The Maltese government does not intend subsidising the roll-over to digital terrestrial television, a spokesperson for the Ministry for Competitiveness and Communications told The Malta Independent on Sunday.

“If it did so it would be discriminating against other technologies such as digital satellite and digital cable,” the spokesperson explained.

This declaration came in the wake of a recent announcement by the European Commission that subsidies worth some €4 million granted to commercial broadcasters for the use of the digital terrestrial television (DVB-T) network in the Berlin-Brandenburg region violate EC Treaty State aid rules (Article 87(1)) because they are liable to distort competition.

“The guidance provided today is intended to enhance legal certainty for possible public policy interventions in the forthcoming EU-wide transition to digital TV. Member States remain, of course, obliged to notify the Commission about all State aid measures before they put them into effect,” the Commission warned.

The Commission has also decided that the subsidies already paid, which had not been notified to the Commission, must be refunded (about half the total).

The Commission stressed that it fully supports the transition to digital broadcasting in line with its 2003 and 2005 policy. There are many ways States can help with the digital switchover that are compatible with EC Treaty State aid rules.

Competition Commissioner Neelie Kroes commented: “The Commission is firmly committed to encouraging the transition to digital TV, which has many advantages for consumers. However, State support must be based on objective criteria, address specific issues where the market does not provide solutions and avoid distortions of competition, particularly between terrestrial, cable and satellite platforms.”

The media authority of Berlin-Brandenburg (‘Mabb’) gave the subsidy to commercial broadcasters, RTL and ProSiebenSat.1, to meet part of their transmission costs via the DVB-T network launched in November 2002 without notifying the Commission. In return, the broadcasters undertook to use the DVB-T network licensed to the company T-Systems for at least five years.

Following complaints by cable operators, the Commission opened a formal inquiry in July of last year. After consulting market operators, the Commission concluded that Mabb’s subsidy violated EC Treaty State aid rules. The aid was not based on any specific switchover costs and was decided after the switchover had been agreed. Different amounts of funding were given without objective justification to broadcasters, who had already benefited from receiving free digital licences, which allow greater transmission capacity at lower cost per channel. The subsidies also indirectly favoured the DVB-T network over competing TV platforms, such as cable and satellite, disregarding the principle of technological neutrality.

The Commission understands that the digital switchover may be delayed if left entirely to market forces and that public intervention can be beneficial, through for example regulation, financial support to consumers, information campaigns or subsidies to overcome a specific market failure or to ensure social or regional cohesion.

The onus is on Member States to demonstrate that aid is the most appropriate instrument, is limited to the minimum necessary and does not unduly distort competition. In the case of Berlin-Brandenburg none of these conditions were met. The Commission recognised the existence of certain market failures, but found that the aid was neither the most appropriate instrument nor necessary to solve these problems.