Decoder Chaos Hits Italian Pay TV Firms

Milan, Italy-Government authorities here threatened to take dramatic action if Italy's two digital pay TV operators, Stream SpA and Telepiù, do not implement the same decoder standards.

On Sept. 12, the Italian Communications Authority is expected to fine each company $250,000. Thereafter, according to undersecretary of communications Vincenco Vita, Stream and Telepiù will have 10 to 15 days to demonstrate that they are working to comply with a new law that requires them to go with a common standard.

Government officials have not ruled out revoking their transmission licenses if they don't do so, according to newspaper la Republica.

"It is unthinkable that we are going to repeat the Wild West antics in the pay television arena that took place in the '80s," Vita said, referring to the battle that occurred when private broadcasters battled for position against state-owned monopoly network group RAI.

At that time, private stations emerged almost overnight, but they failed to comply with many of the state communications regulations. On the other hand, RAI, through state funding, had sufficient resources to implement costly requirements and maintain a competitive advantage over its growing competition.

Despite months of solicitation by authorities, neither Stream nor Telepiù has implemented a common decoder standard. Legislation approved last April mandated a June 30 deadline for the platforms to use the same decoding systems, enabling customers to receive signals from both platforms using one box.

Both companies face financial difficulties and have held off from making further investments in systems that would give competitors access to their subscribers, according to one industry analyst.

However, the country's minister of communications, Salvatore Cardinale, said the new law will benefit consumers in Italy, where digital television remains underdeveloped.

"Both Stream and Telepiù have been confronted," a spokesman for the Italian Communications Authority said. "We are working with them to apply the law, which calls for a unified decoder, and we hope to have a positive solution as soon as possible."

In response to the Italian authorities' intervention, Stream director of customer relations Monica Bossi said, "We can confirm that the receivers used today for Stream are already compatible for receiving all of the pay TV channels offered in the Italian market. This [full] reception will be activated after our technical provider has made available the necessary software."

She added that the software is expected in eight months, and it would be automatically provided to subscribers at no additional charge.

Telepiù officials had no comment on the company's current situation.