Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions Principles and guidelines for the Community's audiovisual policy in the digital age
Date: 1999-12-14
Institutions: European Commission
Subjects: EU action, EU programme, application of EU law, audiovisual communications policy, new technology

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 14.12.1999
COM(1999) 657 final

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE
EUROPEAN PARLIAMENT, THE ECONOMIC AND SOCIAL COMMITTEE AND
THE COMMITTEE OF THE REGIONS

PRINCIPLES AND GUIDELINES FOR THE COMMUNITY'S AUDIOVISUAL
POLICY IN THE DIGITAL AGE

Executive Summary

Digital technologies are bringing about major changes in the audiovisual sector. These will
very likely require the adaptation of both the regulatory framework and the various support
mechanisms for this sector. It is therefore important that operators and other interested parties
in the sector are informed of the Commission’s intended strategy over the next five years.

Rapid growth in the audiovisual sector is also predicted. This will involve new forms of
content and new means of providing it. It entails considerable potential for the creation of
high-skill jobs. It is vital to ensure that this growth benefits the European audiovisual industry
and does not simply result in higher levels of imports. (The Community’s deficit with the
USA in audiovisual trade already stands at 7 Billion Euro annually.) Connected with this is
the social and cultural impact of the sector. Televisions are present in 98% of European
households and the average European spends over three hours a day watching television. The
audiovisual media play a major role in the transmission of social and cultural values and there
are therefore major public interests at stake.

Regulatory policy in the sector is aimed at safeguarding certain public interests, such as
cultural and linguistic diversity, the protection of minors and consumer protection. These are
not called into question by technological development. However, following a wide-ranging
consultation in recent years, new regulatory approaches and techniques would appear
necessary for the future.

With regard to regulation, the Commission proposes separate approaches to the regulation of
transmission infrastructure and content: services providing audiovisual content should be
regulated according to their nature and not according to their means of delivery. Adaptation
should be evolutionary rather than revolutionary. A balanced approach to public service
broadcasting is needed and self-regulatory mechanisms may well play a bigger role in
achieving public interest objectives.
the
Commission considers that certain regulatory questions are likely to pose problems in the near
future and therefore warrant further analysis now. These include cultural and linguistic
diversity, questions of access to audiovisual content, the protection of minors and advertising.

technological developments,

In the light of

With regard to support mechanisms, the principles of complementarity between national and
European levels, Community added value and adaptability should apply. These are
incorporated in the Commission’s proposal for a new MEDIA programme. The proposed
“MEDIA Plus” programme also takes account of the challenges and opportunities created by
the digital age. Coordination between this and other Community actions, such as the Fifth
Framework Programme for Research and Development and the “eEurope” initiative will be
ensured.

In external relations, and with regard to future trade negotiations in the framework of the
WTO, it is vital for the Community and its Member States to maintain their freedom of action
in the audiovisual sector if Europe is to retain its cultural and linguistic diversity. Similarly, it
is important that the accession countries implement rapidly and in full the Community acquis
in the audiovisual sector

2

TIMETABLE FOR ACTION

Action

Evaluative Report on the Effect of the
Recommendation on the Protection of
Minors in Audiovisual and Information
Services

Completion Date

September 2000

Report on the Application of
Television Without Frontiers Directive

the

December 2000

Possible New Guidelines on State Aid
To Cinema and TV production

2000

Communication
Relating to the Cinema Sector

on Legal Aspects

2000

Interim Report on the Community
Statistical Information Infrastructure

October 2002

Independent Study on the Impact of
the Television
Articles 4 and 5 of
Without Frontiers Directive (Content
Requirements)

June 2002

Study into new Advertising Techniques
in Television

June 2002

Review of
Frontiers Directive

the Television Without

December 2002

Final Report
on
Statistical Information Infrastructure

the Community

April 2005

MEDIA PLUS Programme

January 2001 – December 2005

3

TABLE OF CONTENTS

Introduction................................................................................................................ 5

1. The Audiovisual Sector - why it matters................................................................. 6

2. Aims and means of the Community' s Audiovisual Policy...................................... 8

3. Principles for Regulation of the Audiovisual Sector in the Digital Age................... 9

4. Action in the regulatory field................................................................................ 14

5. Principles for the development of Community support instruments ...................... 18

6. Action in the Field of Support Mechanisms.......................................................... 19

7. The external dimension of Community audiovisual policy ................................... 20

Conclusions.............................................................................................................. 23

4

INTRODUCTION

The audiovisual sector is undergoing major changes as a result of the introduction of
digital technologies, changes which will very likely require the adaptation of both the
regulatory framework and the various national and Community support mechanisms
in this sector. It is therefore of vital importance for the operators in this sector to
benefit from a clear and predictable policy environment in which to plan investment
and develop strategies for their businesses. This is essential if they are to make the
most of the opportunities offered by digital broadcasting and production techniques
and by new means of distribution and new types of activities, for example, via the
Internet.

This Communication is intended to contribute towards that predictability by setting
out the European Commission’s priorities for the next five years as well as the aims
and principles of the Community 's audiovisual policy for the mid-term future. It
follows on from a wide-ranging review of the sector carried out by the Commission
over the last two years. Details of this review are given in Section 3. In addition, the
Council of Ministers on 28 June 1999 adopted conclusions on the results of the
Public Consultation on the Convergence Green Paper1 which noted the significance
of these results for the audiovisual sector, and welcomed the intention of the
Commission to present more detailed regulatory principles for the sector in a
forthcoming Communication.

important

technology is already bringing about

Digital
social, cultural and
educational changes and will bring about even greater changes in the future.
Digitisation means not only a quantum leap in the amount of audiovisual content and
information available to the citizen, but allows a wide range of new operators to
participate in the production and distribution of audiovisual content and information
world-wide. For the audiovisual sector major changes are already underway: it is
possible that within a decade, analogue broadcasting will have been phased out in
many Member States and replaced entirely by digital broadcasting. The impact of
digitisation can be readily illustrated. For example, whereas cable TV networks can
usually only deliver some 30 to 40 channels using analogue transmission technology,
digital cable networks can not only offer hundreds of TV channels but also
interactive services, voice telephony and fast Internet access. Satellite services will
soon offer the same capacities and even mobile telephones can now offer Internet
access and e-mail services. Set-top boxes which offer Internet access via the
television at a cost of only a few hundred Euro are already on the market, and in
future viewers will be able to arrange their own viewing schedules independently of
actual broadcast times.

The Internet best embodies the digital revolution. At increasingly lower cost, the
Internet provides access to an amount of electronic content which is, to all intents
and purposes, infinite and which is potentially accessible from any point in the
world. It represents a host of new opportunities for content providers including
creators, producers and distributors in the audiovisual sector. In this respect, digital
television is likely to play a key role: digital television services, via a set-top box or

1

Results of the Public Consultation on the Convergence Green Paper: Communication to the European
Parliament, the Council, the Economic and Social Committee and the Committee of the Regions
(Com(1999)108)

5

through an integrated digital television, may well provide the main route into the
home for most on-line content and for e-commerce. These developments could have
profound consequences for both Community and Member State policy in the
audiovisual sector. In particular, they will pose new challenges to the regulatory
framework and call for a re-examination of the regulatory techniques hitherto used
for the achievement of general public interest objectives.

1. THE AUDIOVISUAL SECTOR - WHY IT MATTERS

Economic growth and jobs

The audiovisual sector has the potential to create hundreds of thousands of high-skill
jobs in Europe. According to a study carried out for the Commission in 1997, the
industry' s overall revenues in Europe would grow by 70% by the year 2005, growth
which could entail the creation of up to 350,000 high-skill jobs.2 The sector directly
employed 950,000 persons in Europe in 1995 and this had grown to 1,030,000 by
1997.3

The industry 's growth potential is in large part due to the development of innovative
services based on digital technology. For example, the Commission’s Report on the
Development of the Market for Television Services in the European Union notes the
rapid growth of digital television in the main pay-TV markets4. The Digital Video
Disc (DVD) market is also expanding rapidly, something which is of particular
interest for Europe given DVD’s capacity for multilingual versions of the same work.
However, it is of particular significance that the development of new services for the
provision of audiovisual content, such as pay-TV, pay-per-view, Near-Video-on-
Demand (NVOD), is not occurring at the expense of existing means such as the
cinema and the video market (both cassette and DVD). Rather than substituting for
existing means of providing audiovisual content,
a
complementary relationship exists.

it would seem that

In particular, cinema is undergoing something of a rebirth in Europe: total cinema
admissions in Europe rose from 760.45 million in 1997 to 814 million in 19985. This
increase would appear to be due at least in part to the growth in the number of
cinema screens in Europe (multiplex) as well as improved facilities at cinemas. In
parallel the video market in Europe, particularly for the sale of videocassettes, is
continuing to grow. Furthermore, the market for video games, whether played on a
PC or a television monitor, is also undergoing explosive growth.

This growth in the sector poses two challenges. First, it is necessary to ensure that the
legislative framework allows the audiovisual sector to maximise its potential for
growth and job creation in Europe, whilst continuing to safeguard general interest
the Community must maximise the competitivity of the
objectives. Secondly,

2

3

4

5

Norcontel : "Economic Implications of new Communication Technologies on the Audiovisual Markets"
http://europa.eu.int/comm/dg10/avpolicy/key_doc/new_comm/index.html
COM (98) 0590 final: Report to the European Council - "Job opportunities in the information society :
exploiting the potential of the information revolution "
COM (1999) 540, pursuant to Article 6 of Directive 95/47/EC of the European Parliament and of the
Council of 24th October 1995 on the use of standards for the transmission of television signals (O.J. L
281 , 23/11/1995 p. 0051 – 0054).
Screen Digest, September, 1999. In 1988, total admissions in Europe were down to 592.72 million.

6

in a flood of

European audiovisual industry in order to ensure that digitisation does not simply
imported or archive (repeated) material. The European
result
audiovisual industry must remain capable of providing quality audiovisual content
that is of relevance and importance to European citizens

In this context, one must recall the simple fact that the European audiovisual market
remains overwhelmingly dominated by American productions. The annual EU trade
deficit with the USA in this sector is approaching 7 billion Euro6. American
productions account for between 60 and 90% of Member States' audiovisual markets
(receipts from cinema ticket sales, video cassette sales and rentals and from sales of
television fiction programmes), whilst the respective European share of the American
market is of the order of 1 or 2%. Quite apart from the economic significance of such
figures, they also have cultural implications. Preserving Europe’s cultural diversity
means, amongst other things, promoting the production and circulation of quality
audiovisual content which reflects European cultural and linguistic identities. In fact,
when it is available, European television audiences show a clear preference for
audiovisual content in their own language and which reflects their own cultures and
concerns: the challenge is therefore to ensure that programming of this nature –
which is usually more expensive than imported material - continues to be available.

The social, cultural and educational impact of the audiovisual sector

Whilst the economic aspects and the job creating potential of the sector as outlined
above are clearly major elements to be taken into account in the elaboration of
Community policy, it is the social and cultural role of the audiovisual media that
forms the point of departure for policy making. The social impact of these media is
very significant: it is their defining feature and as such is central to any policy which
addresses them. This social impact is evident from the role of television alone.
Household penetration of television sets in Europe is of the order of 98% and the
average European watched some 205 minutes of television a day in 1998, up 6
minutes on the previous year.7 For children the figure is even higher. It is the major
source of information and entertainment
the
continued importance of radio as medium should not be overlooked. Europeans listen
to radio as much as they watch television and continue to use radio as an important
source of information: significantly, the radio medium is considered by citizens to be
more trustworthy than either television or the printed press.8

in European societies. This said,

The audiovisual media play a central role in the functioning of modern democratic
societies. Without the free flow of information; such societies cannot function.
Moreover, the audiovisual media play a fundamental role in the development and
transmission of social values. This is not simply because they influence to a large
degree which facts about and which images of the world we encounter, but also
because they provide concepts and categories - political, social, ethnic, geographical,
psychological and so on - which we use to render these facts and images intelligible.
They therefore help to determine not only what we see of the world but also how we
see it.

6

7

8

This figure refers to American billions, i.e. 7000 million Euro.
Analyse annuelle, IP, 1998
Eurobarometer 48, October-November 1997.

7

The audiovisual industry is therefore not an industry like any other and does not
simply produce goods to be sold on the market like other goods. It is in fact a cultural
industry par excellence. It has a major influence on what citizens know, believe and
feel and plays a crucial role in the transmission, development and even construction
of cultural identities. This is true above all with regard to children.

2. AIMS AND MEANS OF THE COMMUNITY' S AUDIOVISUAL POLICY

It is for these reasons that the broadcasting sector, one of the main vectors of
audiovisual content, has, since its inception, been subject to specific regulation in the
general interest. This regulation has been based on the same principles, which are in
turn based on common values, such as freedom of expression and the right of reply,
pluralism, protection for authors and their works, promotion of cultural and linguistic
diversity, protection of minors and of human dignity, consumer protection. All
Member States have imposed public service obligations, which are implemented in
particular by public service broadcasters. Regulation of the sector is increasingly
carried out by bodies or institutions independent of government. Furthermore,
Member States have implemented financial and other support instruments intended
to promote the creation, production and distribution of audiovisual works.

The audiovisual policy of the European Community has incorporated these principles
and common objectives and developed its own instruments according to its particular
competence, notably as regards the freedom to provide services and support for the
industry.

At the regulatory level, the "Television without Frontiers" Directive9 established a
legal framework ensuring the freedom to provide television broadcasting services in
the Community, taking due account of certain well defined general interests (in
particular: the protection of minors, the promotion of cultural diversity and consumer
protection). As regards support measures at European level, the Media I and Media II
programmes complemented and built on actions by Member States by supporting
training, project development and the distribution of European works. Finally, the
Community has always attached great
importance to promoting technological
innovation in the audiovisual sector, for example through Directive 95/47/EC on the
use of standards for the transmission of television signals10, which aimed to establish
an appropriate regulatory regime for the start-up phase of new digital television
services. Equally,
the Action Plan for the promotion of Wide Screen (16/9)
Television11, contributed to the take-off of this market and there were specific actions
on new technologies in the Media I and Media II programmes.

Whilst the digital revolution poses new challenges to European Union audiovisual
policy, the fundamental goals of this policy remain the same, namely: to encourage
the production and distribution of European works, by establishing a secure and

9

10

11

Directive 89/552/EEC on the co-ordination of certain provisions laid down by law, regulation or
administrative action in Member States concerning the pursuit of television broadcasting activities, as
amended by Directive 97/36/EC of the European Parliament and of the Council; OJ EC L202/60 of
30.7.1997.
See footnote 4
Council Decision 93/424/EEC of 22 July 1993 on an action plan for the introduction of advanced
television services in Europe, OJ EC L196/48 of 5.8.1993

8

stable legal framework to guarantee the freedom to provide audiovisual services on
the one hand, and through appropriate support mechanisms on the other.

However, developments in the sector call for the principles and the objectives of
Community policy to be set down in more detail. Moreover, Community policy must
henceforth mobilise more than just the traditional market players (cinema, radio and
television): there are new players whose contribution will be important if the digital
revolution is to benefit
the
producers of new forms of audiovisual content, in particular for the purposes of
information, education and cultural diversity.

the European citizen. This concerns, for example,

3. PRINCIPLES FOR REGULATION OF THE AUDIOVISUAL SECTOR IN
THE DIGITAL AGE

The wide-ranging review of audiovisual policy recently carried out
number of important consultative and analytical exercises, in particular:

included a

• The Commission Green Paper on the Convergence of the Telecommunications,
Media and Information Technology Sectors, and the Implications for Regulation,
published in December 1997.12 This led to an extensive two-stage consultation.
The outcome is summarised in the Commission Communication on the results of
this consultation.13

• The European Audiovisual Conference, co-organised by the Commission and the

British Presidency of the EU, in Birmingham in April 1998.14

• The setting up of a High Level Group on audiovisual policy by Commissioner
Marcelino Oreja in 1997. The Group published its report, entitled "The Digital
Age" in October 1998.15

electronic

On 10 November 1999, the Commission also launched a major review of the
regulatory framework for
In its
Communication “Towards a new Framework for Electronic Communications
Infrastructure and Associated Services: the 1999 Communications Review”16, the
Commission proposes a new framework to cover all communications infrastructure
and the services associated with that infrastructure. This Communication, which does
not address questions concerning audiovisual content, posits five general principles
for regulatory action. These are that regulation should be:

communications

infrastructure.

• Based on clearly defined policy objectives;

12

13

14

15

16

Green Paper on the Convergence of the Telecommunications, Media and Information Technology
Sectors, and the Implications for Regulation, COM (97) 623, 03.12.1997
See footnote 1.
See http://europa.eu.int/eac/bg-intro_en.html for details on the outcome of the Conference.
“The Digital Age: Report of the High Level Group on Audiovisual Policy”
Office for Official Publications of the European Communities, Luxembourg. (ISBN 92-828-4690-3)
http://europa.eu.int/comm/dg10/avpolicy/key_doc/hlg_en.html
Communication from the Commission to the European Parliament, the Council, the Economic and
Social Committee and the Committee of the Regions “Towards a new Framework for Electronic
Communications Infrastructure and Associated Services: the 1999 Communications Review” COM
(1999) 539 Final, 10.11.99

9

• Be the minimum necessary to meet those objectives;

• Further enhance legal certainty in a dynamic market;

• Aim to be technologically neutral17, and;

• Be enforced as closely as possible to the activities being regulated.

also valid in the domain of audiovisual content regulation.
These principles are
However, they need to take account of the specific nature of the sector in the way set
out below.

(1)

The principle of proportionality

The principles of necessity and proportionality, as laid down in the Treaty and
developed by the case law of the European Court of Justice with regard to the
freedom to provide services, form the basis for the relevant Community regulatory
instruments for the audiovisual sector and more generally for the Information
Society. The principle of proportionality requires that
the degree of regulatory
intervention should not be more than is necessary to achieve the objective in
question. This principle is exemplified by the relevant Community instruments:
television broadcasting services are covered by the "Television without frontiers"
Directive and by other instruments on intellectual property and the protection of
encrypted services 18, whereas audiovisual and information services other than
broadcasting services are covered by the regulatory transparency mechanism adopted
in 199819, soon to be supplemented by a Directive on electronic commerce20.

Applying the proportionality test requires an in-depth analysis of the service
concerned. For example, the degree to which an individual user can exercise choice
and control over the content received must be taken into account. This would mean
that the regulatory approach with regard to, say, the protection of minors for a
scheduled free-to-air television service would entail a different regulatory approach
to that for an encrypted Pay-per-View Service which required a user ID and a
method of direct payment.

the results of the consultations to date,

the Commission
Taking into account
considers that, far
from having to reinvent a new regulatory framework for
audiovisual content, the Community can best manage the changes taking place by
building on its existing instruments and principles and where appropriate, through
promoting initiatives for self-regulation.

17

18

19

20

Technological convergence means that services that were previously carried over a limited number of
communication networks can now be carried over several competing ones. This implies a need for
technological neutrality in regulation: identical services should in principle be regulated in the same
way, regardless of their means of transmission.
The Directive on the co-ordination of certain rules concerning copyright and rights related to copyright
applicable to satellite broadcasting and cable retransmission (Council Directive 93/83/EEC, OJ L 248 of
6.10.1993, p. 15) and the Directive on the legal protection of services based on, or consisting of,
conditional access (Directive 98/84/EC of the European Parliament and of the Council, OJ L 320 of
28.11.1998, pp. 54-57)
The European Parliament and Council Directive 98/48/EC amending for the third time Directive
83/189/EEC laying down a procedure for the provision of technical standards and regulations.
Common Position adopted 7 December 1999

10

(2)

Separation of transport and content regulation

The review process and in particular the consultation on the Green Paper on
Convergence established a consensus on the need for separate approaches to the
regulation of the transport of electronic signals and the infrastructure used for this on
the one hand, and the regulation of content including audiovisual content on the
other. In the Commission's view, this implies:

• a need to ensure that content regulation is in accordance with the specific
characteristics of given content services, and with the public policy objectives
associated with those services;

• a need to ensure that content

regulation addresses the specificity of

the

audiovisual sector, building on current structures;

• Application of an appropriate regulatory regime to new audiovisual services,
recognising the uncertainties of the marketplace and the need for the initial
investments involved in their launch while at the same time maintaining adequate
consumer safeguards.

In applying the distinction between transport and content, particular attention must
be paid to questions relating to consumers' access to content, for example with regard
to EPGs and “must carry” rules21.

(3) General interest objectives and the regulatory approach at the European level

The principles and the methodology of Community law are highly relevant to the
development of a stable and legally secure regulatory framework. This is a sine qua
non for the efficient operation and development of the market for audiovisual content
in the Community. This framework must also guarantee effective protection of
society’s general interests, such as the freedom of expression and right to reply,
protection for authors and their works, pluralism, consumer protection, the protection
of minors and of human dignity and the promotion of linguistic and cultural
diversity.

The Commission considers that the digital revolution does not call into question the
interests and, where
need for audiovisual policy to identify relevant general
necessary,
regulatory process. Technological
developments, however, call for ongoing evaluation of the means and methods used,
in order to ensure that they continue to be proportionate to the objectives to be
achieved.

them through the

to protect

Audiovisual policy is concerned with services providing audiovisual content
intended for the public: such services constitute "communication to the public"22 and

21

22

See Section 4.2
The concept of “communication to the public” is already found in Community law, for example in the
various Directives on copyright. The definition of television broadcasting given in Article 1(a) of the
Television Without Frontiers Directive is based on the concept of “television programmes intended for
reception by the public”.. On the other hand, services aimed essentially at enabling private

11

may affect certain general interests associated with the media sector as a whole (for
example, with regard to copyright and neighbouring rights, protecting the integrity of
artistic works, the protection of minors, of consumers, cultural diversity and so on).

Whilst the means of distribution (whether point to multipoint, such as broadcasting,
or point to point, such as Video on Demand) clearly remains crucial, some new types
of service may also require other factors to be taken into consideration when
assessing the necessity and proportionality of any regulatory approach.

A graduated approach to regulation will be required to deal with the general interests
affected by each type of service. The basic rationale for this regulation should be the
failure of the market, real or potential, to reach these objectives (except in certain
cases, such as the protection of minors or copyright, where market forces are not
adapted to the achievement of such objectives). It should take into account the
commercial or non-commercial nature of the transactions involved and the degree of
control and choice which can be exercised by the users.

(4) Recognition of the role of public service broadcasting and the need for
transparency in its financing

Public service television plays an important role in the Member States of the
European Community: this is true with regard to cultural and linguistic diversity,
educational programming, in objectively informing public opinion, in guaranteeing
pluralism and in supplying, on a free-to-air basis, quality programming. The
integration of public service broadcasting in the new digital audiovisual environment
requires a balanced approach. The future of the dual system of broadcasting in
Europe, comprising public and private broadcasters, depends on the role of public
service broadcasters being reconciled with the principles of fair competition and the
operation of a free market, in accordance with the Treaty, as interpreted by Protocol
n° 32 on the system of public broadcasting in the Member States. This means that:

– Member States are free to confer, define and organise the public service remit
and to decide how their public service broadcasters are to be financed (whether by
licence fee, State funding, dual funding, etc.);

– the public service remit, as defined by the Member States, shall be consistent with
the Community interest with regard to services of general economic interest (as
assessed by the Commission);

– the funding scheme, as decided by the Member States, shall respect the principle
of proportionality and not affect
trading conditions and competition in the
Community to an extent contrary to the common interest, in accordance with
Article 86 (2) of the Treaty, as interpreted by the Protocol (while the realisation of
the remit of that public service shall be taken into account) and the case law of the
Court of Justice;

– while the definition of the public service remit and the related funding scheme is
the responsibility of Member States, the Commission has the duty to ensure that

correspondence (such as e-mail) do not normally affect such general interests and the protection of
privacy can only be legitimately limited where activities forbidden by criminal law are concerned (for
example, with regard to the communication of child pornography).

12

these are compatible with the Treaty, as interpreted by the case law of the Court,
in respect of both state aid rules and the freedom to provide services.

Ensuring this balance at national and European level is fundamental, in particular to
allow European public service broadcasters to fully exploit the possibilities offered
by new information technology but also to fulfil more effectively their respective
public service remits, which should, in any event, be defined by Member States.

(5)

Self-regulation: a complementary process

Establishing a stable regulatory framework in an environment of rapid development
entails further reflection on the role that self-regulation can play as a complement to
the regulatory frameworks established by public authorities. The following lessons
have emerged from the debate so far23:

• Whilst

it

is for governments and public authorities to define public interest
objectives, to lay down requirements concerning the level of their protection and
to adopt the regulations necessary for this effect, the operators and the users
concerned can nevertheless contribute to the achievement of these same public
interest objectives through the development of self-regulatory measures within the
overall
legal framework.·Such measures can obviate the need for detailed
regulation.

• Self-regulation at both national and Community level can be a good example of
application of the principle of subsidiarity, as long as it does not
lead to
fragmentation of the Internal Market. Conversely, the development of codes of
conduct at Community level should be encouraged.

• Self-regulation is more suited to certain fields than others. An example where
self-regulation is likely to be less desirable and feasible is copyright, where the
the rights holders will continue to need the
financial stakes are such that
protection of the law.

• Self-regulation must not be allowed to be used by major incumbent operations to
define "rules of the game" that are best suited to their own interest to the detriment
of smaller competitors and/or new market entrants.

(6) Regulatory authorities

The various consultations carried out at the European level lead the Commission to
posit certain common guidelines for the development of regulatory authorities in the
audiovisual sector:

• regulatory authorities should be independent of government and operators;

23

The German Presidency held an important seminar on self-regulation in the media at Saarbrücken on
20-21 April 1999.
See http://www.eu-seminar.de/ for the results of this seminar. On 27 September 1999 the Council
adopted Conclusions on the role of self-regulation in the light of the development of new media
services. OJ C 283/2 of 6.10.99

13

• content

issues are essentially national

in nature, being directly and closely
connected to the cultural, social and democratic needs of a particular society; in
line with the principle of subsidiarity, therefore, content regulation is primarily the
responsibility of Member States;

• technological convergence requires increased co-operation between the regulators

concerned (communication infrastructures, audiovisual sector, competition);

• regulatory authorities can contribute to the development and implementation of
self-regulation. In this respect,
the Commission will examine the utility of
establishing a specific forum for European-level co-operation between regulators,
operators and consumers in the audiovisual sector.

4. ACTION IN THE REGULATORY FIELD

On the basis of these principles, the Commission intends to develop the following
actions.

4.1. The Television Without Frontiers Directive

Adopted in 1989, the Directive was revised in 1997 to take account of technological
and market developments. Member States had until 30.12.98 to implement
the
Directive and the Commission' s immediate priority, in line with its role as guardian
the Directive is correctly implemented and
of the Treaties,
rigorously applied.

is to ensure that

Since its inception, the Directive has provided a stable and secure legal framework
for broadcasting services in the Community. Whilst future technological and market
developments may require revisions to its provisions, the Directive remains today an
effective instrument for point-to-multipoint communication and is well adapted to
the current state of the market and technological developments.

A report on the application of the Directive is required by the end of 2000. In
accordance with Article 26 of the Directive, a second report is required 2 years
later. This will take into account technological developments in the sector as well as
the results of studies carried out for the Commission into the protection of
minors and on advertising aimed at minors.24 Any necessary revisions to the
Directive will be proposed in this context. Article 25(a) of the Directive also requires
an independent study into the impact of the Directive’s provisions concerning
the promotion of European works to be carried out by June 2002. This will
provide input for the report due by the end of 2002. In addition, it will provide an
opportunity for an overall examination of regulatory and support instruments for the
promotion of cultural and linguistic diversity with regard to the audiovisual sector.

24

Study on Parental Control of Television Broadcasting, March 1999
http://europa.eu.int/comm/dg10/avpolicy/key_doc/parental_control/index.html
Call for Tenders for a Study on the Impact of Television Advertising and Teleshopping on Minors OJ
99/S 139-102855

14

4.2. Access to audiovisual content

The audiovisual sector has been traditionally subject to certain rules which have
aimed to guarantee access to certain types of content which, left to the market alone,
may not always be made available. These rules may require adaptation in the future
in the light of technological and market developments.

With regard to cable networks, for example, so-called "must carry" rules have
obliged cable operators to make available certain television channels. In most cases,
these channels have been operated by public service broadcasters. Given the limited
capacity of cable in an analogue setting, "must carry" rules have involved a delicate
balance between the achievement of important general interest objectives (pluralism,
programming in minority languages and so on) and maintaining enough free capacity
in the cable to provide access for other services. This issue is dealt with in the 1999
Communications Review25.

In a digital broadcasting environment, access to audiovisual content is not simply a
question of whether certain content is accessible, but also of whether content is
readily accessible. To navigate through the multitude of content on offer in a digital
broadcasting environment, the viewer will require an Electronic Programme Guide
(EPG). This will not only allow the viewer to navigate through the channels and
services available, but will also offer previews of television programmes and
facilitate pay-per-view and Video-on-Demand services . It will also be able to carry
advertising and to support sophisticated and reliable filtering systems for the
protection of minors. Clearly, the design and operation of such EPGs can influence
both the presentation and availability of audiovisual content. As such, EPGs raise
important questions with regard to pluralism, cultural diversity and other general
interest objectives. Similarly, the Application Programme Interface (API)26 plays an
important role here: it is the API which decides which EPGs may be installed in
decoders and digital televisions.27 Technical developments may, however, lead to a
situation where viewers can choose from a range of EPGs: should this be the case
regulation should be reassessed in line with the principles of necessity and
proportionality At this early stage, when market and technological developments
are highly unpredictable, the Commission does not propose any specific action
for the audio-visual sector, but notes that this is an area to be monitored closely.

Access to content may also raise questions of affordability: where there may be a
danger of social exclusion (resulting in a society of information “haves” and “have-
nots”), consumers should have access to the content in question at an affordable
price. The Television Without Frontiers Directive, for example, allows Member
States to ensure that events of major importance for society are available on free
television.

25

26

27

Ibid. footnote 16, section 4.2.4
The Application Programme Interface (API) can be compared to a computer operating system: it
defines how software applications are managed and displayed.
"Must carry" rules, APIs and EPGs also raise significant questions with regard to access to
infrastructure and the services associated with providing such access. See the 1999 Communications
Review, (ibid. footnote 16), section 4.2.5 and the Commission Report on the Development of the
Market for Digital Television n the European Union, (ibid. footnote 4) for an analysis of these issues.

15

4.3. Copyright Protection and the Fight against Piracy

The Internet makes possible new ways and means of distributing audiovisual works,
and digital technology makes it possible to make perfect copies of such works. This
means that the protection of copyright and related rights and the fight against piracy
must constitute a central element of audiovisual policy. Piracy has already reached
proportions that are likely to cause serious economic harm to the rights holders of
audiovisual works. However, anti-piracy legal measures at national level are not
enough to fight this plague effectively28. A European and/or international framework
must be used to ensure that intellectual property rights are respected on the Internet
(for example, the Commission's proposal for a Directive on Copyright and Related
Rights in the Information Society enhancing the protection for authors, performers
and phonogram producers in the digital environment and implementing the WIPO
Copyright Treaty and the WIPO Performances and Phonograms Treaty adopted in
December 1996, 29, whilst ensuring at the same time the proper functioning of the
Internal Market). The Commission considers the rapid adoption of the proposed
Directive on Copyright and Related Rights in the Information Society to be of
paramount importance.

4.4. The Protection of Minors

Digital technology may in some cases render traditional approaches to the protection
of minors ineffective. For example, digital receivers with integrated hard disk drives
will render time of broadcast (the “watershed”) a less effective method for protecting
minors, particularly when increasing numbers of children have televisions and
computers in their own rooms. The Internet, of course, enables access to all content
hosted on the World Wide Web, as well as to news and "chat" groups, at any time.

It therefore seems likely that filtering and blocking technologies will of necessity
play a larger role in protecting minors from harmful audiovisual content in the
future30. This in no way implies a reduction in broadcaster responsibility nor, indeed,
a reduction in the responsibilities of any other parties involved. There is also a need
for greater transparency and coherence in the way age ratings are attached to
audiovisual content: presently, explicit and transparent criteria for age ratings are
notable more by their absence. Finally, there is the role of awareness and education
in this respect: adults need to be informed both of the effects of harmful content on
children and of the means at their disposal to protect them. Children, in turn, can be
better educated in their use of the media: this involves the ability to find that content
which is beneficial to them as well as how to better deal with harmful content.

In some respects regulation is not always an effective means of achieving these
objectives. Given their greater flexibility and adaptability, codes of conduct and
similar self-regulatory measures can be more effective. However, experience
indicates that self-regulation is more effective when it occurs within an overall legal
framework.

28

29

30

This was apparent, for example, in the hearing organised by the Commission at Munich in March 1999
on the Green Paper on Counterfeit and Piracy in the Internal Market.
COM (97) 628 final.
For further information and discussion on this, see the "Study on Parental Control in Television
Broadcasting", http://europa.eu.int/comm/dg10/avpolicy/key_doc/parental_control/index.html
See also the Community Action Plan for Safe Use of the Internet. http://www2.echo.lu/iap/

16

In this context, the Council Recommendation on the Protection of Minors and
Human Dignity31 illustrates the complementarity of regulation and of self-regulation
and provides a basis for testing this approach in practice. The Recommendation,
which covers broadcasting as well as audiovisual and information services, notably
those available on the Internet (on-line services), calls on the Member States,
industry and the other parties concerned to establish national self-regulation
frameworks to supplement the existing regulatory frameworks.

As stipulated in the Recommendation itself, the Commission will present an
evaluative report on its effect to the European Parliament and the Council in
the final quarter of 2000.

4.5. Advertising and sponsorship

The Television without Frontiers Directive contains a number of provisions with
regard to advertising which serve to protect consumers as well as the integrity of
audiovisual works and editorial independence. For example, the total amount of
advertising per hour is limited and certain types of programme must not be
interrupted by advertising. Advertising must also be clearly separated from other
programming and surreptitious advertising is forbidden.32

Technological developments raise new questions here: for example, with regard to
so-called "virtual advertising". This allows, for example, advertising banners at
sporting events to be digitally "replaced" by other banners without the viewer being
aware of this. Questions also arise over how to deal with advertising which is
broadcast simultaneously with a television programme and which occupies only a
part of the screen.

In fact, digital
technology will create a whole new range of advertising and
marketing possibilities, many of which cannot be foreseen today. Audiovisual
services on the Internet in particular present a multitude of possibilities and thereby a
whole series of questions on how to ensure that adequate levels of consumer
protection apply. Both with regard to digital television and with regard to audiovisual
services on the Internet,
the development of new
is not
advertising techniques but to ensure that basic principles such as the prohibition of
surreptitious advertising and the need for a clear separation between advertising and
other material continue to apply. The Commission will therefore carry out a study
into new advertising techniques in view of a possible future evaluation of the
provisions contained in the Television without Frontiers Directive, in particular
with regard to interactivity and product placement, in order to analyse how to
ensure a clear distinction between advertising and other content.

to restrict

the point

31

32

Council Recommendation of 24 September 1998 on the development of the competitiveness of the
European audiovisual and information services industry by promoting national frameworks aimed at
achieving a comparable and effective level of protection of minors and human dignity. (Official Journal
L 270 of 07.10.1998, p.48).
Other Community legal instruments also apply to advertising in the audiovisual sector, for example,
Directive 84/450/EEC concerning misleading advertising, as amended by Directive 97/55/EC of the
European Parliament and of the Council of 6 October 1997 so as to include comparative advertising
(O.J. L 290 , 23/10/1997 p. 0018 – 0023)

17

4.6 State Aid to cinema and television programme production:
framework for the cinema sector

the legal

In its decision of 9.6.1998 on the French scheme of support to film production, the
Commission set out certain specific criteria on which basis it intended to assess State
aid to cinema and TV programme production under the culture derogation of Article
87 (3) (d) EC. In the same decision it gave a commitment to review the relevant aid
schemes in all Member States under the above-mentioned criteria. After completion
of this review, the Commission will assess in 2000 the need for the establishment of
more precise guidelines for the treatment of State aid to cinema and TV programme
production.

In addition, the Commission will also present during 2000 a Communication on
legal aspects relating to the cinema sector, covering, inter alia, matters such as the
definition of a European work.

5. PRINCIPLES FOR THE DEVELOPMENT OF COMMUNITY SUPPORT
INSTRUMENTS

The advent of the digital age presents new opportunities for producers and
distributors.
in particular with relation to the
fragmentation of markets and the effect this can have on the financing of production.

It also represents challenges,

In this context, existing support mechanisms at both national and Community level
have a crucial role to play in preserving the diversity of European creation and
improving the competitiveness of the industry. Globalisation means that European
producers and distributors have no choice but to take into account the international
dimension of the audiovisual market. Amongst other things, European support
mechanisms must
the market both at
therefore enable them to better exploit
European and global levels.

With this in mind, three principles should guide the action of the Union:

5.1. Complementarity between national mechanisms
mechanisms

and Community

Although they both contribute to the strengthening of the European audiovisual
industry, national and Community support mechanisms often have separate aims. At
the national level, the accent is on encouraging creation and production, while at the
European level support mechanisms aim to enable the industry to better exploit the
possibilities offered by the Internal Market. This said, the national systems are
increasingly incorporating the economic realities of the sector in particular within the
framework of automatic support mechanisms33.

33

Automatic schemes are schemes whereby financial support (in whatever form – grants, loans, etc) is
automatically given to a producer (or a distributor), either on a film-by-film basis or on the basis of a
slate of films (or programmes), on the basis of an objective set of criteria. A simple example is when a
particular film achieves a million entries, and the scheme provides for support at, say, 1Ecu per entry,
the production/distribution company will receive 1Mecus to invest in the production of its next film.
Automatic schemes reward success.

18

There is a need for further reflection at the European level, involving all interested
the various support
parties, on how to strengthen the complementarity of
mechanisms, in order to develop a coherent approach.

5.2. Community added-value

Community support for the sector has concentrated on distribution (including
promotion), on the development of projects and of production companies as well as
on vocational training. These priorities were largely confirmed by the evaluation of
the MEDIA II Programme. By intervening upstream and downstream of production,
they also ensure an effective complementarity with respect to national initiatives and
a high added-value.

Added-value at Community level will also be sought through ensuring better synergy
between the various instruments aimed at promoting content for the Information
Society (audiovisual, informational and educational multimedia, content reflecting
cultural and linguistic diversity etc.) as well as those directly intended to support
small and medium-sized enterprises in this sector.

5.3. Adaptability and flexibility of support instruments

The emergence of new types of content and of new ways of exploiting audiovisual
works, together with the rapid development of the sector, requires any support
programme to incorporate sufficient flexibility to take these into account. Facilities
should exist to launch pilot projects, for example, and the lessons drawn from these
should form the basis for the adaptation of Community support mechanisms.

6. ACTION IN THE FIELD OF SUPPORT MECHANISMS

On the basis of these principles, the Commission intends to develop its actions in the
following fields:

6.1. Cultural and Linguistic Diversity

As outlined earlier in this Communication, cultural and linguistic diversity is a key
goal of Community policy in the audiovisual sector. As the sector develops, there
will be a particular need to evaluate the means by which this aim is achieved.

The digital environment would seem to call for a wider approach, at both national
and Community level, encompassing not only the evolutions in the broadcasting
sector (in particular, the evolution towards a model where viewers not only have a
much wider choice of channels but also more control over viewing schedules) but
also new forms of audiovisual content.

At this stage, when the direction of future developments is still unclear, it would be
premature to opt for any particular approach. Further analysis and information is
required here. In this respect, the timely and effective implementation of the
Council decision on establishing a Community statistical information infrastructure

19

relating to the industry and markets of the audiovisual and related sectors is of vital
importance34.

The Commission's goal, however, is clear: Europe's cultural and linguistic diversity
must be assured, and as such must be a component of the development of the
Information Society.

6.2. The new Media plus programme

the

challenges

and opportunities

The current "Media II " programme runs until the end of 2000. The Commission
proposes to move forward by revising and reinforcing this instrument to take account
of
technologies. The
Commission’s proposal for a new "Media Plus" programme is set out in its
Communication of …….. The Media programme is of crucial importance for the
future of the European audiovisual
industry. In all areas of action (training,
development, distribution, promotion) the new "Media Plus" programme will take
account of the new digital environment . In respect of the principle of flexibility, it
will open up possibilities for pilot projects which can be developed and evaluated
within the course of the programme.

created by digital

6.3. The “eEurope” initiative

To meet the challenges of the Information Society - access to investment capital,
training, research, to name but a few - President Prodi, has launched "eEurope", a
major initiative for the Information Society in Europe. It is clear that the word
"Society" is at least as important as the word "Information". For this reason, the
eEurope initiative will also address the challenge of ensuring that Europeans
have access to audiovisual content - in all its forms - which meets their needs and
which reflects Europe’s cultural and linguistic diversity.

6.4. Research and Development

In the Fifth Framework Programme for Research and Development, a number of
action lines are of interest to the audiovisual sector. For example, the "Multimedia
Content and Tools" action35 deals with interactive electronic publishing and digital
cultural content, education and training, technologies linked to spoken and written
language and questions of access to content. Further research of this kind will be
essential for the future well-being of the sector.

6.5. Co-ordination of relevant Community instruments

The Commission will ensure that, in existing Community programmes and in those
under development, action lines of potential benefit to operators in the audiovisual
sector will avoid duplication and maximise complementarity. Particular emphasis
will be placed on the distribution of timely and relevant information to interested
parties and on the adaptation of the action lines concerned to the realities of the
sector.

34

35

Council Decision 1999/297/EC of 26 April 1999 establishing a Community statistical information
infrastructure relating to the industry and markets of the audiovisual and related sectors, O.J. L 117,
05.05.1999, p. 0039-0041
http://europa.eu.int/comm/dg12/rtdinf21/en/key/09.html

20

6.6. Sharing experience between Member States

The Commission will facilitate the exchange of information and experience between
those responsible for national support mechanisms, with a view to promoting best
practice and optimising complementarity with Community mechanisms. In the first
instance,
establishment of an informal group of
representatives from Member States to exchange information on the operation and
evaluation of national mechanisms. This group could, at a later date, go on to discuss
questions of common interest, in particular as regards the linkage between national
and Community support mechanisms and systems.

require the

this will

7. THE EXTERNAL DIMENSION OF COMMUNITY AUDIOVISUAL
POLICY

The development of the external dimension of the Community’s audiovisual policy
has two central elements: the enlargement of the European Union and the new round
of multilateral trade negotiations in the framework of the World Trade Organisation.
In addition, the question of co-operation between the Community and third countries
or regional organisations in the audiovisual sector needs to be addressed.

• Enlargement of the European Union

the Union offers many opportunities for

The enlargement of
the European
audiovisual industry and, more generally, for cultural and linguistic diversity in
the central question is that of the
Europe. In the current pre-accession phase,
implementation of
in
particular the Television without Frontiers Directive and those Directives relating to
intellectual property. At issue is the creation of a audiovisual “space” common to 500
million citizens, wherein the freedom to provide television services is ensured.

the 'acquis communautaire' by the applicant countries,

In addition, current progress as regards adoption of the 'acquis communautaire'
pleads in favour of opening the future MEDIA Plus programme to full participation
by all the applicant countries. Safeguarding and developing the local audiovisual
industries and stimulating audiovisual and cultural exchange between the European
Union and the applicant countries involves both cultural and industrial priorities. The
Commission will examine the extent
to which the individual situation of each
applicant country in the audiovisual domain may justify the implementation of
specific measures within the framework of pre-accession instruments.

to these two fundamental aspects of the pre-accession strategy,

Parallel
is
important to establish close coordination with the applicant countries in international
fora and to strengthen the dialogue with all interested parties in these countries. The
Commission will consider what initiatives can be taken to stimulate experience
sharing between administrations, regulatory authorities and industries of the Member
States on the one hand and the applicant countries on the other.

it

• The multilateral trade negotiations

The results of the Uruguay Round negotiations for the audiovisual sector can be
summarised as follows:

• Audiovisual services are covered by the GATS;

21

• The Community and its Member States made no commitments as regards
audiovisual services in the GATS. The great majority of the trading partners in the
WTO adopted the same position.

• The Community and its Member States introduced five exemptions to the
application of the Most Favoured Nation (MFN) clause. (There are now 8
exemptions covering national and Community measures for the 15 Member
States).

The European Community and its Member States therefore maintained their freedom
of action with regard to both existing and future measures at national and
Community level. This freedom of action appears all the more necessary since it is
not possible today to foresee the questions and challenges which will doubtless arise
out of the rapid development of the Internet.

It should be stressed that this approach, which aims to preserve and promote cultural
diversity, has not by any means resulted in closure of the European market to non-
European services or content. On the contrary, the European market remains one of
the most open markets in the world and audiovisual industries from third countries
are profiting substantially from its growth. The Commission prepared for future trade
negotiations in the WTO, especially GATS 2000, through a detailed consultation of
the sectors concerned. Organisations and companies from the audiovisual sector were
invited to express their interests and positions by way of a questionnaire covering
commercial aspects of audiovisual services. The contributions received to date show
a clear wish for the room for manoeuvre negotiated in the Uruguay round to be
maintained, both for existing measures and for future developments.

The Commission will continue this dialogue with industry and widen it, if necessary,
to include other fields likely to affect the audiovisual sector such as, for example,
investment or subsidies.

• The development of co-operation in the audiovisual sector

There remains considerable scope in the audiovisual sector for improving co-
operation between the Community and third countries and regional and international
organisations.

Close attention will be given to co-operation between the European Union and the
Council of Europe, to ensure the harmonious development and the smooth operation
of the European audiovisual area outside the borders of the European Union. The
Commission will examine whether it would be opportune for the Community and its
Member States become signatories to certain instruments of the Council of Europe
(such as the Conventions on cinema co-production and on trans-frontier television).

In addition, bilateral or regional co-operation with those third countries which share
the view of the European Union on the specificity of the audiovisual sector and
which have similar policies as regards the promotion of cultural and linguistic
diversity, can prove beneficial in several respects. It can lead to fruitful exchanges
regarding ways to safeguard and develop cultural diversity in the context of
globalisation. The Commission will examine ways to augment this co-operation,
including through the relevant Community programmes.

22

• International Dialogue

Given the trend towards globalisation, there is an increasing need for the Community
to develop its dialogue both with industry and with consumers at the international
level. Fora such as the Global Business Dialogue on Electronic Commerce (GBDe)
and various other industry and consumer dialogues between the EC and third
countries can provide an appropriate framework for such a dialogue.

CONCLUSIONS

the heart of the
The Commission reaffirms the fundamental principles which are at
Community’s audiovisual policy. The Community should develop this policy on the basis of
existing regulatory instruments and support mechanisms. Technological and market
developments must be closely monitored to ensure that the relevant instruments are adapted
as necessary. In this respect, and over the next five years, particular areas for attention will be
the Television without Frontiers Directive, ensuring access to audiovisual content which
reflects Europe’s cultural and linguistic diversity, the protection of minors and consumer
protection in advertising. Community support mechanisms for the audiovisual sector must be
reinforced and adapted to ongoing developments and needs.

23