Leg Convergence

7/27/2019 Leg Convergence

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EUROPEAN BROADCASTING UNION

Legal Department

UNION EUROPEENNE DE RADIO-TELEVISION

Dpartement juridique

30.4.1998

DAJ

EBU REPLY

TO THE

CONVERGENCE GREEN PAPER

APRIL 1998


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Executive summary

THE INFORMATION SOCIETY: FROM SCARCITY OF FREQUENCIES

TO SCARCITY OF CONTENT AND SCARCITY OF ACCESS TO

THE AUDIENCE?

Convergence does not affect the basic distinction between the provision of content

and technical transmission, or, in other words, between issues of content and

distribution infrastructure. The two aspects need to be examined separately and

require different regulatory approaches.

1. Content

Content is the key element in a convergent environment, in both economic and

societal terms. An information society without socially relevant content would not be

worthy of the name. Users, as consumers and citizens, will embrace new services and

new technical devices (e.g. set-top boxes) only if these allow them access to

interesting content.

= Content must be diverse, responding to mass appeal as well as to variousminority-type interests. As far as possible, it should be of (high) quality. Such

content constitutes a merit goodwhich - at least in a free-to-air environment - the

market itself cannot deliver. Theoretically, the merit goodconstraint could, to acertain extent at least, be overcome in a pay-environment. However, this raises the

still more fundamental problem of information society haves and have-nots.

= The remit of public service broadcasting covers exactly this type of programming,and the public funding of public service broadcasting continues to be the best

means of ensuring that it will actually be produced and will be available to every

member of the information society. The more audiences become fragmented, the

more the public funding of public service broadcasting will be necessary to ensure

production of such content.

= The role which public service broadcasting is called upon to play in this field isbound to become still more important, given that the possibilities for regulators to

enforce "positive" content regulations vis--vis commercial operators will be

increasingly limited in a global competitive environment. This applies to

traditional broadcasting and, even more so, to new on-line services, where the

enforcement of "negative" content regulations is already becoming difficult.

= Content which is of interest, relevance and importance to society as a whole("major events") must continue to be available to the entire population, via free-to-

air broadcasting which reaches the highest possible proportion of the population.


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= Content needs to respect human dignity and other basic rights and social values.To ensure that unsuitable material, including pornography and matter inciting

racial hatred, is not communicated to the public, so-called "negative" contentregulations will remain necessary. In applying such regulations to a whole new

range of on-line multimedia services, the characteristics of those services need to

be respected. This will imply a graduated approach which takes into account

factors such as the "publicness" (public accessibility) of services, the relevance of

the content (in cultural, political and social terms) and the amount of effective

consumer control (through filtering systems).

= Diverse content, a result of true pluralism of opinion, will not be available wherediverse programme sources do not exist in the first place, or where access to

programme material is unduly restricted. Horizontal concentration, including

cross-media concentration (television/radio/publishing), constitutes a seriousthreat in this regard. No less serious is the threat from vertical integration on the

programme supply side, where a broadcaster or other programme service provider

simultaneously owns or controls a sports rights agency, an advertising agency, a

film rights agency, a major television or film production company, a major

phonogram production company, a football or other sports club or, indeed, a

combination and a multitude thereof. "Globalization" cannot serve as a valid

excuse, and competition law cannot provide an appropriate (media-specific)

remedy here.

=Huge amounts of invaluable radio and television output, reflecting Europe'sunique audiovisual heritage, are held in public broadcasters' archives. Subject to

legislative assistance with copyright clearance, public broadcasters could make

this material available to the information society thanks to the new communication

channels and methods opened up by convergence. Otherwise, ...

= Finally, content provision must not be unduly hampered, or even madeimpossible, by measures proposed to be taken (such as the extension of the

reproduction right) or not envisaged (such as the introduction of an incidental

reproduction exemption or the limitation of phonogram producers' on-demand

delivery right in connection with radio and TV productions) in the field of

copyright legislation.

2. Access to the audience

Access to the audience is the indispensable concomitant to content. Even the best

content is useless if content providers are denied access to the audience or if the

audience (or at least a substantial part thereof) is incapable of finding content that is

available.


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= The interoperability of technical systems is of key importance in all areas oftechnological convergence. Interoperability should allow viewers access to all

broadcasting services via a single set-top box. And it should allow them, if theywish, to have access to the broadest possible range of interactive multimedia

services through the same home terminal.

= Digital gateways (conditional access systems, EPGs, APIs, etc.) open, or block, abroadcaster's door to the audience. In the absence of open systems and effective

regulation ensuring non-discrimination, gate-keepers are in a de facto position to

cause a serious threat to media pluralism as well as to competition. This is one of

the most important regulatory challenges at the crossroads of telecommunications,

broadcasting and information technology.

= Vertical concentration on the programme delivery side, where a broadcaster orother programme service provider owns or controls satellite transponders,

terrestrial transmission networks, cable distribution systems, multiplex services or

digital gateway providers, may result in serious constraints and competition

disadvantages for other programme providers wishing to reach their intended

audience.

= Broadcasters can play a major role in preparing the general public for theinformation society and enabling it to use new information and communicationtools. Education (especially for the "older" section of the population) is an

indispensable prerequisite for everyone to be able to find his way through thetechnical maze and to the programming of his choice. As long as that result is not

ensured, the public is entitled to be given automatic first access (or, at least, easy

and straightforward access) to those programmes which, through the scope and

quality of their content, serve as a reference point for the entire population.

For EBU members, convergence and, in particular, the information society which is

expected to result from convergence, constitute a challenge and offer positive

opportunities. However, the avoidance of foreseeable, undesired consequences as well

as the furtherance and promotion of desired results will need regulation which

addresses the specific issues of content provision as well as, separately, technical

infrastructure and competition, and which is placed at the appropriate geographicallevel.

The EBU's members are determined to play an active role in, and for, the

information society, by providing socially relevant content and making it

available to the audience via the most appropriate channels and means which

exist at any given time in an increasingly converging environment.

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Table of contents

Executive summary.........................................................................................I

Table of contents ............................................................................................i

Questions in the Green Paper and Answers................................................1

Question 1 ......................................................... ........................................................... ............................1

Convergence at the technological level................................................................................................1

Starting-point: the scope of the convergence phenomenon ...................................................... ......1

Numerous competing delivery mechanisms... and several factors for success................................1There is no certain universal recipe for success in new multimedia delivery systems....................2

The convergence of terminal equipment ........................................................... ..............................3

Is the convergence phenomenon happening at the industry, service and market levels? .....................4

The industry level:vertical integration andalliances rather than convergence...............................4

Content and the markets: diversification and complementarity rather than convergence ...............4

Are effects felt in business and by consumers?....................................................................................5

Question 2 ........................................................ ............................................................ ............................6

Some basics on the economics underlying broadcasting......................................................................7

Potential effects of convergence and globalization on underlying economics.....................................8

Effects of market forces on the markets .................................................. ........................................8

Public service broadcasting and a strong policy for European production will have to be

strengthened in a converging environment......................................................................................9The potential impact on jobs, education, training, way of working ...................................................10

The 5th framework programme..........................................................................................................11

Question 3 ........................................................ ............................................................ ..........................11

Preliminary remarks...........................................................................................................................11

The limited scope of the regulatory analysis of the Green Paper .......................................................12A. Important factors with respect to content ................................................................ ......................13

Availability of diverse content is the real challenge......................................................................13

Cultural diversity and market forces an uneasy relationship....... ...............................................13

Regionalization and globalization a new balance needed ..........................................................14

Digitization and media concentration............................................................................................15

B. Important factors with respect to infrastructure and access...........................................................15

Interoperability is the key to convergence.....................................................................................15Bottlenecks: from frequency scarcity to digital gateways .............................................................15

Question 4 ........................................................ ............................................................ ..........................16

Different legal frameworks for different objectives ....................................................................... ....16

A three-layer approach: media, telecommunications and competition law........................................16

The rationale of media and broadcasting law................................................................................17The rationale of telecommunications law......................................................................................19

The rationale of competition law...................................................................................................19

Question 5 ........................................................ ............................................................ ..........................21

About definitions................................................................................................................................21

The basic distinction between content and carriage remains valid................................................21

A greater need for differentiation ............................................................. .....................................22Will the convergence phenomenon require adaptation of existing approaches or the adoption of new

approaches to be applied to specific issues? ................................................................. .....................23


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Market entry/Licensing ........................................................ .........................................................23

Access to network, conditional access systems and other bottlenecks..........................................24

Access to content...........................................................................................................................27

Pricing ....................................................... ................................................................ ....................27

What should be the objectives of standardization? ............................................................ ................27

Will convergence require changes in management of frequencies, in particular with respect to

"analogue switch-off"?.......................................................................................................................28

Radio Spectrum Issues ................................................... .......................................................... .....28

Switching off analogue TV/radio services ............................................................ .......................28

What about consumer protection?......................................................................................................29

Consumer protection is a major concern alongside the protection of individuals and of the public

interest ................................................................. ........................................................... ...............29

Question 6 ........................................................ ............................................................ ..........................30

Is the way public interest objectives are achieved challenged by convergence?................................30

Would a more universal service-approach be appropriate to achieve this?........................................31The case for public funding................................................................................................................32

Funding new services offered by public service broadcasters ............................................... ............32

Question 7 ........................................................ ............................................................ ..........................33

Deregulation and competition case law: the solution? .......................................................................34

A new communications law: another miracle? .......................................................... ........................35

Adaptation of existing regulatory frameworks and better coordination.............................................35

Question 8 ........................................................ ............................................................ ..........................36

Globalization and European values....................................................................................................36

Global standards.................................................................................................................................37

Central and Eastern European countries ........................................................... .................................37

Question 9 ........................................................ ............................................................ ..........................38Proposed principles ........................................................... .......................................................... .......38

Adapting regulations at the three layers to cover new services and markets in an adequate way......39


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Questions in the Green Paper and Answers

Question 1

Question 1: The nature and impact of convergence todayChapter I highlights the nature of the convergence phenomenon, the technological and

market developments and the underlying political stakes for Europe.

(A) Whilst convergence is occurring at the technology level, to what extent and atwhat speed is this happening at the industry, service and market levels?

(B) Are the effects of convergence already being felt in the business world and in

our everyday lives, and if so, in what way?

Convergence at the technological level

Starting-point: the scope of the convergence phenomenon

Convergence essentially refers to a series of technical developments related to theproduction and distribution of data on networks, i.e. digitization and compression.

Briefly put, in a converging environment various networks and platforms can be used

to convey content of various kinds, independently of each other.

Digital broadcasting and the Internet now appear to be the current "pillars" of the

information society. Over the coming years, they may be combined in terms of

distribution (broadcasting services delivered via the Internet, Internet services via

broadcast delivery) and in terms of terminal equipment (radio/TV on the multimedia

PC, Internet on the TV set). Combinations are also possible at the service level; for

example, broadcasters can offer links between television programmes and the

Internet, including their own websites.

Numerous competing delivery mechanisms... and several factors for success

Convergence will bring with it numerous delivery mechanisms competing for the

public's attention:

= Over-the-air broadcast to TV sets= Internet services to PCs


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= Over-the-air broadcast to PCs: PC cards for reception of TV (already on themarket) also permitting new forms of broadcast multimedia services

= TV access to the Internet: Special set-top box to access the Web on a standard TVset (e.g. WebTV)

= Broadcast delivery of the Internet: Internet compatible services on spare capacityof the broadcast channel; these could improve with digital TV or DAB or

dedicated DVB channels.

= Broadcasting via the Internet: Many broadcasters and others already use the Webto offer limited audio and video services

Success on the consumer market will, inter alia, depend on:

= the content (quantity and quality)1=

the range of features= the ease of use= the cost of equipment= the cost of use.There is no certain universal recipe for success in new multimedia delivery

systems

The successful introduction of new technology relies on the combined strength of the

technology, infrastructure and content. The strength of content is particularly

important and must be measured in terms of the difference between the new service

and what is available already. It is content and low cost infrastructure that have madethe Web successful.

There may well be different formulae needed for success in different geographical

areas, even across Europe, because already available local content, and locally

available infrastructure, will be different. For example, it may be said in broad terms

that in Northern Europe there is a greater tradition of using the written word for

leisure than in Southern Europe. There is also a considerable disparity in available

delivery infrastructures for interactive systems, differences in telephone rates, etc.

There may well be different formulae needed for success within a given national or

local environment, since distinct patterns of behaviour are emerging for mediasystems within a given society. For example, one recent classificationseparates the

user audience into four groups exhibiting different media behaviour: knowledge

workers, time-constrained individuals, leisure-seekers and PC enthusiasts. Each of

these may be attracted to a greater or lesser extent to interactive services.

1See also the 1996 London School of Economics study on convergence, which includes the following as factors of

success : consumer demand, cost, good supplier reputation, ability to integrate technology, realization of economiesof scope, standards that facilitate the development of compatible products (and that will, in turn, promote competition,leading to success).


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A range of technology is possible for introducing "interactive television" in its widest

sense. There are no ways of predicting with certainty which will be successful and

which will not be. The best that can be done at this time or probably at any other, ina climate of rapid technological evolution - is to identify which seem to offer the

greatest prospects of success.

To be successful, an interactive system will need a sensibly-sized mass audience it

must be of value to at least one, and preferably more than one, of the user groups

mentioned above.

We can note the growing popularity of websites that offer "branded" content (TV

channels, radio channels, print media outlets, etc.), as well as the growing popularity

of "push technology", which is the pre-selection of Web material to be supplied

automatically to the user. This brings the Web closer to a broadcasting model,customized to the individual. The companies which probably have the greatest

chances of success may be those which attract and exploit the content and on-line

distribution capacity of broadcasting and the Internet.

We can envisage a future world where the Web is used for video-on-demand. But

today's telephone connections are sufficient only for short, barely watchable video

clips. It will be some years before even VHS quality television is available from the

Web. The data rate needed for even VHS quality video is around 1 Megabit/s; this is

about thirty times the rate available with most Web connections to the home.

There is no certain universal recipe for success in new multimedia delivery systems.

The same technology, DVB-S, introduced in Germany, France, and Italy, has, to date,

enjoyed dramatically different degrees of success. While the technology was the

same, the infrastructure used and the content (relative to already available content)

were different. Furthermore, there may be real differences in public preferences in

different parts of Europe. The introduction of new technology must be looked at from

the content, technological, and infrastructure viewpoints, and not simply in terms of

technology itself.

The convergence of terminal equipment

The convergence of terminal equipment - between TV set, PC and telephone - is less

certain to happen; "couch viewing" and "desk viewing" may remain distinct forms of

communications behaviour. PCs are used in "lean-forward" mode, whereas TV sets

are used in "lean-back" mode.


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PC TV

viewing

distance

social aspect

nature

-viewing distance = about

1.5 x picture height

-solitary activity

-interactive

-viewing distance = between about 6 and

10 x picture height

-often shared with other people

-passive

Is the convergence phenomenon happening at the industry, service and

market levels?

The industry level:vertical integration andalliances rather than convergence

Technological convergence does not imply that the industry itself will converge.

Companies may wish to form alliances2 with other players; the latter may operate

either on the same level (e.g. network operators trying to achieve economies of scale)

or on other levels (vertical alliances between, for example, rights owners and/or

producers and/or distributors). However, globalization, rather than convergence, may

have an impact on the number of independent players.

In particular, vertical integration may appear to be attractive, for several reasons. Most

traditionally, "manufacturers and retailers" try to guarantee the alignment between the

development and the promotion of a set of products or services. Another reason

appears to be that companies wish to spread their risks in a highly dynamic

environment. To that extent, it might even be said that diversity, rather that

convergence, has impact on undertakings. However, vertical alliances might also be

intended to exert power or close the market and are then undesirable in a market

economy3. This is particularly the case where control is extended to digital gateways

and other bottlenecks (see below). Vertical integration represents a challenge for

competition authorities.

Content and the markets: diversification and complementarity rather than

convergence

Technological evolution does not imply, as such, that content services will converge.

From a purely economic point of view, it might, on the contrary, be said that

providers of services will diversify the products/services.

2In the broadest sense of the term.

3See the previously mentioned LSE study on convergence for DG IV, 1996.


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Many broadcasting markets will remain fragmented geographically according to

national or regional preferences and languages, or even become fragmented owing to

the mass market development of pay-services.

Diversification

Television channels will no longer be "stand-alone" services. They will become part

of an overall offer of audiovisual services to the public ("bouquets"): traditional and

interactive services; generalist, thematic or on-line services (including an Electronic

Programme Guide); services including images, sound and data ("multimedia"). The

websites of the BBC, ZDF and ORF are among those which receive the most visits in

their respective countries or, in the case of the BBC, the most visits throughout the

whole of Europe.

Complementarity rather than convergence of services

New interactive services will, to a large extent, be complementary to traditional

broadcasting services. Broadcasting services are probably the most important platform

for the launch of new information society services. In many programmes, such as

sports events, documentaries, current affairs, advertising, etc., complementary

information services will be provided as well as real interactivity.

For instance, several projects in the field of educational programming already include

the Internet as an integral part of the service, i.e. such features as websites or e-mail

are used from the first creative stages onwards. The EBU's so-called "Economics" co-

production project4 is an example. Interactivity also makes it possible for third parties

to intervene in the communication process, instances being evaluators in audiovisual

training programmes.

Are effects felt in business and by consumers?

Seen as a series of technical developments, convergence has so far had a limited effect

on the so-called emerging markets. Digital television output itself is not a reality in

all European countries, and Internet penetration is still limited, even if its growth is

impressive.

The consumer is beginning to feel the effects of the technological developments,

providing that he at least has access to a wider range of media and multimedia

distribution sources, thanks to the output of digital bouquets and access to the Internet,

and to the extent that leisure time is available. Consequently, and under the same

conditions, the quantitative output of available services is also increasing.

4"Economics" is a series of documentaries on economic issues, which is expected to be available next year.


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Moreover, the amount of money which the consumer has invested in such services has

increased overall, given that, in a number of cases, access to these new services has to

be paid for (connection to the Internet, pay-TV, etc.).

From the point of view of companies, few truly "pre-convergent" mass products are

actually available: interactive advertising (on the French digital bouquet TPS), the

loading of software on the digital Canal Satellite bouquet (C Service), etc. Services

such as video-on-demand are still at the experimental stage.

As regards the effects of the technological developments on the companies

themselves, it can be noted that the networks and multimedia are becoming, for some

people, tools for electronic commerce, whereas many people see them as a tool for

communication both within and outside companies (video-conferencing, etc.), which

may have a profound effect on methods of working and of organization.

Question 2

Question 2: The socio-economic, business and consumer impact of convergenceChapter II highlights the potential for convergence to have a significant impact on

society, on employment, growth and competitiveness of businesses in Europe, and on

the way we access a range of services, information, entertainment and culture.

(A) Will convergence have a significant impact on job creation, as well as on

education and training in the European Union? How is convergence likely to impact

the way in which we work? Will its effects be spread evenly throughout the EuropeanCommunity?

(B) What effect are current developments likely to have on telecommunications,

media and IT sectors, in terms of the underlying economics of those sectors, the

services offered and the likely service providers?

(C) What evidence is there of changes in Europe in the way services, information,

entertainment and culture is being accessed in the home and in the office? What are

the implications of current levels of PC penetration, Internet use and TV penetration

for the take up of new services? What action (if any) is needed to overcome low

levels of multimedia computer penetration and Internet use?

(D) In the light of the positions put forward in the Commission Working Paper on

the Fifth Framework Programme, what kinds of Community RTD projects should belaunched in the context of convergence?


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Some basics on the economics underlying broadcasting

Since economic reflections (growth expectations, development of new markets,

competition, etc.) appear to lie at the basis of the present Green Paper, it is useful to

take a look at the basics of the broadcasting sector before analyzing the potential

effects of the "convergence" process, not to mention potential regulatory implications.

The broadcasting sector is worth about 58 billion ECU, i.e. about 0.8% of the EU

GDP (cf. 2.7% for the telecommunications sector). It is growing at a rate of more

than 9% a year5. Other features are:

= Ownership is becoming concentrated, whereas the audience is fragmenting .On the one hand, since high quality content is expensive to produce (but relatively

cheap to edit and very cheap to reproduce), one can say that it has high fixed costs

and low marginal costs, i.e. factors favouring concentration6. On the other hand,

the audience is fragmented,since the increased number of channels has not really

meant more time being spent on more watching/listening7.

= The European broadcasting sector has many different cultures and languages.This does not constitute a barrier which could be lifted; rather, it distinguishes

Europe from, for instance, the United States. It implies that media markets,

including broadcasting, are mainly national (or regional or local in certain

cases), i.e. geographically fragmented markets, except for a few niche marketsfollowing a pan-European strategy (such as international business news).

= The broadcasting sector is also characterized by the fact that it does not produceand distribute content-neutral services. It directly shapes people's cultural

identity (Europe-wide, nationally, regionally or locally), and it influences

citizenship and social cohesion, which are non-financial but fundamental values.

Unlike telecommunications or IT, an increase in demand (potentially induced by

convergence or globalization) might lead to more services, but will not per se

match European quality requirements.

If only for these reasons, unlike telecommunications services or informationtechnology (both of which, however, are regulated), the broadcasting market, which

also represents one of the main sources of creative content for the foreseeable future,

cannot simply be market- or technology-driven.

5Source: IDATE.

6Graham, Davies, Broadcasting, Society and Policy in the Multimedia Age, John Libbey, Media, 1997, p.16.

7Graham, Davies, p. 17.


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An illustration of this is the effect of liberalization on the broadcasting sector

which in most countries occurred in the 1980s. It did not produce the full benefits

expected:

= If growth did indeed characterize the liberalized sector, ownership was highlyconcentrated and production rose relatively little. (Public service broadcasters

generally remained the main producers.)

= Acquired programmes, and especially programmes imported from the UnitedStates (almost twice as many US imports between 1990 and 1995), reached high

levels.

= In parallel, the price for premium content rose, because of its scarcity. It appearsthat content is generally decreasing in terms of creative quality (see EBU and UK

studies on children's programming8), whereas the total offer of programming is

rising and the cost for the consumer is steadily increasing too (owing to pay-TV in

particular).

Thus the main effects on the markets appear to be: more programmes but more

imported content (less European or national), less quality yet higher costs for the

citizen/consumer.

Potential effects of convergence and globalization on underlying economics

Effects of market forces on the markets

If content provision were to be deregulated, however, the following trends would

most probably be emphasized, whatever the globalization/convergence at the level of

networks services might be:

= More fragmentation of audiences, since more services will be available to theaudience, which cannot readily grow in the meantime9 and more concentration of

players, in order to spread the risks underlying highly dynamic markets10

= The shift towards more costs for the end-consumer (pay-TV, conditional accesssystems, etc.)

8The recent UK study on the new children's channels in pay-television suggests that the new channels increase the

choice for children in quantitative terms but do not increase the variety and quality of such programming. The newchannels are filled mostly with cartoons from US archives.9

See also Norcontel et al, Economic implications of New Communication Technologies on the Audiovisual Markets,

final report to European Commission DG X, March 1997, p. 9.10

See also the LSE Study on convergence for DG IV: London School of Economics, Convergence within the mediaindustry, and between media, information technology and/or communications, prospective for competition andcompetition policy, final report to European Commission DG IV, December 1996, p. IX.


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= Fewer creative and diverse European productions, on account of their cost, and,therefore, higher level of imports. The retail price of many already amortized non-

European productions in Europe is low.

The Internet constitutes an example of the potential trend. The global increase in

"communication capacity" has resulted in a situation where 94 of the 100 most

frequently visited WWW sites (even when adult sites and Internet access providers

are excluded) are located in the United States11.

As regards pay-TV, many thematic channels broadcast existing material. Premium

film channels contain an overwhelming number of Hollywood productions. Generally

speaking, the percentage of American programming appears to be very high across the

board, e.g. throughout film channels, drama and sitcom channels, Western and action

channels and, even, children's channels.

Public service broadcasting and a strong policy for European production will

have to be strengthened in a converging environment

Given the underlying economics, the future presence of public service broadcasting

within the broadcasting systems in the Member States is as necessary as it ever was,

since public service can both resist competition pressures on quality through public

funding and constitute the best structural guarantee for achieving the public service

mission.

Public service broadcasting makes it possible to ensure that a strong audiovisual

production base of high quality content with a specific national and regional focus

catering for all citizens alike will continue to exist. Over 90% of programmes shown

on German public television, for example, are of European (mostly national) origin.

The raison d'tre for public service broadcasters is embedded in the diversity,

creativity and quality of their in-house or commissioned productions. These

programmes are expected to reflect the interests, experiences, concerns and

informational, educational and entertainment needs of everyone falling within the

scope of the publicly conferred remit. These programmes are not produced with the

sole aim of making a profit, but are made in the general interest. They are thus able to

resist the pressures on quality and diversity of content resulting from marketfragmentation. Research shows that viewers have a strong preference for national

content, though the smaller European markets in particular have extremely limited

capacity for funding such productions.

For public service broadcasters to act as a counterbalance to the strong economic pull

towards increasingly homogenized audiovisual content, they need to have a sound and

viable financial basis and to participate fully in digital television of the future and its

specific forms of presentation.

11Internet hosts with English as the primary language have a "market" share of over 75% (1997 figures in: OECD,

Webcasting and convergence: policy implications, OECD/GD(97)221, 1997).


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The potential impact on jobs, education, training, way of working

In a general way, the content industry, and particularly the audiovisual sector, creates

jobs. There is no way of knowing with any degree of certainty the implications which

technological developments will have on the total number and character of jobs. To

date, for example, there has been redistribution of jobs rather than an increase in their

number.

On the other hand, what is already known is that in the information society, where

content will be a key resource, the content industry will be of increasing importance

and will require higher levels of qualified staff. It is necessary to innovate, create and

update a larger quantity of "content"; public service broadcasting organizations, whichrepresent a considerable force in Europe in terms of employment, have the necessary

human expertise and audiovisual equipment to deal with these tasks.

Using the technological resources of multimedia services, the content industry (and

public service broadcasters in particular) will bring into being totally new services,

thereby creating the indispensable benefits which will convince citizens and

consumers to move on to the information society.

If Europe selects the appropriate regulatory framework, i.e. either a framework which

supports domestic production (national, regional, European, etc.), which is healthy

(and competitive), its content industry and, in particular, the public service

broadcasters will generate new, highly qualified jobs.

In parallel to this, the increasing use of information technology at the work place and

elsewhere (multimedia productions, distance working, teleshopping for products and

services, etc.) will naturally have an effect on working methods.

As regards education and training, the need (which is recognized by all) has never

been so urgent. Broadcasters - and particularly public service broadcasters - who

have an explicit education mission in their respective countries play an important role

in this regard. Their participation in educational projects of the EuropeanCommission for the development of multimedia content, as well as the guarantee of

quality through their current educational audiovisual productions, show their wish to

take up this major challenge.

Finally, and more generally, the important role played by public service broadcasting

in strengthening social cohesion in Europe eventually leads to a climate favourable to

investment and job creation.


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The 5th framework programme

The 5th framework programme must focus on the central pillars of convergence,

which are digital broadcasting and the Internet. In particular, it should encourage the

development of systems which exploit the potential synergy between the systems.

Question 3

Question 3: Barriers to convergenceChapter III highlights both actual and potential barriers to convergence.

What is the likely impact of the barriers identified and are there other barriers or

factors which may have a significant impact on the convergence process in Europe?

Preliminary remarks

The various elements listed in the Green Paper cannot be reduced to "barriers"; someconstitute real safeguards in the sectors concerned, whereas other refer simply to

economic factors.

The following safeguards are mentioned: general interest objectives, protection ofconsumers, protection of privacy, universal service, public service, licensing regimes,

frequency management, exclusive intellectual property rights on creative works,

regulatory bodies.

The particular issue of public service broadcasting will be dealt with under question 6,

but it can already be mentioned that if regulations prevented broadcasters (in

particular, public service broadcasters) from offering new/interactive services, i.e.

services outside their traditional field of activity, that would seriously restrict the

variety of content on offer.

Some elements of the regulatory frameworks concerned might have to be adaptedaccording to the technological evolution, i.e. certain definitions or certain restrictions

on the use of infrastructure. Nevertheless, these safeguards have very little to do with

convergence as such; still less do they represent barriers to convergence.


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Other elements are merely factors linked to the current underlying economics of the

sector, or at least to the behaviour of parties involved on the markets: limited access to

users, lack of confidence of users, lack of standardization, interconnection prices, highcost of telecommunications services, lack of availability of quality content,

fragmentation of the media markets.

With respect to these economic factors, European authorities should ascertain whether

and how they can and should intervene: preventing abuse of a dominant position (e.g.

on the local loop and other essential facilities, or on secondary markets), reducing

excessive telecommunications costs (although the new liberalized environment in

telecommunications should help this), maintaining/promoting European content

diversity, promoting quality production, etc.

The limited scope of the regulatory analysis of the Green Paper

Finally, it should be mentioned that the scope of the regulatory analysis of the Green

Paper is limited. A significant example is intellectual property rights (IPR). Whereas

the issue of IPRs is obviously crucial for the proper functioning of many "information

society" services, it is not addressed, but is merely "identified", in the Green Paper.

Indeed, although the Commission's document has not really addressed the issue of

intellectual property rights, before converged services can take off some crucial issues

must be resolved. Thus, as it stands now, the Commission's draft Directive fails to

build up a consistent regime for a basic category of content, i.e. archives. If the

current proposal were to be adopted as it stands now, only a tiny proportion of the

estimated 10 million radio productions and 2 million TV productions of public service

broadcasters - that is to say the core of the national and European audiovisual cultural

heritage - now stored in their archives could be offered on the hundreds of new

European programme channels. The proposed extension of the reproduction right, the

failure to provide for an incidental reproduction exemption, the failure to limit

phonogram producers' exclusive right of on-demand delivery in cases where

phonograms are included in radio or TV productions, and the absence of an express

recognition that Member States have the right to provide for mandatory collective

agreements between producers and programme contributors are further issues which,while seeming highly technical and abstract, could have serious practical implications

for the development of the information society. Urgent action is needed here.

Another example is the important issue of pluralism and its relationship with

ownership and competition law. Although mergers and acquisitions and alliances of

all kinds might be regarded as some of the most perceptible consequences of the

growing uncertainty around convergence and globalization (see below), no in-depth

analysis is made of the effect of such a trend on pluralism.


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A. Important factors with respect to content

Availability of diverse content is the real challenge

A broad range of quality information for citizens should be at the centre of the

information society. However, the fact that video/audio/text/data may be transmitted

across the world by wireless means or by wire, or by a combination thereof, and may

be received by a single device combining what are still separate pieces of equipment

today (TV set, radio, PC, telephone) does not of itself result in informed citizens.

Nor does the expansion of transmission capacity, together with the multiplication of

distribution outlets, automatically lead to greater diversity of content. As the overallnumber of programmes broadcast increases, genuine choice does not grow

commensurately. In addition, some forms of content may increasingly be offered only

against specific payment (pay-TV, pay-per-view), and may no longer be available to

the entire public. The chances of equality of access will diminish.

Scarcity of so-called premium content, alongside escalating prices for popular sports

events and films, does not necessarily mean that more investment will be made in the

European audiovisual industry, or that investment will be made in a broader range of

programmes. Soaring prices for premium content, together with increasing economic

pressure, may also mean that less money will be available for less popular (e.g.

minority) programmes and programmes which are relatively expensive to produce

(e.g. domestic films, certain news programmes, documentaries, etc.). If this is the

case, genuine choice for viewers could even become narrower in the new

environment, at least in certain fields, if there are not regulatory or other safeguards,

and, in particular, a viable public broadcasting system, based on public funding.

Cultural diversity and market forces an uneasy relationship

The new environment will not automatically promote cultural diversity in Europe. It is

often said that Europe's cultural and linguistic diversity is a strength for the

development of the information society and that, in turn, new information societyservices will contribute to that diversity. Unfortunately, this seems to be based on

hope rather than concrete market research. Indeed, the opposite view is also plausible:

that Europe's cultural and linguistic diversity may act as an obstacle for European

communications services, that Europe will therefore be at a competitive disadvantage

compared to the United States, and that a new "world Internet culture" will develop

without regard to national and regional characteristics.


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Europe's cultural and linguistic diversity not only needs to be accepted as a matter of

fact but also merits wholehearted support, on account of the creativity it promotes.

Such diversity is an objective jointly proclaimed by the European Union and itsMember States (see Article 128 of the EC Treaty, as amended by the Amsterdam

Treaty). Thus a political choice has been made, which means that cultural and

linguistic diversity must also prevail in Europe's information society.

Regionalization and globalization a new balance needed

Despite the globalization of networks and services, the communication needs of

society are still to a large extent national, regional and local. Public communication at

these levels is essential for the functioning of public institutions as well as for the civil

society. They are no less important for economic and social cohesion.

Care has to be taken to ensure that the benefits of the information society also

materialize at these levels. For all of them, content should be produced, and made

available, which is directly related to the local, regional, national and European

context. If developments were merely to be left to the market, there would be a great

risk that communication in less-favoured regions, and at the regional and local level in

general, would be left behind.

Here again, public service broadcasting can provide an institutional guarantee. It is

firmly rooted in national and regional society and is normally characterized by a

balanced regional structure (with regional studios, correspondents, programme

windows, etc.). It may also be a means of strengthening regional identity and

integration. At the same time, public service broadcasters offer a means of opening

up towards European and world communications. For example12, within the

Eurovision and Euroradio systems, the EBU's terrestrial and satellite network permits

the exchange of over 22,000 news items and 1,800 classical music concerts with

digital sound quality; in 1997, about 6,500 hours of sport and cultural programming

were relayed.

Nevertheless, it is no contradiction to find national/regional/local broadcasting

services being distributed more broadly at a European level, without changing the

fundamental character of their programming. It is the programme content, and not thedistribution area, which gives the regional dimension. Indeed, a more widespread

distribution of local/regional/national/European content should be welcomed.

This contributes to mutual understanding across Europe and beyond, and meets new

communication needs arising from people's increased mobility. However, a

favourable framework is needed for such distribution beyond the primary target

audience.

12Source: EBU, 1997.


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Digitization and media concentration

The setting-up of digital platforms for broadcasting in many European countries goeshand-in-hand with an unprecedented level of media concentration. Even the most

powerful media and telecommunications groups are entering into alliances. One may

argue that this is a necessity for the development of new digital and interactive

services, at least over a transitional period. However, without effective safeguards,

pluralism in the media will never be able to recover fully from such a concentration.

Internal pluralistic safeguards could be of some help, but while such safeguards work

well in general with public broadcasters, it is doubtful whether they can be effective

with regard to private commercial broadcasters, since internal pluralistic structures

and their impact on programming (if any) could seriously affect the profitability of the

enterprise. Therefore, as a counterweight to the concentration in the commercialsector, a strong and innovative public service broadcasting system will be needed

more than ever.

B. Important factors with respect to infrastructure and access

Interoperability is the key to convergence

Apart from the excessive European telecommunications tariffs, the lack of legal

safeguards for the interoperability of systems is probably the main barrier to

convergence. Interoperability must first of all be ensured for digital broadcasting

(between different digital TV platforms at the national and the European level) but it

should also be achieved as far as possible across different sectors, and particularly

between broadcasting in the traditional sense, the Internet and new interactive

audiovisual and communications services.

Bottlenecks: from frequency scarcity to digital gateways

It is true that frequency scarcity can be partly overcome by digital compression

techniques. However, in view of extended programme offers, frequency scarcity will

still be an issue, particularly for terrestrial transmission.

The beneficial effect of alleviating frequency scarcity is counteracted by another

aspect of digital technology: the development of "digital gateways". Whoever is in

control of key elements of digital technology or of the digital distribution

infrastructure is in a position to extend this power to the provision of content. This is a

threat to media pluralism and competition.


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Digital gateways result from proprietary digital technology (both hardware and

software) embedded in, or linked to, digital decoders/set-top boxes. Among these are

conditional access systems, navigation systems/electronic programme guides (EPGs)and application programming interfaces (APIs). In the absence of open systems and

effective regulation ensuring non-discrimination, gatekeepers are in a position to

block or limit viewers' access to certain programme services via their set-top boxes.

This is one of the most important regulatory challenges at the crossroads of

telecommunications, broadcasting and information technology, and it is a challenge to

which the European authorities must response.

Question 4

Question 4: The impact of convergence on current regulationChapter IV.1 examines the challenges which current developments pose to the

balance between regulation, competition rules and reliance on market forces. It also

considers how the convergence process may impact on the principles underpinning

current regulation in the telecommunications, media and IT sectors.

(A) Do current developments require more or less regulation in the sectors affected

by convergence, more or less reliance on competition rules, and more or less reliance

on market forces to achieve the objectives identified in earlier Chapters?

(B) Whether and if so, to what extent convergence challenges the principles

underpinning existing regulatory approaches in the telecommunications, media and ITsectors?

Different legal frameworks for different objectives

The most relevant regulatory frameworks in the field of convergence are broadcasting

law (or more generally media law), telecommunications law and competition law.

These three sets of rules can be regarded as three separate layers of regulation for

content, convergence and the market, as the diagram below shows. All too often their

special character and inter-relationship are misunderstood.

A three-layer approach: media, telecommunications and competition law

Media law deals with the provision of content services to the public. If there is no

relevant content or if there is no communication to the public, or at least to individual

members of the public, then broadcasting or media law does not apply. This is the

reason why broadcasting law does not apply to voice telephony.


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Telecommunications law deals with the carriage, in other words the transmission of

signals. It covers the provision of network and transmission services.

This distinction between the transport of electromagnetic signals transmission and

the provision of content which is conveyed over these networks, has also been

retained in the agreement on basic telecommunications, reached in the framework of

the World Trade Organization in 1997. It has thus achieved global recognition.

Competition law, the third layer of regulation, deals with the functioning of markets,

and the behaviour of undertakings on these markets.

Closely linked to these different objects of regulation are different public policy

objectives or rationales.

The rationale of media and broadcasting law

Media law deals with the provision of content to the public. It is usually regarded as

necessary in order to achieve pluralism of opinions, sound (diversified) information

and education, cultural objectives, etc. In fact, it lies at the very basis of a democratic

Regulatory frameworks

1. Broadcasting/Media Law

2. Telecommunications Law

3. Competition Law

Policy objectives

Media independence, pluralism,

information, culture, education,

protection of minors, etc.,public service broadcasting

Availability of communication

infrastructures, spectrum

administration, universal service

Fair competition, economic

efficiency

Carriage

Market

Content


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society. These objectives should not lose their force owing to technological changes in

the distribution of existing services. The central role of the electronic media with

regard to democracy and culture is unlikely to change.

As regards broadcasting law itself (as part of the general media law), consideration

should be given to the specific character of the media: itsimpact on people and social

cohesion, the social importance of information/education, its universal accessibility,

etc.

One of the features of traditional broadcasting, the scarcity of frequencies available,

will lose much significance through the combined effect of digitization and

compression, though having a profusion of channels is not of itself the objective. The

rationale is rather that a certain type of content should be available to the public.

Impartial information, dissemination of culture and languages, education and

pluralism are at the heart of public service broadcasting. The necessity to protect those

public interest objectives will be all the more pressing in a converging environment.

There follow some examples of areas which are still of legitimate concern:

Information: open and balanced information and editorial treatment are needed more

than ever in view of the overflow of information;

Dissemination of cultures and languages: national public service broadcasters pay

much attention to the promotion of language and culture, whether national or regional

(production, etc.). Such action will be all the more necessary in the global

environment of Information and Communications Technologies (ICT), in order to

promote, or even maintain, cultural diversity;

Education: more than ever there needs to be global education, even if only with

regard to ICT. The need for training and awareness recognized by everyone has

never been so urgent. Public service has an important role to play at that level;

Pluralism: competition seems to lead to mergers and other alliances of "content

providers", rather than to diversity of opinions. In addition, private providers areessentially looking for an audience. As a consequence, programmes may become very

similar, and not pluralistic. Preserving pluralism means that it is still necessary to have

appropriate guarantees.

With a view to attaining the public interest objectives listed above, ICT should be

used whenever necessary. Public service broadcasters are already offering will

continue to offer, for instance, children's channels with interactive educational

programmes, multimedia history or science channels (e.g. benefiting from the rich

store of own archives), etc., according to the particular needs of the public.


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The fact that the need to safeguard these public interest objectives will remain does

not mean that there should be no evolution in broadcasting regulations in line with

technological development. (This will be explained later on.)

The rationale of telecommunications law

In contrast to broadcasting law, telecommunications law is concerned with the

conveyance of signals. It does not deal with content, as telecommunications services

are content-neutral, but rather covers such issues as universal accessibility to networks

and basic services, interconnection or the administration of the frequency spectrum. In

addition, since few major players are in place to provide infrastructures,

complementary rules aim to ensure fair competitive behaviour (the so-called ONP -

open network provision - rules).

The content service, through the technical evolution, can increasingly be seen as

independent from the underlying infrastructure and platforms, i.e. the distribution.

Alternative infrastructures (including cable television networks) are increasingly used

to convey telecommunications services, upgraded telecommunications networks are

able to transmit audio and video items, etc.

There are, however, important links between both, the most important possibly

deriving from the following principle: there is no content if one cannot gain access to

it. Ensuring open access to technical gateways (such as conditional access systems

and APIs) is crucial not only for interoperability but for the whole media system andfor competition too. Therefore, it is not exclusively a matter for telecommunications

law.

The rationale of competition law

Competition law aims to ensure fair competition and contributes to economic

efficiency. Certain arguments in favour of a predominant role for competition law

result from the assumption that the potential application of several regimes would

increase legal uncertainty about the regime applicable to a particular service or

activity: "Which law broadcasting, telecommunications, etc. applies, if any?".

On the one hand, such uncertainty would not cover the whole range of broadcasting

services, telecommunications services and other on-line services, but only part of the

grey area on the borders of the respective categories. On the other hand, the potential

overlap should not automatically be dealt with by giving priority to light-handed

competition law over other types of regulation.


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Firstly, competition law pursues specific economic objectives that are not similar to

other regulations: fair and competitive behaviour, etc. In other words, competition law

has no vocation to replace other regulations. It may even turn a blind eye to the publicpolicy objectives of both media and telecommunications law. It is an additional set of

rules with specific objectives. Leaving other concerns aside is not a sound approach.

In that context, competition authorities will have to pay particular attention to vertical

integration of operators, which can easily be used to exert undue dominance over the

markets involved.

Secondly, competition law does not imply legal certainty in itself. It is based to a large

extent on case law, and leaves competition authorities a considerable margin for

discretion and assessment. For instance, assessing likely future developments of

products or service markets under the Merger Regulation is very difficult when this

evolution is linked to technology which is evolving every day. More generally, aposteriori intervention by competition authorities may not ensure immediate, fair

competition, whereas, for instance, an advance of six months is very often crucial to

the success of technology-related businesses.

Nor should it be forgotten that competition law will also have to adapt to

technological evolution13. Competition law (in particular Article 85(3) of the EC

Treaty and the Merger Regulation) has to take dynamic efficiency issues (versus static

competition) into greater account (innovation markets perspective). It should make

maximum use of the essential facilities doctrine (Article 86) and will also need to

regulate specifically certain bottleneck and standards issues. Therefore, if competitionlaw requires ex-ante regulation in certain areas, for instance regarding standards or

access issues, it is difficult, a contrario, to believe that case-by-case application of

competition law, not to mention the market alone, could achieve objectives which are

not primarily economic.

Thirdly, legal certainty would logically lie within an evolutionary application of an

existing set of rules rather than within a regime, still to be created, based on the case-

by-case application of competition law. The equation "competition law = legal

certainty = development of markets" is simply wrong.

To summarize, it can be said that specific regulations covering communicationsactivities should be adapted to the extent necessary, rather than be replaced by general

competition principles with other aims. Competition law, on the other hand, should

adhere to its primary objective: ensuring fair and competitive behaviour as smoothly

as possible (e.g. opening up any bottlenecks), preventing abuse of a dominant position

and avoiding the replacement of public monopolies by private ones. In so doing,

particular attention must be paid to vertical integration.

13See also: London School of Economics, Convergence within the media industry, and between media, information

technology and/or telecommunications - Prospective for competition and competition policy, Final report to the DG IVof the European Commission, December 1996.


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Question 5

Question 5: Overcoming the barriers - Getting the right regulatory framework

for business and for consumersChapter IV.3 examines in a number of key areas where regulatory solutions may be

needed to overcome barriers and to safeguard competition.

(A) Are the definitions in the telecommunications, media and IT sectors in

national and/or Community legislation adapted to the convergence process?

(B) Will the convergence phenomenon require adaptation of existing approaches

or the adoption of new approaches to be applied to issues of market entry and

licensing; access to networks, customers (including conditional access systems),

content; and pricing?

(C) Will convergence require changes in the approaches to the award and pricingof frequency spectrum, and in particular what approach should be taken, in the light of

convergence, to the issue of completing the transition from analogue to digital

services, including the need for a timetable for analogue switch-off?

(D) What should be the objectives of standardisation in the light of convergence

and what should be the relationship between regional and international

standardisation?

(E) What additional action (if any) is required to ensure that the interests of

consumers and of users with disabilities are respected in the light of convergence?

About definitions

The basic distinction between content and carriage remains valid

Regulations for distribution infrastructures and programme services need to remain

distinct. One of the common traits of new regulatory approaches is the distinction

made between "carriage" (distribution infrastructure, transmission) and "content"

(audiovisual programmes, electronic publishing, information society services, etc.).

This approach was also adopted in the GATS agreement on basic telecommunications

of February 1997: telecommunications concerns the transport of electromagnetic

signals sound, data, image and any combinations thereof but not the activityconsisting of content provision which requires telecommunications services to

transport it.


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This legal distinction has proved useful and corresponds to the "value chain" of

audiovisual services and is also adequate for new "converged" services. It is

independent of the fact that integrated operators may provide both transmission andcontent services14.

A greater need for differentiation

Broadcasting law today already differentiates between, at least, radio, television and,

increasingly also, teletext. In the future, more distinctions will need to be made in

media law to deal with on-line services in all their different forms (electronic press,

audio on demand, video on demand, teleshopping, games, etc.).

Telecommunications law varies according to the different networks, such as public

telephone networks and cable television networks (as well as broadcasting networks).It also normally distinguishes between wired networks and wireless (mobile)

networks. (Regarding networks, however, we probably shall not have the same

diversification as for content services; accordingly, the need for differentiation may

not increase in telecommunications law as it will in media law.)

Competition law makes distinctions in identifying the so-called "relevant markets".

This has to be done in accordance with established principles of competition law, and

the result will be a large variety of markets for different goods and services.

Convergence actually increases the need for differentiation, as there is more interplay

between different kinds of services and between digital television and the Internet.

The categories of services, networks and relevant markets will certainly need to be

amended. But it is extremely important to note that convergence does not, as such,

challenge the distinction between the three horizontal layers.

The challenge of convergence is to make the distinctions right within media law,

within telecommunications law and within competition law. In other words, the

questions arise (horizontally) on each of these layers. We need to extend/adapt

regulations at each level (where appropriate) to cover new services and markets in an

adequate way. This process is already under way in some countries. This might lead

to the creation of a separate category for certain new services if the underlyingprinciple requires it, although it would not be an option as such. Only a pragmatic

approach of this kind will ensure both the necessary legal certainty for investment and

the further adaptability to a highly dynamic technology environment.

14For more details, see the Comments on the KPMG Study "Public Policy Issues Arising from Telecommunications

and Audiovisual Convergence" forwarded to DG XIII of EC (EBU, February 1997).


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Will the convergence phenomenon require adaptation of existing approachesor the adoption of new approaches to be applied to specific issues?

Under this item, only brief comments are given hereafter, since these issues have been

addressed above. It should be stated, however, from a general point of view, that the

fact that in a multichannel/multiservice world broadcasting regulation can no longer

simply focus on individual channels but must deal with multiplexes, bouquets and a

broadcaster's entire programme offer, relates to one of the necessary adaptations of

broadcasting law. Such an adaptation will deeply affect such areas as

licensing/registration, as well as must-carry rules or the assessment of pluralism.

Market entry/Licensing

In line with the above-mentioned observations under questions 3 and 4, and apart

form pure competition aspects, there have always been justifications for regulatory

constraints on the provision of infrastructures on the one hand and content services on

the other.

Radio TV On-lineInteractiveMultimedia

Telephone

Broadcasting/Media Law ( ) n/a

Telecommunications Law ( )

Competition Law ( )

Content

Carriage

Market

Regulatory frameworks Different services/networks/markets


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As far as infrastructures are concerned, the distinctions between telecommunications

and cable television networks (CATV) or other alternative networks, for instance, will

become blurred. To that extent, there may no longer be any reason why a providerwould be prevented from using its infrastructure in order to convey any kind of

services, on condition that "essential requirements" and other matters of public

interest are respected.

Finally, licensing procedures are likely to remain an important tool for achieving

public policy objectives at the national level.

However, growing European and global competition among media (and other)

companies, strong competition among national and regional regulators to attract

investors, and the threats of relocation are already pushing national regulators towards

partial deregulation. For example, the possibility stated in Article 3(1) of the"Television without Frontiers" Directive (i.e. the freedom of Member States to require

television broadcasters under their jurisdiction to comply with more detailed or

stricter rules) is an option which will become less and less feasible in practice, since it

would put a Member State's own media industry at a competitive disadvantage. This

is particularly true with regard to the Directives limits on television advertising,

sponsorship and teleshopping. Outside the areas coordinated by the Directive, it is

particularly felt regarding requirements for media pluralism.

The only notable exception where the fulfilment of stricter requirements can still

realistically be expected is public service broadcasting, which is not exposed to

market pressures to the same extent. Thus public service broadcasting may well be, in

the long term, the only effective instrument that remains for achieving national and

regional media policy objectives in the new environment.

Access to network, conditional access systems and other bottlenecks

Some parts of the media production and delivery chain risk becoming potential

gateways. As far as access is concerned, it is important to prevent any unfair attempt

to favour specific players or to give an undue advantage to the party controlling the

gate. The following potential gateways can be identified: access to the network,conditional access systems (CAS), electronic programme guides (EPGs), application

programming interfaces (APIs).


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Access to the network

Ex-ante sector-specific rules ensuring fair competition have been implementedregarding the interconnection of telecommunications infrastructures for the provision

of telecommunications services (ONP rules). It remains to be seen whether these

should not be extended/adapted to the use of networks for other types of services.

Conditional access systems (CAS)

A first kind of gateway is created by proprietary conditional access systems. Although

sector-specific legislation does indeed exist with respect to these systems, it is

recognized that this does not achieve the objective of an open market in receivers.

The Green Paper can, however, be read as implying that the measures provided in thecurrent Television Standards Directive to ensure the public interest are successful.

This is not the case. As an example, in the country that is most advanced in digital

television broadcasting today, France, there are two incompatible digital satellite

systems. The route to television sets stacked high with different set-top units has

begun. The Directive's plan of using Simulcrypt to protect the public interest and

ensure the need for only one set-top box has not worked. Many EBU Members would

say this was inevitable. If the Directive had made the Multicrypt interface mandatory,

the chances of an open market for receivers would have been greater.

Navigation systems, electronic programme guides (EPGs)

As far as the basic navigator or electronic programme guide is concerned, there need

to be legal safeguards. The "basic navigator" is currently understood as the system

which gives viewers access to all programmes and services available through set-top

boxes/integrated digital receivers. Navigation systems should make it easier for

viewers to find the programmes of their choice, and not more difficult. Free-to-air

services should not be hidden away among a plethora of pay-TV offers. This applies

particularly to access to public service programmes funded by viewers and listeners.

Legal safeguards are required to ensure that navigation systems are unbiased and offer

viewers a full choice.

Navigation systems should at least include a full and non-discriminatory "channel

listing" based on Service Information (SI) data provided by individual broadcasters.

They should give due prominence to public service offerings and allow rapid, simple

access to them (ideally, automatic first access). Viewers should have the possibility to

override the default settings and rearrange the order of channels.


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Application programming interface (API)

In the future, set-top boxes/integrated digital receivers should have a commonapplication programming interface15 and sufficient processing capacity and memory

to allow multiple EPG applications. This means that individual broadcasters, or

groups of broadcasters, should be in a position to offer viewers their own EPG

applications, with additional programme information and interactive functions.

If set-top boxes do not work with an open API, companies controlling the software of

set-top boxes should be required to provide competitors, on non-discriminatory terms,

with all the information (particularly regarding the API) which the latter need to

develop EPG applications16. This, however, is much less satisfactory than the

common use of a unique API, which must be capable of evolution.

Reaching interoperability

There would be clear advantages if the APIs for the different digital delivery systems

were interoperable to the maximum extent. Since each of the systems has a different

capacity, not all of the features can be included on all of the delivery systems.

Nevertheless, there is a case for considering the API situation globally, to harmonize

the systems and to use the same one wherever possible.

This will not happen without intervention. Different individuals in different standards

bodies are developing the systems. This is bound to result in diversity. Regulators can

play a useful role in helping to introduce interoperable software interfaces for the

different multimedia delivery systems.

15 Digital broadcasting offers the possibility of broadcasting "applications". These are packages of computersoftware, which "run" or "execute" once in the viewers receiver. These applications can range from simplemultimedia packages (electronic magazines) to games, calculators, and other interactive experiences. In the yearsahead, broadcasting "applications" may be just as normal as broadcasting films or sports events.

In order to broadcast applications, the broadcaster must know what language (in computer terms) the viewersreceiver is able to accept. This is called the application programming interface. It is just as necessary to have aknown API as it is to have a known standard for the picture and sound. The world already has standards for picturesand sound (MPEG, etc.), but it has no standard for an API.

Broadcasters have known the advantages of having a common open API for Europe for about 18 months. The EBUwrote to DG XIII in early 1997 hoping for action to encourage convergence on a common system. It is reassuring tofind that the Commission is finally acknowledging the value of a common API, although not according it as muchpriority as the EBU would like.

The digital television receiver is not the only digital delivery system that will need an API. Probably all digital delivery

systems will need one. This includes the GSM telephone and its higher bit rate successor, the UMTS system, DAB,and the DVB delivery systems, whether satellite, terrestrial or cable.

16For more details, see "Difficult to be easy the electronic programme guide" (EBU, January 1998).


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The issues relating to both EPGs and APIs, however, are currently left unregulated in

most Member States. If the market proves unable to respond adequately to these

issues, regulations will have to be adopted quickly. The question will remain that ofdetermining who will regulate (competition or sector-specific regulators).

It is nevertheless important to note that the need for regulation, at least during a

transitional period, is very strongly felt already. (See also the objectives of

standardization, below.)17 To prevent excessive regulation, the most urgent step is

obviously to favour the voluntary adoption of open standards, with a commitment to

legislation if this is not effective.

Access to content

Access to content cannot be compared to access to infrastructures: unliketelecommunications services, for instance, quality and desirable content cannot

merely be the subject of a binding regulation. Moreover, exclusivity is a fundamental

feature of intellectual property rights.

On the other hand, quality is not produced by the market itself, as audiovisual

liberalization has confirmed.

All that can be done, therefore, is to favour the production of quality content in

Europe, through an appropriate policy. Even so, talent will remain a scarce resource.

Any such policy should take account of the fact that broadcasters are currently the

main investment engines of creative content production in Europe.

Pricing

The issue of the public service broadcasters' licence fee is dealt with under question 6.

What should be the objectives of standardization?

In line with what has been said above with respect to digital gateways, the role of

official and de facto standards is crucial in an area where telecommunications,broadcasting and information technology meet. Without such standards,

interconnectivity and interoperability will not be achieved, and convergence will be

considerably delayed. Open standards can also help to prevent dominant positions and

thus allay competition concerns the opposite of a situation where the most powerful

players, alone or together, impose their proprietary systems18.

17 See also the LSE study for DG IV.18

The fragmentation of the digital broadcasting market in Europe, resulting from the introduction of set-top boxes withdifferent proprietary technology, is a first example of a missed opportunity, and in the absence of common standardsthe same is likely to happen with regard to interactive services.


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Industry-led attempts at standardization should be encouraged. This is particularly

true in relation to the recent initi

Documents

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