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Digital Terrestrial Television Transition Strategy for BrazilDigital Terrestrial Television Transition Strategy for Brazil

Jarbas José ValenteSuperintendent, National Telecommunications Agency, Brazil

Jarbas José ValenteSuperintendent, National Telecommunications Agency, Brazil

Kiev, Ukraine, 13-15 November 2000Kiev, Ukraine, 13-15 November 2000

3 Introduction

3 Today’s television broadcasting in Brazil

3 Horizontal and vertical market structure

3 Steps toward transition

3 The economic analysis on the digital terrestrial television transition

3 Conclusion

ContentsContents

This presentation has the main purpose of providing an in-depth examination of the transition strategy that Brazil intends to pursue in the introduction of Digital Terrestrial Television Broadcasting (DTTB) services while phasing out the rendering of analogue television broadcasting services.

IntroductionIntroduction

3 Brazil’s broadcasting services are characterised as those freely

and directly delivered to the public in general;

3 Includes Radio and Television Broadcasting;

3 The ownership of a broadcasting company is allowed only to

Brazilian citizens or those naturalised over a period of time

more than 10 years;

3 Networks are mostly under private ownership but some non-

governmental and public entities also hold the control of a few

of them.

Today´s television broadcasting in BrazilToday´s television broadcasting in Brazil

Less thanLess than 60%60%

60 to 70%60 to 70%

70 to 80%70 to 80%

80 to 90%80 to 90%

More than 90%More than 90%

TV density on Brazilian TerritoryTV density on Brazilian TerritoryTV density on Brazilian Territory



Existent Stations in Brazil

STATION Quantity

Generator 333

Relay Station (Biggest) (5 kW) 748

Relay Stations (Smallest)(250W)

7,840

Total 8,921

Difficulties:Difficulties:3 Database on TV spectrum allotment; 3 TV (VHF and UHF) Spectrum Congestion;3 Differences between digital transmission power and analogue

transmission power to cover a particular area;3 Differences in the configuration of TV networks.

Priorities in carrying out the Digital TV PlanningPriorities in carrying out the Digital TV Planning3 The TV in spectrum allotment database must be updated;3 The worst cases, in terms of areas with TV spectrum congestion,

must be identified;3 Possible TV channels to be used by digital transmission must be

defined;3 Studies must analyse each possible TV channel, defining maximum

power, restrictions, etc.

Today´s television broadcasting in BrazilDigital Planning

Today´s television broadcasting in BrazilDigital Planning

2.020

2.980

4.1004.570

4.900

5.440

0

1.000

2.000

3.000

4.000

5.000

6.000

1993 1994 1995 1996 1997 1998

Revenues fromadvertising by allstations

R$ Milhões

Fte: Zenith MediaAverage 1998: US$ 1.00 = R$ 1,21

Horizontal and vertical market structureHorizontal and vertical market structure

Revenue of the main broadcasters in BrazilRevenue of the main broadcasters in BrazilRevenue of the main broadcasters in Brazil

2.600

880

250

250

250

150

520

0 500 1.000 1.500 2.000 2.500 3.000

R$ milhões,1997

OthersCNTRecordBandeirantesMancheteSBTGlobo

Total4.900

Fonte: Globopar, análise da equipe, 1998


Average 1997: US$ 1.00 = R$ 1,1164

15,40%

6,90%

37,30%

9,70%

11,90%

9,10%

7,90%1,90%

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

30,00%

35,00%

40,00%

1) South 2) Center-west3) São Paulo (Capital) 4) São Paulo - Interior5) Rio de Janeiro 6) Northeast7) Southeast (RJ and SP excluded) 8) North Source: Radio e TV magazine, 1998

Percentage of the broadcasters revenue following the Brazilian regionsPercentage of the broadcasters revenue following the Brazilian rPercentage of the broadcasters revenue following the Brazilian regionsegions


100

97

72

92

69

41

0 20 40 60 80 100 120

CNT

Record

Bandeirantes

Manchete

SBT

Globo

Geographic coverage of the main broadcastersGeographic coverage of the main broadcasters

Fonte: Mídia Dados 97


98

97

96

96

95

92 93 94 95 96 97 98 99 100

50/6540/4930/3920/2915/19

% Age classes that view broadcasting programming% Age classes that view broadcasting programming% Age classes that view broadcasting programming

Fonte: Mídia Dados 97, análise de equipe


99

99

98

95

70

0 20 40 60 80 100

EDCBA

% Social classes viewing broadcast programming% Social classes viewing broadcast programming% Social classes viewing broadcast programming

Fonte: Mídia Dados 97, análise de equipe


4 Resolution nr. 69, from 23/11/98 4 Approval of the Procedures to be followed during the Digital TV testing

4 Main outputs deriving from the testing4 Definition and Presentation of the Technical Report (field and laboratory analysis);

4 Definition and Presentation of the Marketing and Technical Report;

4 Public Consultation - Digital TV standard;

4 International Agreement;

4 Technical Regulation for the Provision of Analogue TV and Relay TV Services;

4 Consolidation of the Basic Plans on Analogue TV, Relay TV and TVA;

4 The choice of the Digital Terrestrial Television Broadcasting Standard;

4 Technical Regulation on Digital TV;

4 Basic Plan for Digital TV (main stations);

4 Basic Plan for Digital TV (complete version);

4 Contribution to the question 11/2, SG2 of the ITU-D (The Decision-Making Process on Digital TV at ANATEL).

Steps towards transitionSteps towards transition

What to take into account in the decision making What to take into account in the decision making -- Strategic Strategic Factors:Factors:3 Universal access to information for all social classes;3 National integration and the preservation of the regional identity;3 Latin American integration;3 Technological co-operation;3 Rapid economic development;3 Rebirth of the parts and components industry.

Key issues to be addressed in the choice of DTV Standard:Key issues to be addressed in the choice of DTV Standard:3 Screen Format;3 Interactivity;3 Mobility;3 Television and Personal Computer Convergence;3 Telecommunication and Television Convergence.



What to take into account in the decision making What to take into account in the decision making -- Technical Technical Factors:Factors:3 The digital television service must be, at least, equivalent to the

currently distributed analogue television service;3 Digital and analogue systems must have an adequate coexistence

during the transition period;3 Flexibility for introduction of new applications must be taken into

account in the long-run.33 Implications of the digitalisation process on different TV Implications of the digitalisation process on different TV

networks:networks:3 The digital television service offered in different networks must be

compatible;3 The integration of programs and functionality between these

different networks must be considered;3Must carry rules should be duly applied.

What to take into account in the decision making What to take into account in the decision making -- Economic Economic Factors:Factors:3 Impact on the Broadcasting Industry Value Chain;3 Determinant factors for the promotion of the digital television;3 Cost to the Broadcasters;3 Cost to the Consumers;3 Potential market of each digital television system.

What to take into account in the decision making - Social and Cultural Factors:3 The role played by the television in the life of the citizens;3 The convergence from the cultural point of view;3 Expectations of the users on the digital television;3 Others cultural and socials factors.


What to take into account in the decision making What to take into account in the decision making -- Scenarios under Scenarios under analysis by Anatel:analysis by Anatel:

3 Scenario I - HDTV programming only and low interactivity

3 Scenario II - SDTV programming only

3 Scenario II a - Multiples programs3 Scenario II b - SDTV interactive3 Scenario II c - SDTV with free and paid services3 Scenario II d - SDTV with free and pay TV services and others

telecommunication services

3 Scenario III - Hybrid model

3 Scenario III a - SDTV / HDTV3 Scenario III b - SDTV shared with Educational Stations

3 Scenario IV - Mobility in any of the last Scenarios


Cost to be considered by Broadcaster Cost to be considered by Broadcaster -- StudioStudio3 MPEG Converter 3 MPEG Multiplex 3 Digital Camera 3 Digital VTR 3 Monitors3 Servers 3 Etc.

Total cost for Studio is between 200,000 and 1,000,000 US$ Source: CPqD.


Cost to be considered by broadcasters for Relay StationCost to be considered by broadcasters for Relay Station3 Infrastructure3 Tower3Housing, power supply, air conditioner

3 Reception3 Satellite antenna3 Satellite receptor3Microwave link

3 Transmission3 Transmitter 250 W3 Transmitter 5 kW3 Antenna 250 W

The economic analysis on the digital terrestrial television transition


TV RTV TVA TotalLicensed 333 8,588 25 8,946Planned

alreadyincluded

654 2.060 ----- 2,714

Plannednewinclusions

4,500 8,500 ----- 13,000

Total 5,487 19,148 25 24,660

The current Brazilian Television PlanThe current Brazilian Television PlanThe current Brazilian Television Plan



RegionsMarks to currentTV video quality

Marks to current TVvideo quality with a

conversor

Marks to DigitalTV video quality

Center-west 3,9 6,8 9,4

South 3,8 6,6 9,3

Southeast 4,0 6,9 9,5

Northeast 4,4 6,8 9,2

North 3,8 6,5 9,1

Marks to TV video quality during simulations to the public

Marks to TV video quality during Marks to TV video quality during simulations to the publicsimulations to the public



Per Capita Income (in US$)Per Capita Income (in US$)Per Capita Income (in US$)

Less thanLess than 2,000 US$2,000 US$

2,000 to 4,000 US$2,000 to 4,000 US$

4,000 to 6,000 US$4,000 to 6,000 US$

More than 6,000 US$More than 6,000 US$

National Average is around US5,020



1.700.000

1.000.000

1.300.000

2.150.0002.000.000

2.000.000

2.100.000

0

500.000

1.000.000

1.500.000

2.000.000

2.500.000

1º Quad. 2º Quad. 3º Quad.

199819992000

TV Sets industrial salesTV Sets industrial salesTV Sets industrial sales

Source: ELETROS



680.000

360.000

340.000

660.000

430.000

690.000

395.000

0

100.000

200.000

300.000

400.000

500.000

600.000

700.000

1º Quad. 2º Quad. 3º Quad.

199819992000

Source: ELETROS

VCR’s industrial salesVCR’s industrial salesVCR’s industrial sales



Country Homes (1,000) TV sets (1,000)

Brazil 37,000 53,768

Argentina 8,900 10,600

Uruguay 970 1,750

Paraguay 700 530

Sub-total Mercosur (except Brazil) 10,570 12,880



TV Receiver Market - MercosurTV Receiver Market TV Receiver Market -- MercosurMercosur

3 Brazilians are keen on high technology appliances;3 Brazil’s consumer electronics industry, along with Mercosul,

encourages the local production of equipment;3 Most of the international TV equipment suppliers

(Americans, Europeans e Asians) are presently established in the country;

3 The local production of equipment is an important factor to balance Brazil’s international trade in electronics goods, parts and components.



The analysis of the Transition Costs for Consumers The analysis of the Transition Costs for Consumers consideredconsidered3 Interviews;3Statistics model;3 Assumptions: prices, opportunities, etc.

Transition Costs for ConsumersTransition Costs for Consumers3 The cost must be adequate to the Brazilian Society;3 The consumers equipment must allow a variety of configurations to meet the needs of the Brazilian Society, such as:3 Higher interactivity;3 Lower interactivity;3 Full multimedia applications and services, etc.



Thus, considering the summary of the Brazilian Television Market

presented here in terms of today’s television broadcasting, horizontal

and vertical market structure, steps toward transition and the

economic analysis on the digital terrestrial television transition, the

Brazilian administration believes that owing to sharp intra- and inter-

regional differences in the consumption power of the Brazilian

population, prices and features, of set-top boxes and other related

equipment, are likely to have to adapt to the reality of the Brazilian

market, in this sense the participation of the Brazilian population has

been of great importance in the process .

ConclusionConclusion

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