Euros flick TV switch
EmptyThey might not have noticed anything different in their living rooms, but when the Dutch woke up Monday morning, they were at the dawn of a new television environment. In the small hours, analog television broadcasts were switched off, making the Netherlands the first European country to be completely digitalized for terrestrial broadcast.
The Dutch switchover kick-started a five-year process that gradually will transform broadcasting in the 25 (soon to be 27) member countries of the European Union.
The precise effects of this remain hard to predict, but one thing seems sure: Further fragmentation is on its way, and that can only mean a hard time for Europe's traditional broadcasters. "Digital will mean every existing generalist channel will lose market share. The question is how to manage it," said Ross Biggam, director general of the Association of Commercial Television in Europe.
European governments have, perhaps belatedly, recognized the promise of digital broadcasting, which combines high-resolution with multiple-channel capability, interactive services and convergence with other digital environments like telecommunications. "Digital television is more 'spectrum-efficient' than today's analog technology, so this switchover will both make interactive TV more accessible and free up valuable spectrum for other applications," EU media and information technology commissioner Viviane Reding said.
Digital television already is operational in Europe through all main platforms: terrestrial, satellite, cable and via the Internet, though the situation differs considerably from one EU member state to the next. Last year, EU governments agreed to bring forward their deadline for terrestrial switchover to 2012 (U.S. analog signals are scheduled to be switched off Feb. 17, 2009). Most EU countries that already have decided on an analog switch-off date have chosen 2010, with some, such as Germany, Finland and Italy, aiming for 2007.
Analog switch-off is not a simple process. Poorly managed, it can leave households without television services. Some might resent having to buy a new television or digital converter in order to continue receiving television services. EU officials said it is essential to educate a viewing public still unclear on the concept.
Many governments have taken to subsidizing the switchover with financial support mechanisms ranging from tax incentives and loans to direct subsidies to broadcasters and consumers. Indeed, the German and Swedish governments have fallen afoul of the commission for illegally granting millions of euros in state subsidies for the switch. Italians have been so slow to adopt digital technology that the government announced last month rebates worth up to €200 ($257) on purchases of digital sets.
The subsidies also have infuriated the satellite industry. "As soon as you give subsidies to terrestrial broadcasts, you distort the market," said Aarti Holla-Maini, secretary general of the European Satellite Operators Assn. "All technologies should be promoted equally."
Different approaches to the analog switch-off have been developed depending on the needs and size of the terrestrial markets. The market share of terrestrial households in Belgium is just 3%, whereas in Italy it is 80%. Some countries are allocating spectrum so that they can transmit analog and digital broadcasts concurrently for a number of years. In Germany, for example, that started in 2003 in Berlin, and transitional "simulcast" digital transmissions have spread to other parts of the country.
Other nations are rolling out digital broadcasts regionally and shutting down analog service as the rollout is completed, thus reducing the cost associated with the dual transmission of digital and analog services. This is the case in the U.K., which will move to digital between 2008 and 2012, one region at a time.
The Dutch switchover is relatively straightforward. About 95% of Dutch households have cable, and there are only about 74,000 homes in a population of 16 million that depend wholly on terrestrial for their main TV reception. Finland, as the second EU switchover on Aug. 31, will be a bigger test: It is mainly terrestrial, and as of June, only half the households had digital television sets or set-top boxes.
In a report last month, the European Commission forecast that digital penetration is estimated to reach more than 70% of European households by 2009. "As a consequence of the growth in both TV networks and TV subscription services, the European TV market will be characterized by increasing audience fragmentation," the report said, adding that satellite subscriptions will slow considerably in the face of digital TV and cable.
ACTE's Biggam warned that advertising will be diluted as new broadcasters enter the market. "It's the same advertising pot, but shared among more channels as well as other media like the Internet," he said. "It means the average production budget is going to shrink."
The switchover will be particularly important for public service broadcasters: Terrestrial has been their leading delivery platform for the past 50 years. But the switch also provides public service broadcasters with opportunities to offer more and improved services, according to Alex Shulzycki, the European Broadcasting Union's head of statistics and information.
"Many governments had allocated a full frequency channel, or multiplex, to PSBs, effectively creating families of channels," Shulzycki said. For example, in Sweden, SVT has launched five services on its multiplex, including a children's channel.
"If PSBs can still deliver quality content cost-effectively to license-fee payers, they will have justified themselves in the new digital age," Shulzycki said.