By Serge Henri Saint Michel

France is still thinking about DTTV, unlike other countries such as the UK, Spain and Sweden who have already launched it. The shift to digital is not only a technical upgrade, but also a tricky strategic and political choice.

On October 23, the French regulator (CSA, for Conseil Supérieur de l'Audiovisuel) chose the DTTV channels after many months of struggle and lobbying in which "big money" worries prevailed over consumer expectations and needs, and technical elements over digital development towards the customer.

French DTTV: legal roots

The Senate first had the idea of developing DTTV. Then it was taken over by the government which wanted a law to be passed, the final text of which was ratified in August 2000. The government and the Assembly, politically on the left, gave this law its political positioning.

"Public service first", was the motto of this law, which planned up to 12 Public service channels and local channels, but left the Government free to choose the additional Public service channels.

The law specifies that the existing private channels (TF1, M6 and Canal+) will be simulcast and that they will be able to choose a "bonus channel" without waiting for the regulator's decision ; therefore TF1 has chosen LCI (news), M6 : M6 Music and C+ : i>Television (news).

The law aimed to build legal and economic barriers to "big guns" like TPS, C+, Hachette, by July 2001, in order to avoid a sort of oligopoly, harmful for the cultural diversity (according to the previous government).

These rules limit the number of licence assignments , the share holder's part in editors , the maximum coverage (in inhabitants) for local channels, and the degree of media concentration . But this law is being circumvented by cross-capital structures.

From the beginning, the existing analogue channels swiftly opposed these laws and the upheavals it would cause to their market. DTTV it seems, raises many questions.

Many questions yet to be answered

Costs and politics are the major questions. Concerning costs, the players wonder who will pay for the frequencies adjustments and high-point upgrading (thought to be between E45m and E300m) and who will finance the multicast. They have also requested a lower commitment towards local production and lower fees for editors.

On their side, editors have tried to open the door to new advertising resources while the advertising market is in a slump; producers say DTTV will increase the power of the big players, reducing their margins. Cable and satellite operators consider DTTV as a "too early" competitor, and have threatened to reduce their investments in ISPs.

In doing so they have attracted the Government's attention to the problems that DTTV could hold for their own still developing market. With regard to this political dilemma, the government has to determine the areas of Public service coverage.. and to trigger the market off. These elements have led to strong lobbying strategies, during the hearings, and up to the present moment.

The CSA hearings

In June 2002, the regulator had heard 65 candidates for 22 channels. Four months later, the CSA chose the licence holders and planned to mix them on different multiplexes:
- Network R2 : iMCM, Canal J, Match TV, Direct 8, AB1, NTI
- Network R3 : Canal+, i-Télévision, Sport+, Cinécinémas, Planète
- Network R4 : M6, M6 Music, TF6, Paris Première, TMC, Cuisine TV / Comédie
- Network R6 : TF1, LCI, Eurosport, TPS Star, NRJ TV

For its part, Public Services will have 2 multiplexes including existing analogue channels and other channels (...that have yet to be determined).

Each multiplex is headed by a leader (Lagardère, Canal Plus group, M6 & Pathé, TF1), mixes free and pay channels and avoids direct competition with any other broadcaster on the same multiplex.

Next steps, in 2003

National channels will sign agreement with the regulator by February. This agreement will stipulate how much the channels will have to invest in "fresh" and local production. There is a possibility that these criteria will be softened in order to lessen costs.

The market is waiting for commercial operators. Canal Plus, Orange, EDF, TPS where once mentioned, but none of them is now officially interested, as long as there is no short term opportunity and financial feasibility.

Moreover, the multiplex set-up could be changed by the CSA because the plan puts second rank channels in a subservient position to the leaders. Once the multiplex is chosen, each one will adopt a platform- the CSA decision will make these choices easier- one can bet, for instance, Network R3 will come down in favour of Canal Plus if this group decides to be a platform operator... Moreover, the CSA plans are in that case more "editor-centric" than "consumer-centric".

The scheme itself seems to forget that the consumer will probably choose their channels by type & theme, not by group, and mix free-to-view channels with pay-to-view ones.

And, what would be the impact of a multiplex leader's (often, anti-DTTV) decision on a second-rank (often pro-DTTV) editor? Let's hope these choices are only a draft the CSA will improve, anticipating the consumers expectations.

The device makers will be able to manufacture TV sets and set-top-boxes once the platform operators have determined the technical schedule of conditions.

At the same time, TDF, the national broadcast company, will tune the frequencies according to plans by the National Frequencies Agency and the technical services of the CSA. Private companies will little by little integrate TDF's market. But who will pay for these adjustments? Perhaps a National Fund could come into being, backed by the State and editors.

In springtime, the local channels will be chosen by the CSA. Three more frequencies will then be available. But it implies that the problem of the advertising resources must be solved by the Government because advertising will be the only financial income for local editors. Moreover, the Government will clarify its position on the Public service news channel and on its regional channels.

The development of DTTV implies co-operation between players that have different goals. Existing analogue channels consider DTTV as a source of expense, while newcomers regard it as a real opportunity. The first want DTTV to slow down or to be abandoned; the second request fast State decisions and a short term launch.

Too much haste and DTTV will be a technical and marketing failure. Too much delay and the competitors business plans will be obsolete before a probable launch by the end of 2004. Meanwhile, DTTV channels will easily have time to be integrated into a satellite or cable platform.

Big money and time are the key drivers of this future market. By the way, has anyone thought of the customer?

Serge-Henri Saint-Michel

Biography

Serge-Henri Saint-Michel read Political Sciences and Law at Pantheon-Sorbonne University (Paris), before completing a Master's Degree in Marketing and Communications at Sup de Pub (Paris). Serge-Henri has worked for advertising and communications agencies, responsible for surveys, branding and positioning, marketing, creative and media strategies. Since 2000, Serge-Henri has worked in a strategy & marketing consulting company specialised in telecoms and internet, as director of marketing & communications, and budget manager. He was also in charge of the market watch.

Since 1989, Serge-Henri Saint-Michel has been teaching marketing and advertising in high schools and universities and has published books on advertising strategies. As editor of marketcom.free.fr, a French site dedicated to marketing and communication strategies, he writes articles on these subjects and on "screendising" (marketing for all 'screen supports', i.e PDAs, mobile phones, PCs...).