The 14th International CSTB Exhibition and Forum Round Table Debates Burning Issues

The Pay-TV sector has seen, over the past year, many legislative initiatives and new regulations aimed at establishing clear rules governing the relationships between the players in the market and building simpler channels of communication that are easier to understand. These successes in the domain of legislation together with the most important issues relating to the introduction of digital TV in Russia were debated by senior government representatives and businesses leaders at the Round Table discussion held on the first day of the CSTB 2012 Exhibition and Forum.

– The 14^th CSTB 2012 Exhibition and Forum, the premier event in multichannel TV and communications in Russia opened on February 7th with an inauguration ceremony addressed by Irina Nedumova, Director General of MIDEXPO – the organisers of the event, followed by Yuri Pripachkin, President of the Cable TV Association of Russia, and Alexender Gorbatko, Deputy Chief of the Municipality of Moscow’s IT Department.

In her opening remarks Irina Nedumova said: “I am delighted and honoured that this event enjoys the privileged status of Supported by” the Ministry of Telecommunications and Mass Communications of the Russian Federation, as well as other core ministries that include the Federal Agency for Press and Mass Communications of the Russian Federation and the Moscow Chamber of Trade and Industry”. Nedumova went on to note that “The CSTB 2012 Exhibition and Forum represents one of the most important indicators and drivers of the Russian telecommunications industrial sector”. Adding, “For the past 14 years CSTB has been recognised as the essential business platform for the leading players in the market to introduce their digital innovations, engage in a dialogue with government representatives and launch new projects. This year the exhibition has over 450 participating companies, including cable and satellite TV operators, producers and distributors of equipment for digital TV systems, system integrators, and producers of consumer electronic products. Added to this the TV channels and content producers are actively demonstrating their imaginative and exciting plans and programmes for 2012 in one of the three halls that is dedicated to content”.

On behalf of the Mayor’s Office of Moscow and Moscow’s IT Department, Alexander Gorbatko indicated his desire that the participants and guests of the exhibition achieve their business goals set for the three days of the exhibition and that they acquire knowledge, exchange experience and find new partners. In this ambition he was supported by Yuri Pripachkin who observed that “The CSTB exposition has for many years been an essential meeting place for the leading and most influential professionals in this sector, all of whom are engaged in developing not only TV but also IT technologies and content production and was certain that these goals would be achieved successfully”.

Following the official opening ceremony, the speakers and guests proceeded to participate in detailed discussion of the most important issues in a round table session entitled “Transition to a digital standard in national broadcasting. A new way of interaction between players in the market”. The Round Table was moderated by Yuri Pripachkin, President of Russia’s Cable TV Association who started the discussion with the principle issue facing this dynamically developing sector that is to : establish legislation for mass media including interaction between the operators, subscribers, content producers, copyright holders and advertisers.

The prestigious panel of the Round Table included: Maxim Ksenzov – Chief of the Department of Certification in Mass Communications at Roskomnadzor; Sergey Ulyankin – Director of the Department of Digital TV and Employment of New Technologies in Mass Communication Media at the Ministry of Telecommunication and Mass Communications of the Russian Federation; Viktor Pinchuk – Deputy Director General of FGUP RTRS on Network Control, Operation, and Development; Pavel Chumakov – Vice-President for Innovations of the General Satellite Corporation; Nadezhda Vilkova – Director General of MNITI and ARTAP President; Vyacheslav Mordachev – President of Tricolor TV; Mikhail Silin – Vice-President of the Cable TV Association of Russia; Viktor Koresh – President of AKADO; Artyom Kudryavtsev – President of TransTeleCom; Andrei Semerikov – Director General of ER-Telecom; Dmitri Bagdasaryan – Deputy Director General of the MTS group of companies; Anatoly Smorgonsky – VympelCom Director for Marketing in the Moscow Region; Roman Stolyarsky – Director General of Red Media; Nikolai Dubovoi – Director General of the TV Company “The First Channel. World-Wide Network” and Alexander Gorbatko – Deputy Head of the IT Department of the City of Moscow.

Presenting a short briefing on progress in this field Maxim Ksenzov said that the new legislative basis, established in 2011, makes possible prompt adaptive amendments in the law and regulations, so providing an opportunity to amend mistakes and eliminate shortcomings that arose in the initial law-making process. The fact that such a new concept as “a universal license” has been upgraded to the status of law has become a principal change for all players in the market. This concept allows broadcasting in any environment in a particular region of the country and when a license request is being submitted no proof of technical capacity shall be required. It is quite natural that in practice a number of questions arise in relation to this universal license, e.g., it can be obtained only by an editorial office that is formed as a legal entity. A recommendation was made: To make an amendment to the By-Laws, writing down that the legal entity has the function of an editorial office.

Another new issue identified was a decree that pointed out that it is necessary for the players in the market to advise Roskomnadzor of contracts signed between communications operators and broadcasters.

The law has no definition for “A Content Distributor”, so allowing for the possibility to distribute TV and radio signals without a license.

There was important news for those who had failed to extend their license: Roskomnadzor will issue an internal decree introducing a special procedure for signing contracts in the next six months.

Mikhail Silin shared his view on new risks for operators. They are related to non-specific interpretation of the necessity for communications operators to carry out free activities vis-à-vis broadcasters and subscribers to deliver mandatory channels accessible to all and introduce a new broadcasting standard.

“The new DVB-T2 broadcasting standard is more robust incorporating a system of protective coding, which will make it possible to fully satisfy the needs of terrestrial broadcasting”, noted Sergey Ulyankin. Although the decision on the transition to DVB-T2 was adopted when the digitalization process in this country was already nearing its middle phase, by the end of this year a transition mechanism will be developed that will include regulations and technical plan and network upgrading programme.

“The construction and modernization of networks in Russia has been broken down into several stages, according to the Federal Targeted Program of Developing TV and Radio Broadcasting in Russia in 2009-2015”, said Viktor Pinchuk. In 2011 the second stage was completed which saw the establishment of networks in 12 constituent entities of the Russian Federation and upgrading in 27 constituent entities. And although there was a delay introduced by the reconfiguration of the equipment from the DVB-T standard to DVB-T2, it was acceptable, as the advantages of the new standard were obvious from the very beginning.

When discussing the development of TV, it is essential to take into consideration the views of the largest players in the market, i.e. the multichannel digital TV operators. As of today, “Tricolor TV” with 10 million subscribers is one of the leading operators of satellite TV. Vyacheslav Mordachev is optimistic about high household penetration of digital TV. He claims that 20 million out of the 42 million families in Russia are already watching digital TV.

Among the main factors ensuring successful digitalization of the country, Dmitry Bagdasaryan listed providing subscribers with services they really need, social responsibility of companies, and the cost-effectiveness of products. He noted that the market is now at a threshold of an evolutionary leap which will help make true viewers’ expectations and increase the viewing time for TV channels.

Nadezhda Vilkova said it was important to develop the hardware market as an engine for technology development. High costs can be recouped only by production for a mass market and the main problem in the development of domestic equipment production is the contradiction between a wide distribution of the digital broadcasting network and a shortage of hardware for TV viewers to receive the signal.

Pavel Chumakov observed that the best approach would be to use the technical assets that factories had in the past, while the implementation of the Federal Targeted Program should become a kind of a challenge for the equipment manufacturing industry, while organising the production of set-top boxes in regions may become a spring board for large-scale international export, which would make it possible to successfully compete with leaders in world production such as China.

During the Round Table discussions one of the most important problems voiced was the transition from overhead cable distribution to underground conduit cable- distribution. Here the opinion of Viktor Koresh, AKADO’s Director General is that: “The cost of transferring from overhead distribution, that belong to the company, AKADO, and were installed in compliance with established technical and construction requirements, may reach 12 billion roubles, which is comparable to investments into network infrastructure that this company has made throughout its entire history. And let me remind you that AKADO has only 20% of all aerial-cable crossings compared to the overall cable infrastructure of the operator”.

Alexander Gorbatko indicated that the underground conduit cable distribution is the best way to lay cables in comparison with the existing system, while Artem Kudryavtsev said that this method cannot be used everywhere, as the transition process is extraordinary costly for companies which are already working with surface cable. In a further comment, comparing advertising time on federal and niche channels, Mr Kudryavtsev said the ratio was approximately 10:1, which does not give ground for optimism.

Roman Stolyarsky mentioned that niche channels give minimum of advertising profitability, and in the near future he could not see any drastic changes for the better here. The problem is that neither networks, nor Russian channels are willing to invest in content, and that is the reason why foreign channels are dominating in absolute terms. Nikolai Dubovoy came out with a proposal to produce part of the content on request from operators and create alternative packages, where packages are custom-made.

Anatoly Smorgonsky said that the introduction of a common licensing system is the most important factor and pointed out that TV receivers have become much cheaper. In his opinion, these are positive factors that will have a positive effect on digitalization. Additionally, Andrey Semerikov underscored the growing domination of the Internet as the main aggregator of content that is attractive for the viewer.

The Round Table was concluded with the AKTR Congress under the heading “The Role of the Cable TV Association of Russia in Representing the Interests of the Industry when Working with Legislative and Executive Bodies”.

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