The UK communications regulator Ofcom has published an independent study that examines the potential indirect impact of a proposed European Commission directive that could have profound consequences for the development of new forms of media distribution including broadband and mobile media services.

Since 1989, television services in Europe have been regulated by the Television Without Frontiers Directive. This created a single market for television services and established some minimum requirements in areas such as the protection of minors and advertising.

Under a new draft Audiovisual Media Services Directive currently under consideration, the European Commission proposes to extend the scope of regulation to all audiovisual media services. These have been defined as those with the principal purpose of providing moving images, with or without sound, in order to inform, educate or entertain the general public using electronic communications networks.

As Ofcom observes, after nine months of discussion, “it remains unclear which services are exactly caught by these proposals”. It could include strategically significant new media sectors including internet protocol television, mobile multimedia and online gaming.

Ofcom says it has expressed “serious doubts about the practicability and appropriateness of extending broadcasting regulation to a whole range of new media services which are very different from traditional TV, both in nature and in the manner in which they are consumed”.

The UK regulator asked RAND Europe, a research organisation which provided economic analysis to the European Commission, to undertake further research on the potential impact on IPTV, mobile multimedia and online games.

The results of the independent study have been published by Ofcom. It concludes that the indirect effects on these sectors could be significant.

Ofcom itself concludes that legislators should “make further efforts to clarify the scope of services caught by the directive”. It suggests that “over-regulation risks otherwise driving key strategic activities outside of the EU”.

Questions of definition
The RAND report makes interesting reading — if you are particularly interested in economic theory. However, it is based on some alarming assumptions.

The chapter on IPTV begins: “IPTV is streamed television on the Internet.” From this premise it proceeds to base it arguments. Despite extensive internet research apparent from the footnotes, the appreciation of the technology involved appears unsophisticated.

In our own report, IPTV: Broadband meets broadcast, we define internet protocol television as “the delivery of digital television and other audio and video services over broadband data networks using the same basic protocols that support the internet”.

This definition is deliberately broad, but critical distinctions are made between closed private networks and the public internet, multicast and unicast delivery, streams and downloads.

The real issue is not the technology of distribution, but the possibility that some forms of audiovisual media which are currently unregulated may fall within a regulatory regime comparable to that of traditional television broadcasting.

Push and pull
The draft directive makes the fundamental distinction between linear and non-linear services.

A linear audiovisual service is essentially a ‘push’ model, based on a programme schedule.

A non-linear audiovisual service is defined as a ‘pull’ model, where the user chooses when a programme is transmitted on the basis of a choice of material provided.

Television broadcasting regulations would apply to linear services, while non-linear services would be subject to a basic set of minimum principles. In practice, national implementation of the level of regulation may ultimately vary, which could cause even greater confusion.

The apparently simple dichotomy between ‘push’ and ‘pull’ begins to break down on analysis, particularly since technology and business models may blur the boundary.

Scheduled material stored locally on a personal video recorder is considered to be linear, although it may be viewed in an interactive, non-linear manner.

The ultimate distinction is perhaps between scheduled and non-scheduled programming, but where does this leave services such as push-video-on-demand?

These issues could be critical to the business cases of prospective service providers in terms of the cost of regulatory compliance, but do not appear to be widely appreciated.

Much of the debate about IPTV and mobile media to date has been about technology, rather than regulation. The European Commission proposals could have profound consequences that need to be better understood by operators, regulators and legislators alike.

Assessing Indirect Impacts of the EC Proposals for Video Regulation is an independent study by RAND Europe and is available from the Ofcom web site.