Russia approves digital TV switch program

Billion dollar state program still has unresolved issues

MOSCOW -- The Russian government has approved a program of switching to digital television by 2015. However, some unresolved issues regarding participation of private companies in the scheme remain.

Under the approved program, 122 billion roubles ($6 billion) will be spent on the digital switch scheme, of which the lion's share will be allocated for the modernization of satellite and cable networks. However, the government plans to provide only 76.4 billion roubles ($2.55 billion), expecting that the rest will come from private investors.

Local pay TV operators have welcomed the move. Yuri Pripachkin, president of the Russian association of cable television, told THR that the association's member companies support the final version of the program.

"It is quite logical that the main funding will go to the development of cable and satellite networks, as these segments are critical for the infrastructure of digital television," he said. "Private operators are ready to invest in the program, but there are a number of issues that have to be resolved first. For instance, if private operators will be required to provide a basic package of TV channels for free, they shouldn't have to pay for that content themselves."

Another major issue is digital receivers, which the country's households will have to buy. In the first draft of the program, which was prepared last summer, before the global economic downturn hit Russia, there was a stipulation that the government would compensate the costs fo receivers to all households. Later, an idea of providing compensations from the federal or regional budgets to only lower-income groups of the population was discussed but never made it to the final draft -- leaving unansewered the question of what those who can't afford digital receivers will do.

Meanwhile, Moscow-based Finam brokerage estimates the Russian digital TV receiver market could be worth $3 billion, as reported by the RBC Daily business newspaper. So far, two companies have expressed interest in investing in the market -- the electronics manufacturer Sitronics, which is part of the industrial group Sistema, and state-run GUP Informzashchita.
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