CHAPTER 8: Impact Assessment
170. Several of our witnesses reported concerns
over the quality of the Commission's Impact Assessment which was
carried out on the 2005 proposal. Of these witnesses, perhaps
the sternest criticism came from the Government. The Minister
confessed to be "terrified" by the lack of any attempt
to quantify the effects of the proposal with numbers. (Q 157)
Wes Himes from the European Digital Media Association (EDiMA)
supported this view complaining that the data in the Impact Assessment
had "not been generated statistically", "quantifiably"
or "even been generated qualitatively." (Q 20)
171. Jean-Luc de Cockborne, Head of the Commission's
Audiovisual Policy Department, felt that such criticism of the
lack of quantification of impact contained in the Commission's
Impact Assessment was unfair as it was "impossible"
"to quantify the actual evolution of the market", and
that in any case, the market was so fast moving that in a year's
time it would be out of date. (Q 347)
172. Mr de Cockborne criticised what he
called "the Ofcom approach" to this proposal by saying
that it only sought to distinguish between the cost of regulation
and the cost of no regulation. He told us that in reality, the
two alternatives to consider where the "cost of complying
with one harmonised set of rules at European level" and the
cost of complying "with 25 or 27 different rules" varying
with each Member State. (Q 347)
173. Alex Blowers from Ofcom suggested that a
further significant impact which had not been considered in the
Commission's study was "the indirect effect on the business
behaviour of introducing these rules at a time when this industry
is taking off." (Q 129)
174. Chris Bone from the DCMS told us that he
detected in the Impact Assessment a "bias towards bringing
existing broadcasting interests into these discussion but not
including enough of the telecoms industry, the software providers,
the software houses, the games developers and all the other people
who potentially could be affected by this" and noted that
those consulted by the Commission were "nearly all broadcasters."
(Q 157)
175. Perhaps as a result of this, Simon Persoff
from Orange UK felt that the Impact Assessment lacked "an
assessment of both new and existing business models" and
was specifically lacking in any discussions of the new and emerging
media business models and how they might be affected. (Q 111)
176. Mr de Cockborne from the Commission
responded to this by stating that the Commission had conducted
an open consultation and had published "about 1,500 pages
of comments" from stakeholders, available on the Commission's
website. (Q 347)
177. We accept the Commission's argument that
there are practical difficulties in quantifying how many companies
will be affected by this Directive, partly because the proposal
is designed to regulate according to the type of service, rather
than the type of provider.
178. Notwithstanding the above, more rigorous
impact assessments were possible in our view. We believe that
it was possible to obtain cost estimates in respect of specific
provisions within the proposal. As an example, the quantitative
rules governing the timing of advertising slots, the so-called
'35- (now 30-) minute rule', has direct measurable consequences
in terms of a reduction in the amount of revenue that can be expected
to be obtained by broadcasters.
179. The Commission clearly feel, with some justification,
that their Impact Assessment took full account of the whole spectrum
of media interest, and that the basis for consultation was widespread.
Nevertheless the feelings expressed to us, particularly by new
media service providers, was that the Impact Assessment failed
to give appropriate weight to the impact of regulation on a rapidly
evolving and expanding media services sector with fundamentally
different business models from traditional television broadcasters.
We recommend to the Commission that they discuss this difference
of opinion with the new media service providers as soon as is
practicable.
180. It is also undeniably true that any figures
in the Impact Assessment would only be of temporary value in such
a fast changing market. However both of these reasons should caution
regulators against ambitious action in these markets as there
is clearly a limit to their ability to comprehend fully the markets
they are faced with today, let alone anticipate what the markets
will be like when the proposal comes into force.
181. Wherever empirical measurement or estimation
were not feasible in the current market environment, we believe
that the Commission should have adopted a highly precautionary
approach, only proposing incremental changes to the current regime
where clearly justifiable in terms of protecting matters of general
public interest.
182. In our earlier report Ensuring Effective
Regulation in the EU, this Committee concluded "that
the European Parliament and Council should produce an impact assessment
on any occasion when in the course of debate they depart substantially
from a Commission proposal." [5]
183. It is a matter of some concern to us
that no impact assessment will be carried out on the revised proposals.
Currently neither the Council nor the European Parliament have
either the obligation or the resources to carry out an impact
assessment, nor does the Commission after its initial proposal.
With the scope and regulatory burden for non-linear services very
significantly altered from the original proposal, we call for
a further impact assessment to be made.
5 EU Committee 9th Report, Session 2005-06, HL 33 (para
169) Back
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