“a joint burden laid upon us all”*: advocate general on universal service financing

Posted on June 22, 2010 | Filed Under public services

In Belgium, all telephone service providers have to offer special “social” tariff options as part of a universal service obligations (other universal service obligations are placed only on specific providers). The costs for these special tariffs are distributed amongst all operators in relation to their share of “social tariff”-customers. This has sparked national litigation in Belgium, leading the Belgian Constitutional Court to ask the ECJ for a preliminary ruling; concurrently the Commission started an infringement procedure. In both cases, the advocate general today delivered his opinion (the cases - in part - touch similar, but not excactly the same issues and therefore were not joined).

In the case C-389/08 Base and others v. Belgacom the advocate general made clear that the legislator is no regulator: article 13 of the universal service directive 2002/22 provides that it is the task of national regulatory authorities (NRAs) to decide whether or not an undertaking is subject to an unfair burden (due to universal service obligations). The legislature of a Member States must not take that decision for the regulator. And most certainly it must not do so in retrospective, declaring - as was the case in Belgium - in 2007 that the law passed in 2005 had been preceded by an evaluation of the “unfair burden” (not for the simple reason that no one believes that anyway, but because NRAs have to be notified to the Commission in advance). Of course, the cases C-424/07 Commission v. Germany and C-82/07 CMT come to mind (and are cited by the advocate general).

In C-222/08 Commission v. Belgium, the advocate general also points out that there was no individual and concrete assessment of the “unfair burden” and he also joins the Commission’s view that intangible benefits have to part of equation to determine the net cost of universal service obligations.

*) Shakespeare, King Henry IV, Part 2, Act V Scene 2

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Broadband for all? Universal service and “Europe 2020″

Posted on March 3, 2010 | Filed Under public services

Yesterday, the European Commission started a consultation on universal service, focusing - without too much enthusiasm - on the question of whether or not to include broadband in the scope of universal service obligations in telecommunications. And today the Commission presented its proposal for the Europe 2020 Strategy, including the digital agenda as one of its seven “flagship initiatives”; in the press release this is summed up like this:

“A digital agenda for Europe - delivering sustainable economic and social benefits from a Digital Single Market based on ultra fast internet. All Europeans should have access to high speed internet by 2013.”

In the full proposal this is broken down into the following targets:

  • broadband access for all by 2013,
  • access for all to much higher internet speeds (30 Mbps or above) by 2020, and
  • 50% or more of European households subscribing to internet connections above 100 Mbps.

How this will be achieved is not spelled out in great detail, but in rather general and well rehearsed terms (e.g.: stable legal framework, efficient spectrum policy, borderless and safe EU web services and digital content markets, balanced regulatory framework with clear rights regimes, fostering of multi-territorial licences, actions in support of digital literacy and accessibility, etc.). But then it is only a broad strategy, to be endorsed in principle (”overall approach and EU headline targets”) by the European Council on 25/26 March 2010, and then needs to be broken down into more detailed targets and actions.

As for the universal service consultation, I found it interesting that the Commission obviously saw the need to hit back at the European Parliament: in the consultation document the Commission (which has not been very keen on addressing universal serive at all, much less on reforming it, see for instance this post) first recounts that it had wanted to keep the issue of universal service outside the scope of the recent “review”, but …

“This notwithstanding, the co-legislator deemed it necessary, in the light of developments, to address one particular aspect of regulatory flexibility by amending the current recital in the Directive dealing with functional internet access. In particular, the new recital seeks to allow Member States to define nationally the minimum data rates of the connection ‘which are sufficient to permit functional internet access […] taking due account of specific circumstances in national markets, for instance the prevailing bandwidth used by the majority of subscribers in that Member State, and technological feasibility, provided that these measures seek to minimize market distortion.’ However, this amendment sets out a new principle only in a recital of the Amending Directive without corresponding changes in the body of the legislative text, which gives rise to questions of interpretation and which might affect legal certainty.” (emphasis added)

And while the Commission may be right in terms of the legal issues involved, the wording does not seem particularly polite or respectful towards the European Parliament. I am quite sure this will not go unnoticed by the relevant MEPs.

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“thy just and lawful aid”*: CFI: French licence fee compatible with Common Market

Posted on March 11, 2009 | Filed Under communication technologies, public services

_paris.jpg Funding public service broadcasting is not an easy thing to do nowadays, as the recent UK discussion around Ofcom’s second PSB review has shown. And while public service broadcasters fiercely opposed any intervention by the European Commission under state aid rules, in the view oft their private competitors the Commission had done too little, too late. A case decided today by the Court of First Instance of the European Communities, T-354/05 TF1, goes back to 1993, when the private French broadcaster TF1 first complained against measures taken by France to support the public service broadcaster (France 2 and France 3). The Commission told TF1 - I paraphrase - that it was a complex issue, all Member States were affected, and a study was commissioned. Nothing more happened (at least in the view of TF1), and so TF1 brought the issue to Court - in a judgment issued on 3 June 1999, T-17/96, the Court of First Instance found the Commission should have done something more substantial: it should have made a decision concerning TF1’s complaint (the judgment was upheld by the European Court of Justice on 12 July 2001, C-302/99 P).

The Commission then dealt with the technically more complex issues raised in the complaint, such as investment aids, but it did not touch the core question of the French licence fee regime. In a first decision of 10 December 2003 the Commission found that the specific measures were compatible with the Common Market. TF1 went to court with an ill-adviced claim, and was flatly rejected on 19 May 2008, T-144/04 (the Court’s order speaks of the “the absence of any explanation in the application”, that the applicant’s head of claim “lacks the basic clarity and precision”, or that some reasoning is “particularly vague”).

But the main question, whether the French “redevance”, a broadcasting licence fee collected by tax authorities and distributed according to a decision of Parliament, constituted state aid and if yes, whether it was compatible with the Common Market, still had not been answered. The Commission finally closed the case in April 2005, after the French authorities had agreed to make a few changes so as to avoid “overcompensation” (the public service boradcaster may not get more public funding than it needs to deliver the publice service it is charged with) and establish transparency as far as activities outside the public service remit are concerned (here is the Decision, only available in French).

TF1 again went to Court - and lost again. However, today’s judgment (at the moment available only in French [as well as Spanish, Estonian, Greek and Romanian]) is not as devastating as the order of 19 May 2008 quoted above. The Court agrees with the Commission (and TF1) that the licence fee system constitutes state aid. As TF1 had claimed that the Commission did not correctly apply the Altmark-criteria, the Court points out that if all four of those ciriteria (cf Nr 94 of the Altmark Trans judgment) had been met, then there would be no state aid at all. The Commission had come to the conclusion that the French licence fee system did not fulfill the second and forth Altmark-criteria (”the parameters on the basis of which the compensation is calculated have been established beforehand in an objective and transparent manner” resp “where the undertaking which is to discharge public service obligations is not chosen in a public procurement procedure, the level of compensation needed has been determined on the basis of an analysis of the costs which a typical undertaking … would have incurred”). So the Commission had continued to investigate whether this state aid-scheme was compatible with the Common Market. France finally agreed to change the rules so that any “overcompensation” would have to be used only for fulfilling the public service remit in the following year. The Court ruled that in accepting these undertakings the Commission had not overstepped its margin of appreciation.

TF1 can bring an appeal against this judgment, but even if it does not choose to appeal there is a “next round” open already, as TFa has again brought court action against certain measures adopted by France to support the public service broadcaster (T-568/08 and T-573/08).

PS - only somewhat related: yesterday an Austrian initiative of scholars and journalists presented a “charta for public service media” in support of PSB - it can be read (in English) here; the signatories will circulate it amongst experts in Europe and want to start a discussion, highlighting the importance of public service media.

*) Shakespeare, King Henry VI, Part III, Act III, Scene 3

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CFI on Danish TV2: licence fee revenue “state resources”, but no adequate reasons for Commission’s overcompensation-claim

Posted on October 22, 2008 | Filed Under digital content, public services

_antenna_bird.jpgIn its judgment in the joined cases T-309/04 TV2 v. Commission, T-317/04 Denmark v. Commission, T-329/04 Viasat Broadcasting UK v. Commission, and T-336/04 SBS and SBS Danish Television v. Commission, handed down today (see also the press release), the Court of First Instance of the European Communities annulled the Commission’s decision in the Case C 2/2003 (published in the Official Journal on 23 March 2006).

Action had been brought by all sides concerned: by private broadcasters as well as by TV2 and Danmark. The judgment is based primarily on reasons of procedure, as the Court found that the Commission has failed to provide an adequate statement of reasons for its claim of overcompensation; the Commission also had not substantiated the claim that Danish authorities did not regularly check the level of the accumulated reserves of TV2. The Court therefore concluded that the Commission erred in finding a state aid and did not go on to fully examine all pleas brought by all complainants. It did, however, make a few important points:

The Court restates that “Member States enjoy a broad discretion for defining what they regard as services of general economic interest. Accordingly, the definition of such services by a Member State can be queried by the Commission only in the event of manifest error. … The possibility open to Member States to define broadcasting SGEIs broadly, so as to cover the broadcasting of full-spectrum programming, cannot be called into question by the fact that the public service broadcaster also engages in commercial activities, in particular the sale of advertising space. … [T]he power of the Member States to define broadcasting SGEIs [Services of General Economic Interest] in broad and qualitative terms, so as to cover the broadcasting of a wide range of programmes, cannot be disputed; nor can the Member States’ freedom to use advertising revenue to finance such SGEIs.”

The Court concludes for the Danish situation:

TV2’s mandate is perfectly clear and precise: to offer the entire Danish population varied television programming which aims to provide quality, versatility and diversity. … It is also necessary to reject the argument that TV2 should not have been recognised as a public service channel, on the ground that its programming is no different from that of the commercial channels, and that the Commission should have compared TV2’s programming with the programming of those commercial channels. … To accept that argument and thereby to make the definition of the broadcasting SGEI dependent – through a comparative analysis of programming – on the range of programming offered by the commercial broadcasters would have the effect of depriving the Member States of their power to define the public service.

As regards the licence fee, the Court noted that the amount is determined by the Danish authorities, the obligation to pay the licence fee does not arise from a contractual relationship (but simply from the ownership of a television or radio receiver), where necessary the licence fee is collected in accordance with the rules on the collection of personal taxes, and the Danish authorities determine TV2’s share; licence fee resources therefore are available to and under the control of the Danish authorities and constitute “State resources”.

The Court is, however, harshly critical of the Commission as regards the reasons given for the second and fourth “Altmark“-criteria*). The Court notes (inter alia) the “Commission’s complete failure to examine seriously, during the formal investigation procedure, the actual conditions which, during the period under investigation, governed the setting of the amount of licence fee income payable to TV2″ and also states that the Commission “failed to examine the file seriously” and that there was a “lack of a serious and detailed examination”.

So the Commission’s decision had to be annulled by the Court - and the story continues (very likely with an appeal to the ECJ).

*) No 90 and 93 of the Altmark Trans Judgment: “Second, the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner, to avoid it conferring an economic advantage which may favour the recipient undertaking over competing undertakings.”
“Fourth, where the undertaking which is to discharge public service obligations, in a specific case, is not chosen pursuant to a public procurement procedure which would allow for the selection of the tenderer capable of providing those services at the least cost to the community, the level of compensation needed must be determined on the basis of an analysis of the costs which a typical undertaking, well run and adequately provided with means of transport so as to be able to meet the necessary public service requirements, would have incurred in discharging those obligations, taking into account the relevant receipts and a reasonable profit for discharging the obligations.”

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“mingled with regards that stand aloof from the entire point”*: EP-Resolutions on the media

Posted on September 27, 2008 | Filed Under digital content, public services

wordle - EP Resolution on Community Media wordle.net - EP-Resolution on Media Pluralism

After the hard core legislative acts of the “telecoms package” had been voted on by the European Parliament on 24 September 2008 (see here), the next day Parliament approved two resolutions that contain a lot of big words (as shown in the images here that were created by feeding the resolutions into wordle), but will very likely not have any big consequences “in real life.” The resolution on media pluralism had given rise to fears that the blogosphere would be subject to regulation, but even the reference to blogs now is very opaque: in the “whereas”-part of the resolution it says:

“whereas weblogs represent an important new contribution to freedom of expression and are increasingly used by media professionals as well as by private persons,”

and then the resolution proper picks up the topic again and states that the European Parliament

“Encourages an open discussion on all issues relating to the status of weblogs;”

The main point of the resolution seems to be to bolster the position of public broadcasting, as member states are, for instance, called upon to “support high-quality public broadcasting services which can offer a real alternative to the programmes of commercial channels and can, without necessarily having to compete for ratings or advertising revenue, occupy a more high-profile place on the European scene as pillars of the preservation of media pluralism, democratic dialogue and access to quality content for all citizens”. The resolution also states that “in order to enable the public audiovisual media to fulfil their task in the era of digital technology, it is necessary for them to develop new information services and media over and above traditional programmes and to be able to interact with every digital network and platform” - which is something the German (and Austrian) public service broadcasters will be delighted to here, as they are currently trying to convince the Commission of the need for a quite extensive online presence.

Apart from that - on a more abstract level ;-) - the European Parliament in its resolution is

  • “having regard to” a variety of 15 directives, resolutions, recommendations etc,
  • considering (”whereas”) another panopticum of 63 issues,
  • and then urges (twice), believes (twice, once even firmly), notes, highlights (twice), points out, reminds (twice), calls on (five times), calls for (eight times), takes the view, welcomes (three times), considers (three times), underlines, recognises, encourages (four times), stresses (twice), supports, recommends (five times), maintains, asks, reiterates, agrees, draws attention, is concerned, and finally instructs

As I said, a lot of big words, and if you care to check it out, here is the link. On the same day, the European Parliament also adopted a Resolution on Community Media in Europe. It is somewhat shorter (although having more regards [21], but fewer “whereas” [13], and just 23 paragraphs of calling on, stressing, pointing out, recommending etc.), but to me it seems to provide a little more substance, as it focuses on a more specific issue and drawing at least some attention to community media as an “important means of empowering citizens and encouraging them to become actively involved in civic society”.

*) Shakespeare, King Lear, Act I Scene 1

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From public service broadcasting to public service media

Posted on July 22, 2008 | Filed Under digital content, public services

Only some time after Sarkozy confirmed his plans on the future of public broadcasters in France by announcing the end of advertising in public service television (he wants to replace it with a tax, which should be levied on telecoms firms and commercial broadcasters), I followed an invitation of the French Presidency to Strasbourg joining a conference on “public service broadcasting in the digital age” last week. Even if the speeches and discussions didn’t lead to revolutionary ideas concerning the public service broadcasters’ role in a more and more digital future, the two days program gave a good summary of the current positions various keyplayers have on the topic, which I’d like to share with you.

The discussion revolved around two major issues, the first being the role of public service media today and in the future. The traditional function of public service boradcasters mirrored in their public service remit was mentioned by almost all speakers, who overwhelmingly agreed on the main purposes of such services being:
- to form public opinion
- to foster media pluralism
- to provide high quality programs
- to correspond to democratic, social and cultural needs of society

Even if these public purposes are still the same today, the change in the media landscape on the other hand has been a dramatic one. According to one of the contributions in the plenary discussion already 30% of teenagers in Denmark turn on their TV only once a week and instead make extensive use of new media services, consuming audiovisual media through other platforms than TV, be it the internet or the mobile network.
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“an assessment, tinged with subjectivity”: CFI on state aid and public service broadcasting

Posted on June 26, 2008 | Filed Under competition/mergers/state aid, public services

There is a lot going on in Public Service Broadcasting these days: in France, the “Copé Commission” delivered its final report (which prompted a speech by President Sarkozy, going even beyond the proposals in the report, with a view to abolish advertising on PSB from 8 o’clock p.m. to 6 o’clock a.m. by January next year and completely by 2012), in the UK, the second PSB review is in progress (leading, amongst other things, to official blogging by Ofcom, and to a series of Pro-BBC-lectures), and Germany is finally trying to implement the commitments give in the state aid case that was decided in April 2007. This is not to mention a range of developments in smaller EU member states (as for instance the current state aid case concerning the financing of the Austrian public service broadcaster), and of course the European Commission’s own consultation on reforming the state aid rules applied to Public Service Broadcasting.

And today (some 15 years after the first complaint in this matter had been filed with the Commission) the Court of First Instance of the European Communities delivered a long awaited judgment in the case T-442/03 SIC v. Commission that addresses a few key issues on state aid to public service broadcasters. What are the main points?

  • There is no requirement to the effect that member states must follow a competitive tendering procedure for the award of the SGEI (service of general economic interest, such as public service broadcasting)
  • “Community law in no way precludes a Member State from defining broadcasting SGEIs widely to include the broadcasting of full‑spectrum programming. That possibility cannot be called into question by the fact that the public service broadcaster carries on, in addition, commercial activities, in particular the sale of advertising space. … It follows from all of the foregoing considerations that the power of the Member States to define broadcasting SGEIs in such a way as to include broadcasting a wide range of programming, whilst authorising the operator in charge of that SGEI to carry on commercial activities, such as the sale of advertising space, cannot be disputed.”
  • As regards the monitoring of the public service broadcaster’s compliance with its public service remit, there are two aspects: “In the first part, it is necessary to examine the monitoring of RTP’s compliance with the qualitative criteria … . In the second part, it is necessary to examine the monitoring of the actual provision by RTP of the public services expected of it and the correspondence between those services and the costs declared.”
  • The first part of the analysis “relates to an assessment, tinged with subjectivity, of the qualitative level of public service television” - and this is up to the member state.
  • The second part, concerning “the objective question of the administrative and accounting fairness” of the PSB’s  accounts in relation to the cost items, is a task for the Commission - and the Commission did not fulfill this task properly as it relied on accounts without external verification by auditors. 

So the CFI annulled the greater part of the Commission’s decision. But even if SIC, the private Portuguese broadcaster that had intiated the proceedings, achieved annulment of much of the Commission’s decision, the judgment does not seem a major setback for PSB. Rather on the contrary: the CFI explicitedly referred to the Amsterdam Protocol on the system of public service broadcasting and the Resolution of the Council and the Representatives of the Member States concerning public service broadcasting and stressed the role of member states in defining the public service remit and in controlling the qualitative criteria. Only when it comes to accounting, the creativity of member states is severely restricted.

There is, however, one message in the judgment that sounds like a warning to public service broadcasters: “there is”, it states,  

“no reason for a widely defined broadcasting SGEI which sacrifices compliance with those qualitative requirements in order to adopt the conduct of a commercial operator, by broadcasting programming specifically designed to generate optimal audiences for advertisers, to continue to be financed by the State on the same conditions as if those qualitative requirements were complied with.”

PS: in another state aid/broacasting case (C-333/07 Régie Networks, not yet available in English), brought to the ECJ via a preliminary reference, the advocate general today delivered her opinion - also pleading for annulment (basically because the Commission had not examined all relevant issues).

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“Don’t expect a revolution here” - Revising the Broadcasting Communication

Posted on June 11, 2008 | Filed Under competition/mergers/state aid, digital content, public services

Already announced in its 2005 state aid action plan the European Commission is reviewing the 2001 Communication on the application of State aid rules to public service broadcasting. In January 2008 it opened a corresponding public consultation of which the results now have been published. According to Commissioner Kroes:

“… more than 120 entities made contributions. They ranged from independent producers through to the biggest broadcasters and publishers, and 16 Member States.”

Whereas public broadcasters naturally opted against a review, private broadcasters and newspaper publishers as well as consumer associations seem to be in favour of a more or less comprehensive update. All kinds of media companies join the private broadcasters’ complaint about the public broadcasters’ unrestrained use of public money on platforms like the Internet which allegedly cleans out private initiatives on the internet and distortes the competition (a summary of the contributions is available here).
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Public Service Broadcasters - Contracting Authorities under the Public procurement rules?

Posted on January 12, 2008 | Filed Under public services

The ECJ confirmed – unsurprisingly – that public service broadcasters are to be seen as contracting authorities (‘bodies governed by the public law’) which fall under the public procurement rules. The German public broadcasters tried to argue otherwise, claiming that as public broadcasting service is financed for the most part by the fee paid by the television viewers they do not fulfill the requirement “public funding’ or ‘public control’ as set out in the Public Service Contracts Directive on the definition of a ‘body governed by public law’. The ECJ couldn’t follow this rather formalistic view. The fact that as a matter of law individuals are obliged to pay the fee is sufficient reason to hold that the condition of ‘financing … by the State’ of the activity of the public broadcasting bodies in the sense of the public procurment rules is satisified – so the ECJ.

This decision – at least implictly – also sheds light on the question whether licence fee financing does qualify as a State resource within the meaning of the State aid rules. This has been contested (here again in particular by Germany) based on similar reasons as brought forward in the above described case. Referring in particular to the ECJ case PreussenElektra it’s argued that the State aid character cannot be simply based on the compulsory character of the fee, nor the fact that the collection of the fee is governed by public law. The ECJ obviously has a different view on that. Soon it will have to decide on it also explicitly. See the Case C-305/07 .

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“Let us consult upon to-morrow’s business”*: public service broadcasting and state aid

Posted on January 11, 2008 | Filed Under public services

Public Service Broadcasting and state aid has been a contentious issue over the past few years. In this document, the Commission’s DG Comp lists (and links to) 20 decisions taken by the Commission between 1998 and 2007, providing a useful overview of the state of play - especially for pending inquiries. Some guidelines are contained in a 2001  “Communication from the Commission on the application of State aid rules to public service broadcasting”.

Now this communication will be reviewed: On 10 January 2008, the Commission published a consultation document (plus explanatory memorandum, and a press release), giving two months for responses and announcing a revised communication for the second half of 2008.

* Shakespeare, King Ricard III, Act V, Scene 3

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