International Network for Cultural Diversity

International Network for Cultural Diversity.

Current Developments in the German Broadcasting System

At present, the German broadcasting system is predominantly shaped by an ongoing economic concentration in the field of transmission infrastructures as well as content services and - to some extent contradicting this process - attempts are underway to generate open and horizontal markets for digital TV industries.

I. Common MHP standard to open digital TV markets in Germany?

Back in September ARD and ZDF, the two public service broadcasting organisations in Germany, RTL, a Bertelsmann subsidiary, the Kirch Group, operator of the so far proprietary Pay-TV platform Premiere World, and the Media Authorities of the German Federal States signed a joint statement intended to draw a common roadmap for the progressive migration of digital TV industries in Germany to an open and interoperable standard generating a level-playing-field for all players in the national digital TV scene. In their statement the signatories agree that the Multimedia Home Platform (MHP), a standard jointly created by the European DVB industries, is the means to make digital, interactive TV in Germany a market success.

It was agreed that all new interactive added-value services for digital TV shall be developed on the basis of the MHP standard. The first such services shall be put on the market no later than 1st July 2002. All existing interactive digital platforms shall strive to migrate to MHP within a reasonable timeframe.

In signing the statement, in particular the Kirch Group announced a new orientation of its business strategy. This is of particular importance, because, in doing so, it proofs the argument of those in Germany and throughout Europe ill-founded, that any migration to MHP in the short or medium term would endanger previously made investments in proprietary systems and hamper the overall roll-out of interactive digital TV markets.

II. Liberty Media Inc. purchases cable TV networks

After heavy losses in its cable TV business in the past, Deutsche Telekom decided some while ago for a sell-off of this business branch. Having already sold some regional cable TV networks to foreign investors (Klesch, Callahan), DT concluded in July 2001 a deal with Liberty Media Inc. on all its remaining six regional networks worth €5,5 billions. Klesch, the British investor group, was offered by Liberty the option for a 24,9% buy-in. Liberty, itself, has already considerable influence on a couple of German cable operators by the former purchase of the majority shares in United Global Communications (UGC). By UGC's subsidiary firm United Pan-Europe Communications (UPC), owning the above mentioned cable operators, that influence is realised. At the same time Liberty holds shares in Klesch's regional German networks. This concentration of market shares will offer Liberty economic power on the German cable markets to an extent never ever enjoyed by DT, the former state-owned monopolist.

Liberty Media as well as the other new proprietors of the German TV cable networks are planning to up-grade these infrastructures for high-speed internet access, telephony, and various interactive multimedia services including digital TV.

While the Liberty-DT deal is still waiting for clearance by the German competition authorities, significant concern about the impact of the economic concentration in German cable networks on competition, media pluralism and safeguarding a rich diversity of electronic media content is voiced ever more loudly. In particular, Liberty's announcement to opt against the open and interoperable MHP standard for digital interactive TV makes the overall development the more worrisome. The above mentioned joint statement of the stakeholders in the development of digital TV in Germany, not the least, can be understood as an appeal to Liberty Media and the other new cable network proprietors to refrain from any decision on a particular digital TV technology that would further hinder the roll-out of digital, interactive TV in Germany, foreclose markets and hamper investment in value-added content - all to the detriment of TV audiences and the overall society. While Liberty is expected to opt for a Liberate standard that it, itself, considers to be open as well, the company opposes to make its set-top-boxes available with a Common Interface that would allow for the use of interchangeable conditional access modules. These are the pre-requisite for the operation of various encrypted services over any set-top-box chosen by the consumers. That Liberty intends to use a decoder with a CA module integrated in its technological configurations will be contrary to the goal to generate an open market for end-user devices.

Recently, the Kirch Group and Liberty Media proclaimed their interest in a close business co-operation in digital television. Liberty Media is interested in purchasing those shares in the Kirch Group presently held by Rupert Murdoch's BSkyB. If this deal is to be realised it may be speculated which repercussions it would have for the Kirch Group's declared willingness to promote open and interoperable TV standards pro-actively.

III. Encrypting digital TV satellite signals to become the general rule?

Increasingly, public service and other free-to-air broadcasters see themselves confronted with the demand of copyright holders to encrypt their digital broadcasting signals via satellite. The holders of copyrights make the fulfilment of this request ever more a pre-requisite for concluding contracts with broadcasters, particularly on premium content. While this practise was already well known in other European states in the past, it occured for the first time on the German broadcasting scene as part of the sports rights deal between ARD and ZDF and the Kirch Group about the free-to-air broadcasting rights for a range of matches of the next two Soccer World Cups in 2002 and 2006. The Kirch Group holds the world broadcasting rights for these two tournaments.

With the general provision to encrypt, rights holders strive to protect their opportunities to make business on a country-by-country basis, not hindered by the fact, that in some countries they would not be able to conclude profitable contracts, because of the already existing free-to-air availability of the programmes due to the satellite transmission over-spill. While there is no doubt about the necessity of adequate protection for intellectual property rights and the legitimacy to use state-of-the-art technological solutions to do so, general encryption of broadcasting signals is a precarious issue in open, democratic and culturally diverse societies. It is a paradox, that, while new technologies are capable of enhancing the free flow of information as well as the diversity and general availability of digital content in the information society, copyright protection is about to re-nationalise TV content and respective markets. Overall digital encryption will hamper the accessibility of formerly free information. It will boost the digital divide of our societies into those, who are able to pay for access to information, and those, who are not. It will tend to undermine the existence and very essence of free-to-air broadcasting. It is contrary to public service broadcasting. And, to put the issue in the European picture, it will hinder cultural exchange using electronic means across borders thus undermining the European integration process.

As a preliminary solution to the existing dilemma, the public service broadcasting organisations in Germany will refrain from using the acquired World Cup broadcasting rights for digital satellite transmission. As for the future, rights-holders' interests have to be re-balanced with the public interest on a new legal basis. An adequate solution can only be of European scope, since, by its very nature, satellite broadcasting is trans-national. The revision of the current European Cable and Satellite Directive could offer the right opportunity. The current Directive - made for the analogue world - contains the legal assumption that a broadcaster who has acquired the rights for satellite transmission for his own country has also acquired the rights covering the satellite over-spill. It is accompanied by a provision for reasonable remuneration. In the Directive's revision process, it could be foreseen to make this assumption a legally binding rule. Then it would be up to the European legislator to adopt a new regulatory approach towards remuneration taking into account the legitimate interests of copyright holders adequately. Maybe, already existing regulation in the German broadcasting system could show the way for a European regulation of that issue. The German regulation on short reporting rights contains a provision granting fair remuneration to the rights owner of an event which is subject to that right. The fair remuneration has to take account of the character of the right, and it also foresees an arbitration procedure in case the parties cannot agree on a proper price.

IV. European legislation underway

Currently, the European legislator is about to finalise a new set of regulation on electronic communications networks and services. Besides carrying must carry provisions for specified broadcasting services, access provisions concerning technological gateways to electronic communications infrastructures and rules on access to the frequency spectrum, the European Parliament is determined to include a provision making the use of a single, open and interoperable standard for digital interactive TV mandatory in the European Community.

The provisions of the new regulatory package once adopted and transposed into national law of the EU Member States will set the framework for the development for digital interactive TV in general, and for public service broadcasting, in particular, fulfilling its remit based on public interest objectives, such as freedom of information and opinion, media pluralism, cultural diversity, general availability and accessibility of diverse content services etc., in the years to come.

Jürgen Burggraf/23rd November 2001