Ireland’s digital graveyard

16 Dec 2004

‘Twas the night before Christmas, when all through the house not a creature was stirring, not even a mouse and then it started: a rustling of paper followed by the howl of a twentysomething male who discovered that his new iPod does not contain U2’s 400-song digital box set. Because of unresolved licensing issues, he cannot buy or download music for the device from the iTunes music store.

Inconclusive negotiations with the Irish Music Rights Organisation (IMRO) concerning copyright and royalty collection are blamed as the core reason why Irish iPod users cannot buy U2’s digital box set or the new album How to Dismantle an Atomic Bomb from the EU iTunes Music Store. U2 fans across the world have been able to purchase and download the box set with just one click on the iTunes Music Store in the US and Europe since late November for €116.

In October as well as announcing the deal with U2 and Universal Music, which included a special U2-branded iPod, Apple launched the EU version of its revolutionary iTunes Music Store to music fans in Austria, Belgium, Finland, Greece, Italy, Luxembourg, the Netherlands, Portugal and Spain. The store was already available in the UK, Germany and France. It is understood that the failure to resolve copyright issues with the IMRO prevented Ireland from being among the countries to enjoy the use of the iTunes store. The IMRO exists to protect the rights of Irish recorded music artists and has been outspoken about the threat of music piracy over the internet. Ironically, the advent of iTunes is seen as the first progressive step towards enabling people to buy music and has been broadly embraced across the music industry, both by labels, bands and emerging artists.

Despite being approached a number of times, both U2’s management firm and the IMRO declined to comment on the situation. In a statement, Apple said that it would not be opening any new stores beyond Canada this year, but was nonetheless committed to announcing new countries “as and when they come on board”. As a result it could be next year before Irish iPod users can buy music legitimately from the iTunes store.

At the time the debacle came to light, Mark Rogers, Apple’s general manager for the Ireland and UK, told “There are different licensing rules between countries and we intend to work out an agreement with the bodies concerned. It is disappointing that iTunes is not available right now for Irish users but we hope to bring it to all countries as soon as we can.”

The factors that prevent bringing a fundamental platform such as iTunes to Ireland are only a microcosm of those that prevent the majority of homes from enjoying digital terrestrial television (DTT) services.

Okay, you may argue that we have DTT in the form of BSkyB, NTL and Chorus — which are delivered over satellite, MMDS and cable — but the opportunity for the country to deploy a national DTT service has so far been squandered due to alleged narrow interpretations of licensing and unresolved squabbling between advocates of DTT and the Government. Advocates of DTT also argue that because nothing has happened on the DTT front, players such as BSkyB — which in August boasted 323,000 subscribers in the State out of 849,000 cable, satellite and multichannel television subscribers — are in an excellent position to target the Irish marketplace for advertising, presenting a serious threat to incumbent broadcaster RTÉ. According to figures from the Commission for Communications Regulation (ComReg), digital subscribers in Ireland represent 33pc of all households.

According to an industry insider, Ireland had a good opportunity to deploy DTT services around the time that the Broadcasting Act, 2001 passed into law following a year-long delay caused by squabbling over the ownership of the proposed network. More than three years later, the Government has still not awarded a licence to operate the service in Ireland, despite running a 12-month tender.

The advantage that DTT presents to TV service providers is a more efficient management of ultrahigh frequency whereby 10 times more content could be filtered within one single band, resulting in the opportunity to deploy other services such as broadband and telephony to homes with standard analogue antennae.

Peter Branagan, former head of digital development at RTÉ and the head of a consortium known as It’s Comms (formerly known as It’s TV), is lobbying the Government to create a realistic licensing regime for DTT and argues that there is still time to create a viable DTT service. But such services, he says, would only be viable if the provider could provide commercial services such as telephony and broadband. It’s TV was the sole bidder for the Government’s DTT licence but had not been able to satisfy the Government that it had the necessary financial muscle to fund a network.

Branagan warns that unless the opportunity is grasped soon the DTT market in Ireland could be saturated by UK channels. “We have put forward a modified proposal to the Government in the past nine months that we believe would make DTT a viable proposition. DTT would only be commercially viable if deployed with additional services such as broadband and telephony. We are looking for the Government and ComReg to advertise a licence that is commercially viable for the recipient.”

He believes that the crux of the problem lies in a very narrow interpretation of how DTT services should function under a draft licence put forward by ComReg. He said the licence puts a 20pc data cap on DTT services. “This makes it impossible to provide data services such as broadband and telephony and, therefore, the DTT proposition is unviable. We are calling on the Communications Minister Noel Dempsey TD to use his powers of intervention to have the licence redrafted and allow competition in the market to develop.”
Branagan also believes that it is not too late to create a viable ‘triple play’ DTT package. “Broadband, voice-over internet protocol and television together are integral. RTÉ went through a financial crisis three years ago and doesn’t know which way is up when it comes to DTT. There is a major revolution happening in DTT — just look at the advent of personal video recorders that can store up to 400GB of TV. RTÉ doesn’t understand what a threat this presents and in the years ahead American TV and movie studios may stop selling products to free-to-air service providers in favour of more cash-rich DTT companies,” Branagan says.

Also backing his argument that it is not too late is Fintan McKiernan of DigiSoft, a young Cork-based software company that is winning business across the US and Europe in the sale of software that enables DTT providers to deploy e-commerce services.

Acknowledging that DTT is raging across Europe, McKiernan asserts: “The reason why DTT doesn’t have any political backing in Ireland is because it is not a vote winner. The only motivation factor is that in the EU there is an agenda to switch off analogue broadcasting in favour of DTT. Ireland is one of the few countries that doesn’t have a switch-off date. In Italy by 2006 DTT will cease transmitting analogue signals.”

ComReg wouldn’t comment on the viability or not of the existing licence but says that DTT must not be confused with the multi-channel services being offered by Chorus and NTL. It also notes that “the UK’s DTT service Freeview is not bundled with telephony and broadband”.
ComReg acknowledges the 20pc cap on the existing DTT licence “as it is a broadcasting licence”. “If any operator wants to use spectrum to provide data services (eg telephony and internet) then it would have to approach us for separate licences,” it adds.

Peter McAvock, who is based at the Digital Video Broadcasting agency that works out of the European Broadcasting Union’s head office in Geneva, believes the issues can be resolved. “It wouldn’t be right to say Ireland has missed out — the opportunity remains. DTT represents both an opportunity and a threat to the existing set-up. It could allow other people into their environment in the context of being an enabler of competition in an environment where there is an incumbent.

However, the golden rule of business is to identify competition and if there is a means of blocking competition do so. There’s no reason why the rules should change,” he says.

But there are pitfalls, McAvock reckons. “Direct competition with Sky, which is what ITV tried in UK, was not a good business model as it went bust. However, since the fall of ITV Digital a situation has developed whereby Freeview has been launched and that company has been extremely successful. It is an aggressive company operating a free-to-air DTT offering without competing with Sky. There’s no reason to presume such a strategy couldn’t work in Ireland,” McAvock concludes.

As Christmas approaches and iPod owners scratch their heads at the factors that prevent them from buying music for their new devices over the internet and as families watching analogue TV grow bored at the bargain basement movies that they will have to endure over the holiday, it is again clear that Ireland is a country befuddled by licensing and regulatory problems.

In conclusion, if Ireland proves to be a difficult market where core digital platforms such as music, broadband and television cannot thrive and grow uninhibited, our pretensions to the throne of digital hub of Europe are nothing short of a pipe dream.

By John Kennedy