Web Letter

September 2012

DigiTAG seeks to inform members and non-members about important developments in the digital terrestrial television market. Each month, DigiTAG distributes its web letter with news updates and further exploration of one topic.

To subscribe to the DigiTAG Web Letter, send an email to the DigiTAG Project Office.

Growing Competition in the free-to-air DTT market in France


On 18 September, Canal+ obtained final regulatory approval for its acquisition of the television programme services Direct 8 and Direct Star from the Bolloré Group. This completed a process which began one year ago and which has caused much alarm within a broadcast industry fearful of the leading pay operator in France, Canal+, and its plans to enter the free-to-air DTT market. Broadcasters have been vociferous in their opposition and have clearly articulated their reservations on the possible ramifications of this entry.

In an attempt to avoid distorting the competitiveness of the free-to-air DTT platform, the broadcast regulator, Conseil Supérieur de l'Audiovisuel (CSA), and the Competition Authorities have placed stringent conditions along with their approval of the Canal+ acquisition. These conditions aim to maintain a level playing field in the free-to-air DTT market while simultaneously allowing viewers to benefit from the expertise and financial muscle of a leading broadcaster in the pay television market.

As a result, Canal+ has been allowed to acquire a 60% stake in the free-to-air DTT services Direct 8 and Direct Star for €279 millions. Canal+ already operates 4 services, Canal+, Canal+ Cinema, Canal+ Sport, and Planète, on the pay-DTT platform and 1 continuous news service (iTélé) on the free-to-air platform.

Terrestrial television in France

The DTT platform currently offers viewers 19 free-to-air services and 8 pay services with a coverage of 97.3% of the population.  Officially launched in March 2005, the DTT platform has been a resounding success with 61% of households accessing the platform for their primary television services.

The platform has provided a great increase in television services compared with the analogue terrestrial platform which only offered 5 free-to-air television services (TF1, France 2, France 3, Arte, and M6) and one pay television service (Canal+). However, these so-called incumbent broadcast services have continued to dominate the free-to-air market despite some audience fragmentation caused by the introduction of new television services on the terrestrial platform.  The large commercial broadcasters countered this fragmentation by acquiring some of these new DTT services. In 2009, TF1 acquired TMC and NT1 while M6 holds a stake in W9.

The DTT platform has continued to evolve. In October 2008, the DTT platform launched 5 high-definition services within their programme mix, offering viewers access to HD versions of five programmes, TF1 HD, France 2 HD, Arte HD, M6 HD and Canal+ HD. Most recently, broadcasters have also begun launching catch-up and on demand services on the Internet accessible via the TV set using the HbbTV standard as well as from PCs.

While the free-to-air platform has flourished, the pay-DTT market has had more difficulties.  Four broadcast services have returned their DTT licenses (Canal J, AB1, CFoot, and TPS Star) while two other services (LCI and Paris Première) have requested a change in their licensing conditions to allow them to broadcast on the free-to-air platform. This request, which has been refused by the CSA, has fuelled speculation regarding their subscriber numbers.

Pay-DTT services are distributed by two operators - Canal+ and TV Numéric. While Canal+ has been relatively successful with an estimated 1 million subscribers, TV Numéric has struggled and is currently estimated to have approximately 100,000 subscribers. Earlier in the year, TV Numéric suggested that it may stop offering linear pay-DTT services and concentrate instead on its upcoming video-on-demand service, SelecTV.

Analogue switch-off was successfully completed in November 2011. Not only was the process completed on schedule, but the final cost was much lower than initially anticipated.  While the government, along with the broadcasters on the analogue terrestrial platform, had budgeted €320 million, the final costs were €150 million.

Broadcaster's reaction to the Canal+ acquisition

In an unprecedented move, incumbent broadcasters have come together in their opposition to Canal+ joining the free-to-air DTT platform. They have expressed fear that Canal+ could make use of its dominance in the pay television sector to adversely affect competition in the free-to-air DTT sector. Other broadcasters, new to the terrestrial platform, have remained less vocal.

According to Nonce Paolini, the head of TF1, Canal+ has a financial power greater than that of the two leading commercial broadcasters (TF1 and M6) on the free-to-air market combined. Canal+ is the largest media group in France with a revenue of €4.2 billion and is owned by a leading communications multinational, Vivendi (which also owns the mobile telecommunications operator SFR). The head of M6, Nicolas de Tavernost, has said it should not be possible for a media group with a quasi-monopoly status in the pay television sector to enter the free-to-air sector. He fears a destabilization of the market given that Canal+ could leverage its strong position in the pay market for more favourable terms in the acquisition of cinema and sport rights for the free-to-air sector.  

Even the public service broadcaster France Télévisions entered the fray, declaring that Canal+ could acquire rights for both pay and free-to-air content. And if it should be required to sell its free-to-air rights to the highest bidder, Direct 8 could afford to outbid other broadcasters since its bid price would remain within the Canal+ group.

Only one of the new broadcast entrants, BFM TV, which offers continuous news programming, has expressed its reservation that Canal+ wants to simultaneously broadcast the same morning news programme on its services iTélé and Direct 8.

Benefit for viewers

The free-to-air DTT service, Direct 8, is set to for unprecedented change.  Canal+ plans to transform it into a leading commercial broadcaster in the French television market that can rival the strength of TF1, M6 and France Télévisions. Already, Canal+ has announced plans to invest €150 million in Direct 8 over the next three years which represents three times the current Direct 8 annual budget.

Because of the benefit that the entry of Canal+ could bring to viewers, especially in terms of an improved programme offer, the broadcast regulator CSA has given its approval. However, this approval, like that of the Competition Authority, is dependent on certain conditions. Foremost, Canal+ will need to maintain a separation between its pay and free-to-air operations. To this end, the Competition Authorities have put in place three conditions for the next five years. First, Canal+ will be limited in the content it can acquire from the six major US studios for broadcast on its pay and free-to-air television services. Second, Direct 8 and Direct Star will not be able to increase the amount of content that they acquire from the Canal+ film studios, Studio Canal, or be able to benefit from preferential conditions compared with other free-to-air broadcasters. Finally, Canal+ will not be able to attribute its sports rights to Direct 8 or Direct Star without first holding a tender to be conducted by an independent firm and open to other free-to-air broadcasters.

The conditions from the CSA includes limits on the number of sitcoms from the United States which may be broadcast in the evening, the stipulation that a minimum of 730 hours of previously unreleased French programming shall be shown, an 18 month gap between programmes shown on the pay and free-to-air platforms, a reinforced obligation to invest in French cinema, and diversity in the sports content.

Next steps

On 7 October, viewers will be able to watch the revamped Direct 8 and Direct Star television services. Already, new logos and brands have been announced, with Direct 8 renamed D8 and Direct Star renamed D17. New content has been commissioned and the participation of leading television presenters and journalists has been publicized. The impact of Canal+ on the content and branding will be visible although it may take time before the television watching habits of viewers change to incorporate the new offering.

An even bigger change to the DTT platform is set to take place on 12 December. Six new television programme services, Chérie HD, L’Equipe HD, HD 1, RMC Découverte, ‘TVous la diversité’, and 6ter, will launch on the free-to-air platform. Two new multiplexes will be available, allowing the platform to offer the new television services in HD. These services are operated by broadcasters both new to the DTT platform as well as the incumbents.  

It is not known how these new services will fare on the DTT platform, much less with the new competition from Canal+. However, demand for the licenses had been high. In the tender process for the 6 DTT licenses, the CSA received 31 proposals - and all for the free-to-air platform. While this helps to better understand Canal+'s ambition to enter this market, it also exacerbates the pressure on advertising revenue.



Source: Natalie Mouyal, on behalf of the DigiTAG Project Office

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United Kingdom - DTG makes D-Book 7 Part B available for all

The Digital TV Group (DTG) has now made available its specification for connected television products and services available to its members and non-members.

This specification is known as D-Book 7 Part B. The D-Book is the UK specification for the DTT platform.

Source: DTG website

Poland - ASO to begin on 7 November

The Office of Electronic Communications (UKE) has announced that analogue switch-off is set to begin on 7 November.

The process will take place region-by-region beginning in the voivodship of Lubuskie. The process is to end in 2013.

Source: UKE website

Croatia - Pay-DTT service to launch in November

Planning for the launch of pay television services on the DTT platform is underway.

The service will use the DVB-T2 standard. It will be jointly operated by Hrvatska Posta (Croatian Post) and the broadcast network operator OiV which holds the license to operate the two DTT multiplexes that will be used for the pay service.

Source: Broadband TV News

Ireland - 93% awareness of digital switchover

According to the latest digital switchover tracker study for the month of August, 93% of households are aware of analogue switch-off set to take place on 24 October.

Awareness is highest in rural areas, with these households having an awareness of 96% while 13% of residents in Dublin are unaware of switch-off.

Source: Going Digital website

Germany - Deutsche TV Platform issues report on DVB-T2

According to the Deutsche Television Platform, a policy decision on the adoption of the DVB-T2 standard could be made in the next 6 months.

It has issued its report on DVB-T2 with an overview of the discussion on DVB-T2 in Germany.

Source: Deutsche TV Platform website

Romania - Consultation calls for use of DVB-T2 standard

The Ministry of Communications has opened a consultation on its draft plans for digital switchover.

As part of its strategy, the government calls for the launch of 5 DTT multiplexes (4 UHF and 1 VHF) using the DVB-T2 standard. All services must be launched by 2015 at which time analogue switch-off will be completed. Switch-off will take place region by region.

Source: Ministry website

Czech Republic - Report on digital switchover issued by government

The Minister of Interior, in cooperation with the National Coordinator for Digital Broadcasting, has submitted the final report on digital switchover.

The report is entitled Final report of the National Coordination Group for Digital Broadcasting in the Czech Republic to complete its transition to digital television broadcasts.

Source: Ministry website

Hungary - Frequency changes to be made in October and November

As part of the process of making the 800 MHz band available for mobile broadband services, the DTT platform is required to move its services out of this frequency band.

As a result, the DTT platform operator Antenna Hungaria will need to make frequency changes at 11 DTT transmission sites. Frequency changes will affect Multiplex C and Multiplex A which include both free-to-air and pay-DTT services.

Source: Antenna Hungaria website

Lithuania - Strong increase in TV sales

With analogue switch-off approaching, retailers and pay television operators are experiencing increased demand.

According to the pay television operator Viasat, the number of queries received since the month of August has more than doubled.

Source: Verslo žinios

Nigeria - 900,000 pay-DTT subscribers

The pay-DTT service operator NTA Star Times has announced that it now has 900,000 subscribers. This is the result in the increase in DTT coverage since July 2012 when Star Times had 750,000 subscribers.

NTA StarTimes is available in 10 cities and plans to increase its coverage to 26 cities by the end of the year. It also plans to increase its service offering with 80 television programme services to be available by the end of September. This includes access to a 24 hour sports service.

Source: Punch Nigeria

United States - Spectrum incentive auctions could lead to DTT coverage loss of 2%

According to the draft framework for the spectrum incentive auctions, broadcasters could lose 2% of their current coverage area.

The spectrum incentive auctions call on broadcasters to voluntarily give up their UHF frequencies which will then be auctioned to wireless broadband providers. Depending on which broadcasters choose to release frequencies it may be necessary for other broadcasters to change their current frequency locations.

Source: Broadcasting & Cable