Today, the Georgian National Communications Commission announced a competition for companies and consortia to apply for building and operating the country’s infrastructure for digital terrestrial television broadcasting.

This selection of operators who will operate so-called multiplexes – digital networks that each carry between seven and 15 TV channels – will be the next big step towards the switch-off of analogue terrestrial television on 17 June 2015, to which Georgia and other countries in the region have committed themselves in an international agreement.

In February, the Ministry of Economy and Sustainable Development (MESD) released the government’s strategy for the digital switchover process. The strategy was the result of an often delayed, but largely inclusive consultation process with stakeholders in the final phase of the document’s drafting (TI Georgia disagrees with an assessment that described the process as opaque). Since the adoption of the strategy, the government has made significant progress in moving the process forward.

Who is in charge of the process?

Several key aspects of the continuing implementation of the switchover-strategy will be headed by the Digital Broadcasting Agency, a newly created legal entity of public law, acting under supervision of the Ministry of Economy and Sustainable Development (MESD).

The agency’s mandate includes:

1) carrying out an advertising and information campaign that will educate the public about the digital switchover process and about steps households will need to take in order to be able to watch digital terrestrial TV;

2) procuring set-top boxes (which decode the digital signal into an analogue one that can be displayed by conventional TVs) and distributing them to socially vulnerable households;

3) coordinating and controlling the state-owned TeleRadio Center (which owns and operates the country's broadcasting towers), to ensure the necessary upgrade of transmission infrastructure – if needed, the agency can contract service providers assisting TeleRadio Center.

The agency will administer State aid for 225,000 and 240,000 highly socially vulnerable households and cover the provision and installation of set-top boxes.

It will also set up and operate a 24-hour, multilingual phone hotline, operate a website dedicated to the switchover (digital.gov.ge), coordinate with importers and retailers of set-top boxes and hold trainings for the media and other stakeholders.

The head of the agency is Nino Kubinidze who previously was an advisor to the Ministry of Economy and has more than ten years of work experience in the telecommunication sector, where she worked for MagtiCom and the Azeri mobile phone operator Bakcell.

The Georgian National Communications Commission (GNCC) will be in charge of everything related to the selection and supervision of operators of the digital multiplex networks and their licensing; the Ministry of Justice takes a lead on the drafting of switch-over related legal amendments, a number of which still have to be introduced in the coming months.

Financial matters

The government has earmarked GEL 26.5 million for reforms of the postal and telecommunication sectors in the 2014 budget of the MESD. GEL 20 million out of this sum will be allocated to expenditures directly related to the digital switchover in 2014. Although not mentioned in any official documents, the Ministry has shared the following rough spending estimates at a meeting with civil society representatives:

• GEL 12 million will be spent on purchasing set-top boxes (receivers) for socially vulnerable people;

• GEL 4.5 million will be used to fund information and PR activities in 2014;

• GEL 2.5 million will be allocated for installation costs (the ministry expects about half of all set-top boxes to be installed in 2014);

• GEL 1 million will be spent on the agency’s staff salaries and overhead.

Key elements of the the government’s switchover strategy

The licensing regime for terrestrial TV broadcasters will be done away with after the switchover. This means that content producers can start terrestrial broadcasting after going through a simplified authorization process, and then can pay a multiplex operator to be included as free TV or in a pay-TV package.

Most analogue broadcasting licenses currently held by TV stations are valid for a number of years beyond the digital-switchover date of 17 June 2015. These license holders will be reimbursed for license fees they paid upfront but will not be able to use – with the introduction of an authorization system, their licenses for analogue broadcasting will be withdrawn. Reimbursement issue will be especially important for local broadcasters who will be in great financial need prior to the switchover. However, it is still undecided if the State will return the license fees back in a lump sum or in several payments over a longer period of time.

The government recommends the GNCC that a minimum of 90% of the population should be covered by digital terrestrial signal and that future operators of digital broadcasting networks should install their transmitters on 42 towers and locations controlled by the state-owned Teleradio Center. However operators shall not restricted to present their own network plan and use alternative sites, the strategy states. Teleradio Center will be obliged to guarantee access to all providers to their technical infrastructure and provide non-discriminatory conditions and tariffs for the services that it proves.

Legal changes

Recent legal amendments introduced following key changes:

• Two new terms – Digital terrestrial television network and multiplex platform – were introduced and defined in the Law on Electronic Communication;

• The right to use the radio frequency spectrum to operate a digital terrestrial network will awarded through a competition (this provision allows the GNCC to announce a beauty contest by 1 April 2014);

• The license holder can transfer the powers and responsibilities over the spectrum covered by its license to any other entity or person. The GNCC has to approve this hand-over through an administrative process.

Expected structure of multiplexes

The strategy paper foresees that up to eight digital broadcasting networks, so called multiplexes – short: Mux, each with a capacity of seven (high-definition) to 15 (standard definition) TV programs – could eventually be operational after the analogue signal is turned off.

Mux 1 to 5 will be awarded to one or two private operators through a “beauty contest”. Each operator will be required to operate at least one free-TV Mux and will be allowed to offer pay-TV packages after the analogue switch-off. The state-owned TeleRadio Center, which owns and operates the TV towers, is banned from participating in the contest for these Muxes.

Bidders can apply for Mux 1 and Mux 2, possibly plus Mux 3, 4 and/or 5. The final decision will be made by the GNCC based on proposals submitted to the beauty contest by interested companies or consortia, from Georgia or abroad. The government recommends the GNCC to award licenses to operators that apply for fewer Muxes – an attempt to incentivize a situation where two private operators compete against each other.

In its strategy, the government recommends to GNCC to use the following criteria to identify the best operator(s):

• Proof of financial sustainability;

• Technical and financial proposals (points will be awarded based on a grading system);

• Signed pre-agreements with broadcasters (points will be awarded: for every memorandum of understanding with a national broadcaster – 10 points; for an agreement with a local broadcaster – 2 points; for an agreement with the cable or satellite broadcaster – 1 point);

• Offered fees and tariffs (part of financial proposal):

• the lowest ceiling of transmission fees offered to broadcasters;

• the amount the bidder offers to pay as a one-time license fee.

Mux 6 will be operated by the state-owned entity TeleRadio Center (which owns and operates Georgia’s TV towers) and is reserved for programs of the Georgian Public Broadcaster (Channel 1 and 2, Ajara TV). GEL 10 million were allocated from the 2013 budget to TeleRadio Center for the upgrade of its infrastructure. A set of frequencies for the multiplex platform was already assigned free of charge to the TeleRadio Center.

TeleRadio Center is not allowed to include private free-to-air channels or offer pay-TV. However, excess capacity on Mux 6 may be allocated to a private operator that runs other Muxes on a first-come-first-serve basis, using cost-oriented pricing.

The government strategy suggests that Mux 6 is likely to be the only network on air during the simulcast period. During the 3-month simulcast period, all broadcasting stations, foremost current national terrestrial channels – Rustavi 2, Imedi TV and 1 Stereo (its license is currently used by GDS) – will be carried on the Mux 6 and broadcast in both, analogue and digital signals. These broadcasters will have their transmission fees covered by the State during the 3-months period. It will be the responsibility of TV stations (content providers) to deliver their signals to the Mux operator in the format described in technical documentation, on their own expense.

However, if a private Mux operator manages to set up a network by the time the simulcast period starts (March 17, 2015), this platform will also be allowed to operate and carry broadcasters throughout the simulcast.

Mux 7 will not be awarded at this point – it might be awarded at a later point if the GNCC establishes that there is demand for further capacity or if there is a lack of competition among the other operator(s) that results in problematic market dynamics.

Mux 8, which will broadcast in a different part of the frequency spectrum than the other multiplexes, will allow local broadcasters to install their own transmission equipment to cover their local broadcasting zone. Local stations can opt to use the older DVB-T1 standard and MPEG 2 compression instead of DCB-T2 and MPEG 4. According to the published strategy, for gaining the license to operate their own transmitters locally, local TV stations have to express their interest in using Mux 8 by mid-2014 (the exact deadline has yet to be determined). The frequency spectrum must be awarded within two months of a final deadline. Local broadcasters will not be allowed to offer Pay-TV services; they will be obliged to grant other broadcasters access to their network, if there is free capacity.

Timeline

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