties of implementations to an associated federal agency. The Federal Communications Commission (FCC) was tapped to handle the implementation of th e digital television transition. The FCC enlisted major corporations to compete to develop the best possi ble television standard with the players being the American Broadcasting Company (ABC), the Co lombia Broadcasting System (CBS), David Sarnoff Research Center, and Zenith. The Adva nced Television System Committee (ATSC) was
29 also established to approve and provide cons ultation on Digital Televi sion standards. Other organizations providing consulta tive and administrative roles included the National Association of Broadcasters (NAB), the Electronic Indus tries Association (EIA ), the National Cable Television Association (NCTA), and the Na tional Telecommunication and Information Administration (NTIA). The NTIA handled cons umer subsidies in the form of converter box coupons. The coupons were good for the purchase of a converter box that can down convert digital signals for analog television sets. Left entirely to businesses and consumers to d ecide when digital television would become mainstream, it is likely digital television would eith er have fallen to the wayside like other failed technologies such as Beta Max, Laser Disc a nd HD-DVD. Consumers do not see a reason to change if the product they are already using is acceptable and the other alternatives are significantly more expensive, but not significantly better in quality. Meanwhile businesses are reluctant to attempt to change the entire landscape of their business, if su ccess is not guaranteed. Governments saw great potential for new business and increased revenue in transitioning from analog to digital television, which quickly became a race among developed countries in standards and implementation.
30 CHAPTER 2 LITERATURE REVIEW Governm ent involvement in telecommunications technologies, such as Internet services, cable television services, cellula r networks, and radio, is not uncommon. Public control of utilities, which includes tele phone communications and to some extent radio and television broadcasting, was common until the 1934 Communi cations Act in the United States. Privatization of telecommunication services became an international trend beginning in the late 1980s. Even with an increasing tendency toward s privatization, EU memb er states employ more public control than the United States by implemen ting legislation to ensu re there is no single dominant market player, and that regulations are technology neutral. In both the EU and the US, standards for all devices, radio signals, analog television sets, color te levision and cellular transmission must be approved by the appropr iate government regulatory agency. This involvement typically regulates the industry or products; however, the consumers decide which hardware or complementary software they would like to purchase. The transition to DTV is different. Consumer s relying on free-to-air (FTA) television have no real choice. They must choose between mu ltichannel television subscriptions, purchasing a converter box or new television se t, or no television at all. A government-sponsored obstacle is being placed in front of broadcast television, which, due to its ubiquitous, informative and entertaining nature, is considered a public good. Until the advent of DTV, governments of free market liberal economies typically have not interven ed in the market to such an extent, as to require citizens to purchase a certain product. A review of the basic regulatory philosophies of the EU and US and their respective media policy goals show how the teleco mmunications industry has typical ly been regulated and where changes are beginning to occur. The public good and public interest aspects of broadcast
31 television explains why television is regulated as such, and typi cal consumer adoption theories and practices show where the introduction of DTV deviates from past introductions and adoptions of new technologies. Because of the pub lic good and public interest aspects of digital television and the need to coerce consumers into DTV adoption, consumer subsidies were approved to help meet specific transition dead lines. The full consumer switchover to DTV contributes to EU and US initia tives to increase their internati onal competitiveness in technology and knowledge-based products. Basic Regulatory Philosophies in the European Union and the United States Market regu lation is typically justified as th e correction of a market failure, such as a monopoly, a negative externality, or a public good. The United States often employs boards or commissions to regulate particular polic y areas 1934 Communications Act, regulating telephone, telegraph and radio transmissions, also set up a corresponding regulatory body, the Federal Communications Commission. The American theory behind market regulation is that markets should only be interfered with in specific cases of market failure; otherwise, markets perform best in normal circumstances. Therefor e, industry ownership and operation is primarily through private citi zens (Majone, 1996). However, this sort of regulation has only recently come into fashion in Europe. Citizens of Europe have historic ally been critical of market economies and their ability to survive under crises, like the Great Depressi on and World War Two; therefore, European governments tended to choose nation alization of industry over Amer ican-style market regulation to correct and prevent market failures (Majone, 1 996). There has also been a tradition of state dirigisme and bureaucratic centra lization in European responses to market failures (Majone, 1996 p. 10). However, since the 1980s, Europ ean nations, while still holding on to some traditions, are moving towards deregulation a nd away from nationa lization (Majone, 1996).
32 EU Regulatory Philosophy: Dirigisme and Deregulation In the EU, while developing policies and regulations, including broadcasting and audiovisual m edia policy, there has been a gr owing tension between cultural and economic orientations toward policy. These approaches have been referred to as the dirigiste vision, focused on public service and cultural policy and the deregulatory vision, driving at market liberalization (Collins, 1994; Naranen, 2004; Wheeler, 2004). In the dirigiste vision, there are assumed obligations for the legal and legislative system to guarantee institutional arrangements for services essential to citi zenship and broad citizen partic ipation, which suggest that governments should intervene in pr ivate business affairs on behalf of what is good for the citizenry (Venturelli, 2002, p. 77). The dirigiste vision competes directly with the deregulatory vision, which drives at creating a single market of free flowing goods among European nations through less government involvement. The deregulatory vision appears similar to the US liberal market model; however, there are significant differences. The EU relies on public la w, which favors the general rather than the private interest. Thereby, contract law is employe d as a facet, but not a controlling factor as in the US (Majone, 1996; Venturelli, 2002). However, to encourage growth within the television and audiovisual markets the deregulatory princi ples of liberalization and harmonization guide EU policies regarding competition and concentr ation. The Commission believed that this would enhance media corporations competitiveness and ab ility to establish a global presence (Wheeler, 2004). However, the EU prioritizes differently by promoting transnational networks in data, communication, and content distribution under govern ment guidance, rather than lowering public interest and ownership restrictions as in the US (Venturelli, 2002).
33 US Regulatory Philosophy: Libertarian, Public Interest and the Liberal Market The US regulatory direction originates in th ree models th at are sometimes contradictory and sometimes complementary. The first is th e libertarian model based on the conception of "society without the state" where informati on networks are open, non-proprietary, and state intervention is highly restrained (Venturelli, 2002). The evoluti on of this idea comes from the American historical experience of the perpetual new frontier. Whether it is the exploration of new land, space, industrial development or di gital technology, the new frontier frame pervades the American cultural understanding of the nature and promise of new technology (Higgins, 1995; Venturelli, 2002, p. 71). Second, the public interest model claims protection of individual rights through government protection against unaccountable marketpl ace structures. Most of these laws address the tension between individual and industry rights. This model is based in the tension or balance between interests of cons umers and the interests of the industry, and the belief that governments can encourage perfect markets through ra tional regulation (Ven turelli, 1998). The third model is the liberal market m odel emphasizing "contractual rights and proprietary freedoms for market participants" (Venturelli, 2002, p. 72). A unique feature of US regulation is that there is no distinction between the rights of individuals and the rights of entities. From this viewpoint, rather than th e government encouraging an effective market through regulation, the government should take a minimal role in the transactions between producers, distributors, and consumers. Governments should guarantee c ontractual and property rights, but mostly encourage and allow self -regulation to take pl ace (Venturelli, 1998) EU Media Policy Goals Though the EU and the US use diffe rent met hods for regulating the media industry, their regulations strive to achieve similar goals. The priorities of the Commissions Information
34 Society and Media Directorate Ge neral are to foster innovation a nd competition, and establish a regulatory environment favorable to developi ng information, communication and audio-visual technologies. EU media policies focus on four obj ectives: media pluralism, social and cultural protections, universal standard s, and an effective market (EC, 2005a). According to communication from the task force, the idea of me dia pluralism is broader than media ownership concerns. The principles behind media plural ism incorporate transparency as a method of showing media independence, and access to multiple information sources in order for the population to form opinions w ithout excessive influence fr om a dominant source. The European Commission makes provisions for so cial solidarity in the forms of cultural and multilingual content. These goals receive support from the EU Media Programme, which provides EU member nations with training for the promotion of culture and locally produced content. For example, to preven t the inundation of foreign content, a quota system outlined in the Audiovisual Media Services Di rective (AMSD), ensures that native language productions and European productions still receive airtime (Eur opean Union Directive, 1997; European Union Directive, 2007). Universal standards suggest neutrality across platforms and open standards in the application-programming interface (API). A pplying universal standards allows for the functioning of an effective in ternal market (EC, 2002). US Media Policy Goals The Comm unications Act of 1934 established the FCC and stated that its policy goal is to make available, so far as possible, to all the pe ople of the United States a rapid, efficient, nationwide and worldwide wire and radio communications service (47 U.S.C. ). The 1934 Act grants the FCC the authority to grant spectrum licenses under the considerations of public interest, convenience and nece ssity. In addition, the ame nding Communications Act of 1996 obliges the FCC to pursue the public interest through its regulation of broadcast media.
35 The FCC has enjoyed wide latitude in determin ing what serves the public interest. In its interpretation of the publ ic interest, the FCC balances its concerns for efficiency, antitrust, and media effects in the political, cultural, and social realms, th rough three policy objectives: diversity, localism and competition (Alexander & Brown, 2007). The policy objectives are sometimes at odds with one another and add co mplexity to regulation of the media market. There are multiple interpretations of diversity. Diversity of programming choice should allow viewers varied program and information choi ces that reflect the vari ed preferences of the audience. Source diversity encompasses the availa bility of varied content and genres from producers, and ownership of media businesse s by minorities and females (Levy, 2008). Diversity of viewpoint refers to the availability of political perspective. The number of independent media outlet owners in a market is outlet diversity; it is gene rally thought that the degree of outlet diversity influences both s ource and viewpoint dive rsity. Because outlet diversity is easily measured, it is a prime focus for regulatory action, such as ownership restrictions. While all of these forms of diversity are considered important, outlet diversity is, by far, the most commonly applied method for ensuring diversity in the media market (Levy, 2008). The localism principle is meant to ensure th at broadcasters distribute programming with the needs and tastes of a sp ecific local geographical community in mind (Levy, 2008). The public interest is a primary concern for the FCC, as outlined in Title III of the Communications Act. It explicitly requires the Commission to make such distribution of licenses, frequencies, hours of operation, and of power among the several States and communities as to provide a fair, efficient, and equitable distri bution of radio service to each of the same (47 U.S.C. 307). Therefore, broadcasters, who are considered tempor ary trustees of the publics airwaves, must in turn use the medium to serve th e public interests as well. The FCC has consistently interpreted
36 part of serving the public interest to mean that broadcast licensees must air programming responsive to the needs and interests of the local communities where they are licensed to operate (FCC, 2004). Traditionally, competition refers to economic competition and is generally discussed in terms of advertisers, because in the United Stat es broadcast television is advertiser supported; viewers do not pay for programming. The FCC also looks to efficient competition as a method for limiting government involvement in the ma rketplace. The 1996 Communications Act favors competition and demonstrates the belief that when competition develops efficiently, many regulations can be eliminated. The FCC should de termine whether regulations are no longer in the public interest because competition between providers renders th e regulation no longer meaningful and to repeal or modify rules th at are no longer in th e public interest (FCC, 2002a). However, this does not translate into de regulation for deregulations sake. As stated previously, the FCC should determine whether re gulations have become no longer necessary as the result of competition, and these regulations sh ould thereby be modified or eliminated (FCC, 2002a). Broadcast Televisions Market Failure The EU and the US recognize that broadcast television is a public good, and the goals of the EU and the US are to create an efficient telecommunications market that serves the public interest before, during and afte r the digital transition. Public goods are goods that multiple consumers can enjoy simultaneously, like national defense, parks, and lighthouses (Priest, 1985). These types of goods are non-rivalrous and nonexcludable. Non-rivalrous means that consumption of the good by an individual does not diminish the availability of the good for consumption by others. Non-excludable means that anyone can benefit from its use and no one person can effectively be excluded from usi ng the good. (Olson Jr., 1965; Musgrave, 1969). For
37 example, if I drink my milksh ake, you cannot drink it because it is gone; however, if I view a television program it does not mean that you cannot view it because I have already seen it, but you could view it on the same televisi on set or on another device. Public-goods can be provided by government or contracted out to pr ivate industry, because consumers cannot be excluded from enjoying the benefits of a public good the use of taxpayer money can often be justified (Priest, 1985 p. 11). Some publicgoods, like national defense, are both provided and managed by national government s. However, in most countries, basic communication services are governed by regulat ory frameworks, controlled by regulatory authorities, and, in the US and th e EU, at least partially provided by private firms (Majone, 1996; Picot & Wernick, 2007). In the US and EU the broadcast television model is typically split between a dual system of public and private broadcasting with the US ha ving more emphasis on private broadcasting, and EU countries typically on public broadcasting. This is because in the US, plurality or diversity of viewpoints and outlets is thought to be best achieved through self-regulation and competition law, while in the EU a plurality of viewpoints and outlets is thought to be best achieved through regulation. Both polities use regulation to achieve public in terest, cultural and social responsibility objectives. In most countries, state-run agencies or public utilities organized the provision of telecommunication services such as the telegrap h, telephone, radio and broadcast television until the final decades of the 20th century, when governments began to lean increasingly toward deregulation, especially in the United States. One of the reasons for high levels of state regulation was to guarantee features of telecommun ications that contribut e considerably to the public interest. Even after the privatizati on, liberalization and in troduction of competition,
38 regulatory agencies remain responsible for gua ranteeing certain public-g ood aspects, such as safety, security, the preventi on of radio communication interf erence, and universal service requirements (Picot & Wernick, 2007; Venturelli, 2002). Universal service requirements provide a baseline for acceptable services that should be available to every person residing in a country; this concept is provided for in the US Communications Act of 1996 and the EUs Telecommunications Directive 2002/22/EC. The public good nature of television and public interest goals and sta ndards that both the EU and the US have entrenched in their respective regulatory framew orks requires support of access to television and supporting consumers th rough the transition. Once the two polities found that voluntary conversions we re stagnant, they increased their education efforts, began to offer subsidies and, if necessar y, postponed switch-off deadlines. Consumer DTV Adoption Technological products have two sides, hard ware and software. The utility for the consum er of a product such as a computer, television or phone relies on the availability of complementary products, such as programming, software, or other produ cts. An indirect network externality results when demand for a hardware product is mediated by the availability of complementary software products, thus resu lting in interdependence between interrelated industries (Gupta, Jain & Sawhney; 2001). Digital television transm ission is only as valuable to consumers as the content available, and only as valuable to hardware manufacturers and content producers as the number of interested consumer s. However, without enough consumers or enough content, neither broadcasters nor consum ers were willing to pa rticipate in the DTV transition. To boost the transition and encourage consum er adoption, former FCC Chairman Michael Powell proposed a voluntary plan to key industr y players that would in crease the amount of
39 attractive content available to consumers thr ough digital transmission and make that content available to cable subscribers as well. As a result of the positive industry response to the voluntary plan, the FCC adopted a Second Report and Order and Second Memorandum Opinion and Order requiring nearly all television sets to have DTV tuners by 2007 (FCC, 2002b; FCC, 2002c). However, there remained relatively low dema nd for DTV, as the majority of consumers were unaware of the utility of DTV or the impending conversion (GAO, 2002; GAO 2004). Typical early adopters of DTV or those with a higher awareness and understanding of DTV, were more likely to be male, of a higher socioeconomic status, tech-sa vvy, college-educated and frequent Internet users (Atk in, Neuendorf, Jeffres & Skalsk i, 2003; Chan-Olmsted & Chang, 2006; GAO, 2002). A 2003 study found that the two factors touted as major benefits to consumers, increased picture and sound clarity, we re attractive to consumers. These features were not influential enough to spur a significan t number of consumers to switch to digital television, however, especially while DTV sets were averaging about $5,000 (Atkin, Neuendorf, Jeffres & Skalski, 2003). Typically, the adoption of new media can be examined through the lenses of demographics (Atkin & LaRose, 1994; Dutton et al., 1987a, 1987b; Krugman, 1985), personality traits (Ostlund, 1974) and diffu sion theory (Rogers & Shoema ker, 1971). These lenses for studying and predicting new media adoption are useful for determin ing the characteristics of a person who is likely to adopt a new technol ogy and how quickly they might adopt that technology, but are not useful for determining th e best practices for encouraging reluctant consumers to adopt new technologies. DTV adopti on is not voluntarily, as is the usual case, but instead a government policy.
40 According to Mackays (2007) research in the United Kingdom: The ideal remains voluntary conversion to digital, but there is acceptance by the government that some form of coercion or compulsion will be necessary. The switch from 405 lines to 625 lines took over 21 years (625 was introduced in 1964, 405 was switched off in 1985) despite very strong incentives (receiving BBC2, which increased the number of channels by 50%, and colour) Similarly, in 1987, over 20 years after the introduction of co lour television in the UK, there were still 2.4 million monochrome licenses, 11% of TV households (NERA/DCMS 1998). With digital, it is generally acknow ledged that the numbers involved will be reduced once a switch-off date is announced. Perceived attributes and utility of DTV will be helpful in convincing consumers, but other policy approaches must be utilized as well. Berl in, Germany was able to complete its transition ahead of schedule. Through a GAO (2004) legislativ e analysis of Berlins strategy, three policy approaches toward consumers were very importa nt: an extensive consumer education effort, providing subsidies to low-income households, and setting a near-t erm date for analog shutoff. Though we cannot know how the transition to DTV would have progressed without government involvement, many scholars agree that government guidance was the most effective way to coordinate the transition for consumers (A dda & Ottavianni, 2005; Iosifidis, 2006; Klein, Karger, & Sinclair, 2004; Tadayoni & Skouby, 1999; Trinidad, Leiva, Starks & Tambini, 2006). Reduced equipment prices and increased progr amming availability could have prompted consumers to voluntarily switch (Adda & Ottavia nni, 2005; Atkin, Neuendorf, Jeffres & Skalski, 2003), however, it would have taken longer and a doption levels would plateau without a firm switchover deadline (Adda & Otta vianni, 2005; Trinidad, Leiv a, Starks & Tambini; 2006). Through consumer surveys and interviews, Klein, Karger, and Sinclair (2 004) determined that without a timeline, consumer adoption of the digital platform would plateau between 70 and 80%. Establishing a firm switchover date was de termined to be the most effective method for encouraging consumers to adopt digital televi sion (GAO, 2004; Klein, Karger & Sinclair, 2004;
41 Tadayoni & Skouby, 1999). In fact, Adda and O ttavianni found that there are almost no [consumers], who prefer analogue to no television and no television to digital television (p. 39). Once involved, governments identified specific challenges on the consumer side for achieving a full transfer to digi tal television reception (Iosifidis, 2006). As television is considered a public good, governments needed to ensure that everyone currently receiving analog television would be able to receive digital television; en sure that the switch would be affordable for the majority; and ensure that a high percentage of consumers could access digital equipment before the switch. For example, the British and French governments established the threshold at 95% of citizens with access to di gital television before a switch could take place (CSA, 2007; DCMS, 2004), while the US accessib ility was set at 85% (Balanced Budget Act 1997). In discussion leading up to the defunct 2006 switch-off date, US congressmen found that because the DTV transition represented a gove rnment driven policy, not a market driven phenomenon the government must ensure the succe ss of the transition and that consumers will not lose broadcast service (House Committ ee on Energy and Commerce, 2005, p. 2-3). Considering the number of analog television sets a nd the fact that some of the most economically challenged Americans rely on analog, citizen subs idies were suggested as an important method for supporting the transition (House Comm ittee on Energy and Commerce, 2005). In the EU, subsidies are only acceptable if they meet certain requirements including overcoming market failures and enhancing soci al cohesion (State Ai d Action plan, Article 87(1)). Encouraging the digita l television transition fit these requirements and governments of EU member states have offered subsidies to their citizens to ai d in the transition to digital (Digital UK & Ofcom, 2008; Mabb, 2008; Matteucci, 2008; Mini szterelnoki Hivatal, 2007).
42 Though there are many studies on awareness and the diffusion of digital television on the consumer side, few articles discu ss the specific effect of direct government involvement in the diffusion of digital television. The aim of this th esis is to describe and compare EU policies toward the digital television transition with the approach taken by the United States. This thesis asks: RQ1: (a) What needs to be accomplished for the digital transition to take place, and (b) how has the digital transition progr essed in the EU and US comparatively? RQ2: What policy lessons from the digital television transition can be applied to the introduction or expansion of new communication technologies? The following chapter describes the method us ed to approach this research through a comparative case study. Chapter four describes the governance and history of both the EU and the US. Chapter five discusses the media and digital television legislative framework, while chapter five presents the case study data on dig ital television implementation from the US and exemplary EU member states. Finally, this rese arch synthesizes the case study information to make determinations on best practices, success, failures and experiences th at can be applied to future technological transitions mandated by governing entities.
43 CHAPTER 3 METHOD This is a comparative, qualitative case study exploring the various f acets of EU and US digital television and m obile television policy. Case studies contribute to the knowledge of a group, organization, social, or political phenomenon by providing a detailed contextual analysis of a limited number of events or conditions and their relationships. Case studies focus attention on one or a few instances of a particular soci al phenomenon, and therefore provide more depth than other quantitative methods. Researchers have used case studies over a variety of disciplines and diverse topics such as programs, projects, an d initiatives in education, business management, social problems and technology development. Social scientists, in particular use this qualitative research method to examine contemporary real-lif e situations, and case studies have been one of the most common methods of conducting resear ch for use in public policy and public administration (Babbie, 2007; Yin 2003a; Yin, 2003b). Three types of case studies include: evaluative explanatory and descriptive. Evaluative case studies are generally used to document and analyze an implementation process after the fact (Yin 2003a; Yin 2003b). The comparison of the digi tal television transition in the EU and the US cannot be evaluated as of yet because the tran sition is still in progre ss and there has not been enough time to test or evaluate anticipated resu lts in terms of economic growth, competitive advances or consumer satisfaction. Any predictions will be preliminary and can be evaluated through further research once the transition has been completed in all EU member states. This case study research is desc riptive and explanatory in na ture. A descriptive case study presents a complete description of a phenomenon within its context, while an explanatory approach presents data, describe s causal relationships and descri bes how events happened (Yin, 2003a; Yin 2003b).
44 This case study selected the EU and the US as the primary units of analysis because they are large western polities at the same level of economic competitiveness on the world stage and both pursuing a government led transition to digita l television. However, while both entities are pursuing the same goal, they are taking diffe rent implementation approaches and their governments are structured very differently in fact, some scholars ar gue that the EU is a completely new political governance system. The purpose of this research is to describe the DTV approaches and report the relative successes and failures of each transition process. The account of successes and failures wi ll help other governments intend ing to transition at a later date streamline their own process, be a useful reference point if governments should choose to introduce another technology, a nd serve as a basis for future evaluative research. The variables of interest, which reveal the va rious similarities and differences between the EU and the US, in terms of foundation and orga nization, are exposed through an examination of their respective histories, governance, institutional organizatio ns and legislative process. In addition, when examining the digital television transition policy, the comparison of the EU and the US focuses on specific policy variables su ch as, overriding media and telecommunications legislation, spectrum policy, a nd digital television policy. In addition, due to the comple x organization of the European Union, when describing the actual implementation of the transi tion process, the US must be compared with individual EU member states. The EU and US governing proce sses diverge significantly when it comes to the implementation of digital television policy. The US uses one rulemaking body, the Federal Communications Commission (FCC) to handle the transition in the US, while each EU member state uses its own rulemaking body designated to handle communications matters. Therefore, in the actual implementation of the transition there are a number of different methods, all of which
45 are reported to and checked by the EU thr ough the European Commission. Thus, at the implementation level, the EU cannot be taken as a single unit and compared with the US. Instead, this research examines the transition process of selected EU member states and compares them with the US to sear ch for patterns a nd best practices. Table 3-1. Variables comparing the European Uni on and the United States as single political entities History US: Communications Act of 1996 Governance EU: Audiovisual Media Services Directive Institutional Organization Spectrum Policy Government Organization Variables: Comparing the EU and the US as single political entities Legislative Process Media Policy Variables: Contrasting differences in media and telecommunications legislation Digital Television Policy In order to describe accurately, successes and the EU outlook, this research selected cases that were exemplary of the EU 27. These cases were selected based on their size, population, and length of EU membership. These variables may re sult in different appro aches to the transition that could be applicable to ot her countries regardless of politi cal system. Length of membership in the EU, is characteristic of this particul ar political system, and may contribute to the cohesiveness of the transition and the speed at which EU legislation is adopted into national legislation. These countries also had the most information available on their transition in terms of the process, evaluation and legislation. For some aspects of th is research such as projected digital switch-off date, data from additiona l EU countries were included; however, the aforementioned countries were ex amined in the most depth.
46 Table 3-2. EU member state implementation cases Large Territory & Population Small Territory & Population Later Additions 1973 2004 UK, Spain, Poland Austria, Finland, Hungary, Czech Republic Founding Members 1951 1974 Germany, France, Italy Netherlands, Belgium Once these countries were selected, different va riables needed to be included to describe the implementation process comparatively. From th e experiences of countries thus far, we can determine how their transition is progressing, if it is likely they will meet their switch-off date, and which processes are proving most productive towa rd an efficient switch. Additionally, while examining EU member states we can see in ev en more depth how the EU and national member state governments work together. The EU member states and the US will be co mpared across transition periods, subsidies, and consumer education plans. These variables were chosen based on the preexisting literature and government reports that determine these we re some of the most important methods for encouraging consumers to adopt digital television on a government timeline. Because one of the driving factors for the switch was the introducti on of new technologies to spur economic and competitive growth, this research will also look at policy devoted to and expectations for new technology to be deployed on the released spectrum. Table 3-3. National digital tele vision implementation variables Variables Cases Examined Transition Periods US, Germany, UK, France, Italy, Netherlands, Belgium, Austria, Finland, Hungary, Czech Republic, Spain, Poland, Subsidies US, Germany, UK, France, Italy, Hungary Education Plans US, Germany, UK, France, Hungary New Services US, Germany, UK, France
47 This case study uses policy statements, speeches of intent from lawmakers, and laws enacted by both the EU and the US to interpre t and compare the intent and procedure outlined for the digital television transition. Primary directiv es from the EU include: the Lisbon Strategy, Directive on Advanced Television Standards the Audiovisual Media Se rvices Directive, and the Legal Framework for Mobile Television In the U.S., the primary laws passed by Congress included: the Digital Television and Public Safety Act (included as Title III of the Deficit Reduction Act of 2005) and the DTV Delay Act Individual member state governments primaril y direct implementation and rulemaking for the transition to digital television in the EU. Member state switchover plans8 were studied to compare differences in implementation from state to state across the four categories. As the rulemaking body for laws affecting media, the F CC detailed and implemented the process of the switchover. This process was detailed in the FCCs 700 MHz Second Report and Order the Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993 and the Implementation of the DTV Delay Act. Data on the progress in terms of signal coverage, subscribers, channel availability and subsidy al location in EU member states and the US was gathered from OECD, the NTIA, the DVB Pr oject, and member state switchover plans. In the context of previous literature and the continuing progress in technology development and introduction, lessons from this case study will advance knowledge on government policy toward technology introduction. The steps taken to introduce digital television by the government are the most invasive on the consumer side as of yet, more so than 8 Member state switchover plans can be accessed at http://ec.europa.eu/information_society/policy/ecomm/toda ys_framework/digital_broadcasting/switchover/national_ swo_plans/index_en.htm
48 the standards development and regulatory approa ches toward telephone, radio, television, color television, Internet or cellular phone service.
49 CHAPTER 4 EU AND US GOVERNANCE Introduction A context is necessary to understand the com p arative approaches of the US and the EU towards implementing digital television. This chapter describes the history, government structure, and legislative proce ss of the EU and the US, and clos es with a comparison of the two political entities. This discussi on provides an in depth case anal ysis to demonstrate how the two political entities arrived at their respective pol itical structures and how they arrived at communications policy dire ctions and legislation. European Union From a desire for peace among European nations, the idea of a united Europe has been presented since the 1940s by political thinkers such as Altiero Spinel li, Ernesto Rossi and Winston Churchill. After two la rge-scale wars, World War One and World War Two, originated in and were fought primarily on European soil, European nations searched for a lasting and prosperous peace. Dismantling and stripping bell igerent countries, such as Germany, of their wealth after WWI proved unsuccessful and fueled resentments that led to WWII. Therefore, after WWII, the Allies preferred a process of in tegration and economic stab ilization rather than heavy reparations and dismantling of industrial centers (Rich, 2003).9 History However, concrete step s toward economic and political cooperation did not come until 1951, when French foreign minister Robert Schuman, German chancellor Konrad Adenauer, and French civil servant Jean Monne t, initiated the European Coal and Steel Community (ECSC) 9 The Soviets preferred higher levels of reparations and controlled productivity in the industrial sectors, which caused a rift among the allied powers. For more informat ion on diplomacy after WWII please see Norman Richs Great Power Diplomacy Since 1914, pages 276 321.
50 (Nelsen & Stubb, 2003). Germany and France were epic rivals and their borders were central battle lines and points of contention in both World Wars and previous wars between the two countries. Through transferring the control of esse ntial materials for war preparations, like coal and steel, to a common interna tional authority, Germany and Fran ce would be so economically and industrially intertwined that war between the two would be virtua lly impossible. Six countries joined the ECSC, France, Germany, It aly, Belgium, the Netherlands, and Luxembourg. For Monnet and Schuman, the ECSC was to be th e first step toward bringing other European economic and political processes under a sing le authority (Nelsen & Stubb, 2003; Rich, 2003; Treaty Establishing the European Coal and Steel Community, 1951). Following the formation of the ECSC, in 1957 th e six participating member states created the European Economic Community (EEC) a nd the European Atomic Energy Community (EURATOM) through the Treaties of Rome (Europa, n.d.a.; Treaty Establishing the European Atomic Energy Community, 1957; Treaty Establishing the European Economic Community, 1957). The EEC Treaty committed the six countries to a 12 year time-line for achieving three goals aimed at developing a commo n market: create a free trade area, create a common external tariff, and reduce barriers to the movement of capital, labor, and services (Buonanno, Dowley, and Nugent, 2008; McCormick, 2002; Treaty Esta blishing the European Economic Community, 1957). The EEC Treaty created institutions such as the European Commission, the Council of Ministers and the European Cour t of Justice. The EEC also developed a timeline for the initiation of a directly elected European Parliament laying the foundation for a mixture of intergovernmental and supranational institutions, which are still existent in the EU (Buonanno, Dowley, & Nugent, 2008; Treaty Establishing the European Economic Community, 1957).
51 These treaties, specifically the EEC, and the re sulting economic benefits, demonstrated that a unified Europe was possible (McCormick, 2002). The European Union, as we know it today, is an economic and political union of 27 member states, operating in a single market thro ugh a standardized system of laws to allow the free movement of people, goods, services and capital (Council of the European Union, n.d.b; Europa, 2008a; Europa, 2008b; Europa, n.d.b).10 In order to join the EU, countries must meet the 1993 Copenhagen criteria, requiring a stable democracy, respect for human rights, a functioning free market economy, and acceptance of previously established EU law (Buonanno, Dowley & Nugent; 2008).11 Today the EUs focus has evolved from preventing wars on European soil to economic goals, such as bei ng an internationally co mpetitive large-scale market. The digital television transition was initia led at the EU level to hasten the growth of European technology and knowledge-based markets. Governance The EU is neither a federation like the Unite d States nor an organization for cooperation like the United Nations. The EU is not a pa rliam entary democracy, as is typical of many European nations, nor does it function under a separation of powers characteristic of American federalism. Within the EU, memb er states pool their sovereignty to gain strength and influence on the world stage. The governing bodies of the EU fall under two categories: supranational and intergovernmental. 10 The UK, Denmark and Ireland joined in 1973, Greece in 19 81, and Spain and Portugal joined in 1986. Austria, Finland, and Sweden joined in 1995, the Czech Republic, Cyprus, Estonia, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia joined in 2004, and Bulgaria and Romania joined in 2007 (Buonanno, Dowley, and Nugent, 2008). 11 Candidate countries includ e Croatia, the Former Yugoslav Republic of Macedonia, Icelan d and Turkey, with potential candidates being Albania, Bosnia and Herzegovina, Montenegro and Serbia.
52 A supranational organization is an international organization, or union, whereby member states transcend national boundari es or interests to share in the decision-making and vote on issues pertaining to the region. These representa tives work to integrate European Community interests into the decision-making process and represent the entir e European Community, particularly when it comes to a committee policy area that they represen t. In supranational organizations, member states reli nquish a portion of control over in ternal policy developments to the supranational body vote. This vote has authority over the stat e government, which may obligate a member state to accept policies counter to national preferences. Therefore, these sorts of organizations involve some loss of national so vereignty and work more toward integration of governments than government cooperation (Nugent, 2006; Trondal, 2003). Though it is difficult for any of the EU institutions to be solely supranational or solely intergovernmental, the European Commission and the European Court of Justice are the clearest examples of supranational institutions within the European Union, while the Council of Ministers is the clearest example of an in tergovernmental institution. Intergovernmental institutions are composed of national politicians and civil servants from different nations, selected or el ected to represent thei r own national interest s and integrate those interests into the Community decision-making pro cess. For example, the Council of Ministers depends on agreement between the member states whose representatives are the key actors at these meetings. Policies developed in intergovern mental institutions allo w nations to cooperate on matters of common interest unde r conditions they can control. In these instances, member states can decide the extent and nature of cooperation, th ereby protecting their national sovereignty (Nugent, 2006; Trondal, 2003).
53 Majone (2002) argues that the supranational and intergovernmental institutions of the EU reflect a mixed polity based on the institutional balance of powers represented in the European Commission, the European Parliament and the European Council. Rather than matching up clearly to the executive or legislative branches of the United States, these institutions represent particular interests. The European Parliament represents the interests of the citizens of the European Community, the European Council represen ts the interests of national leaders, and the European Commission represents the interest s of the European Community and Community leaders. Institutional Organization The Maastricht Treaty set out th ree pillars of responsibility within the EU. The first pillar include s the original EEC policies included in the TEU, which are based largely in economic principles and competition. A primary concern for the first pillar is in creating and maintaining the foundation and functioning of the Single Eu ropean Market. Here, the supranational institutions of the European Commission, the Eur opean Parliament and the European Court of Justice have the most influence. The second pillar deals with Common Foreign and Security Policy, while the third consists of Police and J udicial Co-operation in Criminal Matters. The second and third pillars come primarily under the guidance of the intergovernmental institutions, such as the Council of Mini sters and the European Council through unanimous agreement (Buonanno, Dowley & Nugent; 2008). The European Parliament (EP) represents the 492 million European citizens through direct election and shares power with the Council of Ministers. As of 2008, the Parliament was composed of 785 members, but in the term be ginning in 2009, the number of seats was set at 732. Members of the European Parliament (MEPs) hold five-year terms. Representation from each member state is based on population, and rath er than representing na tional parties, MEPs
54 represent European party interest s. MEPs elect the EP Presiden t for two and a half year terms from among themselves. The EP passes laws, su pervises other EU institutions, and shares authority over the budget with the Council (Europa, n.d.c). The Council of the European Union, also known as the Council of Minist ers, is the primary decision making body of the EU and must approv e all legislation proposed by the Commission. Ministers or officials from nati onal government departments meet to debate specific subjects, and often act on their own initiative in intergove rnmental matters such as foreign policy. The Council Presidency rotates every six months to a different member stat e, whose representative chairs all meetings. There are nine different council configurations de pending on the topic or issue being discussed.12 As chair, the President of the C ouncil maintains cons iderable control over meeting agendas and the policy direction of the council during the term. For a policy to pass through the Council of Ministers, there ar e three methods of voting: unanimity, qualified majority, and simple majority. Decisions regarding CFSP and JHA necessitate a unanimous vote. Decisions concerning legislativ e decision-making within the first pillar employ qualified majority voting, which requires 255 votes to pass, a nd procedural matters use the simple majority voting method (Europa, n.d.d). The European Commission, as a supranationa l institution, is independent of national governments and is supposed to act solely in the interest of the EU, while the Council of Ministers is intergovernmental a nd tends to reflect national inte rests. The Commission president is appointed every five years, and requires Parliamentary approval. Then, the Commission president, in coordination w ith other member state govern ments, chooses the other 26 12 General Affairs and External Relations; Economic and Fi nancial Affairs; Justice and Home Affairs; Employment, Social Policy, Health and Consumer Affairs; Competitiveness; Transp ort, Telecommunications and Energy; Agriculture and Fisheries; Environment; and Education, Youth and Culture.
55 Commissioners, who also require Parliaments approval. The Commission is the only EU institution responsible for initia ting legislation; however, Parlia ment may veto policies put forth by the Commission. Once EU legislation is a dopted by the Parliament and the Council of Ministers, the Commission is res ponsible for implementation in all member states within any set time limits (Europa, n.d.e). Commissioners are responsible for different EU policy areas organized into DirectoratesGeneral (DG). Viviane Reding, cu rrently the Commissioner, and Fa bio Colasanti, currently the Director-General for information society and me dia are responsible for overseeing the progress of the digital television transiti on and setting the direction for European mobile television. The heads and the staff of directorates general are responsible for researching and developing legislation and policy for their respective area s. Once a policy is developed, the responsible Commissioner presents the legislation to th e Commission and then Parliament for review. While DGs do a significant amount of legislative research a nd there are national committees set up to advise the EU institutions, these are not comparable to the agencies set up by the US Congress, like the FCC. The US sets up agencies that are responsible for implementation, whereas the EU Commission is re sponsible for implemen tation of legislation passed. Majone (2002) argues that the allowance of agencies would stre amline the effectiveness and coordination efforts of the EU especially in the telecommunications sector. However, the institutional balance of power prevents this sort of delegation. The lack of administrative ability between the supranational level of EU institutions and national governments creates a vacuum, which takes for granted reliabl e national cooperation. Therefor e, with differing levels of resources and expertise, EU legislations of ten lack uniform application (Majone, 2002).
56 EU Legislation The EU evolved from a system of treaties m eant to bring European nations into closer economic association and promote peace throughout Europe. The Treaties of the EU outline the primary EU law, institutional st ructure, legislative procedure, and, in a sense, act as its constitution. Treaties give the European Parl iament, Commission, and Council the ability to make secondary legislation for integrated polic y areas. Secondary legi slations have differing levels of authority and come in a number of diff erent forms: regulations directives, decisions, recommendations and opinions. Other documents published by the EU, including communications, are particularly helpful in understanding the policy-making process. Regulations and Decisions: Once a regulation is adopted by the EU, all aspects of the regulation have immediate binding legal force, and it is immediately in cluded in the national laws of every member state (European Commi ssion, 2008a). Regulations concern specific and technical adjustments to existing EU law, and are usually outlined by the Commission (Nugent, 2006). Regulations are intended to eliminate discrepancies among national laws and bring national laws in line with one another to fost er a common market and European objectives. Decisions pertain to specific pol icy areas and tend to be administ rative rather than legislative; they may deal with the functioning of a particular organization or protocols for handling situations. Therefore, decisions may address an y or all member states, certain undertakings, or individuals (Nugent, 2006). Directives: are mandatory only in the end result. They require member states to implement the legislation in the manner seen fit fo r a particular state, and only become effective once the state enters it as law th rough national legislation. For ex ample, the transition to digital television is required by all member states, how ever each member state follows its own method and time frame to achieve the transition. Therefor e, directives allow a measure of choice in
57 translation to national law and are only binding in the end result. However, the European Court of Justice is able to fine states that fail or refuse to implement a directive (European Commission, 2008b; Nugent, 2006). The DTV transition was enacted as a Directive, which has implications that will be re vealed through the case studies for the implementation of the transition. Communications: are not legislation. Communications are documents released by the Commission typically, while new le gislation is being debated to express the position of the Commission as it pertains to a particular po licy issue. Communicati ons also include the perspectives of other institutions involved in the decision-ma king process and the Commissions reaction to those views (Nugent, 2006). As the Commission is the initiator and a significant proponent of the EU legislative process, Commu nications provide guidance as to the reasoning for EU policy. Most of the instructions and requests to member states concerning the DTV transition were issued as Communications. With three different power-balancing institutions different levels of force of regulation and different methods of voting, all of which are cons tantly evolving, it is difficult to follow the path of EU legislation. There are di fferent procedures for passing different types of legislation, CoDecision is the most common me thod for passing legislation and was the decision procedure for the Digital Television Directive. In the co -decision procedure, the European Commission introduces legislation, the Council of Ministers, representing the states, and the European Parliament, representing European interests, must agree on the final versi on of the legislation. Before the co-decision procedure was introduced via the Treaty on the European Union, the Council could unanimously adopt legislation with out the approval of the European Parliament (cooperation procedure). The co-decision proces s gives both institutions equal influence on the
58 outcome of legislation. If the two do not agree, they must meet in conciliation committee to resolve points of contention; otherwise, the legislation will not be enacted. Once enacted, legislation goes back to th e Commission for implementation.13 The diagram at the end of the chapter illustrates the co-decision procedure. While the initial aim of Eur opean cooperation through the trea ty system was to create a more peaceful and safe environment, the focus quickly moved toward economic concerns, primarily creating a functioning inte rnal market. Currently, the EU presents itself as a new type of political structure bridging the gaps between diverse national societies through a combination of intergovernmental and supranat ional organizations. The channels for legislative development, implementation and the varying degrees of legisla tive force at the EU level are very different from the organization and legislative structure of the United States. For example, the EU draws authority from a treaty system, while the US draws authority from a constitution. The following sections give a brief synopsis of US history, gov ernmental structure, and legislative process to offer the reader a comparison between the two polit ical entities. A basic understanding of the development of the political entiti es and their governing and legislative processes will further inform the discussion of more specific policies, such as the transition to digital television. United States Am ericans first adopted a confederal system under the Articles of the Confederation. Confederations are typically agreements among s overeign states to act together in matters relating to outside countries. Th e central government usually handles matters of defense, foreign affairs and common currency. This is not similar to how the EU functions. The EU central government powers are very limited regarding exte rnal relations and defense; member states 13 For more information on decision procedures please see: http://eurlex.europa.eu/en/droit_communautaire/droit_communautaire.htm
59 retain the power to declare war and to handle foreign relations.14 In addition, only sixteen of the twenty-seven member states sh are the Euro as their common currency. Therefore, even though the states hold the majority of power, the EU central government does not fulfill the typical roles of a confederal government. In the US confederal government, the individual states retained the majority of power including taxation, but only th e central government had the power to declare war, negotiate diplomatic agreements, and resolve issues regarding western territories. However, the Confederation did not give the central government enough power to be effective, so state representatives decided a new system was necessary. History The curren t United States Constitution, replac ing the Articles of the Confederation, established a federal system. The United States federal system established an elected government and, relative to the traditional mona rchies of the 1700s, a weak executive. A federation is comprised of par tially self-governing states or regions united under a central or federal government. Usually, certain powers and self -governing abilities of the federal states are constitutionally protected. These powers may not be exercised by the central government nor can the central government alter those powers by unilateral decision. Though the EU may be taking steps toward becoming a federation, many memb er states are unwilling to give up their sovereignty, especially in matters of internati onal relations and defense, to a centralized EU government, so it currently functions under a hybrid intergovernmental and supranational structure. 14 With the ratification of the Lisbon treaty at the end of 2009, EU member states still have foreign ministers and represent themselves internationally; however, the EU now has a foreign minister as well to represent EU interests internationally.
60 United States Government Organization The United States federal governm ent has thr ee branches, the legisl ative, executive and judicial, whose powers and dutie s are outlined in the United States Constitution. Through a system of checks and balances, each branch has some authority to act i ndependently and a degree of authority over the other bran ches. All powers not given expre ssly to the national government by the Constitution belong to state government s. In this way, government power is not concentrated in one person, inst itution or group of people. The executive branch is composed of the presid ent, vice president, and department heads, also referred to as cabinet members. The presid ent and vice president are elected together for a term of four years and the presid ent is limited to serving two term s, for a possible total of eight years. The president acts as Head of State and Commander in Chief of the U.S. military, performs administrative tasks, and can propose le gislation to Congress. As one of the checks and balances, the President must sign all legisl ation that passes through Congress. If the president disagrees with legislation, he can veto it, and the legislation di es unless a two-thirds majority of Congress overrides the veto (U S Government and Printing Office, 2002). Article I of the Constitution establishes a bi cameral Congress as the legislative or lawmaking branch of government. The public el ects both congressional houses, the House of Representatives and the Senate, through popular vot e. Congresss primary responsibility is to write and pass bills. Identical copies of bills must pass through both the House and Senate before they are sent to the president (US Constitution). Representation in the House of Representatives is based on a state s population. Currently there are 430 voting members and 5 non-voting me mbers representing the territories of the United States who face re-election every two year s. Special duties afforded exclusively to the House include: developing laws that require taxation and deci ding if a government official
61 should be put on trial before the Senate (US Constitution; US Government and Printing Office, 1999). In the Senate, two Senators represent each stat e, regardless of population, with a total of 100 voting members. (US Constitution; US Government and Printing Office, 2007). Senators are elected for six-year terms. One third of the Senators come up for re-election every two years; therefore, there is never an entirely new Senate Special duties afforded to the Senate include confirming or disapproving treat ies drafted by the president, confirming or disapproving presidential appointments, and holding trial fo r government officials accused of committing a crime against the country (US Government and Printing Office, 2003). Article III of the Constitution outlines the judi cial branch naming the Supreme Court as the highest court in the United States. Lower federa l courts were not created by the Constitution but by Congress, which established them under their powers granted by the Constitution. The Courts present a check and balance over the legislative branch by interpreting the meanings of laws, how they are applied, and whether they are in violation of the Constitution through judicial review (US Constitution; US Government and Printing Office, 2000). Through the legislative process, Congress ha s the power to create government agencies responsible for administration of a particular law in terms of implementation, enforcement, and coordination with states. While these agencies do have some autonomy, they must always report to Congress. Government agencies allow Congre ss to focus on the legislative process, creating, researching and debating bills in their various committees and personal offices. For example, as part of the Communications Act of 1934, Congress established the Federal Communications Commission (FCC).
62 As a government agency, the FCC regulates non-federal government use of the radio spectrum, which includes radio and television si gnals, and all interstate telecommunications, such as wire satellite and cable communications in the 50 states and its territories. The FCC also regulates international communicat ions originating or terminating in the United States. The president appoints five commissioners to th e FCC for five-year terms, and chooses one commissioner to serve as the chair. The Sena te must approve the commissioner appointments. Up to three commissioners can be from the same political party, and none of the commissioners can have a financial interest in any commissi on-related business (FCC, 2009e). Without agencies such as the FCC, the institutions of th e EU are responsible for a ll aspects of legislation research, creation, debate, implementation, enforcement and coordination with national governments. However, there are no agencies give n power through EU Legisl ation to facilitate the implementation of new laws as there are in the United States (Committee of the Regions, 2007; Majone, 2002). Legislation Legislation begins in Congress. Only m e mbers of the House or Senate can introduce legislation for consideration. Ther e are four types of le gislation that can be introduced: Simple Resolutions, Concurrent Resolutions, Joint Resoluti ons and Bills. Simple resolutions affect the rules and operation of the body in which it was introduced, either the Ho use or the Senate, not both. Concurrent Resolutions affect the rules and operation of both houses. Neither is submitted to the president for approval (Office of Public Records, n.d.). Joint Resolutions and Bills are nearly interchangeable; however, Joint Resolutions may include a preamble describing the purpose or anticipated effects of the resolution. Bills and resolutions typically follow the same legisl ative procedure except when a Joint Resolution proposes an amendment to the Constitution. Once approved by two-thirds of both
63 Congressional Houses, a resolution to amend the Constitution is not sent to the president for approval, instead, it is submitted to the state legi slatures for ratificati on. Upon ratification, the Constitution is amended (Office of Public Records, n.d.). A Bill is the most common type of legislation in Congress. After introduction by a House or Senate member, a bill or joint resolution is referred to the appropriate House or Senate committee for consideration. The committee may pass a bill on to the floor for consideration, reject a bill by not acting on it, or refer a bill to the subcomm ittee for additional study and public hearings. After additional research and public testimony the subcommittee may decide not to report the bill back in effect the bill dies in subcommittee or the subcommittee may make changes to the bill and report it back to th e full committee. The full committee goes through additional deliberations, public hear ings, and recommendations and th en puts the bill to a vote. If the bill passes it is reported, with all research and hearing testimony, to the House or Senate floor for additional debate. If the full chamber of either the House or the Senate approves the bill, it is referred to the oppos ite chamber for debate (Lexis-Nexis Congressional, n.d.). Once both houses approve an identical form of the bill, the bill is sent to the president for approval. The President can choose to sign the b ill into law or veto the bill. A vetoed bill returns to Congress. Congress can choose to le t the bill die, make amendments to achieve presidential approval, or override the presidential veto through a two-thirds vote by a quorum of House and Senate members (Lexis-Nexis Congressi onal, n.d.). All bills that become law have the same level of force. Though the law may include a grace period for implementation, the grace period is often specified in the law and the law is effective im mediately in all states. This level of legal continuity and certainty is what th e EU is trying to achie ve. The legal certainty facilitates a market of s cale for consumer goods, and significant bargaining power.
64 Summary The nations of Europe have been def ining a nd redefining their boundaries and relations to one another for centuries, but have not represented a single political entity until the formation of the EU through a system of treaties. The US, wh ile much newer in historical terms than the whole of Europe and its nations, is an older political entity, w ith 220 years since the ratification of the constitution, making it the wo rlds longest surviving written gove rnment charter. It is hard to say specifically when the EU began; since the first Economi c Community composed of five member nations 52 years ago, or the signing of th e Maastricht Treaty 16 years ago. It could even be argued that the EU has no definable in ception date since it has no official constitution. A constitution was proposed in 2007, but was not ra tified by all member states and underwent revisions to become the Lisbon Treaty instead of a formal constitution. The Lisbon Treaty was ratified by all member states in October 2009.15 Even though the political status of the EU may be difficult to define, it is a political and economic force on the world stage. The United States united under a common distrust of power concentrated in one individual and the common belief that the government exists to serve the citizens, which is asserted in the initial phrase of the constitution: We the People, and derives its legitimacy from citizen support. The idea for the EU originated in a union to encourage peace and prevent wars among European nations. Ostensibly, the way to promote peace was through economic integration beginning with the European Coal and Steel Co mmunity. In present matters, where war among European nations is unlikely, economic competitiveness becomes a major legitimizing factor, especially pertaining to digital and mobile television. Arguably, the EU claims legitimacy based on economic competition with foreign nations li ke Russia, China, Japan and the US. 15 The Lisbon treaty has come into effect since the comple tion of this research; however, it is unlikely result in any changes in policies discussed in this research.
65 While the US strives to increase and mainta in its current position of power in economic and knowledge-based resources, the EU strives to become more powerful. The driver behind the DTV transition is to achieve a single European market for media and new technology services, rather than a fragmented market of uncoordinated nations with different technical standards and different regulations. Within a single rather than fragmented EU market, products can be developed and sold to a larger number of cons umers, rather than developing the same basic product with minor differences to account for national incongruities. EU member states can realize economies of scale, a nd thereby become more attractiv e to industry. Through a largescale market, the EU will be more compe titive worldwide in terms of production and consumption. The single market goal, for tech nology, media and knowledge-based services is expressed in the Lisbon Strategy, which is th e springboard and basis for many technology-based regulations. The major differences between the EU and th e US are the separation of powers versus balance of powers, supranational and intergovern mental institutions versus federal institutions, and the degrees of regulatory force. Within the separation of powers there is a clear definition of which branch controls the legisla tive the executive and the judicial areas of law. Both houses of Congress must agree to pass a law and the presiden t must sign it into law. In the EU, functioning under institutional balance, the Commission, the Parliament and the Council of Ministers all share in some aspects of passing regulations depending on the intere sts affected by the particular regulation. Depending on the interest area there are different methods of voting, which include co-decision, qualified majori ty, and simple majority.
66 Table 4-1. Differences between EU and US governance EU US Executive and Legislative Institutions Parliament Commission Council Congress: The House and The Senate Executive Parliamentary Committees, Directorates General, Committee of the Regions, etc. Congressional Committees and Subcommittees Federal Agencies (FCC) State Governments Member State Governments Institutional theory Balance of Powers Separation of powers Institutional Organization Supranational & Intergovernmental Federal Legislation Regulations Directives Decisions Communications Laws The supranational institutions and intergovern mental institutions of the EU are natural phenomena of bringing together sovereign nations unwilling to give up full sovereignty to another power. These nations have their own cultures, national industries, and traditional governance structures to protect. The US developed a federal syst em with states represented at the national level in Congress by eq ual number and by population density. The degree of regulatory force is also an in teresting difference; in the US, laws are enacted, implemented and applied to all states in the same manner, with some exceptions. In the EU, decisions are only binding in outcome, so methods of implementation and periods of implementation may vary. Also, member stat es could choose not to implement an EU
67 legislation. While typically th is is not an option for states, since government agencies are implementing the policies or there are methods of economic coercion that can be employed.16 While some national governments are able to employ EU Directives more efficiently and effectively through greater resources and expe rience some national lack the same access to resources and struggle to implement EU legislations especially in terms of telecommunications, health and financial reforms. In addition, some member states may choose not to implement an EU legislation because they do not believe it sup ports national interests. In the interest of harmonization, which behooves a functioning internal market and a competitive world economy, the use of administrative agencies with the power to create laws and implementation processes would help the EU achieve its goal of internal harmonization. The next chapter discusses the basic EU and US media policies and includes a discussion of the political entities legislative efforts surrounding digital television. 16 For an in-depth discussion of states right versus US federal rights please see Hart, H. (1954). The relations between state and federal law. Columbia Law Review (54) 4.
68 CHAPTER 5 EU AND US MEDIA POLICY Introduction As digital video technologies and the industries surrounding them develop, policy makers must decide what role they will play in the de veloping markets, how new firms will be regulated, and how standards will be set. What is interes ting about the broadcast di gital conversion is that, generally, free market economies depend on consum er adoption patterns or market determinants; however governments across the globe are requiring private companies to go digital (Klein, Karger, & Sinclair, 2004). While the previously mentioned advantages of digital television are notably attractive, broadcasters, operators and hardware manufacturers will not convert while there is insufficient consumer demand, and consumer s will not convert if ther e is little content or perceived value. This deadlock was the primary legitimizing factor for government involvement in the DTV transition. Policy concerns in both the EU and th e US also give governments grounds for intervention. Over the air tele vision broadcasts are considered a public good and a necessity for citizen participation as the primary source of in formation and entertainment. In the transition, some entity must assume the role of protecting th e public and ensuring that large segments of the population are not cut off from television broad casts due to economic circumstances or other unpredicted effects. The governments appear to be in the best position to encourage market growth while mitigating social effects. EU: Audiovisual Media Services Directive As technolo gies converge, the EU has take n the stance that, because the boundaries between technologies are convergin g, regulation ought to converge as well. This means that the same regulatory framework should apply to all electronic media including broadcast, cable,
69 satellite, mobile and Internet te levision. The primary legislation for media corporations is the Audiovisual Media Services Di rective (AVMSD) of 2007, which operationalizes the EU stance that contemporary rules ought to be market-oriented, flexible, and neutral among delivery platforms to account for convergi ng digital technologies, and to allow a standardized basis for competition with consistent and clear regulations (European Union Directive, 2007). As the primary legislation for media services, the AVMSD amends the previous media regulatory framework, the Television Without Frontiers Directive (TWF). Arguably, the AVMSD maintained some form of layered regulations by imposing lighter regulations on on-demand services. Meanwhile, heav ier regulations have still been imposed on other media industries, like telecom operator s and broadcasters, while Internet services experience less regulatory interference. Ho wever, the AVMSD notes that industries will continue to converge. Therefore, member states should strive for techni cally neutral regulations and balance between competition provision and specific regulation (European Union Directive, 2007).17 EU: Spectrum Policy EU spectrum policy focuses on coordinating sp ectrum use, harmonizing regulations, and creating flexibility in spectrum regulations ac ross member state borders. Spectrum coordination in European countries is more complex than in the US. Governments must ensure that there is no internal overlap of spectrum usage. In additio n, European countries must also coordinate with the governments of bordering countries where freque ncies may in some cases cross over national borders or, in other cases, eclipse the whole coun try. The US must also deal with international spectrum overlap at its borders wi th Canada and Mexico, but Europ ean countries more often deal 17 See Michalis 1999 for a more in depth discussion on layered regulation versus converged regulation.
70 with high levels of internal spectrum overlap where three or more countries may need to negotiate rather than just two. For example, Ge rmany must coordinate its spectrum use to avoid interference with eigh t other countries: the Netherla nds, Denmark, Belgium, France, Switzerland, Austria, the Czech Republic, and Poland. Allocation of radio spectrum is under the regu latory authority of me mber states, however EU law and international spectrum agreements limit their regulatory scope. National governments and their agencies determine parti tioning and the length of licenses for spectrum blocks. Therefore, partitioning a nd technical specifications, such as which kinds of devices can operate in a particular spectrum block, may va ry among member states. In order to allow services to cross member state borders, th e Radio Spectrum Decision implemented in 2002, drives at the coordination, harmonization and lib eralization of spectrum uses (European Union Decision, 2002). Coordination in this context means equivalent spectrum bands in different countries allow the same types of devices to ope rate, examples include: mobile devices, public safety, or television signals. Harmonization mean s that eliminating interfe rence due to frequency allocation and use in other countri es. Liberalization means removing restrictions for the types of services that can be used on a frequency (Niepold, 2005). To support a fully functioning internal market, more than 27 national regulatory bodies must coordinate and collaborat e with EU spectrum bodies, such as the Radio Spectrum Policy Group (RSPG), the European Conference of Post al and Telecommunicati ons Administrations (CEPT), and the Radio Spectrum Committee (RSC), and global radio spectrum bodies, like the ITU. At one point, the EU attempted to singularly represent all of the memb er states at European and international spectrum gr oup meeting, but member states were not ready to relinquish national authority over spectrum ma nagement to a supranational body.
71 The EU believes that flexible regulations across member state borders are important for allowing innovative information technologies to achieve their full potential in the EU marketplace. Flexible regulations will allow the information technology market to function efficiently across borders. According to the EU current service use and usage conditions are narrowly defined and rigid, which does not allow license holders to intr oduce new technologies that were not available at the time of licensure (EC, 2007b; EC, 2007c). For example: Existing and new operators wish to impleme nt different technol ogies (UMTS, WiMAX etc.) via the 2.6 GHz band from 2008 fo r wireless access to the Internet. Existing second generation (2G) mobile operators want to enhance their current use of the 900 MHz GSM band to deploy new services using 3G mobile technologies. Existing and new operators want to us e the 470-862 MHz band currently used for broadcasting, where the move from analog to digital broadcasting will provide a digital dividend, for new services such as mob ile TV and extending wireless electronic communication services into rural areas (EC, 2007c). The EU is working on a policy to solve these issu es and decrease regulatory barriers to the quickly evolving communications technology sect or. The policy under development is known as the Wireless Access Policy for Electronic Communications Services (WAPECS) and entails identifying specific spectrum bands where regulato ry restrictions can be lifted to introduce competition, including competition between differe nt radio infrastructures (EC, 2007c; Niepold, 2005). EU: Digital Television Policy Digital television policies are developed with the Lisbon Strategy in m ind. The Lisbon Strategy expresses the European Unions plan to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion (EU, 2002). The Strategy, originally developed in 2000,
72 is revisited every year to evaluate member states progress and to update the Lisbon Strategy based on the current economic conditions. The EU sees the implementation of digital television as being an integral part of a knowledge-based economy (EC, 2005b). As a method for pursuing the Lisbon Strate gy, the eEurope 2005 Action Plans primary function was to encourage private investment, e nhance the job market, in crease productivity and allow everyone the opportunity to participat e in the global informa tion society based on a broadband infrastructure (EC, 2002). The Lisbon Strategy was updated to focus specifically on growth and jobs within the information a nd communication technology sector. Hence, the eEurope 2005 was updated by the i2010 A European Information Society for Growth and Employment. This document furthers the prev ious plans objectiv e by incorporating an integrated approach to information and commu nication technologies and audiovisual policies (EC, 2005a). European Union policies directed toward media development demonstrate that the EU views media, new technologies, and their ap plications as mechanisms for driving the economic and civilization progress of European Nations. As implied by the wealth of documentation and focus on a digital informati on strategy, the switch to digital television transmission via terrestrial netw orks is an integral part of the of EU comp etitive strategy. In 1995, the European Parliament and Council enacted Directive 95/47/EC on the use of standards for the transmission of televisi on signals, which is the foundation for recent developments in the digital television transi tion. The Directive gave guidelines and standards requirements to be implemented across all platforms regardless of transmission.18 The Directive officially set in motion the move to digital tele vision by requiring member states to promote the accelerated development of advanced televisi on services including wide-screen television 18 The EUs preference for converged legislation is visible as far back as 1995. After the failure of the HD-MAC standard on terrestrial platforms, the EC produced the 1995 Directive on Advanced Television Services.
73 services, high definition television services, and television services using fully digital transmission systems (European Union Directive, 1995). The Directive also required the Commission to submit a report to the European Parliament every two years on the implementation of the Direct ive in member states and on the status of the market for digital television services. In 2003, the commission requested that member states submit their plans for the transition to digital te levision in the interest of transparency and coordination (EC, 2003). The 2005 Communication from the Commission on accelerating the transition from analog to digital broadcasting, referred to as COM2005, reit erates the desire for a coordinated switch-off time-line. Commissioners determined, from th e published timelines, that most members would be far along in the switchover process by 2010 a nd the whole of Europe would finalize the process by 2012 (EC, 2005c). COM2005 was updated by COM2007, which again published the progress and expected timelines for each member state. Due to the progress of member states, COM2007 recalled the deadline of 2012 and did not i ssue a new deadline. It appears, however, that most members will still be well along by 2010 and finished with switch-off by 2012, with a few states switching-off by 2015 (EC, 2007a). COM2005 emphasizes the importance of techni cal neutrality maintained by the AVMSD, meaning, regulation should neither impose nor discriminate in favor of the use of a particular type of technology. However, differentiated treatment may be justif ied to the commission by member states, especially if a technology enables more efficient spectrum use. However, the Commission must review any adva ntages, which often manifest in subsidies. COM2005 also expresses that member state plans for the newly vacated frequencies resulting from the transition
74 should consider the possibility of future innovatio ns in service, and allow for flexible use of allocated spectrum. US: Spectrum Policy To use a television channel, or m obile phone frequency, US operators must acquire a license. Until 1997, the FCC used comparative hearings to award licenses, but following congressional instruction, commerc ial television licenses have been awarded through auctions. Applicants apply for a channel a nd if there are no challengers, th e license is awarded for free; however, if another applicant expr esses interest in the channel, the license is auctioned. Applicants must meet some minimal eligibility requirements in terms of financial capability, adherence to transmission rules, and, in the ca se of broadcasters, not exceed media ownership rules (Levy, 2008; McMillan, 1994). The FCC awar ded a digital TV (DTV) channel to each holder of an analog TV station license for simul cast purposes without an auction, to aid in the switch-off. The channel that is returned at th e end of the transition wa s auctioned for mobile, wireless Internet, and public safety services. Portions of spectrum are available exclusivel y for terrestrial television use and assigned a channel number, transmitter location, limits on tr ansmitter height and geographical reach for each station signal. These specifications help li mit interference by othe r channels that might otherwise transmit on the same or adjacent channels (Levy, 2008). As noted earlier, ownership regulations have been important for the FCC to achieve its policy goals. There are rules applying to local and national markets. The FCC lim its the number of televi sion or radio stations than one entity can own, and limits crossownership, or owning bot h television and radio stations, as well (FCC, 2008a; Levy, 2008).19 19 For an in depth discussion of ownership limits and rules see the FCCs Review of the Broadcast Ownership Rules, 2008 or Levy, 2008.
75 US: Digital Television Policy The US first established a 2006 switch-off date for analog television signals in the Balanced Budget Act of 1997. This Act establishe d that 85% of households must be able to receive digital television before the termina tion of analog signals. However, consumer awareness of the switch was very low and the industry lacked technical capa bilities. Therefore, the Digital Television Transition and Public Safety Act was signed into law in 2006, and established a new transition deadline of February 17, 2009 for broadcasters to cease analog television transmissions and tran sition to digital technology. Congr ess gave the FCC authority to terminate analog licenses for full-power television stations and reclaim the spectrum for public safety and commercial wireless broadband services. The NTIA wa s given the responsibility of managing the converter box coupon subsidies for cons umers. After analog switch-off, all digital television transmissions are require d to be in the spectrum currently occupied by TV channels 2 through 51, while television channels 52 through 69 in the 700 MHz band of spectrum were opened for wireless communications (DTV Act, 2006). The DTV Act (2006) established two specific statutory deadlines for the commercial auction of the recovered spectru m space: (1) the auction was to begin no later than Jan. 28, 2008, and (2) the auction proceeds were to be deposited in the Digital Television Transition and Public Safety Fund by June 30, 2008. The legislation appropria ted more than $1 bill ion to assist public safety agencies to develop and deploy interoperable emergency communications systems, and up to $1.5 billion to help analog television owners purchase digital-to-ana log converter boxes so they could continue to watc h TV after the Feb. 17, 2009, deadline. However, the DTV transition date was delayed again from Fe bruary 17, 2009 to June 12, 2009 in the Digital
76 Television Delay Act (2009) to account for cons umers unable to receive converter box coupons in time for the February date.20 Comparison of Regulatory Frameworks As comm unications technol ogies like telephone, radio, te levision broadcasting, cable television, and Internet emerged, each was regulated individually. There were distinct barriers between the various business models associated w ith each platform; however, these barriers have increasingly fallen away as tec hnologies and business models ble nded together. There has been some debate as to whether converged technologie s require converged regulations, or if platform based regulatory layering will remain effective. In terms of telecommunications policy regulations, the EU and the US take different approaches. The EU is moving toward converged regulation, or one regulatory framework for all telecommunications and media services, while the US continue s to use layered regulations different regulations for differe nt services based on platform. The EUs Framework Directive 2002/21 establishes a European market and co mpetition regulation for telecommunications services (Articles 14-16). The EU took on the stance that because boundaries between telecommunication technologies ar e converging, regulation ought to converge as well (Picot & Wernick, 2007). Therefore, the underlying philosophy of telecom regulation is that no distinction should be made betw een differing technology platforms. This means that the same regulatory framework should apply to all electronic media includi ng broadcast, cable, satellite, mobile and Internet television. The 2007 Audiovisual Media Services Directiv e (AVMSD) operationalizes the EU stance that contemporary rules ought to be market-oriented, flexible, and neutral among delivery 20 This change will be discussed in more detail in the US Case Study in the following chapter.
77 platforms to account for convergi ng digital technologies, and to allow a standardized basis for competition with consistent and clear regulati ons (European Union Directive, 2007). The AVMSD will apply the same regulations to all a udio-visual media service providers. Member states have yet to fully implement the requirements of the AVMSD; they have until the end of 2009 to comply. The US has made no move to change regulati ons already in place to account for changing communications markets, and some scholars agre e that technological convergence does not necessitate regulatory convergence. Michalis (1999) argues that layered regulation, where each industry is individually regulated, could be more effective because regulations at every level of the media industry must function effectively for convergence to work. In the future, a comparison of how these different approaches to media regulation will be interesting and provide further guidance on the regulation and intr oduction of new information technologies. From the discussion of converged regulation, spectrum policy and digital television policy, it is clear that the EU takes a mo re proactive approach to regulation, while the US takes an active approach. Rather than waiting to see how events w ill transpire, EU regulators become involved early in the standardization and development proc ess. However, it is understandable as the EU has much more work to do to bring 27 countries under the same regulatory umbrella, than the US, which already functions primarily under he same regulatory regime. In terms of spectrum policy and new services, the EU has already ta ken steps to encourage wireless broadband, and has supported DVB-H as the standard for m obile television in 2008 (Europa, 2007c; Reding, 2008). Meanwhile, the US has made no broad move in terms of wireless broadband and was still experimenting with multiple standards fo r mobile television until the end of 2009.
78 As digital television policy in the EU was enacted as a Directive, member states handle implementation. Therefore, EU DTV policy pr ovides general transition parameters and reasoning as to why all member states should implement DTV. EU policy also includes provisions for tracking member st ate progress and ensuring the impl ementation process is in line with all EU law. US policy provides specific gu idelines and procedures, such as establishing a transition deadline, coordinating all spectrum a ssignments, and redistributing returned spectrum space to other interests. The US also has the capability to create and utilize specialized rule making administrations; therefore, policy delegated most administrative responsibilities to the FCC and the NTIA. The EU and the US are both mandating the intr oduction of dig ital television, and they are taking similar yet divergent paths to reach th e end goal of digital terrestrial television transmissions. The previous chapters provided the background for deve loping policies and how government and industry have advanced the transition. The following chapter gives details on the switchover process throughout the EU and the US. These details serve as a basis for comparing the two political entities, and answer s the questions of how the digital transition progressed in the EU and US comparatively, and what policy lessons from the digital television transition can be applied to the introducti on or expansion of new technologies.
79 CHAPTER 6 CASE STUDIES To take the EU as a single unit and com pare it to the US is difficult because of the different political structures. The EU is mixture of supranational a nd intergovernmental institutions and member state governments where regulations an d laws do not necessarily move from EU institutions down to member st ates. Member states often ha ve a strong influence on policy development and implementation. In the US, fe deral laws and their im plementation originate from a centralized power. As a result of these different political stru ctures, the EU provides the parameters for switchover, and each member state works out the details. On the other hand, the US took a nationwide approach to the swit chover, and the federal government managed all aspects of the digital television transition through the FCC. To compare the EUs process of transitioning to the US transition process, it is practical to compare the US process with that of individual member states, as their governments are in charge of the implementation process. This chapter first describes selected EU member state and US reasons for participating in the digital switchover. Then selected EU member states and the US ar e analyzed across four different categories: (1) transition periods, (2) subsidies, (3) consumer education, and (4) new services. Not every EU member state is include d for analysis in these categories, but evidence from exemplary nations is used to describe th e process. This analysis will compare how the respective policies approached the digital terrestr ial television transition, and how these policies may be applied to mobile television. Reasons for Transition Outside of increas ed quality and choice, the pr imary reason for the digital transition in the United States is to reclaim spectrum and aucti on the newly available space to other industry
80 participants. Forcing consumers to choose betwee n a pay platform and no TV at all was not an option in the US. Even though the majority of the US population uses subscription based TV, 19% of the population, about 58 m illion people, still rely on terre strial transmi ssion only (GAO, 2006). Therefore, due to the larg e number of analog terrestrial transmission reliant consumers in the US, and the fact that ther e are no other free methods for re ceiving television, such as the satellite platforms offered in many EU member states, the US decided to not discontinue overthe-air transmissions. In addi tion, the broadcast media goals of diversity, localism, and competition provide the basis for the importa nce of broadcast television, which cannot necessarily be replaced by cable or satellite te levision. The transition to digital terrestrial television is not cost-prohibiti ve to many television consumer s. A basic cable subscription averages about $30/month, with a start-up fee of about $40-50; satell ite averages about $3040/month with an initial fee of about $100, and a digital terrestrial se t-top box costs about $60, with a monthly fee of $0. In the EU, the overriding goal is to beco me the most competitive knowledge based economy (EU, 2002). Even though member states are required to switch to digital terrestrial, according to Directive 95/47/EC, they have their own reasons as well. Countries like the UK, France, Finland, Italy, Hungary, and Poland, ci te increased picture and sound quality for consumers, economic benefits for government a nd business, and increased frequency space for new technologies (AGCOM, 2004; Ofcom, 2004; Official Journal of Hungary, 2007; Regeringskansliet, 2005). In the UK, regulators believe that consumers w ill greatly benefit from the switch to digital television. Consumers will find higher quality tele vision services, choices and opportunities once the transition is completed, and broadcasters wi ll see a decrease in costs. Thereby, the UKs
81 government is committed to providing affordable, universal access to free digital public service broadcasting. By turning off the analog signal, the UK government anticipates the economy will benefit by 1.1 to .2 billion in net present valu e terms, nearly one th ird of the spectrum will become available for new services and DTT signal coverage will extend to the 25% of households unable to receive DTT due to spectrum limitations (Digital UK, 2005). Some countries have additional reasons for comp lying with the digital terrestrial transition. Austrian plans for switchover centered on the fact that as a small country it is dependent on and affected by larger neighboring countries, Germany in particular. Therefore, it is important for it to participate in the EU economy and monitor wh at other EU member st ates are doing in the DTT switch process. DTT allows Austria to provide more media variety, and preserve its regional, cultural, and economic identity (KommAustria, 2003). Hungary and Finland also felt that the ability to add additional channels th rough digitalization would help preserve their cultural identity and language (Niemela et al, 2003; Official Journal of Hungary, 2007) Many countries focused on the ability to intr oduce new technologies and services, like mobile television, through the digital dividend. However, Germanys intention to transmit digital terrestrial television was not to create a digital dividend, but to make the terrestrial platform more competitive with cable and sate llite. There was no expectation of a digital dividend because Germany originally allotted a very small amount of space for broadcast transmissions, and broadcasters were expect ed to still use all of the allotted space for multiplexing, or the ability to provide additiona l channels (Mabb, 2008). If broadcasters did not use multiplexing, then the frequency space would be returned. In some cases, such as Berlin, a digital dividend resulted, and th ese frequencies were allocated fo r mobile broadcasting via the
82 DVB-H standard. In other cases, such as Brandenburg, broadcast frequencies were deployed for broadband use (Mabb, 2008). Table 6-1. Reasons for participating in the digital television transition Economic Advantages New Communications technology prospects Consumer Quality Preserve national culture United States XX* X X European Union XX X X Finland X X X X Hungary X X X X Poland X X XX France X X XX Italy X XX X Austria X X X XX Germany XX X *XX-most important factor, Xcontributing factor, EU and US Transition Periods The EU as a whole takes a regional or state-by-state approach to the switch-off, where each country, or region, switches over on different timelines appropriat e for that particular regions characteristics. Within each member state, a different method and timeline for transition is taking place. The most popular method is the regional approach; followed by the island approach, then the snap or big-bang switchover, and some member states are creating their own methods. Most member states re quire a certain level of digital coverage an d penetration before analog transmissions can be terminated. For example, Poland requires 95% national coverage and 90% penetration, while France requires 85 % coverage before switch-off can begin. Regional Approach In the regional approach, m ember states shut down analog service in one area of the country to focus all resources in that area, pr oblem shoot and then continue the process in another region. Analog transmissions are switch ed off region by region until the entire country
83 moves over to digital. This method had been po pular with larger countries that have a high percentage of terrestrial-reliant viewers like the UK, Italy and France. Italy has had significant diffi culty in developing an eff ective switchover strategy and meeting its analog switch-off deadlin es. It is the most terrestria l country in the EU, with 84.2% analog terrestrial users at the end of 2003 (EC, 2003). DTT launched in Italy in 2003, and the original switch-off date was 2006. However, at the end of 2005 the plan was deferred to 2008 due to subsidy failure and lack of programming, coverage and consumer take up. The switch-off date was changed again to 2012 in 2006 and a re gional approach was introduced. The first region slated for switch-off was the island of Sardinia, scheduled for March 2008; however, this deadline was also postponed in the face of br oadcaster conflicts and spectrum allocation difficulties (Matteucci, 2009). France also follows a regional approach. However, due to spectrum overlap issues near its northern and eastern borders, a significant number of people would not be ab le to receive digital free-to-air TV during the simulcast period. To so lve this issue, France incorporated satellite transmissions. In border areas where it was not possible to have a terrestrial simulcast period, satellite systems simulcast the free to air DTT programs in order to cover 100% of the population. Without satellite he lp, only 80-85% of the population would be able to receive digital terrestrial programming options during the simulcast period (Besson, 2008; Matteucci, 2009) Island Approach The island approach is sim ilar to the regiona l approach; however, efforts focus on the most populous cities first. These populous areas swit ch-off first under the reasoning that digital coverage and switch-off will absorb the more rural areas by the end of the transition. Any remaining areas not covered after the major citie s switchover will be taken care of then. This
84 approach developed under the r easoning that rural regions are less wealthy and they are more likely to experience the digital cliff.21 Therefore, individuals need more time to prepare to buy converter boxes, and industry needs time to fi gure out whether these ar eas will need additional transmission or transponder site s. This approach was initiate d by Germany and has been most popular with smaller or moderately sized coun tries, like Austria and Poland, experiencing spectrum overlap from other countries. The German digital television initiative se t 2010 as the goal for switch-off; however, German state communication authorities, or Landers, were able to complete the digital terrestrial transition in 2008. By the end of 2008, more than 90% of the country (74 million people) was able to receive digital televi sion (Briel, 2008b). With 16 milli on DVB-T converter boxes sold nationwide, about 11% (4.1 million households) use the digital terrestrial service. There are some analog transmissions still being used to fill in gaps in rural areas, but these will shut off in 2009 (Mann-Raudies & Painter, 2008). The Snap or Big Bang Approach The Snap or Big-Bang approach is w hen the entire country switches over at once. Finland and the Netherlands used this approach. Finland and the Netherlands were able to take this approach because the countries are relatively small and most of th e residents subscribe to pay TV services, particularly cable, on their primary television set. This meant there were fewer people to move to the digital terrestrial platform (EC, 2007a). The U.S. also used the snap approach. The first proposed date for the shut-off of analog signals was 2006, and broadcasters were supposed to start simulcasting programs in digital and 21 Analog signals fade out slowly, so even if viewers are not in the prime viewing area of a signal they can still pick up a fuzzy picture. When digital signals begin to travel out of range, instead of going fuzzy, the signal goes black. Therefore, viewers may not receive some channels that were previously available to them This drop off is known as the digital cliff.
85 analog by May 2002 for commercial broadcasters and May 2003 for public broadcasters (Balanced Budget Act, 1997). However, consumer s were unaware of and technically unprepared for the process, and industry did not have all the necessary equipment to broadcast digital signals. In 2002, the GAO conducted a survey on c onsumer awareness of the digital television transition and found that 83% of respondents had never heard of the transition or were only somewhat aware (GAO, 2002). As a result, th e switch-off date changed to February 17, 2009 (Deficit Reduction Act, 2005). By February 2009, all major broadcast stations in the US were ready for the transition and accommodations had been made for low power local stations (GAO, 2008). In addition, most consumers were aware that the transition was taking place and many had purchased digital capable televisions. Nielse n reported on February 5th, that only 5.1% of households, or 5.8 million households were unready for the transition, and a February 18th report said that the number decreased to 4.4% or 5 million househol ds (Nielsen, 2009a; Nielsen 2009b). However, the converter-box coupon program ran out of money, and many people requiring a converter box in order to receive digital signals on their old te levision sets were still on a waiting list. As a result, Congress delayed the switch-off to June 12, 2009 (DTV Delay Act, 2009). Even though the switch was delayed, some stations still were allowed to turn off their analog signals. The FCC announced that, of the nation's 1,726 full-power television stations 641 stations (36%) terminated their analog signals on February 17, 2009 (FCC, 2009d). As a result, 158 stations around the US terminated analog broadcasts on va rying dates, while the remaining 927 stations continued analog broadcasts until June 12 (FCC, 2009c).22 22 The FCC also made provisions for stations to terminate analog signals between April 16th and June 12. All stations had to submit a binding date for switch-off on March 17th, and must air viewer notifications for at least 30 days before terminating analog broadcasts on their chosen date. In addition, affiliates of the major networks, ABC, CBS, Fox and NBC, wanting to terminate analog service before June 12 needed to ensure that 90% of their analog
86 This put the US in an unintended three-phase transmi ssion, which is confusing for consumers because they might have been split between analog and digital channels for a few months. However, the phasing allowed consumers more time to purchase the necessary equipment. In addition, if consumers were in an area where a station swit ched off earlier, they could test their equipment and lear n how to use it, before the rest of the stations switched off. However, after all of the delays and switchover confusion, some people may have expected the government to push the deadline back again. Rega rdless of how many times the date might have been delayed, there will always be people who wait until the last possible minute to adapt. With each extension, broadcasters needed to expend more money to continue simulcasting and corporations who bought new frequencies had to wait longer to launch or test new services. Other Approaches Som e countries, such as Spain, the Czech Republic and Hungary, set up different methods for switching over. DTT in Spain had some initi al troubles, but is now moving along with the rest of the EU and aims for a switch-off date of 2010. DTT first launched in Spain through a pay platform call Quiero; however, the pay terrestrial pl atform failed due to lack of customers. In 2005, the government re-allocated the spectrum previously licensed to Quiero in order to relaunch DTT on a free-to-air platform and gave other companies the opportunity to add pay terrestrial platforms (Roel, 2008). Spain will switchover in three phases, followi ng the initial tests in 2008, and will finalize the process in April 2010. The switch-off plan divides Spain into three groups based on population. The first group will be areas with less than 500,000 inhabitants; the second group viewers would continue to receive analog se rvice, simulcast serv ices, or nightlight22 service from at least one major network affiliate until June 12. However, if more than 10% will lose analog services completely, affiliates must provide consumers with walk-in help centers, referral telephone nu mbers and DTV education and outreach (FCC, 2009g).
87 will be areas having between 500,000 and 700,000 inhabi tants; and the last group contains areas with over 700,000 inhabitants. Th is approach is opposite of th e island approach, which takes on more populated areas first. Twice broadcaste rs requested that the government postpone the switch-off date; however, both times the governme nt reaffirmed the 2010 date. The first group transitioned on June 30, 2009. This group includ es 5 million people across 1,286 towns (Del Valle, 2007). Some countries have found it best to switchover certain chan nels in order to increase digital coverage throughout the country and enco urage consumers to purchase converter boxes. For example, through its regional approach the Czech Republic terminated analog broadcasting of the public broadcaster T2 in some regions. The switch-off date was originally set for 2010. However, the transmission company Radiokomunikace indicated that a later switch-off date of 2014 may be more plausible, and the Czech Tele com Office (CTU) compromised with a date of 2012, as originally requested by th e EU (Dziadul, 2007a; Dziadul, 2007b). Hungary also decided it may be best to switchoff some channels nationwide before others are switched to increase coverage. The count ry expects to switchover in 2011, granted that necessary equipment and all public channels ar e available to 94% of households. Digital terrestrial coverage is a major concern for Hungary because it is a small country and has considerable spectrum overlap wi th other countries, a number of which are not members of the EU. Hungarys ability to terminate analog tran smissions depends a great deal on these other countries, which is why they are combining the regional approach with a channel approach. Currently, digital television is only available to 56% of the country; however in those areas there are three free-to-air HD channels and 15% of the population has access to two mobile television networks (Fenech, 2009; Mini szterelnoki Hivatal, 2007)
88 Table 6-2 shows the switch-off date and the method used by countries that have already completed the switchover. High levels of cable penetration, nearing 40%, and low levels of dependency on aerial-based TV reception characte rize early switchover nations. As with the use of analog television, the rate of consumer use of DTT in these c ountries, with the exception of Finland, remains fairly low. Additionally, due to the low number of users, the requirement for frequency planning was not as in tensive internally nor was there the same level of need for transmitter build out as in more terrestrially based countries (Digital UK & Ofcom, 2008; EPRA, 2008). Table 6-3 shows the anticipated switchover date for nations, which have not yet completed the process. Many of these are larger count ries with populations reliant on terrestrial transmission, like the UK, France, Spain and Italy, or more recent additions to the EU such as Hungary, Poland, Czech Republic or Bulgaria. European Union Digital Television Subsidies The EU exercises its auth ority over member states by putting certain requirements on government aid in Article 87(1) of the EC Treaty, which is in place to encourage competition. This section of the EC Treaty, referred to as Th e State Aid Action Plan, sets certain guidelines for member state aid that applies to digital tele vision subsidies. State aid, as such, should be used to overcome market failures and/or ensure social cohesion. A situation that includes broadcasters not wanting to simulcast in digi tal because it is expensive and consumers not wanting to convert because there is little content could be consider ed a market failure. The need for universal television coverage and access to national television programming would be considered matters of social cohesion. However, once something is considered a market failure or a matter of social cohesion, member states sti ll need to demonstrate that the proposed state aid
89 is the appropriate method for addressing the i ssue, is the minimum necessary, and will not unduly distort competition Table 6-2. Completed analog to digital switchovers Completed Regulatory agency Launch Date Switchoff Date How Denmark April 2006 Nov. 2, 2009 Snap Luxembourg Luxembourg Telecommunications Institute (ILR) Sept. 1, 2006 First country to complete the move to digital broadcasting, with consumers able to access 6 free-to-air television program services (DVB) http://www.dvb.org/about_dvb/dvb_w orldwide/luxem bourg/ Netherlands Netherlands Posts and Telecommunications Authority (OPTA) Dec. 11, 2006 'Big bang' switchover from analog to digital terrestrial television in one night. Only PSBs concerned, no commercial broadcasters were operational in analog terrestrial TV. [EC, Communications Committee COCOM07 (2007).] Finland FICORA 2001 Sept. 1, 2007 Analog terrestrial transmissions stopped nationwide at 4am, September 1, 2007. Five analog networks were switched off and replaces with seven new programming services. (DVB) http://www.dvb.org/about_dvb/dvb_w orldwide /finland/ Sweden Riksdag (Swedish parliament) government appointed Digital TV Commission in charge of planning, technical development, and public information 1999 Oct. 15, 2007 Switch-off of the analog terrestrial network progressed regionbyregion. It began in Gotland on September 15, 2005, and was and was too be completed in February 2008. However, Sweden was able to switchoff analog transmission ahead of schedule on October 15, 2007. The last analog transmitters in Scania and Blekinge were shut down. (DVB http://www.dvb.org/about_dvb/dvb_w orldwide/sweden/ )
90 Table 6-2. Continued Completed Regulatory agency Launch Date Switchoff Date How Germany Regulatory Authority for Telecommunications and Posts (RegTP) 15 different local regulatory authorities known as Landers. Nov. 25, 2008 Began the transisition on November 1, 2002 in Berlin and completed Berlins transition on August 4, 2003. Germany then used an island approach, focusing on major cities first, and used simulcasting of analog and digital programing. Switchover was completed on November 25, 2008. US Federal Communications Commission (FCC) 2006 Feb. 17, 2009 & June 12, 2009 The switch-off date set for February 17, 2009, was pushed back to June 12, 2009 due to consumer unreadiness. 641 stations switched anyway on February 17, while the remaineder terminated analog broadcasting on June 12, 2009. At noon September 8, 2008, major television stations in the Willmington, North Carolina turned off analog; Hawaii followed on January 15, 2009. Final LPTV switchover dates have not yet been determined. Sources: DVB 2009, OECD 2009
91 Table 6-3. Incomplete digital terrestrial transitions In Process Regulatory Authority Launch Date Anticipated Switch-off Date Method Austria Kommunikationbehorde Austria (KommAustria) October 2006 End of 2010 Island switch-off in regional capitols progressing from west to east. Began analog switch-off on March 5, 2007 in Bregenz. Flemmish Community: Vlaamse Regulator voor de Media Completed Nov. 3, 2008 Snap Belgium French Community: CSA November 2007 Expected Nov. 30, 2011 Snap switchover. Nationwide coverage as of 2007 with 2 analog channels broadcasting until 2011. Bulgaria Communications Regulation Commission (CRC) Council for Electronic Media (CEM) First Licenses for DVB-T broadcasting granted in June 2009 Dec. 2012 Plan adopted in January 2008, however, not publicly available as of April 2009 Cyprus Cyprus Radio Television Authority (CRTA) Not launched 2011 Simulcast period before full snap switchover Czech Republic Czech Telecommunications Office (CTO) 2007 Nov. 11, 2011 and June 30, 2012 Started the switch-off in September 2007 and the majority should finish by November 2011; however, some regions will switch in June 2012. Analog broadcasting of channel T2 has been terminated in most areas. Estonia Majandusja Kommunikatsioo niministeeriumi (MKM) (Ministry of economic affairs and communications) 2006 July 1, 2010 A switchover pilot took place on the island of Ruhnu on March 31, 2008. The rest of the Country will have a simulcast period followed by a snap switchover.
92 Table 6-3. Continued In Process Regulatory Authority Launch Date Anticipated Switch-off Date Method France Conseil suprieur de l'audiovisuel (CSA), France Tele Numerique (public body) March 2005 Current deadline: Nov. 30, 2011 Possibly postponed to 2013/2014 Progressing region-by-region. To reach full coverage requires assistance by satellite broadcasters in border regions. First pilot location, Coulommiers switched off February 2009 Greece National Telecommunications Commission (EET) Trials 2006 Full launch 2008 2015 DTT initially available to 50% of the population around Athens, 60-65% of the population should be covered by 2010. Hungary National Communications Authority (NHH) 2008 Dec. 31, 2011 Gradual switch-off of the analog transmitters covering the whole country. Some channels will switch before others. At least 94% of the population must be reached by free-to-air public service programs before switchoff. Ireland Commission for Communications Regulation (ComReg) 2010 2012 Public service broadcaster, RT, plans to make digital television available to most of the population by 2010, and the switch-off is planned to be complete by 2012. Italy AGCOM; Italia Digitale 2003 2012 First regions Sardegna and Valle D'Aosta were switched off respectively in March 2008 and in October 2008. Norway Medietilsynet 2005 Nov. 2009 The switch-off of the analog transmissions started in the Rogaland region in March 2008 and will the progress region-byregion until the last region, Finnmark, terminates analog broadcasts in December 2009.
93 Table 6-3. Continued In Process Regulatory Authority Launch Date Anticipated Switch-off Date Method Poland President of the Office of Electronic Communications ; National Broadcasting Council 2009 Dec. 2012 or 2014 Moving region by region. Switch-off may be later than planned. Portugal ICP-ANACOM; ERC 2008 No set date Began process in April 2008 Romania Ministry of Communications Trials since 2005 Full launch expected 2010 2012 60% of the population covered by 2010 and 90% covered by 2011 Spain Spain Telecommunicati -on Market Commission (CMT) 2000 Initial launch Re-launch 2005 April 3, 2010 An Initial test phase in 2008. Then following a three phase regional switch-off. Switch-off regions were determined based on population, with less populace areas switching off first. UK Ofcom Digital UK October 2007 2012 The UK carried out a trial in Wales in March 2005 and began the actual switchover process in Whitehaven and Cumbria in October 2007. From there the UK is switching off region by region and should finish in 2012. http://www.digitaluk.co.uk/when _do_i_switch) Sources: DVB 2009, OECD 2009 (Article 87(1); EC, 2005d; EC, 2005e; Schoser & Santamato, 2006). In the EUs first major decision on state aid, regarding Berl in, it clarified some of the inst ances when state aid is or is not appropriate for the tran sition to digital television.
94 Germany The case of Berlin is a good exam ple of how the EU exercises its power over member states in the transition. The communication regulatory agency, Mabb, of Berlin-Brandenburg planned a subsidy worth about million disburse d over a five year period to commercial broadcasters to aid in the transition (Mabb, 2008) In exchange for th e support, broadcasters were required to broadcast digitally for a five-y ear period. The subsidy encouraged broadcasters to participate, and was intended to financially protect the broadcast industry and consumer investments for at least five years in case digital terrestrial was not viable (Mabb, 2008). The Commission determined in 2005, that thes e subsidies violated EC Treaty state aid rules (Article 87(1)) (Europa, 2005). In 2007, the European Commission denied a similar plan set out by Germanys North Rhine-Westphalia region, which planned a .8 million subsidy over a five year period (Europa, 2007a). Both subsid ies were in violation because they were not based on any specific costs, were decided afte r switchover had been agreed, various amounts of funding were given without justif ication, and the subsidies disreg arded technological neutrality by favoring digital terrestrial television over other platforms, like cable and satellite. Broadcasters were required to repay any aid already received (Europa, 2005; Europa, 2007a). While North Rhine-Westphalia had not paid out any subsidies before the ruling, Berlin had, and reclaimed about .2 million. Mabb (2008) claims that its approach was approp riate at the time, esp ecially because there was no prior experience to follow. In additi on, switchover would have been impossible without the five-year contract because one broadcaster trie d to defect after two months. However, in its decision based on the Berlin case, the EC gave specific indications of acceptable subsidies for the digital transition, which included (Europa, 2005):
95 Funding for the roll-out of a transmission network in areas where otherwise there would be insufficient TV coverage Financial compensation to public service broadc asters for the cost of broadcasting via all transmission platforms in order to reach the entire population, provided th is forms part of the public service mandate. Subsidies to individuals for th e purchase of set-top boxes for any platform to prevent the exclusion of low-income househol ds from access to TV reception Grants to companies to develop innovative digital services Subsidies to broadcasters to compensate for additional transmission costs when broadcasting analog and digital TV in parallel (simulcasting) Thereafter, subsidies to broadcasters were nonexistent or extremely limited in Germany. For example, Bavaria gave broadcasters aid am ounts below .000, which are not considered state aid by the Commission (Europa, 2005). The Berlin Lander also provided subsidies fo r consumers. These subsidies for converter boxes were allotted only for low-income househol ds relying on terrestrial television. These households could apply through the Social Welfare Office. Qualifying homes received their set top boxes free of charge either th rough participating retailers or by mail. At the time of the transition in Berlin, set top boxes cost 129 euro ($158.70). The Social Welfare office provided 25% of funding for this pr ogram, while Mabb supplied 75%. About 6,000 households required support, totaling ,000 (Mabb, 2008). However, as the transition continued, the price for settop boxes decreased and other region al authorities did not provide subsidies for consumer set-top boxes. The European Commission did not challenge these subsidies. While, Germany stated that the subsidies used were necessary to initiate the transition, sin ce there was no prio r experience to draw upon, after the EUs intrusion Germany drama tically reduced the amounts of its subsidies. As consumer digital equipment decline in pri ce German regions chose not to use subsidies.
96 Italy The Italian governm ent put fo rth two state aid programs, which provided subsidies to consumers for the purchase of a digital terrestrial converter b ox. All Italian consumers were eligible for the initial subsi dy program, which was available from February through October 2004 and from December 2004 through November 2005. In 2004 and 2005, Italy provided grants to consumers totaling over million for the purchase or rental of interactive digital decoders for receiving digital terrestrial signals over th e air or retransmitted through cable networks. These subsidies provided about or half th e cost of a decoder box, which at the time were priced around These subsidies were for boxes able to convert and receive terrestrial and cable signals, and were required to meet technical guidelines for interactivity and interoperability, or the EU suppor ted MHP standard (Roel, 2008). The Italian government also supplied decoder subsidies to the early switch-off regions of Sardinia and Aosta Valley in 2006. Italian subsid ies for digital decoders granted in 2006 were approved by the European Comm ission because the subsidies are available for all decoders regardless of transmission platform, terrestrial, cable and satellite, and ar e therefore technologyneutral and proportionate to the objectives of promoting the transiti on to digital TV and interoperability (Europa, 2007b). However, the subsidies granted by the Italian government in 2004 and 2005 were determined to be non-technol ogy neutral and to cause competition distortion by excluding satellite technology. The Commission decided that these subsidies provided incumbent terrestrial and cable operators an unfai r advantage by allowing them to develop their Pay TV services. In addition, the EC decided that broadcasters w ho benefited from the subsidies the most should repay the aid provided (Europa, 2007b). The primary problem with Italian switchover was providing subsides too soon before the transition. Costs were still hi gh and people who would have b ought digital equipment without
97 help used government support. The first subs idies were for and converter equipment was still very expensive at The EUs subseq uent rejection of the subsidies caused further problems for Italian regulators. These early mi scalculations in the tr ansition planning have significantly contributed to Ital ian delays and difficulties in progressing with the transition. England In England, analog broadcasters, Channel 3, Cha nnel 4, Channel 5 and Public Teletext paid for Digital R eplacement Licenses (DRLs) issued by the UK communications regulator, Ofcom in 2004. Ofcom priced the licenses significantly lower, by about million, because once digital terrestrial television is introduced, spectrum space will increase, and more businesses will be able to purchase licenses. Therefore, under the principal of supply and demand, license value will decrease because license availability will in crease and spectrum scarcity will decrease. Due to these market considerations, the Commissi on did not see Englands plan as distorting competition, but as accurately reflecting the ma rket. In addition, the licenses require these broadcasters to terminate analog transmissions by 2012, and adapt all of Englands 1154 transmission sites to support di gital broadcasting tec hnologies. Broadcasters are expected to spend about 500 million pounds out-of-pocket to update these sites (Ofcom, 2004). Another British subsidy program, the Digita l Help Scheme, provides assistance with obtaining, installing and using digi tal TV equipment that meets th e Core Receiver Requirements for people over 75, disabled people and the bl ind. Free assistance for the least expensive conversion option is available to eligible persons re quiring income support. However, a person can choose a more expensive option and pay the difference. Eligible people not meeting the income requirements for free assistance can still request assistance for a reduced fee of 40
98 pounds. The Digital Help Scheme has been allotted 603 million pounds to be disbursed from 2007 through 2013 (DCMS, 2008).23 France Initially, France set aside a budget of m illi on to help the transition in the border regions where analog television would end without a simulcast phase and only digital terrestrial television would be available. Subsidies were available for households not already subscribing to a digital platform for the reception technology of their choice, be it a terrestrial converter box or decoders for satellite or cab le television in addition to subsidies for services like antennas, installation or subscrip tion fees. The Commission found this aid compatible with all Article 87 requirements because it positively impacts users and th e transition to digital terrestrial television, and it has limited effects on competition and trade, and because it is technically neutral (European Commission, 2006a). Later the French government in creased its support for digita l television technologies and set aside 40 million to be spent through 2011 for low-income households. The program assigned a personalized subsidy, proportional to the households income and based on the regions cheapest platform available (EC, 2006b; Matteucci, 2008). France is able to track which consumers have only terrestrial television and their associated income through the national television license fee program. The television licensure makes it easy for France, and other 23 Tracker surveys from the UKs first test regions in Wh itehaven and the Border regions found that people living alone who felt they would need outside help to switch their equipment to digital was an additional group that would require government assistance. According to the survey, this group composes 5% of the UKs population, are more likely to be female (77%), older (47% are 75+), disabled (47%) and on lower incomes (28%). TV is very important for this audience, with 1 in 3 (30%) heavy viewers, which is almost double the UK average (Digital UK & Ofcom, 2008). In light of these findings, an additional, 2.9 milli on pounds was set aside for the Digital Outreach plan to assist older people who are under 75, those with sensory, mobility or dexterity impairments, people with learning difficulties and those who are socially isolated (Tryhorn, 2008).
99 European nations using the same system, to put reception and income requirements on consumer subsidies. England and France both chose to put age a nd income requirements on their transition subsidies for consumers. While the UK and Fren ch switchover plans are markedly similar, the UKs transition has been much more successful t hus far than the progress in France. French difficulties could be related to the region requiring satellite su pport until switchover and spectrum negotiations are completed, or be related to the economic slump of 2009. Hungary Hungary expects HUF 3.1 Billion ($ 151 million) will be needed from the government per year in order for the transition to move smoot hly and finish by the 2012 deadline. Money is allotted to help public servi ce broadcaster transition, develo pment of innovative digital applications, provide consumer information, subsidies for set top boxes, coordination and monitoring of the switchover. The largest amount of funding is dedicated to facilitating the digital switchover for public service broadcasters by subsidies for consumer set top boxes. An additional 800 million HUF from the Broadcasting Fund is available for platform neutral network development subsidies (Miniszterelnoki Hivatal, 2007). Hungarys progress is in line with EU guidelines thus far, but its plan for subsidies is not entirely clear and it may be over spending on consumer subsidies. United States Digital Television Subsidies The digital television and Public Safety Act of 2005, did not create any subsidies for fullpower broadcast stations, but created two program s, the Conversion Program and the Upgrade Program, to help low-power, class A, and translat or television stations (hereafter referred to as low power stations) through the transition. Th e Conversion Program provided grants to lowpower stations for purchasing digital-to-analog converter de vices to down-convert incoming
100 digital signals from their corresponding full-power television stations and continue to send analog broadcasts (Fed eral Register, 2007).24 The Upgrade Program reimburses low-power stations for equipment allowing stations to br oadcast in digital (Fed eral Register, 2008).25 A major portion of government funding was s ubsidizing consumer purchases of digital converter boxes. Digital conve rter boxes allow those who do not own digital ready televisions and depend on terrestrial signals to still receive television broadcasts. The NTIA was delegated to disburse $40 coupons for the purchase of digi tal converter boxes to people requesting them. Up to two coupons were available per house hold (Deficit Reduction Act, 2005). Congress originally allotted $990 m illion for this program. As of November 2008, the NTIA reported that 62% of over-the-air households requested DTV-analog converter-box subsidy coupons, with 35 million coupons distributed to 19 million households and 14.5 million coupons redeemed (NTIA, 2008). However, in January of 2009, funding for those requesting coupons ran out a nd there were 4.2 million requests from 2.3 million households on the waiting list (NTIA, 2009) Due to consumer need, Congress passed the DTV Delay Act, which not only postponed the transition to June 14, 2009, but also added an additional $660 million in funding to the conve rter-box program (DTV Delay Act, 2009). The NTIA decided not to make the convert er box program based on income or other factors because it was a one-time program and it w ould not be effective to implement eligibility requirements and verification systems, like the ones used with other federal assistance programs, 24 Eligible stations include those broadcasting exclusively in analog and retransmitting a corresponding digital signal, but have not already purchased a digital-analog conversion device (DACD). The average cost of a DACD is $1,000 (Federal Register, 2007). Since there are about 8,000 stations in this category, $8 million was originally available; however, the NTIA determined only $3.5 million would be necessary for supporting eligible stations (Federal Register, 2008). 25 Eligible stations are those not retransmitting the digital signal of a corresponding full power station, or stations receiving signals via satellite or from anot her analog transmitter. Sixty-five million dollars were reserved for this program (Federal Register, 2008).
101 such as Food Stamps. The NTIA also said it was unable to limit coupon requests to just those relying on analog transmissions, because it had no real way of verifying that information. However, consumers visiting DTT transition webs ites are directed to an information section, which explains who will and who will not need coupons (NTIA, 2006). The US program is unique because it did not make subsidies based on income and subsidies were only available for terrestrial e quipment. While the subsidy program did need additional funding and subsequently caused a de lay in analog signal term ination, it appears to have been a reasonable expenditu re. In addition, the program wa s initiated at the proper time close to the switchover deadline and when converter box prices had dropped significantly. European Union Consumer Education Plans As digital switchover approached, it becam e a pparent that many consumers were unaware of the change, or of what they would need to do to accommodate it. Therefore, EU countries and the US engaged in various public education pr ograms. As websites were the most popular method for informing consumers about the digi tal television transiti on, next to broadcast commercials, Appendix A contains screenshots of the websites used by the US, the UK and France. UK The UK has done extensive research on consum er awareness and the e ffectiveness of the switch-offs that have already happened in White haven and Cumbria. Ofcom has been publishing Digital Television Updates since 2003 and consumer UK Switchover Tracker Surveys since 2006 (Digital UK & Ofcom, 2006; Ofcom, 2003). Th e most recent Tracker Survey, published in 2008, found that 90% awareness in the general population of the switchover, 70% understood what they needed to do for the switchover, and 86% of households had a DTV capable TV set. The general education plan is allotted 200 million pounds to fund informational efforts, including
102 a direct mail leaflet sent out between 18 months and a year pr ior to the switchover in each region, and TV and radio advertisin g. Another important aspect of the UKs information plan is the digital tick logo, which is placed on products and services that will conti nue to work after the switchover. Retailers and manufacturers must apply for a license to use the logo and to receive informational material to distribute in indivi dual retail locations. The website Digital UK provides a centralized location for consumers to get informa tion on the digital switchover. Hungary Hungary has left the m ajority of informational efforts up to broadcasters themselves. The Communications Ministry said th at consumers should have preci se information concerning the digital broadcasting services available to them programs and other services offered, technical requirements for reception, and the associated cost s. While the promotion of digital services should be handled by service providers, th e state institutional system can provide a complementary, coordinative, and partnership role and the government may finance one quarter of the cost. In its 2007 digital switchover strate gy, about 400 million HUF per year were allotted for consumer education (Min iszterelnoki Hivatal, 2007). Germany In Germ any, methods of consumer educati on varied depending on Lander decisions. In Berlin, a communication strategy was developed jointly with the Berlin Lander, Mabb, and broadcasters. Communications provided consumers with information on various television options, notified consumers of th e coming transition, but did not specifically promote the use of digital terrestrial television. The information vi a the broadcast stations was the primary method of communication, including advertisements and tic kers. A leaflet was mailed out to residents, but Mabb would not suggest this strategy to othe r regions, due to the high cost. Communication efforts in Berlin totaled 1.1 million (Mabb, 2003).
103 Though the Landers stressed the im portance of consumer partic ipation in the switchover and they found education campaigns to be highly important, it seems there was little research on consumer awareness of the switch and its effectiveness. However, out of about 160,000 households with only terrestrial reception and about 90,000 households using terrestrial reception on a second or third television in Berlin, the digital help hotline handled 22,000 calls, and was able to solve all but 600 problems over the phone. From the low number of helpline calls it appears that consumers were well informed and prepared for the transition (Mabb, 2003). France The French governm ent has set aside million to fund consumer information in the digital switchover in addition to funds appropriated for subsidies. Internet websites, a call center and other means of communication will receive million. A further million is available to fund national and regional tele vision advertising campaigns. France, like the UK, placed an additional focus on the elderly (70+), the disabled and the indigent by appropriating million for communications specifically targeted to these households to help them in the transition to digital television (Besson, 2008). From this sampling of EU countries, we can see that, initially, the most popular methods for informing consumers are television commercia ls and tickers for gene ral awareness, while websites provide detailed consumer informati on (See Appendix A). The logo for digital ready equipment and consumer informational materials av ailable to be displayed in retail locations gained popularity with regulators as the tran sition progressed versus other communications methods. In addition, while the leaflet or printe d materials may be a prim ary strategy in Britain, from Germanys account, this strategy is inefficient for the cost and may not be a good option for smaller European member states.
104 United States Consumer Education The US governm ent supported consumers in the transition through a public relations campaign including public meetings, websites, an d public service announcements. Broadcasters were given three options for educating consumer s on the DTV transition. The different options contained a mix of public service announcements (PSAs), scrolling tickers, informational programs, countdown clocks, and reporting methods. Stations did not receive funding for the campaign, but funded the programs on their own. The FCC also maintained a web site to provide consumers information on the transition. It provided DTV news, explanations of terms and fact sheets, regulatory information, and other consumer services such as digital and hi gh definition television programming lists and a consumer guide for purchasing a digital televisi on set. Part of the NTIAs budget for the converter box coupon program was allotted for edu cating consumers. The NTIA was given up to $5 million for consumer education (Deficit Reduction Act, 2005). The FCC set up a call center in January 2009, to field up to 2 million calls the week of the transition and 400,000 calls the day after the tran sition. The $12 million in funding for the call center came from the $20 million Congress appropria ted in September to fund digital outreach efforts (Eggerton, 2009a). The FCC has been crit icized for its lack of call center planning; the center only had four weeks to prepare for the Febr uary 17 transition date. However, because the full transition date was moved to June 12, and a limited number of statio ns terminated analog transmissions, the call center on ly handled about 150,000 calls. All but 17 US television markets still had some full power analog broadcasts; ther efore, the February transition had significant effects on only 15% of the TV vi ewing population, mostly in smalle r markets. With 85% of the television viewing audience due to switch on June 12, the call centers prepared for between 500,000 and 3 million calls. It was possible that the call center could receive calls in excess of 3
105 million, since Nielsen reported that 4.5 million were not yet ready for the transition (Eggerton, 2009b). In the days surrounding the transiti on, from June 6 through June 14, the FCC call center received over 900,000 calls and the FCC s DTV website received over 3.5 million page views (FCC, 2009e). However, because most low-power stations will not switch-off within the same time frame as their full-power counterparts, viewer s may receive terrestrial programming in analog and digital after the final transition. Potentially, millions of viewers can receive low-power analog transmissions. In order for these view ers to access both analog and digital television signals after the transition, view ers must purchase a converter box that allows both analog and digital signal reception, or purchase a splitter cable runn ing from the box to the TV. Considering the large number of low power stations, about 8,000, this is very important information for consumers to know. However, most consumers do not know how to tell the difference between a low-power station and a full-power station on their screens. In formation about these types of converter boxes and the low-power issue is not readily available or easy to find on DTV websites or commercial warnings, where most consumer s are getting their information about DTV. Problems with reception and signal loss for certain stations have been reported especially in urban markets, such as Chicago, Philadelphi a and New York. Many pr oblems were addressed through digital converter box rescanning and antenna placement, but digital signals are either perfect quality or non-existent. Some stations ar e moving to different channels in order to reach digital viewing audiences comparable to their previous analog audiences, and the FCC has shown flexibility in dealing with DTV issues. Digital television signals are more susceptible to interference and blockage from terrain, foliage, weather and buildings than analog signals. Solutions are often hard to id entify but can include: stations changing their channel location,
106 additional transmitter build out, or consumers purchasing outdoor antennas or pay TV subscriptions (FCC, 2009e; Grotticelli, 2008) New Services: European Union New services in the digital dividend are expect ed to bring large sum s of revenue to the European economy. While there are many possib ilities for new and enhanced services, this section puts more emphasis on mobile television than other innovations. Mobile TV revenues are expected to reach .8 billion worldwide, while using the vacated spectrum for wireless broadband is valued at billion in commerce (Europa, 2008c; Europa, 2009). As part of encouraging the entrance of mobile te levision, in December of 2008 the European Commission published the Legal Framework for Mobile TV Networks and Services: Best practice for authorisa tion The EU model The framework provides member states with guidance on the best way to get innovative serv ices on track at the European level. The Commission establishes that a coherent, stab le, and favorable regulatory environment is necessary to encourage businesses to develop. It claims that without a consistent regulatory environment across member states, business will be less likely to enter the new services market, due to uncertain returns on investment or lack of scale economies (EC, 2008c). The Commissions guidelines say that straightforward, transparent and nondiscriminatory procedures for awarding licenses will enhance investor confidence and avoid launch delays. The process should be open to all industry players; servi ce providers and content providers are encouraged to work together. License conditions should include a minimum requirement for indoor coverage capa bilities and transmission quality levels should be part of the license award conditions. The Co mmission also suggests that licen ses include a re turn clause; whereby, a mobile TV license will be reclaimed by state regulators if services do not begin within a reasonable time (EC, 2008c).
107 The Commission expects players in the DVB -H market, industry and government, to ensure compatibility of servic es across borders. The Commissi on suggests that industry choose non-proprietary technologies available to all c onsumers without the requirement for additional plug-ins for accessing mobile TV content (Europ a, 2008c; EC, 2008c). The Commission issued these guidelines to help member states initiate a competitive European mobile market and prevent stalls in market development and the en trance of the most efficient and popular services. Information Society Commissioner, Vivian Reding, reiterated the importance of a coordinated effort in using the digital dividend in the EU: "Coordinated European action on the digital dividend is indispensable, to harness the potential economic and social value and creating economies of scale for equipment and service provide rs. We also need to avoid a situation where decisions by one EU country nega tively influence the use of digita l dividend in others. This is why radio spectrum policy in Europe requires cl ose cooperation between national regulators and the European Commission (Europa, 2009). The following section provides an account of how some European member states are preparing to use the digital dividend and what has happened thus far. France France is setting the tone for harm onized Eur opean decisions regardi ng the digital dividend through regulation outlined in France Numerique 2012. The majority of the realized digital dividend, totaling 800MHz will be a llocated to audiovisual services such as digital terrestrial television and mobile television; however, 72MHZ will be set-aside for electronic communications, such as mobile broadband (Bess on, 2008). The French plan shows initiative to create European harmonization by followi ng suggestions from supranational and intergovernmental European bodies, such as the European Parliament and the 2007 World Radiocommunications Conference (WRC-07). Pa rliament had suggested that some digital
108 dividend be allotted for electroni c communications servi ces and the allocated 72MHz lies within the sub-band suggests by the WRC-07 (European Parliment, 2008; World Radiocommunications Conference, 2007). The French decision to go with a shared spec trum plan was based on European suggestions and research suggesting that allocation for mobile broadba nd could bring the economy an additional billion between 2012 and 2014 over a udiovisual services alone (Analysys Mason & Hogan & Hartson, 2008). The plan will allow 95% digital terrestrial coverage, 80% mobile TV coverage, and 99% high-speed fixed/m obile broadband coverage by 2012. France Numerique 2012 also includes plans for 40 high defin ition terrestrial channels to be available and possibly 32 mobile TV channels (Besson, 2008). France wanted to launch dedicated mobile TV networks using the DVB-H standard by 2007 or before the 2008 Beijing summer Olympics, however due to broadcaster concerns the launch was delayed. In 2007, 1.2 million consumers could receive mobile television over 3G networks, surpassing Italy, the country first to market and typical mobile TV innovation and subscription leader in Europe. This demonstrat es a consumer demand and a market for mobile TV in France; however, these 3G networks may become overloaded in the near future with increased subscriptions. The DVB-H launch would alleviate network strain s, but it has been postponed until at least 2010, primarily because br oadcasters are concerned about the business plan and expect mobile operators to pay them a fee per subscriber. Also, handsets capable of receiving free-to-air television via the DVB-T standard have al ready entered the market, which may cause a problem for subscription based mob ile TV on the DVB-H st andard as it did in Germany (Briel, 2007; Briel, 2008c; Le bailly, 2009; Screen Digest, 2007)
109 Germany Although Germ any did not expect to have available frequency space for new spectrumbased services, some services are already availa ble. Frequencies became available because some broadcasters chose not to multi cast, thereby creating available frequencies for new technologies. As a result, 30% of the population can receive DVB-T transmission via their mobile devices. Other applications may also benefit from the av ailability of frequencies such as wireless broadband through USB sticks or PC cards for laptops (Mann-Raudies & Painter, 2008). The introduction of mobile TV in Germany a nd its setbacks are an important case for other countries to observe when introducing new sp ectrum technologies. The Mobile 3.0 company received licenses to broadcast m obile TV via the DVB-H platform as an encrypted pay service. The services were launched in Hamburg, Munich, Fr ankfurt, and Hanover to test the viability of the service and consumer respons e. However, the most popula r carriers, including Vodafone, decided not to carry DVB-H compatible sets. They instead decide d to support the DVB-T standard in handheld devices, allo wing their consumers to receive television broadcasts free of charge (Oryl, 2008). Due to the lack of DVB-H compatible handset s, Mobile 3.0s test of DVBH was unsuccessful, and the company returned the license to the government (Briel, 2008a). This does not mean that a pay mobile TV model is not possible. If another DVB-H license gets issued and more cell phone providers develop ha ndsets capable of receiving the signal, then consumers may find pay mobile TV attractive. Germ any also decided to allot space in the digital dividend for wireless broadband between the 790 and 862MHz bands, which should be fully available by the end of 2010 (Telecompaper, 2009). United Kingdom In the UK, a total of 128MHz will be open for ne w services, which is exp ected to bring the economy between 5-10 billion pounds. Ofcom notes that wireless broadband, mobile TV, digital
110 radio and public safety constitute some of th e possible uses. According to Ofcom, the UKs primary objective is not the realization of government revenue but to increase societal value through a market lead approach. For this r eason, spectrum blocks are not reserved for any specific use, which should allow for future changes in technology and changing consumer preferences (Austin, 2009). In 2005, a partnership of UK companies launche d a mobile television trial consisting of 400 people in Oxford using the DVB-H standard. As of 2005, mobile television was available in the UK via 3G networks and had gained some popularity. However, mobile TV is having little success in the UK. In fact, adoption rates am ong mobile phone users fell from 4% in 2007 to 2.75% in 2008 (DmEurope, 2009) New Services: United States The FCC i mplemented a more flexible and market oriented model for spectrum allocation and assignment for mobile service licenses compar ed to its previous policies. Originally, spectrum policy only allowed two entrants per local market and only permitted analog services on cellular spectrum licenses. The current policy allows market forces to determine the number of entrants per local market; many local US market s have five or more cellular service providers. In addition, licensees expe rience increased flexibility to deci de which services and technology to deploy, such as the ability to implement new ge nerations of wireless technology that allow high speed Internet access or mobile TV without requiring governmen t approval or reconditioning of license terms (FCC, 2009g). The switchover to digital television leaves a significant amount of space in the 700MHz band for new licensees. The Digital Television and Public Safety Act (2005) required the auction of the available spectrum no later than 2008. The FCC divided the new space for auction
111 into four blocks, the A-block, B-Block, C-Bl ock and D-Block. The A-and B-Blocks have traditional guidelines for usage. The C-and D-Blocks, however, contain additional requirements. The C-Block contains openness requirements, which require the licensees of this spectrum to allow customers, device manufactures, thirdparty application developers, and others to use the devices and applications of their choice. C-Block licensees are also barred from blocking or degrading users ability to dow nload and use third party applications (FCC, 2007). The DBlock requires the network operator to trade access to their spectrum during non-peak usage times with first responders and allows first responders to preempt commer cial network use on the D-Block during an emergency. During the tr aded and preemptive times, the commercial network operator would have acce ss to the public-safety-grade broadband network (Albanesius, 2007; FCC, 2007). In addition, th e D-Block licensee would pay the costs of reconfiguring the public safety spectrum (FCC, 2007). The US auctions of the 700MHz band, wh ich ran from January 2008 through March 2008, proved very successful, raising more than $19 billion (FCC, 2008b). The 700 MHz band auction gave additional spectrum access to new entrants, rural, regional, and existing nationwide wireless providers, which will enable them to deploy th e next generation of wi reless networks, 3G and 4G. While nationwide carriers, Verizon and AT&T won the largest chunk of the bids; other notable licensees include region al providers Cox Wireless of Cox Communications and Frontier Wireless owned by Dish Network, and new entrant QUALCOMM (FCC, 2008b; Gardiner, 2008). Though Google and other Internet based compan ies were expected to put in major bids, they did not, and Verizon won seven out of twelve licenses availa ble in the C-Block. However, the FCC openness regulations en sure that compatible devi ces, such as Google phones and applications will be able to work on any network that Verizon deploys in the C-Block (Gardiner,
112 2008). On the other hand, the D-Block did not re ceive a winning bid; th e reserve was set at $1.3 billion. Currently, regulators and possible D-Bl ock bidders are working out an acceptable plan. Carriers in the US have considerable control over the handset models that are available to customers, so they can avoid competition from other devices that could receive free TV (Oryl, 2008). Unlike Europe, there is currently no fr ee-to-air mobile TV standard, so cell phone companies do not have to worry about free-to-air competition just yet. The Open Mobile Video Coalition (OMVC) in conjunction with the ATSC developed a free-to-air standard, ATSC-M/H, which was passed on October 16, 2009 as standard A/153. This free to air mobile television standard may be a source of competition in the future, but, due to its late market entry, it may not have much chance in the cell phone market. Pr oponents of the ATSC-M/H standard are looking toward other mobile video devices such as autom obile systems and laptops as a market for freeto-air television (ATSC, 2009a; ATSC, 2009b; Grotticelli, 2008; Taaffe, 2009). The US is typically considered a laggard wh en it comes to mobile television viewing, as only 8.8 million American watched mobile TV in 2008; however, that number increased 52% in 2009 to 13.4 million American viewer s (Nielsen, 2009c). The multip le standards available in the US may have enhanced competition on the hardware side, but hindered the consumer market from developing as rapidly as the mobile TV markets in Korea, Japan and Italy (Lennighan, 2008). However, the US industry recently narro wed the field by choosing two standards for 3G television; Qualcomms MediaFLO on AT&T and Verizon networks, and MobiTV on Sprint and Nextel. Summary Given the case study exam ination of the dig ital television transition implementation based on the transition periods and timeline, subsides, consumer education, and new service entry, data gained from EU and US media policies and the implementation of the transition are now
113 analyzed to make suggestions for best practices for introducing digital television. The discussion of best practices for the digi tal television transition can be extrapolated to other emerging technologies in the media field.
114 CHAPTER 7 DISCUSSION AND CONCLUSION The inte rnational race for a viable high defi nition television standard resulted in the invention of digital television transmission. Th rough digital transmissions, broadcasters can use the same amount of spectrum space to transmit multiple standard definition programs, data streams or high definition progr amming. In addition, as there ar e fewer limits on the number of spectrum users and the space available to them, ne w technologies can enter the market and other technologies, such as cell phones, can enhance their current capabilities. Improved picture and sound quality make digital television attractive to consumers; the economic benefits of the transition to national bus iness and trade in inform ation technologies and knowledge-based industries factored into governme nt decisions to pursue the digital television transition. An overriding goal from each political entity is to remain and become more competitive economically through emerging technologies that utilize spectrum As digital signals take up less spectrum space, governments saw th e economic potential in new technologies, businesses and auctions.26 However, broadcasters did not want to air digital programming if consumers could not receive it, and consumers did not want to buy digital equipment if there was no programming. In 2004, Klein, Karger and Sinclairs consumer sample did not think changing to digital television was necessary or important, did not beli eve that digital television would offer anything better than analog television, and th ought the equipment would be expensive and difficult to use. Following this analysis, it is clear that due to marked uncertaint y, high costs, and the inconvenience of transitioning, consumers and businesses in the EU and the US would not have 26 Though the US uses an auction process, many countries, like the UK, use other processes of assigning frequencies, like beauty contest or administrative hearings that do not bring the government any revenue.
115 participated on their own. To break the deadlock the US and the EU intervened and required the transition to take place. Given the perceived be nefits of digital tele vision, direct government involvement was the most efficient method for bringing about the digita l television transition. The EU and the US are excellent cases to co mpare when discussing the digital television transition because of their simila rities and their differences. Both the EU and the US are liberal market economies. Normally governments practic ing liberal market principles do not mandate that consumers adopt or purchase certain goods However, both the EU and the US have required citizens to either purchase converter boxes, or throw away their perfectly good television sets and buy brand new more expensive television sets on the pretense of increased sound and picture quality and national economic a dvantage. The EU and the US objectives are the same: (1) switch-off digital television, (2) introduce new technologies, and (3) become more competitive in the international market. However, there are two major differences. Wh ile both are liberal market economies, they have drastically different politic al structures. The EU is a co nglomerate of sovereign nations pooling their sovereignty and attemp ting to realize economies of scal e. Governing takes place in supranational, intergovernmental and member state governments. On the other hand, the US is a single nation under one federal government already functioning in a large-scale economy. As a result of different political structures, legislation is enacted differe ntly. In the US, all laws have the same level of regulatory force. In the EU, different levels of force are attached to different enacted legislations. For exam ple, regulations are binding in all aspects immediately, but directives are binding in the end result only. Directives, while allowing for structural, economic, and cultural differences among member states, re sult in varying methods and time frames for national implementation of Community law.
116 In addition to different governance structures and legislative introduction, their approaches to the digital television transition are very different. The US coor dinated its switch centrally and switched all television sets ove r at once. While the EUs supranational governing bodies mandated that the transition take place, member state governments are in charge of the transition. Consequently, the EU will switch-off regionally. Therefore, we have two cases with similar goals, but different methods for reaching these goals. Even though the government organization and le gislative processes are different, and the EU and its member nations, have traditionally been perceived as using more regulation or government control in private industry than the US, their media policy goals are similar. The EUs concept of pluralism, wh ich limits media concentration, encourages transparency and promotes media independence, is akin to the US concept of diversity, which limits ownership concentration and promotes multiple viewpoint s. By extension, the EUs focus on media independence and the USs comparable promotion of multiple viewpoints, both encourage the free movement of political ideas. The EUs cultu ral goals, requiring the av ailability of national language content, are similar to the US localism principle, requiring the av ailability of issues pertinent to a particular state or city via local television news and programming. In addition, the EUs desire for an effective internal market is similar to the US media competition provisions. Conversely, the EUs pursuit of universal standards interferes in the commercial market for media hardware more so than the US. The US tends to remain hands off, as with mobile television, or in a supervisory position, as with dig ital television standards. The US rarely mandates any commercial adoption, with the exception of the digital television transition. However, the EUs involvement in technical standards for products wh ile establishing the internal market does make sense. For example, the electrical plugs for appliances used in many
117 member states have different standards, requireme nts, and shapes from st ate to state. It is impossible to create an internal market of scal e, acting as a single unit, if there are different technical and manufacturing requirements for different regions. Having a single standard creates a larger market, which is more attractive for commerce. Another emerging factor that distinguishes medi a regulation in the EU from the US is the EUs move toward converged regulations for the media industry and media products. The US takes a layered approach, and has made no m ove to bring all electronic media under one regulatory regime. There are di fferent regulations for broadcas ters, cable operators, and other telecommunication services. On the other hand, the EU pursues converged regulation through the AVMSD, which will apply the same regulations to all audio-visual media service providers. Converged regulation is intende d to bring broadcasters, on-de mand viewing, IPTV, and mobile TV under the same regulatory umbrella. Member states have yet to fully implement the requirements of the AVMSD, and have until the end of 2009 to comply. In the future, a comparison of how these different approaches to media regulation will be interesting and provide further guidance on the regulation and intr oduction of new information technologies. This case study examined the EU and the US across four different variables: political structure, policy development, media policies, and implementation. Since the EU is composed of sovereign nations that enacted the transiti on law according to their national needs and are handling their own transition pr ocess, the implementation variable was approached at the member state level and broken into an additional four variables. The implementation variables included: transition method, subsidy allotment, consumer education, an d emerging technologies. From the information provided in the previous chapters, this discussion will answer the initial two research questions:
118 RQ1: (a) What needs to be accomplished for the digital transition to take place, and (b) how has the digital transition progr essed in the EU and US comparatively? RQ2: What policy lessons from the digital television transition can be applied to the introduction or expansion of new communication technologies? The following sections provide answers to the research questions based on the data gained from the case studies. The firs t part of research question one explains that government involvement is necessary due to the public nature of broadcast television, to encourage broadcasters and consumers to participate, and provide consumer support. The second part of research question one examines and evaluates th e digital television stra tegies based on the implementation variables. Then research questio n two examines the different policy approaches of the US and the EU for suggestions on futu re technology introductions. Finally, the chapter notes limitations and opportunities for future research, which is followed by a summary of the primary findings of this study. Research Question 1A: What Needs to be A cco mplished for the Digital Transition to Take Place? (1) Due to public interest concerns, media policy goals supporting those concerns, and consumer-broadcaster deadlock, government interv ention is important for the transition to take place: It was appropriate for both governments to intervene in the pro cess. Governments of the US and EU control spectrum usage through li censes because there is a limited number of frequencies available and too many unfettered broadcasters will cause signal interference. Therefore, governments manage the broadcast spectrum on behalf of th eir citizens, and the transition to digital television is a public policy issue. The dig ital transition, by decreasing the limitations on the number of spectrum licensees a nd enhancing broadcasters ability to provide new viewing options, promotes the policy goals of media pluralism and social/cultural protections in the EU, and localism and diversity in the US.
119 In managing the spectrum on behalf of their citizens, governments must protect the public good aspect of free-to-air televi sion by ensuring that after the transition, large segments of the population are not excluded from basic televi sion information and entertainment provided. Analog free-to-air television has been consid ered a non-rivalrous and non-excludable public good; anyone with television acce ss could view the programming, and one persons viewing of the program does not prevent others from viewing it as well. Realizing th e need to protect the public good nature of free-to-air television, both politic al entities found that consumers needed support during the transition to di gital broadcast television. Broadcaster Participation Content m ust be available for consumers before they will invest in new hardware; therefore broadcaster support is essential. While the EU is tran sitioning all of its platforms to digital transmission, national broadcasters are th e most important industr y participants in the transition. National broadcast chan nels are available free to ai r and on most platforms besides broadcast. They are also typically the most popular channels. The BBC is one of the major coordinators and influencers in the digital tele vision transition in England, while the US, Spain, and France have relied heavily on programming in informational efforts of their national broadcast channels. Consumer Information and Timetables The governm ent is best suited to organize a nationwide communication effort and set a timetable for competing broadcasters. In concert with the intr oduction of broadcast programming, it is important to inform consumer s of the availability of this programming, how to receive it and its benefits. Without adequate consumer information it does not matter how ready broadcasters are to switch; without consumer participation the switch cannot be successful. Awareness of the technology, while a simple idea, is incredibly important. The USs first
120 attempt at switchover in 2006 was postponed part ially due to broadcas ter unreadiness, but primarily because the majority of consumers were unaware of dig ital television av ailability, or even that analog signals would be turned off. Through public information campaigns, websites and call centers, governments can inform and prep are consumers for the transition. Along with the availability and awareness of content, consumers must be aware of when their region will switch-off analog signals. A published timetable of exactly when the switchover will occur will influence additional consumers to purchase the necessa ry equipment to receive digital television. Consumer Subsidies In such a large-scale transition, there must be some sort of support incentive for dem ocratic citizens to acquiesce to a government mandate for consumer purchases. In most regions, subsidies have been necessary for the digital te levision transition to take place without violating public interest concerns. Without subsidies, gov ernments violate the publ ic interest and public good aspects of broadcast television. Most governments chose to implement an equipment subsidy for consumer; however, most European governments put demographic restrictions on subsidies while the US did not. Subsidies will be discussed in more detail in answering the second part of RQ1. Research Question 1B: How has the Transition Progressed in the EU and the US Comparatively? While the E U and the US have similar polic y goals regarding digital television, their implementation approaches have been di fferent. The EU has followed a regional implementation plan, focused more on consumer concerns, and been more proactive with the introduction of new technologies from a regulatory perspective. The US has followed a snap implementation plan and focused more on qui ck technology introduction, but has been more reactive in terms of new technol ogy regulation. We can also see from the case study discussions,
121 that education and subsidy provisions were appr oached in similar manners; however, transition periods and new technology introdu ction were approached diffe rently. Major contributing factors to differences in the implementation and administration of the transition in the EU and the US are: governance structure and legislative force, transition periods, consumer education, subsidies, and approaches to new technology introduction Legislative Process (2) The different political structures w ere a factor in the actual implementation of the digital television transition: The different political structur es contributed to differences in the transition implementation. Since the transition was introduced as a Directive, the EU provided parameters for switchover and each member state managed the transition implementation. Therefore, the EU had no choice but to take a regional a pproach. On the other hand, the US Digital Television Act was impl emented federally; the federal government managed all aspects of the di gital television transition thr ough the FCC. The NTIA also contributed to the transition program manageme nt by tracking the numbe r of transition-ready households and distributing convert er box coupons for consumers. The US could have chosen to take a regional approach, but instead it chos e a snap approach to the switchover. In addition, the EU institu tions do not have the author ity to create administrative rulemaking bodies like the FCC to coordinate the procedure among all member states and EU institutions. While the US, through the FCC, instructed all broadcasters as to how the transition would proceed, the EU set a transition deadline for all member states and required them to submit their transition plans to the Commission. The Commission would assess member state progress every two years. Therefore, each memb er state planned its own transition timeline, consumer education program and consumer subsidy.
122 Transition Periods Both the US and the EU have had to change their final deadlines for switch-off. The US originally planned for 2006, but m oved the date back to February 2009 and changed the date again to June 2009. The EU originally published a 2012 deadline, and expect ed the transition to be well on its way by 2010. However, some nations are predicting later switchover dates, France 2013 and Poland 2015, and the EU recalled the dead line of 2012. Shifting switch-off deadlines is not unusual. Many nations delayed their originally scheduled switch-off time, but even with delays most member states predict a switchover da te by 2012. At this point, Germany has been the only country able to eclipse its own predicted deadline of 2010 with an earlier switch-off in 2008. (3a) While gross population and terrain are contributing factors for switch-off plans, the percentage of terrestrial reliant consum ers was the deciding factor in whether a regional or snap transition would take place: The snap approach taken by the US was effective for moving the transition along quickly, and was more supportive of industry interest. The EUs regional approach was more supportive of high levels of terrestrial viewership and regional concerns, such as landscape interference. Between the US original shut off date in February 2009 and the extended date in June 2009, many broadcasters chose to turn off their anal og broadcasts. In a sense, the US phased out analog broadcasting over a three-month period ba sed on how many people in those areas were prepared for the transition, and completed the pro cess in June. The switch, however, occurred at essentially the same time, so the US is stil l characterized as using the snap approach. Most nations using the snap approach have a small to moderately sized territory, small to moderately sized populations, have a small percen tage of terrestrial re liant consumers, and a small total number of terrestrial reliant cons umers, like Netherlands, Demark and Finland.
123 However, the US has a large territory, a larg e population and a the US low percentage of consumers relying on terrestrial television, only 15 19%, translates to a mu ch larger number of people affected by the transition. The correlating factor among snap transition countries is the low number of terrestrial viewers. In addition to having fewer te rrestrial viewers, the US also put more emphasis on industry interests and econo mic concerns associated with the transition, while most European member states took a c onsumer-centric appro ach to the switch. Considering the economic prioritie s and the low number of terrest rial-only viewers, the snap approach was appropriate for the US. Television in European nations has largely been terrestria l, with a few outlier nations relying more heavily on multi-channel TV services. Rather than use an EU agency to coordinate the switch-off, the EU Directive instructed member states to handle the implementation of the transition. Member states chose deadlines re flecting their populations needs and primarily taking a regional approach. The regional approa ch is usually taken by nations with a high number of terrestrial viewers and sizable territory. Although EU member states are small compared to the United States and could therefore be candidates for a snap switchover, most took a regional approach within their country due to the high numbers of terrestrial reliant televisi on viewers. The regi onal approach allowed organizations in charge of the implementation to target their resources economic, educational, labor, etc. to assess which processes were effective before moving on to the next locality designated for switch-off. ( 3b) The regional approach used in the Euro pean member states does a better job of accounting for regional differences and governme nt support levels than the unilateral US approach: The regional process allows targeted education on the tran sition process, an available
124 support staff for technical assistance, the possibilit y of shorter multicast periods, time to evaluate digital signal strength, and accurately assess the need for transmitter build out. It is excellent for preparing consumers, and making sure that they do not lose access to cha nnels received before the switchover. While this makes for a smooth transition on the consumer side, it is not as supportive to industry participants. The vacated frequencies for upgrading cellular and wireless broadband services or introducing new services like mobile tele vision, take longer to become available. Further, in order to realize a common market using these emerging services, all member states must complete the switch. On the other hand, the snap approach is ex cellent for industry. Though broadcasters in the US already experienced a lengthy simulcast period, some of them simulcasting since 2006, the 2009 switchover allows broadcasters to introduce multicasting capabilities and high definition programming in an effort to attract more consumers. Also, cell ular, wireless and other emerging technologies gain access to wireless spec trum sooner. This could provide the US with a competitive edge in the emerging technologies ma rket worldwide, but it is too soon to tell. The snap approach, however, is not as consum er friendly. Analog signals get fuzzy when a television set is out of range, but often the pr ogramming remains viewable Digital signals are either perfect or nonexistent. When experi encing signal interference, the picture becomes pixilated, freezes, or goes black; this signal dr op-off is known as the digital cliff. Many US consumers, especially in urban areas, experience difficulties as the FCC coordinates with stations to solve these issues. This res earch indicates that the snap appr oach is excellen t for introducing new technologies and being economically competit ive, where as the regional approach is excellent for consumer satisfaction and managing transition resources.
125 Table 7-1. Comparison of the regi onal and snap approaches: Ch aracterizations, advantages and disadvantages. Regional Approach Snap Approach Typically Characterized by Large percentage of terrestrial television viewers Large territory Examples: UK, Spain, France Low percentage of terrestrial viewers Smaller territory Examples: US, Netherlands, Denmark Advantages Targeted consumer education Available support staff Shorter multicast period for broadcasters Time for evaluation Time for transmitter build out Broadcasters have immediate capability to multicast, provide High Definition programming, create new programming, attract new consumers New technologies and economic benefits realized sooner o Enhanced cellular and wireless networks Possible competitive edge in worldwide market for media services Disadvantages Longer wait for new spectrum space Longer wait for new services Longer wait for realization of the European Single Market in media services Not as consumer friendly Digital cliff Consumer signal loss dealt with after the fact Possible over loaded consumer assistance staff Consumer Education EU m ember state governments and the US federal government used similar consumer education plans to further the transition and to provide adequate information on how and why the transition was taking place. Websites and television commercials were by far the most popular method for information dissemination. Mailed le aflets, though popular in Britain, are seldom used in other nations due primarily to high co st. Digital-ready logos on consumer electronics
126 were also a popular method for protecting consumers from b uying products that would be obsolete after the transition. Di gital ready logos are an excell ent tactic to prevent unknowing consumers from being taken advantage of by reta ilers and distributors trying to unload outdated merchandise. (4) The sooner consumers receive a concen trated communication effort, the more likely it is that transi tion deadlines will be met: Analog shut off wa s delayed in most countries because consumers were unprepared. Consumers were typically unprepared because they were unaware of the transition or did not believe analog switch-o ff would actually happen. Governments did not typically put a strong effort behind consumer education until the failure of their first switch-off deadline. Had governments approached consumer e ducation seriously, like Germany and England, they may not have had to postpone the switch-off, like the US, Spain, Italy, and France. Through its regional switch-off plan, the UK had time to evaluate each switchover and correct problems before continuing to the next region. They found the consumer education was necessary for a smooth transition and have increased education efforts since the first switchover. Tracker surveys have been showing increased consumer awareness and readiness for the switchover since 2003, proportional to e ducation efforts. US consum er education did not really begin until 2007, after the 2006 deadline for an alog switch-off was postponed until 2009. Subsidies Subsidies have been im portant for comple ting the digital tele vision transition and protecting the public interest in most countries. Converter box subsidies have been the most popular method for subsidizing consumers; how ever, some countries chose to subsidize installation, outdoor ante nnas, and subscriptions to pay te levision services. The EU is encouraging all media platforms to switch to di gital distribution and is using its technology
127 neutral guidelines to further this goal. Diverg ently, the US is only prom oting the transition to digital on broadcast channels. Many questions about cable distribution of digital multicasts from broadcasters have been put off, and cable comp anies are currently allowing consumers to switch at their own speed. The effects of converged legislation and the idea of technical neutrality versus US layered regulation when dealing with media platforms ar e most clearly demonstrated in how subsidies can be administered. Communications from th e European Commission evaluating member state subsidies against community law state that a su bsidy granted only for terrestrial set top boxes would give broadcasters an unfair advantage over cable and satellite because it is not a technically neutral subsidy. However, US layere d regulations allow more flexibility or more favoritism depending on point of view. Layered re gulations do not require la ws to apply to each platform identically, but take othe r circumstances into account. All cable and satellite companies are private businesses, while nonpublic terrestrial broadcasters are considered public trustees. US subsidies for digital converter boxes we re only available for terrestrial television. In addition, the disbursement of subsidies provides an example of how the EU exerts control over member states, and encourages ha rmony among national laws to create a European common market. The EUs ruling prevented member states from subsidizing broadcasters, as Germany attempted to do. England did not subsid ize broadcasters, but reasoned that with more broadcast licenses available, the future cost of terrestrial licenses would decrease. Therefore the British government lowered the price for terrestrial licenses to broadcasters to reflect future decrease in market value. The US chose not to provide commercial broadcasters with subsidies for their transition. The US government reasoned that broadcasters were provided a second
128 frequency for simulcasting and the benefits of digital distribution, enhanced picture and sound quality and the ability to multi cast, would provide broadcasters with new revenue sources. (5) While subsidies were allotted based on di fferent characteristics, subsidies were determined necessary based on public interest concerns: Consumer subsidies in Germany were for low-income households with terrestrial only television; however, as set top box prices decreased, Landers were less likely to offer c onsumer subsidies. In Italy, there were two different subsidy programs. The first provided subsidies to all consumers regardless of income for converter boxes receiving digital signals via terrestrial or retransmitted through cable, and was not approved by the EU. It excluded satell ite television. The sec ond converter box subsidy program was available to the first sw itch-off region for all platforms. Englands converter box subs idy program focused on the elderly (75+) and disabled persons. Low-income persons with disabilities or 75 and older can receive free assistance for a converter box and installation for the least expensive conversion option in their region, cable, satellite or terrestrial. Thos e who are disabled or 75 and ol der who are not low-income can receive the same assistance at a discounted rate of 40 pounds. France set up two subsidy programs. The first was for regions where there would be no simulcast period before switching to digital and provided subsidies to all households, regardless of income, who did not already have a digital subscription. Thes e subsidies were for equipment and subscription fees for the distribution medium of choice. The second subsidy program applied to low-income households in th e rest of France, where a pers onalized subsidy proportional to individual income would be av ailable for the least expensive digital transmission method. Hungary has also vowed to support consumers through a set top box subsidy, but no detailed plans had been published during this research.
129 The US does not require that aid be platform neutral or regard subs idies for terrestrial television as unfair competition. In addition, the only platform required to be all digital is terrestrial; therefore, converter box coupons ar e only good for terrestria l reception. The US offered $40 converter box coupons to all American ci tizens; there were no income restrictions or analog terrestrial only household re strictions. It was determined that placing these requirements on the subsidies would be costly and in effec tive; there is no real method of tracking analog terrestrial-only homes and these types of restrictions would hinder the process. Research Question 2: What Policy Lessons from the Digital Television Transition can be Applied to the Introduction or Expansion of New Communications Technologies? There are major differences between the intr oduction of new technologies such as wireless broadband or mobile television and digital terrestr ial television, namely that they are not as ubiquitous as free-to-air tele vision. For the purposes for th is study, emerging technologies include mobile TV, increased wireless broadba nd coverage, enhanced cell phone networks, and future innovations. Outside of making the transition to digital television broadcasting, the EU and US diverge on the introduction of other emer ging consumer technologies. Mobile television will serve as the primary example for the di scussion on new technology introduction. Since the completion of this study, mobile television has somewhat falle n out of favor with the EU; nonetheless, mobile tele vision provides a good example for different approaches taken toward introducing a new technology without mandating its use. The EU has taken a proactive role by rele asing a framework for mobile television and instating a mobile television sta ndard (EC, 2008c). US federal authorities remain uninvolved in the introduction of mobile television, even in te rms of instating a natio nal standard. While the US has acknowledged the importance of emergi ng technologies associated with frequency availability, the government has not taken any st eps to promote any of those technologies. Any
130 steps toward creating a mobile television standard have been pursued by independent voluntary organizations like the OMVC and the ATSC. 27 However, the EU, through the Communications and Information Technology Directorate and its le gislative resources, in addition to entering the DVB-H28 mobile TV standard into the official j ournal, promoted a framework for the mobile television business model. Regardless of approach, there ha ve been difficulties in intr oducing mobile television in both the EU and the US. In the EU, both the DVB-T29 and the DVB-H standards are capable of carrying television signals. In the German in troduction of subscription-based DVB-H broadcast networks, the DVB-T free-toair standard cannibalized bus iness models based on paid subscriptions through the DVB-H standard. In the US, there is not current ly a strong choice for mobile broadcasting, so US industries continue to offer mobile TV c ontent on 3G networks rather than mobile broadcast networks. However, with increased data consumption on smart phones, 3G networks often become overloaded and slow. Broadcasting is a separate network for deliv ering content, and the use of mobile broadcast standards could alleviate the overload of 3G ne tworks by intense mobile data consumption. However, cell phone and wireless co mpanies in the future may choose to enhance 3G networks to 4G, utilize broadcast networks, use a combined approach, or find an entirely new solution. While access to broadcast television is consid ered a public good and a near necessity to participate in society, and t hough wireless broadband may one day equal the importance of 27 On October 16, 2009 the Advanced Television Systems Committee (ATSC) announced the approval of A/153 ATSC Mobile DTV Standard, which provides broadcasters with technical specifications for delivering new services to mobile and handheld devices carried through current DTV transmissions (ATSC, 2009) 28 DVB-H, Digital Video Broadcast Handheld is the encrypted mobile television standard able to broadcast to mobile devices 29 Digital Video Broadcast Terrestrial is the broadcasting method for sending programming to stationary television sets; however, mobile devices with the proper recei ving equipment can receive these signals as well.
131 broadcast television, currently a ccess to mobile television and other emerging technologies is not a societal necessity. US broad cast media policy goals do not apply to cable or satellite operators, and do not apply to mobile operators. However, with the implementation of AVMSD the same media goals and laws could apply to all Eu ropean programming services including mobile television. While the possibility of new busines s models on vacated spectrum is a boon to the economy, the success or failure is not necessarily a government concern in the US. However, in concordance with the EUs Lisbon Strategy, to create a common market and become the most competitive knowledge based economy, it is logical that there would be some form of intervention in the mobile television mark et and other communications markets. Limitations and Future Research Most of this research too k place between September 2008 and September 2009. It provides a sketch of the different methods used by the EU and the US for requiring customers to adopt a new technology a nd pinpoints emerging factors in EU and US media regulation. As a comparative case study, this analysis is not gene ralizable because there is no way to establish that the data are representative of other or larger populations. In dealing with complex political systems, data is highly idiosyncratic and cannot easily be applied to othe r situations. However, this research provides an excelle nt reference for the introduction of other technologies, serves as a first step in later evaluative research once th e transition is completed, and pinpoints trends in EU and US government influence of media t echnology diffusion. In addition, though this case study cannot evaluate which approach is better b ecause the transition is ongoing in the EU, it can comment on experiences from the cases. Early Indications of Effective Practices A strong co mmunication effort early in the transition has shown to be effective, and subsidies have also been eff ective, as long as the market price has decreased enough for
132 subsidies to be viable. For example, subsidies should not be introduced while the market prices are still very high and people who would adopt on their own, or early adopters, have not had a chance to purchase equipment. Italy made this mistake, and it has been the primary reason for numerous extensions to their switch-off deadline. Also, the more often switch-offs are postponed the harder it is to get consumers to prepare, be cause they are expecting another extension. Much of Germanys success can be attributed to a clearly communicated and established switchover timeline. A cost-effectiveness comparison of co mmunication methods could be very helpful for determining which mass marketing efforts would be effective should a sim ilar transition present itself in the future. The regional switch-off method has been a better approach to serving consumer needs. If a clear regional switch-off table is published and followed, the regional switchover can also be helpful to broadcasters by reducing their simu lcast period. For example, through the regional process the UK has been able to determine where to allocate resources so that each regional experience is better than the one before it. They have also been able to determine which demographics will require the most support. The snap approach may require longer simulcas t periods if the transition is not completed by the expected date; postponement of analog sw itch-off has been typical. However, longer simulcast periods are better for getting consumers to switch on their own without subsidies. The snap approach serves industry the best because it opens up new spectrum to business interests all at once; regional switch-offs require some business interests to wait for access to the new spectrum. An earlier switchover by the US gi ves it the first to market advantage in new spectrum based services over the EU and may give the US the advantage economically. However, because the transition is ongoing in the EU and the US recently completed its
133 transition, it is too soon to evalua te which approach is most eff ective. After 2012, this research can serve as a starting point for evaluating which constituencies were served best by different transition strategies, and whether or not bei ng first to market was a clear advantage. Once complete data are available on the extent of subsidies used in the EU, and the number of consumers without access to te levision after the switchover in poli tical entity, effectiveness of the two plans can be evaluated more concretely. It is likely that the US subsidy allotment plan, though available to all citizens regardless of qualifying factors lik e income or age, costs less overall than the combined total of EU member state subsidy plans, including the cost for administration and verification. However, with a hi gher total percentage of terrestrial viewers in the EU, proportionally the EU may have spent less. In addition, because the snap switchover is less accountable to consumer n eeds, the US will most likely report a higher number of citizens without access to the same broad cast channels post switch-off. However, these are theories to test through future research. To reach the same goal, the EU and the US are taking different paths. One very interesting difference is the EUs choice for conv erged regulations while the US continues to use layered regulations. As the converged regul ations of the AVMSD have not been fully implemented throughout the EU, this research cannot evaluate the effects of converged versus layered regulations. In the future, these different paths could result in major differences between EU and US media regulation. It further demonstr ates the EUs proactive approach to regulation and the USs laissez-faire appro ach. Future research will be ab le to compare the effects of converged audiovisual regulations in the EU with the layered regulations present in the US. In terms of new services, when these research questions were devel oped, mobile television was the center of attention, especially due to c onsumer, not necessarily commercial, successes in
134 Asia. The EU officially promoted the DVB-H a standard in July 2007 (Europa, 2007c). An independent coalition of US i ndustry representative developed a mobile television broadcast standard for the US, which was published in October 2009 (ATSC, 2009b). However, it remains to be seen whether first to a single stan dard or first to tran sition digital television will be the more effective strategy in introducing mobile television. As there is a clear difference to the EU and USs approaches to mobile televi sion, it will be interesting to see which method is more successful for viable business models, economic growth and market adoption. Recently, however, attention to mobile television has subs ided considerably. The EU scaled back its mobile television initiatives and statements rega rding its development, and increasingly focused on wireless broadband networks. With the focus now resting predominantly on wireless broadband, it will be interesting to compare the level of, and types of government involvement in, wireless broadband and the digital television transition. In the future, ther e could be a transition from private wired and wireless networks to public wireless networ ks, and the methods for transitioning to digital television may be more applicable to this tr ansition, especially if the government becomes involved. Conclusion In conclusion, this thesis se t out to answer two questions: RQ1: (a) What needs to be accom plished fo r the digital transition to take place and (b) how has the digital tr ansition progressed comparatively in the EU and US? RQ2: What policy lessons from the digital television transition can be applied to the introduction or expansion of new communications technologies? In regards to RQ1, we have shown that (1) Due to public interest conc erns, media policy goals supporting those concerns, and consumer-broadca ster deadlock, governme nt intervention is important for the transition to take place. (2) The different political st ructures were a primary
135 factor in the actual implemen tation of the digital televisi on transition. (3a) While gross population and terrain are contributin g factors for switch-off plans, the percentage of terrestrial reliant consumers was the deciding factor in whet her a regional or snap transition would take place. (3b) The regional approach used in the Eu ropean member states does a better job of accounting for regional differences and governme nt support levels than the unilateral US approach. (4) The sooner consumers receive a concentrated communication effort, the more likely it is that transition deadlines will be met. (5) While subsidies were allotted based on different characteristics, subsidies were determined necessary based on public interest concerns. As for RQ2, this research suggests that in the introduction and expansion of new technologies, it appears that a si ngle technological standard is most beneficial to hardware and application manufacturers for crea ting certainty and market growth, which is, in turn, beneficial to consumers interested in purchasing the produc ts. Through the international competition for a digital television standard, it appears that standards competitions are essential to developing the best possible basis for technologies, but the longer these competitions drag on, the less beneficial the competitions become. However, even though the US has been more hands off than the EU in the standards setting procedure, the USs first to market advantage, the US unified spectrum allocation, and coordination for new servi ces may prove to be more competitive for the introduction of emerging services than the in dividual member state approach of the EU. In addition, should another government led transition take place, common market standards, targeted consumer subsidies, and clearly published timelines or strategies are beneficial. Also, unless there is a very small percentage of consumers to transition, a regional process is the best strategy for decreasing industry costs, targe ting consumer aid, and targeting government and industry resources.
136 APPENDIX DIGITAL TELEVISION TRAN SI TION HELP WEBSITES Table A-1. US digital transition help website
137 Table A-2. Hungarian digita l transition help website
138 Table A-3. UK digital televisi on transition help website
139 Table A-4. French digital tele vision transition help website
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155 BIOGRAPHICAL SKETCH Katherin e McAuliffe received her bachelors degree in mass communication with a public relations focus and philosophy, with a minor in po litical science at Virginia Polytechnic and State University in Blacksburg, Virginia. McAuli ffe received her M.A. from the University of Florida in the spring of 2010. She has conducted research in the area of telecommunications policy, new media technologies, co mmunications outlet systems ma nagement, and advertising. She has presented papers on the digital televi sion transition in the United States and the European Union and on consumer perceptions of video game consoles as home multimedia centers at regional and na tional conferences. During her undergraduate studies, McAuliffe st udied for a semester in Riva San Vitale, Switzerland. During her masters research, she worked for a radio station in Budapest, Hungary. These experiences spurred her interest in the differences between the European Union and the United States in communication technologies re gulation. She currently works as an account executive for five different radio stations with Asterisk Communications, and plans to pursue a career in communicatio ns policy research.