Der ORF und Digitales Fernsehen

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1 Der ORF und Digitales Fernsehen - -

2 Impressum Owner and publisher: Österreichischer Rundfunk, ORF, Würzburggasse 30, 1136 Vienna Internet: Responsible for the contents: ORF - Direktion Online und Neue Medien Editors: Eva Elsigan, Hans Hrabal, Markus Kreuzbauer, Karl Pachner Translation: Marinos Agathocleous Photos: ORF, APA, C.M. Kreuziger Graphics & layout: Michael Huber Printing: Typo Druck Sares GmbH, Muthgasse 68, 1190 Vienna

3 Table of contents Foreword Digitization Basic principles and aspects of the ORF strategy Digital terrestrial television guarantees unhampered basic TV coverage Full coverage via digital terrestrial television Terrestrial digitization starts in autumn 2006 DVB-T trial: Interactive television and additional digital TV services ORF Digital: Digital television reception via satellite in Austria Satellite television in Austria Historical development The task of full coverage Encrypted, yet accessible to everyone Neutral, attractive broadcasting platform ORF Digital accelerates digitization in Austria Opportunities and problems of digital satellite television ORF Digital: A free market of platforms and products Further development opportunities for ORF Digital Cable TV and television digitization in Austria Important TV platform for urban areas New TV distribution platforms force cable to modernize Cable TV as the ideal platform of interactive multimedia television Digital cable as an important broadcasting platform for ORF Trial with interactive television and digital additional TV services on cable Digital television, public service remit, and interactive additional services Additional benefit and a new media quality through additional TV services Additional services as a special aspect of public information Digital additional services: the gate to a networked world ORF OK topical information content, additional information on programs, interactive elements DVB-H: Digital television for mobile phones Market outlook and user preferences Importance for traditional TV broadcasters Objectives of ORF

4 Foreword ORF General Director Dr. Monika Lindner The digitization of the communication and information industry, and the convergence process in general have fundamentally and permanently changed the way we communicate and how we use, create, or store media. As a result, several products and services have become not only simpler, cheaper, and more comfortable for consumers, but are now technically improved and more diversified. A second decisive change brought about by digitization affects the quantity of content available through these media, since digital production and distribution technologies offer an unprecedented variety of contents. In this context, public service broadcasting can today more than ever before assume the role of a reliable reference, providing audiences with a wide range of content and objective information. At the same time, however, we are faced with an ever increasing degree of complexity, both in terms of technical platforms and terminal equipment, and in connection with software and operating systems, the width and diversity of content, and with regard to production systems. Against such a background, developing and implementing a clearly defined strategy for a digitized environment is particularly important for ORF as an Austrian public service broadcaster, and hence the representative of the interests of the Austrian audience. This task can only be limited to the definition of guidelines that are universally applicable despite the rapid development of technologies on the consumer markets. - -

5 Digitization: Basic principles and aspects of the ORF strategy - As a public service broadcaster, ORF shall deliver its contents on all relevant technical platforms, which comply with the requirements of the Austrian Broadcasting Corporation Act and other sets of rules that apply for editors and producers of ORF (program guidelines, editorial statutes, etc.). - As a broadcasting organisation, ORF basically considers it its duty to deliver and develop its programs wherever broadcasting technology is used. Wherever Digital Video Broadcast (DVB) is used in the digital world, ORF shall provide unhampered access to its television content (TV programs and additional services like, for instance, teletext) as defined in its statutory obligation. Programs must be encrypted whenever copyright laws require this. This applies in particular to digital broadcasting via satellite (DVB-S). Despite encryption, however, access to ORF s television content must remain as easy as possible for Austrian viewers. When choosing third party providers for cooperation, ORF must ensure that the principle of unhampered access is guaranteed in the best possible manner. - Unhampered access particularly refers to the protection of viewers against running costs for the reception of ORF programs in addition to the mandatory radio and television fees. In a wider sense, however, unhampered access also refers to the exclusive use of open interfaces and systems, which allow the creation of non-discriminatory program content. In the interest of its viewers and listeners, ORF therefore basically rejects the use of proprietary platforms and systems. - ORF advocates a radio spectrum policy that will provide broadcasters with adequate resources in view of digitization in the future, in particular with regard to the next Regional Radiocommunication Conference in The shift in spectrum management from a coordinated strategy toward liberalisation and deregulation (spectrum trading) as currently planned by the European Commission, is being rejected by ORF in so far as sufficient spectrum must remain available for broadcasting as a public task even after the switchoff of analogue transmission. ORF cannot subscribe to the Commission opinion that terrestrial broadcasting is substitutable by other platforms, especially in view of the legal obligation by public service broadcasters to provide full coverage terrestrial broadcasting, in particular through new platforms (portable and mobile devices) can ensure compliance with this obligation where satellite and cable coverage is not available

6 - The audiovisual program of ORF depending on the economic and copyright-related restrictions will continue to develop so as to give audiences access to both the current content and to historically valuable ORF libraries using different technologies (conventional storage media, MP3 platforms, other mobile or online services). - The digital world continuously increases the range of products, both with regard to content itself and to channels. On the one hand, this causes an ever growing competition pressure, while, on the other, individuals find it increasingly difficult to navigate through this rising flood of different products and services. The products and services of ORF must take this situation into account and facilitate the audience s orientation through proper content, structure, and preparation. - Since it is impossible to predict when and which technological innovation will achieve a breakthrough in the consumer market, ORF must carefully monitor new developments in the digital world and take responsible decisions on how to invest the radio and television fees it collects. ORF is aware that its decisions may serve as a model for imitation for its viewers, and therefore needs to consider this aspect in its investment plans. The task of ORF is to remain at the leading edge of technology so as to secure the acceptance of public service broadcasting, especially among young audiences, and to avoid seducing audiences into developments that may prove to be blind alleys of information and communication technology. To achieve this, ORF must intensively and seriously deal with the possible consequences of its technology decisions. In the digital age, public service broadcasters require a development guarantee in order to fulfil their public mandate

7 Digital terrestrial television guarantees unhampered basic TV coverage Despite the current distribution of the TV reception market in Austria households served by cable and satellite account for approx. 89 percent, terrestrial television still remains a very important broadcasting platform. By the end of 2005, eleven percent of Austrian TV households were still fully dependant on terrestrial reception. If one includes the analogue satellite TV households that watch German television channels via satellite dish but receive Austrian channels by antenna, almost half of all households currently depend on terrestrial broadcasting for watching Austrian programs. Source: ORF Medienforschung Illustration: APA - 5 -

8 Full coverage via digital terrestrial television ORF s legal obligation to provide coverage shall continue to apply with regard to digitization. ORF is preparing for the challenge: as compared to a technical range of 96 percent in the analogue network, the aim for digital terrestrial television is a coverage of over 90 percent, an incomparably high objective by European standards. Being a public service broadcaster, ORF considers full digital-terrestrial coverage not only an obligation. It also believes that, despite considerable costs, it plays an important role in guaranteeing unhampered access to public Austrian content. After all, ORF holds the well-justified view that continuous unhampered access to basic TV coverage is only possible if television can be freely received nationwide on a platform which is independent from content providers: DVB-T. Consumers will only have a free choice of reception platform (satellite, terrestrial, or cable) and of the desired program content if a largely nationwide terrestrial digital coverage with free-to-air television has been secured. Without the terrestrial platform, however, audiences will be deprived of an essential choice. If terrestrial television is not given the basis for full coverage, television audiences as a whole will lack access to communication services. Therefore, ORF rejects isolated digital solutions and a comprehensive encryption on cable or terrestrial distribution platforms, since they would undermine the audiences right to coverage. Public service television must always remain free-to-air in the areas where its licence fee payers live

9 Terrestrial digitization starts in autumn 2006 For the above mentioned reasons, ORF regards digital terrestrial television, scheduled to begin operation in densely populated areas in autumn 2006, as an essential basic service for Austrian TV consumers. A tender was launched by the Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR) for DVB-T operation in Austria, and the contract was awarded to network operator ORS (Österreichische Rundfunksender GmbH). The latter will be responsible for the development and operation of two multiplexes (technical infrastructure for distributing and bundling the digital programs and additional services combined in a digital data stream), one of which will reach 90 percent of Austrian TV audiences in its final stage, while the other will be limited to densely populated areas and will reach a technical range of approx. 70 percent. Each multiplex can accommodate a maximum of four TV programs; the first multiplex will also contain additional MHP-based TV services by ORF und ATV+, and it will allow the regionalisation of the ORF 2 program for the respective areas of the nine Federal Provinces. In the second multiplex, several capacities were reserved for DVB-H (digital terrestrial television for handheld devices) (February 2006). The main product advantages of DVB-T are: - unhampered access to Austrian television programs without additional costs for fee-paying homes, - portable or mobile television reception, depending on the coverage area, - improved reception quality and greater choice of programs compared to current analogue television, - provision of additional digital services (news, services, program-related information) that deliver real added value for viewers. The introduction of DVB-T in autumn 2006 will be accompanied by a comprehensive information campaign and other incentives for a platform-independent switchover from analogue to digital reception

10 DVB-T trial: Interactive television and additional digital TV services An initial DVB-T trial involving full interactivity was carried out in Graz, the provincial capital of Styria, in The core partners of this trial, which lasted several months, were ORF, Siemens Austria, and Telekom Austria. The project was initiated by the Austrian Regulatory Authority RTR and was co-financed by the Federal Government s Austrian Digitization Fund. The trial involved 150 households in Graz, and, apart from ORF, program providers also included television channels ATV+, Pro7 Austria, Sat.1 Austria, gotv, as well as two regional TV channels, Steiermark 1 and Aichfeld-TV. The market research accompanying the trial delivered the following main results: - In general, viewers attributed a better reception quality to digital terrestrial television as compared to analogue broadcasting. - The participants found the portability of the terminal device to be a particular advantage of this platform. - The additional digital MHP (Multimedia Home Platform) services proved very popular, and participants made intensive use of both the familiar, teletext-like information content and of the new additional program-related services. - The households participating in the trial showed greater interest in digitization than before involvement with the new technology helped increase their awareness. Both the results of the Graz trial and the digitization reports of the regulatory authority were used in the subsequent broad discussion organised by the Digital Platform Austria, and they will also be considered in the actual implementation of the rollout plan when DVB-T is launched in Austria in autumn

11 ORF Digital: Digital television reception via satellite in Austria Satellite television has lead to an explosive increase of program content in private households, while digital broadcasting has helped optimize distribution capacities. Satellite television in Austria Historical development Satellite television broadcasting began in Europe in In 1988, analogue satellite television in Austria was first included in the Teletest system (electronic viewer counting system). - In 1992, satellite reception reached a two-digit market share (14 percent). - In 1998, satellite television surpassed the long established cable TV reception in Austria for the first time. When ORF launched the digital distribution of its programs over an ASTRA satellite with ORF Digital in 2000, satellite reception had already reached 43 percent, further increasing to 50 percent or 1.6 million households in The task of full coverage ORF started the operation of ORF Digital at the beginning as a digital satellite bouquet for ORF 1, ORF 2 (in all nine versions for the federal provinces) and the special-interest channel TW1 with the intention of providing a technically flawless reception of ORF programs (full coverage) to those households that, due to Austria s geographic situation, could not be adequately supplied by the terrestrial network despite its high level of coverage. In the planning phase of ORF Digital, the number of homes with reception problems due to their geographical position was estimated at 100,

12 In der Planungsphase von ORF Digital war man von etwa Haushalten mit topografisch bedingten Empfangsproblemen ausgegangen. Source: ORF Digital Illustration: APA Encrypted, yet accessible to everyone Due to copyright obligations, ORF is compelled to encrypt the programs it broadcasts over satellite. This is necessary because ORF only purchases broadcasting rights for Austria and South Tyrol, and must therefore prevent reception of its programs in neighbouring Germany, where the same language is spoken. Therefore, ORF encrypted its satellite bouquet with the Betacrypt system between 2000 and 2002, and has been using Cryptoworks as the main encryption system since Despite this technical measure, however, ORF makes sure that ORF Digital is and will remain basically accessible to all Austrian viewers. Accordingly, Austrian households must merely furnish proof of the mandatory radio and television registration and make a one-time payment for the remuneration of registration costs and the delivery of the ORF Digital smartcard in order to obtain access to ORF Digital. No additional regular payments are necessary to receive ORF Digital, since reception is covered by the radio and television fees. ORF Digital thus complies with the ORF s self-conception and obligation as a public service broadcaster to make programs freely accessible in its coverage area

13 In addition, ORF also operates ORF 2 EUROPE, a free and unencrypted channel broadcast over ASTRA, which can be received outside Austria as well. ORF 2 EUROPE broadcasts the existing ORF 2 program in unchanged form, provided that ORF holds the rights for unencrypted satellite broadcasting for the respective program. Its Austrian news programs and shows are equally addressed to Austrians living abroad and to the people of other EU countries. Neutral, attractive broadcasting platform The technical umbrella of ORF Digital, which grants competitors the same broadcasting conditions as with its own programs, also accommodates the commercial broadcasters ATV+ and gotv (a special-interest music channel). As a result, ORF Digital has become a neutral, non-discriminatory broadcasting platform for competitors from Austria that is highly attractive for both viewers and broadcasters, illustrated by the fact that ORF outsourced satellite operation to ORS (Österreichische Rundfunksender GmbH) in This clearly delimitated satellite and thus platform operations from ORF s program activities in every respect. ORF Digital now benefits all major participants in the Austrian television market and hence the business sector of the Austrian content industry, while remaining open for new broadcasters. ORF Digital accelerates digitization in Austria Due to the introduction of ORF Digital in August 2000 and the conversion process from analogue to digital launched by a Pay-TV provider the year before, digital receivers very soon replaced analogue devices, at least in those cases in which new equipment was purchased. In 2000, 82 percent of all satellite receivers sold in Austria were designed for analogue reception (total quantity in 2000: 146,000 units), dropping down to a mere 13 percent in 2005, although the total volume almost doubled (271,000 units). Digital satellite television (and along with it ORF Digital) achieved the decisive quantitative leap in 2003, when Cryptoworks replaced Betacrypt as the encryption system. This system change brought a wider range of set-top boxes to the market and led to a decrease in the prices for reception equipment. So while average prices for digital reception equipment were halved between 2002 and 2005, sales in the same period almost quadrupled. This indicates that the product group is subject to considerable price elasticity. Therefore, the decision to opt for an independent encryption system has brought a considerable benefit for consumers, television broadcasters and equipment manufacturers alike

14 Source: Fessel+GfK Illustration: APA Opportunities and problems of digital satellite television The increase in sales of these set-top boxes, however, cannot be merely attributed to falling prices. Since these receivers are suitable for the reception of all free-to-air television programs broadcast via ASTRA, buying a digital satellite receiver also enables Austrian viewers to gain access to well over hundred television channels from all over Europe and hence to countless products and contents from other EU Member States

15 This also opens market opportunities for content producers outside Austria, since all so-called program windows offered by German commercial broadcasters (containing advertisement for the Austrian market) can be used on the receivers suitable for ORF Digital reception. This, however, leads to an increasing loss of advertising revenue for the refinancing of Austrian content production, which presents a problematic development from the point of view of the Austrian television market and its production capacities, since so far Austrian content production for these program windows of German broadcasters is still modest compared to the outflow of advertising revenue from Austria. ORF expects that this issue will be resolved in a constructive manner in connection with the review of the Television Directive in favour of smaller peripheral EU Member States, geared toward protecting national content production. Unhampered reception of television programs via satellite can constitute an important link between the populations of the Member States of the European Union. Therefore, it is in the best interest of Europe s citizens to maintain a wide range of general programs and special-interest television channels freely accessible without technical barriers, not only because of the resulting chances and opportunities for the content industry, but also in promotion of European integration on the level of consumers

16 ORF Digital: A free market of platforms and products ORF Digital constitutes a proof that the digitization of satellite reception is not necessarily the result of market activities of Pay-TV providers. Although in some EU countries, especially Great Britain, the market success of digital satellite television is directly linked to the respective leading Pay-TV provider, digitization must not necessarily mean that freely accessible contents have to lag behind, something that particularly applies to sports programs. Apparently, it is possible to eliminate the association that many consumers make between digital and pay subscription, which is problematic and has a negative impact on viewer acceptance, and thus to ensure the audiences freedom of choice. This is not only important in terms of democracy and technology, but it is also decisive for lowering the acceptance threshold of digital television among consumers. Österreichische Rundfunksender GmbH (ORS), which operates the ORF Digital platform on behalf of ORF also works for other broadcasters. The open nature of this platform encourages the use of these services by the audience. In contrast, a Pay-TV provider is operating its own technical digital platform for satellite reception. The small size of the Austrian market does not seem to pose a barrier for the development of competition, so that there is no economic necessity to establish monopolistic reception structures like the ones currently (early 2006) being debated in Germany. Despite the fact that or rather because the platforms of ORF and the Pay-TV provider are different both in terms of technology and content and entail different overall costs for the consumers, developments in the Austrian reception market prove that both ORF Digital and the competitor have room for growth. So freedom of choice for the consumers is, indeed, an important factor for the success of a technology on the market

17 Further development opportunities for ORF Digital The development of ORF Digital as a broadcasting platform, which started in 2003, is far from being completed. The growth potential of the satellite reception platform, however, tends to diminish compared to the overall number of households, since the number of cable households remains stable, and there seems to be little direct competition between reception platforms. The evolution of ORF Digital will largely come from the replacement of existing analogue receivers with digital satellite receivers. However, this does not alter the fact that, for the time being, satellite reception in Austria shall remain the main drive behind the digitization of broadcasting. Although almost a third of all satellite households currently own digital receivers, the percentage of digital receivers among cable homes is well below five percent. Although digital-terrestrial television (DVB-T) in Austria will not be launched until the second half of 2006, it will be available in all densely populated areas. Therefore, one can expect a widespread success for digital-terrestrial television in the period 2006/2007, particularly since new additional MHP-based (Multimedia Home Platform) digital television services will render the new platform more attractive. Despite this, ORF expects that the conversion trend from analogue to digital satellite reception will continue. As soon as they become widespread via terrestrial broadcasting, ORF s new additional MHP-based services will also be broadcast via satellite. These additional services are essential in replacing analogue teletext, which constitutes a major source of information for citizens in Austria. These new services will be of decisive importance in providing information and shaping public opinion in Austria and therefore must be and, in part, are already subject to the same provisions and regulation criteria that apply to public service television

18 Cable TV and television digitization in Austria Being public service television programs, the ORF 1 and ORF 2 channels are fed into every cable TV network in Austria. Just as in most European countries, cable networks in Austria are obliged to accommodate public service channels in accordance with the so-called must-carry regulation. Important TV platform for urban areas By mid-2005, 39 percent of all Austrian households received their programs via cable, having access to an average of 35 analogue channels. This makes cable TV the second most important television broadcast platform, just a few percentage points behind satellite reception. Yet the importance of cable networks as a distribution technology for television programs is far greater in urban areas. As to the distribution of digital television channels, however, the 130 or so cable network providers in Austria currently lag far behind the range available via satellite. In 2005, almost 500,000 households received their television programs in digital quality via satellite. In comparison, only a few thousand cable customers currently receive digital television. This may change soon, since the technical capacities of many an Austrian cable network allow for a very quick conversion to digital television. In fact, most of the large and medium-size cable network providers are already offering digital program and service packages to their customers. In general, it can be observed that the so-called triple play (the complementary package of television, broadband Internet, and fixed telephony via cable) is already a technical reality in most Austrian cable households. For this reason, the digitization of cable TV reception may be implemented at a comparably fast rate

19 New TV distribution platforms force cable to modernize In view of the strong growth in digital satellite TV reception, but especially because of the imminent availability of other reception technologies (broadcasting of TV programs and additional TV services, and of video-on-demand [VoD] via IPTV, also as a triple play in combination with conventional telephony and broadband Internet), the pressure on cable network providers to deliver digital program bouquets is mounting. In addition, the reception market will dynamically develop as a result of the imminent digitization of terrestrial TV broadcasting (DVB-T) and through new forms of television such as TV-like UMTS products, which are being offered by mobile phone network providers. Finally, the emergence of new cable-like distribution technologies is leading to a disintegration process among network providers: not only Austria s largest fixed telephony provider is planning a cable-like nationwide competition product to conventional analogue cable TV, the largest cable network provider in Austria currently operating in Vienna, Graz, Klagenfurt, and Wiener Neustadt also intends to develop a nationwide product together with an IPTV provider, which will be competing with other cable TV providers in their own local markets. Cable TV as the ideal platform of interactive multimedia television Among the three conventional television reception platforms (terrestrial, satellite, cable), however, cable TV is technologically best equipped to face the challenges of the digital television age with new products and very promising innovative business ideas: Installed for the first time 20 years ago, most television cables, at least those owned by the large cable TV providers, already use fibre optic and coaxial technology. This does not only facilitate their upgrade to digital technology. The cables can also be used in bidirectional mode. The return-channel function inherent in cable technology allows both the transfer of data to customers and from customers to external data centres. Therefore, the integration of Internet products via cable in addition to the TV channels proved an obvious business for cable network providers, just as cable-based fixed telephony did

20 Cable television presents a similar potential in connection with the expansion of TV-relevant products into the digital television world. Especially with regard to interactive program elements or additional TV services, such as votings, quiz shows, or video-on-demand services, the cable platform enjoys an advantage over satellite and terrestrial broadcasting due to the technical conditions it offers (the already existing, uniquely attributable return channel). TV-related additional services, as they are now becoming available through the digitization of television, are virtually tailor-made for the digital cable platform. Apart from delivering all forms of content-related interactive television, the development and use of cable s full return-channel capability also offers the possibility of TV shopping, TV banking, TV betting, or interactive TV advertising, all these being new activities and business fields for innovative cable network providers. Although these new business fields are not relevant from the point of view of public service broadcasting, the focus of cable operators on new return-channel product models, as described above, can be of great significance for the continued success of a proven technical platform required for the reception of public service television programs. Digital cable as an important broadcasting platform for ORF In the digital age, cable television will continue to play a significant role for ORF and other content providers. As a result of its greater comfort and technical reliability, audiences enjoy particular advantages in television reception. In addition, the digitization of networks is facilitated by the fact that Austrian cable network providers as opposed to Germany do not suffer from technological structure problems (such as, for instance, classification in different network levels) that could hinder digitization. Of course, one may not ignore the fact that cable television involves running costs and is not available everywhere. Therefore, even if cable networks step up their development pace, they cannot replace digital-terrestrial basic coverage for unhampered access. Besides, cable television today is used only by those who are not satisfied with the television content available through the terrestrial platform. Therefore, DVB-T and digital cable television coexist in a complementary fashion and present clearly different performance parameters. However, the decisive factor for the digitization of cable networks in Austria and for the resulting consequences for program providers will be whether or not digitization is carried out on the basis of open standards and interfaces

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