Regulatory Implications of the Adoption of Digital Television in

Sergio Godoy Etcheverry, MBA PhD Pontificia Universidad Católica de Chile

Introduction pared with only 90% of with mobile tele- The present study offers an assessment of the reg- phones. In contrast, an estimated 48% of people access ulatory implications of the adoption in Chile of digital the Internet (one of the highest rates in Latin America) terrestrial television (DTTV, i.e., open digital televi- and 30% of households receive pay TV. At the rate of an sion), particularly following the November, 2008 sub- average of about three hours of viewing per capita per mission in Congress of the draft presidential reform day, TVA provides the foundation of the notions of law to regulate all television (No. 18,838) and after the “reality” in the minds of the average Chilean. This adoption of the Japanese ISDB standard in September, occurs not only through news programs, but in the mod- 2009 in line with Brazil, Argentina, and Peru. This els and stereotypes in the genres of entertainment, as study applies to this vision of the entire television sys- well as the advertising messages that finance the entire tem, including its public policy, economic, industrial, package. Because of its massiveness and immediacy technological, and social dimensions. In addition I will (which makes it very effective), TVAhas attracted more give priority to the public’s perspective as to how digi- advertising for decades: according to the Chilean tization may enable them to access (or not) more and Association of Advertising Agencies (ACHAP), in better television, at a reasonable cost, with more and 2008, it captured half of the advertising pie ($933 mil- better content developed locally. lion), one of the highest ratios in history. This work has three parts. The first outlines the TVAis “open” because of the characteristics of its context of television in Chile, in terms of its social rel- transmission medium, the electromagnetic spectrum. evance and the changes in the business and production First, the spectrum as a natural resource is freely avail- models due to digitization. The second part presents able. The sender needs only an antenna to transmit and, three models of analysis that help manage the regulato- before digital technology, could not charge people who ry discussion: liberalism/restrictions (Curran & Seaton, had receivers; they, in turn, are accustomed to receiv- 1997), public service television, and parameters of ing television content for free. Thus, broadcasters had quality television for the various social actors and ana- to find finance by third parties: advertisers, govern- lytic levels. Each of these applies to the present as well ments, or sponsors. Second, the spectrum is finite: as the historical reality of the legal frameworks of there is no room for an unlimited number of broadcast- Chilean TV. This section also refers to the British sys- ers, unlike what happens with other media, like print. tem of DTTV—Freeview—whose success has much to Third, when not regulated, the use of the spectrum do with a consistent and updated regulatory frame- leads broadcasters to interfere with each other work, one of which targets the common good. The third (McQuail, 1998; Wood, 1992). part analyzes and assesses, based on the models and For all these reasons, the received wisdom holds detailed background in the previous sections, the legal that the electromagnetic spectrum serves as a national reform project of the government to allow DTTV. asset for public use, franchised by specific criteria to individuals or organizations selected by some mecha- nism, hopefully (but not always) unbiased. Countries 1. The Context often require certain compensations to the concession- aire in return for this privilege, which vary from coun- A. The importance of television try to country (McQuail, 1998). In Chile, among other Along with the radio in 2008, almost 100% of things, television broadcasters must allow a segment of Chilean households receive broadcast televison (TVAin electoral advertising at election time and ban obscene its Spanish acronym, referring to terrestrial broadcast- or violent contents, subject to penalties by the National ing, not to be confused with satellite distribution), com- Television Council (CNTV).

COMMUNICATION RESEARCH TRENDS VOLUME 29 (2010) NO. 2 — 25 B. Digitization ship based on a general audience, and advertising estab- TV receivers in Chile cannot capture both analog lished to raise finance. The amount and type of audience and digital signals, unless they add an adapter to con- attracted, as measured by a survey (electronic, in this vert from one format to another. But digital video case: the people meter) by a separate company, already exists in the forms of DVDs, pay TV (which Time/Ibope, serves as the basis for advertising alloca- requires a decoder or set top box), and the Internet. tion. The need to attract mass audiences encourages TVA channels require a legal change to transmit with operators to imitate each other, with the consequent loss new digital technology, since the public needs to of program diversity and sense of few alternatives from change their receivers or get a decoder. And contempo- the audience (Ishikawa, 1996; Godoy, 2000). rary societies assume that universal free access to TV TVA filled seven channels (2, 4, 5, 7, 9, 11, and has become an acquired right, something that applied 13) in the VHF band, with each license given to a dif- to neither the Internet nor cable. ferent operator since the existing law prevents the con- But apart from the change in the reception equip- trol of more than one channel per operator. This variety ment, the digital formats amend the premises on which of operators (one state, three universities, and three pri- the industry built the conventional TV model. vate, although one university licensee ceded operations Digitization encodes images, sounds, and text using the to a business, controlled by the newly elected presi- protocols of computers, thus not only allowing one to dent, Sebastián Piñera) ensures reasonable levels of mix previously separate media (like news, music, TV, editorial quality and diversity, considering the limited or movies) but also telecommunications, because wire- possibilities of a middle-income small country like less and cable networks can transmit any kind of bina- Chile (Godoy, 2006, 2000, 1999). The law has pre- ry data. This process of technological convergence lies vented the concentration of ownership that exists in at the heart of the switch from analog to digital, which other countries and media sectors; it also requires sta- correlates today to mergers and acquisitions. tions to compete fiercely with each other for a share in This means, first, that analog TVA no longer pro- the advertising pie, with ratings based per minute (this vides the only type of television. Digital protocols allow prevented the development of analog UHF channels recourse to a wide range of delivery mechanisms and during the 1990s—there was almost no interest for /or combine them. Thus, there are TV direct-to-home licensing analog television in the UHF band available satellite systems (DirecTV and Sky, for example), cable since 1990 because of difficulties in financing it: each systems (VTR, Zap, Telefónica), conventional terrestri- license requires the operator to compete and sell adver- al broadcasting (TVA or open television), and broad- tising in isolation without being able to merge channel band Internet. In some respects, they complement each operations, Godoy, 1999). other; in others, they replace network television. To dis- Along with this traditional set-up, pay-TV also tinguish it from the “other” digitized television, we operates in Chile, funded largely by direct charge to the speak of digital terrestrial television (DTTV), which is user (and also marginally by advertising sales). As in open digital TV, transmitted using antennas located on many countries, a single large company dominates pay planet Earth (as opposed to transmission by satellite TV (VTR concentrated 71% of subscribers in 2007); mounted antennas floating in space). The distinction the company provides subscribers with dozens of chan- between DTTV and other television matters because nels, both general and specialized, with different pay- they involve different viewing experiences for the pub- ment options depending on level of service for each of lic and also various operational and business models, them (basic signals, Premium, and pay per view). The although they often share the same screen at home. VTR subscription revenues, totaling some $360 mil- lion in 2007 (equivalent to almost 80% of the revenues C. The television business model: Deep change of all broadcast channels together) have the added The business model of the TVA and its regulatory bonus that subscriptions are more stable than advertis- framework is old. It is actually very similar to AM ing sales. broadcasting in the 1930s to the 1950s, with relatively Like Telefónica, VTR (Chile’s subsidiary of few licensees (four nationwide, three in the regional cap- Globalcom) gets additional revenue through links to ital, ). In general, channels developed most of Internet telephony and broadband, and will add mobile the content they broadcast, the programming arranged in phone service during 2010. This triple pack of telepho- a grid, the spectrum distributed through a grant relation- ny, Internet, and television is the core business of these

26 — VOLUME 29 (2010) NO. 2 COMMUNICATION RESEARCH TRENDS companies, and the relationship of television income creating content for mass appeal in Chile. And by act or with respect to telephony and the Internet is about one omission, the regulatory framework defined for DTTV to ten. And while pay TV still has a theoretical ceiling affects that. of 65% to 70% of Chilean homes that have not yet signed, broadcast or network television has nowhere to 2. Evaluation Parameters grow: There are no new homes to gain, and a couple of This section discusses policy and analytic models decades ago the advertising pie reached the GDP ratio that help to frame the legal reforms under discussion. observed in developed countries (Godoy 2000; Tironi The first model, adapted from Curran and Seaton & Sunckel, 1993). (1997), characterizes the broadcasting system accord- At the same time, despite the trend towards merg- ing to the degree of liberality or restriction on the two ers and acquisitions, the television value chain is main areas that comprise regulatory action. The second becoming more complex and fragmented (Godoy model follows the principle of public service televi- 2007, 2006; Aris & Bughin, 2005). The typical Chilean sion, a concept showing European influence in Chile, broadcast channel creates and packages content (pro- which justifies television regulation for the common gramming) and distribution systems but is not involved good. The third model spells out the parameters of in providing hardware (which now includes television quality television, according to the different players sets, phones, PCs, notebooks, iPods, and other and levels, in order to visualize the different legitimate devices). Although there are specific examples of soap interests, which it must reconcile to achieve or regulate operas and program formats exported or licensed to a television system. third parties (some companies in Mexican, Brazilian, and Venezuelan television), the main Chilean channels A. The Curran and Seaton Model: normally produced programming solely for their own The liberal-restrictive axis use. Only recent years have seen consistent efforts to The model of Curran and Seaton (1997) provides break that trend with new reality shows, soap operas, two essential regulatory axes that are usually regulated and drama series. But today telecommunications and in all or most media systems: the content and the eco- the Internet let you jump from one to another of these nomic/corporate interests (that is, the conditions for links: YouTube, for example, does not require a pro- media companies’ operations and finances). Both axes grammer/distributor like TVN, HBO, or Cinemax for range from a restrictive to a liberal pole, defining four the videos to reach the public. Moreover, these tools quadrants according to the scenario combining more or also enable new dynamics within each step, building less regulatory restrictions on one or other axis. In on the dynamics of Web 2.0 (that is, an Internet with Chile, the system is mainly regulated by the National active users exchanging material, not just as a reposito- Television Council Law No. 18,838 (which regulates ry of documents, BCG, 2008). television), the Law on National Television in Chile In the field of professional television, this envi- (TVN) No. 19,132, and the General Telecommunic- ronment allows more flexible models of production, ations Law No. 18,168. The regulatory bodies consist such as “360 degree production,” in which content can of the National Television Council (CNTV), an be exploited through different and complementary win- autonomous and collegial constitutional body dedicat- dows, such as cinemas, DVDs, premium signals, gen- ed to monitoring content and promoting quality pro- eral cable, and network TV. It also draws on the support grams, and the Undersecretariat of Telecommunic- of technologies such as cell phones and the Internet to ations (SUBTEL), a technical body devoted to manag- abstracts or lighter versions of the programs, polls, pro- ing the broadcast spectrum. motions, synopses, discussion areas, and the like. At all In their critique of the British media system dur- stages the producer can more actively integrate the ing the Thatcher period, Curran and Seaton showed a audience through interactive features, which digitiza- strong contradiction between economic liberalism and tion facilitates and also allows the capture of direct editorial restrictions, a scenario similar to Chile’s after payments from the public (Aris & Bughin, 2005). the military coup of 1973. The freedom to develop a Thus, the convergent scenario increases competi- modern and dynamic British media industry also pro- tion but also creates new opportunities. Even though duced a strong concentration of ownership that impov- their business model seems outdated in several erished the diversity of editorial views and ideological respects, the TVA operators have the most expertise in systems, whatever the increase in channels and media.

COMMUNICATION RESEARCH TRENDS VOLUME 29 (2010) NO. 2 — 27 In parallel, the Conservative government restricted emerged the year after the opposition victory in the information on labor along political lines (Curran & presidential referendum of 1988, when there was no Seaton, 1997). further point in the political control of the media. To Following this model, the evolution of the regula- this was added the surprise sale of the frequencies for tory framework of Chilean television from its origins to channels 4 and 9 (controlled by the state network TVN) the present day moves from the restrictive to the liberal to business supporters of the outgoing government quantrants (see Godoy, 2007). Decree Law No. 7039 of (Acuña, Gutiérrez, & Puentes, 2007). However, the 1958 was liberal on both dimensions: as with radio, TV entire economic system had been converted to the neo- would be a private business without special control of liberal paradigm during the previous decade, which content. But that never happened. Only three university involved the modernization and privatization of the channels were authorized, and they were forbidden to media system and its financing through advertising sell political advertising. As in radio, the President of (Tironi & Sunckel, 1993). the Republic granted concessions at his discretion after After the restoration of democracy, the govern- a technical report by the then Department of Electrical ment amended Law No. 18,838 only in 1992; it Services. Although for different reasons, neither Jorge remains in force, persisting in controlling content Alessandri (independent right, 1958-1964) nor Eduardo through the control of the CNTV, which is more loose- Frei (centrist Democrat, 1964-1970) wanted to allow ly applied to pay TV. This is just one example of the private television: Alessandri hated television, while obsolescence of the regulatory framework. Frei tried to monopolize the glory of a modern televi- The emphasis on controlling content through this sion network and focused on creating the public TVN law is embodied in Article 1, which defines a “proper (Hurtado, 2007, 1989). functioning” of television in terms of a vague code to The subsequent Law No. 17,377 of 1970 imposed deliver desirable content. Unable to formulate these restrictions on both dimensions, under the paternalistic desirable norms, in practice the CNTV sanctions unde- principle “to educate, inform, and entertain” first sirable content defined in a separate Regulation (pri- declared in 1923 by the BBC. Like Decree No. 7089 of marily pornography, excessive violence, and involving 1958 and Law No. 18,838 of 1989 (still in force), the minors in acts opposed to good morals, Acuña, law was passed at the last minute by the outgoing gov- Gutiérrez, & Puentes, 2007). In contrast, groups did ernment seeking to hinder its successor (in this case, reach consensus on the usefulness of the CNTV com- the socialist Salvador Allende). That law also created petitive fund for quality programming (Donoso, 2008; the TVN public network (which de facto began the year Godoy, 2005, 2007, Sierra, 2006). before) and the content regulator, the CNTV. This manifests the contradiction of such an The military coup of 1973 involved heavy restric- arrangement: a more liberal economic system coupled tions on content, but the neoliberal economic model with a more controlled content, where an elite con- imposed by Augusto Pinochet deregulated economic troller (like the BBC in 1923) assumes that it knows aspects, specifically businesses such as advertising better than the public what it can see. Although corpo- sales (an increase that offset losses from reduced state rate issues are less regulated than in the past, TVA subsidies to televison, first established in 1970). From licensees face several hindrances in contrast to radio this period dates a couple of interesting instruments: broadcasters: remarkably, they cannot operate more the mandatory “cultural strip” (whereby the channels than one channel per service area. And it is difficult to decided what to show and the state did not spend one lease or transfer the license to third parties. That does peso) and the CNTV competitive fund for quality pro- not happen in radio, where the broadcasters do not suf- grams. The problem with this novel mechanism was fer these restrictions, nor are they supervised by CNTV. that it had very little money: it exceeded one million dollars only in 2005. (During the 1980s, a British par- B. The model of public service television liamentary committee, the Peacock Committee, seri- The second model, public service television, has ously considered replacing the BBC by a similar mech- had considerable influence in the Chilean system. anism, Godoy, 2000). Although open to debate, its principles (even though The military regime promised private television not expressly mentioned) have emerged in various in the Constitution of 1980, but took nine years to aspects of regulatory design. This section examines the accomplish that: the respective law (No. 18,838) concept and its relevance in the Chilean context, and its

28 — VOLUME 29 (2010) NO. 2 COMMUNICATION RESEARCH TRENDS role in articulating strong public policy objectives for the emerging Web 2.0), and the different actors the change to digital television. involved. The scenario also implies flexibility to adapt The notion of public service TV in Chile. In or exclude institutions that will become obsolete. For short, this concept of European origin (and in force in example, the British system merged all of the broad- countries such as Japan, Canada, Australia, Israel, casting and telecommunications regulatory bodies, India, and throughout Southeast Asia and the European which before operated separately. The result is a con- Union) means a system of television oriented to the verged regulator, the Office of Communications common good, to the quality of life of the population (Ofcom), which restated the notion of public service (including entertainment), and to democratic coexis- television around complying with a series of overarch- tence, in contrast to sole control by the market and/or ing purposes rather than maintaining a set of institu- an authoritarian political power. This system offers the tions. In this regard, and based on relevant internation- widest variety of programs on national channels freely al experiences (see Brown & Picard, 2005; Iosifidis, available to all (Godoy 2007, 2000). While Chileans Steemer, & Wheeler, 2005, Ofcom, 2005), the change often assume that public television comes only from to digital should tend towards two main objectives in the public TVN network (following the old cliché of Chile, formulated from the perspective of the user/citi- “educate, inform, and entertain”), in practice there are zen (Godoy, 2007): a number of institutions that have public service aims: • More and better television for Chileans: in tech- • The channels are national in scope, with free nical terms, this means access to all applications access to all the inhabitants of the country; they of digital technology at a reasonable cost and offer a reasonable range of different program without discrimination: more channels, a sharper types (not all but several of which contribute to the image, mobile reception, interactive applications. democratic functioning and improved quality of Regarding programming contents, this means life of the public) ; ensuring a system that guarantees universal free • There is editorial and corporate diversity among access to the widest possible diversity of content, the operators (universities, both private and ideological and editorial opinion, different geo- autonomous public); graphical realities beyond Santiago, and ensuring • All operators must observe certain positive princi- the supply of relevant, reliable contributions to ples of programming, outlined under the term “cor- democracy, peaceful coexistence, and a national or rect operation” in Article 1 of Law No. 18,838; local identity, as appropriate. • All television operators are subject to the control of • More and better local content production: the a regulator, the CNTV; plan recognizes that the digital era requires a lot of • The CNTV operates a competitive fund for quality content production to fill the different platforms programs (which reached a record high $7.9 mil- and emerging distribution channels and, as audi- ences prefer the local, the plan should meet that lion in 2009), open to any producer who has an demand with national talent. It involves a mode of agreement with any broadcaster with an affiliation production of exportable content; content that is with TVA; adaptable, flexible, and open to co-production with • Only televison falls subject to these special partners around the world; content that is innova- arrangements. tive and original; content that appeals to and chal- Although we might expect the TVA to move to lenges the public; content that rescues national and the liberal/liberal quadrant defined by the axes of local identity; and content that generates employ- analysis of Curran & Seaton, the experience of coun- ment and local expertise in the industry. tries like Britain suggests that the concept of public service TV typically moves to an increasingly frag- C. Parameters of quality television mented, commercialized, and convergent scenario. As Even if one rejects the idea that television should with public works concessions in Chile (which have be governed by principles of public service, the third multiplied exponentially the construction of roads, air- model of analysis helps to clarify the interests that must ports, and similar works), it is important not to lose be reconciled. This model allows one to compare stan- sight of the overall goals of the common good and to dards of quality television as social actors and levels of have the common sense to accomplish them, taking analysis; it adapts the work of authors such as McQuail advantage of market logic, the new citizen media (with (1998), Ishikawa (1996), and Rosengren, Carlsson, and

COMMUNICATION RESEARCH TRENDS VOLUME 29 (2010) NO. 2 — 29 Business: Legislators Broadcasters Journalists, The Public Producers Uses and gratifica- tions at both intellec- tual and affective “Public interest,” Survival of the business, Professional stan- levels; sense of System based on ideologies, editorial freedom, effec- dards, ethics, techni- belonging, citizen embodied in laws tive messages cal standards media, representa- tion of everyday problems Access to various media pluralism, value-based content, Operations, conditions Freedom to act, stability working environ- child protection, Media of operation, expected of operations, protection ment free from pres- reinforcement of roles of the media. of broadcast sector sure, employment, identity, access to working conditions citizen media. Protection of vulnera- Programming ble groups, prohibition Sense of belonging of harmful content Table 1. Matrix of parameters and levels of media preference Based on McQuail (1998) and Rosengren, Carlsson, & Tagerud (1996) Tagerud (1996) to the Chilean reality (in Godoy, 2000). mere aggregate of individual opinions, the other as a Table 1 shows the model as a matrix that groups society collective and mutually reinforcing social bond) con- as four major social actors, each with its own interests tested between an elitist view (reflected in the “proper and performance standards applied in three overlapping functioning” language of the Law No. 18,838) and a levels: the complete television system, that of a specific view which defines television as a mass medium medium (from TVA channels to pay TV operators), and financed by popular preferences. The contradictions individual efforts (for example, of program critics). also appear among paradoxical opinions of the The legislative actor (which may be a politician Constitutional Court, which on the one hand, require or analyst) normally acts on behalf of the public inter- broadcasters to issue information and electoral infor- est to define its own ideology, and seeks to legislate in mation and, on the other, recognize that the law, among this sense: on the right, to deregulate the system to let other things, allows them to refuse to publish news or the market operate at its maximum (see Sierra, 2006, information because of editorial freedom (Peña, 2007). LyD, 2009); on the traditional left, to act in solidarity In either case, the system requires a healthy democrat- with the disadvantaged groups and promote a more ic and institutional system, one transparent and with lit- active role for the state (see Donoso, 2008). The latest tle corruption. proposals from the ideology of social solidarity stress At the level of the system, the legislature defines strengthening the “third sector” of citizen media as a the intended function of television, who should operate counterweight to the exaggerated roles of the market it, under what conditions, how to finance it, and how to and the state in contemporary systems (Saez, 2008a, protect vulnerable groups such as minors or ethnic 2008b). McQuail (1998) and Rosengren, Carlsson, and minorities. For regulatory discussion that interests us Tagerud (1996) synthesized these views with different we will stay at the system level, but keep in mind that “theories of the press” (authoritarian, free press, social this “actor model” also encompasses broadcasters and responsibility, communist, social development, partici- /or content specific to current standards and obligations patory democracy), while Peña (2007) offers an inter- (implicit or explicit) at the level of the media and the esting analysis of ideological contradictions present in programming. the Chilean system. The contradictions noted by Peña The rationale of the broadcaster corresponds to appear in two implicit concepts of democracy (one as a that of the owner of the media. Large or small, or non-

30 — VOLUME 29 (2010) NO. 2 COMMUNICATION RESEARCH TRENDS profit, ad supported or state funded, conservative or lib- two proposals to Congress: one to amend Law No. eral, its purpose is the survival of the organization and 18,838 dealing with National Television Council, and the maintenance of maximum freedom to do what it the other to amend Law No. 19,132 regarding TVN. pleases and to make the message or content effective Despite the technological changes involved, the pro- (either to make money, maximize social influence, posals did not touch the General Telecommunications attract audiences, reinforce the brand, or persuade the Law No. 18,168 or attempt to integrate the various reg- public). In contrast, the rationale of the media profes- ulatory agencies. sional depends on ethical and proper technical stan- This article deals only with the draft amendment dards. For example, journalistic ethics requires the pub- to Law No. 18,838 of CNTV, because it focuses on the lication of an important story even if it means offending change to digital. But before going on, we need to the sponsors, which is why many prestigious media out- include three additional facts. First, the proposal was lets “shield” reporters from the business management. sent to the Chamber of Deputies, a more diverse body In the case of producers or filmmakers, their interest in and thus more difficult to coordinate than the Senate, innovative and creative programs often collides with the which means that the process can take years. Second, fear of management about new content whose appeal the CNTV protested at not having been consulted has not been proven and can scare off advertisers. (though its chairman is appointed by the President of The public, meanwhile, differs from the other the Republic) and at ignoring content and other rele- three actors. First, several authors recognize people’s vant subjects as criteria for assigning the new digital right to access a wide variety of programs as a basic cri- concessions (CNTV, 2009). Third, until this reform terion of performance of a media system (Ishikawa, takes place, there will be no DTTV although the 1996). Exposure to certain content is explained by the Executive did decide to adopt the Japanese ISDB tech- uses and gratifications that the public makes of them, nical standard. whether emotional or intellectual in nature. Often con- B. The amendment of Law No. 18,838 to allow tradictory, these very human motivations can differ from the introduction of digital terrestrial television program preferences shown in ratings measurements (see CNTV, 2008a). Besides the typical features of The proposal focuses on four aspects, of which entertainment and information passively consumed, the the first is the most important: new licenses for DTTV. public also appreciates the sense of belonging to a group, The others are secondary: public campaigns, some and the opportunity to be heard and to complain about adjustments to the role of the CNTV, and the transition everyday problems (which is usually very well to digital broadcasting. addressed by participatory radio programs—see On new licenses for DTTV: The first innovation Winocur, 2002). The possibilities offered by digital tech- is to define licenses for “intermediate services” in addi- nology in terms of increased channel availability, flexi- tion to traditional television or “free reception” (Art. bility of use (for example, mobile reception, delayed or 15º and 31º). The former allows transmission; the other skipped commercials), and interactive features become is tantamount to a license to create content (that is, the particularly appealing, provided they come at a reason- owner of a license to broadcast “free reception” cannot able cost and are easy to use (Brown & Picard, 2005; distribute programming to the public if it has not also CNTV 2008b; Godoy, 2005; Goodwin, 2005a, 2005b; received a grant for intermediate services for itself). Iosifidis, Steemer, & Wheeler, 2005). This allows licensees to distribute signals generated by In short, an adequate regulatory framework third parties, something that today is not allowed on should balance the interests of these stakeholders in the television or radio. Although not mentioned in the draft best possible way to maximize the collective welfare. law, the provision allows SUBTEL to offer new digital licenses that would add a total of 30 channels in the UHF band (Godoy, 2007). 3. Evaluation of the Pending Broadcast TVA’s current licensees will automatically gain Legislation the two types of grants to continue digital broadcasts of their current contents. In order to prevent concentration A. Context of the proposal of ownership, these operators are prevented from accu- mulating more than one grant of intermediate services, After several postponements, at the end of 2008 but additional ones can be obtained for free reception. the government of Michelle Bachelet (2006-2010) sent (The ISDB standard allows the broadcaster to provide

COMMUNICATION RESEARCH TRENDS VOLUME 29 (2010) NO. 2 — 31 a signal to mobile telephony and two high definition must cover at least 85% of the population within its channels or eight standard definition channels.) service area; 100% of coverage should be completed A second innovation is to establish national, within a maximum of eight years. The legislature regional, local, and community licenses (Art. 15º), as assumes that these goals should be met even if viewers in Spain and other countries. The last two do not are not interested in obtaining digital receivers. require intermediate service licenses, which lowers the cost of maintaining transmission and antenna systems. C. Major criticism of the proposal (The community license has the same coverage as the From a liberal economic perspective, the Libertad local one—less than 50% of a region—with the differ- y Desarrollo (LyD) think tank indicates that the text ence that private nonprofit organizations, incorporated exceeds the title as the amended substantive aspects of in Chile and engaged in civic and social objectives, are the licensing scheme were not justified by the simple eligible). The proposal states that at least 40% of technological change (LyD, 2009). In particular, LyD licenses must be regional, local, and community. criticizes the fact that operators cannot concentrate With regard to the conditions to obtain and main- only on a grant of intermediate services, and believes tain the licenses, Art. 31º sets a 20 year renewable term. that this restricts their ability to compete (in this case Articles. 23º and 31º provide only technical criteria to correctly) and further believes that there is no risk of govern these. Whoever offers the best conditions of concentration of ownership in television given the transmission and efficiency of spectrum use, deter- increased availability of channels (in this case, incor- mined by SUBTEL (the CNTV simply sends along the rectly, as suggested by the national and international background of the applicants), gets the award. As in experience in various media). current law, there are no requirements concerning the LyD also states that the term of 20 years for programming contents offered. This is unlike what licenses is inconsistent with the 30 years set out in the happens in radio, where two competing projects with General Law of Telecommunications for telecommuni- similar technical merits and equal financing go in a cations intermediate services and the 25 years for sealed envelope to the SUBTEL to settle. broadcast licenses (ibid.). The figure is also inconsis- Public campaigns and some changes in the role tent with Law No. 19,131 amending Law No. 18,838 in of the CNTV: Art. 12º provides free broadcast cam- 1992, which established indefinite licenses for televi- paigns for the public good or public interest by TVA in sion channels available prior to that date, and 25 years order to “protect the population and promote respect for new ones (Sierra, 2006). and the rights of persons” (Art. 12m), and provides that Although LyD rejects indefinite licensing, arguing any one campaign may take no more than five weeks a that holders must apply to renew their licenses in the year and not more than 90 seconds for each transmis- interests of their proprietary rights, it does not dare to sion. The General Secretariat of Government decides recommend the final privatization of the spectrum as on these campaigns, subject to the approval of the Sierra has done (in Godoy, 2005) although it insists on CNTV (who could disapprove). Television licensees talking about concessions (licenses), which by definition may determine the form and content of the spot repre- are finite and renewable, as has the CNTV (2009). From senting the campaign, but the CNTV should verify an opposite ideological position, Donoso (2008) high- compliance with the plan. lights that New Zealand has a 20 year limit on licenses; Additionally, the CNTV receives new powers to Italy and England, 12; Spain and France, 10, and the limit the proportion of advertising that is broadcast dur- USA and Australia, eight and five. For the Chilean case, ing productions financed by the development fund for the author suggests a 15-year concession to the applicant programs of high quality (Arts. 12 and 12 bis). As in and a preferential right to renew its license. the draft amendments to the TVN Act, it also set norms If the issue of time promises to be controversial, to which licensees can be held accountable for their the criterion for allocating the grants could be even management once a year before the Senate (and, as more difficult especially given the ideologized Spanish with TVN, it is unclear what happens if the Senate experience, where the governments of Aznar (Popular rejects the statement submitted). Party, right) and Zapatero (Socialist) favored their Transition to digital broadcasting (art. 1 tran- respective supporters (Bustamante, 2008). While LyD sient): Establishes a minimum period of five years so and current TVA licensees prefer only technical crite- that, from the entry into force of the law, each licensee ria, this has been strongly criticized by the CNTV

32 — VOLUME 29 (2010) NO. 2 COMMUNICATION RESEARCH TRENDS (2009) who, like Donoso (2008), feels it is essential to SUBTEL, TVN, and the industry supporting TVAwith- consider the content offered by the licensees (free, but out acknowledging that the environment is changing responsibly) as a discriminatory factor. The CNTV also radically. Pay television is a key player (and a monop- claims that, ultimately, SUBTEL should settle things oly) in the equation, but is not considered. Nor did the and not the Board, an independent public body with new law consider attempts to integrate other public ini- constitutional status (in contrast, SUBTEL is a techni- tiatives that promote different digital technologies from cal-administrative body subordinate to a ministry). other ministries, such as Digital Strategy, the Innova- Another area of disagreement has to do with the tion Council, and the Plan Enlaces. support that is given to the “third sector” on television. The change to digital television equals the change While LyD regrets positive discrimination in favor of inaugurated by the railroad or the automobile. People local and community licensees, such as reserving 40% still travel from Santiago to in a mechanized of licenses or receiving favor in the competitive funds, vehicle faster than they did in a wagon, but trains and those from the opposite position (Saez, 2008a, 2008b, cars are very different. Similarly, people will continue and Donoso, 2008) argue that this ensures public access to watch news, soap operas, movies, trade shows, and to grants of TVA, assuming that their community-based so on through a screen called “television.” But digital and nonprofit nature provides real independence from technology allows far more versatility than that offered the state and private commercial media that now domi- by “Television,” which until recently was synonymous nate the system unchecked. Government public interest only with broadcast television. The bills sent to campaigns that the project proposes would replace the Congress are similar to those to amend the law of rail- media producers and, for different reasons, LyD also ways: the rail monopoly (EFE) perhaps might work rejects these campaigns (LyD, 2009). better than before, but that does not stop cars, trucks, and buses standing in for the train. 4. Conclusion After examining the contemporary significance References of television in Chile, the changes in its business model Acuña, F., Gutiérrez, S., & Puentes, A. (Eds.). (2007). Los as a result of digital convergence, and the theoretical primeros 50 años de la televisión chilena. Santiago de models applied to the current system, we conclude that Chile: Facultad Comunicaciones UC/VTR/El the legal reform proposed by the government seems Mercurio/Canal 13. well intentioned, but poorly designed: the amendment Aris, A., & Bughin, J. (2005). 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