Competition Authority’s Sector Inquiry Report on Television Broadcasting
Introduction
Important technological transformations have been emerging in the television broadcasting sector. As a result of these changes, whereas some parts in the sector are more competitive, in the other parts, competition concerns come into play. The Competition Authority has decided to conduct a sector inquiry in order to determine the impact of the changes in the sector, to identify the encountered competition problems, and to determine remedy proposals in this respect.
The Competition Authority considers the transition to the digital technology to be the reason of the change in the television broadcasting sector. Through this manner, any production can be presented through different networks, such as the internet and traditional broadcasting. Thus, consumers will have the opportunity to watch the productions of their choosing through the internet, or through traditional broadcasting channels. This technological development, which multiplies consumers’ options, has also paved the way for the presentation of broadband internet services and television broadcasts, together, i.e. the convergence. The Competition Authority states in the above-mentioned Sector Inquiry Report (“Report”) that transmission capacity is no longer a problem with regard to the field of television broadcasting. In parallel with this, the importance of content has also begun to increase. Therefore, the Competition Authority considers (i) the decline in the importance of the transmission limitations as a result of this competition among the networks, and (ii) the opportunity has arisen for consumers to reach the productions they prefer through various networks, such as traditional broadcasting and broadband internet services, and is viewed as positive alterations in the relevant sector.
On the other hand, it is stated in the Report that there are concerns regarding enterprises that have control of certain assets, which can be produced as a result of high costs, such as the conditional access systems that are used in the aforementioned networks and electronic program guidelines, to use this power for excluding their competitors. In other words, although the capacities of transmission networks that are used in relation to television broadcasting and their diversity have increased, the importance of the assets, such as conditional access systems and electronic program guidelines, creates the possibility for these to be used to exclude the competitors.
Television Broadcasting in Turkey
The Report reveals that the content of television broadcasting in Turkey is made through four different means, those being terrestrial analogue, satellite broadcast, cablecast, and broadband internet infrastructure, but that satellite broadcasting is by far the one which has the highest access rate (81%) amongst these means. The Competition Authority states that the investments in cable casting are insufficient, the broadcasting through broadband internet services is new, and it can be provided depending on internet speeds and fiber infrastructure. Hereby, the Competition Authority establishes that broadcasting through cablecast and broadband infrastructure is an indeed progress, albeit slow. Moreover, it is determined by the Competition Authority that there are no provisions regarding the access of television channels and Pay TV platforms through which to transmission infrastructures, but that no problem has been found with respect to infrastructure access.
With regard to access to Pay TV platforms, an important development has been emerging in Turkey. The Competition Authority recommends making regulations regarding Pay TV platforms, which become increasingly important. The Authority requests the regulatory authorities to issue regulations, particularly with respect to the access of enterprises that provide media services to Pay TV platforms. It is stated in the Report that in recent years the Pay TV platform services market has consistently grown in relation to the number of subscribers, but that the rate of increase has declined each year. However, it is also established in the Report that the prevalence of Pay TV platform services is low, and that this can be explained by Turkish audiences’ viewing preferences, their opportunity to reach many channels through satellite, socio-economic conditions, and through piracy access. Hence, the Competition Authority purports that the most important alternative product with regard to Pay TV platform services is open television broadcasting presented through satellite. In this way, it can be understood that both transmission systems are substitutes from the point of consumers.
According to the Report, the most conditioned market, in terms of competitive market conditions, is open television broadcasting. The Competition Authority expresses that there are no competitive concerns with regard to the procurement of content with high ratings by channels and relationships between channels and production companies. It is established that the most important problem with regard to the aforementioned market is piracy access. It can also be observed from the Report that the market power of Digitürk, which operates in Pay TV platform services, is embraced. It is seen that the mentioned enterprise holds a powerful position regarding both Pay TV platform operations and satellite platform operations. Accordingly, Digitürk’s rights to broadcast for the Turkish Super League are considered as an important factor of market power and competitive advantage against the other Pay TV platform operators.
The most important and interesting determination made by the Competition Authority is in relation to the joint product presentation. The issue regarding the presentation of the internet, fixed-line and television services in a single package is embraced in detail in the Report. In this respect, the Competition Authority determines that television and broadcasting sectors became closer to each other, but that in this case, there is the risk for the television broadcasting sector to be affected by the irregularities in the telecommunication sector. The IPTV services that are provided depending on the broadband internet infrastructure are given as an example of this situation. The fact that the fiber internet infrastructure is not sufficiently prevalent is given as the principal reason underlying the obstacles to the IPTV development in Turkey. Therefore, the Competition Authority points out that if telecommunication services become more competitive, competition will increase in markets, such as IPTV services and Pay TV platform operations.
The final issue that comes to the forefront in the Report is the development as to primary content. The Competition Authority states that the demands for primary content have increased due to the developments in the broadcasting field. It further purports that the scarcety of primary content is obtained by exclusive rights and, therefore, there is a competition structure for the market with regard to primary content. The primary content consists of film and sports broadcasting and, in particular, the sports content consists of important events, notably football matches. The Competition Authority explains that the Pay TV platform operators do not have a notable problem regarding their access to primary film content, but that the difficulties in access to football matches create competitive concerns. The sale of the live broadcasting rights for football matches in a single package is criticized in the Report. The Competition Authority underscores the fact that live broadcasting rights are marketed in more than one package in many European countries, and it points out the necessity to establish a more competitive tender structure.
Conclusion
The Competition Authority’s Sector Inquiry on television broadcasting reveals, in general, the emerging developments in light of the technological improvements in television broadcasting. The Competition Authority states that the prompt completion of the transition to the digital broadcasting is an important stage. It is also clear that the improvement of cable television and broadband internet infrastructure is recommended as another competitive factor. Eliminating obstacles to the installment of broadband internet infrastructure, allowing the electricity-gas companies to install fiber-optic cables, and enabling third parties to use their unutilized capacities are rather radical recommendations; whereas, this issue requires adopting exhaustive regulations, it can also cause other competition problems as the electricity and natural gas distributorship companies are dominant companies that have considerably high market power.
Another important recommendation that the Competition Authority included in the conclusion of the Report in question is to ensure the collaboration among the regulatory authorities with regard to the television broadcasting sector. The Competition Authority especially recommends increasing the cooperation between the Information and Communication Technologies Authority and the Radio and Television Supreme Council.
The Competition Authority makes its strongest criticism with respect to the tender structure regarding football matches. It is clear that the marketing of live broadcasting rights by way of separating into more than one package will be more competitive. Considering the existence of considerably early-dated decisions of the Competition Board regarding the live broadcasting of football matches, time will tell whether a more competitive tender structure can be ensured or not.
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