TV without frontiers, lawmakers in tears

"We are completely negative about it," says Shaun Woodward MP, Minister for Creative Industries and Tourism. "The more we look at it; it seems a really bad idea. The fundamental flaw is that it probably won't work. I see it doing huge damage to our growth," he adds. "The problem is the absolute lack of clarity."

Woodward says that the exact scope of the legislation the European Commission is proposing is "unclear", as it could cover a range of Internet services and mobile content providers. Regulations for linear services such as traditional broadcasting, may not be extendable to non-linear services, such as content available on the Internet.

"We have serious concerns over the inclusion of non-linear services [such as video-on-demand] in the Directive. This is neither desirable nor practical, as there is nothing to stop companies relocating outside the EU to bypass regulations. Companies may relocate, taking jobs and services elsewhere, while the content is still consumed here," says Woodward. "This is a good example of where the EU goes wrong. Viviane Reding has got it wrong.”

Telcos are also concerned about the scope of the directive as they increasingly move towards becoming content distributors, by starting to offer services, such as BT Fusion, which combines IPTV streaming with telephony and Freeview, as well as mobile Internet access.

Neil Gibbs, European regulation manager for BT is worried that the "reach of the Commission proposal will spread to have a variety of unintended consequences, including banning the editorial independence of programme makers".

Apprehension over the remit of the new regulations is not just limited to UK providers. Andrea Grillo, European regulatory manager for Telecom Italia claims it would be "helpful to have a more specific definition of linear and non-linear services", and that the telco was in favour of light regulation that "does not hamper the distribution of new content forms."

Europe’s Internet service providers are more vociferous critics, seeing the directive as regulation of the Internet by stealth. The European Internet Service Providers Association (EuroISPA) wants self regulation of the Internet, arguing that "regulated self regulation" — where players are left to regulate themselves until something goes wrong — will be abused as some players will have a vested interest in not reporting abuse of the regulations to the authorities.

"[The Directive] is regulation of the Internet through the back door," says Professor Michael Rotert, president of EuroISPA. "We think Commissioner Reding has not understood the concept of the Internet. It might be she thinks she's regulating content, but you can't distinguish things so easily. Regulated self-regulation will be misused immediately, when it comes into practice."
 
ISPs also argue that the eCommerce Directive and other existing legislation already protects children and consumers. For its part, AOL argues that child-abuse images are already illegal, and consumers are protected by regulatory bodies.

"We believe strongly in self regulation as the way forward," says Camille de Stempel, director of policy, AOL UK. "We don't see the need for the directive — we have a lot of tools to protect children, it's in our interest to... If anything we should look at the relaxation of broadcasting regulations rather than trying to shoehorn the Internet into a new regulatory framework."

ISPs favour letting the consumer decide which content to view, and are putting the emphasis on parents to police what children can access. AOL UK is extolling the virtues of its parental controls, while Verizon also wants parents to assume that responsibility.

"We don't need governments doing these things for us if parents are more active," says Mike McKeehan, executive director of Internet and technology policy for Verizon. "We call it old world, old rules, new world, new rules. Trying to drag square-peg regulations into a round hole often creates more problems than it solves. We'll fight [the EU] putting broadcasting and telecoms laws into the Internet space."

Verizon also claims that old regulations cannot work, especially if they are only Europe-wide, due to the global nature of the Internet. "Legislators and regulators seem to think the Internet stops at the borders of the EU. But US and other sites are not living by the same rules. The global nature of the Internet makes it difficult to police, and difficult to extend the long arm of the law. Bad sites are like cockroaches — turn on the light and they scurry away," says McKeehan.

Some industry players, however, favour light regulation, but stress that it should only be brought into play as a last resort. Microsoft was involved in setting up the Freiwillige Selbstkontrolle Multimedia-Diensteanbieter (FSM) in Germany in 1997, in response to government legislation concerning the regulation of illegal content and the protection of minors. FSM advocates voluntary self-control of content by e-commerce alliances, and "supports the state by forwarding complaints to the state commission," says Mike Cosse, Microsoft's lead counsel for Europe.

Cosse argues that lightly regulated self-regulation by the industry can work. "Let's use self-regulation on content, and help the state in a co-operative, non-confrontational way," he says. "We want to encourage the authorities to step in against those who obviously provide very illegal content. Apply appropriate regulations to the appropriate content."

Kyle Kim, Microsoft director of business strategy, claims that regulated self-regulation could work in providing a balance between ineffectual cross-border legislation and subjective and untrammelled self-regulation of the Internet.

"The problem with government regulation is the international nature of the Internet, and the problem with content regulation [by industry players] is that it's largely values-based," he says.

The Audiovisual Media Services Directive, as the update to the TVWF may be known, also contains proposals to limit "overly repetitive advertising" online, according to Viviane Reding. Advertisers view this as a potential threat to advertising revenue and want to move towards less regulation than there is currently.

"TV is mostly paid for by advertising and subscription, with some public service broadcasting," says Ian Twinn, director of public affairs for ISBA, the UK advertisers' association. "We do want to exist within legislation, but if the rules are tight we will go elsewhere.”

Mobile broadband providers tend to agree that advertising should only be lightly regulated, but have warned that more deregulated advertising would drive consumers away. "There's a huge amount of consumer choice," says Hamish MacLeod, chairman of the Mobile Broadband Group, a consortium of mobile operators which includes O2, Orange, T-Mobile, Vodafone, 3 and Virgin Mobile. "If we overload them with ads, customers will go elsewhere."

Regulating a medium which is still in its disruptive phase is an almost impossible task. However, opponents of the regulation concede that legislation, if needed at all, should be light, and that heavy, top-down restrictions would not benefit anybody.

The European Commission insists that the scope of the proposals is unambiguous. "There is a clear answer. We are trying to regulate moving images and audiovisual content," says Harald Trettenbrein, head of sector for digital information society and media at the European Commission. "We are not trying to regulate static content on mobile phones, and we don't care about the online extension of newspapers. Text stills are not covered by the regulations."

Trettenbrein claims the legislation is light and only intended to protect minors and ban hate speech. He also insists that the proposals will benefit UK businesses, because they can export more content produced in English. "This is a business opportunity for the UK," he adds.

Some members of the European Parliament claim that the proposed legislation is light already, and that industry players and the UK Government are seeing problems where there are none. Spanish Liberal Democrat MEP Ignasi Guardans Cambo says the debate surrounding the Directive reminds him of the Cervantes character Don Quixote. "I see people charging against monsters that don't exist. Calm down, it's just a windmill," says Cambo.

However, the UK Government says that the proposed changes could have a major impact on the development of services that people access over the Internet and on their mobile phones. "The economic and cultural impact of the proposals will be substantial, and they could also extend red tape where we should be cutting it," says Shaun Woodward.

Communications regulator Ofcom says that it shares some of the UK Government's concerns, but is uncomfortable about the arguments being put forward about the benefits or disadvantages to businesses. We saw the potential danger of these proposals early," says Alex Blowers, international director at Ofcom. "The real problem area is the extension of scope. We are not favouring the industry view. We should be protecting consumers — the Commission needs active support in that."

The update to the TV Without Frontiers directive is scheduled to end by the beginning of 2007, adding extra urgency to the debate. The UK Government has launched an industry consultation process, and is scheduled to present the findings to the EC by mid-September. UK Ministers such as Woodward are urging businesses to participate in the process, and quickly if they want to be heard.

"We have already had extensive discussions with industry and other stakeholders. But we need to know more about what they think, especially the likely impact on new media services," says the Minister for Creative Industries and Tourism. "This consultation will enable us to take the considered views of industry and the public back to the Commission and to our fellow Member States, so that the final Directive takes account of what is best for the UK and Europe in the future."