EBU/ITU Meeting of High-Level Experts on
"Competitive Platforms for the Delivery of Digital Content",
Geneva, 21-22 June 2007
Session 8
Regulation and Economics: What are the emerging business cases in the convergent
world? What are the new challenges for media regulation?
 Regulatory frameworks for linear and non linear services
Joanna Wrona
European Commission - DG INFSO
Referring to a successful business case for media in a convergent world I would like to
draw your attention to the new regulation of audiovisual media content, i.e. Audiovisual
Media Services (AVMS) Directive. It can be considered as a solution to the successful
business case since providing for a liberalized framework for all audiovisual services it will
contribute to the better financing of the audiovisual content, securing at the same time that
consumer/viewer interests are taken into account. Additionally, it provides for another
important feature of successful business case, i.e. a right balance between regulatory regime
and self-regulation.
The new AVMS Directive amends the present Television without frontiers Directive that
in face of substantial changes, relating to the convergence of technologies and services,
became outdated. In the last years, the traditional TV has been accompanied by internet TV,
TV on the mobile phones and other mobile devices. We have been faced with the expansion
of fixed broadband, digital TV and 3G networks, increase in pay-per-view TV and the arrival
of new delivery services such as video on demand (VOD) and peer-to-peer exchanges of
audiovisual content. This mixture of traditional and on-demand services required a new
regulation to keep pace with rapid technological and market changes in order to ensure that
Europe's audiovisual sector remains competitive. At the same time greater viewer choice
called for more flexible regulatory framework.
The new framework, on which a political agreement was reached on the 24 of May, is
expected to enter into force before the end of 2007 and Member States will be given 24
months to transpose the new provisions into national law, which means that we can expect
that this modernised regulation will fully apply in 2009.
The regulation establishes a single market for all audiovisual services since it covers for
the first time not just linear but also on-demand services, though the latter are subject to
lighter harmonization. It is so because there would be no justification for regulating
audiovisual content supplied at the viewer's request beyond safeguarding essential public
interests such as protecting minors, encouraging cultural diversity,, preventing incitement to
hatred or basic consumer protection rules. Setting a Community benchmark for the regulation
of these key general interests is meant to discourage Member States from regulating further
than the provisions of the Directive require.
The new regulation creates a legal security both for businesses and citizens. As regards
businesses three main features should be noted. Firstly, the Directive provides for a
comprehensive regulatory framework that reduces the regulatory burden and covers all
audiovisual media services.This means that for the first time – no matter how distributed
(including over electronic networks) – these audiovisual media services would have to
comply with a set of minimum rules harmonised at the European level with regard to the
protection of minors and human dignity, but also in view of qualitative rules concerning
advertising.
Secondly, the Directive is based on the country of origin principle that has already helped
Europe's broadcasting industry to flourish since 1989 and now it will also apply, with the
minimum harmonization, to no-linear services. It will contribute to creating a level playing
field for all companies that offer on-demand audiovisual media services, irrespective of the
technology used to deliver their services.
Finally, less detailed and modernised rules on advertising will allow for their flexible
application which will ensure better financing of audiovisual content. The new Directive
relaxes rules on inserting advertising in TV programmes and is open to new forms of
advertising. Instead of being compelled - as is now the case - to allow twenty minutes time
between each advertising break, broadcasters will be able to choose the most appropriate
moment to insert advertising during programmes. Nonetheless, films made for television
(excluding series, serials and documentaries) cinematographic films, children programmes
and news remain protected and may only be interrupted once per each period of 30 minutes
time. The rule that advertising is restricted to 12 minutes in any given hour also remains in
place.
However, it is a legal framework for product placement that has been considered as one of
the biggest successes of the new Directive since it will ensure a better information of viewers
while allowing new income for the audiovisual industry. At the same time it will help to boost
Europe's creativity and reinforce cultural diversity. This practice is not addressed as such by
the current Directive and only prohibited in as far as it can, under certain circumstances, be
considered to be surreptitious advertising. Product placement is, nonetheless already
authorised, under certain conditions, by some Member States and is widely practiced all over
Europe in independently produced works and feature films without any EU level protection
for consumers. The new regulation introduces clear rules on product placement, obliging
broadcasters to inform consumers when it takes place, thus providing for an adequate level of
consumer protection.
The Directive also provides for other consumer/citizen oriented provisions, such as:

clear identification of media service provider;

a new right to access to extracts of important events for general new purposes, which
supplements the right of access on free to air TV to events of major importance;

the prohibition of incitement to hatred for all audiovisual media services;

the encouragement of improved access to audiovisual media services for people with
visual or hearing disability;

the respect by all audiovisual media services (also on-demand) of a set of qualitative
rules on commercial communications, notably with regard to respect for human
dignity and the protection of children;

the setting up of codes of conduct on commercial communications for unhealthy
foodstuffs in and around children's programmes.
The new regulatory framework will play a significant role for media regulation and due to
its flexibility will not hinder the activities that the media sector has to undertake in order
to accommodate technological and market developments, as well as changing viewing
habits resulting from convergence. It is also expected to ensure a right balance between
the level of public regulation and market driven solutions by requiring from Member
states and the Commission to encourage co-and self-regulatory regimes at national level in
the fields coordinated by the Directive. This combination of the liberal public regulation
and business based models of regulation should constitute a very positive regulatory
environment for media, provided that it is effectively enforced.