The Approach to the Assignment of Broadcasting Spectrum to be Withdrawn from ATV following Expiry of its Free TV Licence

The Communications Authority ("CA") today (31 July 2015) announced its decision to adopt the administrative approach to the assignment of broadcasting spectrum to be withdrawn from Asia Television Limited ("ATV") from 2 April 2016 following expiry of its domestic free television programme service ("free TV") licence.

The CA also announced its decisions (a) not to accede to the request of Television Broadcasts Limited ("TVB") for more spectrum on top of its existing assignment of 1.5 digital multiplexes to enhance its licensed free TV services, and (b) to be prepared to assign to HK Television Entertainment Company Limited ("HKTVE"), subject to the agreement of HKTVE to comply with all the additional conditions the CA imposes,  half of the transmission capacity of a digital multiplex for the provision of its licensed free TV services from the date when the broadcasting spectrum becomes available to the end of the term of HKTVE's free TV licence on 31 March 2027.

ATV is currently assigned two sets of analogue TV frequency channels, 1.5 digital multiplexes, comprising one digital multiplex of the single frequency network coupled with half of the capacity of one digital multiplex of the multiple frequency network ("MFN") in 470 - 806 MHz of the Ultra High Frequency band ("broadcasting spectrum"), for the provision of its licensed analogue and digital terrestrial television ("DTT") services.  Following the decision of the Chief Executive in Council on 1 April 2015 not to renew the free TV licence of ATV and to extend the term of ATV's current licence to 1 April 2016, the CA exercised its power under the Telecommunications Ordinance (Cap. 106) ("TO") and on 20 April 2015 gave notice to ATV of the withdrawal of all the frequencies assigned to ATV following expiry of its free TV licence.  The broadcasting spectrum of 1.5 digital multiplexes currently assigned to ATV will be available for re-assignment from 2 April 2016.

The CA endorsed two criteria for the assignment of the broadcasting spectrum to be withdrawn from ATV.  First, only free TV licensees under the Broadcasting Ordinance (Cap. 562) ("BO") should be eligible for assignment as only they are in a ready position to effectively and efficiently use that spectrum for the benefit of the viewing public.  Secondly, as a general principle, subject to the availability of spectrum, free TV licensees should be assigned such amount of broadcasting spectrum as is commensurate with, and no more than what is required to meet, their respective licensed service needs.  Such licensed service needs would be measured primarily in terms of a free TV licensee's licensed service programme channel line-up.  

"These two criteria would seek to ensure the efficient allocation and use of the broadcasting spectrum in view of the finite supply of spectrum for free TV services in the near term before switching off analogue TV broadcasting ("ASO"), planned by the Government to take place in 2020, the likelihood of competing demands for the broadcasting spectrum from existing and prospective free TV licensees, and the prevailing free TV landscape," a spokesperson of the CA explained.

The CA decided that an administrative approach should be adopted for the assignment of the broadcasting spectrum to free TV licensees and that the broadcasting spectrum would not be subject to the payment of spectrum utilisation fee.  In coming to this decision, the CA has taken into consideration all relevant factors, including the provisions of the TO and the Communications Authority Ordinance (Cap. 616) ("CAO"), its statutory duties, the prevailing free TV landscape, the Radio Spectrum Policy Framework promulgated by the Government in 2007, and the policy views of the Commerce and Economic Development Bureau ("CEDB").  In particular, the CA is of the view that the unique social functions performed by free TV services which historically, and today, justify the adoption of an administrative approach to spectrum assignment, the practical difficulties, far-reaching and adverse implications on viewers' programming choices and competition in the free TV market of adopting a market-based mechanism for spectrum assignment, and the importance of providing a level-playing field for incumbent and new entrants to compete in the free TV market constitute overriding public policy reasons for not adopting a market-based approach to assign the broadcasting spectrum to be withdrawn from ATV to free TV licensees.

On TVB's application under its free TV licence for the assignment to it of the remaining half of the capacity of the digital multiplex of the MFN it currently shares with ATV so as to improve the broadcast quality of its Jade and Pearl channels, the CA notes that TVB has already been re-assigned 1.5 digital multiplexes for the provision of its licensed DTT services, comprising five programme channels in high-definition ("HD") format, until the expiry of its renewed free TV licence, i.e. 30 November 2027.  The CA considers that the existing assignment of 1.5 digital multiplexes is commensurate with TVB's licensed service needs for providing five HD programme channels.  In view of the finite supply of spectrum available for the provision of licensed free TV services, the likely competing demands from existing and prospective free TV licensees, and CEDB's views that the CA may assess whether the assignment of the broadcasting spectrum could enhance variety and provide more diversified free TV programme choices for the public, the CA considers that existing and prospective free TV licensees which do not have any spectrum assignment for the provision of their licensed free TV services should have priority for being assigned broadcasting spectrum.  Accordingly, the CA decided not to accede to TVB's request for more spectrum on top of its existing assignment.  Nevertheless, the CA is prepared to consider future requests for spectrum from TVB to enable it to make improvements to the broadcast quality of its licensed free TV services if and when more spectrum becomes available after ASO.

Regarding the application from HKTVE, it is licensed to use a fixed network to provide a 24-hour Chinese channel by 31 March 2016 and a 16-hour English channel by 31 March 2017.  Upon licence grant it applied under its free TV licence to the CA to use spectrum as an additional mode of transmission and seeks to be assigned a full digital multiplex for the provision of its licensed free TV services.  In considering HKTVE's application, the CA has taken into account all relevant factors, including its statutory duty to have regard to the promotion of competition in the communications market, the policy views of CEDB regarding enhancing variety, providing more diversified programme choices for the public and enhancing competition in the free TV market, and under the prevailing free TV landscape, the likelihood that in around eight months' time the free TV market would be left with only one spectrum-based free TV licensee with high coverage and penetration providing its service to Hong Kong viewers.  Accordingly, the CA is inclined to approve, with conditions imposed, the application from HKTVE to use spectrum as an additional mode of transmitting its licensed free TV services.  

On HKTVE's request to be assigned a full digital multiplex, the CA notes that HKTVE is licensed to provide one HD programme channel and one standard-definition ("SD") programme channel.  Guided by the general principle that a free TV licensee should be assigned such amount of broadcasting spectrum as is commensurate with, and no more than what is required to meet, its licensed service needs, and mindful of the finite supply of spectrum for the provision of licensed free TV services before ASO, the likelihood of competing demands from other prospective free TV licensees, and the policy views of CEDB, the CA considers that the possible assignment to HKTVE of half of the transmission capacity of a digital multiplex should be commensurate with its licensed service need to provide two programme channels of a reasonable broadcast quality.  Accordingly, the CA is prepared to assign to HKTVE half of the transmission capacity of a MFN multiplex for the provision of its licensed free TV services from the date when the broadcasting spectrum becomes available to the end of the term of HKTVE's free TV licence on 31 March 2027. 

"The CA wishes to emphasise that its possible approval of HKTVE's application for the use of spectrum as an additional mode of transmission and the possible assignment to HKTVE of half of the transmission capacity of a digital multiplex would be premised upon and subject to agreement by HKTVE to comply with all the additional conditions the CA imposes that are pertinent to spectrum assignment for the provision of licensed free TV services.  The CA is also prepared to consider future requests for spectrum from HKTVE in excess of the planned assignment of half of a digital multiplex if and when more spectrum becomes available after ASO," the spokesperson added.

Detailed considerations of the above decisions of the CA are set out in the CA's Statement on "The Approach to the Assignment of Broadcasting Spectrum to be Withdrawn from Asia Television Limited following Expiry of its Domestic Free Television Programme Service Licence" which is published on the CA's website.

For the avoidance of doubt, nothing in the CA's Statement will in any way fetter the CA's discretion to manage spectrum and to decide how it should be assigned in the future.  In exercising that discretion and making such decisions, the CA will have regard to all relevant factors, including the TO and the CAO, its statutory duties, the prevailing free TV landscape and the relevant policy considerations. The CA will consider future assignments or re-assignments of spectrum on a case by case basis.

Communications Authority
Secretariat

31 July 2015

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