Protecting Innovation and Investment in New Electronic Media
6th December 2005
I am delighted to have secured this debate today for while most discussions about Broadband Britain have so far focused on questions relating to technical infrastructure, more attention must now be given to the content that will fill the new high-capacity pipes. But first it is important to set the scene.
Broadband is now available to 99.6% of the UK population – the highest level of any G7 country. And of this we can all be proud. However, this does not mean the task of infrastructure development is complete. Most Broadband users can only access speeds of 512kbps and this is not ‘broadband’ in the true sense of the word though it’s a darn sight faster - over 10 times faster, in fact – than dial-up. True broadband has the ability to stream moving images and that needs stable data transfer rates of at least 2, maybe 4, Mbps. And widespread availability of these speeds is the challenge that now faces Government and telecoms companies like BT and others.
The ability to access Images - both still and moving - is one of the key advantages of true, high speed, broadband. And it is the audiovisual content on which I want to focus this debate today.
Hollywood movies, soap operas and high-level sport will continue to play a large role. But the potential of broadband networks will not be fully realised if they are used simply as an additional platform for the distribution of traditional TV channels, or an alternative to the video-rental shop on the corner of the street.
By a happy coincidence, at the same time that broadband is cutting audiovisual distribution costs, the costs of professional-quality AV production are also falling. Some digital video cameras now on sale in the high street are equivalent to the BBC’s most sophisticated colour equipment of only a few years ago.
Furthermore, the podcasting phenomenon has already demonstrated that there is large public appetite for “do-it-yourself” content produced by individuals from outside the mainstream media industry.
There is therefore good reason to expect that the audiovisual markets of the future will be very different from those with which we are currently familiar.
It is quite feasible to anticipate the development of a rich ecosystem of niche content providers, serving local communities and minority interests rather than the mass national audiences we have today - albeit that even these are reduced in size with the diversity of TV channels currently available.
This development represents a particular opportunity for the UK economy where a strong creative sector already accounts for more than 8% of GDP. In addition to the economic benefits, there is huge potential to enrich the quality of life of individuals across the country.
Against this background, European Commission plans to regulate all audiovisual services are a matter for serious concern.
Specifically, the Commission will shortly present proposals for revision of the so-called Television Without Frontiers Directive. This legislation aims to establish an effective single market for traditional TV services by forbidding any Member State to block the reception or retransmission of broadcasts made in conformity with the law of any other Member State. So far, so good. But in pursuit of that objective the Commission will lay down minimum standards for national legislation in a number of areas. Advertising, protection of minors and European content quotas are the three most significant issues covered.
The Commissioner responsible, Mrs Vivienne Reding, has announced her intention to amend the scope of these rules so that they apply to all services which involve the delivery of moving images to the general public across electronic networks.
As we move to a world where every citizen is a potential content provider, this plan presents huge scope for unnecessary constraints and unintended consequences. This is inevitable since this is regulation of an industry that – for all practical purposes - does not yet exist. Nobody knows what successful business models will look like in this fast-moving sector. The Commission is nevertheless suggesting a leap in the dark.
Such a leap is, in fact, completely unnecessary. None of the justifications which Mrs Reding has advanced for additional EU regulation stand up to scrutiny. Let me take 3 points.
Firstly, there is no need for EU action to ensure a level playing field between traditional broadcasters and providers of new on-demand services. All European countries agree on the need to prevent children having access to unsuitable material, and to avoid exposing consumers to untruthful advertising. In other words, they will try to ensure that new on-demand services respect the same public policy objectives as traditional services – whether or not they are forced to do so by EU legislation.
Indeed, in most EU Member States on-demand services are already subject to some form of control. In the UK, for example, a successful self-regulatory regime – the Association for Television on Demand - has already been established by the industry in question. And the internet is not excluded from the jurisdiction of the Advertising Standards Authority. If any gaps are revealed as the sector develops, these can easily be filled by national legislation which is better able to adapt to rapidly evolving circumstances than inflexible EU regulation. I think this is known as ‘Subsiduarity’.
Secondly, although underlying public policy objectives need to be the same in both areas, the principle of technological neutrality demands that traditional broadcasters and providers of on-demand services are not regulated in the same way. By definition the latter offer greater opportunities for user choice and parental control. Password controls can be used to ensure that children are protected. Such protections are unavailable on traditional TV. The nine o’clock watershed is almost irrelevant as younger children stay up later. Have you seen the latest episode of ‘Rome’?
Consequently, it is far from self-evident that on-demand services should be subjected to requirements designed for a world where user choice was limited to a small number of licensed broadcasters, where the broadcasters – not the viewers – decided what their audience would watch, and where a large part of the population watched the same thing at the same time.
Thirdly, we come to freedom to provide services across borders which should be the Commission’s central concern. In fact, this freedom is already guaranteed for on-demand services by another piece of EU legislation – the so-called E-Commerce Directive. Mrs Reding argues that this guarantee is not firm enough – Member States may still block foreign services in certain circumstances. However, no amount of Brussels harmonisation is going to remove the need for service providers to continue to tailor audiovisual services to national languages and cultural preferences. The guarantees provided by the E-Commerce Directive are therefore proportionate to the foreseeable scope for cross-border trade in services.
In fact, the only argument in favour of the Commission’s proposals appears to be bureaucratic neatness – it looks untidy if you have EU rules applying to one type of audiovisual content, but another category of content escapes. While this argument may be appealing to some of the more Cartesian, controlling minds in Brussels, I should like to enter a plea for Anglo—Saxon pragmatism: “If it ain’t broke don’t fix it.”
This viewpoint is shared by practically all the UK organisations who would be affected by an extension in the scope of EU legislation – and many of their European counterparts. In the UK the Broadband Stakeholders’ Group, the ICT trade association Intellect, the Internet Service Providers Association and ATVOD, the self-regulatory body referred to earlier, are all united in their opposition to such a move. In the EU, the European Telecoms Networks Association and the European Competitive Telecoms Association oppose it too.
It has therefore been gratifying to note the content of the Government’s response to the final round of consultations conducted by the European Commission prior to adoption of its proposal. In short, the Government appears to concur that Mrs Reding’s plans are completely superfluous. Would the Minister agree with this summary?
Would the Minister further agree that that Mrs Reding’s plans stand in direct contradiction to President Barroso’s “Better Regulation” agenda which requires new EU legislation to respond to a clearly defined need, to be proportionate, and to be accompanied by a reliable impact assessment?
Would the Minister also provide an assurance than the UK will maintain robust opposition to the extended scope of EU legislation once the proposal enters discussion in the Council of Ministers?
Sometimes it needs hindsight to prevent bad legislation. In this instance we can see it coming. I hope today that the Minister can reassure me, the Telecoms industry, and future users of this new medium that he will stop this bad legislation in its tracks.
