Your ref Our ref Date

Transcription

1 EFTA Surveillance Authority Rue Belliard Brussels, Belgium Your ref Our ref Date 16/ The Ministry of Cultures answers to questions about the digitization of radio The Ministry of Culture refers to letter from The EFTA Surveillance Authority of 23. February 2016 regarding the digitization of the national radio-network in Norway. Please find below our answers to the questions in your letter. 1. Can you confirm that the Norwegian government plans to close partially the FM Network by 2017 and to phase out the remaining FM Network by 2022? According to Meld. 8 St. ( ) the Norwegian proposal for the digitization of radio, the digitization of radio should be industry driven and leave technology choices to the industry. The role of the authorities is to facilitate digitization in general by setting up criteria's after which the Government will allow the national broadcasters to switch off their FM-transmissions. The following three conditions were absolute: Digital coverage for the NRKs radio services correspond to that of NRK P1 on FM. Riksblokk I must cover at least 90 % of the population. The digital radio offer must represent added value for the listeners. Postal address Office address Telephone* Department of Media Our officer PO Box 8030 Dep Akersg Policy and Copyright Anders Huitfeldt NO-0030 Oslo Vat no postmottak@kud.dep.no

2 In order to allow for analogue switch off in 2017 for the national broadcasters, two additional conditions had to be fulfilled: Affordable and technically satisfactory solutions for in-car radio reception must be available. At least 50 % of daily radio-listeners employ digital platforms, exclusively or in combination with FM- In April 2015, the Ministry of Culture concluded that all conditions are fulfilled after receiving reports from The Norwegian Media Authority and Norwegian Communications Authority. The ministry therefore allowed the national broadcasters NRK, P4 and Radio Norge to switch of their FM-transmissions during Furthermore, according to Meld. St. 24 ( ) 23 licences for commercial local radio on FM in the four biggest cities will not be announced again after the current licences expires in As stated in our letter to Norsk Lokalradioforbund of 4 December 2015 there is no decision to phase out the remaining 215 licences for local radio on FM after All these licences have been prolonged to 2022, but the Government has not decided whether these licences should be announced for another period after Both white papers received support from most of the political parties in the parliament. 2. If yes, could you elaborate on the reasons which have led to this decision? As stated in our answer to question no 1, there is at the moment no decision to phase out the entire FM-network. The reasons for the partial phase out are elaborated in our answer to question no If yes, could you indicate the different legislative or administrative acts adopted or under preparation in order to implement the closing down of FM radio network? As stated in no 1 the digitization of radio should be industry driven and there is no decision to phase out the FM-network. According to Meld. 24 ( ) the requirements for local radio on FM will be significantly liberalised in order to secure a level playing field for analogue and digital radio. The Media Authority will soon publish a public consultation of the amendments in the Broadcasting and on-demand audiovisual services regulation (no. 153 of 28 February 1997) liberalizing the requirements for local radios on FM. On 19 February 2016 the Ministry adopted an economic support scheme in order to promote the digitization of local radios (Forskrift om tilskudd til lokale lyd- og bildemedier). The scheme applies for different digital distribution platforms. The regulation is arranged according to the Commission regulation No 1407/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de Minimis aid, and therefore exempt from notification to the Authority. 4. Can you confirm that DAB technology will replace FM radio after 2022? Page 2

3 No, please refer to our answer to question no Will the AM network be phased out as well? The AM-network has still a limited use in the northernmost parts of Norway and there is currently no plan to phase out the entire AM-network either. Yes. 6. Will it be possible to sell FM radio transmitters and receivers in Norway after 2022? 7. Please consider how the phasing out of the FM Network complies with the principle of technology neutrality as laid down in Article 8 (1) of Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (OJ L 108, , p.33-50). The Ministry does not agree with the premises for this question and refers to our answers to question no 1. According to directive 2002/21/EC Article 8 (1) national authorities shall "take all reasonable measures ( ) proportionate to those objectives" in order to promote competition by inter alia "ensuring that end users ( ) derive maximum benefit in terms of choice, price and quality", "ensuring that there is no distortion or restriction of competition in the electronic communications sector" and "encouraging efficient investment in infrastructure, and promoting innovation". The Ministry underlines that the primary goals of the digitization of radio are to promote greater competition and to ensure increased diversity and increased content in broadcasting. Digitization involves a transition from a licensing regime whereby only one public service broadcaster (with three radio channels) and two commercial radios (P4 and Radio Norge) have the right and ability to send nationwide or near nationwide radio, to a digital terrestrial network potentially allowing for up to nationwide (that is at least 92 percent household coverage) radio channels. Equally, the local radio block within the DAB network allows for up to 15 to 20 local radio stations in each region, while in the FM network there was only room for a handful of radios in each area. The Ministry emphasises that the Government's policy of digitization is to allow the industry for a choice of technology and that the Government is fully committed to the principle of technology neutrality. The role of the Government is not to adopt a specific technology for digital radio, but rather to facilitate digitization in general by setting up criteria for switching off the national FM-network. This has been the Ministry's overarching approach in all relevant white papers including St. meld. nr. 62 ( ), St. meld nr. 30 ( ), Meld. St. 8 ( ) and Meld. St. 24 ( ). In Meld. St. 8 ( ) the Ministry on Page 3

4 page 38, 48 and 52 states the policy of leaving technology choices to the industry. The coverage criteria is therefore not linked to a specific digital technology but formulated as digital coverage: "Whether the digital coverage of NRK radioservices corresponds to that of NRK P1 in the FM-network". The choice of digital technology in order to fulfil the criteria of digital coverage was left to the industry, see page 41: "The Ministry finds that a criteria for coverage should not be linked to a specific technological platform at the moment.( ) The central consideration for the authorities must be to secure that everybody in the country gets a good digital radio offer." In 2014 the Ministry took note of NRKs agreement with Norkring for a renting capacity in a DAB-network until 2031 with a digital coverage that corresponds to that of NRK P1 in the FM-network. The Ministry thereby concluded that it was not necessary for the Norwegian Communications Authority to measure the coverage of other digital technologies in order to assess whether the digital coverage criteria was fulfilled. The Ministry's role was therefore not to assess whether other digital technologies where suitable or not. Although the DAB-network secures the whole population digital radio, the radio industry also uses several other digital distribution platforms such as streaming via broadband and mobile broadband, radio via the digital terrestrial TV-network (DTT) and radio via cable-tvnetworks and radio via satellite-tv networks. Since 2006, the Norwegian Communications Authority has issued licenses for testing of several other digital technologies such as DRM, HDRadio and FM Extra (now referred to as VuCast). All of these licences have now expired and the former licensees have not applied for renewals. We therefore consider that other technologies has not been discriminated and that our policy is in line with directive 2002/21/EC article 8 (1) and that considerable effort has been made to "encouraging efficient investment in infrastructure, and promoting innovation" according to (2) litra c. DAB has been in use in Norway since 1995 and has since 2005 been the preferred standard for the industry. We refer to the report "Digitalradio i Norge" 1. In the report Norsk Lokalradioforbund P4, Kanal24 (Radio Norge), NRK, Norkring and Elektronikkbransjen (Consumer Electronics Trade Foundation) participated in a working group led by the Norwegian Media Authority concluded: The working group has studied all of the better-known standards and technologies, taking into consideration the developments since DAB (Digital Audio Broadcasting) was introduced. The working group concludes that DAB will clearly be the most flexible and economic main platform for digital radio in Norway. The working group, including Norsk Lokalradioforbund (the complainant) also concluded that the authorities in consultation with the operators must decide upon a specific date for switching off the analogue radio transmissions. Several local radios already broadcasts in DAB and local radio entities gained a majority of licences to operate DAB-networks for local radios at the auctions held at 15. March Summary in English, page 29, published 19. December 2005 Page 4

5 In our view, the principle of technology neutrality cannot preclude the Government from taking account of the fact that a DAB network now is established, that DAB-radios are widely available in the consumer marked and that a large audience has bought DAB-radios and use this technology as their preferred digital platform. We therefore consider that our policy is in line with directive 2002/21/EC article 8 (1) and that considerable efforts has been made to ensuring that the users derive maximum benefit according to (2) litra a. The Ministry refers to article 1 (3) of directive 2002/21/EC where measures to pursue audiovisual policy are emphasized: "This Directive as well as the Specific Directives are without prejudice to measures taken at Community or national level, in compliance with Community law, to pursue general interest objectives, in particular relating to content regulation and audio-visual policy." The Ministry also recalls that the objective of technology neutrality is not an absolute one, as clarified by Directive 2002/21/EC amended by directive 2009/140/EC article 8 (1) with states that member states "shall take the utmost account of the desirability of making regulations technologically neutral". According to article 9 (3) and (4) litra d, Member states may "provide for proportionate and non-discriminatory measures" by requiring that "an electronic communications service to be provided in a specific band ( ) shall be justified in order to fulfil ( ) the promotion of media pluralism, for example by the provision of radio and television broadcasting services". 8. Are you aware of another EEA State that plans to discontinue the FM network? In countries such as Denmark, United Kingdom, Belgium, Germany, the Netherlands, Poland, Italy and Ireland, DAB is the preferred technology as a digital terrestrial free to air network. There are concrete plans to discontinue the FM-network in United Kingdom and Denmark in the EEA as well as Switzerland outside the EEA. 9. Please state the reasons why it has been decided not to have the FM radio Network and DAB coexisting? The Ministry underlines that Norway's topography and settlement pattern with small communities more or less all over the country require over 3000 transmitters in the national FM-network to fulfil the Government's coverage obligation of 98, 6 % for NRK and 90 % for commercial radio (Radio Norge). The national DAB-network has better coverage compared to FM with 952 transmitters while carrying eight times more radio channels, making DAB a much more cost- effective distribution system compared to FM. Nevertheless, Norway's topography and settlement pattern requires the world's most extensive DAB-network serving a population of only 5 million. In United Kingdom with a population of about 60 million, the BBCs DAB-network (97 % coverage) has 400 transmitters while NRK (99, 5 % coverage) has 762 transmitters. The commercial DAB network in United Page 5

6 Kingdom (91 % coverage) has 155 transmitters, while Riksblokk I in Norway (90 % coverage) has 190. The relative cost for operating the DAB-network for NRK in Norway is more than 20 times higher than for the BBC network in United Kingdom per potential listener. The relative cost for operating Riksblokk I DAB-network in Norway is about 15 times higher than the commercial DAB-network in United Kingdom, per potential listener. NRK and the two national commercial radios, P4 and Radio Norge, have stated that simulcast on FM and DAB is too costly and could only be maintained for a limited period. As of 2015 the annual extra cost of broadcasting on FM for NRK is estimated to NOK (2015), while the cost for the two commercial nationwide radios is estimated to NOK (2015). However, the FM-network has been maintained to be in use until 2019 without reinvestments. It is highly probable that the costs will increase substantially in the longer term. In 2011, it was estimated that a prolongation of the FM-network until 2031 would cost approximately the same as the establishment of a new DAB-network with the same coverage. Because of the high cost of maintaining the FM-network and the relative high cost of establishing a DAB-network, the digitization in Norway is dependent upon a swift and coordinated plan for analogue switch-off, where all national broadcasters and major commercial local radios end their FM-transmissions at the same time. The analogue switchoff for these radios is coordinated with the expiry of the licences for commercial radio. This means that no licence is called back. If one or a few of the major radio networks for FM was to be announced for an addition period, those licence holders could easily steal listeners that have not yet converted to digital radio and reduce the listeners incentives to digitize. This would in turn spoil the incentives for investment in digital radio technologies and undermine the digitization process. All of the current licence holders of the above-mentioned radios except one already broadcast in the DAB-network. The one local radio not currently broadcasting on DAB has the opportunity to broadcast on DAB at similar costs as in FM. 10. Do you consider to impose DAB standard only or other standards as well? The Ministry does not agree with the premises for this question, as the government has not imposed the DAB-standard. Please refer to our answer to question no Have you considered the application of Directive 1999/5/EC of the European Parliament and of the Council of 9 March 1999 on radio equipment and telecommunications terminal equipment and the mutual recognition of their conformity (OJ L 97, ,p. 1G-28)? Please refer to our answers to questions nos 1 and 6. The Ministry would also like to point out that according to directive 1999/5/EC Article 1 no. 4 and Annex I no. 4 the directive does not apply for "Receive only radio equipment intended to be used solely for the reception of sound and TV broadcasting services." 12. As there will be no market for FM radios in Norway, FM radios from other EEA States will not be able to enter Norway. Please explain, if you consider this a Page 6

7 restriction on the free movement of goods and/or establishment, irrespective of whether or not this is the case, please explain why the potential restriction on the free movement of goods and establishment should be considered justified. The Ministry does not agree with the premises for this question. Please refer to our answers to questions nos 1 and 6. The supervision of frequencies is regulated in electronic communication directives, which gives the authorities the task to adopt a national plan for the use of the electromagnetic frequency spectrum. The Electronic Communications Act Section 6-1 stipulates that the Government shall adopt a national plan for the use of the electromagnetic spectrum. One of the main objectives of a national plan is to promote the efficient use of society resources. The primary goals of the digitization of radio are to promote greater competition and to ensure increased diversity and increased content in broadcasting. Digitization involves a transition from a licensing regime whereby only two market players had the right to send national commercial radio, to a digital terrestrial network potentially allowing for up national radio channels. Equally, the local radio block within the DAB network allows for up to 15 to 20 local radio stations in each region, while in the FM network there was only room for a handful of radios in each area. The Ministry is of the opinion that as the Norwegian Government`s approach is consistent with the directives in this area, the approach will also be consistent with the general rules of the EEA Agreement. Furthermore, we wish to refer to the fact that the digitization of both the terrestrial TV network and radio network has been an area of priority within the EU. We refer to the European Commission's communications On The transition from analogue to digital broadcasting (from digital switchover to analogue switch-off ) [SEC (2003)992] of 17. September 2003: Replacing analogue broadcasting with a system based on digital techniques presents huge advantages in terms of more efficient spectrum usage and increased transmission possibilities; these will lead to new services, wider consumer choice and enhanced competition. These advantages are underlined in the Action Plan eeurope The objective of this Action Plan is to provide a favourable environment for private investment and for the creation of new jobs, to boost productivity, to modernise public services, and to give everyone the opportunity to participate in the global information society. eeurope 2005 therefore aims to stimulate secure services, applications and content based on a widely available broadband infrastructure. In this context, the European Commission takes an active interest in the development of digital television and, more generally, in the future of digital broadcasting and in the migration to this new technology. However, the Commission does not take any position on the timing of analogue switch-off, which is a matter to be decided at the level of the Member States or of the regional authorities. With regard to the consideration for providers of radio receivers, the European Commission's communications on accelerating the transition from analogue to digital broadcasting [SEC Page 7

8 (2005)661] of 24. May 2005 recalls the advantages from the Communication of 2003 and points out the benefits of digitization for the equipment market: "Switchover will stimulate innovation and growth of the consumer equipment market, and contribute to the renewed Lisbon agenda." The Ministry underlines that there is no decision to phase out the entire FM-network and that are no restrictions on the selling of FM-radio transmitters. It should also be noted that the vast majority of DAB receivers available in the retail market in Norway also support FM. Nevertheless, the Ministry refers to the digitization of terrestrial television supported by the European Commission. As a result of the digitization of TV in Norway during the period between September 2007 and December 2008 as well as in several other European countries, it became very difficult to sell pure analogue TV-receivers. Similarly, when the NMT networks were closed down respectively in 2001 (NMT 900) and 2005 (NMT 450), the markets for NMT-450 and NMT-900 phones disappeared. Turning more concretely to the free movement of goods, the Ministry notes, first, that the relevant EEA rules relevant for the digitalization, including the secondary legislation must be considered in context and as a whole when applying Article 11 and 13 EEA. The national measures promote the overall aims of the general and more specific EEA regulation; in particular increased competition and diversity. As long as the national measure is compatible with more specific EEA legislation, and there is no ban on the use of FM-network and FM radios, the Ministry questions whether there is a relevant restriction under Article 11 EEA. If one had to consider the impact on radios and other items more specifically, a possible restriction, should one be found to exist, would in any event be legitimate and proportionate based on the said objectives. As regards freedom of establishment for radio channels the primary goals of the digitization of radio are, as already mentioned, to promote greater competition and to ensure increased diversity and increased content in broadcasting. Digitization involves a transition from a licensing regime whereby only two market players had the right to send national commercial radio, to a digital terrestrial network potentially allowing for up national radio channels. Equally, the local radio block within the DAB network allows for up to 15 to 20 local radio stations in each region, while in the FM network there was only room for a handful of radios in each area. The Ministry refers to the fact that NRK in FM disposed approximately 2/3 of the capacity, while NRK will only allocate 1/4 of the capacity of the DAB. This illustrates that the entry possibilities for commercial radios has been greatly improved as a result of digitization. In the analog licensing regime, the only possibility to establish radio in Norway was by purchasing one of the existing licensees or by waiting until a new tender was being announced every seven years. Digitization involves a significant simplification for the radio industry, as one will switch from a system of licenses being awarded by beauty contests to an arrangement whereby all radios that enter into an agreement with the entity, which has the capacity of the transmission network (normally the plant licensee), are automatically assigned a license. In Page 8

9 practice, the system works as a registration scheme. Internet radio is an important distribution platform beside DAB. A full freedom of establishment applies for Internet radios and there is no requirement of registration. In addition, the cost of establishment as an Internet radio is very low. Both FM and DAB network use frequencies that ultimately are a limited resource It is therefore necessary to have some form of access control / licensing system. The right to require concessions is provided by electronic communication directives / telecommunications package. The Ministry is of the opinion that if the procedures laid down in these specific rules are followed, then the overall EEA legal regulations must be considered to be fulfilled. Hence, if any restrictions on the freedom of establishment were found to exist, it would be legitimate and proportionate based on the said aims of increased competition, diversity and broadcasting content. 13. Do you plan to notify national measures related to the phasing out of FM radio networks under Directive 98/34/EC of the European Parliament and of the Council of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations (OJ L 204, , p )? The Ministry does not agree with the premises for this question. We refer to our answer to questions nos 1 and 4. There are no national restrictions on the selling of FM-radios in Norway. Furthermore, according to directive 98/48/EC article 1 and Annex I to directive 2015/1535/EU, the directives do not apply for "radio broadcasting services". Yours sincerely, Øyvind Christensen Deputy Director General Anders Huitfeldt Senior Adviser This document is authorised electronically by the Ministry of Culture and requires no handwritten signature. Copy: Samferdselsdepartementet Postboks 8010 Dep 0030 OSLO Page 9