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Content Regulation Without Frontiers:
Why the EU is Indeed Regulating the Internet

  Progress Snapshot
Release 1.24 December 2005

By Patrick Ross *

A new set of media regulations now sits before the European Union and the European Commission, as well as its many member states. Yesterday EU Commissioner Viviane Reding unveiled a proposed rewrite of the EU's Television Without Frontiers Directive. Reding's goal, she said yesterday, is to update this nearly 20-year-old document to create a "level playing field" of already regulated European broadcasters with newer video providers. My hope had been that the European Commission would seek that level playing field by regulating down, [1] but I feared they would in fact regulate up. [2] Upon preliminary review, the European Commission seems to have confirmed my fears. They have chosen to regulate new media consistent with old paradigms.

European broadcasters are clearly a winner in this proposed revision. They are given more latitude in when to air commercials and are permitted to do product placements, among other relaxations. But they remain regulated, and those regulations are extended to services such as cable and satellite TV that did not previously have as many obligations.

But what is most alarming is the Commission's proposal to regulate Internet content.

The new Directive would regulate something the Commission calls "audiovisual media services," essentially any moving picture, with or without sound. [3] In an explanatory statement, the Commission states that this is meant to incorporate all "TV-like services, irrespective of the technology used to deliver them (e.g. broadcast, high-speed broadband, third generation mobiles)." [4] Thus, an IP video service would be regulated just like a broadcaster. [5] The same would hold for any video sent to one's cell phone, video iPod or PDA.

These rules would fall under what the Commission is describing as "linear" services. They also have developed regulations for "non-linear" services, i.e., any video that one seeks out (video-on-demand, video clips on a web site). It is exceedingly unclear when a service or service provider is a "linear" or "non-linear" provider, and this concern is been raised by others. [6] But for the moment let's assume that any site posting videos for streaming or download is a "non-linear" provider. That increasingly is the way video is being offered online; the on-demand nature of the Internet offers consumers infinitely more flexibility than does a broadcast tower or coaxial cable. A recent prominent example of such a "non-linear" service would be AOL.com's offering of "classic" TV shows like "Welcome Back Kotter" and "Wonder Woman" for free in exchange for viewing ads. [7]

The Commission argues in a Frequently Asked Questions (FAQ) list that these non-linear regulations will lead to a vibrant online video industry rooted in the EU, citing the fact that any such service would be subject to regulations only in its country of origin, rather than all 25 EU nations. This is a significant issue, as we have seen that EU nations can be inclined to regulate an Internet offering based outside their borders. [8] But it's hard to see how an AOL.com offering could be made in the EU (although presumably Europeans can access the U.S.-based AOL.com just fine).

The proposed revision to the Television Without Frontiers Directive states in the preamble that "non-linear" services will not be subject to many of the regulations spelled out in the revision. In fact, the preamble says the only regulations applicable to "non-linear" services will be the revised Articles 3c to 3h. But these regulations are hardly trivial:

•  Article 3c requires posting the name, geographic location and immediate contact information for the video distributor. That will upset those who enjoy the anonymity of the Internet.

•  Article 3d requires EU member states to ensure that none of this video content "might seriously impair the physical, mental or moral development of minors." That standard presumably could be applied to the vast majority of online content today.

•  Article 3e requires member states to ensure no content will incite "hatred based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation." Again, most satire could be found to violate at least one of those provisions, for this isn't limited to the intent to incite. No video programmer can control the reaction of a viewer.

•  Article 3f requires member states to promote the production and access of European works. This has in the past been applied to terrestrial broadcasters, and in that context has its own sort of perverse logic, but makes no sense on a global medium such as the Internet.

•  Article 3g regulates the advertisements on these online video services, banning tobacco ads, seriously restricting alcohol ads, and banning ads that discriminate on grounds of race, sex, or nationality; are offensive to religious or political beliefs; encourage unsafe or unhealthy behavior; or "encourage behaviour prejudicial to the environment." It's hard to imagine an ad worth watching that doesn't violate one of those tenets; some take on almost all of them. [9]

•  Article 3h provides further regulation of online ads, for example banning the promotion of medical products or treatments available only in the member state where the service is located.

The Commission launched the Television Without Frontiers revision as part of its i2010 initiative. The i2010 initiative itself is a follow-up to the Lisbon Agenda, where European leaders agreed to work together to bring the collective European economy into the 21st Century and compete equally in the digital economy with the United States. After five years it has failed to close any ground with the U.S., as a Commission-sponsored study found. [10] Driving this new Directive, as the Commission clearly states, is a desire for more economic growth, more job creation, and more prominence globally. But the online video providers the Commission hopes will develop can operate from any place on Earth and still reach Europe, or any other online location. It's unclear how regulating an industry that previously was not regulated, and that can relocate much more quickly than, say, a local broadcaster, will help grow Europe 's economy. [11]

Reding and other Commission officials have repeatedly said they are not regulating the Internet, [12] and they repeated that claim yesterday but with a caveat. In its FAQ, the Commission said it is not regulating Internet infrastructure or networks. But they do acknowledge that "given the impact that audiovisual media services have on the economy and society, the Commission proposes that some rules should apply to all audiovisual content services as such, irrespective of the technology that delivers them."

That is regulation of the Internet. It is regulation of content rather than infrastructure, but it is Internet regulation nonetheless. The Commission argues it must do this to create a "level playing field" because consumers will increasingly fail to distinguish Internet "non-linear" or "linear" content from other media. That likely is true. But the solution is to remove the existing media regulations from the providers that are being drowned in a wave of creative destruction. Any effort to apply content regulations to the online world will be futile, and attempting to regulate with that intent only creates false expectations among European cultures. The Commission is right in recognizing dramatic change in the media marketplace but misguided in its proposed response.



* Patrick Ross is a senior fellow and vice president for communications and external affairs at The Progress & Freedom Foundation. The views expressed here are his own.

1. Ross, "Video Satellite Regulation in an Online World," SkyReport, November 16, 2005
2. Ross, "Regulation Without Frontiers: Europe Shows U.S. Policymakers How Not to Embrace Convergence," Progress Snapshot 1.15, The Progress & Freedom Foundation, September 2005
3. The newly proposed Directive is on the European Commission's web site
4. "TV Without Frontiers: Commission proposes modernized rules for digital era TV and TV-like services," European Commission, December 13, 2005
5. U.S. examples of such services would be Verizon's FIOS fiber-optic video service and LightSpeed from AT&T (formerly SBC).
6. Antony Walker, director of the U.K. telecom association Intellect, said "The linear/non-linear split may be a useful conceptual framework for policymakers but it doesn't reflect the nature of the new interactive, on-demand, IP-based services... Working out which rules apply will be a headache for the industry." Emiko Terazono, "Brussels Move to Extend Directive Alarms Technology Sector," Financial Times, December 14, 2005.
7. Matthew Karnitsching, " AOL to Offer Vintage TV Free -- With Ads," The Wall Street Journal, Page B1, November 14, 2005 (one of WSJ's free online stories -
8. The classic example of that would be the struggle between Yahoo! and France, when in 2000 a French court demanded Yahoo! filter out or take down Nazi merchandise others were selling through Yahoo!, on the basis that such sales were illegal in France.
9. I'm thinking in particular of the Virgin Mobile ad campaign on Chrismahanukwanzakah; for those who haven't seen it here's a link
-- http://www.chrismahanukwanzakah.com/.
10. Trend Chart, "Innovation Policy in Europe,"
11. It's certainly reasonable to think that if this new Directive becomes operational, online video providers across Europe would suddenly relocate their corporation headquarters to Switzerland, which is in the center of Europe but is not an EU member.
12. Dugie Standeford, "EU TV Directive Subjects Internet Services to 'Light' Regulation," Communications Daily, December 14, 2005.

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