Market Insight

Lithuania completes analogue terrestrial switch-off

October 30, 2012

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Lithuania switched off analogue terrestrial broadcasts on 29 October, nine years after free-to-air DTT channels first launched in the country and four years after the commercial launch of a pay digital terrestrial (DTT) service from incumbent telco TEO LT.

Currently, four multiplexes in Lithuania broadcast twelve free-to-air and 31 pay DTT channels, including three in HD. The DTT services are provided nationwide by the transmission company, Lithuanian Radio and Television Centre (LRTC), and TEO LT. The Telia Sonera-owned telco, which initially won licences for multiplexes 3 and 4, offers the pay DTT channels on its platform, Digital Gala, also using LRTC's multiplex 2. In September 2012, TEO LT had 72,845 DTT subscribers. All multiplexes cover almost 100 per cent of homes and there is also a regional DTT service provided by Balticum TV. Total cost of rolling out free to air DTT network was about €4.5m.

In 2013 three more national multiplexes are planned to launch: one operated by LRTC; one by TEO, and one for public broadcaster LRT. Commission for Radio and Television, LRTK, is planning to call a tender for the channels willing to broadcast on the commercial multiplexes by the end of 2012. LRTK intends to dedicate the two multiplexes for HD channels and will soon also call tenders for local DTT channels.

Lithuania has one more additional multiplex in hand. The licenses for multiplexes currently in operation are valid until 2022 and at the moment there are no plans to upgrade any part of the DVB-T network to the newer standard, DVB-T2.

At the end of 2011 the government reduced the 2012 budget for set top box subsidies from LT32m (over €9m), to LT10m (short of €3m). By ASO only about LT1m was used. Low-income households which haven't yet applied for a subsidy, have time to 20 November 2012. Total cost of information campaign was €3.5m.

According to local sources, short time before ASO twelve per cent of homes were still dependent on analogue terrestrial transmission.

At the end of the second quarter 2012 multichannel TV penetration reached in Lithuania 80 per cent of homes, which was relatively low considering the imminent analogue switch-off. The high number of homes dependent on analogue terrestrial TV just before switch-off in spite of many years scheduled for transition, a good supply of set top boxes to the market, and an intense campaign may look surprising. Likely the purchasing power of Lithuanian households didn't allow many of them to purchase a set top box earlier. It is, however, also possible that the campaign didn't address all the important issues, like availability of subsidies, as according to local sources the use of subsidies was relatively low. There is no information regarding the number of homes left without any signals. However, it seems likely that many of them will purchase DTT equipment after switch-off.

The vast majority of analogue terrestrial homes have switched to free DTT, which in the fourth quarter this year has become the largest platform in the country, with the penetration of about 40 per cent of households. Many homes from this group - still targeted by pay TV players - can be expected to migrate to pay TV. The most natural choice in this case seems TEO, due to DTT set top boxes already purchased by free DTT homes. The incumbent will strengthen its offer further with the channels on the multiplex it will launch in 2013.

Lithuania launched DTT in the DVB-T standard using MPEG-4 compression, which enabled HDTV, as well as a number of channels sufficient to build an attractive pay TV offer. There is therefore no urgent need to upgrade the DTT network to a newer standard in Lithuania as it is in many countries (primarily from Western Europe) which started digitisation with the MPEG-2 format.

Lithuania is one of the last EU countries to complete ASO before the EU-recommended deadline this year. It joins five Eastern European EU countries: Estonia, Latvia, Czech Republic, Slovakia and Slovenia. Four other EU countries in Eastern Europe - Poland, Romania, Hungary and Bulgaria - will not switch off analogue terrestrial broadcast before the end of 2012.

Poland is starting switch-off analogue in the beginning of November 2012, but ASO completion is scheduled here for mid-2013; Hungary, in spite of a good DTT roll-out, postponed ASO deadline from 2012 to 2014; in Romania, where ASO was also put off until 2014, there are currently public consultancies over the transition plan; Bulgaria, after the results of DTT tender were questioned by EU Commission, is now planning a DTT tender in 2014 and ASO for 2015.

Recently Slovenia, which switched off analogue terrestrial at the end of 2010, has called a tender for a third DTT multiplex. Of non-EU CEE countries, Macedonia has recently awarded licences for two multiplexes to Telekom Slovenia, already operating DTT multiplexes in the country under the brand BoomTV. Macedonia is planning to switch off analogue in mid-2013.

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