Definition of digital dividend

The switchover from analogue to digital terrestrial television (DTT), expected to be completed in Europe by the end of 2012, will free up a large amount of radiofrequency spectrum. For the same number of broadcast television programs, only a fraction – about one quarter to one tenth depending on the level of compression and standard – of the spectrum is required by DTT. This is known as the “Digital Dividend”: for the same number of television channels, less spectrum is needed and the respective frequencies can be made available for other uses, such as mobile telephony.

This spectrum offers a unique opportunity to meet new demands for services and to support the European agenda for innovation. Most importantly, it could have a significant impact on the EU economy, driving innovation, job growth, productivity and competitiveness.

What is key is how the “Digital Dividend” will be allocated. Governments should resist the temptation to please broadcasters and let them have this dividend for nothing. Instead they should let the market decide, possibly via auction mechanism. It is likely that it will end up in the hands of operators supplying new wireless communications services.

This would be far more beneficial for the EU economy because the contribution to productivity and GDP from investment in telecoms and especially mobile is much greater than anything else, as confirmed by a range of economic modelling studies.

Example

Italy completed the latest round of spectrum auctions in September 2011, which included the sale of licences in the 800-MHz “digital dividend” frequencies. The auction brought in some EUR 4 billion (USD 5.4 billion), paid by cellular operators who will use these frequencies, previously allocated to analogue TV, to deploy the new generation of high-speed mobile communications (4G). [1]

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