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Benefits of Divergence in Digital Television
EL CRONISTA COMERCIAL, Buenos Aires, April 28, 2006

CRONISTA OPINION PAGE 15
by Sebastian Martin Cabello*

The governments of Argentina and Brazil have postponed the final decisions for digital television standards in their countries. In spite of the cooperation accord signed by both countries to adopt a common system, new challenges have arisen for the new Argentine Secretary of Communications, Carlos Lisandro Salas, as the Folha de Sao Paulo indicated in a recent article which noted that Brazil has already opted for the Japanese standard (ISDB-T).

The issue is that for Argentina, the Japanese standard is the system that appears to offer fewer relative advantages, even taking into account the benefits that could stem from coordination with Brazil. This is the position of the principal Argentine firms in this business, who divide their preferences between the European system (DVB) with global presence, and the US system (ATSC) which has been implemented in Mexico, Canada and South Korea. Clearly, if Brazil does choose ISDB-T, Argentina--as the second largest South American market--would obtain important benefits from those promoting DVB and ATSC in order to maintain their regional presence.

A delegation made up of Brazilian ministers Costa, Amorim and Furlan met in the middle of April in Tokyo with the Japanese Prime Minister Junichiro Koizumi, with whom they signed a Memorandum of Understanding. The Brazilians promised to guarantee investments announced by the Japanese, such as the installation of a semi-conductor manufacturer in Brazil, a fact that would justify the adoption of ISDB-T. The idea is that the implementation of the Japanese standard in Brazil would permit the integration of Brazilian technology which is in the development phase. Among the Brazilian national players, Rede Globo exerts the greatest pressure in favor of the Japanese standard. Rede Globo is the fourth largest television chain in the world and accounts for about 60 percent of the television audience and 80 percent of TV advertising in Brazil. To be more explicit, (Rede Globo) can exercise important influence at the time of a presidential election, as Brazil will have in October of this year. This is something that president Luis Ignacio Lula da Silva cannot neglect to take into account as he gives a definitive go-ahead to the standard to be adopted by Brazil.

If all goes as expected and Lula confirms ISDB-T as the digital television standard, Brazil will become the only country outside of Japan using the system. What, then, would be Argentina's options?

If Argentina opts for the European standard (DVB) it could have access to 400 million Euros in credit from European banks committed to the migration to digital TV in Latin America. With Brazil out of the game, Argentina would be the primary candidate to access to these funds to finance the expensive transition to digital TV. In addition, the European standard provides the best multimedia convergence, especially between television and mobile telephony, therefore offering better options to consumers. In contrast to Brazil, Argentine providers of television content do not seem worried by the integration of these business interests. Triple play would permit television companies to broadcast between four and eight different channels per signal, and in the case of mobile telephone operators, it would enable them to emit TV signals.

At the same time, if the 1998 decision made in favor of TASC standard is reaffirmed, Argentina could also find itself in an advantageous position. President Bush approved last February the "Digital Television Transition and Public Safety Act," which authorizes huge subsidies to aid in purchases of digital TV signal converters, which would prolong the life of existing analogue television sets. This way, we predict an integration of users that could receive the new TV signals and as a consequence end the emission of analogue TV by February of 2009. Argentina could be the launching pad for this standard in South America and could obtain converters at very low prices that would facilitate the transition. Moreover, distribution of the digital signals could mean better final prices, which would be a plus for the content imported from the north as well as for the content Argentina could export to the Hispanic market in the north, competing with Mexico.

If the choice for the digital TV standard for Argentina is accompanied by sound regulations that would facilitate migration to digital and free up broadcasting spectrum, thus allowing for mobile television, a decision in favor of the ATSC standard would include the mobile variant of DVB known as DVB-H, which is also deployed in the USA today. This choice could satisfy both the Europeans and the North Americans, who surely would be open to invest in Argentina to ensure their regional presence.

The previous head of the Communications Secretariat, Guillermo Moreno, has said that the decision would be made that is best for Argentina, distancing us a bit from the Brazil decision. Perhaps this is the moment, given the new Telecommunications Law (expected to be sent to Congress in mid 2006 at the latest), to coordinate this decision with appropriate regulatory policies in an integrated long term strategy to position Argentina      within the world of information and communication technologies.

* Sebastian M. Cabello, economist, is Associate Director of Research of TechPolis, Inc., international consultancy firm on technology policies based in San Diego, California, USA.