“From one that’s of a neutral heart”: net neutrality in the new EU-framework

Posted on September 27, 2007 | Filed Under communication technologies

As Susan Crawford, referring to an interview of Nigel Shadbolt on ZDNet UK, recently pointed out, “net neutrality isn’t just American”. True indeed: even the European Commission has taken up the issue in its proposals for a reform of the electronic communications framework. At least in the documents that now are in “interservice consultation” (see earlier post), net neutrality has found its way into the explanatory memorandum, and - somewhat diluted - even into the text of the draft proposals.

Article 8 of the Framework Directive lays down the “policy objectives and regulatory principles”. The reform proposal calls for an amendment to this article, so that its paragraph 4 will require the national regulatory authorities (NRAs)

“to promote the interests of the citizens of the European Union by inter alia: …
g) “being guided by the principle that end-users should be able to access and distribute any lawful content and run any lawful applications and/or services of their choice.“

In the draft proposal for amending the Universal Service Directive, a new Article 20 (3b) requires that consumers will have to get clear advance information in case a provider wants to limit access to certain content. Here is the proposed wording:

“Member States shall ensure that where contracts are concluded between users and undertakings providing electronic communications services and/or networks, subscribers are clearly informed in advance of the conclusion of a contract and regularly thereafter of any limitations imposed by the provider on their ability to access or distribute lawful content or run any lawful applications and services of their choice.”

Recital 13 gives the reasoning for this new provision:

“A competitive market should ensure that end-users are able to access and distribute any lawful content and to run any lawful applications and/or services of their choice, as recalled in Article 8 of the Framework Directive. Given the increasing importance of electronic communications for consumers and businesses, users should in any case be fully informed about any restrictions and/or limitations imposed on the use of electronic communications services by the service and/or network provider. Where there is a lack of effective competition, national regulatory authorities should use the remedies available to them in the Access Directive to ensure that users’ access to particular types of content or applications is not unreasonably restricted.”

We have to keep in mind that at this stage the text is still a draft and has not yet been accepted by the Commission. According to the Financial Times (thanks to Information Overlord for pointing this out), adoption of the reform proposals in the Commission may still run into some controversy, especially on the functional separation and “superagency” issue. So I would not take it for granted that the promised date 13 November 2007 will hold (but the timetable has not been met before). Meanwhile, anyone interested in a fresh view on the net neutrality issue, take a look at Daithí Mac Síthigh’s presentation!

While for supporters of “net neutrality” the draft proposals now on the table in the European Commission certainly will not go far enough, they at least could take comfort that the drafts obviously

“came from one that’s of a neutral heart,
And not from one opposed.”

(Shakespeare, King Lear, Act III, Scene 7)

“But, gentle friend, lie further off”: the remedy of functional separation

Posted on September 21, 2007 | Filed Under communication technologies

Separating infrastructure from service provision to ensure fair competition in a market where some operators are vertically integrated is not a new idea. You could either opt for structural separation (”ownership unbundling”), where the network is placed in a separate legal entity and under different ownership, or for functional separation, establishing operationally separated entities, having separate accounts but remaining under the same ownership.

In the EU, functional separation has been tested, and while - in the words of the European Commission - it has “made a positive contribution to the emergence of competitive … markets“, experience has shown that “three types of problems arise“:

1. the network operator may treat its affiliated companies better than competing third parties
2. non-discriminatory access to information cannot be guaranteed as there is no effective means of preventing network operators releasing market sensitive information to the services branch of the integrated company
3. investment incentives within an integrated company are distorted. Vertically integrated network operators have no incentive for developing the network in the overall interests of the market; on the contrary, they have an inherent interest to limit new investment when this will benefit its competitors and bring new competition onto the incumbent’s “home market”.

This experience - presented in the explanatory memorandum to a newly proposed directive - lead the Commission to the conclusion that functional separation is not enough: ownership unbundling now is on the agenda - in the energy sector.

Meanwhile, in electronic communications, functional separation will have to be sufficient as a remedy of last resort: the proposals for the new framework will most likely include the possibility for NRAs to “impose an obligation for functional separation on vertically integrated undertakings requiring them to place activities related to the wholesale provision of access products in an independently operating business unit.” However, to impose this specific obligation the NRA will need the express approval of the Commission.

The fragility of any functional separation with separate “entities” attracted to each other is illustrated in Shakespeares A Midsummer Night’s Dream, when Hermia, lying down to rest for the night, asks Lysander to “lie further off”:

“Such separation as may well be said
Becomes a virtuous bachelor and a maid”

In Shakespeare’s play it turns out that only magic can keep up this (functional) separation.

Read more

Something substantially simpler? A “Superagency” for peer-review

Posted on September 20, 2007 | Filed Under communication technologies

Most likely, the “end of October 2007″ (formerly known as the “end of 2006″ and the “first half of 2007″ - for details see this post) will turn out to be 13 November 2007: the date when Commissioner Reding will finally unveil the Commission’s proposals for changes to the EU framework for electronic communications networks and services. Currently, the proposals are still undergoing interservice consultation in the Commission, but basically the texts are no secret to anyone in the industry.

One of the cornerstones of the “2007 Reform”, as it is now called, is the creation of a new Community Authority, the “European Electronic Communications Market Authority” (also known as the “superagency”, although - unlike the “Agency for the Cooperation of Energy Regulators” that was presented yesterday as part of the Commission’s “3rd energy package” - it is formally not an agency, but an “Authority” - but terminology might very well be streamlined in the legislative process).

As I have already pointed out at a time when I did not yet have the full texts, the main focus of the Authority will not be in formal decision making, but rather in advising, assisting, and supporting the Commission. Incidentally, the creation of a new authority with 110 full-time-equivalent staff is sold by the Commission in its explanatory memorandum as “something substantially simpler and more efficient.”

The tasks of the Authority as laid down in Article 2 of the proposed regulation will be to

• a) issue opinions on request of the Commission or on its own initiative;
• b) assist the Commission by preparing measures to be taken for the implementation of the provisions described in this Regulation. The Authority shall also provide the Commission with the necessary technical and administrative support to carry out its tasks;
• c) assist the Community and its Member States in their relations with third countries and represent European regulatory authorities in discussions and exchanges with third countries;
• d) provide guidelines and advice for market players and national regulatory authorities on regulatory issues;
• e) exchange, disseminate, collect information and undertake studies in areas relevant to its activities and;
• f) carry out other tasks within its remit.

The decision-making Executive Board (usually meeting every other month at an estimated cost of 30.000 Euros per meeting) is comprised of the heads of NRAs. As one of its main tasks is commenting on NRA-decisions brought before it by the Commission, it will be interesting to see whether this “jury of peers” will really act independently or whether there will be some trade offs.

And then there is one issue which is a real novelty: when an NRA does not complete a market analysis within the timeframe that will be set in Article 16 of the Framework Directive (in general one year for new markets, and every two years for existing markets), the Commission - according to the proposed Article 16 (7) of the Framework Directive - may request the Authority to complete a market analysis in lieu of the NRA and give an opinion (including draft measures, remedies and all). Then the Commission will issue a decision directing the NRA what to do. So in this case the Authority, otherwise merely assisting, advising, and supporting, may well be something like the SWAT-team of the Commission.

(And to round it all off with Shakespeare again: “More authority, dear boy, name more; and, sweet my child, let them be men of good repute and carriage.” [Love’s Labour Lost] Today, of course we equally hope for women of good repute and carriage.)

New eJournal launched!

Posted on September 19, 2007 | Filed Under national regulatory authorities, events / publications

To follow Austrian constitutional developements has been almost impossible for non-German speaking professionals, since the number of publication in other languages has been negligible. This lack however has been filled to a certain extent by the recently launched Vienna Online Journal on International Constitutional Law. The quarterly published eJournal does not only feature articles on a variety of topics in international constitutional law but also wants to open a window to recent constitutional developments in Austria for an international audience. It does so by summarizing and commenting the latest judgements of the Austrian Constitutional Court which until now were only available in German.

The first issue includes a summary of and comment on the Court’s decision on the constitutionality of a provision in the Austrian Communications Authority Act which regulates the Communications Authority’s publication of the monthly monitoring results on the compliance of broadcasters with the advertising regulations laid down in the Austrian Broadcasting Corporation Act, the Private Television Act and the Private Radio Broadcasting Act. The Constitutional Court declared it unconstitutional to name the broadcasters in the publication of monitoring results as this could lead to a conviction in advance - against which the broadcasters were granted no right to appeal - and thereby would contradict the presumption of innocence and the principle of objectivity.

TV 2.0

Posted on September 14, 2007 | Filed Under digital content, public services

In the US television via the Internet (IPTV) has already become a reality. Services such as iTunes - selling more than a million TV downloads a week only one year after being introduced - have shook up the entertainment industry and more and more online platforms feature popular TV shows available for download.

But also in Europe television via internet is rapidly developing. European broadband operators already offer so called triple play packages which include voice over IP and IPTV in their internet bundle. But besides this kind of closed content distribution by telecom operators IPTV also takes the interactive form of an open space for video content e.g. on platforms like YouTube (NZZ, 14.9.07). Public service broadcasters are engaging in online activities. While ZDF has only recently presented its new on-demand platform the SF and the BBC have been offering TV programmes online for quite a while. The BBC even lets the users download and save the programs for free under the so called Creative Archive Licence which means if the program is only used for private purposes and the BBC is named as source of the content.

Private TV companies criticise the expansion of the public service broadcasters’ activities into the digital realm (e.g. former Premiere-CEO Georg Kofler in an interview with the german magazine FOCUS). The German constitutional court however has argued in this weeks decision on the German radio and television license fee that all the technological developments of the past years have not changed the need for specific legal rules to regulate broadcasting. Representatives of the german public service broadcasters already start to interpreted this argument as a concession to engage in new media activities (for more on that see Hans Peter’s german blog e-comm).

However the German ‘Bundesverfassungsgericht’ is not the only one who is calling the tune here. Considering that the European Commission does not oppose a parallel distribution of broadcasts via the internet, but denies the possibility to extend the traditional mandate par for par to the new media (see the press release on the closed investigation regarding the financing regime for German public service broadcasters), the final decision in this matter might not have been taken yet.

In the face of the entrenched rights of the incumbents

Posted on September 12, 2007 | Filed Under communication technologies, fundamental rights

Italy’s relevant national legal framework for broadcasting is, as we learn from Advocate General Poiares Maduro’s opinion in the Case C-380/05, Centro Europa 7, “a complex amalgam of laws and decree‑laws”.

In 1997 the Maccanico Law introduced new restrictions on concentration in the market for national broadcast television, with a view to ensuring competition and respect for the principle of pluralism. Under the Maccanico Law, no one was to be allowed to operate more than 20% of national broadcast channels as from 30 April 1998. However, incumbent operators exceeding the 20% threshold were allowed to continue their broadcasting “on a temporary basis”, but channels which breached the threshold were eventually to cease terrestrial broadcasting, following the adoption of a national plan for the allocation of frequencies.

In a public tender procedure in 1999, Centro Europa 7 Srl obtained national television broadcasting rights on terrestrial frequencies. Regarding the specific frequencies, the Ministerial Decree granting the broadcasting rights referred to the national allocation plan which had yet to be implemented. According to the Decree, the AGCom and the Ministry of Communications were to implement the national allocation plan within 24 months from the notification of the Decree.

But, not really surprising considering the Italian political situation and the “complex amalgam” of politics and broadcasting at that time, nothing much happened:

“The national allocation plan failed to materialise. […] The deadline expired, but no plan was ever drawn up.”

Read more

Nothing changed, everything changed: Public Service TV today

Posted on September 12, 2007 | Filed Under public services

11 September 2007 marks an interesting date for anyone interested in Public Service Broadcasting in Europe. One the one hand, the German Constitutional Court decided on the hotly debated issue of the German radio and television license fee (full text / press release - only in German), and on the other hand UK’s Ofcom started its “Second Review of Public Service Television Broadcasting” (full text as pdf / press release).

The German case rests on technicalities of how the license fees are determined in Germany’s delicate balance between state officials (politicians), who think they know how much money the public service broadcasters deserve, and the KEF, a commission established to calculate how much money these broadcasters really need. Add to this an intricate set of laws and treaties between the “Länder”, and you can imagine that any decision by the Constitutional Court touching on these issues will be rather complex reading - which of course does not stop anyone from summarizing the decision with words as simple as: “more money for public service broadcasters”.

I will not go into details of the German case, but reading Ofcom’s consultation paper that was published the same day, one aspect struck me as significant: While Ofcom’s focus is on a media landscape that “has evolved rapidly” even since 2005 and Ofcom’s CEO Ed Richards states that “the way PSB is delivered and consumed is changing radically”, the German Constitutional Court stresses continuity: in the views of Germany’s highest judges, all the technological developments of the past years have not changed the need for specific legal rules to regulate broadcasting.

By the way: do TV license fees constitute state aid? The civil court of Genoa has asked for a preliminary ruling of the European Court of Justice on the following question (Case C-305/07):

“Assessed at both national and local level, does the fiscal obligation imposed, for the purpose of funding the public television service, on all owners of appliances capable of receiving radio and television signals constitute State aid within the meaning of Article 87 EC?”

Here comes the “superagency” - maybe

Posted on September 7, 2007 | Filed Under communication technologies

While officially the Commission remains silent on the exact content of its proposals for a new regulatory framework, the first drafts have begun circulating in the industry (but not yet on the Web - so sorry, no link). These documents, drawn up by DG INFO, now have to undergo the scrutiny of other Commission services, and possibly - though informally - also of key players in the member states. It is not yet clear when the Commission will formally adopt the proposals, but now that the first full drafts are out in the “semi-open”, it should not be more than two months before the proposed new framework will officially be presented.

The proposals for the new framework will include a regulation establishing a European Electronic Communications Market Authority, as Commissioner Reding has indicated before. From what is publicly known (see a story on EurActiv) , the new agency would basically have an advisory role, while the real powers - especially the right to veto national measures, which is to be extended to remedies - would rest with the Commission. The new agency would provide expertise, and it would also provide a forum for the heads of national regulators, where they could continue to feel important.

It is too early to give an evaluation of the drafts, since there is still the possibility of changes in the design due to the internal consultation in the Commission. But I doubt that the new European Electronic Communications Market Authority will really be the “superagency” the New York Times believes it to be. The agency will basically provide the Commission with staff and expertise, but the superpowers will be those of the Commission.

Update 10 Sep 2007: According to the German Newspaper “Welt”, the new EECMA should have a budget of some 22 million Euro per year (see this article [in German]).

new non-linear avms by german public broadcaster ZDF

Posted on September 4, 2007 | Filed Under digital content

The avmsd - which is still at common position stage - is already prepared for emerging on-demand services, like the newly introduced ZDF-mediathek. It was introduced last friday and currently blurres the lines between classic television broadcasting and online audiovisual media service as it allows you to watch the TV-programs of the german public broadcaster simultaniously on the net or browse through a list of features and shows of the last seven days via a function called “missed a program?”
In terms of the new avmsd an ‘on-demand service’ or ‘non-linear audiovisual media service’ is:

“an audiovisual media service provided by a media service provider for the viewing of programmes at the moment chosen by the user and at his/her individual request on the basis of a catalogue of programmes selected by the media service provider”

For such services the avmsd will include only a basic tier of qualitative rules in order to meet clear public policy objectives as detailed ones would not make sense from a technical point of view (see recital 38 of the avmsd). These are for example rules on protection of minors (Art 3g) as well as on the promotion of European works (Art 3h).