In the United States, the  Congress and FCC provided television stations with additional spectrum  to transmit both an analog and digital signal, and set a deadline for the  shutoff of the analog signal at the end of 2006, or when 85 percent of  households can receive the digital signal, whichever is later. German Television Market Is Characterized by Central Role of Public Broadcasting and Is Regulated Largely at the State Level

We were told that regulation of the German television market is primarily  the responsibility of state government, with the federal government  exercising only limited authority to regulate this market. Although terrestrial broadcasting was once the only means by which  German households received television program signals, today only 5 to 7  percent of these households rely on terrestrial broadcasting, with the  remainder using cable or satellite service for the reception of television  signals. In the context of the DTV transition, the  Ministry led the effort in Germany to develop and recommend a strategy  for the transition from analog to digital radio and television broadcasting. We were told  that this amounts to about 6 billion Euro ($7.38 billion) annually. Typical  cable systems in Germany were constructed for the provision of analog  service, provide about 30 to 33 channels of analog programming, and cost  subscribers less than 15 Euro ($18.45) per month. Berlin Officials and Industry Participants Engaged in Extensive Planning for the Rapid DTV Transition in the Berlin Test Market

In Germany, government officials and industry participants are  implementing the DTV transition to improve the viability of terrestrial  television in the face of a low and declining share of households that rely  solely on terrestrial television. Several elements of the DTV transition will  apply throughout Germany, including an island based approach, where the  DTV transition will occur separately in different metropolitan areas, and  the adoption of standard-definition digital television. In Berlin, extensive  planning facilitated the rapid DTV transition. Important elements of the  Berlin DTV transition included a short simulcast period, financial and  nonfinancial support provided to private broadcasters, subsidies provided  to eligible low-income households for set-top boxes, and an extensive  consumer education effort. We were told that Germany adopted this approach because the  DTV transition could not be achieved throughout the entire country  simultaneously; officials thought that a nationwide DTV transition would  be too big to manage at one time. Finally, German officials did not plan for the return of spectrum following  the DTV transition. mabb and Industry Participants Engaged in Extensive Planning for the Berlin DTV Transition

mabb, the Media Authority that regulates radio and television in the states  of Berlin and Brandenburg, made several key decisions about how the  DTV transition would occur in the area under its authority. mabb and industry participants implemented the  DTV transition in the Berlin area with a short simulcast period. German federal  officials and other Media Authorities are generally encouraged by the  success of the short simulcast period in Berlin. Public broadcasters  were able to finance their transition costs through the radio and television  license fee they receive. Because the DTV  transition only affected households relying solely on terrestrial television,  the consumer education effort focused on means that would target only  these households, and not households subscribing to cable and satellite  service. Need for Set-Top Box Deployment Is Key Challenge in Germany and in the United States

Based on our examination of the DTV transition in Berlin and other areas  of Germany, it is clear that the manner in which DTV is to be rolled out is  considerably different than in the United States. Nevertheless, we found  that much of the focus in Berlin leading up to and during the simulcast  period was on making sure that consumers who receive television solely  through terrestrial means obtain the necessary set-top boxes so that they  would be able to view DTV signals once the analog signals were turned off. To summarize my statement, Mr. Chairman, although the context of the  transition differs considerably in Germany as compared with the United  States, there may be interesting and helpful lessons for the Congress and  FCC from the DTV transition in Berlin and other areas of Germany.
Why GAO Did This Study

In Berlin, Germany, the transition from analog to digital television (DTV), the DTV transition, culminated in the shutoff of analog television signals in August 2003. As GAO previously reported, the December 2006 deadline for the culmination of the DTV transition in the United States seems unlikely to be met. Failure to meet this deadline will delay the return of valuable spectrum for public safety and other commercial purposes. Thus, the rapid completion of the DTV transition in Berlin has sparked interest among policymakers and industry participants in the United States. At the request of the Subcommittee on Telecommunications and the Internet, House Committee on Energy and Commerce, GAO examined (1) the structure and regulation of the German television market, (2) how the Berlin DTV transition was achieved, and (3) whether there are critical components of how the DTV transition was achieved in Berlin and other areas of Germany that have relevance to the ongoing DTV transition in the United States.

What GAO Found

The German television market is characterized by a central role of public broadcasting and is regulated largely at the state level. Although the federal government establishes general objectives for the telecommunications sector and manages allocations of the German radiofrequency spectrum, 15 media authorities organize and regulate broadcasting services within their areas of authority. The two public broadcasters are largely financed through a mandatory radio and television license fee of 16 Euro ($19.68) per household, per month, or about 6 billion Euro ($7.38 billion) in aggregate per year. Today, only 5 to 7 percent of German households rely on terrestrial television. Most households receive television through cable service, which typically costs less than 15 Euro ($18.45) per month, or satellite service, which is free once the household installs the necessary satellite equipment. Berlin officials and industry participants engaged in extensive planning for the rapid DTV transition in the Berlin test market. In Germany, government officials and industry participants are implementing the DTV transition largely for the purpose of improving the viability of terrestrial television; officials do not expect to recapture radio spectrum after the transition. Several elements of the DTV transition apply throughout Germany. For example, Germany is implementing the transition within specified "islands," which are typically larger metropolitan areas, because officials thought that a nationwide DTV transition would be too big to manage at one time. Also, the German DTV transition focuses exclusively on terrestrial television, not cable and satellite television. The Media Authority in Berlin specified other components of the DTV transition for the Berlin area, including a short (10 month) simulcast period, financial and nonfinancial support provided to private broadcasters, subsidies provided to low-income households, and an extensive consumer education effort. Certain aspects of the DTV transition in Berlin and other regions of Germany are relevant to the ongoing transition in the United States because, even though the television market and the transition are structured differently in the two countries, government officials face similar key challenges. We found that much of the focus of government officials leading up to and during the brief simulcast in Berlin was on ensuring households who rely on terrestrial television received the necessary consumer equipment. In the United States, most television stations are providing a digital signal--that is, the United States is in the simulcast phase. Thus, the challenge facing the Congress and the Federal Communications Commission, as was the case in Berlin, is encouraging households to purchase set-top boxes or digital televisions. The key components of the Berlin DTV transition that enabled the rapid deployment of set-top boxes included (1) implementing an extensive consumer education effort; (2) providing subsidies to low-income households for set-top boxes; and (3) setting a relatively near-term, date certain that all stakeholders understood would be the shutoff date for analog television.