The Slippery Slope Of Digital Transition

Michael Hedges March 28, 2012 Follow on Twitter

Digital transition means different things to different people. Certainly, there has been opportunity for new products and services. With that has come unruly competition confounded by unsettled consumers. Attempts at bringing order to it all slip away in the digital paradox: transitions are chaotic.

The European Commission (EC) again reminded the government of Bulgaria (March 22) of its obligations under the Competition Directive to offer “open and non-discriminatory access” to digital television multiplex licensing.  The official “reasoned opinion” gives the Bulgarian government two months to see the error in their ways and inform DG Competition lawyers of its necessary corrective action. In May 2011 the Bulgarian government was asked to explain its digital TV policies as official analogue TV shut-off neared.  Left unsatisfied, the EC might very well file a formal infringement complaint at the European Court of Justice (ECJ). The EC is concerned Bulgaria might not meet the September 2013 deadline for analogue TV shut-off.

The Austrian government lodged a complaint with the EC after the 2009 bid for a digital television multiplex from broadcast infrastructure company ORS (Österreichische Rundfunksender) was disqualified. ORS is owned by Austrian public broadcaster ORF (60%) and Medicur-Holding (40%), which is owned by big Austrian bank Raiffeisen. The ORS bid was rejected after a rule change prevented digital multiplex owners from having interests in TV content production.

Four of the six DTT multiplexes were awarded to Hannu Pro, a Latvian audiovisual equipment and infrastructure company. The other two went to Towercom, a Slovak company eventually acquired by NURTS (National Unit Radio and TV) Bulgaria, a joint venture of BTC/Vivacom and Mancelord Limited, a Cyprus-based holding company “represented” in Bulgaria by banker Tzvetan Vassilev, who is suggested to have financial interest in terrestrial television channel TV7, reported Capital (March 23), and having influence with Bulgarian Prime Minister Boyko Borisov. NURTS Bulgaria provides analogue broadcast infrastructure and BTC/Vivacom is the incumbent telecom. In December 2008 BTC signed a deal to sell NURTS to ORS but in the first few months of 2009 BTC delayed then retracted the transaction. BTC/Vivacom sold its 50% stake in NURTS to Bluesat Partners, based in Dubai, in July 2011 for €57 million.

“The selection criteria of the contest procedures were disproportionate and therefore not in line with the requirements of the Competition, Authorization and Framework Directives,” said the EC statement. After a May 2011 letter from the EC, the Bulgarian government hustled through enabling legislation for a seventh digital multiplex, in a move local media watchers believe designed to deflect the EC’s attention. That, too, has brought attention as the necessary frequencies are currently used by the Bulgarian military and not precisely a multiplex but a collection of frequencies.

The European Commission proposed in 2005 that all Member States shut-off analogue television transmission by January 1st, 2012. It wasn’t hard and fast rule. Many had moved to digital TV by 2010. There were, however, several laggards and a wide variety of excuses, always about money. Enabling national legislation was often mired in politics as the new digital TV multiplexes were seen as licenses to print money. The EC later reached agreement among all Member States to finally shut-off analogue TV broadcasting in 2015.

The Bulgarian government is far from alone in EC reprimands over the transition from analogue to digital television. An infringement proceeding against France was opened in November 2010 questioning certain allocation benefits given to big incumbent broadcasters. That moved to the “reasoned opinion” stage in September 2011.

When strong letters fail to move errant governments the last stop in the European Court of Justice (ECJ). Arguably the biggest digital crony ruling by the ECJ came at the expense – literally and figuratively – of Italian media giant Mediaset in July 2011. Mediaset, owned by the family of now ex-Prime Minister Silvio Berlusconi, benefited from a government-financed set-top box subsidy plan. The ECJ said Mediaset had to pay back €200 million.

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