Interoperability, Uncertain Demand Slow ITV Deployment in U.S., Europe

In June 2004, the European Commission (EC) found “no clear case for mandating standards at present.” The ITV market developed without a European applications program interface (API) standard, it said, adding that it triggers concerns that consumers wouldn’t be able to buy a standardized universal receiver capable of receiving all free and pay TV interactive services. The EC said it was also concerned that consumers would be locked into using pricier receivers containing proprietary APIs. The EC said it feared that broadcasters would have problems developing and delivering interactive services because they would be forced to negotiate with vertically integrated network operators with proprietary API technologies.

The concerns led to inclusion of a provision in the EC’s e-communications framework directive requiring member states to encourage providers of digital ITV equipment and services to use an open API, the EC communication said. In March 2004, responses fell into 2 camps, the EC said. Some, such as consumer groups, wanted imposition of open standards, while others said interoperability had already been achieved. The crux of the dispute, the EC said, “is the relationship between general interests and market forces.”

Broadcasters, particularly public service broadcasters, are charged with fulfilling general interest objectives such as media pluralism and cultural diversity, while network operators are key to making Europe a competitive, knowledge-based economy through investment in advanced communications networks, the EC said. The dual policy objectives are pursued in Europe by separating content regulation, which seeks general interest achievements, from communications regulation, which seeks to build a competitive market, the EC said. “These two policies meet at the API, which is why this debate is so intense.”

The EC’s approach to DTV has “always been underpinned by a need to demonstrate consumer benefits,” a spokesman for Information Society & Media Comr. Viviane Reding said Fri. ITV has the potential to provide additional means for the delivery of information society services, he said. The key challenge for ITV deployment is to figure out how to enable ITV applications and equipment to “attain critical mass and exploit economies of scale,” to boost market takeup. After its July 2004 communication, the EC created a member state multimedia home platform (MHP) implementation group, the spokesman said. It also confirmed that EU countries can offer consumer subsidies for ITV receiver equipment, subject to certain conditions.

The MHP implementation group met for the first time in Nov., and plans its 3rd meeting in March, the spokesman said. It may consider “open” API standards other than MHP, to encourage ITV deployment, as well as other issues related to ITV interoperability. “Intense coordination within the industry and national authorities” is needed to reach critical mass of services in receivers in homes, the spokesman said.

The Commission is slated to review the interoperability situation in the 2nd half of this year. Meanwhile, the spokesman said, “we continue to monitor the issues linked to the evolution of digital broadcasting and interactivity, with a view to encouraging interoperability of digital interactive services and the freedom of choice for users.”

ITV is operating commercially in Europe but “really hasn’t taken off in the U.S. yet,” said Jim Penhune, dir., Strategy Analytics broadband media & communications service. ITV got a supply-side push in the U.K. when British Sky Bcstg. (BSkyB), the country’s dominant satellite provider, launched the service even before determining whether there was consumer demand, he said, and had the clout to drive uptake.

The lack of an interoperability standard has been a concern in Europe, Penhune said, but operators appear to be slowly adopting the open cable applications protocol derived from DVD and MHP standards. The standards issue is “gradually going away,” he said.

In the U.S., the lack of standards for developing applications is a key issue, and consumer demand remains to be seen, Penhune said. No one can agree on what applications should be written for what system, he said. Moreover, operators, particularly cable providers, have “a lot on their plates” and have focused on services that are easier for consumers to understand, he said. Cable companies decided to expand cable penetration and video- on-demand, which can be considered a form of ITV, Penhune said. The development of more flexible and navigable interactive program guides is another high priority for many operators, he said.

Unlike the U.K. -- where online betting is permitted and where consumers prefer PC-type services over their TVs instead of online -- games and interactive advertisements haven’t been “deemed that essential” yet in the U.S., Penhune said. The real battleground, he said, is over services closer to the core behavior of watching TV: Access to more channels and to greater control over them.