Digital switchover: EU state aid, public subsidies and enlargement

Wheeler, Mark (2016) Digital switchover: EU state aid, public subsidies and enlargement. In: European Media Policy for the Twenty-First Century Assessing the Past, Setting Agendas for the Future. Routledge Advances in Internationalising Media Studies (17). Routledge, New York, London, pp. 118-135. ISBN 9781315719597


This chapter focuses on the European Union's (EU) Competition Directorate's approach concerning the application of the State Aid mechanism with regard to those Member States who used public subsidies for digital switchover. This paper will show how the European Commission (EC) deployed its competition rules to pursue a normative view founded upon the liberalization of services and the enhancement of consumer needs to ensure economic opportunities. However, it was further required to deliver a framework for social accountability to allow for an equitable delivery of services across a range of different platforms. Therefore, this analysis considers not only how the Directorate’s approach was governed by a market-driven set of rules but also discusses whether it proved to be adaptable enough to encompass the specific requirements of Member States.

For national television markets, the introduction of digital services facilitated a range of technological, economic and social reforms. Most especially, digital television (DTV) operations carried many more channels than their analogue predecessors. Through the compression of data in which eight digital channels used the amount of spectrum previously taken up by one analogue station, consumers could benefit by enjoying a wider degree of choice; improved picture quality and better sound; and a greater amount of flexibility through portable and mobile reception, on-demand and enhanced information services (European Commission, 2005a). In tandem, business opportunities allowed for new market suppliers, a rise in competition, first-mover advantage, alternative forms of delivery and convergence (European Commission, 2005a). In this respect, digitalization became a major pillar in the EU’s i2010 Initiative and within the Lisbon Agenda adopted in 2000.

Moreover, the freeing up of the analogue transmission spectrum meant that a ‘digital dividend’ would be effected as business contractors could buy the channels to pursue commercial gains. In particular, the switching off of analogue broadcasts left a surplus of radio frequencies to be divided into three sub-bands on the available Ultra High Frequency (UHF) band 470–862 MHZ for other applications. These included opportunities for mobile and high definition television alongside the release of 800 MHZ bandwidths for transnational mobile telephony including 3G, 4G and WiMAX (ITU, 2012).

Consequently, between 2003 until 2013, the EU promoted digital switchover for economic gain and consumer benefits. It harmonized digital switchover throughout the range of EU Member States while maintaining the principles of subsidiarity and derogation. Thus, the EC recognised the importance of digital switchover in its 2005 Action Plan eEurope and in three related communications. In particular, the Commission committed itself to the goal of analogue switch-off / digital switchover by 2012.This was problematic, as at the beginning of the switchover process in 2003, 43% of all European households were still only in receipt of analogue-based terrestrial services (Matteucci 2008, p. 3). In the event, a number of Member States (Poland, Hungary, Bulgaria, Greece, Romania) could not achieve switchover by the 2012 deadline (Starks, 2013, p. 92).

Moreover, the EU was confronted by the problem that the exponential take-up by Member States of Digital Terrestrial Television (DTT), Digital Satellite Television (DST) and Digital Cable Television (DCT) services had been differentiated due to specific national governmental frameworks, regulatory structures and market demand (Iosifidis 2011b: p. 162). Most especially, despite the mandatory requirement of technological neutrality, it became apparent that the market-leading DTT platform’s penetration on an EU-wide level was inconsistent and problematic. Such variability within take-up led to questions of potential market failure and the need to affect public subsidies to ensure complete take-up by 2012.

Therefore, Member State governments, regulators and audio-visual actors sought financial support through public subsidies to facilitate analogue switch-off / digital switchover (Wheeler, 2010). This usage of public subsidies triggered the employment of the EU State Aid mechanism to determine whether such an employment of funds was competitive or had unfairly distorted the market between public and commercial television suppliers. Further, there was an underlying concern that such an employment of state monies would lead to ‘mission creep’ in which the values of the market might be absorbed into a wider array of public service provisions (Donders & Pauwels, 2008, p. 295). This chapter will provide a review of these concerns with reference to EC legislation and policy provisions to consider how several State Aid cases concerning digital switchover were considered by the Directorate: The EU … was particularly hawk-eyed on the subject of State Aid for the digital terrestrial platform, where, of course, rival platforms were quick to complain. While national governments could promote a specific digital television technology if this was justified by 'well-defined general interests', e.g., to achieve a fast and efficient switchover, 'policy interventions should be transparent, justified, proportionate and timely to minimize the risk of market distortion'. (Starks, 2013, pp. 76–77)

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