Opinion of the Committee of the Regions on the "Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on The Convergence of the Telecommunications, Media and Information Technology Sectors and the Implications for Regulation"

(2000/C 57/02)

THE COMMITTEE OF THE REGIONS,

having regard to the Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on The Convergence of the Telecommunications, Media and Information Technology Sectors and the Implications for Regulation [COM(97) 623 final] [COM(1999) 108 final];

having regard to the decision of the Commission of 17 March 1999 to consult the Committee on the subject in accordance with the first paragraph of Article 198c of the Treaty establishing the European Community;

having regard to the decision of its Bureau of 2 June 1999 to instruct Commission 3 (Trans-European networks, transport, information society) to prepare the opinion;

having regard to the draft opinion (CdR 191/99 rev. 1) adopted by Commission 3 on 24 September 1999 (rapporteur: Mr Schiffmann) (D, PSE),

at its 31st plenary session of 17 and 18 November 1999 (meeting of 17 November) unanimously adopted the following opinion.

1. Introduction

Consultation on the Green Paper on Convergence

1.1. The subject of this opinion is the results of the public consultation on the green paper on The Convergence of the Telecommunications, Media and Information Technology Sectors and the Implications for Regulation. The green paper was submitted by the Commission on 3 December 1997.

1.2. This was followed by a public consultation on the content of the green paper, the results of which were published by the Commission on 29 July 1998 in a working document(1). In this working document the Commission also posed questions on three problem areas which had proved to be of particular importance during the first stage of the consultation (access to networks and gateways; investment, innovation and content production; balance between the public interest and competition considerations in regulation).

1.3. In its Communication of 9 March 1999 the Commission presented its view of the overall results of the consultation on the green paper, summarised the main results and sketched out the next steps planned.

1.4. The green paper highlighted the importance of this trend for economic development, job creation and the diversity of cultural identity in Europe, and looked in particular at the question of the legal framework. It analysed the concept of convergence, investigated existing and potential barriers which might hinder market and technological developments and dealt with questions connected with existing and possible future regulatory frameworks and initiatives in this area. Finally it put forward ideas on a future regulatory policy for the sectors affected by convergence.

1.5. In its Communication the Commission considers the main conclusion of the consultation to be that the convergence of technological platforms and network infrastructures is already a reality and that similar regulatory conditions should therefore apply to all such infrastructures, irrespective of the types of services carried over them. This "horizontal" approach to the regulation of infrastructure should be complemented by the existing vertical approach to the regulation of service content, which would continue to depend on the specific nature of the service in question. The second stage of the consultation dealt specifically with the three questions of access to networks and gateways, investment, innovation and content production and the balance between the public interest and competition considerations in regulation.

The first opinion of the Committee of the Regions

1.6. The Committee of the Regions adopted an opinion on the green paper itself, based on a draft drawn up by the rapporteurs, Mr Koivisto and Mr Nash(2) in September 1998(3). The Committee of the Regions' second opinion deals with the results of the second stage of the public consultation.

1.7. In its opinion on the green paper the Committee of the Regions considered the launch of a debate on the development of regulation in response to convergence to be of the utmost importance. It also endorsed, inter alia, the Commission's view that regulation should be kept to the bare minimum. It argued that the Commission had placed too much emphasis on market development and not enough on general social objectives. It believed that the best approach was to retain the existing regulatory systems and, building on these, to make cautious adaptations to new circumstances, e.g. the many forms of on-line and interactive service.

2. Comments on the Commission's statements on the results of the consultation

Assessment of the convergence of the telecommunications, media and information technology sectors

2.1. Convergence of the telecommunications, media and information technology sectors is to be understood as the growing together or exchangeability of different network platforms used for the transmission of similar kinds of electronic communication services, or as the merging of appliances such as telephones, televisions and PCs. This is therefore initially a technological phenomenon, but also an economic phenomenon in the development of the information society. There is as yet little evidence of a rapid convergence of content between broadcasting and new services.

2.2. The Commission continues to consider this convergence trend as of outstanding importance for future economic growth and for the creation of new jobs in Europe. In line with the Committee of the Regions' assessment, however, the Commission stresses in its new communication that convergence could under certain circumstances also pose a threat to the preservation of cultural identities and social cohesion.

2.3. The COR agrees with the Commission that the new technologies and the broad use of new services and applications in a number of important areas will affect and change the life of society and the individual.

2.4. The Committee of the Regions shares the view of many participants in the consultation that the Commission is overestimating the speed of the trend and the foreseeable economic significance of convergence. Convergence offers Europe's regions a number of chances and opportunities; at the same time, however, there is also a danger of negative effects, as the Committee argued at length in its opinion on the green paper in connection with the possible accentuation of existing regional disparities with regard to infrastructure networks and the use of media and services.

Regulatory approach

2.5. The Committee of the Regions is pleased to note that as a result of the public consultation on the green paper the Commission is now emphasising more strongly that regulation should not only promote investment, especially in new services, but should also above all offer a number of public interest guarantees. The COR does not see a balanced regulatory framework of this kind serving the public interest as a barrier to entry for new market participants, but rather as a major precondition for legal and investment certainty.

2.6. The rules should be transparent, clear and proportionate. Here the Commission makes a distinction between a) regulation imposing positive and negative obligations in the public interest; b) sector-specific regulation replacing or complementing competition rules; and c) promotional measures geared to specific policy objectives.

2.7. The Commission proposes that transport media and content be regulated separately. The regulatory approach should provide for homogeneous treatment of all transport network infrastructure and ensure that content regulation is in accordance with the specific characteristics of given content services.

2.8. In accordance with the regulatory objectives in the public interest a vertical approach should be adopted to the regulation of content, building on current structures and complying with the principle of proportionality in regulating new services.

2.9. Finally, the Commission feels that the consultation also highlighted as major objectives the need for effective application of the competition rules and measures to promote premium European content.

Answers to the three questions put during the second stage of public consultation

2.10. The Committee of the Regions is glad that the second stage of the consultation dealt in detail with the central issues of access to networks and digital gateways in a converging environment, the creation of an environment conducive to investment and innovation, the promotion of the production, distribution and availability of European content and guarantees of a balanced regulatory approach.

2.11. Non-discriminatory access to networks and gateways is of strategic importance for the development of competition, as it creates a link between network operators, service providers and end-users.

2.12. A balanced approach to regulation is to be adopted in order on the one hand to avoid the danger of over-regulation and on the other to protect the public interest and promote sustained competition. In this context the Committee of the Regions stresses its belief that the market and competition cannot make an effective contribution to the protection of minors and human dignity.

2.13. The Committee of the Regions stresses, as one of the findings of the consultation on achieving the political objectives set, the need for sector-specific rules on access to infrastructure. These rules should not, as the Commission suggests, be subordinate to the application of competition law, as without them the public-interest objectives cannot be achieved. The question as to whether these would be permanent rules or merely transitional rules pending the establishment of a mature, competition-orientated market can remain open for the time being. This question should be reassessed and resolved in the light of developments at the appropriate time.

2.14. As stressed in the Committee of the Regions' first opinion, flexibility and national and regional discretion should be central elements in a future regulatory process in the light of different infrastructure and competition situations and with a view to the principle of subsidiarity.

Promotion of European audiovisual productions

2.15. With a view to the preservation of the cultural diversity of Europe's countries and regions and to the creation of jobs in the audiovisual industry, the Committee of the Regions welcomes the proposals for further measures to promote European audiovisual production. The Committee recognises the economic importance of attractive audiovisual content and objectives.

2.16. The Committee generally welcomes the conclusions of the consultation relating to the components of an environment conducive to the production of European content. It considers these components to be a regulatory framework, regulatory requirements for the production of European audiovisual content, effective copyright protection, tax and financial incentives and open and interoperable technical standards.

Conclusions on public service broadcasting

2.17. The Committee of the Regions is glad that the consultation highlighted the need for optimum integration of public service broadcasting into the new environment in order to achieve public service objectives such as basic supply and diversity of opinion; particularly so as the consultation, in line with Protocol 9 to the Amsterdam Treaty and the COR's first opinion, laid emphasis on the responsibility of the Member States for determining the remit and responsibilities of public service broadcasters, and suggested that these broadcasters be encouraged use new technologies and ways of reaching their public.

2.18. In view of the increasing proliferation of channels offered in the converging media environment the Committee of the Regions attaches special importance to the general remit of the public service broadcasting channels.

2.19. The Committee of the Regions would also refer to the central role, highlighted in the consultation, of the public service broadcasters in the production of European content and the establishment of a quality benchmark.

2.20. The Committee of the Regions also notes that the idea emerged from the consultation that the public service broadcasters should be encouraged to make a clear distinction between their public service broadcasting activities and those activities which were subject to competition. In accordance with Protocol 9 to the Amsterdam Treaty, the Committee would sound a warning against translating this idea into rules so comprehensively that the existence and development of public service broadcasting might be prejudiced. Under the additional protocol the Member States' responsibility for laying down the financing arrangements for public service broadcasters is restricted only where it might prejudice trade and competition conditions in the Community to such an extent that the public interest would be compromised. But even here, in assessing this restriction "the realisation of the remit of that public service should be taken into account".

3. Specific comments on the results of the consultation from the point of view of the regions

Importance of general social objectives in regulation

3.1. The Committee of the Regions points out that in its opinion on the green paper it voiced the criticism that the green paper placed too little emphasis on general social objectives. The Committee of the Regions still believes that rules to protect the public interest do not stand in opposition to, but rather coincide with the objective of developing open markets. Only a generally binding regulatory framework makes it possible for all market participants to work together in an ordered and predictable way, thus forming the essential basis for the development and operation of competition-orientated markets.

3.2. The Committee of the Regions feels that this view has been confirmed by the results of the consultation and therefore calls for more attention to be paid to general social objectives.

3.3. The Committee of the Regions therefore welcomes the Council's statement in its conclusions on the results of the consultation that the regulatory environment needs to be underpinned by clearly defined political objectives and that regulations based on these principles are a necessary means for the achievement of public-interest objectives such as a universal service, pluralism, cultural diversity and the protection of minors and human dignity. The objective must also always be to ensure that information providers act responsibly and that information is reliable.

3.4. The Committee of the Regions also welcomes the European Parliament's support for linking application of competition law with respect and guarantees for political goals like pluralism, protection of minors and promotion of cultural diversity. The Committee endorses the Parliament's view that the disappearance of the shortage of frequencies must not prejudice the safeguarding of political goals.

Need for sector-specific rules

3.5. The Committee of the Regions maintains its view that the aim should be to establish a regulatory framework which is a combination of options 1 and 2 proposed in the green paper, i.e. the maintenance in principle of existing regulatory systems with simultaneous cautious adaptation to changing circumstances. This should allow for the continuation of regulatory systems in the Member States where the differing importance and influence of services is reflected in differing degrees of regulation. The Committee of the Regions is glad that this assessment received clear support in the course of the consultation.

3.6. The Committee of the Regions wholeheartedly welcomes the European Parliament's support for the concept of a single regulatory framework for the function of transmitting information over different networks and for separating this regulatory framework from that covering content.

3.7. The Committee of the Regions believes that there is a need for sector-specific rules in relation to network access too. There is also a general need, and not just in individual cases, for rules specific to broadcasters, including "must carry" rules for public service broadcasting. The regional level should be involved in the decision on network access.

Promotion of the production of audiovisual content

3.8. The Committee of the Regions expects the demand for high-quality content to increase, particularly in the audiovisual field, and believes that further measures for the promotion of European production should be studied and put into effect.

3.9. The Committee of the Regions urges the Commission, in the framework of the GATS negotiations now beginning, to ensure that the necessary scope for responsible, particularly regional, support measures is retained in full. The efforts to achieve worldwide free trade, whilst in principle laudable, must not call into question either European, national or regional support projects or the financing, existence or development of public service broadcasting.

The special role of television

3.10. The Committee of the Regions also shares the European Parliament's view that in the age of digital production and distribution television will continue for the foreseeable future to be the principle medium of primary information provision and processing and that it continues, therefore, to be of paramount importance in our society and democracy in helping people to arrive at opinions and decisions, in the preservation of cultural diversity and in conveying social values. The Committee of the Regions agrees in particular that this applies irrespective of the type of financing and the method of transmission.

3.11. The Committee wholeheartedly welcomes the Council's comments of 25 January 1999 on the role of public service broadcasting, on the power of the Member States to finance this, on the fulfilment of the mandate of public service broadcasting and on the ability of bodies in this sector to provide high-quality channels and services and to develop and diversify their activities in the digital age.

4. Conclusions of the Committee of the Regions on the next steps planned by the Commission

Interests of the regions in the convergence process

4.1. The Committee of the Regions points out that exploitation of the possibilities of the information society offers economic opportunities as well as risks, particularly for peripheral regions. The Committee calls on these regions to seize the opportunities. In this context it reiterates its reference to the major differences between the regions in terms of infrastructure and media culture and use and calls on the Commission to help iron out these differences in the interests of cohesion in the Union. It would refer in this connection to its Opinion on the Communication from the Commission on cohesion and the information society (rapporteur Mr Koivisto)(4).

4.2. The Committee of the Regions calls on the Commission, in connection with its responsibilities for shaping the regulatory framework and the support measures, to work to ensure, in relation to network infrastructure and media culture and use, that basic supply, cultural diversity and pluralism are maintained in all regions of the EU.

Sector-specific rules and public objectives

4.3. The Committee of the Regions believes that the legal regulatory framework should guarantee the protection of the public interest, particularly protection of minors, pluralism and cultural diversity. These protection objectives and rules must in particular be maintained during the forthcoming revision of the Television without frontiers Directive.

4.4. The Committee of the Regions reiterates its call for a regulatory framework in the form of a combination of options 1 and 2 proposed by the Commission (retention in principle of the current regulatory systems and simultaneous cautious adaptation to changing circumstances). This would also take account of the uncertain course of the future development of convergence in technological, content and economic terms.

4.5. The Committee of the Regions is in favour of separate regulation of services and content. It is convinced that technological convergence does not necessitate the same legal treatment of broadcasting, new services and telecommunications products. Rather, the legal classification of services should be geared to the nature and importance of products and services. The Committee of the Regions also believes that the legal regulatory framework should not be seen primarily as a barrier to entry, but rather above all as a precondition for guaranteeing legal certainty. The Committee would stress that it is in favour of sector-specific regulation in relation to network access too.

4.6. In relation to the content of electronic communication, the Committee of the Regions is in favour of a graded-intensity regulation model - building on existing rules and respecting the principles of subsidiarity and proportionality - which would be applicable independently of the infrastructure used. The model would have to take account of different contents and ensure that contents aimed at the public continued to meet particular requirements in terms of public service and social objectives.

4.7. The Committee of the Regions believes that sector-specific regulation should also embrace supervision of market-dominating firms for abuses and the possibility of ex-ante regulation to achieve certain competition objectives, such as non-discriminatory network access.

4.8. The Committee of the Regions urges that, in the process of further regulation, the need for measures to protect consumer interests be examined. The legal position of consumers should not differ to any significant extent according to which network platform is used.

Contribution of self-regulation

4.9. The Committee of the Regions thinks that self-regulation and monitoring, particularly in the case of services aimed at the public, can make an important contribution to safeguarding public interests, provided that they conform to national and regional cultural and legal traditions and practice and provided that functioning competition is guaranteed.

Public service broadcasting

4.10. The Committee of the Regions assumes that television's central role in society will continue and that the achievement of public-interest objectives such as the protection of minors, human dignity and cultural diversity will therefore continue to be particularly necessary in this area.

4.11. The Committee of the Regions is in favour of a balanced approach to the optimum integration of public service broadcasting into the new environment. The Committee in particular believes that broadcasting markets should continue to be organised on a national and regional basis.

4.12. The Committee of the Regions reiterates its view that a separate legal framework will continue to be needed for public service broadcasting in order to continue to underpin the important role assigned to it in Protocol 9 to the Amsterdam Treaty.

4.13. The Committee of the Regions believes that public service broadcasting should be integrated in such a way as to exclude any threat to its existence and development. In particular the Committee thinks that broadcasting organisations' public service remit, which is also the basis of their financing, should not stop at the boundary between public service broadcasting and competition-orientated broadcasting or new activities. The Committee of the Regions is in favour of guarantees of the existence and development of public service broadcasting which, in the framework of this remit, would also include the right to exploit all the new technologies and services.

4.14. The Committee of the Regions believes that in view of their proximity and direct involvement the regions have an important role to play in the authorisation and supervision of broadcasters.

Coordination of regulatory authorities

4.15. The Committee of the Regions is convinced that the coordination of, and continuous exchange of experience between, national regulatory authorities at European level is both useful and necessary.

Brussels, 17 November 1999.

The President

of the Committee of the Regions

Manfred DAMMEYER

(1) SEC(1998) 1284 final.

(2) CdR 149/98 final.

(3) OJ C 373, 2.12.1998, p. 26.

(4) CdR 270/97 fin - OJ C 64, 27.2.1998, p. 20.