Region Focus

Pay digital TV (DTT) in Spain: what's needed for success

With the analogue TV switchover just around the corner, the process of migrating to DTT in Spain is proving to be a major challenge for the whole sector. By March this year, just 50.7% of Spanish homes had access to digital TV according to data from Impulsa TDT, the organisation overseeing the Spanish switchover. While this puts Spain ahead of its neighbours in the switchover race, it’s simply not enough to guarantee that the whole country will be ready to shut down analogue signals completely by April 2010.

What’s more, the many channels that have sprung up thanks to DTT have led to a clear fragmentation of the audience. This has meant a significant decline in advertising revenues for broadcasters, which until recently were their main and almost only source of income.

There was a failed attempt a couple of years ago to launch pay DTT in Spain, but it has now re-emerged at the right time and with a working business model. If implemented and handled in the right way, it’s likely to become a key asset in driving the digital migration process. By offering additional content that is appealing to viewers, it becomes much easier to approach the issue of a collective analogue shutdown. And, of course, it makes it more feasible for broadcasters to supplement their advertising revenues with those resulting from paid-for content.

There’s already a high level of acceptance among industry players that pay DTT is a suitable model. It allows for the creation of a horizontal market and the allocation of roles and responsibilities to each player. This means that broadcasters and operators are responsible for delivering paid-for content while the manufacturers of consumer goods ensure this is designed and marketed across all distribution channels.

Given the success rates of pay DTT in other countries, this is a sensible idea. In Italy, there are more than three million users of pay DTT. In the UK, while there are only about half a million subscribers, there are about ten million DTT receivers in use, almost all of these for Freeview. This demonstrates a clear horizontal market model which other regions can learn from.

The experience in these other markets also highlights the key factors that need to be considered before a horizontal market for pay DTT can be created:

• 1. It’s vital to ensure that sufficiently appealing premium content is available to encourage consumers to purchase it. In Spain this means providing live football content.
• 2. There should be one single certification which is well publicised to let consumers easily identify receivers offering pay DTT. This means creating a certification programme that provides clear and equal standards for all manufacturers.
• 3. It’s crucial to ensure interoperability between receivers. Based on the experience of other markets, the most efficient way to do this is to make sure that DTT receivers which are certified for paid-for content are also compatible with the various service providers and their interfaces. In addition, if new paid-for content is on offer by an operator using a different conditional access (CA) system to the viewer’s receiver, it should still be possible for the user to access the new pay channels without needing to change receiver. Having the appropriate dual-CA software in the set-top box (STB) and then inserting the relevant smart card will help overcome discrepancies.
• 4. Conditional Access Modules (CAM) should be promoted alongside external decoders. These modules are inserted into the PCMCIA slot of integrated digital televisions (iDTVs) to enable access to paid-for content without needing an external receiver. The modules, built into TVs by manufacturers according to EU requirements, have been well received by viewers in that market, with more than half a million units sold in the second half of 2008. At the same time, the modules should also be subject to programme approval and will need to meet interoperability requirements.
• 5. Finally, it makes sense to adapt the technology implemented across all markets instead of creating new technology just for the Spanish market. This requires mature technology that has been tested to avoid deployment issues, especially if it needs to be implemented in a short period of time. It also guarantees buy-in from manufacturers as they’re able to commercialise the same products in Spain as in other markets. The advantage of having synergies and economies of scale is that manufacturers are encouraged to launch their products in Spain and help develop the market.
  

The criteria for success are clear. More importantly, they’re also straightforward for the full pay DTT vision to be realised in Spain. While we’re currently awaiting confirmation from the relevant administrative powers for the changes to happen, we can still claim that the industry is ready to undertake this new phase of development in TV viewing.