Wednesday, January 14, 2009

Is Romania Bungling Its Digital TV Shift?

businessweek.com

The recent history of Romanian television is little more than a series of foibles. Repeated attempts to depoliticize the public service broadcaster TVR over the past decade have failed woefully, calls for tougher regulation to stem the tide of coarse programs that inundates television schedules are constantly ignored, and nothing has been done to stave off political and business pressures on commercial TV.

The hope was that digital TV would pump fresh blood into this sclerotic market. Digital brings more channels through more efficient use of the frequency spectrum, offers better image and sound quality, and allows greater interactivity. But as in the past, Romanian decision-makers botched it. After two years of dawdling and ignoring well-founded proposals, at the last minute the previous government rushed to amend the broadcast legislation to accommodate the transition to digital. The law lacks clear-cut plans for how to tender the digital licenses and gives the government a big say in the process.

Just days before the parliamentary elections on 30 November in which it was voted out of office, Prime Minister Calin Popescu-Tariceanu's government passed an emergency ordinance on digital broadcasting. The stated reason for the rush was the sudden realization that the country wouldn't make the 2012 deadline recommended by the EU to scrap the analog signal. It looked like a ploy to push through the law it wanted while public attention was distracted by the elections.

"We were lagging behind," Rasvan Popescu, president of the National Audiovisual Council regulatory body, said at a news conference on 25 November.

The hastily formed framework for the switch to digital split experts into opposing camps. A former culture minister, Adrian Iorgulescu, said the government's move would put an end to state control of television signals because broadcasters would be able to choose the "multiplex" of digital channels through which they air their programs.

But a grouping of more than 30 media organizations and trade unions slammed the law, charging that it gave the government control of the country's broadcast market.

Each argument was partly right, but the media people and unionists highlighted a serious danger. True, there will be competition in the digital transmission market; however, the government will retain a major say in the process through appointing its regulators.

The government ignored a proposed digitalization law drafted in consultations among the main stakeholders. Released in October, that proposal emerged from a two-year process involving regulators, broadcasters, and civil society organizations. After an initial draft amendment had been approved by the lower house of parliament but turned down by the Senate in 2007, a new set of amendments, tweaked to accommodate the latest set of EU regulations, was proposed, put up for public debate, refined by the Ministry of Culture under Iorgulescu and then opened again for public debate. The final version released by the ministry was said to have incorporated recommendations from the Justice Ministry and the country's antitrust watchdog. In other words, the country had a fairly good law.

Instead of approving it, the same month, the government amended the law through an ordinance, ignoring the two-year-old bill. "Romania is the first state that has managed to integrate digital services," the National Audiovisual Council's Popescu said. "I am not sure whether Sweden has done that." Along with Luxembourg, the Netherlands, and Finland, Sweden has completed already the transition to digital broadcasting. The Czech Republic and Slovenia are to do so in 2010. Dan Georgescu, the head of the government-controlled regulator in charge of managing the frequency spectrum, admitted that Romania won't reach the 2012 deadline anyway. Along with Bulgaria, Romania is the EU's digital laggard.

The ordinance leaves the licensing process to the mercy of the government or its bodies. Media organizations argued that this process should have started with a public review of the frequencies available.

Some tried to downplay the issue, pointing out that terrestrial digital TV is only a small part of the market, since nearly 80 percent of Romanian viewers are served by cable and satellite broadcasters, which are not covered in the new law. This argument doesn't hold water. Following an agreement on the redistribution of frequencies in Europe hammered out in 2006 by the International Telecommunications Union, Romania received eight digital multiplexes. That means that some 50 free-to-air channels could be made available digitally. The largest existing broadcasters—public service TVR, and the commercial stations Pro TV, Realitatea TV, and Antena1—automatically received digital licenses.

The Romanian television market is vibrant, with many channels. However, broadcasting is concentrated in the hands of four media behemoths: American-owned Central European Media Enterprises (CETV), German group ProSiebenSat.1 (PSMG_p.DE), Media Intact, controlled by Conservative Party Senator Dan Voiculescu, and the Realitatea Media conglomerate controlled by controversial businessman Sorin Ovidiu Vintu. These players divvy up the advertising cash and are closely tied to the country's political and business interests. In this environment, chintzy, lowbrow programs flourish, making Romanian TV among the worst in Europe.

With intelligent planning, digital broadcasting could resettle the market and bring new and better, not to mention free of charge, programs that could entice some viewers away from their paid cable and satellite providers. A new plate of free terrestrial channels, which would include the most popular domestic channels plus new ones, is an attractive proposition. If done right, digitalization would foster competition on the market. But it looks as though the country won't enjoy many of the digital benefits.

Marius Dragomir is a London-based media analyst and the editor of several reports on broadcasting in Europe.

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