Public service in the heterogeneous communication infrastructure age Reza Tadayoni, Anders Henten and Knud Erik Skouby CTI Working Papers, no. 94 Center for Tele-Information
Public service in the heterogeneous communication infrastructure age Reza Tadayoni, Anders Henten & Knud Erik Skouby Center for Tele-Information Technical University of Denmark Building 371 DK-2800 Lyngby E-mail:
[email protected],
[email protected] [email protected]
1. Introduction The development of broadcast technology has in recent years been dominated by digitalization of production and distribution and emergence of digital delivery platforms for TV and Radio. Digitalization has had a two folded influence on public service broadcast; on the one hand, digitalization has opened new possibilities for development of public service and, on the other hand, digitalization has changed some of the preconditions regarding the role of public service broadcast. The aim of this paper is to analyze the future of broadcasting, including public service broadcasting, in the light of the technological development focusing on the evolution of current communication infrastructures, the emergence of new infrastructures and the combination of these infrastructures in a heterogeneous setting. The latter is considered a vital component in the future development of communication, information and entertainment industries/services, including public service broadcast. Digital broadcast emerged as the natural continuation of the technological development of broadcast and was strongly influenced by technological developments within other electronic communication platforms. The emergence of digital broadcast and the further continuation of the development towards IP TV resulted in new potentials and possibilities, as phrased by Eli Noam1: ‘…the development will go from the current multi channel systems to the future Mega channel systems, where current TV systems will be replaced by Internet / Cyber TV’. On the other hand the development was connected to uncertainty discussed in an early article by Jean K. Chalaby and
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Noam E. M.: “Towards the Third Revolution of Television”, presented at the symposium on “productive regulation in the TV market”, Bertelsmann Foundation, 1995
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Glen Segel2: ‘…digitalisation increases the sources of uncertainties and the level of risk for an expanding number of players involved in broadcasting’ Digitalisation was, furthermore, a last step in questioning some of the assumptions regarding the way broadcast market was organised and regulated. The shaking up of these assumptions started by the introduction of multi channel platforms like satellite and cable and was fulfilled, in the era of the liberalisation paradigm, by digitalisation, which brought multi channel development into the terrestrial platform. The assumptions for maintaining the regulatory framework of broadcast were resource scarcity and interference as well as other market failures like public good characteristic of broadcast services, externality and scale and scope economic3. The technological and policy developments directly influenced public service broadcasting and its rights and privileges. The question here was to what degree the market failures were non-existent in the new liberalised digital era and whether public service still had a role to play. Eli Noam in ‘TV in Europe’4 argued, based on modelling of consumer preferences, that the removal of resource scarcity in the markets, which are large enough, results in a situation where the market by itself can fulfil the needs and wants of consumers. Andrew Graham, on the other hand, in ‘Broadcasting policy in the digital age’5 gave a detailed analysis of the market failures and the role of public service and questioned ‘the markets ability to foster a democratic environment, provide the information to which all citizens are entitled, extent rather than diminish tastes, experiences and capacities of individuals…’. In this paper we analyze how the potentials of digital broadcast have been utilized and to what degree the uncertainties have influenced the broadcast market and especially the role of public service broadcast in a competitive market where commercial broadcasters consider public service as a problem and a barrier for enabling competition. The paper is structured in the following way. First, the technological framework of digital broadcast platforms and the new capabilities of these platforms are described. Then two national case studies, Denmark and UK, are given. Thereafter an analysis is given on how digital broadcast has utilized 2
Chalaby Jean K. & Segell Glen , ‘The broadcasting media in the age of risk’, New media & society 1999, Vol 3 see amongst others (Graham 1998) 4 Noam E. M. (1991). Television in Europe. Oxford University Press, New York. 5 Graham Andrew: Broadcasting policy in the digital age, in digital broadcasting and the public interest, Aspen institute, 1998 3
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the new possibilities in the digital and convergent platforms and, with regards to public service, to what degree it has been successful in utilizing the new possibilities for development of public service obligations. At the end, the conclusion and references are given. 2. Technological Framework 2.1 Digital Broadcast The simple digitalisation of an analogue signal was a revolution when it was invented, but it is not a recent phenomenon. Digital technologies have been used in telecommunication networks since the beginning of 1960’s using Pulse Code Modulation (PCM) for regular telephone services6. In broadcasting, using digital technology for transmission of signals has become relevant in recent years due to the extensive development in audio/video coding and modulation of digital signals making it possible to ‘compress’ digital data and drastically reduce the required transmission capacity. Consequently, the number of modulated bits per second per frequency unit has increased and the frequency bandwidth needed to transmit a TV program has been reduced substantially. With digital technology, the frequency capacity needed for a transmitter to distribute one analogue TVprogram can be shared by several TV-programs or TV/radio-services7. Exactly how many services can share the capacity for one TV-channel depends very much on the quality requirements, deployed technology and the complexity of the video/audio sources that are subject to transmission8. Three main technical characteristics have radically changed the conditions for the broadcasting services market in the digital era: •
The expansion of transmission resources and the amount of transmitted services per frequency unit, which remove (or at least diminish) the assumptions for the resource scarcity argument.
•
The emergence of new access technologies, enabling the broadcast services to be sold directly to the end consumer. This removes the non-excludability characteristic of broadcast services,
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Plain Old Telephony Services (POTS) For digital broadcasting the concept service is used instead of channel. This is because there is no longer a unique relationship between the frequency and a TV / radio channel. 8 See amongst others: Reza Tadayoni, ‘Technological, political and economic changes and their implications for the evolution of broadcasting services – A political economy of digital broadcasting’, Center for Tele-Information, DTU, November 2000 7
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which has led to the establishment of the current organisation and financing models based on license fee and advertising. •
The possibility for interactivity that is built in the digital TV standards, which enables the convergence with other communication platforms and services.
2.2 Service development in digital Broadcast The service development in digital broadcasting is directly influenced by the above mentioned changes and proceeds in three different directions. One direction is the provision of the same service as in analogue broadcasting. Here, the increased capacity available in digital broadcasting will be used to provide the same type of service as traditional broadcasting, but more of it. This development is in continuation of the development of analogue satellite / cable broadcasting that rendered the emergence of new TV channels, e.g., channels providing all sport, all news, all art, etc. possible. With the emergence of digital broadcast, also terrestrial broadcasting joined the multi channel platforms. The second direction is the provision of advanced broadcasting services, where the new possibilities in digital broadcasting are used to add value and change the character of broadcasting services. The advanced broadcasting services denote value added services that basically are the same services as offered in analogue broadcasting but more value is added to them using facilities and possibilities in digital broadcasting. One of the new capabilities of digital broadcast is the provision of subscription services, pay TV and pay per view services on the terrestrial platforms, enabling broadcasters in establishing new business models. The third direction is the provision of new data services. The data services can be program related as well as ‘stand alone’ data services. Data services offered in digital broadcast networks can be divided in two different categories: basic data services and advanced data services. The basic data services are mainly control and data signals that are needed for the decoder to demultiplex and decode the services, while advanced data services are real services provided to the end consumers like enhanced text TV, download of software, download of newspapers to the set-top-boxes, Tcommerce, Internet on TV, etc.
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2.3 Digital Broadcast in a heterogeneous network environment 2.3.1 Combination of broadcast and communicative networks Broadcast networks have the following main characteristics: One-to-many transmission, and High capacity. And, Communicative networks: point-to-point communication and Low capacity By combining broadcast and communicative networks, the service provider can split the services into different elements and transmit the elements with high capacity requirements and mass appeal within the broadcast networks. This combined platform enables service providers to develop new services including high quality video/audio components. 2.3.2 IP TV Development of broadband technologies and deployment of Internet Protocol (IP) with its fundamental principle of separation of the network infrastructure platform from the service platforms creates radically new possibilities for the development and distribution of broadcast and on-demand audio/video services. Presently the traditional incumbent telecom as well as the alternative broadband operators will mainly base their services on provision of Internet, broadcast radio /TV (and on-demand video /audio) and Voice over IP (VoIP) services marketed as triple play services. This development opens up for a new and powerful delivery platform for digital TV, which does not have any scarcity problems, when the broadband infrastructure is mature for provision of audio/video services. In these platforms, broadcast services are so tightly integrated with IP services that it leads to the development of radically new services and have optimal potentials for being THE platform for the development and provision of Interactive TV and radio services. 2.3.3 Broadcast mobility Mobility has played a big role in the justification of Digital Terrestrial broadcasting in Europe. The argument has been that it is only the terrestrial platform, which offers general mobility (indoor as well as outdoor) and, therefore, it cannot be replaced by cable and satellite. Even though the
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European DVB-T standard is designed for mobility support there are limitations that will be dealt with in a new standardisation process of DVB-H9 (DVB- Hand held). Broadcast mobility is a key parameter in the future development of networks and services. Here, the efficiencies gained by a combination of broadcast and communicative services can be transferred to the mobile market. Also with regard to spectrum efficiency this combination of terrestrial broadcast platforms and mobile platforms is important. There are two aspects of mobility support related to DVB-T, which result in different requirements to the standard: •
Vehicle mobility: In traditional broadcast discussions, the main issue has been the ability to provide broadcast services in cars, buses, trains, etc.
•
Person mobility: The ability to provide broadcast services to personal handheld devices
By optimising different parameters for mobile reception in the vehicles it is possible to offer 11 Mbit/s per 8 MHz multiplex block, using the current DVB-T standard. With regard to person mobility, a limiting factor for persons on the move is the size of battery. To solve this problem, different technologies have been suggested to be included in the new DVB-H standardisation10. 3. Development of Digital broadcast: national case studies 3.1 Digital broadcast in Denmark 3.1.1 Penetration Satellite There are approximately 530,000 satellite households in Denmark (22% of Danish TV households). The number of households who subscribe to a digital satellite service are about 350,00011 (14,5% of
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The Mobile DVB-T standard has had several names: DVB-X, DVB-M and DVB-H. DVB-H is the last and probably final name of the standard. 10 See Henriksson : DVB-X. DVB Scene 05, March 16 2003, 11 The reason for the difference between the subscribers and households is that a number of people only use Free-To-Air TV and there are a portion of satellite households who use illegal piracy cards for watching pay- and subscription TV services.
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Danish TV households). The satellite market in Denmark is shared between Canal Digital and VIASAT. These two providers operate in all Nordic countries. Canal Digital Danmark A/S is a part of Canal Digital AS, which was founded in March 1997 as a joint venture between the French pay-TV company CANAL+ and the Norwegian holding company Telenor Plus. Today, Telenor owns 100 % of Canal Digital. Canal Digital started its regular digital services in the fall 1998. Today, Canal Digital has about 150,000 digital subscribers in Denmark. Canal Digital turned off the analogue distribution of its main premium pay-TV channel, Canal+, in February 1999, and offered free digital set-top-boxes to its subscribers for a one-year period. The only precondition was that the subscribers agreed to continue the subscription to Canal+ in 1999. At the moment (end of 2004), Canal Digital provides only digital services. The only analogue TV channel that is transmitted by Canal Digital is DR2, which is Free-To-Air (FTA). Canal Digital has no Danish TV channel by itself and sees its business focus mainly in the distribution of TV channels. However, Canal Digital has a strategic cooperation agreement with SBS that owns TVDanmark and Kanal5 and the premium pay TV channels from Canal + (Canal + yellow, Canal + Blue, etc.). VIASAT is owned by Modern Times Group (MTG) AB. VIASAT has about 300,000 subscribers in Denmark. VIASAT began digital transmissions in late spring 2000. According to VIASAT the digital change was primarily a consequence of in the level of maturity of the market and the fact that the introduction of digital satellite TV could be done at considerably lower costs, as the price of set top boxes and satellite capacity was been reduced substantially. VIASAT’s advertising-based national TV stations in Denmark are TV3 and 3+ (and a number of sports channels) and its premium pay TV channels are TV 1000 and Cinema. From June 2000, VIASAT stopped selling analogue subscription, but they maintain parallel simulcasting to provide services to old analogue customers. Cable The number of home-passed cable households in Denmark are almost 1.8 million, of which approximately 1.35 million (48% of TV households) subscribe to a minimum of one cable TV service. The market for cable TV in Denmark consists of the two major Cable network providers
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(TDC Kabel TV and SOFA), and a large amount of smaller independent operators who acquire their content independently and offer services that vary considerably in terms of quantity and standards. The cable operators do not have their own TV stations12 and the packages offered by these operators are a combination of Danish and foreign TV channels. The public service and local TV stations are available in all cable TV networks due to ‘must carry’ regulation. TDC Kabel TV is the largest cable TV provider, covering its 900,000 household network digitally. Even though, the network is digitalized, the numbers of digital subscribers are far below the expectations. Today there are about 100,000 digital subscribers in TDC Kabel TV network. This is very much due to the high price of digital packages and the lack of value added services from the consumers’ perspective. At the supply side, there is no strong indication of initiatives to put efforts in terms of massive marketing or, e.g., to subsidize set-top boxes to facilitate total transition to digital. TDC Kabel TV has, however, offered its premium pay TV subscribers free digital set-topboxes and has terminated analogue transmission of these services. STOFA, the other major cable TV provider, is the Danish cable TV subsidiary of the Swedish Telia. It has approx. 600,000 households in its network. STOFA does not have a centralized distribution network. Instead, services are provided through local offices/ municipal based networks. STOFA’s networks are also almost fully digitalized but there are not so many consumers willing to go digital. STOFA started the digitalisation of its network in late 1998. In the areas where the network has been digitized, the premium pay-TV services are only transmitted in digital form and consumers’ analogue proprietary boxes have been replaced by digital ones. There are no indications of digitalization of the remaining small and bigger SMATV networks, which count for about 300.000 households in Denmark. According to FDA13, there is little economic incentive for them to do so in the future due to the lack of economies of scale. An important reason for the slow digital roll out in cable TV networks is that the cable operators put their efforts on offering broadband connections. Broadband access via cable TV system is very well developed in Denmark and is in a good competitive position compared to other broadband operators. 12 13
TDC Kabel TV tried once to establish a sport TV station without any success Source: Forenede Danske Antenneanlæg (FDA), Danish cable television association.
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Terrestrial Terrestrial digital TV does not exist in Denmark. In the beginning, one of the major reasons for this was the lack of available frequency resources for digital broadcasting in Denmark. Presently, the resource issue is changed; there has been an ongoing work to find new resources for digital TV by re-planning and harmonisation with the neighbouring countries. This has resulted in a situation, where 3 Multiplexes (MUX) are available and will be deployed for digital TV. Work is going on to find a fourth MUX by continuing re-planning and negotiations with the neighbouring countries. At the moment of analogue shut down, two additional Multiplexes will be released with frequencies that currently are deployed to transmit DR and TV 2/DANMARK in analogue form. Only one of the MUXes (MUX1) has been assigned to specific operators for distribution of digital terrestrial TV. According to the media agreement of 1996, the public service stations, DR and TV 2/DANMARK, will have the possibility to simulcast their current analogue TV services in digital form. Furthermore, they will have the possibility for transmission of two new channels in digital form, one for DR and one for TV2. There is an ongoing work to find a model for organization of MUX2, MUX3, and the coming MUXes14. The Danish incumbent broadcaster, DR has put its efforts on digital radio, DAB, which has been on the air for quite some time. There are 6 DAB channels available at the moment and this will be extended to 1615 during 2004. 3.1.2 New services The majority of the channels available in the digital satellite and cable networks are traditional TV channels in digital form. The marketing and advertising of DTV in the Danish market has mainly been focusing on two qualities: 1) The variety of choices 2) The high technical quality of digital TV programs.
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Reza Tadayoni, 'Denmark: Emulating Sweden, But Hesitating', in Allan Brown and Robert Picard (editors), Digital Terrestrial Television in Europe, Lawrence Erlbaum, Mahwah New Jersey, 2004, pp.245-269 15 Furthermore DR’s current 4 FM channels will be simulcasted in DAB platform.
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With regards to digital radio only the variety of choices is seen as the main driving force for role out of digital radio16. The emergence of new (interactive) services plays a secondary role in the development of services or digital TV and radio. But digitalization of cable and satellite has expanded the possibility to subscribe to premium pay TV and Pay per view channels, and also new specialized channels. Some examples are: •
The premium pay TV channels, Canal+ family, TV 1000 family
•
Foreign language channels especially in TDC Kabel TV
•
Pay per view channels such as KIOSK in Canal Digital service– in reality a NVOD channel
•
All sport channels like VIASAT Sport1-3
•
Pay per view service like Tyson boxing match
Interactive TV is not seen as having significant interest. There are, however, new services like: Email, Chatrooms, Advanced program guides, Individual choice of camera angles, Product information, On-line shopping and TV games. With regards to DAB, the philosophy of DR is to re-pack the programs that already are developed for the analogue platform and send them in digital form mainly based on different genre, like, e.g. music channels: DR Soft, DR Jazz, DR Klassisk, DR Rock, DR Boogiradio, News: DR nyheder (news), DR Erhverv (economy and financial news), DR Sport, DR politik (mainly transmission from the parliament debates), and Others: DR plus (culture and debate), DR Literature, DR Kanon Kamelen (children program), DR event (national and international events like royal weddings,..), DR Gyldne genhoer (Mainly archive material) Furthermore, the public service broadcasters, DR and TV2/DANMARK have a huge online activity. Especially DR has a very successful online activity, where background information and archive material directly connected to the radio and TV programs are available. In addition, DR has stand alone on line services like games, on line forums, etc. of very high quality and popularity. DR’s and TV2’s online activities have raised concerns from the commercial broadcasters.
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Presentation of Leif Lønsman, director of DR radio in the DAB seminar at CTI, September 2, 2004
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3.1.3 Cooperation and competition The commercial actors have a negative attitude towards the privileges of public services broadcasters in Denmark. The opinion of VIASAT/TV3 is, e.g., that it is basically not justified for the state to operate a media company. By referring to the end of state involvement in the written press it is argued and foreseen that the state cannot continue its deep involvement in the broadcast institutions. Even when the necessity of some public service programming on the radio and TV platforms is accepted, the idea of public service in the online area and the subsidization of this activity by license fees are seen as totally unacceptable. TV3 has a rudimentary online activity and no news programs; they base their programs on rerun of American series and movies and have some successful national programs. To the question of why they do not have advanced online activities and news programming, they blame it on the uneven competition conditions on the market. On the other hand, the public service and its defenders argue for the necessity of public service being available on all platforms and having access to the citizens where they can be accessed, online, on mobile, wireless, etc. Another concern raised by the commercial actors like VIASAT is that the public service should concentrate on education, religion, high quality music (opera and the like) and should not use the public service means for the development of program types that can be developed on a commercial basis. This is a known argumentation that at best sees the role of public service as a niche provider to fulfill what the market cannot supply17. VIASAT accepts, however, that in small markets like Denmark it can be necessary to support production of high quality drama and children and news programming by public funding but the model should be designed to support program production and not the institutions. In this model, the commercial operators will have the chance for acquiring state support for production of high quality programming. An important barrier for development of the Interactive TV services in Denmark is the problem of non-interoperability of the middleware technology in the set top boxes: Application Programming Interface (API). All the Danish market players agree and have committed to change to the DVBMHP standard. The market players agree that this will solve the problem of interoperability at the 17
For example, the whole public service concept in the US is based on this logic
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supply side but at the same time they admit that it is a difficult and costly process especially for satellite providers which have advanced consumer bases. With regards to the availability of public service on digital platforms, the situation in Denmark is that public service is available on cable networks due to must carry rule, and the satellite providers are eager to establish contracts with public service stations that are the most popular TV stations in Denmark. This has resulted in favorable contract conditions to make these channels available in their packages. DR and DR2 are, e.g., available in all of the packages offered by Canal Digital and VIASAT with no cost for the consumers and no cost for DR. TV2/DANMARK is not available on the satellite platforms and according to satellite providers, they are more than willing to distribute TV2/DANMARK in their packages but TV2/DANMARK does not want to be available on their networks. One of them, VIASAT, goes so far that they want the ‘must carry’ rule to be enforced also in the satellite market. 3.2 Digital broadcast in the UK 3.2.1 Penetration The UK is the most advanced country in Europe with respect to broadcast digitalisation. Digital radio started in 1995 - but has been relatively slow to take off. Digital television started in 1998 and is, presently, reaching penetration levels well beyond other countries. By mid 2004, 55% of UK households had digital television access18. More than half of these households have access via satellite; the second most important access form is terrestrial; and cable comes third19. BSkyB (satellite) quickly converted their analogue pay-DTH customers to digital and has further expanded their customer base. Free set-top boxes have been offered to customers. Cable is not as widespread in the UK as in a number of other European countries and it, furthermore, took a while with the analogue-digital switch-over; but presently almost all cable customers have digital access. Digital terrestrial was at first launched by the commercial public service broadcaster ITV as
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David Currie, Ofcom chairman: ‘RTS Fleming Memorial Lecture 2004 – Television and the Digital Future’, http://www.ofcom.org.uk/media_office/speeches_presentations/currie_20041011 19 Ofcom: ‘Assessment of the Market Impact of the BBC’s New Digital TV and Radio Services’, London, Ofcom, October 2004, page 8.
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a pay-TV service; but the ITV service went bust in 2002, and the free-to-air service, Freeview, backed by BBC and commercial broadcasters took over with noticeable success20. Developments in radio have been much slower. By May 2004, there were a little more than 600,000 digital radio sets sold in the UK. Compared with the probably more than 100 million analogue sets in the 24.5 million UK households, this represents a rather small percentage. However, it seems that a faster take-up of digital radio started in the latter part of 2003 and it is foreseen than there will be app. one million digital radio sets in the UK by end 200421. 3.2.2 New services In connection with the digitalisation of broadcasting in the UK, channel numbers have increased considerably, and Ofcom reports that there were (autumn 2004) 272 television channels on Sky excluding pay-per-view services22. The BBC has, for instance, added four new television channels to its channel portfolio, two channels for children (CBeebies and CBBC), one channel for younger people (BBC3) and one for ‘audiences in search of greater depth and range of their viewing’ (BBC4)23. In the radio area, there were already a large number of analogue radio services, but digital technology is the basis for new services from BBC as well as commercial stations. The new BBC stations are BBC 6 Music (popular music outside mainstream), BBC 7 (speech radio), BBC Five Live Sports Extra (sports), CCB 1 Xtra (black music), and BBC Asian Network (for British Asians). On the commercial national radio multiplex, there are presently 8 services, and in addition there are local radio multiplexes with a wide range of different services24. Pay-TV existed on satellite and cable before digitalisation; however, digital technology allows for improved encryption and, therefore, for conditional access systems with a greater degree of security in exclusivity for providers of channel packages as well as individual channels and pay-per-view programmes. However, the obvious possibilities in conditional access systems for expanding and developing alternative business models to the public service license fee model and the advertisement based model have not (yet) had a major impact on the broadcast area. BSkyB has expanded their customer base, and ITV experienced a pay-tv growth with the terrestrial service 20
Information based on Peter Goodwin: ’The UK from Speculation to Reality’ in Fausto Colombo (ed.): ‘TV and Interactivity in Europe’, Milano, V&P Strumenti, 2004, page 133. 21 Information from Ofcom: Op.cit. page 15. 22 Ofcom: Op.cit. page 8. 23 Ibid. pages 11 and 13. 24 Ibid. pages 16-17.
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ONdigital (later ITV Digital) but went broke in 2002, opening the way for the free-to-air service Freeview25. In summary, growth in conditional access based systems has not had a major impact on UK broadcasting. The same applies to interactivity. In an overview of the digital TV experience in the UK, Peter Goodwin explains that in the digital terrestrial television proposal by the ITV companies (Carlton and Granada) in 1997, they explicitly rejected the provision of additional services26. When ONdigital in 2000 launched an Internet access service, they explained, more or less, that it was mostly there for show – to ‘enable us to say that we are the only platform that gives you full access to the internet’27. BSkyB, on the other hand, has put more emphasis on interactivity. All 7 million BSkyB customers (mid 2004) have access to a number of interactive services using a separate return path. However, the actual usage of these interactive services is rather limited. With respect to on-line services via Internet, broadcasters in the UK have been very active. The BBC, for instance, has a considerable activity in this field. On-line technology has played a very important role for broadcasters and has provided the possibility for presenting material to the public in different ways and on different platforms. In summary, it could be said that digital technology until now has had its greatest effect on the number of channels offered and on the new possibilities provided by Internet, while interactivity relating to the transmissions themselves and new business models based on conditional access, yet, have to materialise to a larger extent to become really important development features enabled by digital technology. Furthermore, it can be concluded that, as it has been an explicit aim to boost the digital broadcast take-up by means of the additional services offered to digital users, it is probably mostly the new channels in combination with the free set-top boxes which have driven the market for digital broadcasting in the UK more than the possibilities offered by interactivity via the television set. 3.2.3 Cooperation and competition The broadcasters can be divided into three main groups when examining the question of cooperation and competition between the BBC and the commercial broadcasters. There is the BBC 25
Goodwin: Op.cit. page 133. Ibid. page 134. 27 Quoted from Peter Goodwin: Op.cit. page 134. 26
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which is the state owned totally license fee funded public service incumbent in the field; there are the pure commercial broadcasters; and then there are the commercial broadcasters with a public service obligation28. These commercial public service broadcasters have obtained the right to use terrestrial frequencies ‘in exchange’ for a commitment to deliver public service content and they, furthermore, receive some public service funding. The BBC is seeking to extend their public service offerings. The pure commercial operators are rather hostile to the BBC and have the opinion that the public service concept should be narrowed down to comprise only programmes that would not otherwise be offered to the public. In the words of Kelvin MacKenzie, head of the TalkSPORT radio station, ‘the BBC should stick to programmes about sparrows in Serbia’29. The commercial public service broadcasters, on the other hand, have a more ‘nuanced’ view with an important role for public service but with a more prominent position for commercial broadcasters. It is in the light of this discussion that cooperation and competition and the divisions of labour between the BBC and the commercial providers are examined in this sub-section. The basic tenet of the UK regulatory agency in the communications field, Ofcom, is that ‘public service broadcasting in the UK has been sustained over many years by a mutually reinforcing mix of institutions, funding and regulation’ and that ‘this delicate balance will not survive the move to the digital age’30. There are different aspects of this statement: There are the new possibilities offered by digital technology to the BBC; there is the issue of competition and cooperation between the BBC and the commercial providers; and there is the fact that the incentives of the commercial public service providers to enter new ‘public service contracts’ may decrease when they have access to digital multiplexes and do not need analogue channels. On the other hand, the commercial public service providers may have an interest in retaining their public service image and the status associated with it. In order to obtain a firmer basis for determining the impacts of digitalisation and their consequences for policy and regulation, analyses of the cooperative and competitive relationships between the 28
One of these commercial public service broadcasters is actually state owned, presently, namely Channel 4. The two others, ITV and Five, are privately owned. 29 Quoted from Patrick Barwise: ‘Independent Review of the BBC’s Digital Television Servise’, London, DCMS, 2004, page 21. Patrick Barwise reports that in BSkyB’s submission to his review consisted of ‘24 closely spaced pages without saying a single positive thing about the BBC’, page 22. 30 Ofcom: ’Ofcom Review of Public Service television broadcasting’, London, Ofcom, 2004, page 6.
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different kinds of broadcasters have been performed in three areas, television, radio and on-line service31. The aim has been to examine the development of the BBC’s services in these three areas and to make an analysis of the impact of the initiatives of the BBC on the commercial broadcasters. The general point of departure and also the conclusions in the analyses in all three areas are, first, that the BBC has made considerable efforts to develop its digital services, second, that the BBC’s initiatives have positively impacted the general development and market for digital radio and television services, which has also been advantageous to commercial providers, but, third, that there are grounds for concern that the BBC may out-compete the commercial providers. The reasons given are that the BBC may unduly dominate the different communication areas or even hinder commercial providers from entering the market and may contribute to an increase in prices for subcontractor programmes and services, as the BBC is relatively well-funded and can afford to pay relatively high prices. The positive side of the cooperation and competition issue for the commercial providers in the radio area is, for instance, that the BBC is important for developing the DAB market. In the first years of its existence after 1995, there was very little development in digital radio. However in 2001, the BBC formed a joint enterprise, Digital Radio Development Bureau (DRDB), together with commercial radio broadcasters, which was instrumental in getting equipment manufacturers to develop DAB radio sets32. In the television area, the BBC has cooperated with commercial providers to push the terrestrial Freeview service. The negative side for the commercial providers is that the BBC offers services, which they might be interested in delivering. In the on-line area, there was originally a discussion as to whether the BBC should enter this communication area at all. However, the BBC has put much emphasis on on-line services as being part of their public service portfolio, and this has generally been accepted by commercial providers and among policy-makers. But as in the radio and television areas, there is a discussion on the kinds of services offered by the BBC. In the Graf report on BBC Online, it is formulated in the following manner: ‘The remit and the strategic objectives, which guide BBC
31
The report by Patrich Barwise is one of them (in the television areas). The two others are Tim Gardam: ‘Independent Review of the BBC’s Digital Radio Services’, London, DCMS, 2004 and Philip Graf: ‘Report of the Independent Review of BBC Online’, London, DCMS, 2004. 32 Information from Tim Gardam: Op.cit. page 18.
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Online, should be more clearly defined around public service purposes and/or programme-related content…’. Furthermore: ‘BBC Online should be clearly distinctive from commercial offerings’33. An important reason for examining the relations of cooperation and competition between the BBC and the commercial broadcasters is closely related to the digitalisation of broadcasting. In Tim Gardam’s report on radio services, it is phrased as follows: ‘In radio, as in television, the implications of digital technology fundamentally challenge the BBC’s traditional view of itself as an institution set apart from its commercial rivals. For most of its history, the BBC has been able to equate its difference of purpose with its separateness34. However, it is clear that the advent of digital technology makes that splendid isolationism increasingly difficult to justify’. According to Tim Gardam, digital technology inserts the BBC more directly into the broadcast market and, therefore, makes it increasingly necessary to look at the competitive relations between the BBC and the commercial providers. This is, indeed, a general and crucial premise in much of the discussion on digitalisation and public service in the UK. With respect to the present market shares, the BBC had in the second quarter of 2004 a market share for all its channels of a little less than 30%. BBC1 and BBC2 are the BBC channels with the largest audience, respectively 19.5% and 6.2%, while, for instance, ITV1 has 18.1%, Channel 4 had 7.7% and Five had 5.0%. Among the new channels established by the BBC on a strictly digital basis, CBeebies had the largest audience with a market share of 1.2%; BBC3 had 0.7%, CBBC had 0.5%, and BBC4 had 0.3%. It can thus bee seen that the new digital BBC channels have not changed the market situation markedly. However, the CBeebies channel with 1.2% market share is a market player with some importance just below Sky One with 2.2%, Sky Sports 1 with 1.7%, ITV2 with 1.6% and E4 with 1.5%35. In the radio area, the total share of digital listening was 3.3% in the second quarter of 2004. Of these 3.3%, the five digital BBC stations had 17.7% (equalling app. 0.6% of total radio listening)36. The market share of the BBC in the analogue radio area is much bigger. In the AM area, it was 53.9% in the second quarter of 2004 and in the FM area, 55.6%37. It, therefore, seems that commercial radio
33
Philip Graf: Op.cit. page 9 and 10. Tim Gardam: Op.cit. page 13. 35 Statistical figures from Patrick Barwise: Op.cit. page 31. 36 Tim Gardam: Op.cit. page 27. 37 Ibid. page 17. 34
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stations have taken the lead in the digital area, but the digital radio market is still very young and market shares will change when the hole radio area becomes digital. 4. Summary: Public service and digitalization Digitalization is challenging the concept of public service as well as the institutions providing it along two dimensions. First, digitalization is providing more ‘room’ for broadcast services and, second, digitalization is enabling new broadcast services. The combination of digitalization and compression technologies provides the possibility to send more services on the same frequencies than in analogue transmission. This possibility is interesting especially in relation to terrestrially distributed TV. Since the break-through of TV as real mass communication, the public service debate has been focused on terrestrial TV, mainly because of the combination of high national coverage – typically close to or 100% - and limited capacity. The capacity has been limited by the frequencies allocated to TV by international agreements resulting in few channels with national coverage in European countries, and these have traditionally mainly been reserved for public service. Digitalization will give the possibility for at least four TV services and some data services per traditional analogue TV channel. This has sharpened the debate on public service both with respect to what proportion of the capacity should be reserved for public service and the character of this considering the increased supply and choice for the viewers (cf. the above discussion of both the situation in Denmark and the UK). Cable distributed TV has typically lower actual coverage and high capacity, and the services have generally not been cable born national services but rather redistributed terrestrial TV services, local services, international services or films. This has resulted in a public service debate for cable typically addressing the more limited aspect of ‘must carry’, i.e., an obligation to show the public service programs from terrestrial TV. Satellite distributed TV has very high capacity and limited actual coverage and is not necessarily nationally based, i.e. out of range for national public service requirements. Digitalization offers the capacity for more services, but also for new services. As evidenced, e.g., in the discussion in the UK this sharpens the discussion on the character of public service. Even if there is no common agreement on a definition of public service it has always been related to the idea that there is a public/ state interest in providing certain sets of information to the general
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public. There has not been agreement on which sets of information, but if public service providers move into the new service areas even this concept is being challenged by digitalization. The new services are mostly associated with the idea of servicing individual/ specific demands for information, entertainment, education etc., but for public service operators typically based on other services already in their portfolio. It can nevertheless be seen as a movement into an area traditionally serviced by commercial operators which have, however, not been broadcast operators. Consequently, the capacity increasing potentials of digitalization means that both the balance between public service and other operators and the balance between public service and the commercial market more generally are being challenged. How these challenges are being met is largely an empirical question and as illustrated by the Danish and UK cases this is still far from being determined. In UK the offer of TV services has increased dramatically especially the number of satellite transmitted services, but also BBC has increased their TV services on traditional public service areas as children and ‘narrow in-depth’ programs. The potentials in radio have so far especially been used by the public service operators both in Denmark and the UK where specific segments are targeted with specialized services (jazz, sports, literature etc.). In UK the commercial radios have mostly used DAB to offer more ‘traditional’ radio with national and local coverage. The potentials to offer new services based on interactivity has, however, so far only been exploited to a rather limited extent. The Danish public service operators and especially DR have developed active and innovative online services both connected to radio and TV programs and as stand alone activities. This has, however, been severely criticized as being out of the public service area. But there is also clearly an expectation that the public service stations are front runners and barrier movers in the deployment of the new technologies. As argued above it seems obvious that the public service concept and its institutions are challenged by the ongoing digitalization. It is, however, far from obvious how this challenge should be met in a situation with a very high number of services/ channels and possibilities for many new unproven services. At the European scene there seems to be a general agreement that public service is still needed.
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5. Conclusion The research question of this paper is the impacts of digitalization on the broadcastings sector and especially the role of public service broadcast in the digital era. The minimalist point of view is that public service is confined to services and programs that the commercial operators are not willing to undertake due to insufficient income from commercials based on low number of listeners/ viewers. If this results in a lower number of users then it is the way it has to be. There are several problems associated with this line of reasoning. It is clearly in conflict with the general European tradition where public service operators have been front runners in the development of technology and content. Furthermore, it will lead to a very different result in big and small countries where the limited market – all things being equal – must allow for higher public service activity and require more cooperation between the players. This type of differentiated national policies is, however, destined to create political problems on the EU market. The broader point of view argues that public service has to work within all genres, address all potential users and work on all platforms. This is quite obvious the view that has so far been dominating in, e.g., Denmark and the UK where both development of new content and to some extent the technology has been promoted by public services operators without serious consequences for possibilities for commercial actors. In our view this leads to favor an arrangement where public service operators have the possibility and obligation to work for the development of new services on new platforms and consequently have the possibility to work broadly within genres and address users broadly. This does, however, require an ongoing dialogue on the programs and technologies developed and the required funding. 6. References David Currie, Ofcom chairman: ‘RTS Fleming Memorial Lecture 2004 – Television and the Digital Future’, http://www.ofcom.org.uk/media_office/speeches_presentations/currie_20041011 Graham Andrew: Broadcasting policy in the digital age, in digital broadcasting and the public interest, Aspen institute, 1998 Henriksson: DVB-X. DVB Scene 05, March 16 2003 Chalaby Jean K. & Segell Glen , ‘The broadcasting media in the age of risk’, New media & society 1999, Vol. 3
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Noam E. M. Television in Europe. Oxford University Press, New York, 1992 Noam E. M.: “Towards the Third Revolution of Television”, presented at the symposium on “productive regulation in the TV market”, Bertelsmann Foundation, 1995 Ofcom: ’Ofcom Review of Public Service television broadcasting’, London, Ofcom, 2004 Ofcom: ‘Assessment of the Market Impact of the BBC’s New Digital TV and Radio Services’, London, Ofcom, October 2004 Patrick Barwise: ‘Independent Review of the BBC’s Digital Television Service’, London, DCMS, 2004 Peter Goodwin: ’The UK from Speculation to Reality’ in Fausto Colombo (ed.): ‘TV and Interactivity in Europe’, Milano, V&P Strumenti, 2004 Philip Graf: ‘Report of the Independent Review of BBC Online’, London, DCMS, 2004 Reza Tadayoni, Ph.D. Thesis: ‘Technological, political and economic changes and their implications for the evolution of broadcasting services – A political economy of digital broadcasting’, Center for Tele-Information, DTU, November 2000 Reza Tadayoni, 'Denmark: Emulating Sweden, But Hesitating', in Allan Brown and Robert Picard (editors), Digital Terrestrial Television in Europe, Lawrence Erlbaum, Mahwah New Jersey, 2004, pp.245-269 Tim Gardam: ‘Independent Review of the BBC’s Digital Radio Services’, London, DCMS, 2004
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