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© 1996 - 2008 European Publishers Council All rights reserved
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EPC news - April 2008Your monthly EU media issues update direct from Europe's leading publishers
Dates for the diary17 April - Open Alcohol Forum, Brussels
Key issues of the monthEPC calls for radical change to public service broadcasting rulesResponding to the Commission’s Communication on the Application of State Aid Rules to Public Service Broadcasting, the EPC has issued a news release welcoming the review of rules for Public Service Broadcasters (PSBs) and calling for radical changes in order to protect the future viability of commercial media. In the press statement, Francisco Pinto Balsemão was quoted as saying: “Long established public service broadcasters in Europe have expanded hugely with public funds – and in some cases with the unfair advantages and distorting effects of advertising revenues too. But today’s PSBs are producing products little different from their commercial competitors and with only a handful of services which could truly be described as public service broadcasting”. Mr Balsemão added that: “The publicly funded broadcasters have expanded beyond their ability to maintain broadcasting standards which critics can respect. Public Service Broadcasting was “good while it lasted” but is no longer serving the public interest.” Following years of distortion of competition from publicly funded broadcasters on the TV market, commercial media companies now face the un-regulated colonising of the internet and mobile market from PSBs. This poses a major challenge to commercial media as governments continue to confer unrivalled funding and unparalleled protection and promotion of their legacy public service broadcasters across media market. Mr Balsemão warned that “The impact of high expenditure by PSBs on the development of online publishing is profound. It restricts commercial growth, reduces the potential size and diversity of the commercial market and deters new entrants. “Publicly funded broadcasters follow the trends set by the private sector but from an unequal position and with distorting effects. The Communication must address the question of how to define a public service, establish criteria for assessing what is of value to the consumer and work out appropriate levels of funding to achieve this objective without distorting or damaging the private sector and without stifling the growth of the media sector. Fair competition, a competitive European media and consumer choice are all at stake.” The EPC’s key messages are as follows: 1. Advertising: It is possible and indeed desirable to prohibit access to advertising and sponsorship revenues for any part of a service covered by a public service remit. This would go a long way towards removing distortions in those markets where dual funding already exists, and protect those markets where publicly funded broadcasters are exploring possibilities of introducing advertising to parts of their new media offers, particularly the internet. 2. Funding The funding of PSB should be restricted to purely public service activities, according to clearly defined remits. Long-established PSBs in Europe - with a reputation based largely on a remarkable past performance, have expanded hugely thanks to public funds and in some cases with the help of advertising revenues. This is no longer justified. 3. Remit Member States appear to have extended their remits for PSB to cover whatever they fancy to be public service activities with little or no regard for the market impact of extending their reach beyond traditional PSB. This needs to be addressed urgently. 4. Regulation Independent regulation is essential but sadly lacking across the EU. EPC believes you must start from the point of first principle of defining what the public service remit can incorporate. Once the remit has been defined, clear ex ante evaluation of requests for expansion to new media should be established together with criteria for ex ante market impact assessment by competition authorities/independent regulators. 5. Definitions A clear distinction between publicly funded and commercial activities requires major clarification. This is the only basis upon which public funding can be properly assessed and investment decisions made by the private sector. Unlike the early days of traditional broadcasting, rooted in spectrum scarcity, there is no need for pioneering, state-subsidised semi-monopolies to make the heavy investment necessary to ensure the growth of new media markets. On the contrary, new media markets and their customers will benefit from the very opposite architecture: a wide diversity of suppliers, unrestrained by unfair competition from any dominant, state funded player. The Internet must absolutely not be defined as broadcasting. The Internet is naturally an extension of the publishing business model. Furthermore, there needs to be a fair and open market for the development of e-commerce without the distorting effects of state aid.
CopyrightCommission to hold high-level conference on CounterfeitingAt the behest of Commissioner McCreevy, the new Enforcement Unit of DG Markt is organising a one-day conference to discuss the most important aspects of counterfeiting and piracy, including the harm for European competitiveness and innovation and the risk for health and safety for European citizens. It will be held in Brussels on 13 May in the Charlemagne building. Speakers will consider measures that could be used to improve the fight against counterfeiting and piracy, including the use of new technologies. Commissioner McCreevy has named combating piracy and counterfeiting as one of his main priorities between now and the end of his tenure next year.
ISPs under pressureInternet providers will soon be obliged by Swedish courts to hand over information on suspected file-sharers in a move to crackdown on online piracy. Writing in Svenska Dagbladet, the Swedish Justice Minister said: "We need to... stand up for musicians, authors, filmmakers and all other copyright owners so that they have the right to their own material.” Meanwhile, Eircom, Ireland's biggest internet service provider (ISP) and former Irish state telecoms monopoly , is being sued by the four biggest record labels over illegally downloaded music. The Irish subsidiaries of EMI, Sony BMG, Universal and Warner are demanding that Eircom take action to prevent its network being used to share copyright-infringing material. Eircom is also being asked to filter the offending material out of its service, but it will argue in Ireland's High Court that it has no legal obligation to monitor all the traffic on its network. There is, however, growing international pressure on ISPs to tackle illegal file-sharing by users. France is introducing a trial of a system that forces ISPs to block infringing material this summer, while a Belgian court last year ordered an ISP there to filter traffic and . There are moves in Japan to filter traffic to weed out copyright-infringing files. Its four ISP representative organisations have said that their members will disconnect users found to be using file-sharing software to copy music and games illegally. Trade body the Irish Recorded Music Association claims that music sales in Ireland are in steep decline and that this is a direct result of illegal file-sharing over the internet. It said that music sales in Ireland were €146 million in 2001 but only €102 million last year. The UK Government has said that it will introduce a law forcing ISPs to disconnect illegal file-sharers later this year if the internet access and music industries cannot come to an agreement before then. The Government is believed to favour a system of staged warnings to users with a final sanction of disconnection for persistent file-sharers.
Advertising and sponsorshipWFA defends self-regulationConsumer rights groups are calling for junk food ad bans on all media including the Internet and mobile phones – to be legally enforceable. The International Obesity Taskforce (IOTF) and Consumers International (CI) will present a new plan, called the ‘International Code on Marketing of Food and Non-Alcoholic Beverages to Children’ to the World Health Organization (WHO) General Assembly in May. “The time has come for all concerned to recognize that an international code, enforceable in law, is the best way forward,” said University of Copenhagen professor Arne Astrup, an advisor to IOTF. “Voluntary measures and individual pledges from some companies offer inadequate protection when children are being targeted in the internet, by mobile phone as well as via television, and especially in developing countries where these kinds of calorie-dense foods can have a devastating impact on children's health.” The IOTF defines ‘unhealthy’ food as “energy-dense, nutrient-poor foods that are high in fat, sugar and salt.” Laws in the UK on junk food ads and ads targeting children were hardened recently and, as expected, commercial broadcasters have greatly reduced production of children’s programming. Several major food companies – including Nestlé and Burger King – adopted their own Code last year and the World Federation of Advertisers (WFA) has condemned the IOTF calls for an international code on food marketing as unhelpful, “as they ignore and do not build on the far-reaching commitments advertisers have already made to promote healthier diets and lifestyles. Consumers International’s and the International Obesity Task Force’s (IOTF) proposals overlook the extent to which industry’s far-reaching initiatives are already changing how and what is advertised to children.” The WFA has been at the forefront of promoting best practice for responsible marketing to help encourage healthy lifestyles. WFA is currently:
Big advertisers are increasingly adopting global food marketing policies in line with these industry programmes. This will mean that regional initiatives will de facto apply in all markets where the global advertisers operate. These companies represent a significant share of the food advertising market in most countries. However, advertisers strongly believe that further regulatory restrictions on advertising will be counter-productive: innovation for healthier products goes hand in hand with marketing. There is a clear consumer demand for healthy options to which industry is increasingly responding. Marketing is essential to communicate innovation to consumers. Stephan Loerke, WFA Managing Director, said: “Obesity requires a holistic societal response. The industry has made great strides in regulating itself and promoting responsible marketing is part of this effort. However, it is inconceivable that an ad ban will be a magic bullet that will fix the obesity problem. Instead, we should continue harnessing advertising to help promote healthier lifestyles.” The WFA is not opposed to sensible international recommendations for effective regulation and self-regulation of food and beverage marketing. But Consumers International and IOTF are proposing a blunt instrument that is totally unsuited to fix a complex problem: an advertising ban is a questionable tool to achieve healthier lifestyles. Furthermore, a global system to categorise foods as “healthy” and “less healthy” is unreasonable in the face of the enormous diversity in food cultures that exists globally. “Consumers International and IOTF should see that advertisers are already committed to only market the healthier options to children”, concluded Loerke, “But we need to base policy choices on evidence: all the evidence shows that special advertising rules may be warranted for children up to the age of 12. Beyond that age children are fully capable of understanding the persuasive intent of advertising and have the necessary cognitive tools to assess it critically.”
Information societyEPC invited onto European Content Online PlatformThe EPC has been invited to participate in the new debating platform “European Content Online” do help define the strategy and principles that will lead to a draft Recommendation. Commissioner Reding is drawing together business executives, content creators, consumers and other actors in the content online value chain.
“Internet of things” initiative due by end 2008The European Commission is preparing a non-regulatory initiative, due to be presented by the end of the year or at the start of 2009, on "the internet of things", a growing concept that basically refers to objects capable of communicating with one another through the use of advanced technologies. For example, a refrigerator might note that it is short of milk or eggs and place an order directly with the supermarket. There are no plans for a European directive on the internet of things because "it would be pointless to adopt a rigid law" in a context where, once in application, the directive would be outdated in three to four years due to technological progress. The Commission tends to prefer self-regulation by industry or co-regulation with the national authorities. It remains to be seen how it plans to go about it. In parallel with its initiative on the internet of things, the EU executive also plans to present a communication this autumn on future networks and internet, which will cover a wide range of fields. "The internet of things will naturally be discussed in this communication," notes the Commission. "That is why we are assessing whether there should be a separate communication on the internet of things, or whether, for reasons of consistency, it would be better to put out a working paper that would be attached to the communication on future networks and internet". European research funds are already committed to developing the internet of things and other more ambitious projects are expected to be launched in 2009. The Competitiveness and Innovation framework Programme (CIP), in particular its ICT PSP (Policy Support Programme), is expected this year to promote the development of a thematic network on RFID, "a way of centralising knowledge and talent in Europe to prepare for the internet of things", comments one expert. The Commission is also working on European standards with the European Telecommunications Standards Institute (ETSI) and other standardisation bodies, with the aim of speeding up the development of RFID and guaranteeing security.
Radio frequency identification (RFID)The EU is trying to make good its delay in the dissemination of RFID (Radio Frequency Identification) tags in everyday consumer goods. This technology is booming and is seen as the main vector of the internet of things. RFID tags are intelligent labels that allow data to be collected on the objects (or in some cases, animals or people) to which they are attached - origin, location, manufacturer, freshness, or personal data in the case of a credit card - which are then transmitted to a reader using radio waves. In June or July, the Commission will adopt a recommendation advocating that, except where the consumer decides otherwise, the technology will be automatically deactivated at check-out where a RFID application involves personal data or where the impact assessment carried out by industry identifies a "high probability" that private data can be generated. While these electronic tags promise big earnings for European industry, they also raise fears over the exploitation of sensitive data. For example, a chip placed in an article of clothing could be used for surveillance. The Commission will also recommend the creation of a common symbol showing that a product contains a RFID tag and the adoption of a code of conduct by industry. The European consumers' lobby (BEUC) welcomes the recommendations but identifies a number of questions: effects on health or the environment, potential competition-related problems and the importance of information campaigns on potential risks. BEUC has concerns over "discriminatory profiling" of consumers (the collection of data on their buying habits could lead to the exclusion of less 'attractive' consumers, commercially speaking). The organisation is calling for binding legislation.
Broadband spread in EU too slow, says CommissionHigh-speed internet connections can now be found in one out of five households across the EU, but this is still well below the bloc's 30% target, according to the 2007 report on the EU Telecoms sector published by the European Commission on 19 March. The report indicates that some Northern EU countries are world leaders in broadband deployment. Notably, Denmark and the Netherlands are at the top of the international league with penetration rates respectively over 34% and 33%. Also Finland, Sweden, the UK and France, among others, are ahead of global actors such as US and Japan. However, the majority of EU states still lag behind, with high-speed network deployment below the EU average of 20%. Among the most developed European economies, Italy, Spain and Ireland record significant delays. The Commission regularly publishes such progress reports, with its previous edition registering an average EU broadband penetration rate at 18.2%. Altogether, the EU bloc continues to chase world leaderrs like Switzerland, South Korea, Norway, Iceland, Canada, Australia, US and Japan. Information Society Commissioner Reding’s recipe to close the gap is to lower national incumbent operators' share of the market. "Incumbent operators hold more than 46% of broadband lines," reads the press release issued by the Commission. "Competition is limited for access to the fixed network which is still provided to 86.5% of customers over the incumbent’s infrastructure," underlined Commissioner Reding. However, the incumbents, such as France Telecom, Telefonica or Telecom Italia, view the glass from the other perspective and highlight that "alternative operators hold more of 50% of the market shares", according to a position paper of ETNO, the European incumbents’ association. While both are right, the proposed solutions are conflicting. Reding wants functional separation, which if applied by national regulators would oblige telecoms giants to split the management of their networks and services activities. Conversely, incumbents insist on the necessity of new investments to allow Europe to catch up with its world competitors. They argue that only big companies have the strength to support heavy structural innovations, but that they will not do this if they are made smaller by new regulations. An Economist Intelligence Unit report in 2006 considered Denmark the first best place in the world for e-commerce. According to a research from the "Center for Research on Information Technology and Organizations" (CRITO), Denmark's e-commerce strategy is centered in the rapid adoption, implementation, and exploitation of e-commerce in all sectors of the economy. B2B is the most successful e-commerce model developed in Denmark; contrary to B2C which has reported a slower progress, the CRITO report points. The highly evolved information technology ("IT") sector and its dissemination among Danish residents is another reason for the ranking of Denmark as top e-commerce hub. Over 80% of Danish residents have Internet connections and cell phones. Electronic banking is the most common form of banking in Denmark. With this impressive place in the world's e-commerce market, it is important to know Denmark's E-commerce Legal framework. Denmark's E-commerce Act 227 ("ECA") was enacted on April 2002 and it constitutes Denmark's E-commerce Legal Framework. ECA is applicable to all services in the information society and they are defined as 'any service that has a commercial purpose... and is delivered online at an individual's request of a recipient of the service.' According to this Act, information society services provided by a service provider ("SP") established in Denmark (it could be a natural or legal entity) must comply with the Danish law within the coordinated area (coordinated area is defined as the information society area and their applicable regulations, including EU Directives). This rule applies even if the information society services are received by Danish residents or by residents of any other European Union Member State. Yet, an exception applies if the SPs are established in other EU Member State; in this case, the SPs are not required to comply with the Danish regulations within the coordinated area. Despite this legal reciprocity for other EU SPs, the Danish government may restrict information society services rendered in Danish by SPs established in other Member States when it is necessary for public policy like prevention of criminal activity, including protection against minors; public security; and consumer protection. According to ECA, ISPs in Denmark must provide the following information: (i) complete name of the service provider; (ii) the physical address where the SP is located; (iii) an e-mail address where the ISP can be contacted; (iv) the Central Business Register- CBR, if any; (v) affiliation to any supervisory authority if any; (vi) prices of the information society services, including information about taxes and delivery costs if applicable. For those SPs are providing professional services over the Internet, they must provide in addition to the above requirements: (i) the name of the professional association or similar institution to which the SP is registered; (ii) details on the professional title and the Member State where it was granted; (iii) reference to the professional rules applicable to the SP. These are important requirements for those non-Danish professionals that are expanding their commercial/professional offerings in Denmark through the use of websites or any other online service.
Commission backs DVB-H standard for mobile TVThe European Commission has decided to add the Digital Video Broadcasting - Handheld standard (DVB-H) to the EU list of standards published in the Official Journal, which will oblige the member states to promote it on their territory, it announced on 17 March. This decision bring to conclusion a lengthy debate on the introduction of a European standard for these services, which the Commission hopes to see take off with the European Football Championship and the Olympic Games this summer. Mobile TV could generate up to €20 billion on a global market of 500 million customers by 2011. "The standards war is over," welcomed the spokesman for Information Society Commissioner Viviane Reding, who added that 16 member states are currently between trials and commercial launch. "The member states must not ban other standards but should encourage the DVB-H standard, in particular through the assignment of frequencies," he explained. "This is in the interests of consumers; they will not be limited to the services of companies based on their own specific standards". Originally, Commissioner Reding had not ruled out the possibility of imposing DVB-H, but the Council urged her on 29 November 2007 to "recognise the importance of innovation, technological neutrality and a market-based approach" (see Europolitics 3425). "I really do not see why we should have to choose another," concluded Reding, calling on the reluctant states (in particular Germany) to come round to that view. DVB-H services already exist on the Italian market and are expected to become available this year in Austria, France, Switzerland and Spain. The advantage of DVB-H lies in its openness to other technologies (interoperability) and its compatibility with digital television. DVB-H belongs to the family of DVB standards that dominates digital TV globally, with DVB-S for satellite-based digital television, DVB-C for cable digital television and DVB-T for terrestrial digital television. The following firms support DVB-H: Nokia, Motorola, Philips, Sagem, Pace, Sony-Ericsson and the mobile operators Vodafone, O2 and T-Mobile. Others have concerns about binding regulations, including BSkyB, Canal+, Deutsche Telekom, Liberty Global, Microsoft TV, Qualcomm, Samsung, etc. The Asian groups, such as South Korea's Samsung and LG Electronics, and Japan's Panasonic, work with the DMB standard. The Commission will provide guidelines on mobile TV authorisation schemes, which are the responsibility of the member states, to help them implement the standard "without delay". It could also tackle intellectual property rights management systems, advocating "a transparent scheme [...] based on fair, reasonable and non-discriminatory terms and allowing low-price devices".
SportEPC and ENPA state case for press freedom in sportsThe EPC and ENPA have written to MEPs in the Education and Culture Committee asking for their support for two amendments to the draft report on the White Paper on Sport proposed by EP Rapporteur, Manolis Mavrommatis MEP. In their letter, ENPA and EPC have said that whilst they support the need to respect intellectual property rights, they also believe that a balance should exist between a sporting organisation’s legitimate concerns and the rights of the public to news and information on a sporting events of public significance; brought to them by news media professionals (journalists, reporters etc) who should be guaranteed access to events in order to be able to report on them and serve the public interest. “Through this report, the European Parliament has the opportunity to emphasize the importance of sports as a social value that needs to be promoted and reflected to the citizens. The freedom of the press to report on sport events is a key element and an essential pillar of a healthy society. Thus, the European Parliament can contribute to its protection by supporting these amendments in a report of such gravity. Specifically, EPC and ENPA are asking for the following amendments to be supported: COMPROMISE 8 Paragraph 11 Mavrommatis 184, Galeote 185, Bennahmias 186, Trüpel 187, Heaton-Harris 188 & 189 "calls on the European Commission and Member States to introduce legislation and/or strengthen existing regulations and to attach particular importance to respecting intellectual property rights relating to commercial communications, trademarks and image, names, media rights and any other spin-offs from the sporting events organisers are running so as to protect the professional sport economy while respecting the right of short reporting as stipulated by the 'Audiovisual Media Services' directive and the self-sustained and balanced development of sport, without putting at stake the proper balance between a sporting organisation's legitimate concerns and the needs of the public to be able to access and create objective, informative and topical information in the forms of written, pictorial and audio content; points out that it is also important to ensure that recipients are guaranteed the possibility of having distance access to sports events at cross-border level within the EU; in particular, problems of ambush marketing, internet piracy and unlawful sports betting should be addressed as a priority by Member States and the European Commission;"
Amendment by Manolis Mavrommatis Amendment 274 Paragraph 21 a (new) 21a. Acknowledges the right of all media to access and report on organised sporting events of public significance in order to guarantee the right of the public to receive such news and information;
EPC fought so as to exclude from the text the following lines which would have a negative impact for our sector if adopted “recognises that media rights are owned by sport organisations and sports intellectual property rights require the same protection as other media rights”.
Data protectionEurope’s privacy officials call for more data protection of childrenCompanies processing children's data may need explicit consent directly from a child to continue using it once that child reaches maturity, Europe's privacy officials have said. The child may also revoke consent given earlier by a parent or guardian. The Article 29 Working Party, a committee of European countries' data protection officials, has said that when a child becomes mature enough to make their own decisions anyone processing their sensitive data must ensure they have the child's permission and not just that of the child's representative. 'Sensitive personal data' is defined in data protection legislation and includes information about someone's ethnic origin, religious beliefs, health and more. The Working Party has outlined the requirement in its guide to children's data protection. It said that data protection policies for children must be sensitive to the point at which a child is mature enough to make his or her own decisions, and must respect those. "If the processing of a child's data began with the consent of their representative, the child concerned may, on attaining majority, revoke the consent," said the guidance. "But if he wishes the processing to continue, it seems that the data subject need give explicit consent wherever this is required." "For example, if a representative has given explicit consent to the inclusion of his child in a clinical trial, then upon attaining majority, the controller must make sure he still has a valid basis to process the personal data of the data subject. He must in particular consider obtaining the explicit consent of the data subject himself in order for the trial to continue, because sensitive data are involved," said the Working Party. The Working Party also warned of the dangers posed to children's privacy by new digital recording technologies such as the video recording features on many models of mobile phones. It said that schools must take responsibility for making children aware of one another's rights to privacy. "Schools should warn their students that unrestrained circulation of video recordings, audio recordings and digital pictures can result in serious infringements of the data subjects’ right to privacy and personal data protection," it said. The guidance also said that any organisation that holds data on a child must be more than usually vigilant about deleting that data because it will lose its relevance more quickly than data about an adult. "Because children are developing, the data relating to them change, and can quickly become outdated and irrelevant to the original purpose of collection. Data should not be kept after this happens," said the guidance. The Working Party also advised that schools be particularly careful about collecting data on children, and said that children should be able to opt out of biometric access systems which are increasingly used in schools to control access to the school. It should be simple for children or their representatives to object and be issued with an access card instead, it said. The guidance also warned schools about their use of websites. It said that private information posted online should be protected, and that schools should exercise caution when using photographs of pupils, obtaining their permission first.
TelecomsEU Aiming for agreement on mobile satellite servicesThe single most difficult telecommunications subject facing the Slovenian Presidency is mobile satellite services. Ljubljana will attempt to forge a political agreement on this, but several member states openly question whether the draft decision could genuinely achieve pan-European coverage. The idea is to introduce an EU-wide selection process and coordination among member states allowing candidate satellite system operators to deploy a pan-European network for mobile satellite services on the 2 GHz radio frequency. The Council fears that some remote areas may not be covered, thus placing certain users at a disadvantage. The European Parliament is expected to examine the proposal in April. Member states will then attempt to reach an agreement at the Telecommunications Council on 12 and 13 June in Luxembourg. Slovenia is more optimistic about the EU’s part in the Ambient Assisted Living (AAL) programme, which relies on new technologies to provide help and assistance to elderly people. A sum of €150 million has been set aside for the programme between 2008 and 2013. A political agreement in first reading is expected at the Competitiveness Council on 29 and 30 May in Brussels. However, it is unlikely that the Presidency will push on with the debate over the reform of European telecom regulations, settling rather for a status report. France will take over this controversial issue since it plans, among other things, to create a European telecoms authority. EU ministers responsible for audiovisual affairs should discuss a communication about online content and related intellectual property rights at the Culture Council on 21 and 22 May. They are also preparing conclusions on media literacy.
Diverging interpretations of EU telecoms market situationIncumbents and new operators on the European telecoms market have vastly different interpretations of the European Commission's 13th progress report on the single European telecoms market, presented on 19 March (see Europolitics 3493 and 3495). ETNO, the European association representing incumbent operators, sees the continuing increase in competition described in the report as proof that the existing regulations work well. There is consequently no need for new regulatory initiatives. "The real challenge to be taken up today," says ETNO Director Michael Bartholomew, "is to stimulate competition based on infrastructures and to encourage the roll-out of broadband networks". According to figures from the European Audiovisual and Telecommunications Institute (IDATE) mentioned by ETNO, the EU is lagging behind, with only one million users subscribing to optical fibre connections in 2007 compared to 2.5 million in the United States and some 10 million in Asia in 2006. "Reaching 30% broadband penetration throughout the EU [the objective the Commission has set for 2010] is an ambitious target that will require considerable efforts to bridge the digital divide and major investments to develop new broadband networks," argued Bartholomew at a meeting with US telecoms regulators. "There is no secret to success in broadband. The countries with the best track record (Ed.: UK, Finland, Netherlands, Sweden] are those where the regulator has taken the firmest measures to open up themarket to competition. If all countries were as determined, Europe as a whole could strengthen its position in world telecommunications," replies ECTA, the European Competitive Telecommunications Association. For ECTA, the fact that copper lines are gradually being replaced by optical fibres does not solve competition problems on traditional lines. "The incumbents currently own 85% of Europe's phone lines and most customers have only one or two lines connecting their houses," explains Innocenzo Genna. "We have to find a way to share infrastructure effectively while allowing a fair return for those investing," he concludes. ECTA reiterates its support for the Commission's proposal to introduce - in the new telecoms package submitted to the European Parliament and Council - the possibility of imposing unbundling on incumbent operators, ie a separation between service and network activities through the creation of an independent venture responsible for managing the network. This is a "possibility, not an obligation", repeated the EU's Information Society Commissioner Viviane Reding, who stressed the positive impact of unbundling in Britain, the only EU country to have adopted it, and Sweden's determination to impose it this year. The commissioner recommends a European approach: the regulator will have to assess the situation - whether or not the market develops - and obtain the Commission's backing. On investments, ECTA sees the figures in the Commission's report as an opportunity to deny the "alarmist claims that regulation would undermine investments". By making such claims, the incumbents are trying to protect their virtual monopolies by diverting the attention of policymakers. According to the report, growth in the sector (+1.9% in 2007) rests on total investments of €50 billion, with new entrants participating at twice the level of incumbents. ETNO nevertheless stresses the ongoing slowdown in growth on the telecoms market, quoting IDATE figures: 1.7% in 2007 compared to 2.4% in 2006, 3.4% in 2005, 5.2% in 2004 and 6.2% in 2003.
The 13th Progress Report on the Single European Telecoms Market 2007Frequently Asked QuestionsWhat is the objective of the 13th Progress Report on the Single European Telecoms Market 2007? The 13th Progress Report on the Single Telecoms Market gives a snapshot of the EU’s Telecoms market and the main regulatory developments that took place in 2007. It is based on facts and figures from national telecoms regulators and market players, verified by the Commission services.
Why is Telecoms regulation necessary? Telecoms regulation has led to market liberalisation and competition, with significant progress leading to a reduction of regulation in areas where competition is functioning. However, there are still problem areas where regulation remains necessary. In the fixed sector, for example, incumbent operators still have considerable reach and the market shares of alternative providers remain very low. 86.5% of consumers are still offered access to the fixed network over the incumbent's infrastructure. The same applies to the broadband sector. Moreover, there are areas where inconsistent application of EU directives in the Member States has led to discrepancies which hinder the proper functioning of the Single Market. This includes discrepancies in Mobile Termination Rates and number portability.
Why is the European consumer better off in 2007 than in 2006? 2007 saw consumers benefit from lower prices and a better choice of services. Prices for mobile services fell by almost 14%, while the entry into force of the Roaming Regulation tackled high prices for mobile voice calls when travelling across the EU. Consumers have made savings of around 60% for roaming calls. Apart from lower prices, consumers benefited from increased platform competition such as mobile broadband and higher-speed fixed services, particularly over fibre. Consumers took advantage of more bundled offerings: 13% of Europeans now subscribe to a bundled offer with a single bill; 12% of Europeans include television in their bundled package, 23% include voice telephony, 6% include mobile telephony and 24% include Internet access.
Is Telecoms regulation the friend or the enemy of investment? Investment by operators in the European Telecoms sector has increased year-on-year (a 16.33% increase over the past 5 years) and exceeded €50 billion in 2007. This is similar to the US and higher than China and Japan put together. What is still missing in Europe is a sound regulatory environment for cross-border investment. Only 30% of major operators' EU business is outside their home market. This is why strengthening the single market, and competition in the single market is the best recipe for Europe to overtake other continents in terms of growth and investment.
How do Member States compare in terms of penetration? What has changed from last year? Strong broadband growth has continued throughout 2007. The number of fixed broadband access lines was nearly 100 million as of 1 January 2008, up from 80 million in January 2007. The EU average broadband penetration rate has risen from 16.2% in January 2007 to 20.0% in January 2008. Denmark, Finland, the Netherlands and Sweden are world leaders in broadband deployment with penetration rates over 30% at the end of 2007. These EU countries, together with the United Kingdom, Belgium, Luxembourg and France, all had broadband penetration rates higher than the US (22.1%) in July 2007. 19 million broadband lines were added in the EU in 2007, the equivalent of more than 50,000 households every day. The broadband sector generated estimated revenues of € 62 billion and Europe’s overall penetration reached 20%. The gap between Member States with the highest and the lowest penetration has increased from 27.4 percentage points in January 2007 to 28.0 percentage points in January 2008.
Why is the mobile market still growing? The mobile sector continued to grow by 3.8% in 2007 reaching €137 billion, thus remaining the largest segment in the Telecoms market. Higher mobile penetration (up from 103.2% the previous year to 111.8%, meaning that consumers start having multiple mobile phone subscriptions) and the take-up of mobile data services such as mobile broadband more than compensated for a 14% fall in prices. The popularity of SMS also contributed to this growth. There are now more 3G networks offering mobile services than 2G networks. This is enabling mobile operators to increase data usage on their networks through, for example, mobile broadband offers. Meanwhile, mobile termination rates, which operators charge each other for completing calls on their networks, fell to 9.67 euro cents, though major discrepancies still exist between Member States.
Why do most European subscribers still use the network of the incumbent to get a fixed telephone line? Only 13.5% of subscribers use an alternative provider for direct access in Member States across the EU. In 12 Member States they are even less than 5%, this showing that there is still a lack of direct access competition. There are alternative network solutions such as cable and fibre. However the main source of competition in the fixed voice market remains largely based on indirect access wholesale products such as carrier pre-selection (i.e. the ability for a subscriber to select another operator by using a prefix permanently) and carrier selection (i.e. the ability for a subscriber to select another operator on a call by call basis).
Why is the independence of national regulators so important? National regulatory authorities (NRA) are the backbone of the regulatory framework. The independence shown in pursuing their tasks such as promoting competition, contributing to the internal market or defending consumer interests is critical for the credibility and effectiveness of regulation at national level. This is a fundamental principle of the regulatory framework, which the Commission takes very seriously. In 2007, there were still problems regarding regulator's independence in Bulgaria, Poland, and Luxembourg.
To what extent are consumers benefiting from lower prices? Apart from falling mobile prices described above, broadband prices have in general decreased while speeds have increased. After 10 years of constant reductions in fixed telephony prices, national prices are now stabilising with prices falling by around 0.3% during 2007. Meanwhile, according to the Eurostat e-communications household survey, 16% of Europeans using a PC are making free calls on the Internet to other users who have subscribed to the same Internet phone service (in the case of Czech Republic and Latvia the percentage is 45% while for Poland it is 44%). Moreover, 4% of Europeans are making cheap international calls or calls to mobile numbers using VoIP technology via the fixed line.
What is the state of play regarding number portability for fixed and mobile users in Europe? Last year more than 12 million consumers were able to switch operators while retaining their fixed or mobile numbers – 'number portability', a service which is now possible in all Member States except for Bulgaria and Romania. There are still major inconsistencies across Member States in terms of time taken by operators to actually implement the change. On average, it takes about eight days to port fixed and mobile telephone numbers. The best performers for mobile portability are Malta and Ireland (just one day) followed by Germany and Austria (3 days). However, porting a number in Italy and Slovakia can take 20 days. The best performer for fixed portability is France (only 4 days), while in Estonia and Poland, porting a fixed number takes 30 and 22 days respectively. This regulatory tool is an important competition enabler, and is also addressed in the EU Telecoms Reform proposals. Once adopted by legislators, it will be possible for consumers to switch providers and retain their telephone number within one working day.
What are mobile termination rates? Why are they regulated? And why do divergences between mobile termination rates call into question the Single European Telecoms Market? Mobile Termination Rates (MTR) are the wholesale charges by one operator to another for connecting calls between their mobile networks. They are currently regulated in almost all EU countries by the national telecoms regulator to avoid distortions of competition. Average MTR dropped below 10 cents for the first time this year to 9.67 cents, a fall of 12% compared to 2006. However, average MTRs still vary widely across the EU. The highest MTR in absolute terms charged by an operator in the EU is more than 10 times higher than its lowest. In Cyprus, one operator charges as little as 1.9 Euro cent/min to connect calls from other operators' networks to its own, while in the case of Estonia, there is an operator that charges up to 22.4 Euro cent/min. A common approach to overcome these discrepancies is still needed to achieve the Single European Telecoms Market.
Why has the European Commission proposed, in November 2007, a reform of the EU Telecoms Rules? Europe has a strong Telecoms sector thanks to the current EU Telecoms Rules of 2002. But the sector fails to reach its full potential if Europe does not remove the barriers to the Single European Telecoms Market. Positively, 27 national markets have progressively opened up to competition and consumers today have more choice at lower prices than 10 years ago. Yet there are still significant obstacles. Competition bottlenecks persist, in particular on the important broadband market which is key to our knowledge society. Cross-border competition and pan-European services are hampered by 27 different, partly inconsistent regulatory systems. Finally, radio spectrum, the lifeblood of all wireless services, is under-utilised in the EU, despite its strong potential to enhance competition, to extend broadband coverage and to deliver better, more innovative services to the citizen. A reform of the EU Telecoms Rules is therefore imperative if Europe wants to promote growth and jobs for its citizens. The EU Telecoms Reform must ensure that 500 million EU citizens get easier and cheaper access to a variety of innovative telecoms services and will have, as a result of more effective competition, more freedom of choice between different operators. Citizens, wherever they are in Europe, must get better access to emergency services, improved access to telecommunications (for people with disabilities), freephone numbers and the benefits of increased price transparency and greater security when using communications networks. For more information on the Commission's proposals for a reform of telecoms regulation in Europe, see IP/07/1677.
EU: Telecoms still a mainstay in spite of slow growth – but still work to be doneAccording to the Commission’s report, the European telecoms market continued to fare well in 2007 in spite of slower growth in broadband and mobile services. Prices paid by consumers, in particular mobile phone users, continued to decline. Earnings from fixed telephony continued to drop as mobile services and voice over internet (eg Skype) have expanded. These are the main findings of a draft report on the telecoms market and on the implementation of telecoms regulations in the EU, set to be adopted by the European Commission on 19 March. Growth in telecoms in Europe is admittedly low – 1.9% in 2007 – but the sector is still a pillar of the economy, making up 44% of the value of information and communication technologies (ICTs), with €293 billion generated in 2007, compared to €289 billion a year earlier. Telecoms "continue to be a mainstay of the European economy, accounting for around 12% of growth in labour productivity," notes the Commission. Investments rose slightly, from €47 billion in 2006 to over €50 billion in 2007. While they have increased steadily for the past five years, their slow growth is due to the fact that mobile telephony has reached a limit, with network coverage almost complete, explains the Commission. The incumbent operators invested some 13.5% of their earnings in 2007, about the same level as in 2006. Alternative operators invested 25% of their earnings, and even 30% in France and Italy. In Germany, investment levels among incumbent and alternative operators are equal. The report, which analyses the period to 1 October 2007, also represents an opportunity for the EU executive to justify its recent telecom package reform proposals in support of competition, deployment of broadband and mobile services. It also reiterates the necessity of strengthening the coherence of regulations. In spite of the success of the regulatory framework where it is correctly implemented, the Commission gives the national regulators "considerable latitude" when it comes to strategy and rules. As a result, "the regulatory environment is often based on incoherent approaches, which represents a major obstacle to completion of a single market and its economic advantages". The Commission has in its sights the regulation of mobile termination rates, which it wishes to harmonise, treatment of voice over internet, mobile number portability and non-discriminatory access for alternative operators to incumbents' networks. The Commission has proposed the creation of a European telecoms authority that would assist it in its regulatory work, which would be stepped up: the EU executive wishes to be able to veto remedies imposed by national regulators in case of competition problems and, if necessary, to be able to impose another more appropriate remedy, with the assistance of the authority. This proposal has caused a stir in the Council and the European Parliament (see Europolitics 3487). Digital divide There is still a great deal of work ahead on broadband, in spite of continuing growth (€62 billion, as against €58.5 billion in 2006). The European penetration rate was 18.2% in July 2007, compared to 21.3% in Japan, 22.1% in the United States and up to 29.9% in South Korea, reports the Commission (see Europolitics 3432). While Denmark and the Netherlands cap the 30% level, the digital divide has grown between the top and bottom performers, from 27.4 percentage points in January 2007 to 28.4 points in July 2007. There are still big gaps between urban regions with good coverage and rural regions: broadband coverage in rural areas is 71.3%, compared to 89.3% at national levels (94% in urban areas alone); cable coverage is 7.4% in rural areas compared to 35.6% at national level. These differences are particularly pronounced in Slovakia, Italy, Latvia and Germany. To bridge the gap, the Commission has proposed the use of frequencies freed up by the switchover from analog to digital television, to the consternation of broadcasters, who wish to keep their frequencies. Although text messages continue to provide an important source of income for mobile operators (around 14% of their earnings), other data such as mobile internet use now account for 7% of turnover, up from 5% in 2006. The Commission intends to tackle the prices charged for text messaging and data services between EU countries, as it did for mobile voice telephony services, if operators do not lower their prices by 1 July. The Single Telecoms Market... there is still a lot to do The Commission's telecoms report also identifies areas where the Single Telecoms Market is incomplete:
Audiovisual sectorCroatia first candidate country to join EU MEDIA 2007 programmeCroatia has become the first candidate country to join the MEDIA 2007 programme was signed by Viviane Reding, EU Commissioner for Information Society and Media, and Ambassador Branko Baricevic, Head of the Croatian Mission to the EU. Croatia is the 32nd country to join the MEDIA programme for the competitiveness of the European audiovisual industry, and the distribution and exhibition of audiovisual works (following the EU27, Iceland, Liechtenstein, Norway and Switzerland). The total budget for MEDIA 2007 is € 755 million for 2007 to 2013. “I warmly welcome the entry of Croatia in the MEDIA 2007 programme which confirms its willingness to actively participate in the promotion of Europe's audiovisual industry and of Europe's cultural diversity. I am convinced that Croatia's participation will give a push for a more active cooperation between the film industries of EU countries and the Croatian film industry," said EU Media Commissioner Reding. "MEDIA 2007 will help Croatia promote Croatian films and distribute them more widely across borders and allow more audiovisual works from the rest of Europe to find an audience in Croatia." MEDIA 2007 will strengthen the competitiveness of the Croatian audiovisual sector by facilitating access to financing and supporting the transition towards digital technology in the development, distribution and promotion of audiovisual works, and by helping the training of Croatian film people and the cooperation between film schools. Croatia's participation in MEDIA 2007 is a result of its progress in complying with EU audiovisual rules and acquis, in particular the Television without Frontiers Directive. Croatia will, as all non-EU participating countries do, contribute to the budget of MEDIA 2007 (contribution will be of 127 333 euros in 2008 and increase to 139 546 euros in 2013). Croatia has a vibrant film industry with spectacular, unspoilt locations and exceptional local talent, both in front of the cameras and behind the scenes. Croatian films have already received international recognition: Ta divna splitska noc (That Wonderful Night in Split) by Arsen A. Ostojic nominated for the European Discovery EFA award in 2004; Tu (Here) by Zrinko Ogresta which won the Special Prize of the Jury of the Karlovy Vary Film Festival; Oprosti za kung Fu (Sorry for Kung fu) and Armin by Ognjen Svilicic both premiered at the Berlin Film Festival in 2005 and 2006.
Freedom of the pressThe Commission supports committed journalism: Launch of Lorenzo Natali PrizeThe European Commission has launched the 16th edition of the Lorenzo Natali Prize. This prize is awarded to journalists defending human rights, democracy and development. This year it is open to all journalistic media: radio, television, written press, Internet. The European Commissioner for Development and Humanitarian Aid, Louis Michel, said: "The Lorenzo Natali Prize is a symbol of the freedom of speech that it is our duty to promote. Without information, without the media, the world loses its memory of the past, its awareness of the present and the debate about the future. That is why, through the Lorenzo Natali Prize, Europe offers its support to journalists who speak out to defend development, democracy and human rights". The Natali Prize was established in 1992 and is open to the press worldwide (1500 journalists from 164 countries in 2007). This year entries may come from journalists using any of the 21st century media: radio, television, written press and on-line. Journalists wishing to enter may do so up to 30 June 2008 (www.nataliprize2008.eu). Prizes will be awarded in November at a special ceremony to be attended by European Commissioner Louis Michel during the European Development Days in Strasbourg. There will be a total of €50 000 in prize money for journalists from Africa, Europe, Maghreb/Middle East, Asia and Latin America/Caribbean. The Prize is an integral part of the European Commission's development policy which sees defending freedom of speech, democracy, human rights and development as action in favour of good governance, peace and progress, and for improving living conditions in the poorest countries. To help in organising the Lorenzo Natali Prize, the European Commission is this year working with two of the world's best-known press associations: Reporters Without Borders, winner of the Sakharov Prize for freedom of thought in 2005. World Association of Newspapers, representing a total of over 18 000 publications across five continents.
VATCommission consultation on VAT RatesThe Commission has launched a public consultation on possible changes related to the reduced VAT. The publishing sector will not be among the Commission’s first priorities. This will come at a later stage. The Commission is, however, asking in the questionnaire whether it would be sensible to include the online press in the Annex III of the VAT Directive the press on line and music on line. Regarding audiobooks, the consultation says that “Some adjustments for technical reasons and for the sake of coherence and clarity may also be addressed in the 2008 Commission proposal. This might, for example, be the case for audio books [...] an ISBN (the International Standard Book Number) identification number marks any book unmistakably and should audio books be assigned a code similar to the identification number for the paper format, they could equally be considered as books and be eligible for reduced rates. http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/rates/index_en.htm
RegulationEPC invited to SMO HearingThe EPC took part in a Hearing organized by the Single Market Observatory (SMO) of the European Economic and Social Committee on "The Current State of European Self- and Co-Regulation" on Monday 31 March 2008 in Brussels. The purpose was both to allow for an exchange of views on alternatives to classic regulation and to present the database dedicated to European self- and co-regulation initiatives (http://eesc.europa.eu/self-and-coregulation/index.asp), which the EESC developed in close cooperation with the Secretariat General of the European Commission. Feedback on the event will be reported in the next newsletter.
LobbyingLobbyists - The Parliament goes for more transparencyThe Constitutional Affairs Committee of the Parliament has adopted a report by Alexander Stubb MEP on activities of interest representatives (lobbyists) in the EU. "Lobbies are an essential part of the work done by MEP's. Policy-making would be very poor without their contribution. With this report we ensure a level playing field to lobbies and increase transparency", Mr Stubb says. Stubb continues: "We welcome the Commission's proposal to include financial disclosure. Among other means we call for a common register and common code of conduct between Parliament, Commission and Council. This is a major step forward." "This report should clarify some of the myths around lobbying. The report is fully supported by the EPP-ED group", says Inigo Mendez de Vigo MEP, Spokesman of the EPP-ED Group in the Committee of Constitutional Affairs. The report envisages a joint high level working group between the institutions to work on the details of e.g. financial disclosure. The Committee considers that mandatory registration should be a requirement for lobbyists wanting a regular access as is already the case in the Parliament. It asks also for disclosure of support received by the intergroups. The idea of a legislative footprint is acknowledged. It is estimated that there are about 15 000 lobbyists and 2 500 lobby organisations in Brussels. For example in-house lobbyists, NGO's, professional consultancies, law firms, trade associations and labour unions all play an essential role in the open and pluralistic dialogue of the EU legislative process. According to Mr Stubb lobbying should be defined as broadly as possible excluding roles foreseen in the Treaties: "Anyone who comes into my office and tries to influence a piece of legislation, is a lobbyist in my eyes." Further information:
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