The section on IT (information technology) social infrastructure in the government's e-Japan2 strategy of 2 July 2003 makes the introduction of digital broadcasts a national priority. It expressly mentions that the switchover to digital will be achieved by 2011.
However, it seems that the switchover is going to be very difficult. Broadcasters will have to convert all of their analogue facilities to digital by then. All consumers will have to be ready with digital receivers. The companies producing consumer electronics will have to supply the market with low-cost digital receivers. The current price for a 26-inch LCD receiver is 1,800 US dollars, which is too expensive.
High Cost of Investment
Will the switchover be possible? First, let me survey the financial problems.
The broadcasting industry in Japan is a market with an annual turnover of 3.15 trillion yen. This market is roughly divided into two categories: the public broadcaster NHK, and the commercial stations.
NHK, which relies on receiving fees, has an income of 675 billion yen. The 127 commercial broadcasters, which rely on advertising, have a market worth 2.47 trillion yen. The outlays for going digital are enormous. Digital broadcasts will require large-scale investment. NHK estimates it will have to spend a total of 400 billion yen, while the commercial broadcasters estimate they will have to spend a total of 800 billion yen.
The biggest cost will be terms of the transmitting networks. The commercial broadcasters possess 15,000 transmitters, while NHK has 3,500 transmitting towers. Switching all of them over to digital will involve a considerable financial burden. NHK plans to convert facilities for 95 per cent of the areas in Japan. But even after that investment, 5 per cent of areas will still be left with analogue facilities. Cable or satellite will be required to bring digital broadcasts to those remaining areas, in which case, consumers will have to be supplied with set-top boxes.
Each local commercial station will, on average, have to spend 5 billion yen, a sum equal to its annual turnover. The restrictions on the ownership of commercial broadcasters, which were designed to prevent over-concentration of ownership in the mass media, have also been eased. Many local commercial stations are likely to merge in the future. It's not clear whether the switchover to digital can be achieved by 2011.
The next set of problems concerns the consumer.
Some 3.03 million digital receivers have been sold in Japan so far. Meanwhile, Japanese households possess 100 million TV sets, which can only receive analogue. We need to accelerate the spread of digital appliances given the very small number of digital receivers. Services will be the determining factor for going digital. Consumers won't endorse the change in the absence of any new, attractive services.
Japan has adopted an ISDB (Integrated Services Digital Broadcasting) system for digital broadcasts. This system offers three components: high-definition pictures, a multi-channel capacity, and high performance.
NHK has especially put effort into the first component, given the desire for high picture quality amongst viewers. NHK has become the leader of this field, given the positive appraisal of HDTV amongst viewers. Ninety per cent of NHK content is already in a high-definition format.
HDTV has also helped spread flat-panel displays. Flat-panel displays have growing market. 1.5 million flat-panel (PDP, LCD) displays were sold in 2004, accounting for 17 per cent of sales for TV sets. Their share of the market exceeded 30 per cent in 2005, and they are expected to capture 80 per cent of market by 2008. Some people ultimately think that the market in Japan for digital appliances will be worth 60 trillion yen by 2010, a figure equivalent to more than 10 per cent of GNP, which currently stands at around 500 trillion yen.
So HDTV is important for both business and the consumer. What about the second component, the multi-channel capacity?
The commercial broadcasters have to keep the value of their current advertising medium, and so they aren't keen to adopt a multi-channel capacity. They don't believe that a multi-channel capacity will attract viewers.
The third component is high performance. There are many problems with it, since it involves new technologies. There are problems producing programmes for digital broadcasts. The introduction of digital broadcasts is different from conventional broadcasts in that it requires new personnel, such as computer programmers and the like.
The schedules for producing programmes that will go on air and for producing computer software are completely different. With programmes, a lot of time is spent gathering and editing camera material. A lot of work is required in the final stages. With computer software, there is initially the most important task of deciding the specifications. Overcoming these discrepancies between broadcasting and computers is a big issue. Broadcasters will have to train and educate a large number of skilled specialists. High-performance content is still underdeveloped because that problem has to be resolved.
Linking Up Broadcasts & Telecommunications
Let's summarise what has been examined so far, by mentioning that many people think a new approach is required.
The new approach is linking broadcasts and telecommunications. The Telecommunications Council inside Japan's Ministry of Internal Affairs and Communications presented an interim report to the government on 28 July 2004, relating to the spread of digital terrestrial broadcasts and the role the authorities should play in it.
The report cited the following issues regarding the role of the government and the local authorities, and regarding telecommunications in the digital era:
．The broadcasting and telecommunications sectors should complement each other.
． Unimpeded operation of devices or terminals when they are used for either broadcasts or tele-communications.
．Sharing of broadcasting and telecommunications transmission routes.
．WDM (wavelength division multiplexing).
The interim report stresses co-operation between telecommunications and broadcasts. TV sets will have to be hooked up to telecommunications networks in areas where digital relays are difficult. Such a link could also enable people to view information from various local public bodies and other community-related information. It might also be possible to access medical services, and to carry out various formalities of a public nature from the TV set.
Broadcasts for Mobile Phones
Next, let me feature plans for some dramatic services, which could start in the near future. They are a classic example of this new approach.
We need to spread digital broadcasts for mobile phones. There are 80 million mobile phones in Japan. Video content can be sufficiently viewed from mobile phones with the H.264 (MPEG4 AVC) technology. A standard for providing broadcasts to mobile phones was established in December 2004. The standard is to ensure:
1. Reliable reception.
2. A remote-control feature, which can issue warnings to people over distances in the event of a disaster, by providing emergency signals to their mobile phones.
3. Expansion of individual viewing and viewing time.
4. Creation of new `prime-time' services.
A warning system holds promise in light of numerous natural disasters, such as tsunamis and earthquakes. The communication feature should simultaneously open up a new market for advertising. And there are bright prospects for broadcasts given the sheer scale of the market for mobile phones.
Server-type broadcasts refer to broadcasts for very high-performance PVRs or personal video recorders. The standards for server-type broadcasts are likely to be established by mid-2005. There are two types of server-type broadcasts: Type I will provide a link with stream broadcasts and metadata, while Type II will provide pay services for files accessed via a storage unit.
NHK is pushing ahead with the development of Type I. It wants to expand the current CAS (Composite Application System) into a `Super CAS' system. Broadcasters could use this format to encrypt all of the content they air. Content could be stored on hard discs, and be likewise encrypted when it is accessed via networks and other storage media. This system could provide very strong protection against the pirating of content. Content from this super CAS system could be decoded and viewed, at any time and place, via a network or other storage media. Metadata on the stored programmes could be simultaneously received via the Internet, enabling the individual to retrieve and view favourite scenes.
Going digital is a not a mere changeover from analogue, but the introduction of various advances. Broadcasting, which experienced a golden age during the twentieth century, will have to develop itself into an industry for the twenty-first century. Broadcasts will have to link up with telecommunications in order to become an information industry. The success of going digital will hinge on the link between broadcasts and telecommunications networks.