Mrs Viviane Reding
Member of the European Commission responsible for Education and Culture
Television without Frontiers : amending the directive
RTL Group Management Conference
Venice, 22 June 2001
Ladies and Gentlemen,
It is a great pleasure for me to have the opportunity of addressing you today. The RTL Group is the largest broadcasting company in Europe. More than this, RTL is a genuinely European company, with radio and television stations broadcasting in many languages in no less than 10 European countries. As the Commissioner responsible for audiovisual policy, one of my main concerns is to ensure the existence of a thriving European audiovisual industry able to compete with its North American counterpart. I therefore view with great satisfaction the success of companies such as RTL which are both producers and distributors of European content.
This said, the success and the future of a company such as yours is in turn dependent on the existence of an appropriate regulatory framework in Europe. So, let me try to explain to you the European Commission’s approach to the regulation of the audiovisual sector in the digital age.
Regulatory objectives in the audiovisual sector
Allow me to begin by recalling the regulatory objectives that are specific to the audiovisual sector. These were mapped out in the Commission’s Communication of December 1999 entitled “Principles and Guidelines for the Community’s audiovisual policy in the digital age”. Both the Council and the European Parliament solidly endorsed this Communication. The primary purpose of regulation in the audiovisual sector is, or has been, to safeguard certain public interest objectives, such as:
cultural and linguistic diversity;
the right of reply;
consumer protection, and;
the protection of minors.
The basic rationale for regulation should be the failure of the market to achieve these objectives. Moreover, regulation must be proportionate. That means it must be the minimum necessary to achieve these public interest objectives.
The Television Without Frontiers Directive contains provisions relating to all these objectives with the exception of copyright. Copyright is dealt with at Community level by a series of specific measures, the most recent of which is the Directive on copyright in the Information Society adopted by the Council just two months ago. With this, the European Community has put in place a modern regulatory framework for copyright and I will therefore leave aside this issue today.
To return the Television Directive, it contains, as I said, provisions aimed at ensuring important public interest objectives such as pluralism, cultural diversity, consumer protection and the protection of minors. These provisions constitute the minimum level of harmonisation which is necessary to ensure the freedom to provide broadcasting services in the European Union. It is important to understand, I believe, that this is the primary purpose of the Directive. Indeed, in matters such as media pluralism and the protection of minors, for example, the Treaty is silent. On consumer protection and cultural diversity, the Community’s competence is limited. However, in order for the single market to function it is necessary that the national rules on these vitally important public interest objectives be harmonised to at least a minimum degree. This is the logic behind and the purpose of the Television Without Frontiers Directive. Without this Directive, firms like RTL would face a much more complex regulatory environment and their business would much more difficult.
The changing nature of the audiovisual sector
If we take a moment to look back into the history of broadcasting, we can see that things used to be a little more straightforward. Up until the 1980’s broadcasting was analogue and it was terrestrial. That meant two things:
The number of television and radio channels was very limited;
Broadcasting was a national business.
In a situation where the number of national television broadcasters is limited to 2 or 3, there is clearly a need for very careful regulation of those broadcasters. Their political power is immense and the potential for abuse enormous. There is also a need to ensure that they cater for all groups and elements within society. That is why television broadcasting remained exclusively under public control in most European countries until the 1980s.
With the arrival of satellite and cable broadcasting, the broadcasting landscape in Europe began to change. Commercial broadcasting was authorised and the number of television channels slowly increased. The regulatory landscape changed too. Most Member States established independent bodies to regulate the activities of commercial broadcasters and a certain easing of regulation accompanied the increase in the number of channels.
As for the Community, the arrival of cross-border broadcasting – thanks to satellites – created a need for a single market instrument in this sector. It arrived in 1989 in the form of the Television Without Frontiers Directive.
Regulation and convergence
Just as the arrival of satellite broadcasting and commercial television changed the audiovisual landscape in Europe, the advent of digital technology is now producing an even more profound transformation. Yet, whilst technology and markets may be going through profound changes, the public interest objectives which are the goals of regulation remain the same. The question therefore facing us is “do we need to adapt the regulatory framework and, if so, how?”
I would first say that it already seems clear that a regulatory approach designed for a landscape dominated by a limited number of television channels will no longer be appropriate. Let us consider three examples that illustrate this, starting with television advertising.
The Directive currently lays down very detailed rules on when, in which programmes and for how long advertising is permitted. The question we have to answer is “will these rules remain effective, necessary and proportionate?” By that, I mean, in plain language, are such detailed rules still justified in a world where the “zapper” rules?
However, this is not merely a question of viewers being able to zap through channels to avoid advertising spots. More and more television and radio programmes publicise a Web site dedicated to that programme. The programme and the related site form an integrated product. Certain RTL programmes such as “Who wants to be a millionaire?” or “Big Brother” exemplify this perfectly. Increasingly, Web sites are able to offer video content. Increasingly, viewers are able to access the Internet via their televisions. Television and Internet content are in such cases converging.
Under these circumstances, one has to ask whether the goal of protecting the consumer is achieved by quantitative restrictions on television advertising? After all, a whole new range of advertising and marketing techniques become possible with digital technology, including the insertion of Internet hyperlinks in television programmes, the placing of direct orders by consumers during television and radio programmes, virtual advertising and virtual product placement. One also has to ask whether the current rules could hinder the development of new services and of new ways of financing them. It is a provocative question perhaps, but one could even ask why banner advertising is prohibited on television when it is allowed on the Internet.
In the field of advertising I think it is important to remember that the essential goal is to prevent the consumer from being mislead. The consumer must therefore be able to distinguish clearly between advertising and editorial content. Given the plethora of new advertising techniques that become possible with digital technology, and given their rapid evolution, it may no longer be practicable to protect consumers by adopting detailed rules at a European level. It may be more appropriate to set the objectives to be achieved at European level, whilst leaving the development of detailed and practical rules to a co-regulatory framework.
The Court of Justice, in the field of consumer protection, has developed the notion of a “reasonably circumspect consumer”. This posits the consumer as someone who is able to protect himself or herself on the basis of sufficient information. I believe this approach is also appropriate for television. However, there is one large group of avid television viewers who cannot be brought into this category and who must be considered as “vulnerable consumers”. I am, of course, talking about children. Now, I do not believe that television advertising to children should be banned. To do so would be counterproductive, since it would remove at a stroke the main financing source for children’s programmes on commercial television. Moreover, it would be disproportionate, when those same children can also access the Internet. But I do believe very strongly that there must be strict and effective rules in place to prevent the unscrupulous from exploiting children’s inexperience and credulity. These rules should, apply across all electronic media. Whether these rules are developed in the framework of pure regulation or co-regulation is not important: what is important is that they are effective.
2. Protection of minors
Staying with children, let me move now to my second example. Protecting minors from harmful content is clearly a major public interest in the broadcasting world. Hitherto, this has mainly been achieved through the “watershed” – that is, broadcasting certain material at a time when it can be assumed that most children will not be watching.
Once again, technology, combined with social and economic change, is undermining the effectiveness of this approach. Televisions and set-top boxes with integrated memories are already being marketed and more and more children have televisions in their own bedrooms. Digital technology offers the possibility of filtering devices that may in future be both more effective than the watershed, whilst offering broadcasters greater flexibility in their scheduling.
However, all filtering devices rely on classification systems, which categorise content according to its suitability for children. Children today use a wide range of electronic media: they watch television, they surf the Internet, they play computer games and they watch videocassettes and DVDs. And, of course, they continue to go to the cinema. Yet the classification systems for all these media are still different in most Member States. For parents, this is a bewildering and confusing situation. In my view, there is a pressing need for a single, coherent classification system that covers all electronic content – television, Internet, computer games, the lot.
Please do not misunderstand me on this point. I am not saying that all Member States should attach the same age rating to a particular television programme or computer game or film. I am simply saying that when age ratings are attached to these products, they should be attached on the basis of the same criteria and according to a common system for all electronic media. Content needs to be evaluated in the same way, regardless of the technology used to deliver it and parents should not have to struggle with different rating systems for different media.
Here too, I believe there is considerable scope for self-regulation, possibly on a pan-European scale.
Allow me at this stage to say a few words about self-regulation in general. I have been rather positive so far in this speech about self-regulation. In my opinion, it is an appropriate and up-to-date approach to preserving the balance between the essential principle of free speech and the preservation of legitimate public interest objectives.
But self-regulation has limits and is not suitable for all objectives. It is entirely unsuited, for example, to copyright questions, where clarity and legal certainty are essential. Moreover, self-regulation should not be used as a means to evade democratic processes. In the field of the protection of minors, for example, self-regulation is only meaningful and effective if consumer groups are fully involved in the process. It may also require the participation of public authorities – including the European Commission. Most of all though, if it is to be effective and accepted by the public, it requires a serious commitment and full engagement on the part of industry. Lip service is not enough.
3. Cultural diversity and pluralism
The final example I wish to consider concerns the European content obligations in the Directive. Their purpose is to ensure cultural diversity. Less famously, with a view to ensuring pluralism, the Directive also contains obligations for broadcasters with regard to independent producers.
In a world where the number of channels for supplying audiovisual content was limited, these requirements made sense. But in a world of hundreds or even thousands of channels, of Video on Demand, of broadband Internet one has to pose the following question:
are quotas an effective and proportionate means of ensuring cultural diversity and pluralism in a digital world, where electronic content is limitlessly available?
Whilst one must pose this question, it nevertheless seems to me that neither the market nor self-regulation are sufficient or appropriate to achieve the aim – as laid down in the Treaty – of promoting cultural diversity. For smaller countries and language groups, the market is simply too small to sustain certain kinds of audiovisual production. Therefore the need for specific measures to promote the production and distribution of European electronic content and audiovisual works in particular will remain for the foreseeable future.
In this respect the new MEDIA Plus programme, adopted at the beginning of the year with a budget of 400 million Euro over 5 years, will make a significant contribution to the enhancement of the European dimension of the industry. It supports training, development, distribution and promotion. An important innovation will be the launching of pilot projects to encourage the development of digital content for today’s rapidly evolving markets.
Furthermore, I have recently reached agreement with Philippe Maystadt, the President of the European Investment Bank, on a strategy to release substantial financial resources for the audiovisual sector. This initiative, which we have called “i2i audiovisual”, essentially makes available EIB credit lines specifically for the audiovisual sector. It covers both large and small enterprises, infrastructure as well as content and the funding of risk capital funds specialised in the audiovisual media.
A new approach for content regulation?
In such a scenario, some public interest objectives, such as pluralism, will increasingly be met by the market itself. Where they are not, self-regulation may play a greater role than hitherto. Other objectives may require new approaches and solutions – I mentioned the protection of minors as an example in this respect.
Above all, we must avoid over-regulation, which might hinder the development of the market and harm Europe’s competitiveness. Europe’s competitiveness depends in great part on the rapid move to the Information Society. We must ensure a flexible regulatory framework that encourages innovation and transition.
Review of the Television Directive
To meet this challenge, the Commission has launched a comprehensive review of the Directive and of its approach to the sector. My services have concluded contracts for three major studies in the fields covered by the Directive, to be completed by early next year.
The first of these will evaluate the impact of measures to promote the distribution and production of European television programmes. It will, in particular, evaluate the effectiveness of the European content obligations in the Directive as against other measures.
The second study will be a very broad one. It will analyze the recent technological and market developments in the sector and attempt to identify cause and effect relationships. It will provide the Commission with a set of likely scenarios for the future development of the market.
The third study will examine the development of new advertising techniques, in particular with a view to how a separation between advertising and other forms of content could be achieved.
These are not to be “ivory tower” type studies. They include an obligation for the contractor to conduct a series of workshops in Brussels this year, in order to allow for input from all interested parties. The first workshops have taken place and, to my great satisfaction, were marked by high levels of interest and participation.
At the beginning of 2002, the Commission will publish a consultation document based on the results of these studies. It will in addition conduct a series of hearings in 2002. At the end of that year we shall publish a Communication on the results of this consultation, together with any necessary proposals for amending the Directive.
In doing so, we shall have to bear in mind the fact that it usually takes at least 3 years for Commission proposals to evolve into legislation implemented by Member States. The Commission therefore has to take into account the likely developments in the market and has to ensure that Community legislation is flexible enough to be “future-proof”. In this sector above all, we need to safeguard vital public interest objectives without stifling innovative services and the development of a competitive European electronic content industry.
The question we need to answer
I shall conclude by trying to sum up the challenges we face in one general question:
Does digital technology mean that, from a Community point of view, rather than thinking in terms of freedom to provide television services, we should think in terms of a more liberal regime governing freedom to provide electronic content services?
This is not a rhetorical question. The Commission does not know the answer and has certainly not come to any conclusions. I merely wish to say at this stage that it seems to me that this is the question that we now have to answer.
I stress that the key element in the review will be openness. I attach great importance to receiving the advice and views of all those concerned. In this context, I would urge you to participate fully and to place your experience and expertise at the disposal of the Commission. If we are to propose legislation that is both effective and proportionate, we need your input.