Digital Switchover in Lithuania

1. Digital Switchover in Lithuania Buchara, 2009-05-27 Feliksas Dobrovolskis

2. Outline of the presentation • General overview; • TV broadcasting in Lithuania; • DTV broadcasting; • DVB-T networks; • EU dimension; • Spectrum dividend; • Challenges to DTV development; • Ways to overcome; • Role of Regulator; • Future trends. Feliksas Dobrovolskis

3. General overview Beginning - 30 analogue TV sets • April 1957 - First television transmission – about 30 TV sets in Lithuania. • End 1957 - already 1.5 thousand TV sets. • 2005 - 94 % of households had colour TV set. • 2007 - colour TV (sets’) penetration reached 140 %. • Public TV – 2 national terrestrial analogue TV channels • 3 commercial national analogue TV channels. • IVQ 2008 – 30,2 % of households were cable TV and MMDS subscribers. 86 % of households can be potential subscribers. • Visionfor 2012 – Almost every household will be able to use digital TV, • of which >400 000 households (about 30%) use DVB-T Aim - > 98% of households equipped with digital TV (DVB-T, DVB-C, DVB-S, IPTV) Feliksas Dobrovolskis

4. TV broadcasting in Lithuania: long path of evolution 2004 2006-02 2007-12 1975 1993-04 2005-07 2003-08 2004-10 2006-10 2009 2012-10 2006-05 1957-04 1989 2003-05 2005-09 2005-04 2001-03 2006-07 Pilot Digital Terrestrial TV transmission in Vilnius by 53rd TV channel transmitter Full launch in Vilnius and 40 km around First TV transmissions Pilot TV via mobile (GSM/UMTS) phone Live mobile TV (GSM/UMTS) broadcasting DVB-T networks in 5 biggest cities Cable TV network deployed Radio programs via Internet TV programs via Internet Final switch-off of analogue TV IPTV authorisations issued Colour TV broadcasting Digital Cable TV, MMDS Contest for DVB-T networks At least one DVB-T network coverage - 95 % of territory IPTV services started Digital Satellite TV Pilot Digital TV broadcasting promotional project in Vilnius trolleybuses Issued DVB-T broadcasting and re-broadcasting licenses Commercial TV started Feliksas Dobrovolskis

5. Order of Director of the RRT Concerning the Approval of the Rules for Allocating and Using of Radio Frequencies / Channels TV broadcasting in Lithuania: long path of evolution Law on Provision of Information to the Public Strategy for the Assignment of Radio Frequencies to Broadcasting and Transmission of Radio and Television Broadcasts (Government Resolution) Strategic Plan for the Assignment of Radio Frequencies to Broadcasting and Transmission of Radio and Television Broadcasts Order of Director of RRT on Digital Terrestrial Television Development Plan Strategic Plan of the Development of Informational Society of Lithuania (Government Resolution) Strategy of the Development of Informational Society of Lithuania (Government Resolution) National Radio Frequency Allocation Table (Government Resolution) European Convention on Transfrontier Television Law on the National Radio and Television Law on Services of Information Society … 1996 1997 2001 2003 2004 2005 2006 Conceptual Framework of the National Information Society Development of Lithuania (Government Resolution) Model of Implementation of Digital Television in Lithuania (Government Resolution) Law on Amendment of Republic of Lithuania Law on Provision of Information to the Public Feliksas Dobrovolskis

6. DVB-C (digital cable TV): DTV broadcasting in Lithuania: DVB-C • As of the beginning of 2007, 51 cable TV and5 MMDS networks were operated in Lithuania. • The number of cable TV subscribers experienced permanent growth (average 1997 – 2006 growth of cable TV subscribers was 14.55 per cent). Source: Communications Regulatory Authority. Balticum auksinis – the first DVB-C programs package, introduced in 2004. Balticum auksinis started with 6 TV programs in 2004, followed by 40 programs in 2005 and 60 programs in 2006. Balticum TV UAB was expecting to increase the number of programs to 100 by the 2007. Also in 2004 Balticum TV UAB had introduced programs package over the DVB-T network, available by that time in a certain area of Vilnius city. Feliksas Dobrovolskis

7. DTV broadcasting in Lithuania: DVB-S, IPTV • DVB-S (digital satellite TV): • VIASAT programs are being broadcasted over satellite SIRIUS 3 & 2 and cover whole territory of Lithuania; • VIASAT offers encoded package „Auksinis paketas“, which encompasses over 40 TV and 10 radio programs; • Other free programs are available over this satellite. • IPTV (internet TV): • IPTV ensures high sight and sound quality and control over TV content option; • In October 2006 started GALA TV – IPTV, realized by fixed incumbentTEO LT. In 1H 2007 number of IPTV subscribers reached 11.382 thousand; • Other service providers(www.tvaidas.lt, www.skynet.lt, www.tiltas.lt/iptv) offered commercial and pilot broadcasts also. Feliksas Dobrovolskis

8. DTV broadcasting in Lithuania: DVB-H like • Digital TV for mobile terminal equipment • Two mobile communication operators started DTV services for mobile phones in 2005; • 3G (UMTS/IMT-2000) licenses were issued at the beginning of 2006 and network deployment started; • Tens of TV programs currently can be seen on mobile within the 3G network; • Further technical studies on real DVB-H (multimedia on mobile platform) implementation are going on. Feliksas Dobrovolskis

9. DVB-T step by step • 2002 -DVB-T experimental broadcasts; • 2003 -DVB-T pilot project (compression standardMPEG2); • 2005-AB LRTC и TEO LT, AB were authorized to use relevant frequencies; • beginning of network deployment (two national networks of each operator); • operators have chosen H.264/MPEG-4 AVC compression standard; • 2006-Winners of licenses for TV programs broadcasting were chosen; • Primary broadcasts in Vilnius, programs visible till 40 km around the city; • Information company dedicated to end users on DVB-T started; • 2007 -DVB-T broadcasts started in five biggest cities, 85% of population covered; • 2009 - Both operators transmit 10 programs within each of their networks (40 totally); • 15 programs are free of charge, 25 – encoded; • 2012-2015 гг. – запустить 9 DVB-T сетей, до 90 ТВ программ (или несколько меньше если часть ресурсов использовать для передачи HDTV программ). DTV broadcasting in Lithuania: DVB-T Feliksas Dobrovolskis

10. DVB-T: I network 1-st network Feliksas Dobrovolskis

11. DVB-T: II network 2-nd network Feliksas Dobrovolskis

12. DVB-T: III network 3-rd network Feliksas Dobrovolskis

13. DVB-T: IV network 4-th network Feliksas Dobrovolskis

14. DTV broadcasting: EU dimension • Between 2004 and 2007 the Radio Spectrum Policy Group (RSPG) issued a number of opinions offering guidance to the European Commission on a range of spectrum issues: • RSPG Opinion on the EU Spectrum Implications of Switchover to Digital Broadcasting (RSPG04-55. 19 November 2004); • RSPG Opinion on Wireless Access Policy for Electronic Communications Services (WAPECS) (RSPG05-102. 23 November 2005); • RSPG Opinion on the Introduction of Multimedia Services in particular in the Frequency Bands Allocated to the Broadcasting Service (RSPG06-143. 25 October 2006); • RSPG Opinion on the EU Spectrum Policy Implications of the Digital Dividend (RSPG07-161. 14 February 2007). • Among the spectrum issues which are currently being examined by the EC is the Digital Dividend – the spectrum in UHF Bands IV and V (470-862 MHz) released as a result of the switchover from analogue to digital terrestrial television (DVB-T). Feliksas Dobrovolskis

15. DTV broadcasting: EU dimension Why switch-off in 2012? General EU non-binding approach: digital dividend after 2012. Feliksas Dobrovolskis

16. In the EU the UHF spectrum is considered as suitable for WAPECS and having been identified as relevant for mobile TV as well as for extending the reach of all types of wireless electronic communication services into rural areas. However, the usage of UHF spectrum for mobile technologies is constrained because of historical usage for the terrestrial broadcasting, various national policies regarding the digital dividend and by other services outside the EU: The firs serious reservations are related to the need of claiming for protection of non-EU analogue TV stations as long as they switch them off by the year 2015 (in case of optimistic scenarios). So, the success in usage of digital dividends in the Member States located at the outer EU borders crucially depends on the transition from analogue to digital terrestrial TV in the EU neighbouring countries. The second reservation is related to the non-broadcasting services operating in the countries outside EU. In accordance to footnote RR No.5.312, in some countries the band of 645-862 MHz is also allocated to the aeronautical radio navigation service on a primary basis. Particularly in Russian Federation the sub-band 790-862 MHz and in Belarus the sub-band 830-862 MHz is allocated to the Aeronautical Radio Navigation Service and is used with priority for governmental usage, national defence, security and maintenance of public order. DTV broadcasting: digital dividend in Lithuania Feliksas Dobrovolskis

17. DTV broadcasting: digital dividend in Lithuania Lithuania is going to have unlimited access to 1/3 of spectrum dividend only. Feliksas Dobrovolskis

18. Challenges to digital TV development • Audiovisual and communications sectors undergo a fundamental change due to technologic progress : formerly clear borders between content and transmission are blurring. • Unlimited number of audiovisual content delivery channels, i.e. the same content can be delivered over different transmission means: - cable TV, satellite TV, MMDS, terrestrial TV, IPTV, mobile TV; • – Currently different means are licensed separately (no clear reason for licensing at all); • – Some transmission means risk to be ignored due to the lack of legal ground; • States’ borderlines are no more restrictive factors: – Increasing popularity of internet TV and radio; – Target audience can be easily reached from abroad; • – Digital technologies enable personal program individualization; • Necessity to develop a flexible regulatory structure; • Need for consistent, pro-competitive and stimulating expansion of the digital economy regulatory system. Feliksas Dobrovolskis

19. Supply side Demand side Economical implications Investments Technologies Ability to pay / Value for money End users’ equipment Social implications Services Needs Awareness Challenges to digital TV development Feliksas Dobrovolskis

20. Supply side Economical implications Investments Technologies Ways to overcome: role of regulator How broadly to invest? Which investment strategy to choose? • Strategies for regulator: • Direct intervention • Compensations; • Capital injections. • Staying away. • Indirect influence • Creating preconditions. • In Lithuania we chose the 3rd option: Exemptions for licenses holders in DVB-T networks were introduced: - fee for the supervision of radio frequencies (channels) was reduced by 30 per cent; - payment of fee for the supervision of radio frequencies (channels) was rescheduled for 1 year period from license issue date. Clear date of the beginning of switch off of analogue TV by 2012 was announced in 2004.Now it is specified as final switch off in October of 2012. Feliksas Dobrovolskis

21. Supply side Economical implications Investments Technologies Ways to overcome: role of regulator Which one is the best and which one to choose? Compression standard – MPEG – 4? • Pros • Better compression possibilities : transmission of up to 10 standard quality TV programmes; • Saving resources of radio frequencies (channels). • Cons • Relatively new standard; • Currently is not very common; • Small (but growing) supply of TV sets and set top boxes in the market. In Lithuania: The winners of the digital terrestrial television broadcasting tender - Lietuvos Radijo ir Televizijos Centras AB and TEO LT, AB at the end of June 2006 began to provide services of transmission of digital television using MPEG 4 compression standard in the digital television networks. The standard was chosen voluntarily. Also use the same standard: Estonia,France, Norway, Sweden, Slovenia,Brazil, Poland A range of countries are considering possibility of usage the MPEG-4. Feliksas Dobrovolskis

22. Supply side Economical implications Investments Technologies Which one is the best and which one to choose? Ways to overcome: role of regulator European Commission promotes MHP as the most advanced open applications program interface (API) standard in Europe, But… It also calls for voluntary use of interactive television standards. And… The European Commission has decided that compulsory technical standards imposed by regulators are not necessary for the roll-out of interactive digital television services in Europe. So… Lithuania, taking in account opinion of market participants, in the late 2005 presented to European Commission project of the legal act on determination of uniform and compulsory standard of digital interactive television (MHP), butthe Commission didn’t countenance it and the legal actwasn’t approved. Therefore… To inspire voluntary agreement between participants of the Lithuanian market of digital terrestrial television on usage of uniform standard for digital interactive television on purpose to achieve best benefit for themselves and customers of digital terrestrial TV – is the next reasonable follow-up. Feliksas Dobrovolskis

23. Supply side Social implications Services Ways to overcome: role of regulator What services to supply in order to meet customers needs? According to research of Consumers Association (UK) – the most important driver of digital television take-up is the availability of extra channels. The vast majority of adopters subscribe to a basic channel bundle, while more than half also pay for premium channels. Almost three quarters of adopters mentioned a particular channel type, mostly films and sport, as an important factor in their choice. In Lithuania: 7 broadcasters and 2 re-broadcasters will offer 40 TV programs in total. New national commercial TV companies. Feliksas Dobrovolskis

24. Demand side Economical implications Ability to pay / Value for money End users’ equipment Ways to overcome: role of regulator Am I able and why should I pay for extra equipments and services? The dynamics of household expenses for communication services and the expanse part within the total household expense structure in 2003-2005. Source: Statistics Lithuania In IV quarter of 2008 30,2 % of households were connected to CaTV or MMDS in Lithuania. This means, that 30,2 % of households are already paying for TV services. These consumers might be already over the barrier of paying extra for their television before they get digital. Still for the majority of Lithuanian inhabitants paying for TV is not a commonplace. According to the experience of other countries, free-to-air model might be a digital TV penetration driver. Therefore in Lithuania, at least 5 programs to be broadcasted free-to-air were foreseen in the legislation. As the result of digital terrestrial television broadcasting tender14 TV programs will be broadcasted free-to-air in Lithuania. Feliksas Dobrovolskis

25. Demand side Economical implications Ability to pay / Value for money End users’ equipment Ways to overcome: role of regulator What extra equipment do I need? Provision of Lithuania’s households with television sets in 2002-2005, number of sets per 100 households Source: Statistics Lithuania Challenge No 1. Lack of set-top boxes and TV sets with digital function.Market wasn’t prepared because of uncertainty about the compression standard. Now the MPEG-4 is in place, but supply of set-top boxes is still at low scale. Challenge No 2.The price of set-top box varies from 60 to 400 Euros. Having in mind non-willingness and tiny ability to pay for extra TV services by Lithuanian inhabitants, introduction of a compensation mechanism, partial financing or tax reimbursementssystem in order to stipulate digital TV penetration in Lithuania during the transitional period might be the options for consideration in Lithuania. Feliksas Dobrovolskis

26. Demand side Social implications Needs Awareness Ways to overcome: role of regulator Do I need digital TV? Lack of information about digital TV’s advantages and costs doesn’t motivate for set-top boxes acquisition, doesn’t involve in viewing or switchover to digital platform. According to research of Consumers Association (UK) – the reasons for choosing digital TV change over the time. First users were engaged by sports channels mainly, but now the main drive for change is extra services option (e.g. internet, e-mail), which can be offered by digital TV. What I know about digital TV, its potential and costs? Lack of information problem is evident, therefore… For a successful digital TV development wide public information campaign is essential. Basic digital TV information is always available on RRT website. Feliksas Dobrovolskis

27. What regulation we are seeking for? • Light-touch, flexible and future oriented: – Not trying to “wrap” all possible media delivery technologies into legal acts; – Equally applied to all delivery means; • Realistic: – With clear perception, that number of content delivery channels is unlimited; – Conscious of limited regulatory institutions jurisdiction; • Content but not transport means oriented: – A program can be delivered via different means, if the content meets established requirements; • Enabling further investments: – Investments to foreign countries with the aim to reach a particular (e.g. Lithuanian) audience from there is not acceptable; – Unnecessary administrative obstacles should be removed; • Ensuring programs critical to the public and their proper delivery: – Delivery of relevant programs to the consumers must be ensured regardless of the technological development. Feliksas Dobrovolskis

28. Considering possible means to DVB-T encouragement 2. Financial measures batch 1. Informational measures batch • Income tax concessions for all households, purchasing set top boxes; • Aggregate purchase of set top boxes for schools, social care/ foster institutions and other public institution; • Inducement of set top boxes lend to households for determinate time period. • Periodical researches about current DVB-T cognition determining what information about DVB-T is essential; • Creation of information infrastructure: dedicated internet site and free-of-charge info phone line; • Information campaign with the purpose to introduce DVB-T to as much potential customers as possible; • Announcement of exact date of final turn-off analogue TV; • Development of interactive DVB-T services guides. 3. Other measures batch • The promotion of voluntary agreement among DVB-T market participants regarding usage of uniform standard for digital interactive television; • Sufficient state financing for national broadcaster; • Concession of broadcaster’s licence supervision tax. Feliksas Dobrovolskis

29. Future vision of digital TV Market vision • Main trend – individualization and personalisation, to meet needs of any individual consumer. • TV channels, sets of TV programs, timing and devices of TV watching will be up to choice like books in bookstore. • Digital TV, TV via PC and mobile phone - inter-compatible. Mobile TV complements digital TV. • Trend of miniaturisation of mobile phones – discontinuation. • No limitations to number of channels. • Regulatory vision • Revised licensing system moving to fully liberalized one; • New approach to content regulation – securing vested interests of consumers and no artificial restrictions to content provision; • Closer cooperation internationally. Feliksas Dobrovolskis

30. Thank you Feliksas Dobrovolskis Communications Regulatory Authority, Algirdo 27A, Vilnius, Lithuania Phone: +370 5 210 5627 e-mail: fdobrovolskis@rrt.lt Feliksas Dobrovolskis