House of Lords - European Union

Select Committee on European Union Third Report

APPENDIX 4: CORRESPONDENCE WITH THE MINISTER

Letter from the Lord Grenfell, Chairman of the Select Committee on the European Union to James Purnell MP, Minister for Creative Industries and Tourism, DCMS

15983/05 COM(05) 646SEC (05) 1625: Explanatory Memorandum on European Community Legislation—Proposal for a Directive of the European Parliament and of the Council amending Council Directive 89/552/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities

Annex to the Proposal for a Directive of the European Parliament and of the Council amending Council Directive 89/552/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities.

Impact Assessment, Draft Audiovisual Media Services Directive

Sub-Committee B considered this document and your Explanatory Memorandum at its meeting on 6 February 2006 and agreed to maintain the scrutiny reserve, pending receipt and examination of the Regulatory Impact Assessment which you mentioned will be forwarded to us under a Supplementary Explanatory Memorandum.

We noted, and shared, the serious misgivings of UK industry in relation to this document. We are minded to revisit this matter more fully in the forthcoming weeks.

In paragraph 39 of your Explanatory Memorandum you mentioned the UK-based stakeholder group. It would be helpful to have a brief summary of areas of concern that this group has considered.

In paragraph 48 and 49 of your Explanatory Memorandum you explained that the UK Government had serious reservations about aspects of these Proposals. Are you able to expand further on these reservations?

9 February 2006

Letter from James Purnell MP to the Lord Grenfell

Thank you for your letter of 9 February about the European Commission's proposal to amend Council Directive 89/552/EEC, otherwise known as the 'Television Without Frontiers' (TVWF) Directive.

You asked about the UK-based stakeholders group. The group met three times last year and has met once so far this year, with another meeting imminent. Represented on it is a wide range of interests including broadcasters, satellite and cable operators, Internet Service Providers, new media providers, content producers, co and self-regulatory organisations, trade unions and civil society groups.

The major concern for stakeholders has been the scope of the Directive. An overwhelming majority are not in favour of the scope being extended to on-line services. Many have expressed concerns that the Commission's proposals could lead to increased regulatory burdens and legal uncertainty. They also believe that the Commission's definitions do not make it clear which services the revised Directive will cover, or where exactly the proposed dividing line between 'linear' and 'non-linear' services would be drawn.

The Government shares these views. Aside from the important issue of lack of clarity in the proposed definitions, our key concern is that the concepts of 'audio-visual media' and 'non-linear' services in the Commission's text appear to bring in a very wide range of new media services which have little in common with broadcasting. This is a fast growing and converging area, and we should take great care before imposing controls which might discourage particular business models or encourage providers to move outside the EU.

Harmonisation of minimum standards of the kind proposed across all the services which fall into the scope of the current draft Directive would pose a threat both to their growth and to national traditions of free speech. We consider that the case for such harmonisation in this way at this time has not been made.

In particular, the impact assessment prepared by the Commission offers no convincing case for harmonisation across all the services falling within the scope of the Directive. It is based upon a theoretical projection of what might happen if Member States were to take advantage of derogations available under the e-commerce Directive to impose burdensome national controls that would distort the working of the internal market, or if there were to be serious distortions (in terms of legal certainty or market advantage) as between the types of regulation that applies to different platforms.

It concludes that there would be an overall—albeit essentially unquantified—loss of business. But there are very few figures in the assessment to back this assertion up.

We see no sign that Member States are in fact imposing burdensome, damaging controls in these areas, although the assessment claims that no less than 23 already have controls of some sort. Our own extensive discussion with UK and pan-European businesses and trade associations has not revealed any evidence of concern that lack of harmonisation is stifling business opportunities.

Rather, discussion has revealed severe concerns that these proposals could increase business uncertainty and regulatory risk. Without more evidence of potential harm to business, it seems to us that proceeding with these measures in their current form would run counter to the Commission's own stated aim—endorsed by Member States—of better regulation.

If evidence of undue interference in the single market for such information society services did come forward, we believe that the question would be best resolved in the forthcoming review of the Electronic Commerce Services Directive.

Our overall concern, therefore, is that the imposition of controls of the sort suggested on non-linear services could itself cause just the kind of damage to growth and development in these sectors which the Commission quite rightly seeks to avoid. They would themselves lead to market distortions and to a net outflow of jobs and development in the new media industries from the EU area.

28 February 2006

Letter from the Lord Grenfell to James Purnell MP

TELEVISION WITHOUT FRONTIERS DIRECTIVE

EM 15983/05 COM(05) 646SEC (05) 1625

Thank you for your letter of 28 February 2006, replying to my letter of 9 February 2006, which Sub-Committee B considered at its meeting on 20 March 2006.

We were most grateful for the fullness and candour of your response. We share your concerns over the potential damage that inappropriate harmonisation might cause to new media industry sectors both in the UK, and across the wider EU. We agree strongly that in such a fast moving area, further bureaucracy has the potential to impede growth.

We have decided to maintain the scrutiny reserve. We would be grateful if you could keep us informed of any progress on this Directive.

21 March 2006

Letter from the Lord Grenfell to Shaun Woodward MP, Minister for Creative Industries and Tourism, DCMS

12348/06 12348/06 +ADD 1 COM(2006) 459 final SEC(2006) 1073: Communication from the Commission to the Council and the European Parliament on the application of Articles 4 and 5 of Directive 89/552/EEC "Television Without Frontiers", as amended by Directive 97/36/EC, for the period 2003-2004

Sub-Committee B considered this document, and your Explanatory Memorandum at its meeting on 23 October. As you will be aware, this area is of great interest to the Committee, which is currently conducting an inquiry in the Commission's proposal for a Directive amending Council Directive 89/552/EEC (Television Without Frontiers).

We note and accept your arguments with regards to the Commission's criticism of the UK's performance in the context of the targets set by Articles 4 and 5, and also note that this assessment covers the review period 2003-2004, and may now be outdated. We agree that some of the criteria are clearly impractical when applied to small, specialised channels. What pressure can the Government apply to improve the existing criteria? Can you confirm that UK public service broadcasters meet the targets set by Articles 4 and 5?

We are content to clear the document from scrutiny.

26 October 2006

Letter from the Lord Grenfell to Shaun Woodward MP

As you will be aware, Sub-Committee B is conducting an inquiry into the Commission's proposed revision of the Television Without Frontiers (TVWF) Directive. We have completed taking evidence and will produce our final report in December. For the moment, we thought it might be helpful to let you know of certain concerns we have over the proposal, in the light of the evidence we have received, ahead of the Council Meeting on 14 November, where we understand agreement to a General Approach is sought by the Presidency.

The purpose of the original 1989 Directive was to create and maintain a single market in television broadcasting. We recognise that the context at that time was of large television companies which enjoyed near-monopoly status in many Member States, limited consumer choice and no internet. The central elements of the original directive were, and should continue to be, two-fold: to ensure that television services could be delivered in the EU as a single internal market and on the basis of the Country of Origin principle. To this end there were certain regulations relating to consumer protection. We feel now that there is a further need to employ the minimum necessary regulation while providing allowance for the protection of minors from harmful content, and for the control of material seeking to incite hatred on the relevant grounds.

In updating the Directive, we assume that current thinking on EU legislation would be to adopt a framework which employs the lightest possible regulatory touch necessary to achieve the objectives of the legislation. The revised Presidency text of 20 October endorses the principles of self and co-regulation in these sectors, and we warmly welcome this move. We believe that, where consistent with Member State law, self-regulation is the best possible option especially in an area where technology and markets are changing continuously.

We are concerned that by adopting a terminology relating the directive to Audiovisual Media Services, there may be a danger that legislators are drawn into a desire to regulate the internet and other new media services. On the evidence we have received during our inquiry, this would in our view be a grave mistake. These services already provide a strong single internal market across the EU and indeed often globally. There appears to be little or no purpose in seeking to regulate these services in order to achieve a single market which already exists across media. No evidence has been provided that suggests otherwise.

As far as public interest protection is concerned, we note that the eCommerce Directive already covers the point-to-point, on-demand services which it regards as 'information societies'. The Directive requires internet services providers to remove illegal content when it is reported to them, and through derogations to the Country of Origin Principle, it permits Member State governments to block content originating from other Member States on grounds of public policy including health, security and consumer protection.

We recognise, as the evidence before us demonstrated, that the distinction between television and the internet or other new media services is becoming blurred in two ways. Consumers are freely exercising choice across these media and the advertising market also views these varying markets as to a degree inter-competitive. We do not believe that it is the role of regulators to seek to protect businesses or providers that are challenged by the emergence of new developing technologies.

Nevertheless, the evidence appears to be that there is still a recognisable television market, in what one might term a traditional sense, being broadcast and available to the population as a whole for simultaneous viewing, often free at the point of use. The evidence to us in general strongly supported liberalising the quantitative rules on advertising on television services in recognition of the vastly increased consumer choice and the availability of new technology to enable consumers to decide how much advertising they want to see as well as time-shift technology. We held concerns over the 35 minute rule in the Commission's original draft Directive, and recognise that the move to a 30 minute rule is a tentative step in the right direction. The evidence to us on product placement was mixed, and we recognise the difficult issues involved here, especially as regards the potential impact on editorial control in programme production.

The evidence to us, taken as a whole, very strongly suggested that it remains useful to have a Directive that deals solely with what is conventionally termed television, but that it should not seek to go beyond that. In one sense, we recognise that the Presidency draft of 20 October represents a significant improvement on the scope of the original Commission draft, which in our view was excessively and dangerously wide. The Presidency draft nevertheless does seek to extend regulation into the internet and other new media services and seeks to limit this incursion by defining certain "non-linear services" as on demand services which are described as having the characteristics of "television-like" services (Recital 13a). The implications of this are set out in Article 1(aa). We have received little evidence that convinced us that this incursion into the internet and other new media services is necessary to achieve a single internal market in the EU, nor desirable on any other grounds bearing in mind the existence of the e-commerce directive.

We note that the Presidency draft seeks to moderate the implications of this incursion beyond television services by limiting the scope and intensity of the regulations proposed for those "non-linear services". Insofar as this is a considerable improvement on the Commission's draft, we welcome this. Nevertheless, we received no evidence to suggest that the current Directive needs to be extended in scope into the internet and other new media services in order to achieve the limited objectives of the revised Presidency draft. Existing laws appear to protect important public interest matters such as the protection of minors, which we strongly endorse.

In our view, having reflected carefully on the evidence before us, extending the Directive into the internet and other new media services has two substantial dangers. By identifying some of these services as "television-like", it may lead some to conclude that eventually "like-services" should be regulated in a "like-manner", i.e. a perfectly "level playing field". The Presidency draft seeks to identify and propose the regulation of "television-like" services but proceeds to regulate them differently. As we note above, if they are to be included at all we agree that they must be regulated differently, but the wording and definitions in the Presidency text may encourage the idea that they can and should be regulated in the same way as television. We would consider such a move now or in the future to be a grave error.

There is a second problem with extending the draft Directive into non-television services, such as the internet and other new media services. It might be taken as an encouragement that it is desirable to extend regulation into these services more widely and eventually to go beyond "television-like" services into other parts of the internet and new media. Given the practical difficulties in defining, regulating and enforcing a Directive based on "television-like" services any further incursion into the internet and other new media services will be fraught with even greater difficulties and, as we have indicated above, is unnecessary in order to secure a single internal market.

In summary, the Presidency draft to be considered next week is an undoubted improvement on the Commission draft. But based on the evidence before us in our inquiry, we believe that it has been a mistake to seek to extend the scope of the existing Directive into the internet and other new media services. We agree that, with the present state of technology, and in the communications market place, there is still an identifiable and important television market and that certain aspects of television do need to be liberalised in the face of greatly increased consumer choice and new technology. Going beyond television into the internet and other new media services is in our view unnecessary to achieve the fundamental objectives of the legislation in this area. Moreover commencing the process of incursion into these areas opens the door to significant problems in the future and in any case may prove difficult to enforce, other than in a way which interferes unnecessarily with the business model of a new media service provider and creates for them an un-level playing field.

8 November 2006

Letter from Shaun Woodward MP to the Lord Grenfell

Thank you for your letter of 26 October confirming that you are content to clear this document from scrutiny.

I can confirm that the UK public service broadcasters have exceeded the requirements of Articles 4 and 5. You may be interested in the attached summary report (not attached) which was prepared by OFCOM on the position of the public service broadcasting analogue and digital terrestrial channels. This summary showed that for these channels in 2004, the overall proportion of European works was 85 per cent and of independent European works it was 45 per cent.

You asked what pressure the Government can apply to improve the existing criteria for the types of channels which are expected to meet the TVWF European production quotas. The Government's approach has been to keep a watching brief on this issue and to make sure the position does not worsen.

So far as the current negotiations on the revision of the Directive are concerned, there have to date been no moves to increase the current quotas for 'linear' (i.e. television broadcasting) services or to remove the existing flexibilities. We are pleased about that, but our primary objectives in this negotiation have been concerned with its scope, the country of origin principle and the limits which are set on television advertising.

Member States' approach to the quotas varies. While Germany, for example, would like to see the quotas for non-linear services removed, France would like to see them increased and would even like to include industry levies.

22 November 2006

Letter from the Lord Grenfell to Shaun Woodward MP

Thank you for your letter of 22 November 2006 which Sub-Committee B considered at its meeting on 4 December.

We were grateful to you for confirming that the public sector broadcasters in the UK exceed the requirements of Articles 4 and 5, and for the summary report from Ofcom which you sent us.

We are however seriously concerned that the Government has limited its actions on what are unsuitable criteria contained in these Articles to "a watching brief", as there is a clear danger that future reports will mislead readers as to the state of broadcasting in the UK. We trust that you will consider raising this issue with the Commission.

As you are aware, we are finalising our report into the revision of the Television Without Frontiers Directive and expect to publish shortly.

6 December 2006