# EUR-Lex - 52012DC0203 - EN

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# 52012DC0203

**REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS First Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the application of Directive 2010/13/EU "Audiovisual Media Service Directive" Audiovisual Media Services and Connected Devices: Past and Future Perspectives /* COM/2012/0203 final */**

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TABLE OF CONTENTS

1........... Introduction — Background to
this Report...................................................................... 3

2........... Application of the Directive............................................................................................. 4

2.1........ Country of origin, free
circulation and freedom of expression............................................ 4

2.2........ Public policy objectives:
protection of minors and incitement to hatred.............................. 4

2.3........ Audiovisual media services for all: accessibility................................................................. 4

2.4........ Freedom of expression: right to
information..................................................................... 4

2.5........ Cultural diversity: promotion of
European and independent works.................................... 5

2.6........ Commercial communications........................................................................................... 5

2.7........ Self-regulatory initiatives................................................................................................. 7

3........... Recent technological
developments and expansion of the audiovisual media services market in Europe  7

4........... Conclusions.................................................................................................................... 7

1.           Introduction
— Background to this Report

Article 33 of the Audiovisual Media
Services Directive, ‘the AVMSD’, invites the Commission to submit regularly a
report on the application of the Directive to the European Parliament, the
Council and the European Economic and Social Committee.
This is the first application report on the AVMSD and covers the period
2009-2010[1].

The first part of the
report looks retrospectively at the implementation of the Directive, including
questions about the effectiveness of qualitative advertising rules in a sector
where the offer and individuals' response to advertising are changing. Where
the assessment identifies room for improvement, this does not weaken the
intervention logic of the AVMSD but calls for more effective means. The report
thus serves as a building block to strengthen the evidence base towards that
end.

The second part
addresses in a prospective way the influence of important technological changes
on the regulatory framework as traditional broadcasting and internet rapidly
converge.

The AVMSD aims to
ensure the free circulation of audiovisual media services as an internal market
instrument reflecting the right to freedom of expression and information
enshrined in Article 11 of the Charter of Fundamental Rights of the European
Union while at the same time ensuring the protection of important public policy
objectives.

The AVMSD defines a set of minimum
requirements to ensure a level playing field and allows audiovisual media
services to circulate freely throughout Europe. In some cases, the AVMSD
harmonises concepts (e.g. advertising spot) whereas in other cases, it does not
affect the competence of Member States to define specific requirements in the
light of national circumstances and traditions (e.g. content harmful for
minors).

Altogether the European regulatory
framework for audiovisual media services has served citizens and businesses
well.

For business, it has
provided the stable legal framework media service providers need to make
business decisions. Since its creation, the regulatory framework has allowed
the market to grow from a small number of service providers to more than 7,500 broadcasters today. It has also enabled the
development and growth of video-on-demand services. An
estimation of on-demand services in the EU by the competent regulatory
authorities would be at least 650 as of January 2012.

In
February 2012[2]
the number of online video-on-demand services[3]
(excluding catch-up TV services, news-only services, adult
programmes, film trailers, home shopping programmes and branded services such as YouTube,
Dailymotion and iTunes) is estimated at 251
in the EU.

From a citizen's perspective, access to
channels and choice of audiovisual services has increased significantly. In
2009, television viewing time increased in almost all Member States, with the
daily average ranging from 145 minutes in Austria to 265 in Hungary.

The last revision of the Directive
(2005-2007) was in response to the convergence of all audiovisual media and
brought on-demand services within the regulatory framework. The challenge is
now to monitor market developments and new business models to ensure that the
regulatory framework continues to provide the right conditions for growth and
the achievement of public policy goals.

In response to the call from the European
Council to develop a roadmap for a true digital single market in Europe by 2015
and as part of the Union’s Europe 2020 strategy for growth and jobs and the
Digital Agenda for Europe as its flagship initiative, the European Commission
will launch a debate on the challenges and opportunities of convergence.

2.           Application
of the Directive

The AVMSD is an internal market instrument
that combines the right to provide audiovisual services with the right to
freedom of expression and information and the protection of important public
interest objectives.

As regards the transposition of the AVMSD,
by the end of 2011 notifications had been received from a total of 23 Member
States, twenty of which amounted to full transpositions. Three Member States
still need to make some changes to their legislation in order to comply with
the Directive. Measures communicated by two Member States are still being examined.
At the end of 2011, seven infringement proceedings for non-communication of
transposition measures were still pending.

In 2011 the Commission wrote on various
issues to 24 Member States seeking information about their implementation of
the AVMS Directive. This exercise was followed up by
meetings with the Member States concerned.

2.1.        Country
of origin, free circulation and freedom of expression
(Articles 2, 3 and 4)

Internal market rules in conjunction with
the right to freedom of expression and information find practical application
in the country of origin principle of Article 2 of the AVMSD. Services that
comply with the law of the Member State in which their providers are
established may circulate freely within Europe without a second control by the
receiving Member State.

However, this freedom of circulation of
services is not limitless. The Directive provides for safeguard clauses for the
receiving country to protect societal interests of paramount importance, such
as the protection of minors and bans on incitement to hatred. In practice,
Member States may take safeguard measures where a television broadcast
originating in another Member State manifestly, seriously and gravely infringes
the Directive’s rules on protection of minors or incitement to hatred. A
similar provision exists with respect to on-demand services.

Media freedom and
pluralism are essential features of democratic societies and explicitly
recognised by the Charter of Fundamental Rights of the European Union as an
element of the right to freedom of expression and information. Notably when
using the possibility of Article 4(1) AVMSD to apply stricter rules to the
providers under their jurisdiction, Member States have to comply with these
fundamental principles. These considerations also formed the basis of the
discussions between the Commission and the Hungarian authorities on the new
media legislation as regards the obligation of balanced coverage and the rules
on offensive content. Some modifications were also agreed between the
Commission and the Hungarian authorities on other provisions which could
constitute an infringement of the AVMSD and/or the rules on free circulation of
services and establishment.[4]

2.2.        Public
policy objectives: protection of minors and incitement to hatred
(Articles 6, 12 and 27)

Prohibition of incitement to hatred based
on race, sex, religion or nationality is a key public policy objective pursued
by the AVMSD. During the reference period, this provision was applied in
relation to the repeated broadcasting by the satellite channel Al Aqsa under
French jurisdiction of material inciting to anti-Semitic hatred.

The Commission intervened and the French
regulator ordered the French satellite capacity provider Eutelsat to stop the
retransmission of Al Aqsa TV, who ceased transmitting such programmes in
Europe.

2.3.        Audiovisual media services for all: accessibility (Article 7)

Accessibility
of audiovisual media services for all EU citizens is a further key objective that the AVMSD pursues by requiring access for hearing and visually impaired people to improve
over time. All Member States
have introduced rules to that effect. The implementation of these rules,
however, reflects the diversity of market conditions. While some Member States
have very detailed statutory or self-regulatory rules, others have only very
general provisions or limit the accessibility obligation to the services of
public service broadcasters.

2.4.        Freedom
of expression: right to information (Articles 14 and 15)

In order to ensure the public's right to
information on events of major importance, Member States may draw up a list of
events that they deem to be of major importance for their society. The list of
events and the measures must be approved by the Commission.

FIFA and UEFA introduced a complaint before
the General Court against the decisions taken by the Commission with respect to
the Belgian and UK lists of major events. This concerned the inclusion of the
entire final tournament of the FIFA World Cup and the UEFA European Championship
in these lists.

The General Court has recognised the
possibility of restricting fundamental freedoms for overriding reasons of
public interest, which in this case is the public's right to information as an
element of freedom of expression and information[5].

The General Court closely scrutinised the
elements put before it and recognised the validity of the Commission's decision
on the Belgian and UK lists of events of major importance regarding the
inclusion of the entire final tournament of the FIFA World Cup and UEFA
European Championship.

2.5.        Cultural
diversity: promotion of European and independent works
(Articles 13, 16 and 17)

In order to promote cultural diversity,
broadcasters must reserve a majority of their transmission time for European
works. They must also reserve at least 10 % of their broadcasting time or
programming budget for European works created by independent producers. A
similar obligation exists regarding video-on-demand services. The Commission
reports periodically on the implementation of these obligations.

The last report[6] shows that throughout the EU
the average broadcasting time for European works increased from 62.6 % in
2007 to 63.2 % in 2008. Between 2005 and 2008 it remained stable at a
satisfactory level. The average share of independent works broadcast by all
European channels dropped slightly in 2008 (34.9 %) compared to 2007 (35.3 %).
The overall trend in the medium term (2005-2008) also shows a slight downward
trend for independent works. Nevertheless, the results achieved testify to
satisfactory implementation of Article 17.

Some Member States have included stricter
or additional rules in their national legislation by requiring a higher
proportion of European works, independent works or productions in an official
language of the country[7].
Spanish legislation, for instance, requires broadcasters to earmark a
percentage of their operating revenues for the pre-funding of European
cinematographic films and films made for television; 60 % of that funding
is reserved for the production of works in one of Spain's official languages.
This obligation was challenged before the European Court of Justice[8]. The Court confirmed that
Member States may adopt measures to defend and promote one or several official
languages as part of their cultural policy.

2.6.        Commercial
communications (Articles 10, 11 and 19 to 25)

The
proportion of advertising and teleshopping spots on television may not exceed
12 minutes per hour. The application of this rule gave rise to discussions on
the concept of advertising spots. Monitoring of advertising practices in Spain
highlighted the use of special commercial formats, clearly promotional, called ‘anuncios publicitarios de patrocinio’, ‘microespacios’,
'merchandising spots’, ‘telepromotion spots’ and ‘morphing spots’ which,
according to the Spanish authorities, did not amount to advertising spots and
hence did not fall under the 12 minute rule.

In line with the Commission's position, the
Court found that an advertising spot is any type of advertising broadcast between
programmes or during breaks, unless it is covered by another form of
advertising expressly governed by the AVMSD or unless it requires, because of
the way it is presented, a duration greater than that of advertising spots, on
condition that an application of the restrictions prescribed for advertising
spots would, without valid justification, amount to disadvantaging the form of
advertising concerned[9]
. In other words, the Court adopted a wide and uniform interpretation of the
notion of ‘advertising spot’ in line with the purpose of Article 23 AVMSD,
which is to protect the viewer from an excessive amount of advertising.

The
Commission monitored advertising practices in eight Member States during the
reference period. In a number of Member States the 12-minute limitation of
advertising spots is regularly breached. On the basis of these findings,
administrative letters were sent to the Member States concerned and discussions
are still ongoing. The Commission intends to continue monitoring Member States'
compliance with the 12-minute rule and, if necessary, initiate infringement
procedures.[10]

The monitoring
of advertising practices also revealed a number of issues in the area of
commercial communications concerning sponsorship, self-promotion and product placement.
This shows a need to clarify the rules governing the various forms of
commercial communications.

For the first
time, the implementation of the qualitative provisions on advertising
was monitored separately during the reference period. The relevant provisions
concern alcohol advertising, gender discrimination and advertising targeting
minors. Content analysis was considered to be the most appropriate methodology[11].

In the monitored Member States alcohol
advertising represents between 0.8 % and 3 % of overall advertising
activity on audiovisual media services based on the total number of spots
broadcast over the monitored period. As regards the application of the relevant
provision of the AVMSD, very few cases of clear infringements have been found.
However, a significant proportion, more than 50 %, of the advertising
spots contained elements which might be linked to some of the characteristics
banned by the AVMSD, although in view of the detailed requirements of the AVMSD
they fell short of constituting a clear cut infringement.

In implementing the AVMSD requirements on
alcohol advertising, 22 Member States have put in place somewhat stricter rules
for alcohol advertising[12]
involving channels, advertised products or time slots.

The AVMSD also regulates advertising
targeting children. Audiovisual commercial communications must not cause
physical or moral harm to minors. This means that they must not: directly
exhort minors to buy or hire a product or service by exploiting their
inexperience or credulity; directly encourage minors to persuade their parents
or others to purchase the goods or services being advertised; exploit the
special trust minors place in parents, teachers or other persons; or
unreasonably show minors in dangerous situations.

Content analysis of the 100 most frequently
broadcast advertising spots showed that the Directive’s provisions on the
protection of minors in advertising were seldom contravened. As with alcohol
advertising, because of the detailed wording of the relevant provisions, there
are few infringements of the AVMSD. Nevertheless, it does appear that
advertising techniques geared towards minors are frequently used in television
advertising.

Five Member States prohibit advertising in
children’s programmes. Four Member States impose a partial ban or other
restrictions on advertising in children’s programmes, either during specific
time slots or for specific products, and seven Member States prohibit the
showing of sponsorship logos in children’s programmes[13].

In view of the
above, it seems appropriate to update in 2013 the Commission’s interpretative
communication on certain aspects of the provisions on televised advertising in
the ‘Television Without Frontiers’ Directive[14].
The experience gained around the EU Platform on Nutrition and the Alcohol
Health Forum as well as the work carried out on behavioural advertising will be
taken into account in this update. Further investigations are required to
assess the impact of commercial communications, especially for alcoholic
beverages, on minors as regards exposure and consumption behaviour, and the
effectiveness of the Directive's restrictions in achieving requisite
protection, while taking account of the benefit/cost ratio of monitoring
activities. The Commission will initiate necessary research in 2013.

Another issue addressed by the AVMSD in the
field of commercial communications is discrimination based on sex, racial or
ethnic origin, nationality, religion or belief, disability, age or sexual
orientation. Such discrimination is prohibited. Another aspect of
discrimination is the systematic association of a certain category of the
population with specific roles or attitudes. An analysis of sex discrimination
and gender stereotypes in the 100 most frequently broadcast advertising spots
in eight Member States was made. Stereotyped representation of gender roles was
found in 21 % to 36 % of the spots analysed. However, in some Member
States a number of positions, professions or products are more systematically
associated with a specific gender than in other Member States. None of the
countries surveyed is immune to such stereotyped representations.

Member States and stakeholders raised the
question whether cross-border broadcasts of gambling advertising fall within
the areas coordinated by the AVMSD. Article 1(1)(h) is intended to cover all
forms of audiovisual commercial communication defined as 'images with or
without which are designed to promote, directly or indirectly, the goods,
services or image of a natural or legal entity pursuing an economic activity'.
However, the AVMSD does not apply to gambling services as such.

2.7.        Self-regulatory
initiatives (Article 4(7))

Another important feature of the AVMSD is
the reference to alternative means of regulation by way of self-/co-regulatory initiatives,
particularly in the field of advertising. These regimes must be broadly
accepted by the main stakeholders in the Member States concerned and provide
for effective enforcement. In all but two Member States self- or co-regulatory
schemes exist, or encouragement provisions have been directly included in the
media legislation[15].

For the advertising and marketing of food to
children, self-regulatory practices have also been promoted at EU level through
the EU Platform for Action on Diet, Physical Activity and Health. The Platform has obtained a total of more than 300 stakeholder
commitments.[16]
Responsible commercial communication for alcoholic beverages also accounts for
25% of more than 200 commitments undertaken by members of the European Alcohol
and Health Forum. Self-regulation of marketing and advertising of alcoholic
beverages has thus substantially improved in terms of media services and Member
States covered. Further work will have to establish the contribution that these
initiatives make to attaining the level of protection required and whether
common definitions need to be introduced to reinforce their effectiveness. An evaluation of the Platform for Action on Diet, Physical Activity
and Health[17]
concluded that stakeholders’ initiatives in the field of marketing and
advertising showed good progress, but that their impact could be further
strengthened. In the context of these platforms, the Commission will support
the development of a definition of stricter age and audience thresholds for
advertising and marketing and more consistent nutritional benchmarks across
companies. Member States have a key role to play in framing industry-led
self-regulatory approaches, in particular with regard to the efficient and
well-resourced administration of codes and the handling of complaints.

In
the more specific area of audiovisual commercial communications in children’s
programmes for sweet, fatty or salty foods or drinks, Member States must
encourage audiovisual media service providers to develop codes of conduct
regarding inappropriate audiovisual commercial communications in children’s
programmes.

3.           Recent
technological developments and expansion of the audiovisual media services
market in Europe

The emergence of Connected or Hybrid TV
integrating Internet and Web 2.0 features into modern television receivers
marks a new stage in the convergence of Internet and TV. While some providers
offer a limited number of applications with no real Internet access, others
offer open access to audiovisual content on the Internet.

Several major US operators are in the
process of launching their services in the EU and the emergence of those new
platforms will undoubtedly increase competitive pressure on the creation,
financing and retail of EU works.

Connected TV services are currently
operational in Germany and Italy and about to be introduced in France and the
UK. The use of Connected TV remains limited at present. Although many of the TV sets sold now are connectable, only 20% to
30 % are actually online. With more citizens having access to higher
Internet speeds, and the increase of connected devices and available content,
it can be expected that Connected TV will grow relatively fast over the next
few years.

In addition to traditional broadcast TV,
connected devices including tablets, smart phones and consoles also provide
consumers with access to video-on-demand services through apps and catch-up TV
services from broadcasters’ own hybrid broadcast/broadband platforms. Estimates
predict 47 million active connected in-home devices in Europe including
connected TV sets, games consoles, standalone TV set-top boxes, Blu-ray disc
players and pay-TV set-top boxes by the end of 2011[18].

The opportunities opening up and the
challenges posed by the transition to Connected TV are substantial: achieving a
level playing field, standardisation issues, access to underlying
platforms, switching costs and ‘lock-in’, control over advertising and content,
impact on the effectiveness of measures promoting European works, intellectual
property rights issues[19],
protection of minors, data protection and media literacy of vulnerable groups.

This technological evolution might have as
consequence that boundaries between broadcasting and over the top delivery of
audiovisual content become blurred. The regulatory framework set by the AVMSD
will have to be tested against evolving viewing and delivery patterns. There is
a need to maintain a consistent level of protection across different
audiovisual media environments while taking into account their respective
specificities. Recent studies indicate that consumers suffer substantial
detriment when using digital content, including audiovisual media, especially
due to problems with accessing the content, unclear or missing information, and
low quality content[20].
Viewers also have high expectations of content regulation of broadcast
television and associated VOD and catch-up services.[21] For on-demand delivery, the
Directive already provides the same high levels of protection on a number of
issues including service provider identification, a complete ban on incitement
to hatred and qualitative standards for audiovisual commercial communication.

An important
element going forward is the level of media literacy.
Media literacy is the ability to access, understand and critically evaluate
different aspects of the media and media content and to establish
communications in a variety of contexts. A monitoring for the Commission during
the reference period[22] found 28 % of the EU's population to
have a basic level of critical understanding, 41 % a medium level and 31 %
an advanced level.

A significant
part of the population (75%-80 %) seems to have a rather critical view of
audiovisual media services and is aware of the existence of regulation in that
area. Nevertheless, there are parts of the population (offline, young people,
low income) where the level of media literacy and regulatory awareness is
clearly much lower. As regards younger age groups and their perception of
advertising, the study concluded that age is one factor involved in the
identification of advertising, but not the only one. Advertising literacy helps
younger people recognise the selling intent, but the identification of more
subtle techniques is more complex and generally not within the reach of the
majority of children.

In view of the above, technological
developments need to be followed closely. Preliminary discussions have already
taken place with the Working Group of EU Regulatory Authorities in the field of
Audiovisual Media Services and the Contact Committee. A further debate with
stakeholders should help formulate a European policy response to maximise
opportunities for citizens and for the European audiovisual sector and to
address the policy challenges which Connected TV raises.

The Commission will deepen its analysis in
the coming months and launch a wider consultation process in view of a policy
document on Connected TV.

4.           Conclusions

All in all, the European
regulatory framework for audiovisual media services has struck the right
balance and served citizens and businesses well.

Nevertheless, some points need attention, particularly in the field of
audiovisual commercial communications, where several of the issues involved
should be further monitored and assessed in order to strengthen the effectiveness
of the rules having regard to their objective, in particular with regard to the
protection of minors across different audiovisual media environments. The
envisaged update of the Interpretative Communication on certain aspects of the
provisions on televised advertising in the ‘Television Without Frontiers’
Directive will provide clarification on specific issues in this field.

More
effort needs to be made to create scale, support and best practice for codes of
conduct on inappropriate commercial communications for food high in fat, salt
or sugar targeting children. The effectiveness of such codes of conduct must be
further assessed.

Foreseeable technological developments
might blur the boundaries between broadcasting and over the top delivery of
audiovisual content. As a result, the current regulatory framework set by the
AVMSD may have to be tested against evolving viewing and delivery patterns
taking into account related policy goals such as consumers' protection and the
level of media literacy.

As the possible
impact on the market and the regulatory framework are not totally clear yet, a
full assessment of the current and future situation should be made. The Commission launched an open debate
with stakeholders about "over-the-top" delivery of audiovisual content
and will deepen this analysis in the coming months in
view of a policy document on Connected TV.

[1]               Developments in 2011 have been covered where
appropriate.

[2]               European Audiovisual Observatory.

[3]               Feature or short films, TV
catalogue programmes, animation, documentaries, training, music and archives.

[4]                http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/11/6&format=HTML&aged=0&language=EN&guiLanguage=en.

[5]               Cases T-385/07, T-55/08 and T-68/08, FIFA/ UEFA/
Commission, 17.2.2011.

[6]               COM(2010) 450.

[7]               See
Contact Committee document http://ec.europa.eu/comm/avpolicy/reg/tvwf/contact_comm/index_en.htm.

[8]               Case C-222/07, UTECA, 5.3.2009.

[9]               Case C-281/09, Commission/Spain, 24.11.2011.

[10]             For
results of previous monitoring activity, see the application reports available
at: http://ec.europa.eu/avpolicy/reg/tvwf/implementation/reports/index_en.htm.
All Member States will have been monitored by the end of 2012.

[11]             Content analysis is a research technique for the
objective, systematic and quantitative description of the manifest content of
communication. For more details see staff working paper.

[12]             See Contact Committee document   
http://ec.europa.eu/comm/avpolicy/reg/tvwf/contact_comm/index_en.htm
.

[13]             See
Contact Committee document http://ec.europa.eu/comm/avpolicy/reg/tvwf/contact_comm/index_en.htm.

[14]             OJ C 102, 28/4/2004, p. 2, see Annex.

[15]             See Contact Committee document   
http://ec.europa.eu/comm/avpolicy/reg/tvwf/contact_comm/index_en.htm.

[16]             http://ec.europa.eu/health/nutrition_physical_activity/platform/platform_db_en.htm

[17]             http://ec.europa.eu/health/nutrition_physical_activity/docs/evaluation_frep_en.pdf

[18]             IHS Source Digest.

[19]             See also Green Paper on the online distribution of
audiovisual works, COM(2011) 427 fin.

[20]             Europe Economics: Digital Content Services for
Consumers: Assessment of Problems Experienced by Consumers (2011):

http://ec.europa.eu/justice/consumer-marketing/files/empirical_report_final_-_2011-06-15.pdf;

Detailed Survey Results:

http://ec.europa.eu/justice/consumer-marketing/files/empirical_report_final_appendix_9_2011-06-15.pdf

[21]             Ipsos MORI, Protecting Audiences in a Converged
World, January 2012.

[22]             Danish Technological Institute and European Association
for Viewers’ Interests, Testing and Refining Criteria to assess Media
Literacy levels in Europe, April 2011.