“The new EU audiovisual regulatory framework:
challenges and opportunities”
Doctor Antonio Martusciello
Commissioner for Agcom
Tel Aviv January 29, 2019
Good morning delegates and distinguished guests. I am privileged and grateful to have the honour of making this keynote speech and I would like to give a sincere thank you to Emanuele Giaufret, Ambassador of the EU Delegation to Israel and Netanel Cohen, MoC Director General, as the representatives of the institutions that are hosting us here and who have promoted the implementation of this twinning project.
Introduction: The European single market
The European Union since its foundation, under the Treaty of Rome, aims to create a single market where citizens and businesses can freely exchange goods and services.
In modern times, the objective of economic cohesion among Member States finds its own expression in the digital single market because, in the Commission’s perspective, information and communication technologies “no longer constitute a sector in their own right, but the very foundation of all modern innovative economic systems “.
Within the framework of the Digital Single Market, with specific reference to the audiovisual sector, the Commission Directive has a technologically neutral approach, which regulates only digital content and not electronic communications networks that are governed by a different regulatory package.
The Commission, while maintaining the separation between networks and content, considered that it was necessary to update the content discipline, given that the market for audiovisual media services had a significant evolution in terms of convergence between audiovisual media services and internet services. The reform process led to a new release of the AVMS Directive, approved a few months ago, on November 14, 2018.
The new Directive is full of interesting news, and today I would like to elaborate on four points that I consider particularly significant for the purposes of the debate, namely:
firstly, Material jurisdiction
secondly, Regulation of VSPs
thirdly, Regulation of VODs
and finally, Independence of regulators
Since the first Directive “TV Without Frontiers” of 1989, the objective of European legislation has always been to create a set of common rules for all broadcasters active in the territory of the Union.
Harmonizing the rules means working to a level playing field, facilitating the creation of pan-European publishing groups. The main cornerstone of this strategy is the principal country of origin, can provide services freely in all of the European Union provided they comply with the legal provisions in force in the Member State. This rule, which is extremely useful for the creation of an European content market, has made it possible to achieve a good level of consistency between the legal systems of European countries.
However, the possibility of using Internet content coming from the most disparate places, has therefore raised serious doubts on the relevance of the principle of the country of origin which has always been the basis of Community legislation.
Many advocated the transition to the country of destination principle, seen as a corrective to problematic aspects emerged from the application of the country of origin criterion, first of all the phenomenon of so-called “forum-shopping”, i.e. the choice to settle legally in a Member State because of a more favourable regulation.
Despite these perplexities, in the new Directive, the country of origin principle is maintained and made stronger, given the uneven panorama of the transposition of some provisions of the directive by the member countries.
The regulation of VSPs
A significant change made by the Directive is to include video-sharing platforms in the regulatory perimeter and it is certainly appreciable that the Directive acknowledges the centrality of these subjects, given a definition (art.1bis), also including, in a certain measure, social networks. This is the first time that subjects belonging to the e-commerce directive “enter” into the directive on audiovisual media services.
However, fully shared principles, such as those expressed in recitals 4 and 5 of the new directive, which explicitly states that these services are “in competition with audiovisual media services for the same public and the same revenue”, do not match the articles of the directive.
In fact, while specifying that their main objective is, like television, to provide programs to the general public “in order to inform, entertain or instruct”, these services are excluded from the scope of “editorial responsibility” and this approach. determines, in cascade, their exemption from the relevant obligations of the Directive.
The Regulation of VOD
VOD services are normally functional to pure entertainment and therefore are less relevant for the protection of the Union’s qualified interests such as information pluralism and cultural diversity. These services are provided through subscription systems that guarantee per se an access filter, so that this situation has historically justified lighter regulation.
Article. 13 of the Directive, in paragraph 1, provides that catalogues contain at least 30% of European works and paragraph 2 gives member states the right to request media service providers under their jurisdiction to contribute financially to the production of European works. This is the so-called “Netflix tax”, that is an important exception to the country of origin principle (in favour of the country of destination principle) whose introduction confirms the problematic aspects that have emerged so far.
The European legislator therefore, given the growth of these services all over the world, considered that a certain degree of regulation was necessary also for non-linear contents, determined in a certain sense the end of the “regulatory holiday” for these subjects.
Independence of regulators
Article. 30 of the Directive provides some specific measures on the independence of regulators. In particular, each Member State designates one or more national regulatory authorities and ensures their independence from the government and any other public or private body.
Member States shall ensure that national regulatory authorities or bodies have adequate human and financial resources and sufficient enforcement powers to carry out their functions effectively. Plus, the procedures for appointing the members must be transparent and non-discriminatory.
An initial assessment of the AVMS Directive
These are some of the main changes that the directive is proposing, but the question is: is the new regulatory package an opportunity for the market or are there risks?
I trust that this question can find effective answers in the panels that will discuss these issues later and so I would like to close this brief introduction by launching suggestions that the distinguished guests of the workshop will develop more fully.
Let us start with the topic of material jurisdiction, certainly keeping the country-of-origin principle firmly in place, placing a level playing field theme between traditional broadcasters and VODs. For example, those who work in digital terrestrial television, and want to distribute their content in Europe, must establish themselves in the country where the transmission network, ending up subject to the legislation of that state, a pan-European broadcaster will therefore have several locations depending on the countries where it wants to operate.
Unlike those who distribute content online, who can easily control several markets, taking advantage of the country of origin principle, choosing to settle in the country with the lightest regulatory regime and thus only respecting the rules of a single Member State. The rule therefore seems to present a favor for non-linear services but we must take into account that there is a structural difference between traditional broadcasting and the distribution of content on an IP network that justifies an asymmetric discipline.
Regarding the regulation of VOD, we have said that the Directive, while recognizing the specific nature of non-linear services, nevertheless imposes on these platforms new regulatory obligations, especially in the field of the promotion of European works. In this case the level playing field is pursued by laying down new rules, rather than by to lighten existing ones.
However, an assessment on this issue is suspended pending implementation by the Member States, as the directive on the principle of cultural diversity provides ample scope for European countries to graduate their obligations according to the individual cultural policies of each country. The transposition must take place within 21 months and therefore we reason on a time horizon of 2020.
With reference to the independence of the regulators, this goal is also reinforced through the role of ERGA (European Regulators Group for Audiovisual Media Services), which supports the Commission providing opinions on technical or regulatory aspects.
I am proud of this resolve because I have the honour and the challenge of representing Agcom within ERGA. The European Union understands the importance of international cooperation, and this is evident in light of today’s conference, a twinning between Italy and Israel, which we all hope will offer opportunities for all.
Regarding the regulation of the Video sharing platform, the main critical point remains the regime of editorial responsibility of online platforms. On this issue, the Commission’s position appears firm in maintaining the current “safe harbor” system outlined by the 2000 e-commerce Directive, even though the role of the platforms has enormously evolved and diversified with respect to that era as they play a direct action on the contents (from which they profit) no longer comparable to the simple role of storage and access to information.
However, there remains a question mark regarding the possibility of applying the Directive to social media, based on the criterion of “essential functionality”, but this doubt can be unravelled downstream of the guidelines that the Commission will have to publish on the subject.
Regulation challenges: what next?
Now to conclude, this is a first assessment of the current legislation, but it does not escape us that further interventions are needed. We are facing an epochal change in the way we approach the issues affecting the net, there is a widespread awareness that the time has come to find rules, shared at international level, to ensure that the consumer maintains confidence in the enormous potential that this communication tool offers. The point is not whether or not to regulate the internet, but how to regulate it.
But if the need to intervene has been now focused, we are still lagging behind in the search for regulatory instruments of the Internet. At this moment European legislation relating to the communications sector does not offer a convincing solution. The Directive on audiovisual media services, as we seen, provides a massive recourse to forms of self-regulation whilst the Directives on the electronic communications that regulate telecommunications networks, omit Internet services offered in OTT mode.
I believe that the time of Internet self-regulation has come to an end. Multinational and large companies would do better to admit that there is a problem related to pathological uses of the network, such as misinformation or the misuse of personal data, and seek solutions that are shared with the public authorities. After all, if the trust of the consumer in the security of the Net is cracked the first to lose would be the main online platforms, whose closure with respect to the rules, would follow.
I would like to stress that it is important to restore the primacy of politics. As if politics is not incisive, the operators, in the regulatory, will occupy a space that, although virtual, is capable of profoundly affecting the democratic structures of Member States.
As you can see, there are many interesting topics, so I would like to give the floor to the speakers and experts so to allow them to analyse the challenges and the opportunities of the new regulatory framework. But before I end I would like to remind us all here of what Winston Churchill once said, “A pessimist sees the difficulty in every opportunity, whilst an optimist sees the opportunity in every difficulty”. Let us all today be the optimists.