Cablegate: French Law On Digital Television Taxes Telco Providers

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DE RUEHFR #1262/01 0890621
ZNR UUUUU ZZH
R 300621Z MAR 07
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 6099
INFO RUCPDOC/USDOC WASHDC
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RUEAWJA/DEPARTMENT OF JUSTICE WASHDC
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UNCLAS SECTION 01 OF 02 PARIS 001262

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E.O. 12958: N/A
TAGS: ECPS ETRD FR
SUBJECT: FRENCH LAW ON DIGITAL TELEVISION TAXES TELCO PROVIDERS

Ref: 06 Paris 7728

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Summary
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1. (U) On February 22, the French Parliament approved a GOF-drafted
bill that will replace analog with digital television by 2011,
launch high definition television (HDTV), and provide for handheld
portable TV services. The GOF has not yet decided how it will
allocate the spectrum freed by the end of analog television. The
bill will extend the tax that TV stations pay to support new content
production to all TV distributors, including telecommunications
operators of ADSL broadband services.

End summary.

The Digital Shift
-----------------

2. (U) Proposed by the Government in June 2006 and approved by
French Parliament on February 22, the law on the "Modernization of
Audiovisual Broadcasting and Television of the Future" entered into
force on March 7. The law's purpose is to organize the conditions
for the replacement of analog television by digital TV. Digital
television will replace analog television between March 31, 2008 and
November 20, 2011. A national plan will determine when the switch
will occur in each region as well as other details related to the
change. The GOF will draw up this plan after conducting public
consultations and receiving a proposal from the Digital Strategic
Commission that President Chirac established in May 2005.

3. (SBU) The Prime Minister will reallocate spectrum freed up by the
switch from analog to digital television to the French
Administration, French broadcasting regulator Conseil Superieur de
l'Audiovisuel (CSA) and telecoms and postal services regulator
Autorite de Regulation des Communications Electroniques et des
Postes (ARCEP). The GOF will make public its strategy for spectrum
reallocation at a later date. ARCEP Spectrum Management Chief
Michel Combot told us that the GOF is considering a U.S.-style
auction to reallocate the spectrum, although some of it may be set
aside for audiovisual uses.

Allocating capacity for new TV services
---------------------------------------

4. (U) The GOF will provide some, but not all, of the spectrum to
CSA so that it can quickly launch audiovisual (a/v) services on new
platforms or using technology not yet developed. One of the first
new services will be television services delivered over mobile
telephones. Generally, the CSA will take into account a network's
commitment to abide by the existing French and EU broadcasting
quotas (50 percent French content plus an additional 10 percent EU
content) in delivering digital HDTV licenses. For mobile television
services, however, the law allows CSA to be as flexible as possible
so that new service providers can attract enough customers to make
their services viable. Depending on the frequencies available and
the roll-out of the HDTV network, mobile television services could
be launched as early as next fall.

Mandating action in favor of new services
-----------------------------------------

5. (U) A Parliamentary amendment was attached to the GOF-drafted
bill that mandates that all television sets sold from 2008 include a
digital tuner. The law bans manufacturers from delivering
analog-only television sets to retailers beginning nine months from
the law's date of entry into force (March 7), and retailers will no
longer be able to sell analog-only TV sets from March 7, 2008.

6. (U) The law specifies that Digital Terrestrial Television (DTT)
will be available to 95 percent of the French population. To enable
the remaining 5 percent to access services similar to those
available on the DTT platform, the law requires that a free-to-view
satellite service be available as of this summer.

A price to pay
--------------

7. (SBU) The law will extend the tax that TV stations pay to support
new content production to all TV distributors, including

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telecommunications operators of ADSL broadband services. This tax
is already paid by France-based terrestrial and cable TV stations to
support new content production, provide grants and subsidies to
French films and producers of audiovisual works, and contribute to
the production of high-definition and mobile-television formats. A
Union for a Popular Movement (UMP) Parliamentarian who leads a
Parliamentarian study group on internet issues asserted that these
provisions illustrate that the new bill is technologically neutral.
An ARCEP Commissioner told us that such a legal provision had the
advantage of allowing ADSL operators to gain access to content.

8. (SBU) To protest this move, France's leading triple play
(internet telephony/ADSL broadband/television) service provider Free
unsuccessfully started an online petition against what it called the
"Internet tax," which generated over half a million signatures in a
few days. Free questioned whether it would benefit from this tax.

Comment
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9. (SBU) While reaction to the law's switch to digital television
was unanimously positive, criticism has focused on the extension of
the new tax to finance French content. Observers have noted that
the audiovisual financing provisions are increasingly out-of-touch
with technological developments, particularly given the rise of user
generated content, interactive TV, and websites such as YouTube or
BitTorrent.

Stapleton

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