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IP/04/911

Brussels, 14 July 2004

Commission enquiry into State financing of switchover costs to a digital terrestrial television (DVB-T) project in Germany

In order to promote the DVB-project, the Media authority in Berlin-Brandenburg has compensated private broadcasters for the so-called “switchover costs”. The private broadcasters were granted a subsidy in order to make them switch from analogue terrestrial to digital terrestrial television. The new terrestrial digital television network is operated by T-Systems, a subsidiary of Deutsche Telekom AG (DTAG). Triggered by a complaint, the Commission has examined this compensation. At this stage, the Commission feels that the compensation payments may amount to State aid, both to the private broadcasters as well as to T-Systems, the operator of the DVB-T network. The Commission has therefore decided to open a formal investigation procedure. The opening does not prejudice the final outcome of this investigation.

The Media authority in Berlin-Brandenburg promotes the introduction and development of digital terrestrial television (DVB-T) in Berlin-Brandenburg. In order to facilitate the switchover process, the media authority has awarded subsidies to the private broadcasters on condition that they use a T-Systems’ network. This subsidy does not only seem to confer an advantage directly on the private broadcasters but indirectly on T-Systems as well. The Commission’s main concern is the advantage granted to the latter. The intervention allows T-Systems to launch its new service while it does not have to charge the broadcasters at a rate that covers the entire investment costs. Since DVB-T is a technology which competes with digital television by cable (DVB-C) or by satellite (DVB-S) the intervention might distort the level playing field to the detriment of cable and satellite operators.

Deutsche Telekom AG (DTAG) obtained the DVB-T frequencies after a call for tender. As an owner of the frequencies DTAG was obliged to construct and to exploit the DVB-T network, a task undertaken by its subsidiary T-Systems. The broadcasters pay a fee to T-Systems which transmits their TV signal over the DVB-T network to the end-user.

Background

Today’s probe is the first investigation that covers the financing of a DVB-T infrastructure. It is important because the Berlin model of financing the switchover may be implemented also in several other Länder. Nordrhein-Westfalen and others have already adopted (a variant of) the Berlin model. The impact of the subsidy model consequently goes beyond the boundaries of Berlin-Brandenburg.

In addition, other Member States foresee a switchover from analogue to terrestrial television. It is important that such a switchover is in line with the policy line by the Commission stated in the Communication about the switchover from analogue to digital broadcasting[1]. Member State policy interventions should be non-discriminatory and technologically neutral. Otherwise subsidies could jeopardise investments made in alternative networks.


[1] Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions on the transition from analogue to digital broadcasting (from digital 'switchover' to analogue 'switch-off'), COM/2003/0541 final


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