Correspondence with Ministers October 2006 to April 2007 - European Union Committee Contents

TELEVISION WITHOUT FRONTIERS (12348/06)

Letter from the Chairman to Shaun Woodward MP, Parliamentary Under Secretary of State, Department for Culture, Media and Sport

  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targets set by Articles 4 and 5, and also note that this assessment covers the review period 2003-04, and may now be outdated.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 Chairman 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-monoply status in 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 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 Service, 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 County 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 availabiltiy 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", ie 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 unncessary 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 Chairman

  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 which was prepared by Ofcom on the position of the public service broadcasting analogue and difital terrestrial channels. This summary showed that for these channels in 2004, the overall proportion of European works was 85% and of independent European works it was 45%.

  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 quotes for "linear" (ie 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 quotes for non-linear services removed, France would like to see them increased and would even like to include industry levies.

22 November 2006

Annex A

ARTICLES 4 AND 5 OF THE TVWF DIRECTIVE

Summary Report Prepared by OFCOM on the Performance of the PSB Channels

Public Service Broadcasting Channels Statistical Statement Part I

UK	TMMS	AS	AS	Type	TM	EW (% TQT)		IP (% TQT)		RW (%IP)
Broadcaster	channel	2003	2004			2003	2004	2003	2004	2003	2004
BBC	BBC1	19.5	19.6	PS	T, D, S, C	74	75	21	22	99	99
BBC	BBC2	7	6.8	PS	T, D, S, C	80	82	16	21	91	88
BBC	BBC3	0.6	0.9	PS	D, S, C	92	92	31	34	100	99
BBC	BBC4	0.2	0.1	PS	D, S, C	94	94	22	27	99	98
BBC	BBC News 24	0.7	0.6	PS	D, S, C	100	100	37	26	100	100
BBC	CBBC	0.3	0.5	PS	D, S, C	82	84	13	15	96	97
BBC	Cbeebies	1.2	1.3	PS	D, S, C	95	98	46	50	73	88
Channel 4 Television Corporation	Channel 4	6.9	7.3	PS, C	T, D, S, C	77	71	50	65	83	86
Channel 5 Broadcasting	Five	4.7	5	PS, C	T, D, S, C	51	54	90	92	72	72
GMTV	GMTV	E	E	PS, C	S, C	80	76	35	36	100	100
ITV	ITV1	19.2	18.8	PS, C	T, D, S, C	81	85	40	42	50	53
S4C	S4C Analogue	E	E	PS, C	T, S, C	99	97	71	72	97	95
S4C	S4C Digital	E	E	PS, C	D, S, C	99	97	87	86	93	87
total						13	13	13	13	13	13
total number reported channels						13	13	13	13	13	13
non-operative channels (N/Op)						0	0	0	0	0	0
covered channels						13	13	13	13	13	13
channels for which no data were communicated (NC)						0	0	0	0	0	0
channels below the thresholds (50% EW/10% IP)						0	0	0	0	0	0
channels above the thresholds (50% EW/10% IP)						13	13	13	13	13	13
number of channels increasing proportions over this reference period							6		11		3
number of channels decreasing proportions over this reference period							4		2		6
number of channels with stable proportions over this reference period							3		0		4
general trend							2		9		-3
compl rate IND 2						100%	100%	100%	100%	100%	100%
average IND 1/4						85	85	43	45	89	89
growth							0		2		0.692
KEY
EW	European works/TQT (cf Article 6 TWF Directive)
IP	European works made by independent producers/TQT (cf Article 5 TWF Directive)
RW	Recent European works by independent producers/IP (cf Article 5 TWF Directive)
TQT	Total qualifying transmission time (escluding news, sport events, games, advertising, teletext services and teleshopping)
AS	Audience share of channels
NC	Non-reported channels for which no date were communicated to MS (will be calculated with 0%)
NO	channels not-operative during the period concerned
Type	Channel type: public service, commercial, niche, interactive, near video-on demand, teleshopping, news, sports, other
TM	Transmission mode: (digital) terrestrial, satellite, dable, ASDL
EXC	channels exceptionally exempted (cf footnote 7, COM (2004) 524) or discharged under "where practical" clause (specific reasons to be given by MS)
E	Audience share figures not freely available. Estimated at less than 1%

Letter from Shaun Woodward MP to the Chairman

  Thank you for your letter of 8 November.

  I was grateful for the opportunity to give evidence to your Committee's Inquiry on this issue last month, and I am equally grateful for this early sight of its possible conclusions. We entirely share the reservations which you have expressed.

  Successive drafts of the proposals to amend the TVWF Directive have tried to incorporate the concepts of light touch controls and co- and self-regulation which must, as you say, be at the core of our approach to EU legislation. These good intentions were of course very much belied by the substantive parts of the draft amending Directive which the Commission introduced just under a year ago, in particular in terms of its imposition of sectoral controls onto "on-demand" new media services, whether delivered over the internet or over mobile or other networks.

  The Presidency draft of 20 October represented a significant improvement as compared with the Commission's initial proposals, in particular as regards the scope of the Directive. When the Education and Culture Council met on 13 November, it reached a general approach on a slightly revised text but this had the same salient features as the 20 October version.

  We now therefore have an agreed Council text which restricts the extension of scope of the Directive to those services, in particular video-on-demand, which provide a service closely similar to television broadcasting and compete in the same market. The text does not embrace services such as weblogs, online games, or user-generated material.

  Our having made this proposal in the Council meant that we were to a large extent leading debate on this issue. I am convinced that, had we not done so, the Council would have agreed a scope for the revised Directive which would have been considerably more damaging to both UK and genral EU interests.

  The European Parliament (EP) will be discussing the Directive in plenary session in mid-December. We are continuing to have discussions with MEP's as the EP's position develops, but as things stand I am very much encouraged by the fact that the proposals which are being put to this plenary session by the Education and Culture Committee (which is taking the lead on this Directive) propose a very similar scope to that which the Council has now agreed.

  I attended the Council on 13 November, and spoke in favour of it reaching a general approach on this basis. The Government of course very much shares the reservations you express in your letter about the scope of the Directive being extended. We expect that we would be able to implement this text in the UK without imposing the kind of burdens on providers which the original Commission proposals would have implied.

  I do however take the point which you have made about the Directive encouraging further undesirable incursions into regulating the internet, and it is of course very much our intention that it should not do so. The Council's text contains a review clause (in Article 26). We will need to argue strongly that these periodic reviews provide an opportunity for the progressive loosening and dismantling of the controls—as opposed to the imposition of new ones—as the technology and the market develops.

  I should mention two other key aspects of the new text. First, there is a new procedure in Article 3 which enables a Member State to take action when it considers that it is being targeted by broadcasts from another Member State which undercut the rules which it sets for its own domestic TV broadcasters.

  Under Article 3, the first Member State could ask the second, as the "Country of Origin", to request the broadcaster to comply with the stricter rules. This request places no legal obligations on the broadcaster. If the broadcaster chose not to comply, however, and had established itself in the second Member State in order to avoid the stricter rules of the first, then the first Member State could then take its own domestic action against the broadcaster.

  The procedure would be overseen by the European Commission, which would be required to decide whether what was done was compatible with Community law and could if necessary tell the First Member State to reverse any domestic measures it had taken.

  We were seriously concerned about this as possibly creating an exception to the Country of Origin principle which is the key feature of this Directive. The version of this procedure in the Council's text is acceptable, in particular because there is no compulsion on the Country of Origin to take measures itself, and because the language of the proposal reflects the existing European Court of Justice jurisprudence (the "TV-10 case") which upholds the right of companies to freedom of establishment.

  Nevertheless I should emphasise—and I made this point very strongly at the Council on 13 November—that the Council text on this is at the absoslute limit of what the UK is prepared to agree to. As against that, several of the Member States who originally supported this procedure had wanted a considerably stronger version of it, and formally opposed the final text in the Council.

  The text contains a clause about television advertising in children's programmes with which we remain concerned. This is at Article 11.2, which requires that a children's programme must last for longer than 30 minutes before it contains an adveretising break. We see no reason for this. I lodged an objection to it in the Council, and we will return to this issue as discussion of the proposals continues.

25 November 2006

Letter from the Chairman to Shaun Woodward MP

  Thank you for your letter of 25 November 2006 which Sub-Committee B considered at its meeting on 4 December.

  We are 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

Letter from Shaun Woodward MP to the Chairman

  Thank you for your letter of 6 December.

  You expressed concern that the Government had confined itself to keeping a watching brief on the criteria contained in Article 4 and 5. If I may elaborate, the Commission did not propose any changes to these articles and so, technically, they are not open for discussion in the current negotiations on the Directive. However, what is clear from the discussions about European productions in on-linear services is that there are very different views across Europe and my judgment is that seeking to open discussion of the linear quotas would be risky at this stage.

  I do take your point that the Commission's report fails to recognise the very good story the UK has to tell on overall levels of investment in European production and we will seek an appropriate opportunity to raise this with the Commission.

8 January 2007

Letter from the Chairman to Shaun Woodward MP

  Thank you for your letter of 8 January 2007, which Sub-Committee B considered at its meeting on 22 January.

  We understand your reluctance to open negotiations on the criteria for European-produced content contained in Article 4 and 5 of the Directive, bearing in mind the difficulties recently encountered in discussions on non-linear services. However, we remain concerned that the report does not reflect the healthy state of European-produced content in UK public service broadcasting, and are reassured by your commitment to "seek an opportunity to raise this with the Commission". We look forward to hearing of their response.

  You may be interested to know that we are planning to publish our report into the revision of the TVWF Directive in the first week of February.[47] We will of course send a copy to you and look forward to hearing your response in due course.

29 January 2007

Letter from Shaun Woodward MP to the Chairman

  I thought that I should write briefly to express my appreciation for the work which Lord Freeman and his Inquiry Committee have done in analysing and reporting on the complicated issues which surround the Commission's proposals for revising this Directive.

  We will of course be submitting a formal Government response to their report but I think it right, if I may, to tell you now that we think it is an excellent piece of work which will stand as an important and positive contribution to discussion on this issue.

  I was impressed in particular by the careful way in which the report distinguishes between the proposals as they were originally published by the Commission in December 2005 and the Council of Ministers' General Approach and European Parliament First Reading texts. These texts were both of course being worked up at precisely the time when Lord Freeman's Committee were engaged on their Inquiry, and I was glad to see the endorsement in the Inquiry's report of the progress that they mark in relation to the crucial issue of the scope of the Directive. I was also struck by the report's penetrating and judicious commentary on the other fundamental issue of the Country of Origin principle.

  I should however mention that we were slightly surprised at the tone of the press release which marked the publication of the report, which—with the exception of course of Lord Freeman's own quote—gave a rather more hostile assessment of the position than the actual contents of the report appear to justify. It seemed to me that the press release rather implied that the Commission were continuing to promote their original proposals, when it was clear from their own evidence that they were not. That is of course entirely a matter for you, but I would of course be glad to discuss the issues with your Committee again if that would help in any way.

  I expect within the next few weeks to be laying an Explanatory Memorandum before your Committee about the revised proposals which the European Commission will, we believe, be publishing fairly soon now and we are also, as I have said, planning to respond formally to the Inquiry report as you have asked. Either of these submissions would provide a good opportunity for a further discussion with Lord Freeman's Committee, and I stand ready to help in any way that I can.

18 February 2007

Letter from the Chairman to Shaun Woodward MP

  Thank you for your letter of 18 February, which Sub-Committee B considered at its meeting on Monday 5 March.

  We were grateful to you for providing us with your very positive initial reaction to our report. We apologise if the press release accompanying the report was not clear in separating out the evolving versions of the text, but felt that strong criticism of the scope of the Commission's 2005 proposal was both warranted, and necessary to set the content for our inquiry. The press release did note that, with the exception of the Country of Origin principle and aspects of the quantitative rules on advertising, the latest versions of the text were a marked improvement. This remains our view.

  We would very much welcome the opportunity to meet with you following consideration of both the Explanatory Memorandum on the revised text, and the formal Government response. Such a meeting would also be very helpful to us in discussing some of the other important EU policies, such a spectrum allocation.

7 March 2007

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47   Television Without Frontiers?, 3rd Report of Session 2006-07, HL Paper 27. Back