Memorandum submitted by Video Networks
Limited
ABOUT VIDEO
NETWORKS
Video Networks Limited ("VNL") is
a broadband platform operator, which supplies the new home communications
and entertainment service, Homechoice. Homechoice offers subscribers
a large suite of digital broadcast television and radio channels,
comprising over 50 free and pay, live and timeshift channels,
including all of the recognised and popular BBC television and
radio services, together with video-on-demand television, broadband
internet connectivity and telephony services. In addition, on
demand channels provide access to feature films, television programmes,
music videos and public information services.
Homechoice is supplied to customers via Digital
Subscriber Line ("DSL") technology, using unbundled
local loops on BT's Public Switched Telephony Network. After an
initial soft-launch VNL launched its services commercially in
late-summer 2004 in the Greater London area. At commercial launch,
VNL had a presence in 73 BT exchanges and so was able to offer
HomeChoice to 1.25 million households. VNL has recently expanded
its network and Homechoice is now available in 136 BT exchanges,
and can offer the Homechoice service to approximately 2.4 million
homes across Greater London. VNL intends to expand its footprint
to other regions in the United Kingdom in 2006.
VNL welcomes the opportunity to comment on the
impact upon creative industries of recent and future developments
in digital convergence and media technology.
A. THE IMPACT
UPON CREATIVE
INDUSTRIES OF
RECENT AND
FUTURE DEVELOPMENTS
IN DIGITAL
CONVERGENCE AND
MEDIA TECHNOLOGY
1. Digital convergence is at last becoming
a reality and the opportunities for the creative industries and
the new delivery systems are exciting. Consumers increasingly
expect to be able to access whatever content they want, whenever
and wherever they want. However, the impact of convergence goes
beyond merely being able to see or hear the same thing in a different
way or at a different time.
2. The potential of new technology to personalise
the consumer experience, vary it and broaden it is impressive.
New audio-visual formats will increasingly link "TV"
with broadband and VOD applications and mobile audio-visual elements.
Additional plot elements, character back-stories, alternative
endings, competitions and communities will increasingly become
part of a "TV" show's overall offering, through the
exploitation of new technologies.
3. All this has occurred through the two
arms of convergence: both the means by which content is delivered
and the devices upon which content is receivable have converged,
such that the same or similar audiovisual content is now deliverable
and viewable across a wide range of platforms.
4. Theoretically this should mean there
are more purchasers of rights, more sellers of rights and more
outlets for rights, provided the incumbent major players are not
able to monopolise and control rights and distribution.
5. Barriers to the fulfilment of the potential
of convergence include various issues in relation to access to
content, as follows:
(a) The relatively straightforward issue
of "catch-up" rights (the right to make a TV programme
available for a short period (seven days in the case of the BBC)
after first broadcast on an on demand basis) has become mired
in wider discussions between producers and broadcasters about
new media rights, hindering the launch of such services by digital
TV platforms with an on demand capability, such as Homechoice
and the cable companies.
(b) A failure to resolve the issues between
producers and public service broadcasters has led to many "new
media rights" simply not being exploited at all, to the detriment
of the producers and the new distributors.
(c) In the context of a fast-developing converged
media landscape, long holdbacks in respect of any rights (or any
holdbacks at all) have a chilling effect. As the barriers to cross-border
content distribution are increasingly lowered and the new media
world becomes increasingly international in scope, this carries
with it the danger of placing the UK industry at a significant
disadvantage.
(d) Vertically integrated broadcaster/TV
platforms (such as Sky and Telewest) typically withhold their
channels from new entrant DSL and IPTV platforms, hindering the
emergence of technologically advanced converged platforms. In
some cases they may have sufficient market power in respect of
the distribution of digital TV to be able to place barriers in
respect of the access by such new platforms to third party content,
a point referred to by the OFT's recent determination in respect
of Sky's acquisition of Easynet. This reduces consumer choice
and limits the potential of new technology to benefit consumers
and provide a new and innovative market for the creative industries.
(e) The primary terrestrial broadcasters
(and those with a particular interest in the less-flexible delivery
platforms, such as satellite and digital terrestrial TV) may have
a vested interest in limiting the speed of the technological revolution
and stifling functional creativity to protect the relative comfort
and simplicity of the existing market.
(f) The bundling of rights can prevent the
emergence of new services. This is true of (i) the bundling of
rights via the primary rights in commissioned programming and
(ii) the bundling of new media rights into any holdbacks. These
practices effectively prevent "new media" distributors
from creating new services and bidding for the rights required
by those services. This further entrenches the privileged position
of the free to air broadcasters and premium broadcast rights monopolists,
to the detriment of consumers, new entrants and producers.
(g) Steps need to be taken to ensure that
dominant or incumbent players cannot leverage their market power
in one area to prevent access to content in another. It is important
that a wider range of content aggregators can get access to content
on sensible terms.
B. THE EFFECTS
UPON THE
VARIOUS CREATIVE
INDUSTRIES OF
UNAUTHORISED REPRODUCTION
AND DISSEMINATION
OF CREATIVE
CONTENT, PARTICULARLY
USING NEW
TECHNOLOGY; AND
WHAT STEPS
CAN OR
SHOULD BE
TAKEN—USING
NEW TECHNOLOGY,
STATUTORY PROTECTION
OR OTHER
MEANS—TO
PROTECT CREATORS
1. The UK leads the world in online TV piracy.
This is due in large part to having a common language with the
US, coupled with the fact that popular US TV series typically
play out in the US months ahead of the UK. It is also fuelled
by holdbacks imposed by the UK free to air broadcasters. The consequential
explosion in online piracy of TV shows, via BitTorrent and other
file sharing mechanisms, inevitably hits the UK creative industries
directly, via the piracy of UK productions, as well as damaging
the broadcasters of both the US and UK shows. Widespread piracy
inevitably reduces the secondary rights value of creative content.
2. Piracy simply highlights a demand that
is not being met. The vacuum created by holdbacks is inevitably
filled by the pirates. The music industry experience has shown
that the demand is not necessarily for "free content"
but for on demand (and early) access to content.
3. Whilst new technology will struggle to
defeat piracy, demand for pirated copies might be reduced by:
(a) closing or removing the holdback windows
between first UK broadcast and secondary exploitation (absent
a "dark" period the demand for pirated copies is reduced);
(b) allowing for a seven day video on demand
catch-up window as part of the primary right to minimise the potential
for someone to "miss" a programme;
(c) wider exploitation of creative content
in all media, new and old; and
(d) direct action and education of those
participating in piracy.
4. The government has appointed Andrew Gowers
to head an independent review of intellectual property rights
legislation. As a part of that exercise, consideration should
be given to proposing clarifications to the law with a view to
removing any danger of new forms of piracy slipping through copyright
law loopholes.
5. At the same time, the review should consider
areas where the existing law contains distinctions that are not
suited to the way technology has developed or may in future develop.
For example, as currently drafted, personal digital video recorders
("PVRs") fit within the so-called "home taping
exemption", whereas server-side remote recording technology
does not. Hence, a customer with a Freeview PVR or Sky+ box can
legitimately make digital copies of TV programmes in their homes,
but customers served by a distribution platform such as Homechoice
are reliant upon the platform operator (and broadcaster) obtaining
the necessary rights (on commercial terms) in order to make available
even a seven-day "catch-up TV" service via their centralised
servers. This is despite the fact that the centralised server
is under the control of the platform (and indirectly the broadcaster)
meaning a server-side recording facility is capable of filling
the function of "home taping" without ceding control
of the content itself (and as a result is intrinsically more secure
than the in-home recording devices enabled and popularised by
the uneven application of the Copyright Act's home-taping exemption).
C. THE EXTENT
TO WHICH
A REGULATORY
ENVIRONMENT SHOULD
BE APPLIED
TO CREATIVE
CONTENT ACCESSED
USING NON-TRADITIONAL
MEDIA PLATFORMS
1. Any attempt to extend the broadcast television
regulatory regime to "non-traditional" media should
be resisted as being (i) unworkable (ii) counter-productive and
(iii) unnecessary. Whilst the protection of children is of paramount
concern, self or co-regulatory approaches are more than capable
of addressing this and should be encouraged.
2. Voluntary affiliation with self-regulatory
bodies, coupled with improved education in relation to child protection
software and PIN systems should allow public confidence to be
maintained without stifling new services or creating an unworkable
bureaucratic system. The Association for TV On Demand ("ATVOD")
model in the UK provides a good example of a way forward and the
voluntary utilisation of the BBFC system by games producers similarly
demonstrates that the industry will happily and responsibly embrace
the self-regulatory approach.
3. The government should strenuously resist
attempts by the EU to impose anything more onerous on the industry.
The worst outcome for the UK/EU would be the off-shoring of creative
talent, investment and revenue generation to avoid an uneven playing
field in an increasingly globalised creative environment.
D. WHERE THE
BALANCE SHOULD
LIE BETWEEN
THE RIGHTS
OF CREATORS
AND THE
EXPECTATIONS OF
CONSUMERS IN
THE CONTEXT
OF THE
BBC'S CREATIVE
ARCHIVE AND
OTHER DEVELOPMENTS
1. Consumer expectation is increasingly
moving away from reliance on content being scheduled at specific
times on particular devices, towards on demand availability and
mobility. The BBC is very pro-active in exploring new media opportunities
but needs to be strictly controlled as regards the impact of its
activities in these areas on the development of the commercial
new media sphere.
2. It should be taken as read (although
currently it is not) that the BBC should treat all distribution
platforms on a platform neutral basis. However, the greatest danger
is that initiatives such as the BBC's Creative Archive, whilst
undeniably capable of being a force for the good of the UK's creative
industry and the development of its next generation, will have
a two-fold negative effect:
(a) to draw "viewing hours" away
from new content; and
(b) to provide the BBC with a means to create
for itself a disproportionately large presence in the on demand
world (ie a "BBC Universe" which the consumer may struggle
to leave) to the detriment of the development of the commercial
creative sector (large and small).
3. Currently proposed safeguards are insufficient
to prevent the over-reaching of the BBC or to prevent the BBC
crowding out the commercial sector. Furthermore, the BBC being
wedded to a non-commercial approach makes it significantly harder
for the commercial sector to adapt to the on demand world, as
the BBC does not need to develop commercially driven business
models to support its new media activities. The raft of free BBC
services emerging into the market serves to define and shape consumer
expectation around the notion of free access to everything at
all times and in all places.
4. If producers and other creators are expected
to find a greater proportion of their income from "new media
rights", a large "free" BBC content presence in
the emerging markets will stand as a material barrier to the creation
of new and innovative ways of developing, distributing and extracting
value from audio-visual content. The controls on the BBC in this
area need to be every bit as strict as those covering any proposed
new BBC broadcast channels.
5. Arguably the restrictions and controls
on the BBC in relation to non-broadcast exploitation of BBC content
should be far stronger. The danger of the BBC crowding out the
commercial sector is not to be underestimated. The BBC has already
been permitted to launch two dedicated free to air children's
channels and a youth-oriented channel into a market very well
served by the commercial sector. Since then, the BBC has made
available free downloads of the complete Beethoven Symphonies,
to the dismay of the recorded music industry and has now announced
its plans for the Creative Archive, along with trialling the proprietary
iMP player (thereby taking great steps to creating a huge "BBC
Universe" providing access to limitless amounts of free BBC
content and significantly chilling any efforts by the commercial
sector to provide new services for consumers).
6. Consideration should be given to requiring
the BBC to limit the free distribution of content to its broadcast
TV and radio channels (together with limited free "catch-up"
windows). The BBC's forays into non-traditional distribution of
repeat programming, downloads and so forth would then be required
to operate on commercial terms, providing the basis for more fair
competition and opportunities for the commercial creative sector.
The Creative Archive project would need to be operated on a controlled
basis and kept separate from other BBC activity (ie accessed separately,
in a limited way) to ensure that it serves only its stated purpose,
and does not serve as a viewing substitute for new or non-BBC
content.
March 2006
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