The transition to DTT in Italy: economic model

1
The transition to DTT in Italy economic model
regulatory aspects

• Lisa Di Feliciantonio
• AGCOM, Italian Authority for Communications
• Warsaw, 25 February 2004

2
Summary

• The regulatory model
• Key features of the model
• The trasition to all digital
• The business model
• Pluralism and competition
• The Public service broadcaster

3
Objectives to be achieved by the regulation
The regulatory model

• Transition to be led by terrestrial incumbent
  operators
• In order to support the transition they have to
  maintain their leadership role
• Create opportunities for alternative content
  providers
• In order to strenhgten competition and pluralism
• Free-to-air to be the dominat business model
• DTT to be complementary to other digital platform
  not an alternative to pay satellite or cable.

4
Key features of the regulatory model(Law 66
AGCOM code)
The regulatory model

• Trading of frequencies as it is the only way to
  rapidly allow the start up of DTT
• fragmentation of the value chain distinction
  between network operator (manages the network and
  the frequencies) and content provider (the editor
  of the channels). It should encourage new editors
  to enter the TV business
• capacity managed by network operators, free to
  establish their business model and the channels
  to carry on their multiplexes
• very early switch off date as it is the only
  real lever to push the broadcaster to start up DTT

5
The transition to all digital
The regulatory model

• The transition to be lead by existing
  broadcasters
• Until March 2004 analogue broadcasters, that have
  acquired frequencies through the trading, may
  apply for DTT provisional authorization as
  network operators
• The experimental authorization will be valid
  until July 2005
• Applicants that hold more than one TV license
  must ensure, during the experimental phase that
  40 of their DTT capacity will be given to
  independent content providers
• From March 2004 those who have been authorized
  for experimentation, as well as analogue
  broadcaster may apply for a long time network
  operator licence.
• Terrestrial analogue channels not applying for a
  licence as DTT network operator will lose their
  capacity
• After 2006 (switch-off) available capacity will
  be granted to existing licensees or other
  applicants.

6
The business model
The regulatory model

• Interaction between content providers and network
  operators left to market dynamics
• Capacity assigned by multiplex
• network operators will negotiate with content
  providers and independent channels to put
  together an offer
• no limitation to ownership of networks
• national networks can carry local content and
  local networks can carry national content
• no indications/obligation as far as the revenue
  model is concerned.

7
Pluralism and competition
The regulatory model

• Special attention on access rules and
  concentration issues
• Experimental phase(through July 2005)
• 40 of the capacity reserved to independent
  content provider
• After the licenses have been granted
• 1/3 of total capacity reserved to local
  broadcasters
• Media concentration threshold
• Same content provider cannot be granted
  authorization to broadcast more than 20 of
  digital television programmes
• Rules for access to networks
• Access to be granted by network operator to
  independent content providers on FTND conditions
• Should available capacity be not adequate to
  guarantee access to all requests, AGCOM is
  issuing a new regulation to grant access to
  independent content providers of particular vlue

8
Public Service Broadcaster
The regulatory model

• Leading role for PSB but no financial resources
  for DTT
• Law 66
• RAI has to acquire capacity through frequency
  trading as the other
• One multiplex is reserved for RAI after the
  switch off (Law 66)
• New Communication Act
• Obligation for the PBS (RAI) to invest and
  develop in digital terrestrial television
  developing two multiplex
• 50 of the population by January 2004
• 70 of the population by January 2005
• Yet no additional financial resources are
  assigned to PSB for the development of DTT