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Case Study:

DTT (Digital Terrestrial

Television)

Warsaw, February 2004

Roberto de Martino

Autorit per le Comunicazioni


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Index

AGCOM Introduction

Italian TV market overview

DTT technical aspects

Regulatory Framework

Conclusions


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AGCOM Introduction

Section 1.


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AGCOM Introduction

AGCOM (Autorit per le Garanzie nelleComunicazioni) established by Law n. 249/1997

Council assisted by two Commissions: networksand services

Regulatory Authority for bothTelecommunications and audiovisual

Convergent Authority Responsabilities also in press and publishing

sectors


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AGCOM Introduction

AGCOM activities and responsabilities:

Interconnection

Verification of dominant position (TLC, TV) Accounting separation

Universal service

Audiovisual frequency plan TV monitoring

Numbering Plan

Italian PNRF (official comments to Tlc Ministry)


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AGCOM Introduction

AGCOM activities and responsabilities:

Tarifs

Mobile market competition

Services quality

TV-SAT

Political pluralism

Advertising, Audiovisual production quota

Press


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CONTENTS

TRANSPORT

BROADCAST

Regulatory interventions:

Decoder unicoDISTRIBUTION

Respect of programmation quotas and of production contentPublicity quotas

Minor tutela, Information ecc.,

Licencers and authorizations,

Antitrust rules etc


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Section 2.


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Italian TV market

overview GENERAL INFORMATION:

11 national terrestrial channels

+600 local TV, +1000 radio About +2,5 milions satellite pay-TV subscribers

1 satellite digital platform (SKY)

Cable Tv: strong growth

switch off (ATO) date: end 2006

Previous Tele+ frequencies have been sold to aconsortium (Ben Amar/TF1) to give birth to Sport

Italia (Europa TV) and D-free (Prima TV)


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Italian TV market

overview RECEPTION PATTERNS:

Households: more than 20 millionsTerrestrial Tv: 88/89% (50% EU average)

Satellite Tv: 10/11% (21% EU average)

Cable Tv: 1% (29% EU average) Terrestrial analogue TV still

dominates the market


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Italian TV market

overview TV SERVICES:

Terrestrial FTA: Two major national

players (RAI, Mediaset), strong localcharacter

Satellite Pay-TV: One main Pay-Tv

operator Sky Satellite FTA

Cable TV: optical fiber, and ADSL


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Composizione percentuale dell'utenza televisiva per tipo di

offerta

0%

20%

40%

60%

80%

100%

1997 1998 1999 2000 2001

Anni

servizi televisivi via cavo

satellite digitale a pagamento

satellite analogico in chiaro

etere analogico a pagamento

etere analogico in chiaro


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Italian TV market

overview DIGITAL OFFER:

Total Digital TV penetration: 12/13% (EU

average 18%) DTH: 12/13% (EU average 12%)

DTT: trials/experimentation (EU average 1-

2%) Cable: 0.1/0.2 millions HH (EU average

4%)


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Italian TV market overview:

Alternative services to

analogue terrestrial Tv

Utenza di servizi televisivi alternativi alla diffusione analogica via

etere in chiaro

0

0,5

1

1,5

2

2,5

3

1997 1998 1999 2000 2001

anni

utenti(milioni)

servizi televisivi via cavo

satellite digitale a pagamento

satellite analogico in chiaro

etere analogico a pagamento


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Italian TV market

overview CONCLUSIONS ITALIAN TV MARKET MAIN

CHARACTERISTICS:

Analogue terrestrial TV still dominates the market

Presence of 2 strong national operators which own3 TV channels each

Strong presence of local operators (more than 600) Vertical model in the analogue terrestrial TV (the

operators manage the transmission capacity, ownthe frequencies, content production, advertising

ecc.)


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CONCLUSIONS ITALIAN TV MARKET MAIN

CHARACTERISTICS:

Satellite Pay-TV is the strongest alternative so farto conventional analogue terrestrial Tv

Digital penetration is in the EU average

Still weak penetration of cable TV (even with

quick growth and ADSL coming soon) New entries in the Italian broadcast market

DTT started (5 Mux, +20 programs)

DTT expected growth (switch-off set end 2006)


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DTT Technical aspects

Section 3.


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DTT Technical Aspects

DTT BENEFITS:

Better Picture/sound quality

Increase capacity and efficiency of

networks

Reduce transmission costs

Better spectrum efficiency

Lower entry barrier, increased competition


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DTT Play-out elements:

Encoder

Multiplexer

OFDM Modulator

EPG

CA


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DTT distribution network:

SFN

MFN

Network adapter


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Analogue frequency TV Plan (Analogue

PNAF):

Issued in 1998 by AGCOM AGCOM Delibera n 68/98

Two level plan approach:

First level plan- optimization of resources Second level plan- once completed the first level

plan optimization (integration) of left resources


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ANALOGUE TV PLAN REQUIREMENTS:

VHF frequency band (I and II)

UHF frequency band (IV and V) 45 channel (frequency) available in UHF band for

planning

6 channel (frequency) available in VHF band forplanning

Total: 51 channel (frequencies)


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ANALOGUE TV PLAN REQUIREMENTS:

Quality objective: 4 on the ITU-R scale

One third of capacity to be reserved to local programming

Utilize European channelization in VHF band

Territorial coverage objective: 80% of the Italian territory(with inclusion of all Italian capoluoghi di provincia)

Power > 200 W

Transmission infrastructure positioned on the sameposition (site)

Total number od transmission sites: 480


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ANALOGUE TV PLAN (I LEVEL)

RESULTS:

3 channels (frequency) per TV network National coverage with 17 TV channels

6 TV channel reserved to local TV

11 TV channel reserved to national TV All requirements set satisfied


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ANALOGUE TV PLAN (II LEVEL)

REQUIREMENTS:

II level TV plan total number of sites: 480 Constraint regarding maintenance of coverage

established in the I level TV plan

Power greater than 200 W

Regional coverage area

Provincial coverage area


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ANALOGUE TV PLAN (II LEVEL)

RESULTS:

AGCOM Delibera n 95/00/CONS 126 regional area covered

1502 provincial area covered


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Digital frequency TV Plan:

Issued in 2003 by AGCOM

AGCOM Delibera n 15/03/CONS Two level plan approach:

First level plan- optimization of resources

Second level plan- once completed the firstlevel plan optimization (integration) of leftresources


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DIGITAL TV PLAN REQUIREMENTS:

VHF frequency band (I and II) 52,568 MHz and174-223 MHz

UHF frequency band (IV and V) 470854 MHz

48 channel (frequency) available in UHF band forplanning

6 channel (frequency) available in VHF band forplanning

Total: 54 channel (frequencies)


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DIGITAL TV PLAN REQUIREMENTS:

Quality objective: 95% service probability

One third of capacity to be reserved to local programming

Utilize European channelization in VHF band

Territorial coverage objective: 80% of the Italian territory

(with inclusion of all Italian capoluoghi di provincia)

Transmission infrastructure positioned on the sameposition (site)

260 planned sites


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DIGITAL TV PLAN (I LEVEL) RESULTS:

3 channels (frequency) per TV network(multiplexer)

National coverage with 17 TV channels

6 TV planned network (multiplexer) reserved tolocal TV

12 TV planned networks (multiplexer) reserved tonational TV

64 QAM better exploits available resources

All requirements set satisfied


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DIGITAL TV PLAN (II LEVEL)REQUIREMENTS:

II level TV plan total number of sites: 260

Constraint regarding maintenance of coverageestablished in the I level TV plan

16 QAM (more robust)

Power greater than 200 W Regional coverage area

Provincial coverage area


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DIGITAL TV PLAN (II LEVEL) RESULTS:

AGCOM Delibera n 399/03/CONS

126 regional networks served 1272 provincial networks served

Toal number of served networks: 1398


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Example: Spectrum Benefit

Comparison between terrestrial analogue TV andDTT planning based on the analogue TV plan(PNAF) and digital TV plan both developed byAGCOM

Plan resources: 51 (54 in the digital case) TVchannels

6 TV freq. channels VHF-III band

45 (48 frequencies in the digital case) TV freq.channels UHF-V band


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PlanningExercise Results:

National TV

Program

Regional TV

Programs

Total Tv Programs

(National andRegional)

Analo

gue

11 126 137

DTT 48/60

(12x4/5)

378/504

(126x3/4)

426/564


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Planning results:

DTT multiplies the resources (program

number) by a factor of 4/5 in the case ofnational programs

DTT multiplies the resources (program

number) by a factor of 3/4 in the case oflocal programs


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Decoder definitions:

Zapper: only conversion between TV analogueformat and digital TV format

Interactive decoder: enhances zapper because itallows the user also to utilize interactiveapplications

iDTV: it combines in the TV set the decoderfunctionalities

CA: for pay-TV applications

API: tied to interactivity (operating system

analogy for PC)


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Decoder market:

+ 40 Million TV sets

+ 20 million Households

Zapper price: about 150 Euro (25% marin)

Interactive decoders price: about 300 Euro

(25% margin)


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DTT Technical aspects

Application Program Interface (API):

MHP platform has been chosen by the

biggest broadcast operators

MHP Applications in terms of enhanced TV

MHP applications tied to interactivity for

regional/local/government services


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Interactivity:

Program-tied interactivity to enhance programcontent

T-learning

T-government in collaboration with local entity,University, Tegion and Public Administration

Application: On-line bet market Return channel: wireless or cabled

SIM card (to identify user requesting a certainservice)


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Major broadcasters have invested in DTT

Investments cover head-end and regional

hubs, distribution network and transmissionnetwork

As a rule of thumb: 45% transmission

network, 35% distribution network, 15/20%play-out (head-end)


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DTT started with:

DTT networks operating

Multicast of same programs available in

terrestrial analogue

Multicast (satellite) of other programs

Some (still limited) new editorial programs


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Rai DTT Experimentation phase status(N.B. press information source):

DTT network in operation 2 multiplexer

RAI 1, RAI 2 and RAI 3

Some satellite RAI program (News, sport,Edu)

Some new program (Rai Utile, Rai Doc)


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RTI Experimentation phase status (N.B. press

information source):

DTT network in operation 1 multiplexer

Rete Quattro (analogue TV channel)

Some programms also available via sat (BBCWorld, 24 Ore TV, Coming Soon, ecc.)

Some local TV program


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Other Broadcaster activity (N.B. pressinformation source):

Some other broadcaster starting DTTexperimentation:

Telecom Italia Media which is the holding of La7TV, MTV Italia

1 multiplexer La 7 TV, MTV Italia programs in the DTT

bouquet


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Other Broadcaster activity (N.B. press

information source):

Prima TV: Ben Hammar/TF1

1 DTT multiplexer

bouquet includes: Canale 5, Italia 1,

SportItalia, La Chaine Info and a childprogram


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Some other DTT activity:

Government subsidies (Finanziaria 2004 Law)

Government decoder contribution 150 Euro per decoder with interactive features

Total: 110 Meuro (available in the Finanziaria2004 Law)

User involvment in the experimentation (usermonitoring to gather data and information aboutuser preferences)

Family panel to verify user taste and preferences


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DTT information campaigns:

TV ADS, SPOTS

Press Conference Press campaigns

DGTVi association (in collaboration FUB,

RAI, Mediaset and La7 TV) to promoteDTTV penetration in the Italian maket

UK experience


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CONCLUSIONS:

Benefits pertinent to Italian market:

Spectrum: a more efficient utilization of thespectrum to reduce the frequency overcrowd

New entry: minor entry barriers to push thenational TV market which is now concentrated

around two main actors Digital culture: with a fast introduction of STB to

favor interactivity applications and Internet amongusers


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CONCLUSIONS (based on press information

source)::

Experimentation phase DTT networks (5 multiplexer)

Both national and local broadcaster partecipation

New programms online (terrestrial) Some DTT incentive campaign: TV ads,

government incentives


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Section 4.


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Four main steps have been completed:

Libro Biancoon the introduction of DTT

by AGCOM issued in 2000 Law n. 66/2001

Delibera n. 435/01which contains the text

of the Regulatory document for the DTTstart-up (until 2004)

Adoption of digital PNAF by AGCOM


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Libro Bianco (White Book) on DTT

Propose ATO dates between 2006 and 2010

Suggests two alternative transition phase; onebased on the analogue PNAF (2010) and thesecond based on a spontaneous market evolution(fast switch-off 2006)

DTT frequency utilization following the analoguePNAF

Based on island-by-island switch-off


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Libro Bianco (White Book) on DTT:

Suggests the incentives (e.g. STB subsidies) tofavour and accelerate the transition phase for allthe market actors (operators, final users andindustry)

Suggests the not necessarity of simulcast (in the

first phase of transition) but recommends atransition in which a wider and diversified contentprogram offer is available to DTT users


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Law 20 marzo 200, n. 66:

Target date for terrestrial ATO: 31/12/2006

Demand to AGCOM to define a specificregulatory framework (regolamento digitale) to setthe rules for licences and authorization (by mid-2001)

Release of the DTT licenses and authorizations byMinistry of Telecommunications

Adoption by AGCOM of the digital PNAF by end2002

Defines the principles for the regolamento digitale


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Law 20 marzo 200, n. 66:

Separation of the content provision from thenetwork provision

Provision of rules which favour the infrastructuresharing between operators

Definition of the license and authorization

obbligations Prevision of the analogue-to-digital transition

phase towards ATO

Suggest obbligations for FTA broadcasting


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Regolamento DTT main points:

Separation between network operator, contentprovider and service provider

Distingueshes the obligations, restrictionsbeteween the content and service provider whichin the analogue world were assigned to the onlyexisting concessionario

Network provider Licencse; Service and ContentProvider: Authorization

Defines the rules set for the start-up DTT phase

which will last until 2004


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Regolamento DTT:roles separation

Content provider: Authorization regime

Commitments concerning:

Advertising

Production quotas

Protection of minors

Political pluralism


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Regolamento DTT:roles separation

Network operator: license regime

Specific rules concerning: Neutralitywith respect to content providers

Siting and RF characteristics

Infrastructure sharing Accounting separation for holders of license and

authorization


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Start-up phase:

Will last until 2004

During this phase the existing TV operators (andconsortia) can request the title (abilitazione:temporary license) to operate DTTexperimentation

The operators which request the abilitazione andthe ones which hold more than one concessionecan keep their frequencies but shall reserve tothird-party entities at least 40% of theirtrasmission capacity (Mux capacity)


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At the end of the start-up phase (2004) AGCOMwill issue a second DTT Regolamento by the endof the transition phase (2004);

after the issue of this second DTT Regolamentothe abilitazioni can be converted in full licensesif the operators comply with the obligations

Main contents:

Access guarantee rules to content providers

Rules regarding Pay-TV

Criteria for the assignation of further licenses

Rules regarding accounting separation


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Conclusions

Section 4.


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Conclusions (1)DTT Benefits

Main advantagesfor the Italian TV market frommigration to DTT:

Spectrum: a more efficient utilization of the

spectrum to reduce the Italian frequencyovercrowdproblem

New entry: minor entry barriers to push thenational TV market which is now concentratedaround two main actors

Introduce Horizontal modelin the chain value

Digital culture


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ConclusionsATO strategy (2)

Phased approach to reach the switch-off:

DTT White Book (2000)

Law 66 (2001)

DTT Regolamento (2001)

Digital PNAF (end 2002)

Final DTT Regolamento (2004)


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Conclusions (3)ATO

Strategy Start-up Phase (Until 2004):

Content provider market entry requestingAuthorization title

Actual TV operators can partecipate to the processrequesting an abilitazione title to start to operateDTT

Holders of more than one concessione can keeptheir frequencies but shall reserve to third-partyentities at least 40% of their trasmission capacity

Issue of the digital TV PNAF


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Conclusions (4)ATO

Strategy From 2004 to end 2006 final migration phase

regulated by the second DTT Regolamento:

Access guarantee rules to content providers

Rules regarding Pay-TV

Measures regarding accounting separation ofsubjects owning licenses and authorizations

Conversion of the abilitazione to license ifobligations maintaned during the start-up phase

Criteria for the release of further licenses becauseof Concessioni expiration (end 2006), excess

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