Media regulation in the Internet age Given its status as a seemingly sprawling, borderless phenomenon
The fast-moving world of Web-based media has long been defined by a lack of regulation, but as legislators and industry begin to grapple with reigning in the Internet, issues of state aid, freedom of expression and intellectual property have come to the fore.
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Given its status as a seemingly sprawling, borderless phenomenon, the Internet has proven to be a challenge for regulators. Indeed, there has been a perceived reluctance to constrain its freewheeling nature, given its sheer complexity and the risk of curtailing commercial activity and free speech.
However, real-world issues are bringing the virtual world down to earth. Commercial television companies are complaining that state broadcasters are migrating onto the Web and investing heavily in their online presence.
This in turn raises the issue of media pluralism, amid concerns that state-backed media monopolies and large media conglomerates are beginning to assume an increasing share of online traffic, diminishing the diversity of media outlets that is the hallmark of the Internet.
In 2001, the European Commission published a Communication on the application of state aid rules to publicly-funded broadcasting. Since then, more than twenty decisions were adopted concerning the financing of state broadcasters. In December 2007, the Audiovisual Media Services Directive came into force. The directive took account of technological developments by extending the scope of the EU audiovisual regulation to emerging media services.
These developments, along with rulings by European Court of Justice, called for an update of the 2001 communication. In November 2008, the Commission published a draft version of its new broadcast communication and scheduled a hearing
State aid for public broadcasters
State aid for public broadcasters has long been an issue for independently-funded media companies. However, the number of complaints to the European Commission has increased recently, as commercial operators claim they are forced to compete on an uneven playing field.
Private companies allege public broadcasters are going beyond their remit by cross-subsidising their new media ventures with public money. Public service broadcasters oppose making a distinction between new and old media.
However, commercial firms involved in online and mobile technology platforms seek to draw a clear line between the traditional model of state-supported broadcasting and the next generation of media.
This issue hit the headlines again in early 2009 (EurActiv 9/01/09) when France introduced an ad-free policy for its state broadcast channels. The move means national TV stations in France will be dependent on state funds for income, which is unlikely to be in keeping with the direction the Commission advocates.
In its draft communication, the EU executive suggested separating the public service and non-public service activities of publicly-funded media groups. This would involve separate accounts for each arm of a broadcaster's activities.
The Commission points to broadcasters' rapidly evolving business models, which currently embrace new sources of finance, such as online advertising and pay-per-view access to premium content. A number of member states have already opted to prevent public service broadcasters from offering paid-for products within their public service remit.
The EU executive expressly highlights access to premium UEFA Champions League football matches and viewers' participation in phone-based game shows as "manifestly commercial activities" which cannot therefore be financed by state aid.
Maintaining diversity of ownership and content is consistently highlighted by the EU as a cornerstone of its media regulation policies.
In 2007, the Commission produced a working paper on media pluralism, which stressed the need to ensure that citizens have access to a variety of information sources, allowing them to form opinions without "undue influence of one dominant opinion-forming player".
It also noted that the emergence of new technology should not be taken as a threat to media pluralism. To develop a concrete set of indicators to assess media pluralism in member states, an independent study was initiated. The tender was awarded to Katholieke Universiteit Leuven, in partnership with Ernst & Young, Jönköping Int. and CEU Hungary.
The study was originally intended for publication in 2008, but is now expected to appear during the first half of 2009. A follow-up study, which would systematically apply media pluralism indicators to all member states, may subsequently be commissioned.
The issue of net neutrality is gathering attention in the US, but has thus far generated less debate in Brussels. User groups complain that large broadband networks are restricting content and websites.
There have also been accusations of anticompetitive behaviour by Internet service providers (ISPs) amid claims that they are attempting to influence the content viewed by their customers in a way that is financially advantageous to ISPs.
Tim Berners Lee, often dubbed 'the father of the Web,' ranks among the high-profile personalities to have publicly lobbied for regulation to mandate the neutrality of the Internet. However, others have argued that regulation is unnecessary and would threaten innovation.
In Europe, consumer representatives have cautioned that limiting citizens' ability to connect to and communicate on the Internet effectively cuts people off from civic and cultural life.
Controlling the kind of information available on literally billions of webpages is a daunting task and raises concerns about censorship. However, illegal activity related to terrorism, child pornography, people trafficking and copyright theft, to name but a few, are spurring legislators to act.
The EU unveiled an investment of €55 million as part of its Safer Internet Day , which focused on protecting children from online predators and cyberbullying.
However, awareness programmes and self-regulatory initiatives were at the centre of this strategy, rather than penalties for Internet service providers hosting illegal material or sites considered inappropriate for users.
Private media companies prefer to draw a distinction between censorship and filtering illegal content. The latter relies on content recognition technologies designed to ensure certain kinds of material are not viewed by Web users.
Advertising content online – particularly for free-to-view websites – is the cornerstone of the business model of most commercial websites. As advertisers migrate to the Web, advertising standards have attracted attention.
This often takes the form of self-regulatory codes of conduct developed by industries keen to stay ahead of external regulation. The alcohol industry in Europe has just launched its own guidelines for advertising alcoholic drinks. The code seeks to ensure that alcohol advertisements are targeted at appropriate adult consumers.
The Commission's proposed Directive on Information to Patients also attempts to set down rules on providing online information on medicines (EurActiv 2/18/09).
This is an attempt to counter the plethora of promotional material and other advertising of dubious reliability.
EU Competition Commissioner Neelie Kroes said the media market had changed dramatically in the years since the 2001 legislation.
"Technological advances, particularly digitalisation, are driving convergence. Changing consumption patterns have meant new and modified business models for public and commercial broadcasters alike. And new services have emerged across all media platforms – most obviously the Internet," she said.
Kroes noted that public service broadcasters are uniformly against any change to the existing legal framework, while private media have come together to complain of state aid and demand an updated communication.
EU Information Society and Media Commissioner Viviane Reding has stated that net neutrality is a priority and new network management techniques should not be used for anti-competitive purposes. Measures proposed to reform the telecoms package would protect against abuse of such technologies, she added.
The European Broadcasting Union opposes the introduction of new rules on funding for public service broadcasters, which it says could lead to "harmonisation of PSB regulations".
"The EBU strongly supports member states in their refusal to accept Commission measures which indirectly lead to a de facto European harmonisation of PSB regulations," said EBU Director General Jean Réveillon. He said the EU executive's approach ignores the views of a large majority of member states, which were expressed in writing to EU Competition Commissioner Neelie Kroes.
The EBU believes the current version of the communication published by the Commission is so detailed that it could "reduce the scope for member states to grant public service broadcasters a significant role in the information society".
In a letter sent to Commissioner Kroes, several groups representing the private media industry urge her to resist pressure from national culture ministers "to derail the sensible proposals on state aid to public broadcasters".
The Association of Television in Europe (ACT), the European Publishers Council (EPC), the German Association of Commercial Radio and Telecommunications Providers (VPRT), the European Newspaper Publishers' Association (ENPA), and the European Radio Association (AER) estimate that €22 billion per year is given in state aid to public service broadcasters. This represents a tactical advantage and distorts the market for other entrants, according to the private sector.
This view is echoed in an individual position paper from ACT highlighting the growing participation of governments in several sectors, and warns that the current financial crisis must not trigger a loosening of state aid rules.
It says the Commission's proposal is a "modest improvement" on the existing text but requires clarification on several points, including the definition and scope of public service broadcasting. The group has also been critical of member states' lobbying for a less detailed communication (EurActiv, 24/02/09).
Viestinnän Keskusliitto (FinnMedia, the federation of the Finnish media industry) called on the Commission to make a clear distinction between public and commercial media.
"Offering pay-services is in conflict with the public service remit. It obfuscates the division between public and commercial service and distorts competition. Therefore offering pay-services either direct or through intermediaries must not at all be included in the public service remit."
The group said the Commission's communication on public service broadcasting must set out clear and precise definitions of what kind of programming supports the democratic, social and cultural needs of society, and at the same time safeguard media pluralism.
The European Publishers Council (EPC), in a letter to Philip Lowe, director General of the Commission's competition arm, stressed that Internet publishing is not simply an extension of the public service broadcasting role.
"The European Publishers Council has been following the increasing tendency of public broadcasters to migrate to the Internet, becoming in many cases, publicly funded newspaper and magazine online publishers, in direct competition with our own web-based services."
The publishers group said it would welcome a clear communication on how state aid rules would be applied to public service broadcasting. "PSB activities on the Internet are not analogous to their pioneering role in conventional broadcasting, and to subsequent market developments," stated the EPC, which also presented a detailed response to the Commission's draft communication in January 2009.
The European Satellite Operators Association (ESOA) took a similar line, suggesting member state support for national media is incompatible with the principles of the EU Treaty and state aid rules.
"In the transition from analogue to digital television, various EU member states tend to favour national technologies based on terrestrial systems over others that are more successful and provide a much larger plurality of services, such as satellite. This leads to the adoption of state aid policies that are often incompatible with the competition principles of the EU Treaty in general, and with EU state aid provisions in particular."
ESOA called on the Commission to take action against national initiatives which fail to respect the 'technology neutrality' principle enshrined in the European regulatory framework on electronic communications.
On the issue of net neutrality, European consumer group BEUC warned against any move that would limit citizens' ability to connect to and communicate on the Internet.
"Consumers care about network neutrality and are deeply concerned about what type of regulation we need to preserve it. Seen from a commercial point of view – and also from a service quality point of view – clearly network neutrality is a stumbling block."
The organisation compared the information superhighway to road infrastructure, which should be open to all. "No democratic societies have yet allowed road authorities, bus or freight operators or taxi companies the right to decide how other agents should access the road network."
Regarding online safety, BEUC called for the protection of children and teenagers' personal data and privacy. Raising awareness about potential threats and protecting against inappropriate marketing to minors should also be a priority, it said.
Open Forum Europe welcomed the Commission's efforts to tackle net neutrality and opposes any attempt to use traffic management for anti-competitive purposes.
"A key component of the Commission's communication relates to the discussion surrounding a fair, nondiscriminatory, transparent and competitive playing field, the principle that end-users can reach the Internet applications, content, and services they desire on a level playing field, without anti-competitive discrimination on commercial grounds, or restrictions," it said.
Cable Europe, the European Cable Communications Association, said a revision of the Satellite and Cable Directive will help more widespread availability of audiovisual technology in the EU by creating important steps towards a more effective system for rights clearance across the Union.
The British Broadcasting Corporation (BBC ) Trust welcomed the general spirit of the draft revision of the 2001 legislation, but described it as "more detailed and prescriptive than necessary".
The European Alliance of Listeners' and Viewers' Associations (EURALVA) reacted positively to the Commission's draft communication, but suggested a clear distinction be drawn between public service broadcasting and state-aided broadcasters. It is also critical of the EU executive's reliance on competition-based criteria in assessing the impact of public service broadcasting.
As part of a public consultation on the draft of the updated Communication on state aid for publicly-funded broadcasters, several governments set out their views:
Bulgaria emphasised the role of member states in defining the public mission of public broadcasters for themselves. "Due to the fact that the organisation, funding and programme content of European public media cannot be unified, then the modification of the communication should comprise only certain basic and flexible principles, but it should not set strict and detailed rules when defining the conditions for conferring services of general economic interest."
Denmark expressed concern that the draft communication is too detailed and risks reducing the rights of member states to define the remit of their public service broadcasters.
Ireland cautioned against adopting a "one-size-fits-all" approach to regulating this area. It suggests the language adopting in the draft communication would consign public service broadcasting to history by stating that "the platforms of the future belong to the commercial sector in the first instance".
Sweden believes the draft is too detailed and that the specific examples of commercial activities outlined in the text should be removed.
The UK welcomed several aspects of the Commission's draft communication, but warned against being "too prescriptive" in case this negatively affects member states' ability to ensure public service broadcasters can make a proper contribution to the democratic, social and cultural needs of society.
The EEA EFTA States stated that the basic principles outlined in the 2001 communication are still adequate. Any revision of this should take account of new case law and respect the principles of the Amsterdam Protocol, "notably the principle of subsidiarity".