BECTU's response to the European Commission Green Paper on convergence

23 January 1998

Introduction
The concept of convergence
'Barriers' to convergence
The gatekeepers
Securing public interest objectives in broadcasting
Future regulatory structures
Conclusion

Introduction

BECTU welcomes the opportunity to submit comments on the Green Paper on an issue which already appears to be a significant factor in policy development in member states, not least in the UK.
As a media trade union, BECTU has a particular interest in the implications of convergence for the future regulation of broadcasting. For us and our members, this could in the short to medium term, have a direct impact in terms of the reform of regulatory structures. In our submission we therefore focus on this aspect of the debate, although we initially wish to examine the notion of convergence itself.
The concept of convergence
The convergence of the broadcasting, telecommunications and computer sectors through the application of common digital technology is causing widespread interest both at industry and governmental level throughout all the developed economies. New products and services are emerging which span two or even all three of the sectors concerned. Examples, as illustrated in the Green Paper, include:
- services previously seen as actually or potentially delivered by telecom or broadcasting platforms now provided over the Internet (e.g. home banking, home shopping, voice telephony)
- access to IT services (e-mail, World Wide Web) over mobile phone networks
- digital broadcasters providing new services such as data broadcast and Intenet webcasting
- Internet service providers distributing audiovisual material
- telecoms operators, in their new competitive environment, providing audiovisual services such as near-video on demand and cable television
The convergence appears at the level of the network (with the network in each sector beginning to carry services previously associated with other sectors) and at the level of consumer equipment (in the use of telephones, televisions and personal computers for new services, and the future development of new consumer devices as in the TV/PC). As a consequence we are already, in the UK, beginning to see new cross-sectoral corporate alliances eg BSkyB and British Telecom in British Interactive Broadcasting and possibly, Microsoft and British Digital Broadcasting. Our regulators also appear to be contemplating new, broader roles (eg the Independent Television Commission's discussions with internet service providers concerning high quality video applications on the World Wide Web). These developments are being replicated across Europe.
However, a note of caution is due and this is relevant, for example, to the Green Paper's questions 1A and 2B. The concept of convergence is seductive. The possibilities and potentialities of sectors developing in the same direction can become, in the hands of some commentators, a matter of inevitability. The blurring of distinctions between sectors can develop - with superficially attractive but inherently false logic - into the disappearance of any such distinctions. The delivery of various services over the same network can seem to anticipate their becoming essentially the same service. None of these propositions is, in our view, necessarily true.
What is at fault with some of the current discussion on convergence as it affects the broadcasting sector is the leap - a form of technological determinism - from evidence of technical convergence to a prediction of convergence in content. On the contrary, it by no means follows these will be significant convergence in matters of content between the broadcasting sector and the telecoms/IT sectors. Broadcasting - which from our perspective is primarily about content rather than form, about software rather than hardware, about programming rather than transmission technology - is and will remain significantly distinct for the foreseeable future. The market for audiovisual goods is, in many ways, diversifying rather than converging. We believe this perspective is essential in prescribing regulatory structures for the new technically-convergent era.
We further believe that an excessive focus on convergent digital technology and the means of delivery can obscure the fact that content - in the broadcasting context, programming - is becoming increasingly important. In the words of the Green Paper (II.2), 'value [is] migrating from simple delivery to the production and packaging of content' and 'the transmission and delivery of services [is being rendered] a commodity item, converting it into a low-margin, high-volume business.' In the actual and potential explosion of broadcasting hours made possible by digital technology, quality programming will be increasingly at a premium. Regulatory structures formed exclusively on the basis of common technology are in danger of missing the point - the distinctive regulatory concerns associated with broadcast programming may become more not less relevant and necessary in the future.
As a side issue to the increasing importance of content, we are glad to note the Green Paper's Comment (in III.1) that 'Content providers will only be willing to make content available if their intellectual property rights are sufficiently protected'. We would only wish to add a note of emphasis that IPR protection should be seen to apply to the individual creators (writers, directors, designers etc.), as much as to the corporate owners of copyright. We accept that more detailed consideration such on such issues is best undertaken in other contexts such as the Green Paper on Copyright and Related Rights in the Information Society.
'Barriers' to convergence
As a consequence of our caution on the concept of convergence, and specifically on the argument that technological convergence subsumes convergence in content, we also take issue with the assumption, which appears to underpin the view of some commentators, that regulation is at best a necessary evil, and at worst a straightforward barrier to be overcome so that the 'natural' play of market forces can take their course.
The Green Paper expresses the view, in IV.1, that 'regulation is not an end in itself' and quotes the Commission's previously expressed principle of 'no regulation for regulation's sake'. We would lay equal stress on the view that 'market forces are not ends in themselves' and the principle of 'no market forces for market forces' sake'. Market forces do not represent a 'natural' state of affairs; just as with regulation they are the product of human decision making within a particular economic context.
We fear that in a sector as complex as broadcasting - with very significant cultural, democratic and political as well as economic criteria in play - the prospect of market failure in achieving non-market oriented objectives is significant. Market forces cannot, for example, necessarily guarantee consumers the benefits of public service broadcasting. Political and cultural pluralism in the media does not naturally develop from a free market in broadcasting (which may, in many contexts, lead in precisely the opposite direction towards excessive concentration of ownership). Non-market oriented objectives require specific regulatory frameworks to ensure at least the prospect of achievement.
We therefore believe that the Commission's approach to the role of regulation in the context of convergence - and consideration of the Green Paper's questions 3 and 4 - should involve the explicit rejection of any assumption that market forces represent a natural 'default position', against which any regulatory intervention has to be justified as a special case. On the contrary, we believe regulation has a positive and indispensable role; the only issue is what form this should take.
The gatekeepers
Within this general context, there is one specific aspect of the Green Paper's discussion of tackling barriers (and in particular, consideration of Question 5B) that we would like to add our comments on. Our views on regulatory structures generally are set out separately below, but we recognise that the application of digital technology is bringing new regulatory issues to the fore - one of which concerns the role of the gatekeepers to the new digital era.
In the broadcasting context, we mean by this the role of conditional access systems, subscriber management systems, electronic programme guides, and the application programming interface - all of them affecting the way consumers access programming in the more complicated world of digital broadcasting. Key corporate players will have the opportunity - if inadequately regulated - for practices such as discrimination in favour of their own services, cross-subsidisation, channel 'bundling' and predatory pricing. The European Commission's investigation into British Digital Broadcasting may have been an early example of further problems in store, and more generally we are already concerned about BSkyB's overly influential position straddling programming (especially sports and film rights), the transmission system (i.e. digital satellite) and the set-top decoders.
We accept that the Television Standards Directive on conditional access systems - which requires that they be offered on a fair, reasonable and non-discriminatory basis - is a valuable early step. We believe both that this should be policed and enforced rigorously in the digital broadcasting sector and that this approach should be generalised wherever feasible to all types of digital services.
Securing public interest objectives in broadcasting
Central to our concerns, however, is - as indicated above - the future regulatory structure for broadcasting in the digital era. Before setting out our views on future regulation generally we wish to emphasise our strong belief - particularly in response to the Green Paper's question 6 - that the aims and values of public service broadcasting (PSB) should remain at the heart of the EU and member states' approaches to this issue.
It would be highly ironic and sadly inappropriate to orient our regulatory structures away from PSB at a time when the Amsterdam Protocol has so recently recognised the centrality of PSB values. As noted in the Green Paper, the Protocol emphasises that 'the system of public broadcasting in the members states is directly related to the democratic, social and cultural needs of each society and to need to preserve media pluralism.'
In our view, the new possibilities opened up by the application of digital technology do not lessen the case for PSB, they strengthen the need for a clear restatement of PSB aims and values in the digital era. Anything less opens us to the accusation of technological determinism - that we are retreating from and amending our broader social aims in relation to broadcasting purely due to the pressure of developments in technology and that we are acceding to the argument that any interference with a free market approach imposes a 'burden' on the broadcasters. On the contrary, we can and should choose that the technical possibilities opened up in the digital era should still conform to PSB aims and values, so that the consumers of broadcasting - the viewers and listeners - can enjoy the fuller participation in the new Information Society which PSB can offer.
What does PSB bring to the digital era that a more a market-oriented approach might not?
- the democratic, social and cultural role referred to in the Amsterdam Protocol
- the central contribution to our democratic system offered by broadcasting sector which is pluralistic in content and provides universal access to all at a minimum affordable cost, (as opposed to a subscription-based system priced at what the market will bear)
- programming for a mass audience which seeks to entertain, educate and inform (and specifically not just the residual supply of what the market fails to deliver)
- a benchmark of quality against which all broadcasters can be judged and which can serve in this way to raise and maintain standards across the board.
- emphasis on the need for a range and quality of programming (and the consequent programme investment) which the market may not spontaneously provide.
- the strongest existing source of investment in and commitment to original European programme production, as opposed to excessive repeats and imports
- a counterweight to the private concentration of ownership in the media (how 'free' is the broadcasting 'free market'?)
- a successful and popular track record: in many member states it is still the free to air generalist PSB channels that continue to attract the majority of TV audiences
In the context of the convergence debate, we are therefore opposed to any notion of a converged regulatory structure which seeks to equate PSB standards to, for example, the universal service obligations (USO) characteristic of telecoms regulation. USO is usually limited to minimal service provisions, an emphasis on access to infrastructure or delivery systems and no concern for content (i.e. the quality of a telephone service is unrelated to the content of the telephone calls). We see no merit in contemplating any convergence between these two regulatory approaches.
Future regulatory structures
Our starting point as already indicated above in the section on convergence is that broadcasting - and in particular all aspects of programming - will continue to require a distinctive regulatory approach in the digital era. If anything, the provision of quality programming may become a bottleneck requiring more, not less, regulatory attention. This underlines our response to the issues raised in the Green paper's questions 7 and 9.
We accept that some participants in the convergence debate hold very different views. In particular, there are those who believe that the spread of digital technology across the different sectors calls into question the rationale of the previously separate regulatory approaches. This is often linked - whether explicitly or implicitly - to a justification for a more minimalist approach to regulation, with an emphasis on competition rules and economic criteria to the exclusion of other aspects.
In the above section on public service broadcasting, we set out a number of elements of broadcasting regulation which are not, in our view, compatible with a minimalist approach. For example, political and cultural pluralism in the media does not develop naturally through the application of market forces; regulations based primarily on economic criteria will not deliver a broadcast service which seeks to educate, inform and entertain for a mass audience as opposed to market niches; cost-intensive programming outside of the traditional mass market genre such as sport and feature films is unlikely to be encouraged within such a framework.
A minimalist regulatory approach is not in our view likely to support the maintenance of quality broadcasting services. We suspect that when, as a consequence, 'market failures' in this area become apparent, the only solution will be ad-hoc interventions by regulators seeking to remedy problems after the event. In short, the public interest in the future of broadcasting involves more than just economic priorities, and distinctive regulatory criteria and structures will be necessary, in our view, to reflect this.
All of this forms a justification for a separate regulatory approach to broadcasting even in the technologically-converging digital future. It provides most clearly a justification for a distinctive approach to programme content - and indeed this seems the area most likely to find support even among the proponents of regulatory convergence.
We would go further, however. The existing regulation of broadcasting is not just content regulation. It is vital to recognise that content cannot simply be separated from the underlying structural aspects of the broadcasting sector.
In particular, the issues of market power, vertical integration and concentration of ownership are elements which cannot be ignored if we wish to retain a broadcast media that is democratic and pluralistic. As the Green paper itself recognises in IV.4, 'a strict separation between service provision on the one hand, and transmission and carriage on the other....could create difficulties in addressing issues of market power and vertical integration.' . We would therefore propose that any future broadcasting regulator should have a clear remit to deal with concentration of ownership, media cross-ownership and all issues arising from any EU initiative on pluralism and concentration.
Other structural aspects concern the economics of original programme production. Broadcasting is currently far from being a free market. There are specific regulations on the proportion of independent production, of original production and of European-originated production. These underpin the broadcasting sector's ability to produce a range of quality programming, and form a necessary barrier to over-reliance on repeated programmes or cheap imports from the world's overwhelmingly dominant audiovisual industry based in the US. These regulations are structural rather than content-related, but we believe it will be equally important for future broadcasting regulators to retain responsibility in such areas.
We therefore oppose a simple 'horizontal' approach which would seek to separate the regulation of service provision/content from the regulation of infrastructure or network. If we are to retain key aspects of our broadcasting sector - in particular those identified with PSB - then it seems to us that some form of continued vertical regulatory model will be necessary.
In terms of the Green Paper's options for regulatory development set out in V.2 and elsewhere, our argument clearly places us closer to Option 1 (building on current structures) that to Option 2 (developing a separate cross-sectoral regulatory model for 'new services'). In the short term it would also place us in a different position to that outlined in Option 3 (introducing a new cross-sectoral regulatory model for both existing and new services) - although we see no reason why in the medium term, the 'Build on' approach taken under Option 1 could not lay the basis for more selective common regulatory frameworks in the future.
Conclusion
In recognising the reality of technological convergence, we believe it is essential to realise that this does not automatically or necessarily imply a convergence of the services provided. On the contrary, we believe that broadcasting will remain for the foreseeable future a separate sector requiring a separate regulatory approach. Rather than a minimalist approach geared to competition rules and primarily economic criteria, we see a strong and continuing need for broadcasting regulations reflecting the aims and values of public service broadcasting.
We therefore support the need for a distinctive regulatory model for broadcasting and for such a model to have a remit encompassing not just programme content, but also the structural aspects of broadcasting including media ownership and requirements for independent production, original production and European production. If we can retain and develop such a distinctive regulatory approach to the broadcasting sector, we believe the benefits to viewers in terms of the future range and quality of programming can be hugely significant, while the existence of a healthy democratic and pluralist broadcasting ethos will make a vital contribution to European society in the digital age.

Last updated 3 March 1998

BECTU's response to the European Commission Green Paper on convergence

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