Nº 2 2015 > Special Report on the Digital Switchover
Digital switchover in Latin America
Some Latin American countries are well-advanced in deploying digital terrestrial television. This article focuses on two countries in the region that are at the forefront of the digital switchover — Brazil and Mexico. The two cases illustrate some of the challenges of migrating to digital terrestrial television.
Brazil and Mexico are market leaders for the digital switchover in Latin America and are the countries closest to completing the process. Although they have chosen different technologies for digital terrestrial television, they both demonstrate that actively involving the broadcasting industry is key to success, and that the government also has to promote digital switchover and help the poorest citizens acquire digitally compliant devices.
Digital switchover can be a lengthy process in large countries that rely on terrestrial television as their main television platform. This has regional consequences, because countries at an advanced stage of digital switchover cannot easily re-allocate digital dividend frequencies for mobile use while neighbouring countries are still using these frequencies for broadcasting.
The main challenges that Latin American countries face concern the management of the simulcast period (which has lasted for more than six years in São Paolo, for example) and the switch-off process. The best-practice examples of Brazil and Mexico could, however, benefit other countries in the region in terms of identifying the network parameters that will best meet market demand, involving stakeholders, and carrying out pilot tests. Digital switchover calls for strong government support and action to tackle challenges as they arise.
Brazil leads the market in South America in the deployment of digital terrestrial television. Brazil started deploying its digital network in 2007 and by the end of 2013 had seen six full years of digital transmission, at a time when other countries in the region were just embarking on the planning of digital switchover.
But the transition period has been lengthy: although digital terrestrial television was initiated in 1999, final analogue switch-off will not occur until 2016. The National Telecommunications Agency initiated digital television transmission to assess the technological and economical parameters, as a basis for the government to decide on full digital switchover, analogue switch-off and release of a digital dividend.
In contrast to Mexico, Brazil has chosen to use the Integrated Services Digital Broadcasting — Terrestrial (ISDB‑T) standard, originally developed in Japan, although with a different video compression. Brazil has renamed its standard the Brazilian Digital Television System (Sistema Brasileiro de Televisão Digital — SBTVD). Following Brazil’s lead, many other South American countries have chosen SBTVD for their digital terrestrial television networks. Only Panama, Colombia, Suriname and Guyana have adopted Digital Video Broadcasting — Terrestrial (DVB‑T), the standard used in most European countries. In the early 2000s, the National Telecommunications Agency conducted studies (together with universities and broadcasters) on possible approaches to digital switchover. Bringing all of these stakeholders into the process and maintaining their engagement throughout is a key factor in the success of the Brazilian digital switchover.
Almost all (98%) of Brazilian households had a television set at end of 2013, which means around 60 million households. But just 31% of these households subscribe to a pay-television service — one of the lowest rates in South America. Thus 70% of the population will be affected by the digital switchover.
The government considers that no Brazilian should be without television at home but, as in many other countries in the region, Brazil has a high proportion of low-income households for which new digital television sets or set top boxes are unaffordable. Accordingly, it is helping around 20 million households to purchase such devices through the Minha Casa Melhor (“My House Best”) scheme, set up in 2013, which grants a low-interest (0.4%) loan to the poorest households to finance their in-house appliances. This loan from the Bank of Brazil can finance a digital terrestrial television set costing up to BRL 1400 (around USD 600).
The switch-off needs to be staggered to allow time to ensure a sufficient supply of digital television sets and set-top boxes. The government thus plans to shut down analogue signals progressively, starting with the largest cities. Digital signals were first broadcast in big cities such as São Paolo, Rio de Janeiro and Brasilia, and these cities can also be pilot schemes for analogue switch-off. Once analogue switch-off is completed in the bigger cities, the process will continue from 2015 to 2018 in smaller cities.
Brazil is widely regarded in South America as providing an example of well-managed digital switchover, which has succeeded by keeping all stakeholders involved, conducting pilot projects in big cities, adapting timelines for each region and city, and helping the whole population to acquire digital devices.
Mexico started to deploy digital terrestrial television in 2004. Although the digital switchover process has not yet been completed, it is expected that — on 31 December 2015 — Mexico will be the first Latin American country to fully switch off analogue terrestrial television signals.
To implement digital terrestrial television, the Mexican government chose the same digital terrestrial television technology standard as that used in the United States, for two principal reasons. First, the United States had completed its digital switchover a few years previously, and the Mexican population living in border areas was already using set-top boxes or television sets compliant with the Advanced Television Systems Committee (ATSC) standard adopted in the United States. Second, Mexico is one of the world’s largest producers of television sets and it mainly exports its digital television sets to the United States, so having the same standard facilitates production for the export market. Today, 97% of the 30 million households in Mexico have a television set, and 46% of these subscribe to a pay-television service. Analogue switch-off will therefore affect 15.5 million households, leaving them without a television service unless they switch to digital. In fact, because “must carry” content obligations for pay-television have only recently been mandated, all 30 million households could be affected.
Before launching the country-wide digital switchover process, the Mexican government decided to conduct a pilot project in Tijuana. Although some initial reports were negative, the project was ultimately viewed as a success. It achieved analogue switch-off on 18 July 2013, freeing up 48 MHz of spectrum in the 700 MHz band. The analogue switch-off process is now in progress in the rest of the country, making use of the experience gained through the pilot scheme.
Following the structure of the analogue terrestrial television market, the government has allocated a digital licence to each broadcaster. While avoiding the need for market restructuring to create a separate transmission company for digital terrestrial television, this approach appears to be less efficient in terms of the digital dividend spectrum.
The government has allocated an ATSC multiplex to each broadcaster. With the ATSC standard, however, a multiplex of 6 MHz cannot contain more than two high-definition channels or six standard-definition channels. This means that more rather than less spectrum is needed in Mexico to accommodate the digital terrestrial television services. In contrast, in the United States, a digital dividend resulted from the digital switchover.
To ensure the success of the digital switchover in Mexico despite the large proportion of the population having a low income, the government decided early in 2014 to offer almost 14 million high-definition television sets to the poorest households. Subsidizing these households to gain access to digital terrestrial television is costly (estimated at MXN 19 billion, equivalent to USD 1.5 billion) and poses a risk for the local television manufacturing industry, in terms both of meeting demand and of potentially creating a second-hand market where government-funded sets are sold on.
So far, despite these risks, Mexico is succeeding in its transition to digital terrestrial television. As one of the most advanced countries in the digital switchover process in Latin America, and one of the first countries in the region to plan its digital switchover, Mexico had to make some choices based on international experience, without any best-practice examples from other countries within the region. This influenced choices such as the adoption of the ATSC standard, and the decision to fully subsidize high-quality television sets for the poorest households.
Other countries in the Americas
Argentina, Venezuela, Chile and Uruguay, like most Latin American countries, have all chosen the Brazilian standard for digital terrestrial television and can use Brazilian best practice to achieve their digital switchover.
In all of these countries, the penetration of pay-television is much higher than in Brazil (78% in Argentina, 68% in Venezuela, 67% in Chile and 64% in Uruguay). With fewer households relying on digital terrestrial television, the problem of analogue switch-off leaving some households lacking a television signal will be less serious than in the Brazilian case.