Tratados internacionales multilaterales

We have adopted the method described above for calculating private value in building the DTT model. The model is split into three sections:

 DTT consumer surplus (both free-to-air (FTA) DTT and some pay-TV channels, assuming that, in line with many other European countries, the DTT network in Greece might include a mixture of FTA and paid-for content in the future)

 DTT producer surplus (as above)

 non-DTT, pay TV consumer and producer surplus.

The non-DTT pay TV market value was modelled in order to take into account any potential losses that might be incurred through the availability of improved free-to-air DTT services. In other words, the availability of improved free-to-air DTT services might result in some substitutive effects (for example, cancellation of pay TV subscriptions).

In this way, we can reflect the impact of each scenario on the industry as a whole.

Our modelling of the value of UHF spectrum for DTT in the base case (Scenarios 1a and 1b) considers a ten-multiplex DTT network. In Scenarios 2a and 2b we have assumed that loss of the 800MHz band will result in a reduction from ten to eight multiplexes, and in Scenarios 3a and 3b, the loss of the 700MHz and 800MHz band results in a further reduction in multiplexes, from eight to five. However, we note that further optimisation of the DTT frequency plan may make it possible to accommodate additional multiplexes (e.g. by migrating from multi-frequency networks (MFN) to single frequency networks (SFN)). The frequency plan for DTT services has not been evaluated as part of this study, other than to assess the estimated impact of the loss of the 800MHz band, which is illustrated in Annex A.

For the purposes of our modelling, we have assumed that each DTT multiplex can accommodate six programmes if used for SD programming, or three programmes if used for HD (using DVB-T). We have also considered the impact on economic value if DVB-T2 is used for HD programming, since using DVB-T2 for HD programming would result in an increase in the number of HD channels per multiplex, which we have estimated to be an increase from three to five.

4.5.1 DTT consumer surplus

The DTT consumer surplus model is based on the total number of channels available for a given number of multiplexes, which fit within the allocated spectrum for each scenario. The channels are further split between SD and HD.

The choke price on which the DTT consumer surplus is based, is calculated using an incremental value per channel curve, showing diminishing returns as the total number of channels increase. High definition channels are assumed to hold higher marginal value per channel compared to SD. The following figure illustrates the approach we have used to estimate the consumer surplus for DTT services.

Figure 4.30: Approach to calculating DTT consumer surplus [Source: Analysys Mason, 2012]

Key inputs to the DTT consumer surplus model include:  colour TV households

 pay DTT subscribers as a percentage of the total  DTT multiplexes by scenario

 number of channels per multiplex

 split of multiplexes between SD and HD (HD is itself split between DVBT and DVBT-2)  terrestrial television licence fees (applied to all households in Greece)

 DTT customer premise equipment (CPE) costs such as set-top box, antennae and installation  pay DTT average spend per user (ASPU)

 pay DTT choke price.

Number of MUX (SD/HD) Channels per MUX (SD/HD) Number of channels (SD/HD)

Choke price Subscribers Population coverage Terrestrial penetration DTT consumer surplus Subscription and licence fee CPE and other cost Average revenue per DTT HH External benefit ASPU Other TV platforms’ market share Other TV platforms’ consumer surplus Subs Total consumer surplus Choke price

Each of these inputs was considered in the light of our spectrum scenarios, and trend assumptions were adapted to reflect these scenarios. In addition, we tested base, high, low sensitivities around pay DTT as a percentage of total DTT and the number of channels per multiplex.

4.5.2 DTT producer surplus

The DTT producer surplus model introduces the indirect benefit of advertising revenues to the DTT industry.

The model is structured around five key areas:

 subscriber revenues (including fees paid by Greek TV viewers through power supply bills and purchase of set-top boxes, antennas for digital coverage and installation fees, where applicable)  advertising revenues

 cost of goods sold (COGs)  operational expenditure (opex)  capital expenditure (capex).

The following figure illustrates the approach we have used to estimate the producer surplus for DTT services.

Figure 4.31: Approach to calculating DTT producer surplus [Source: Analysys Mason, 2012]

In addition to the inputs used for the consumer surplus, additional inputs to the DTT producer surplus model include:

 total television advertising revenue  terrestrial television share of advertising

Number of sites Total terrestrial TV advertising revenue Terrestrial TV market share

Network opex per site Network capex per site Programming costs Other costs Number of multiplexes Total DTT revenue

Total COGS, opex and capex

DTT producer surplus Licence fees,

subscription fees and CPE revenue

COGS Advertising revenue Other TV platforms' market share Other TV platforms’ producer surplus Subscription revenue Total producer surplus External benefit Other TV platforms’

revenue EBITDA margin

 additional revenues from sponsorship and interactive services  CPE equipment costs

 network opex per site, split between main sites and repeater sites  programming costs

 other opex

 switchover cost of communications and marketing

 upgrade to digital cost per site, split between main sites and repeater sites  upgrade cost for the distribution link per site

 cost per additional multiplex  capex replacement cost.

Similarly to the consumer surplus, each of these inputs was considered in the light of our spectrum scenarios, and trend assumptions were adapted to reflect these scenarios. In addition, we tested base, high, low sensitivities around pay DTT as a percentage of total DTT and the number of channels per multiplex.

4.5.3 Non-DTT, pay TV consumer and producer surplus

In calculating the fixed broadband private value, we considered the impact of the improvement in the free-to-air DTT service through the addition of extra channels on the pay TV market and the resultant potential loss in pay TV revenues.

The consumer surplus considered a uniform ASPU and choke price across all scenarios, taking into account differences in pay TV subscriber forecasts.

The producer surplus is calculated based on both subscription and advertising revenues, in addition to additional revenues from sponsorship and interactive services. In order to calculate the cost side, we have used a benchmark of EBITDA margins. Additional capital expenditure is assumed to be minimal.