Germany’s Digital Free-For-All – Nothing Will Be Free

Michael Hedges October 23, 2006

Mobile media is all the rage. Telecoms and hand-set makers say it’s the future, a pay-to-play future. Even Germany’s conservative publishers are throwing their weight around. It could be another one-way trip, say German broadcasters, with a wink and a nod: remember the 300 million receivers already in households.

Very early in Europe’s digital media shift Germans took the lead. German State regulators, while not always headed the same direction, opened wide the digital doors. Much of the receiver and transmission technology came from German developers. Public and private broadcasters raced through those doors with proposals by the stack, mostly for television and mostly because regulators set hard deadlines for digital TV switch-over.

More recent fuel for the German digital media push came in the run-up to the 2006 World Cup football championships. Everything would be available on every possible digital platform. But northern Germany, notably Berlin-Brandenburg, chose the DVB-T mobile phone platform and southern Germany, notably Bavaria, emphasized DAB/DMB technologies. German consumers and World Cup visitors chose big screen digital TVs.

Even with general agreement that digital media’s presentation last summer was not ready for prime time though digital platforms are the media future few players in this action-packed drama agree on the next act, much less the script.

Facing a known future and a disruptive present, fusty friction left unsettled about Germany’s media system has re-ignited the ever-contentious chemistry of public and private sector media.

The German private broadcasters association (VPRT) drew a line in the sand at Munich Media Days stating that the situation for private sector broadcasters is dire.

Armed with a new study, VPRT claims German public broadcasters benefit unfairly from fortunes in financing and preferential treatment in spectrum allocation. Germany’s public broadcasting system enjoys a six-fold revenue advantage (€3.2 billion vs €640 million) over private sector broadcasters with a mix of guaranteed license tax revenue and advertising. Guaranteed income allows public sector broadcasters to more easily invest in developing and promoting new media services, according to the study produced by AKM (Arbeitsgruppe Kommunikationsforschung München). The conclusion, falling short of specific recommendation, finds digital difficulties that private sector broadcasters may not overcome.

The AKM/VPRT study’s findings mirror those in similar reports produced by private sector broadcasters in the UK.

In September VPRT argued for completely re-allocating Germany’s FM allocations, doing away with frequencies held in reserve by public broadcasters.  

Whole New Order

“It is high time for the creation of a new media system, which creates fair competitive conditions for the digital media landscape, “ implored VPRT President Jürgen Doetz, speaking to VPRT members ahead of Munich Media Days.

Private sector broadcasters would like to see limits placed on public service broadcasters’ expansion into new media as well as all other distribution. Calls for wholesale changes to Germany’s broadcast landscape from the private sector are not new. VPRT has taken its case to the European Commissions Competition Directorate as well as the German Federal courts.

Public broadcasters, who have heard all of this before, continue to fall back on the argument that fulfilling the “public service remit” requires expansion into new media and that European Union treaties enshrine support and continuity for that remit.

Financing it all

Unless again delayed, the radio and television license tax in Germany will be extended to include internet enabled personal computers and mobile telephones in January. Howls of protest, largely from businesses expecting huge payments due for each PC, brought earlier implementation to a halt.

German public broadcasters are the sole beneficiaries of the license tax. Their argument is that any device that can be used to access their programs should be taxed to support those programs. As new media has come to mean that any content can be accessible on any platform public broadcasters see the additional revenue as essential for successful development. And, under the existing plan, the increase in revenue would be substantial.

Whether or not the license fee would be extended satellite and cable distribution has yet another level of controversy. Following form, private distributors oppose and public broadcasters support the idea. But giving a government agency access to household data collected from encoded satellite and cable set-top boxes is a political hot-potato.

ZDF Director Markus Schaechter took issue with the figure of 2.5 million business potentially affected by the PC extension to the license fee, suggesting the number is closer to 38, 000.

All sides of the arguments about Germany’s media future seem intent on finding political solutions. As the issues are not life-and-death - it’s only television - politicians seem to welcome an opportunity to take sides.

Bavarian Prime Minister and well-known conservative politician Edmund Stoiber addressed Munich Media Days calling for modernization, liberalization, fundamental reform and equal treatment for telecoms and broadcast media. He also called for uniformity in German State media regulations, particularly in ownership rules, and allowing the licensing of national channels.

PM Stoiber also took shots at European Commission’s latest draft of the Audiovisual Media Services Directive for proposing to allow product placement and to further restrict advertising. Turning one of public broadcaster’s inveterate arguments on its head, he blasted the Amsterdam Protocol – the treaty that enshrines public service broadcasting – as giving up national sovereignty to the European Union: “Broadcasting is not just an economic good, it is cultural property.”

As if a telltale anecdote to Germany’s digital free-for-all, two major publishers – Hubert Burda and Holtzbrinck – jumped into, if not over the fray, each buying one-third interests in Neva Media, offering subscription television to mobile phones. Neva Media offers the Mobile 3.0 service using DVB-H technology. At the same time, Mobilcom launched a similar service using rival technology DMB.