Memorandum submitted by AOL UK
AOL UK is delighted to comment and give evidence
on the White Paper "A New Future for Communications"
to the Culture, Media and Sport Select Committee.
AOL UK is the UK's leading subscription-based
interactive services provider and a division of AOL Europe. AOL
Europe provides the AOL, CompuServe and Netscape Online services,
AOL Instant Messenger, AOL and CompuServe portals in 10 countries
and five languages across Europe.
AOL is the service for the whole family, providing
members with interactive education, entertainment, financial and
information content, and access to the whole Internet. From the
first service launch in 1995, AOL UK's multiple brands now reach
more than 5.4 million households in Europe including more than
3.9 million households served by the company's AOL and CompuServe
This paper provides a summary of AOL UK's position
and identifies our key areas of interest. A more detailed response
on all the issues raised by the White Paper is to be submitted
to the Department for Culture, Media and Sport and Department
of Trade and Industry and we would welcome a discussion of all
aspects of the paper during our hearing before the Select Committee
AOL UK'S KEY
In summary we welcome the White Paper and the
vision it addresses of the future convergence of the communications
industry. This is a vision we share and have adopted as a key
driver of our "AOL Anywhere" business strategy by which
we aim to make our interactive services and content available
to consumers wherever they are over whatever platform they choose.
1. The Internet is a consumer revolution merging
the broadcasting and Internet industry across all communications
At its heart convergence revolutionises the
role of consumers in the communications industry. Consumers now
have the potential to enjoy:
Multiple ways of accessing content,
so thatfor examplenews can be read in a newspaper,
received by e-mail, downloaded on to a Palm pilot;
New forms of content, such as increasingly
sophisticated and interactive video games;
New ways of controlling content through
interactivity, such as choosing or changing the ending to a film
or book; and
An unfettered ability to create content
and make it accessible to others.
In the last year, this consumer revolution has
begun to extend beyond its heartland of the PC and narrowband
analogue modem. Mobile telephones, personal digital assistants
and the TV are beginning to add interactive functionality. However
for most consumers, those platforms are isolated from each other
with separate phone numbers, separate e-mail addresses and separate
customer relationships. We are connecting these dots. For example,
the AOL Anywhere Strategy means that an AOL Member's e-mail address
is the same irrespective of which device is used (PC, Palm, Mobile
etc), providing seamless interaction between various communications
As a result of these changes old regulatory
approaches must be reassessed and challenged. We are concerned
that the White Paper stops short of addressing the full impact
of these changes. For example, AOL suggests that at least in part
the traditional motivation for regulation has been scarcity of
distribution channels (such as through a limited number of television
channels, itself linked to spectrum scarcity) and the resulting
limited accessibility for consumers of the content and services
carried over those channels. New technologies and platforms mean
that this scarcity has been rebalanced. Therefore, we would suggest,
the need for, and type of, regulation should be reassessed.
AOL would endorse the White Paper's consumer-centric
approach to policy and regulation. In our view that approach should
lead Government to seek regulation only where it is needed to
ensure that consumers have access to services and content of their
Content issues are discussed later, but this
goal requires an appropriate regulatory framework for infrastructure
which should be driven by market need. This means acting promptly
to ensure competition in the monopolistic or oligopolistic markets
which look set to prevail in the provision of access to communications
networks (be it narrowband, fixed broadband, 3G mobile etc), and
preventing any anti-competitive leveraging from these markets
into downstream markets where a much greater degree of competition
is and can be expected to exist. It is also important that the
complex problems and issues relating to access to infrastructure
and leveraging are not diluted or underestimated in the broader
pursuits of the new OFCOM.
Regulation of media ownership will also need
review. The broadening in the choice of distribution channels
available to consumers, coupled with the shift towards demand
driven access to information and content, means that a more refined
view needs to be taken of whether disproportionate media control
is being achieved. Moreover, it is likely that a competition law
based analysis could be just as capable of identifying problematic
situations as today's market share assessments.
AOL UK welcomes the unified regulator OFCOM,
as we believe that a combined regulator will provide an essential
overview and understanding of the converged industry as it develops.
However, in AOL UK's view it is crucial to ensure key requirements
are met in order for OFCOM to succeed in its role:
1. The Regulator must be independent of Government
and must be staffed by highly skilled and experienced personnel
able to tackle the complex and often cutting edge issues associated
with this industry. Proper incentives must be put in place to
ensure retention of key personnel.
2. The Regulator must be able to act in Internet
time. In this fast moving industry timing is criticala
complaints resolution process is unsatisfactory when it requires
(even when expedited) many months to achieve resolution. The regulatory
processes put in place must enable the Regulator to act in a sufficiently
3. The Regulator should contain staff sufficiently
skilled to deal with the particular issues raised by the various
bottlenecks and impediments to competition and in particular access
to telecoms infrastructuresuch as the continued dominance
of British Telecommunications Plc in the local loop.
3. What is the role of public service broadcasting
in the unknown converged communications market of the future?
The changes we have outlined above also mean
that preconceptions concerning the future of public service broadcasting
need to be challenged. As convergence empowers people to pursue
their own individual and community interests, be they local, national
or global, AOL UK believes that the role of public service broadcasting
in the unknown communications future should be re-analysed and
that flexibility will need to be included in any legislation.
As convergence and interactivity
multiply the ways in which people can connect with each other
and access information and entertainment, and therefore maximise
consumer sovereignty AOL questions whether public service broadcasting
will still be central or important to consumers' lives in five
or 10 years time and whether the choice of content and services
and of platforms over which these can be accessed will be so diverse
as to end the need to safeguard public service broadcasting.
AOL UK also questions whether the
BBCincreasingly operating in a competitive market and now
considering advertising over some of its propertiesshould
in the view of its commercial strategies continue to be offered
protections such as guaranteed prominence on competitors' EPGs,
in particular in a world where set-top boxes can support a variety
of competing EPGs.
In any event the role of the BBC and public
broadcasting in the new converged industry will require a delicate
balance of regulation and liberalisation. AOL UK would recommend
that no decisions should be pre-empted through hasty legislation
to protect the BBC without full consideration by OFCOM of the
position of the BBC and its commercial strategies in the converged
4. The foundations of Internet regulation
are potentially being radically revised with the move from economic
regulation by Oftel to economic and content regulation by OFCOM.
The White Paper puts forward a list of principles
and objectives for the regulation of content across all electronic
communications. The White Paper does recognise the different needs
for content regulation over various channels, so that the Internet
(where content is not "pushed out" to consumers) suits
a lighter touch for regulation. We also welcome the results of
the ITC research which demonstrated clear consumer endorsement
of this approach. However, we are concerned that the proposed
remit of OFCOM and its powers to make decisions on the acceptability
of content are not consistent with this approach.
In tackling the issue of content on the Internet,
AOL UK welcomes the Government's recognition that partnership
provides the best approach for Internet services and their intention
to support self/co-regulatory schemes.
AOL has a policy of worldwide zero tolerance
of child pornography and is a member of the Internet Watch Foundation
(IWF). The basic objectives of the IWF are to remove criminal
content, in particular child pornography and illegal racial hate
speech hosted by ISPs in the United Kingdom. The IWF operates
a hotline enabling users to report illegal content. AOL is also
a leading member of the Internet Crime Forum, a group composed
of ISPs, law enforcement and data protection officers.
In terms of labelling and filtering of legal
material, AOL is a founding member of the Internet Content Rating
Association (ICRA), which is developing a voluntary international
self-rating and filtering system. AOL UK also offer to its members,
free of charge, its own "Parental Controls" with four
category levels that can also be tailored individually (kids only,
teens, young adults and general access). Parents can determine
the level of access to AOL and Internet areas based on the maturity
of each individual child. AOL is supporting the search for effective
solutions to such issues. As well as contributing to the funding
of the IWF and ICRA, AOL has its own dedicated team helping members
experiencing difficulties online.
AOL is a member of the Internet Services Providers
Association (ISPA), which since its inception has argued for self-regulation
to allow this technologically fast moving industry to progress
and expand without the hindrance of unnecessary legislation. ISPA
has developed a Code of Practice for ISPs, which addresses service
quality and the issue of illegal material on the Internet. The
UK Government and European Commission have previously publicly
commended ISPA's efforts in this area.
However, AOL UK is concerned that the White
Paper acknowledges research that suggests that consumers prefer
self-regulation and user empowerment to make choices about access
to Internet content, whilst also stating that OFCOM "will
consider and adjudicate on complaints on content; if unresolved
by the service provider in a timely manner". The White Paper
also suggests that representative bodies will be put in place
to represent "public interest" in the content of communications.
AOL UK believes in the power of the judiciary and Courts to state
whether content is illegal. Criminal behaviour in the online world
is no different to the offline world. If the real issue is the
speed of decision-making, then the judiciary should find a solution.
The introduction of mechanisms such as online magistrates could
be considered. On the question of content which is legal but may
be unsuitable for minors or offensive to certain groups then filtering
products enable consumers to make their own choices as to whether
they or their children access this content.
Finally, AOL UK is committed to working with
industry to devise codes of conduct for notice and takedown for
illegal content as part of the implementation process of the E-Commerce
Directive to be managed by the DTI. AOL UK would caution Government
against taking action or vesting powers in OFCOM which would be
inconsistent with the regime anticipated by the E-Commerce Directive.
In summary, AOL welcomes the White Paper as
a good starting point for addressing the many challenges posed
in effectively achieving the right level of regulation in the
communications sector. It also provides a good basis for the Government's
own approach to bringing Government services online. However,
there are questions and issues which need more deeper consideration
and we look forward to exploring these in depth with the DCMS
and DTI over the coming months.