Even though Estonian Public Broadcasting (ERR) contracts with cable/digital television operators expired back on July 1, contracts with Elisa and Telia have not been renewed. Negotiations continue, while ERR finds the price offered by telecoms unacceptable and vice versa.
To try and avoid the deadlock, the public broadcaster first launched negotiations two years ago, head of procurement at ERR Toomas Luhats said.
But the effort has been in vain.
"We wanted to find a solution to satisfy all sides, while taking into account price hikes in television production and remuneration over the past decade. What we wanted to ensure was for our most important partner – the Estonian viewer – not to have to suffer because of the interests of mediators, such as Elisa and Telia," Luhats said.
Luhats said it is a fact television service providers have hiked prices not in cents, but euros. At the same time, broadcasting fees have remained virtually unchanged, with operators paying 2.6 cents per customer for ETV that is the most viewed TV channel in Estonia. The price is the same for ETV2, ETV+, as well as for online and on-demand viewing. This comes to a total of 13 cents per customer a month.
Luhats said that this price level has become unsustainable. "This in no way covers costs and investments made by ERR on the taxpayer's dime to create and maintain the capacity to offer channels in HD," he said.
ERR is asking telecoms for 25-35 cents per customer for the right to show its television channels and services in its recent offer.
Elisa and Telia agree that they are not willing to pay more than 14 cents a month or 2.8 cents per service.
Luhats described the offer as both unfair and insensible.
"ERR has been open to negotiation for two years, while no offer that considers the market situation has been made. We have told all operators that there is room for compromise and still do. Therefore, there is no sense talking about ultimatums. While I can talk about sums. What ERR is asking Elisa and Telia is 5 cents per service per customer. Allow me to give an example. I paid Telia €54.99 last month that also includes internet access. In this light, ERR's wish to charge five cents for ETV HD, ETV2 HD, ETV+ HD, online and on-demand viewing seems entirely reasonable and something service providers could easily swallow without hiking the price for consumers. It is clear Elisa and Telia are doing good business in Estonia, raking in solid annual profits; however, in a situation where new services using ERR content are created and customers charged extra for them, the public broadcaster has the right to share in that revenue," Luhats said.
He added that the internet and television services providers basically want the taxpayer to subsidize their private business models.
Elisa: Proposed solution a no-go
Negotiations have failed so far and no compromise as to what would be a sensible price level has been achieved, CEO of Elisa Sami Seppänen told ERR.
"The chairman of the board of the public broadcaster has offered a virtual ultimatum – we either submit to a utopian price hike or our television service customers will only be able to view ERR channels using digiboxes, in SD quality and without on-demand viewing," Seppänen said.
The Elisa CEO added that ERR programming has been paid for by the Estonian taxpayer and that the broadcaster is now trying to have viewers pay for the same content twice through putting pressure on service providers.
"One of the purposes of ERR is to make publicly designated content available to the people, and it remains incomprehensible why we are suddenly charged 169 percent extra for showing public-law television funded directly from the state budget," Seppänen said.
Luhats said that the price offered by telecoms cannot cover ERR costs. "The price has remained virtually unchanged, only rising by 1-2 cents for the bundle in the last few years. At the same time, both Elisa and Telia offer updated packages using ERR content for which customers are charged extra every time. Allow me to give a simple example of ballooning costs – ERR's electricity bill has tripled in only a short time. The end-user has long since paid for what ERR is asking through subsequent price hikes."
"The conduct of foreign-owned operators can be summed up simply as greed," Luhats said.
Seppänen proposed patching up holes in ERR's budget using public resources.
"Elisa has proposed creating paid ERR services packages in which customers could decide whether they want additional services and pay ERR for them through Elisa," Seppänen said.
Telia: Demand unlawful
Kristjan Viilmann, head of the private customers unit of Estonia's second leading cable operator Telia Eesti, said the ISP does not agree that Estonian service providers Telia, Elisa and STV are obligated to pay ERR hundreds of thousands of euros a month for transmitting its programming.
"At the same time, ERR is offering the exact same content through various own mediums, such as the ERR website and the jupiter.ee streaming platform, both live and on-demand completely free," Viilmann said.
He repeated Telia's position that current legislation does not allow ERR to charge service providers that much for re-transmission of content.
"Compliance with ERR's demand would lead to a situation where ERR, that is obligated to broadcast television as a state-funded enterprise, demands private service providers subsidize its activity," Viilmann said.
Toomas Luhats described Telia's position as incomprehensible. "This would be akin to taking a state-subsidized ferry to the islands and refusing to pay for the ticket."
Additional services in danger
According to the law, all owners of audiovisual content, including ERR, are permitted to charge operators a transmission fee.
ERR managed to lock down an agreement with companies representing private networks Kanal 2 and TV 3, while Luhats described the talks as tense.
Viewers should not be alarmed as the law obligates cable operators to make sure ERR linear channels are transmitted. However, the law includes no obligation to offer HD image quality, online or on-demand viewing.
Seppänen described the situation that could lead to additional services disappearing as fooling the customer.
"Consumers could no longer view ETV, ETV2 and ETV+ channels in HD and complete with on-demand viewing. Service providers could also not offer ERR channels on smart devices or applications. Only direct viewing in SD would be retained, even though the Estonian taxpayer has already paid for HD channels, on-demand viewing etc.," Seppänen said.
Luhats said ERR has given operators until October 1 to respond to its recent offer.
"The responsibility for half a million households losing HD image quality lies with Telia and Elisa, not with ERR, because we are broadcasting ETV, ETV2 and ETV+ in HD free-to-air and recommend using jupiter.ee for online on-demand viewing. Our proposal is to solve these differences and find a solution to satisfy all sides," Luhats added.
Telia and Elisa belong to major Nordic telecom groups.
Telia's EBITDA came to €110 million at a turnover of €316.6 million in Estonia in 2020.
Elisa sales revenue in Estonia amounted to €180 million.
Editor: Marcus Turovski