Towards Digital Television in the Federation of Russia

The European Audiovisual Observatory has just published a report on the development of digital television in Russia. This report has been edited for the European Audiovisual Observatory by Groteck Co. Ltd, a consulting and publishing company in Moscow.

The report (155 pages) analyses the current situation and perspectives of development of digital television on the various platforms (satellite, cable, digital transmission and ADSL). It also analyses the emergence of VoD services.

These developments are taking place within a context of rapid development of the ICT market. According to the preliminary data of the Ministry for Information Technologies and Communications of the Russian Federation, the size of the Russian ICT market (IT, telecommunication, TV/Radio) amounted to Euro 42,1 billion in 2007, an increase of 25.4% in comparison with 2006. The IT and communication market size is expected to total Euro 50 billion in 2008.

The development of digital television in Russia appears in a specific context. Terrestrial broadcasting was the only method of delivery of TV signals to people up to the end of 1991 (before the disintegration of the USSR). The cost of access to terrestrial TV for households amounted to not more than 0.08% of the general average household costs (from Euro 0.16-0.56/month).

The development of Russian digital television within the next 5-7 years will be determined by a contradictory configuration of the competing interests of the main market regulators (Ministry of Information Technologies and Communications, Federal Service for Supervision in the Sphere of Mass Communication, Telecommunications and the Protection of Cultural Heritage) and the largest players in the markets for fixed-line telephony, mobile communications, cable television and satellite television. A contradictory process of transition to digital television is not specific to Russia: in other European countries too, governments are pushing to the transition towards terrestrial transmission in order to liberate the spectrum while industrial players – in particular broadcasting companies – are more concerned by the immediate possibility of exploiting all possible networks to distribute the maximum of channels to a maximum of viewers.

The government priority: the transition to the digital terrestrial television

The transition of terrestrial TV from analogue into digital format (in DVB-T standard) has been announced as being a government priority in Russia and identified in the document Concept of TV Broadcasting Development in Russian Federation within 2008-2015. The main positive factor in the introduction of terrestrial TV broadcasting in DVB-T standard, according to the opinion of market players, has been the approval of a TV broadcasting development framework in the Russian Federation for 2008-2015 (approved by resolution of the RF Government # 1700-p, dated 29 November 2007).

Having chosen the European standard for digital television, Russian market regulators now have to take into account the time constraints concerning Europe’s transfer to digital broadcasting and also European approaches to the organisation of digital broadcasting.

The total investments in the transition of terrestrial TV from analogue into digital format are expected to be Euro 10 billion during the period 2008-2015.

The industry strategies: satellite, cable and ADSL

Russian operators have, so far, been mainly interested in the American model of television signal delivery to the population, as is apparent in the prevalence of satellite and cable television as the main modes of distribution of television channels. With such an approach, the players are following the opinion of leading experts on the Russian TV market, who believe that terrestrial TV is only really necessary for a maximum of 10-15% of Russian households. All other households can be covered by satellite television (in particular when new players providing “economic” services emerge) and cable television.

In the satellite TV segment 100% of signals are broadcast in digital format (by the end of 2007 the number of subscribers of the three satellite TV operators had reached 2.5 million). Regarding cable TV networks (as of April 1, 2007) a minimum of one million of subscribers watched digital channels (7.4% of the total number of cable TV subscribers). The Moscow subscribers of STREAM TV, who receive TV channels over ADSL with the use of IPTV technology, are included in this number.

The largest telecommunication operators are currently directing their main investments towards the development of broadband access networks.

Digital cable television and broadband constitute the delivery system of highest priority for private companies. The development of digital TV in Russia in 2008 will be financed on the basis of the largest private investors. The broadband subscriber access networks based upon DOCSIS, ADSL (ADSL2+) and Ethernet (MetroEthernet) technologies will be the main distribution channels for digital TV channels.

The declared amount of investment in the modernisation of telecom networks for 2008 totals at least Euro 2.73 billion. This figure includes the investments of the largest and most noticeable players in the Russian market for broadband access. The amount of investments in the development of networks of broadband access and Triple Play services (with reference to investments of regional Internet providers and CATV operators) may total Euro 2,91 billion in 2008.

Divergent analysis of experts in assessment of the current market penetration

Assessments of the market penetration of DTV in Russia differ. The Ministry of Information Technologies and Communications believes that DTV does not exist in a practical sense in today’s Russia, aside from in several pilot zones where trials have been conducted on the introduction of the terrestrial television using the DVB-T standard.

According to some experts’ estimations, from the end of 2007, the number of digital TV subscribers within the cable networks (as of December 31, 2007) had doubled, and reached two million due to the aggressive policy pursued by such market players as “The Central Telegraph”, “AKADO” and “Corbina Telecom”, in connecting subscribers to digital TV.

Over 200,000 mobile TV subscribers (the largest operator is “MegaFon”) and those receiving TV using MMDS technology (the largest operator is “Cosmos TV”) also receive TV channels in the digital format. There are about 100,000 digital TV subscribers in the pilot zones where the introduction of the terrestrial digital TV (DVB-T standard) was tested.

It can then estimated that almost 10% of households had access to the services of digital TV in Russia as of the end of the year – i.e. 4.7 million households out of 49 million Russian households.

Source: Groteck Co., Ltd, 2008

More: The Report (9MB)