Indonesia's Digital Switchover Marked by Controversy, Conflicting Interests i

Television industry players have pointed to flaws in revisions of the 2002 Broadcasting Law, which are currently drafted by the government and lawmakers, highlighting weaknesses in the proposed business model in meeting industry players' expectations in transitioning from analog to digital systems. (ID Photo/Emral Firdiansyah)

By : Dames Alexander Sinaga | on 3:51 PM June 12, 2017
Category : Business, Featured, Tech, Special Reports

Jakarta. Television industry players have pointed to flaws in revisions of the 2002 Broadcasting Law, which are currently drafted by the government and lawmakers, highlighting weaknesses in the proposed business model in meeting industry players' expectations in transitioning from analog to digital systems.

Digital terrestrial television, which refers to a technological evolution that allows people to receive free-of-charge high-definition television (HDTV) broadcasts, was initiated in 2010 to replace the existing analog system that relies on UHF/VHF antennas for signal reception.

However, that system has faced challenges due to numerous technical and legal barriers.

The existing law is considered too outdated to accommodate the latest technological advancements that would allow digital TV services to be available nationwide. The latest revisions of the law were submitted to the House of Representatives' legislative council in February and are scheduled to be discussed in plenary session in August.

Ishadi Soetopo Kartosapoetro, chairman of the Indonesian Private Television Station Association (ATVSI), said broadcasters have always been ready to embrace digital TV services, but have been held back by legal uncertainties, which have deterred investment.

"Television broadcasters, since the beginning, have been ready. Why? Because we all know that ultimately, we all will go there," Ishadi told reporters during a discussion of the law revisions at Warung Daun restaurant in Cikini, Central Jakarta, on Saturday (06/10).

Ishadi is also a commissioner at Trans TV and Trans 7, free-to-air television stations of Trans Corporation controlled by media mogul Chairul Tanjung.

Nationwide free-to-air television channels are currently limited to a few dozen broadcasters, including government-owned TVRI and privately owned channels RCTI, Global TV, MNC TV, SCTV, Indosiar, AnTV, TVOne, Trans TV, Trans 7 and Metro TV, due to the limitations of the current analog UHF/VTF technology.

MNC's offices on Jalan Srikaya in Central Jakarta. The group controls free-to-air broadcasters RCTI, Global TV and MNC TV. The country only has a dozen free-to-air broadcasters due to the limitations imposed by the existing analog UHV/VHV transmission technology. (JG Photo/Yudha Baskoro) MNC's offices on Jalan Srikaya in Central Jakarta. The group controls free-to-air broadcasters RCTI, Global TV and MNC TV. The country only has a dozen free-to-air broadcasters due to the limitations imposed by the existing analog UHV/VHV transmission technology. (JG Photo/Yudha Baskoro)

Digital Switch-Over

According to the government's initial plan, the digital switch-over, or the process in which analog television broadcasting services will be converted to digital, was initially scheduled for Jan. 1 next year. However, due to technical and legal problems, the plan has been postponed to March 2023.

Some limited digital terrestrial television services are currently available with existing free-to-air television stations and broadcasters offering services in specific regions. However, companies are limiting their investments in the scheme as they wait for a stronger legal basis to ensure business sustainability.

Ishadi questioned the need for set-top boxes, or devices that convert digital data transmitted by broadcasters to analog. Old tube televisions and even some LCD TVs manufactured in the past, still cannot receive digital television signals, thereby requiring set-top boxes to work under the planned system.

"There are currently 70 million television sets in Indonesia. If the set-top box costs about Rp 100,000 to Rp 200,000 [$7.50-$15] per unit, who will pay for that? [...] We will prepare ourselves for it, as long as there is legal certainty. Don't keep changing [the regulation]," said Ishadi, who started his career at TVRI in 1967.

The most up-to-date TV sets are already capable of capturing digital television signals.

Multiplexing

Since the government rolled out the digital switch-over, television stations and broadcasters – both private and public – have been in limbo due to the policy's dubious legal standing.

The first controversy emerged after the Supreme Court in 2013 revoked Communication and Information Ministry Regulation Number 22 of 2011 on digital TV regulations, which as signed by the then-minister, Tifatul Sembiring.

That law, if implemented, would have seen the re-allocation of radio frequency band in the country, a necessary step to allow companies to smoothly transition to digital.

The 2013 ruling also jeopardized an important tender that was already issued in the industry. Taking into consideration the Supreme Court's decision, the State Administrative Court (PTUN) in 2015 revoked the licenses of 33 companies that won multiplex tenders.

Multiplexing, sometimes called "mux," is a technology system that allows digital signals to compress into one signal over a shared medium. This allows a better use of radio frequency to transmit data, enabling broadcasting companies to offer HDTV services and more channels on a designated radio frequency band.

Under the 2011 regulation, implementation of the multiplexing system requires a separation of digital broadcasting providers from broadcasting institutions, such as channels or television stations. For instance, broadcasters will be responsible for tracking the conversion process to digital, while a separate company or station would only produce content.

While this system promises a better service for customers, it would alter the entire broadcasting practice in the country, as the two processes are currently handled by television stations. The 2011 ministerial regulation also introduced so-called "multiplexing agents," which require television stations to offer digital terrestrial services.

These unknowns created fears in the television industry, before a judicial review struck down the regulation.

Apart from these technical aspects, the 2002 law, which is the legal umbrella for any public broadcasting activities in the country, did not anticipate a multiplexing system that uses digital technology.

These developments have clouded the future of digital TV services in Southeast Asia's biggest economy for years and broadcasters have been waiting for a revision of the law before they could transform their business models. At the same time, the internet has allowed for TV streaming and video-on-demand, which have added strong competition.

Henri Subiakto, an expert staffer at the Ministry of Communication and Information Technology, said the current administration understands the industry's concerns and hopes to wrap up the revisions as soon as possible.

"We expect the revisions to the Broadcasting Law to be concluded as soon as possible. Indeed, the sooner, the better. The country gets no benefits if [the revisions] take too long," Henri told reporters.

Many Indonesian families still rely on analog transmission technology to receive signals on their television sets. (Antara Photo/Aloysius Jarot Nugroho) Many Indonesian families still rely on analog transmission technology to receive signals on their television sets. (Antara Photo/Aloysius Jarot Nugroho)

Single-Mux Operator

However, television stations and broadcasters are apparently unhappy with the latest draft revision of the 2002 law.

Ishadi of ATVSI said the concept of the "single-mux operator" proposed by the government, which will introduce a single operator that will control frequency usage and broadcasting infrastructure, poses a serious threat to existing stations and broadcasters.

Under this scheme, the government will look to establish the Radio and Television Public Broadcasting Agency (LPP-RTRI) as the sole operator in the digital terrestrial television industry. Lawmakers reportedly signaled that they may approve this concept.

Nearly similar to the 2011 ministerial regulation, this would mean television stations would only produce content and that they would have to rent frequency bandwidth and broadcasting infrastructure from the LPP-RTRI. The government expects this scheme to add revenue to the state's coffers, which will be considered non-tax revenue.

Ishadi warned that this regulation, which means television stations would be excluded from the management of broadcasting-related infrastructure, may prove detrimental to revenue streams.

"There will be a waste of investment in infrastructure that has been built, and there will even be layoffs of employees at television stations that have been managing transmission infrastructure," Ishadi said. He added that the proposed revisions risk limiting the flexibility of television stations in planning their businesses.

Free-to-air television stations are currently also technically the broadcasters of their own channels.

Companies behind these TV stations have prepared the relevant facilities and infrastructure needed – from transmission stations, antennas, newsrooms and production houses – to support their channels, all of which rely on revenue mostly gained from advertising.

Free-to-air television stations, unlike the paid-television industry, are allowed to air content nationwide, which is vital for ratings, which influence advertisers' decisions.

Still, Ishadi argues that the centralist approach towards frequency and broadcasting infrastructure is prone to abuse, being monopolized by certain entities, and unhealthy business practices.

Alternative Schemes

Ishadi said industry representatives have proposed two alternatives to the current revisions.

One approach would incorporate what is known as a "multi-mux operator," where television stations manage their own frequencies and broadcast independently, but are allowed to decide what channels to place under the multiplexing system.

The frequency slots companies secure from the government under the multiplexing system would now carry more than one channel due to the more efficient use of radio-band technology and data compression.

This system would allow television stations to conduct business-to-business deals with content providers.

Another alternative is known as the hybrid mode, where the government would appoint some broadcasters, either government-owned or private, to become operators that manage frequency and broadcasting infrastructure independently.

Other broadcasters will have to rent the frequency and pay for the broadcasting infrastructure services provided by these operators.

"We don't expect the revision of the Broadcasting Law to be completed as soon as possible, but it also needs to cater to common television broadcasting needs," Ishadi said.

However, Henri of the Communications Ministry said the government is likely to stick with the single-mux operator system as it seeks to create a level playing field for established television stations, which have larger budgets, and potential newcomers.

ATVSI representatives were invited to discuss the draft revision with the House's legislative council on April 3.

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