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Media in Italy

07/03/2015 - 02:30 PM

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AGCom adopted Decision 181/09/CONS, enacted in article 45 of Law 88/2009, setting the criteria for the LLU digital switchover of terrestrial television networks. On the basis of this measure, the Ministry for Economic Development (MISE) allocated licenses to the digital frequencies. The measure was necessary due to the infringement proceeding 2005/5086 brough t by the European Commission against Italy,which found that problems in the Italian television sector and the monopolizati on of frequencies by RAI and Mediaset needed to be redressed. The infringement proceeding is still pending.
Following the switch-off process, which lasted four years and was concluded on July 4, 2012, the Ministry for Economic Development definitively assigned the digital frequencies.
Specifically, on June 28, 2012, the decision was taken to definitively assign the user rights of digital frequencies for 20 years.
On July 18, 2013, AGCom adopted Resolution 451/13/CONS on the National Digital Frequency Assignment Plan. The new plan involves 22 national networks and reserves channels 57-60 UHF for mobile services, effective immediately. The amendment of the PNAFD also involved a review of the allocations made and the resolution of interference problems and international coordination issues,including replacing channel 60 UHF (which suffers interference from the mobile services on the adjacent band) – allocated to Persidera – with channel 55 UHF.
The substitution is due to be completed by June 30, 2015.
In terms of the steps taken to address the findings of the EU Commission, in 2010 AGCom – via Resolution 497/10/CONS – arranged a ‘beauty contest'for the assignment of the user rights to digital dividend frequencies. However, the contest was canceled on April 28, 2012 with the entry into force of Law 44/12 and replaced with a competitive tender under new rules set out by AGCom in Resolution 277/13/CONS (adopted on April 11, 2013) for three lots of frequencies (L1, L2 and L3).
The only party that participated in that tender – which was carried out in June 2014 and which Persidera (then TIMB) was unable to participate in, because it was incorrectly equated to RAI and Mediaset – was the Cairo group, which was awarded the MUX L3 for 31,626,000 euros.
The allocation of the two remaining frequencies (Lot L1 and L2) not yet awarded has still not been formally decided.
Also under the infringement procedure, AGCom completed the analysis of the conditions and methods of use of the transmission capacity for the broadcasting of audiovisual content, which was aimed at evaluating the possible introduction of must carry obligations for network operators that hold five MUXs.
The analysis showed that, at present, there do not appear to be any problem issues that justify the imposition of must carry obligations at national level.

On September 30, 2014, following a public consultation, AGCom published Resolution 494/14/CONSsetting the criteria for determining the contribution fees for user rights of television frequencies. In particular, it established:
    •The value of Lot L3 of the digital dividend auction (awarded to the Cairo Group), discounted at a rate equal to the rate for 15-year 2013 BTPs, as the benchmark value.
    •An increase of 5% for the second, 10% for the third, 15% for the fourth, and 20% for the fifth MUX, as an anti-monopoly measure.
    •A discount of up to 30% for the DVB-T2 MUX up to 2018.
    •A discount of at least 70% for local operators.
    •A glide path not exceeding 8 years for non-integrated operators (such as Persidera), halved forintegrated operators (such as RAI and Mediaset). During the glid e path stage, the anti-monopoly measure mentioned above will only apply to Rai and Mediaset.
Considering that these contribution fees are additional to the administrative fees and user fees for the backbone network frequencies (Article 34, Article 35 and Attachment 10 of Italian Legislative Decree 259/03), AGCom has suggested that the Ministry for Economic Development conduct a full review of these specific fess to take account of the particular  characteristics of terrestrial television networks.
Persidera, also supported by a legal opinion, has appealed against this resolution as it proposes criteria that would result in values that are unreasonable,discriminatory and out of proportion (approximately 15% in additional expenses on the total market value). The EU Commission has also expressed a similar opinion. In a letter dated July 18, 2014, sent to AGCom and the Ministry for Economic Development, the Commission made several observations on the measure still under consultation, as part of the infringement proceedings no. 2005/5086 concerning television frequencies.
The letter contains a crucial passage in which the Commission reiterates the importance of setting contributions that take account of the characteristics of the Italian television broadcasting market, as it is affected by several factors, including "the advantages that incumbent operators have benefited from the transition to the digital system, as well as subsequently, and in particular, as acknowledged by the Italian authorities in their 2009 proposal, the advantages of incumbent integrated vertical operators that have a significant number of multiplexes".
Persidera deems that the value of the contributions should not deviate from the international benchmark and the comparison with the mobile market:
    • the UK Authority has set the contribution fee for national MUX user rights at approximately 230,000 euros per year, reserving the right to amend these values after 2020;
    • a similar value would be obtained based on the values of user fee contributions for mobile frequencies pursuant to the Electronic Communications Code, adjusted proportionately to the reference market.
The Ministry for Economic Development has issued a decree (published in the Official Gazette on January 19, 2015) establishing that, by January 31, 2015, as an advance for the year 2014, network operators must pay 40% of the amount paid in 2013.
This advance serves to provide income flows to the Government budget, pending the establishment ofthe contribution fee regime to be applied to network operators and service providers, in consideration of the impossibility of matching progressive rates with equal revenue levels, envisaged by Law 44/12, or with the principles of proportionality and non-discrimination, established by the EU regulations.  

Once the global conference on the regulation of the radio spectrum – to be held in Geneva in late 2015(WRC-15) – has been concluded, 700 MHz band frequencies (between 694-790 MHz, corresponding to television channels 49-60 UHF) currently allocated to broadcasting, will be able to be allocated on a co-primary basis to broadband mobile services.
Ahead of this deadline, it is likely that the EU authorities will reorganize the frequency spectrum to enable the development of mobile broadband services, with a consequent reduction in the resources allocated to digital terrestrial television.
The reallocation process, which will presumably take place between 2016 and 2018, will most likely mirror the process implemented the "first" digital dividend for 800 MHz bandwidth, involving the re-farming to other available frequencies or the return of the frequencies in exchange for monetary compensation. There is a remote possibility that, if the right regulatory and technical conditions arise at the right moment, television operators could use these frequencies to provide mobile broadband services.In this regard, the agreement between TI Media and Gruppo Editoriale L'Espresso sets out the procedures through which TI Media will be able to acquire the user rights for channel 55 UHF allocated to the MUX TIMB2.
In particular, TI Media has reserved itself two different purchase options, one alternative to the other,involving: (i) the purchase of the right to use the UHF CH 55 or (ii) the acquisition of the entire share capital of TIMB2 S.r.l., a newly formed company, which,after completion of related approval process, will be awarded this right of use.
Both options may be exercised during the period from June 30, 2016 to June 30, 2019. If right to use the CH 55 is transferred, a rental agreement will be signed between the two companies whose execution is subject to authorization in accordance with current regulations.
On September 1, 2014 Pascal Lamy as Chairman ofthe High Level Group on UHF, formed in January 2014 and consisting of representatives of broadcasters, mobile operators and manufacturers, presented the report on the future use of the UHF spectrum to the European Commission.
The report proposes a "2020-2030-2025" time frame for meeting the objectives of the European DigitalAgenda, providing broadcasters a stable route to invest and grow in the medium to long term, structured as follows:
    •allocation of the 700 MHz band to mobile broadband services in 2020,with a margin of more or less 2 years (2018-2022) to take account of different market situations in the Member States;
    • allocation of the bandwidth under 700 MHz (470-694 MHz) to broadcast services across Europe until 2030;
    • re-evaluation of the scenario in 2025 with an assessment of the state of the market and technology.
This report will serve as an input to the new European Commission, in establishing the spectrum policy, also in view of the ITU-R World Conference 2015 (WRC-15), the outcome of which could lead to more specific and stricter measures being adopted for the Member States.