Time to Act: TV Innovators Missing the Boat on Media Convergence Regulation

Online video, EPGs, connected TV and the internet are coming under fresh regulatory scrutiny yet key TV innovators are largely absent from the debates taking place in this pivotal European election year. Discussions getting underway now will set the tone for the 2015 legislative agenda. The ship is setting sail. Time to get on board!

Online video, EPGs, connected TV and the Internet itself are coming under fresh scrutiny as debates on the future of audiovisual regulation step up a notch during this pivotal European election year. It´s a perfect moment for behind-the-scenes maneuvering, so what´s on the regulatory agenda?

One of the hottest topics is a potential – and radical – shift away from the ´country-of-origin´ principle, whereby service providers need only adhere to the laws of the nation in which they are domiciled.

This underlying tenet of EU law is designed to promote free trade and provide legal certainty for businesses. If it were to happen new ´country-of-destination´ regulation would force, for example, providers of online video services to comply with individual national laws, creating a compliance nightmare for major multinational services.

It´s coming under discussion now because the entire European TV ecosystem is under threat: Internet-based TV has dramatically lowered barriers to entry, enabling new entrants – especially those who are outside EU jurisdiction and who do not have to abide by EU rules – to compete with Europe´s broadcasters on an unprecedented scale.

EPG ¨prominence¨ is another hot topic. Here the goal is to ensure the discoverability of public service content in ¨Electronic Programme Guides¨.

Given the huge levels of investment in content by Europe´s broadcasters, the goal is to maintain prominent positions for public service programming within the interfaces of EPGs. The concern is that when connected TV manufacturers and other innovative TV platforms enable wide access to diverse content sources, content from the national and local broadcasters will become far more difficult for audiences to find. But how to achieve this remains an open question.

Meanwhile, the innovations continue. Boxfish, a company that has been processing, in real time, every single word spoken on 1,000 different TV channels across the world is just one example of a new approach to content discovery, enabling search, discovery and personal recommendation. “EPGs? They’re now archaic,” said Marios Stylianou, Boxfish’s vice president of marketing & product, who claims to have a database ¨so vast and so versatile they can barely figure out what aspect of the video industry to revolutionise first.¨

In the context of such new services, it´s hard to see how ´EPG prominence´ is really meant to work in practice where content discovery paradigms have shifted away from grid-based EPGs. A government consultation on this topic was promised in the UK in February 2014 but has yet to materialize, however EPG prominence, and the wider ´media convergence´ debate, remains firmly on the agenda of Europe´s regulators. Connected TV and commercial overlays (eg, icons or textual elements which accompany a broadcast) were also cited as concerns in separate declarations by French broadcasters and the EBU in 2011, while social media and apps are also intimated to be within regulators´ sights in the UK following research by Ofcom, as child and consumer protection continues to be a primary concern.

Moreover, the French regulatory authority Conseil Supérior de l´Audiovisuel (CSA) has recently announced its intention to regulate audiovisual digital content on the Internet with the publication of its 2013 annual report. Current conversations are taking under the auspices of the newly formed European Group of Regulatory Authorities (EGRA), headed by Olivier Schrameck, who also happens to be chair of the French CSA. The French position has always been an influential one amongst regulators in other EU member states. Therefore the CSA’s attempt to extend its regulatory reach into the Internet space, as well as its proposals for changing the ´country of origin´ rule will be watched closely by Europe´s media regulators, according to an April 2014 report by Winston Maxwell, a media lawyer at Hogan Lovells.

In 2013 the European Commission published a Green Paper consultation document ¨Preparing for a Fully Convergent Audiovisual World¨. The responses are now being scrutinized by regulators and conversations this year will set the scene for an active agenda in 2015 once the May 2014 European elections are over with and newly elected officials settle into their roles. Members of the European Platform of Regulatory Agencies (EPRA) will meet to discuss it at their June 2014 meeting. All of this is taking place ahead of a major announcement on the Audiovisual Media Services Directive (AVMSD) by Neelie Kroes expected early autumn.

More than 180 of the 200+ responses to the Green Paper have been made publicly available, and though it´s possible that their responses have been kept confidential, Netflix, Google, Amazon and others are not much present in the public debate. There has been hardly any involvement or contribution from other online video innovators. Partially this is due to the fact that many of the major online video players are based in countries with more relaxed regulatory and corporate tax regimes such as Ireland and Luxembourg and presumably they consider themselves protected under the country-of-origin rule. Smaller players are far less potent in having the resources to participate effectively – no matter how open the process is, it is just not feasible for small players to have an effective voice in the context of such powerful active players. Is a level playing field even realistic?

Despite sufficient funding to commission research and getting themselves well-briefed, regulators nevertheless remain far removed from disruptive TV market innovators. This is perhaps one aspect that limits their horizons in terms of stimulating wider debate. As a result ´media convergence´ policy proposals today are being driven principally by those most active in the debates: the broadcasters, traditional TV platforms and regulators.

So why have we reached this critical moment when online video providers, publishers, website owners and other innovators should be paying attention now?

Over the past decade, the European Commission has keep itself busy with much needed revisions to the EU´s audiovisual media services policies. The result was an extension of the laws that previously only applied to traditional TV services. Those new rules – the Audiovisual Media Services Directive, which came into force in December 2009 – were specifically extended to include non-linear video services (video-on-demand, catch-up TV, etc) regardless of their method of delivery (eg, mobile, Internet, etc) for the first time.

The EC´s main goal was to update the original TV Without Frontiers Directive in order to ensure a level playing field between traditional TV services and on-demand service providers. AVMSD therefore now applies to all ´TV-like´ on-demand programme services (e.g., VOD) – a concept which remains subject to ongoing refinement and definition. In October 2012 Ofcom even commissioned research to help define: What does TV-like mean?

The TVWF Directive has been the cornerstone of the European Union’s audiovisual policy ever since it went into force in 1991. It has been subject to ongoing reviews since 2001. By 2005, given that TVWF still only applied to traditional television and the advertising on those services, the Commission finally submitted proposals to update it and it took a further two years of debate before some form of could be consensus could be reached.

The outcome in 2007 was the AVMS Directive which continued to preserve the same fundamental tenants of TVWF including the free movement of European TV programmes amongst Member States and the so-called ´broadcasting quotas´ that oblige TV channels to reserve more than 50% of their transmission time to works produced in Europe. It also maintains a number of fundamental public interest principles that include cultural diversity, protecting minors, guaranteeing the right of reply and promoting the availability of access services (subtitles, audio description, etc). AVMSD also modernised the rules governing advertising across all these platforms, enabling for example Member States to allow product and prop placement for the first time. The rules for on-demand services, however, were not so stringent as to include broadcast quotas or to mandate investment in European content or access services, but there is an obligation to ´encourage´ on-demand service providers to gradually introduce and increase the provision of such services under AVMS rules.

The subsequent birth of co-regulation in the UK, from 2009 onwards, and the transposition of the Directive in all the EU Member States was quite a lengthy process, even though some countries merely incorporated the original texts within their own communications laws. It took until 2013 for all the Member States to finally transpose AVMS into national law! While self-regulation was recognised within the Directive, this was not adopted anywhere. National regulators took charge instead, and a co-regulatory system is uniquely in place in the UK where ATVOD was designated with Ofcom having backstop powers.

With the Directive finally now fully transposed across Europe, what has happened in practice? What are the issues that keep regulators up at night? Will the ongoing review procedure ever end?

The AVMS Directive defines an audiovisual media service as being ¨under the editorial responsibility of a media service provider and the principal purpose of which is the provision of programmes in order to inform, entertain or educate, to the general public by electronic communications networks¨. Further distinctions determine whether the service is a television broadcast or an on-demand audiovisual media service. The latter being defined as a ¨non-linear audiovisual media service provided by a media service provider for the viewing of programmes at the moment chosen by the user and at his individual request on the basis of a catalogue of programmes selected by the media service provider¨. There are number of further cumulative criteria that determine which video-on-demand services are ¨in scope¨ of the Directive, as well as a number of exclusions. However the general characteristics must be met, in that they are ¨‘television-like’, i.e. that they compete for the same audience as television broadcasts, and the nature and the means of access to the service would lead the user reasonably to expect regulatory protection within the scope of this Directive. In the light of this and in order to prevent disparities as regards free movement and competition, the notion of ‘programme’ should be interpreted in a dynamic way taking into account developments in television broadcasting.¨

The concept of ¨scope¨ has been a topic of much debate. This is true particularly in the UK where online newspapers have experienced intense scrutiny as to whether their services are in ´scope´ of the Directive. In Sweden four newspapers were however determined to have online video services that were subject to the AVMS rules, despite wording in the Directive which states: ¨The scope of this Directive should not cover electronic versions of newspapers and magazines.¨

AVMS is also routinely used by ATVOD to catch adult websites that fail to put in place child protection controls (regardless of whether they meet all the cumulative criteria of the directive – and latterly using the Obscene Publications Act as reinforcement). Every case must be assessed individually, say regulators like ATVOD, which poses a huge question mark for websites that carry video content, or simply describe themselves as ´TV¨. While adult websites are understandably a particular focus of the ATVOD´s attention, efforts are ongoing in the UK to find a way to block payments to foreign adult sites who don´t put in place the proper child protection controls. In other words, that pesky jurisdictional problem again given that the Internet respects no borders.

In another high profile case, BBC content on You Tube was determined to be a TV-like service. This ATVOD determination was appealed by BBC Worldwide, and following a lengthy investigation and appeal Ofcom quashed the decision.

With definitions like these, it is no wonder there is endless interpretation and refinement. However, as a general rule AVMS only applies to those services that are, of course, domiciled in the EU. Accordingly, since each Member State is entitled to ´transpose´ European Directives into national law according to their own discretion, the resulting laws are not implemented in a ´standard´ way, eg, giving rise to the ´country-of-origin´ principle.

Will this continue to be the case for all audiovisual services delivered in the EU? As regulators see it, it´s the foreign services that are out of jurisdiction that pose the biggest threat to the TV ecosystem. It looks like this fundamental principle may well be in for a second-look by regulators as we anticipate a full-scale revision to AVMSD commencing in 2015.

Jurisdictional issues related to foreign content and services beyond the reach of European laws also concern regulators in terms of preserving cultural identity, child protection, investment in content and other issues. Public service and commercial broadcasters across Europe invest considerably in European content but face competition nowadays from global players. Lluís Borrell, of Analysis Mason, speaking at the eur§reg 2014 conference in Zürich, described the EU TV industry as a rich ecosystem with over €100 billion in revenue, a third of which is invested in content and around €15 billion in European works. ¨This is supported by a media and telecoms policy based on a strong national broadcasters regime. Internetbased TV lowers the entry barriers to TV distribution and opens up an unprecedented level of global competition. We are seeing exponential growth in the short term but there is long-term uncertainty about scale/timing of impact. However, there is a perception of threat to the overall EU TV ecosystem and ¨European works‟ in particular. This has opened up a wide public policy debate which is yet very uncertain and complex to transpose into the new TV ecosystem¨, he said.

This time regulators face a far more complex landscape than ever before. Considering the pace of technological innovation together with corresponding debates raging around data protection and privacy, net neutrality and the protection of children online, social media apps and censorship, the task seems mammoth. Indeed it is.

What´s next? As reported by EPRA, on 12 March 2014 the European Parliament adopted a Resolution as a follow-up to the Commission´s Green Paper. The Resolution, which is based on a Report of the EP Culture and Communication Committee drafted by MEP Sabine Verheyen and adopted in January 2014, is built around a six-tier structure addressing the issues of convergent markets, access and findability, safeguarding diversity and funding models, infrastructure and frequencies, values and the overall regulatory framework. It follows a similar Resolution on Connected TV that was published last July.

The Committees of the European Parliament are designed to aid the European Commission in initiating legislation. Parliament can amend and reject legislation and it can make a proposal for legislation, however it needs the Commission to draft a bill before anything can become law.

It´s unclear at this point how far these recommendations will actually go, given that European elections are imminent. Over the next year content regulation developments will require close scrutiny as this scenario plays out without much involvement from technology innovators in the online digital video space. Given that the debates taking in 2014 will significantly influence the regulatory agenda for 2015, if you´re not already actively following these discussions, it´s probably just the right moment to get involved.