Digital Frequencies and Switch Off
TV Channels Conversion to Digital
In Community infringement procedure 2005/5086, the EU Commission found that the Gasparri Law and Consolidated Broadcasting Law (TURTV) were not compliant with the European regulatory framework. According to the Commission, the contested laws introduced "unjustified restrictions" in the provision of broadcasting services, resulting in exclusive rights for established analog broadcasters.
In order to respond to these issues, the executive passed Law 101 of June 6, 2008, which contains a provision by virtue of which the activity of a digital terrestrial network operator is subject to general authorization in accordance with the Electronic Communications Code, in compliance with the principles established in EU Directives.
While the EU Commission expressed satisfaction with the statutory reforms introduced by Law 101/08, it however found bandwidth assignment procedures inadequate, and recommended an increase in the number of digital dividends earmarked for auction to allow new players to enter the market. In response to these further remarks, in Resolution No. 181/09/CONS, transposed into primary legislation by the 2008 Community Law, the Regulator set the rules for the full digitalization of national terrestrial television networks.
In Resolution No. 181/09/CONS, AGCOM established that the single-frequency network (SFN) technique already tested in Sardinia should be employed in the interest of allowing efficient, pluralistic use of frequencies and with the aim of planning the greatest number of television networks in each geographical area to be divided between national and local networks. In accordance with 181/09/CONS, the digital frequency assignment plan is to call for 21 national networks covering approximately 80% of Italian territory to be earmarked for digital terrestrial television broadcasting (DVB-T) and for four additional national networks to be used for television broadcasting to mobile handsets (DVB-H).
In accordance with the “one-for-one” conversion principle for existing networks, Resolution No. 181/09/CONS calls for 8 digital MUXES for the conversion of analog networks and 8 MUXES for the conversion of the existing digital networks. The decree also acknowledges the availability of a national digital dividend of no less than five DVBT networks and possibly one DVB-H frequency to be awarded through competitive procedures based on objective, proportional, transparent and non-discriminatory criteria in accordance with the principles of Community Law.
Resolution No. 181/09/CONS states that no network operator may obtain more than five national DVB-T networks (including networks converted from existing networks) at the conclusion of the tender. If an entity has obtained access to five DVB-T networks at the end of the tender, that entity will be required to sell 40% of the fifth network’s broadcasting capacity to third parties. The obligation to sell 40% of broadcasting capacity shall apply when the frequency is actually awarded and shall remain in force for five years from the national switch-off date.
Conversely to events in Sardinia, the implementation of the television network digitalization criteria laid down in Resolution No. 181/09/CONS resulted in the Telecom Italia Media Group being awarded frequency resources for the construction of only three digital multiplexes, and thus the inability to convert all of the analog and digital networks operated by the Group.
Following the Ministry’s failure to approve petitions seeking annulment under the self-protection system, the Group submitted an appeal to the Regional Administrative Court of Lazio (after initially submitting the appeal to the President of the Republic, Telecom Italia Media only filed with the Regional Administrative Court following the transposition of Rete A/L’Espresso Group), challenging the Ministry’s determinations regarding the assignment of digital frequencies made in violation of the principle upheld by industry legislation and reiterated in Resolution No. 181/09/CONS, whereby all operators are entitled to convert all legitimately operated digital and analog networks to digital (known as the “one-to-one” criterion).
New grounds for the impugnation of any and all the determinations and deeds assigning user’s rights for only three, rather than four digital frequencies have been raised.
Beauty Contest
By Resolution No. 497/10/CONS, AGCOM established the criteria to be applied during the beauty contest procedure for the assignment of the internal digital dividend.
The published resolution confirms the layout of the public consultation and erroneously treats TIMedia as standing on an equal footing with RAI and Mediaset which are, in fact, incumbents on the terrestrial networks market.
As a result of such assimilation, TIMedia will be entitled to participate in the tender for Lot B (2 DVB-T frequencies) with RAI and Mediaset, and for Lot C (1 DVB-H/DVB-T2 frequency), given that it is barred from bidding at the auction for Lot A (3 DVB-T frequencies), which is reserved to new market entrants and small operators, a category in which AGCOM has placed SKY Italia, which was admitted to the bidding by the EU Commission.
In line with the action already brought in respect of digital frequencies as well as to impugn the EU Commission’s decision to allow SKY to take part in the auction, TIMedia has challenged AGOM Resolution No. 497/10/CONS before the Regional Administrative Court (TAR) of Lazio, as further motives of the appeal on digital frequencies.
National Digital Frequency Assignment Plan
Resolution No. 300/10/CONS sets the frequencies for 25 national networks: (i) two networks for public-service needs, the regionalized MUX and the DVB-H or DVB-T2 MUX; (ii) 20 DVB-T networks covering approximately 80% of national territory; and (iii) three DVB-H networks, two of which will be for the conversion of existing networks (Mediaset and H3G), restricting the usage of these latter two networks.
The resolution fixes the internal digital dividend at six networks, five DVB-T networks and one DVB-H network, to be assigned in a competitive beauty contest procedure, without stating the values thereof, and considers the channels 61-69 UHF an external digital dividend, to be used beginning in 2015 for telecommunications services in line with Community objectives and to be assigned through a competitive auction procedure.
The Plan resolution differs from Resolution No. 181/09/CONS on television network digitalization criteria in that it:
- introduces the k-SFN technique for certain networks that otherwise would not have coverage of 80% of the territory;
- authorizes the assignment of more frequencies to the public-service MUX; and
- authorizes RAI to operate the DVB-H frequency in DVB-T2.
Telecom Italia Media has contested the Plan's ratification of the current allocation of frequencies contrary to its interests, the unlawful exceptions and additional assignments made to RAI and the non-equivalency of the k-SFN and SFN techniques by filing additional arguments to its digital-frequency petition against Resolution No. 300/10/CONS.
Timetable for the Switch Off and the Auction of the 800 Spectrum for Mobile Services
In accordance with Law No. 101/08, the Decree of the Ministry for Economic Development of September 10, 2008, as amended, defines the timetable for the switch off and indicates the geographical areas affected and the respective deadlines, with the aim of meeting the schedule that calls for the transition to digital technology with coverage of 70% of the Italian population by 2010 and the conclusion of the process by December 31, 2012.
The 2008 Ministerial Decree divides Italy into 16 technical areas, largely coinciding with the regions, the transition to digital of which is coordinated by the National Digital Italy Committee (the “Committee”), established by decree of the Ministry of Communications dated August 4, 2006, as well as by individual regional task forces.
The Committee, which was formed on October 8, 2008, consists of the representatives of network operators, the regions initially involved in digitalization, manufacturing industries and customers, and is organized into four operational areas: network technology and development, monitoring and data, communications and user support, and public radio and television services.
Following Sardinia’s transition to all-digital in 2008, the plan to shut down analog broadcasting in Valle d’Aosta, Western Piedmont (the provinces of Turin and Cuneo), Trentino Alto Adige, Lazio and Campania was completed in 2009, and in 2010 the switch-off was completed in all the North of Italy, reaching 70% of the Italian population.
The Stability Law of 2011 requires the 790-862 MHz frequencies (formerly the television channels CH 61-69 UHF), or “800 spectrum” in short, originally assigned to local television broadcasters, to be earmarked for broadband mobile communications services and auctioned to sector operators. The law in question also requires local broadcasters to be compensated using 10 percent of the proceeds of the auction, subject to a cap of €240 million.
Legislative Decree No. 34 of March 31, 2011 lays down measures for streamlining the radioelectric spectrum. In detail, the definitive schedule for the transition to digital terrestrial television broadcasting has been deferred until September 30, 2011 and the deadline for assigning frequencies to local operators has been set at June 30, 2012. Local operators will be chosen according to rankings for each region based on: a) assets, net of losses; b) the number of employees with indefinite-term contracts; c) coverage of the population; and d) chronological priority in conducting business in the area.
Whilst no CH 61-69 UHF channels will be assigned in areas that are not yet digitalized, in all-digital areas the Italian Ministry of Economic Development intends make these frequencies available, by assigning spectrum III VHF or spectrum IV and V UHF frequencies to local broadcasters that meet the related entitlement criteria.
Local broadcasters are contesting these regulatory provisions on the grounds that they are unlawful and the economic compensation mechanisms are entirely inadequate.
As a result, there could well be delays in the proposed timetable for the transition to digital, under which Liguria, Tuscany, the Marches, Abruzzo and Molise are all to be digitalized by the end of 2011, with Puglia, Basilicata, and Sicily following suit in the first half of 2012.