As already mentioned, as regards the regulation of the sector, the public service concession holder's broadcasting activity is regulated not only by the Law, but by the Service Contract.
In accordance with the Service Contract, the offering of quality programming, which is to be in line with Italian values and ideals, as well as with audience sensitivities and the interest of minors, is characterized by a range of content and efficiency in production that gives the public a positive image of the public service provided, and this in terms of the level of programming, the appropriateness of the mission that it is required to fulfil as compared with commercial broadcasting, and the cost of the licence fee.

To that end, the following is a list of the primary responsibilities:
• the freedom, completeness, objectivity, and pluralism of information;

. safeguarding the national identity, as well as local identities and the identities of the minority language groups;

• the nation's political and economic developments and the challenges of modernization;

• the developments in political and economic relations with European partners and the dissemination of the key aspects of their cultures;

• providing information on the politics, economies, and societies of non-EU countries, particularly the world's least-developed nations both economically and socially;

• promoting culture, history, traditions, and artistic heritage;

• respect for the environment;

• representing the reality of daily living in Italy;

• promoting employment and employment conditions;

• the issues of civil law, solidarity, feminism, equal opportunities, and integration;

• public safety, reporting violence, crime, breakdown of the social fabric and social marginalisation;

• focus on the family;

• the protection of minors, the elderly, and other groups in need of protection.

On 6 April 2011, at the Ministry for Economic Development, the Service Contract with Rai, issued for the 2010-2012 term, was signed. The Contract will come into force, upon completion of the approval procedure, the day after publication in the Official Gazette of the Italian Republic. The main elements of the Contract are summarised below.

Digital Terrestrial Television

The term of validity of the Contract covers the switchover phase by the Italian television system from analogue to digital.

Within this framework, the switchover represents the central element of the Contract, both in terms of the offering and of technological development. As regards the offering, the Contract requires Rai to create "general interest, semi-general interest and specialized channels to fulfil the Public Service mission; in this area, Rai develops and articulates the offering of new channels with the aim of reaching all audience targets thanks to programming open to innovation and conceived in view of the growing complexity of television audiences".

It envisages:

• expansion to the new digital channels of the setting for definition of the predetermined offer of Public Service, with an increase in the minimum charge share from 65% to 70%;

• the development of specialized channels. This concerns minors (with Rai making a commitment to create two channels specifically for preschool and school children), Italian and European audio and visual channels, information (with a commitment by Rai to reserve "a specialized channel for information and general investigation").

As regards technology, the forecasts requiring Rai to play a driving role in the switchover of the Italian television system to the new digital technology are of particular importance. In this setting, the Concession Holder is required to "implement the process of conversion of the networks to digital technology in accordance with the timing and methods indicated by the Ministry, as well as the Master Plan of conversion activities, drawn up by the Ministry for each of the technical areas".

Consolidation of the Public Service role

The Contract introduces a series of standards aimed at consolidating the public service role assigned to Rai. In this sphere the Rai is required to "create a comprehensive offering of quality programming, which is to be in line with Italian identity, values and ideals, as well as with audience sensitivities and the interest of minors, respectful of women and their human, cultural and professional dignity, characterized by a broad range of content and efficiency in production", identifying the principles and general criteria for the pursuit of this aim.

The principle which establishes that Rai - among other things - must ensure "the quality of information as a necessary presidia of pluralism, completeness and objectivity" and favour "also through journalistic information, the development of a critical, civil and ethical sense of national collectiveness, with respect for the right/duty to provide information, the truth of the facts and people's right to be informed".

This also comprises the provisions requiring that Rai "apply, during the exercise of its activity, the principles, criteria and rules of conduct contained in the Code of Ethics and the Charter of Duties of Public Service Operators, considered as the combination of values which Rai acknowledges, accepts and shares and the combination of responsibilities taken on by Rai within its own organization and with others, and consequently to sanction every form of behaviour that goes against the letter and spirit of the above-mentioned documents, using the methods envisaged therein".

The principles that establish that Rai "is required to acknowledge in the Code of Ethics (the pertinent part) and in the Charter of Duties, the Code of Selfconduct on the matter of the portrayal of legal issues in radio and television broadcasts, signed on 21 May 2009, the Code of Self-conduct of broadcasts commenting on sporting events, known as the "Sport and media code", signed on 25 July 2007, and the TV and minors code pursuant to article 34 of the Consolidated Law, as well as specific provisions for reality programmes, to be communicated to the Ethics Commission within three months of entry into force of this Contract".

Also of importance are the commitment to contrast "concealed forms of advertising", developing a new monitoring system, and the commitment to publish the results to the Ministry for Economic Development, the AGCOM (Italian Communications Authority) and the Parliamentary Monitoring Commission.

The new Contract aims to launch a new cultural trend, requiring Rai to observe "the correct portrayal by television of the image of women and the female world in general" also through the promotion and exploitation of "a new direction in the use of the female figure, with complete respect for the professional and cultural dignity of women, also with a view to contributing to the removal of the obstacles that limit equal opportunities".

Ratio between costs and revenues relating to the Public Service mission

The Contract introduces a series of defensive standards that allow Rai to propose changes to the Contract in the event of significant alterations to ratio between Public Service costs and revenues.

In this setting, we can see how the role of the Ministry-Rai Joint Commission has been strengthened. Not only is the Commission responsible (as already seen in the Contract currently in force) for "defining - in line with the evolution of the reference setting - the most effective operating methods for application and development of the activities and obligations envisaged in this contract", but also for:

•"a) defining the appropriate interventions to overcome the difficulties of application and interpretation which might emerge;

• b) informing the parties to the contract of significant alterations to the contractual balance, also in terms of the proportional and adequate ratio between Public Service mission and costs and relative funding, suggesting the measures best suited to reestablishing it".

It is also deemed appropriate to mention the Ministry's commitment to "identify, with the involvement of the pertinent administrations, the most effective methods to contrast evasion of the licence fee, suggesting appropriate legislative initiatives and taking the necessary administrative measures".

The new Service Contract will make Rai's Ethical Code, as approved by the Company's Board of Directors in 2003, binding with regard to the importance of the commitments envisaged in said Code.

With a subsequent resolution, the Company's Stable Commission, as envisaged by article 1.5 of the Ethical Code, was set up, in order to supply assistance and support with the implementation and control of the observance and effectiveness of the Ethical Code.

As envisaged by its regulations, approved in the first meeting held on 29 November 2004, the Commission met once a month.

Since 2005, the Ethical Code has been an integral part of Rai's Organization and Management Model under Legislative Decree 231/2001. It has been distributed to employees and staff members and is referred to for formal adhesion in all the agreements and contracts entered into. The Code can also be found on the corporate website (www.rai.it).