Memorandum by the Mobile Broadband Group
1. The Mobile Broadband Group ("MBG",
whose members are O2, Orange, T-Mobile, Virgin Mobile, Vodafone
and 3) welcomes the opportunity to submit evidence to the House
of Lords' inquiry into the proposed amendment of the Television
without Frontiers Directive.
30 OCTOBER 2006
MAIN POINTS
2. The MBG recognises that it is timely
to review the TVWF Directive. However, we believe that further
changes are required to the current draft to make the Directive
fit for purpose.
3. In particular non-linear services should
be excluded from scope. Current broadcast regulation is predicated
on command and control being effective and efficient. Where content
is supplied from all over the world over the Internet other strategies
are needed.
4. Self-regulatory schemes that work well,
are valued by customers and are efficient must not be de-railed
by this new Directive. To the extent that the state has to be
involved by law, it should just provide minimum back-stop cover.
5. Changes to the definition of "Linear"
are still required, so that it just includes traditional real
time broadcast services. At the moment too many new types of service
are potentially captured unnecessarily.
6. Further measures could be taken to liberalise
the rules on advertising. All rules relating to the quantity of
advertising should be relaxed. Consumers now have the power to
influence the quantity (and indeed quality) by choosing not to
watch channels with too much advertising. The quantitative rules
are not suitable for other platforms such as linear content supplied
over mobile platforms.
7. New markets and services (such as mobile
TV) need much work and investment by industry. They must be allowed
to develop in an appropriate regulatory environment that does
not assume the old rules will be suitable for these new models.
8. It is already difficult to source high
quality content and obtain rights clearance. Service providers
should be allowed to develop new formats based on business models
(ie quantity of advertising, product placement and sponsorship)
that suit their market. They should not be lumbered with quotas
from the outset.
INTRODUCTION
9. The mobile phone is rapidly developing
from being a communications tool to becoming a multi-functional
information and entertainment device.
10. Audio visual material available on a
mobile device is now very diverse: sports highlights, music videos,
computer games for mobiles, personal video blogs, internet content
accessed from mobile browsers. It is mostly non-linear at the
moment. The first examples of advertising on mobile are just emerging.
Operators in the UK and other European countries are also starting
to announce the first broadcast mobile TV services.
11. As a consequence, the new Directive
has the potential to have a very direct impact on mobile operators
and their customers in the UK and throughout the EU.
12. The MBG agrees with the Committee's
assessment that the Commission's proposal "would substantially
amend the terminology and terms of the existing measures"
for content regulation.
A. The need for regulatory initiative in
this area
13. The MBG recognises that the Directive
needs to be amended, in order to bring it up to date with current
market circumstances and to reflect the circumstances of the audio
visual communications market today and in the foreseeable future.
14. For example, the rules on advertising
and product placement, drawn up in the days of limited spectrum
and channel choice, must be relaxed in order to reflect today's
realities—when customers can exert pressure on broadcasters
not to overfill schedules with advertising, either by choosing
not to watch their service or skipping through advertising altogether
with the use of a personal video recorder (PVR).
15. The MBG, while not entirely agreeing
with the Commission's approach, also supports the basic objectives
of the Directive, such as promoting the single market, protecting
minors and human dignity and promoting cultural diversity and
media plurality. We strongly support the country of origin principle.
16. Along with many other stakeholders,
we question the wisdom of bringing non-linear services within
the scope of the Directive. The UK Government, almost alone among
European authorities, has been very public in taking this line,
as have been a number of European representative organisations.
[1]Our
arguments are set out more fully in the second section of our
evidence.
17. In answer to the Committee's question
are there advantages of regulating this area, we would respond
that with respect to linear broadcast services[2]
there may still be advantages.
18. First, the general public still has
an expectation that content on television will be regulated. And
because the physical infrastructure for broadcasting is generally
located within the EU and radio spectrum is controlled by member
states, it is reasonably practical to do so.
19. Regulation of TV services in one jurisdiction
for broadcast throughout the EU (albeit with some derogation for
the more extreme content) has generally been cost effective and
beneficial for producers and consumers alike.
20. Content delivered via the Internet,
on the other hand, has developed in a completely different regulatory
environment. Audio-visual content appears in all kinds of formats,
from short clips to full length films. Some content is professionally
produced but much is self-generated by individuals (some of which
is commercial and thus potentially in scope). And, although many
people have concerns over the content available, as they do with
TV, the great majority want to take responsibility for what they
and their children access on the Internet. For the most part they
do not see this as primarily the role of Government.
21. People also recognise that it would
be impossible for the UK government to regulate content that can
be distributed from anywhere on the globe by any one of the hundreds
of millions of people that can upload audio visual content onto
the Internet.
22. As a consequence people are developing
their own strategies for protecting themselves, such as applying
filters to their Internet access service. In the mobile sector,
all the mobile operators offer filtering of Internet content for
customers under the age of 18.
23. The MBG does not believe that it will
be cost-effective, or even effective at any cost, to require the
national regulator to regulate the providers of non-linear content.
The regulatory regime is being set up to fail.
B. Can the proposed Directive, in its current
form, meet its broad objectives?
Does the Proposal sufficiently liberalise the provision
of broadcasting services within the European Union?
24. The MBG supports some of the proposals
that the Commission has made to liberalise broadcasting services,
such as the move to allow product placement. We also support the
continued restrictions on the advertising of cigarettes etc.
25. However, we feel that the Commission
can go further in its drive to liberalise the quantitative rules
on advertising, particularly the 20 per cent rule and the 35 minute
rule.
26. The MBG's overall view on the rules
on quantitative advertising is that they are anachronistic. We
have sympathy with policy maker's desire not to "Americanise"
television with over frequent interruptions for advertising. However,
the consumer now has enough choice (and technical tools) to exercise
power over broadcasters to persuade them not to insert too much
advertising.
27. A further reason for relaxing the rules
is that new models, such as mobile TV, are emerging. Trials to
date suggest that mobile TV is not a substitute for but is complementary
to domestic TV. Customers watch mobile TV in much shorter sessions,
while they are out and about, filling in downtime. The quantitative
rules invented for domestic TV do not make sense for mobile TV,
particularly the 20 per cent rule, which we would like to see
removed. Research recently published in the UK by Strategy Analytics
indicates that the average mobile TV user watches three times
per day for an average of five minutes at a time.
28. New platforms such as mobile TV need
to be developed in regulatory environment that is suitable for
the way these services are used. If the services are to become
viable, they must not be lumbered with quantitative advertising
rules developed for domestic TV but must be given the freedom
to develop business models, supported by advertising, sponsorship
and product placement, that are suitable for their market segment
(which, research shows, is very different to domestic TV).
29. The MBG would like to see the Commission
go further and abolish quantitative rules altogether. The TV market
is now so diverse that such tinkering is unwarranted. Regulators
should exercise a preference for non-intervention on the workings
of the TV advertising market.
Does the Proposal contain measures that will effectively
protect public interest objectives?
30. As stated above in paragraph 16, the
MBG has grave doubts about setting national regulators the task
of regulating non-linear services.
31. To address services supplied from all
over the world over the Internet (by individuals in their bedrooms
and large corporations alike), we must move away from a command
and control mentality and develop new models for dealing with
public policy issues.
32. There are, after all several tools at
our disposal—the general law, technical tools, self-regulation,
community regulation (eg e-bay), customer education and even,
where appropriate, co-regulation. In any given situation all can
be deployed individually or in combination. In the long term,
this will be a much more effective way of dealing with the global
phenomenon of content delivered over the Internet. It is not realistic
to try to ring fence the European market or meaningful just to
attempt to control what goes on inside its boundaries. The MBG
would like to see non-linear services removed from the scope of
the Directive.
33. To the extent that the Directive covers
non-linear services at all, it should be tightly defined only
to those on demand services that are designed to be a substitute
for traditional television, where the regulator has a realistic
chance of being able to identify the market players and exercise
a measure of proportionate regulation.
SPECIFIC QUESTIONS
Is there agreement on the Commission's proposal
to distinguish between linear and non-linear media services?
34. The MBG agrees that there is some rationale
for making a distinction between linear and non-linear, because
there is still an expectation among the public that TV will be
regulated. The public, in general, expects to take responsibility
for their own viewing habits for non-linear (eg on-line) services.
It is also reasonably practical for regulators to regulate linear
broadcast services.
35. However, we do not agree with the current
definition of Linear Service and there is still work to be done
to define more clearly the difference between linear and non-linear
services. An example of a service under threat of being defined
as linear, is a subscription service where the content is downloaded
to a subscriber's device at a time of the provider's choosing
(say during the night) but watched by the customer at a time of
his or her choosing—ie viewing is on demand rather than
simultaneous to the broadcast. Also content that it provided on
a continuous loop and is more in the nature of an on demand service
should not be deemed as linear. It is not a substitute for traditional
television.
36. The definition of linear should only
cover what we today understand as traditional real time TV broadcasting,
which is designed to be transmitted and viewed simultaneously.
37. However, even with the definitions amended,
the MBG anticipates that there will be many, as yet unthought
of, examples where it will be not quite clear whether a service
is linear or non-linear. The Commission should therefore also
be seeking to liberalise further the rules for linear (for example
in respect the quantitative advertising), so that the distinction
becomes less important.
Jurisdiction and country of origin—Does
the Proposal go far enough in facilitating the free movement of
broadcasting services?
38. The MBG strongly supports the country
of origin principle. The Directive does go far enough in facilitating
the free movement of broadcasting services. We do not see that
it is necessary for this Directive to address non-linear services.
There is no evidence from industry that the inclusion of non-linear
services confers any benefits beyond those that already accrue
from the e-Commerce Directive.
Regulatory approach—what role should industry
self-regulation play in the new regulatory framework framework?
39. In 2004 the MBG members published a
Code of practice for visual content. [3]It
represents some of the strictest regulation in the content market
(eg customers cannot get access to adult rated commercial content
until they have produced independent evidence that they are at
least 18). It has proved efficient to administer and effective
in achieving its aims.
40. The AVMS Directive should not be allowed
to derail voluntary self-regulatory schemes that are proven to
be working (such as the mobile content code). This would dissipate
all the advantages that come with self-regulation—responsiveness
to changes in the market, quick settlement of disputes and cost
effectiveness. If the state has to be involved at all by law,
in order to transpose the Directive, it should be at the minimum
possible level.
Advertising—should broadcasters be given
greater flexibility to in respect of the arrangements they enter
into for financing programmes?
41. The MBG welcomes the measures being
introduced to relax the rules on product placement and sponsorship
and we would like to see these introduced into the UK market.
New business models will be key to the continuing existence of
traditional broadcasting models. They will also be vital for the
establishment of new broadcast platforms such as Mobile TV. As
stated above, the Directive could go further and relax the quantitative
rules on advertising, such as the 35 minutes rule and the 20 per
cent rule.
Protection of minors and human dignity
42. The MBG completely agrees with the policy
objectives of protecting minors and human dignity. That is why
we published the Code, referred to above, in 2004. All MBG members
are subscribers to the UK's hotline for reporting illegal content[4]
on-line. Nevertheless, for reasons stated elsewhere in this evidence,
we believe that the approach taken in this directive with respect
to non-linear services is wrong and that there are other ways
of keeping people, particularly children, safe on-line: technical
tools (such as filters), the general law, self-regulation and
information for consumers, to name a few.
Media plurality and cultural diversity
43. The MBG supports the EU's objective
for the European Union to remain an attractive location in which
to invest in and create new audio visual media services. We also
believe that there is a strong demand from consumers for content
that is culturally familiar and attuned to its citizens. One of
the great benefits of making content available on-line and on-demand
is that it is easier to promote cultural diversity and to cater
for fringe minorities (eg Gaelic speakers in Scotland) whose size
may not justify a large amount of broadcast airtime (the "long
tail" effect). However, on demand content is different to
broadcast content, in that, self-evidently, it is only accessed
if it appeals to its audience. Quantity of material available
is not a very interesting or meaningful thing to measure if nobody
is downloading it.
44. The MBG does not support any quota requirement
for non-linear services, on the grounds that it would create uncertainty,
reduce programming flexibility, discourage investment in new services
and be extremely difficult for the regulator to make any meaningful
measurement.
45. Just as the traditional platforms were
given time to work up to quotas, the new broadcast platforms,
such as mobile TV, should also be given this opportunity and not
be subject to a raft of quota regulation at the outset. These
mobile broadcast technologies have exciting prospects and trials
indicate that they will be popular with customers. Nevertheless,
the concept is in its infancy, the services require heavy investment
to set up and the market needs careful nurturing—not regulatory
interventions that will make it harder to succeed from day one.
October 2006
1 For example The European Internet Service Providers
Association, GSM Europe, European Telecommunications Network Operators,
Bitcom (Germany). Back
2
That is as we currently understand the broadcast TV definition,
not the definition in the Directive. Back
3
The UK Code of Practice for the self-regulation of new forms of
content, http://www.mobilebroadbandgroup.com/social.htm, and www.imcb.org.uk Back
4
The Internet Watch Foundation. Back
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