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Mr Erkki Liikanen
Member of the European Commission, responsible for Enterprise and the Information Society
"The New Communications Directives and their benefits for the Audiovisual Sector"
European Voice Conference "Television without Frontiers"
Brussels, 21 March 2002
Ladies & Gentlemen
I welcome the opportunity to present the benefits that the new Communications Directives will bring to broadcasters. For the first time, there will be common, horizontal regulation embracing all networks.
As technologies converge, a horizontal approach is essential for a level playing field between all networks. Fair competition between networks is a pre-condition if the Union is to achieve the benefits of convergence and fulfil the Lisbon objective: "To become the world's most dynamic and competitive knowledge-based economy".
Thanks to convergence, broadcasters will benefit from a wider choice of networks and terminals.
New broadband networks are already being made available such as digital subscriber line for high bandwidth over an ordinary phone line. This offers a return path for interactive television and can even enable television distribution next to traditional mechanisms like terrestrial, cable and satellite.
Mobile networks will become another alternative. They can likewise be used as a return path for interactivity. Somewhat further in the future is the combination of a 3G mobile terminal with a digital broadcasting receiver. This is being explored in the EU's Information Society Technologies programme to enable new forms of interactive television such as mobile multi-casting.
Combining the networks offers tremendous flexibility for delivering Internet and multimedia services. Clever network software squeezes the most requested data that are related to the TV services in the broadcast signal. The individually-requested data are then sent through the interactive channel, which can be the cable, a fixed phone line or the mobile network.
Interactive television has a large market potential. There are already successful applications, notably the Electronic Programme Guide. This EPG is essential for navigating through the plethora of television channels available on new digital platforms.
Broadcasters are working hard to add sophisticated interactivity to their programmes. You can expect to follow tennis championships in greater depth by choosing a viewing angle, or explore details about the Titanic as part of the watching the movie.
Some of the most exciting potential lies in delivering Information Society services. Home banking using a digital decoder is already on offer in some markets, for instance. Some platforms also offer Internet services like e-mail and electronic shopping. Interactive personalised television advertising is being explored as well.
For broadcasters, the technology-neutral approach of the Communications regulatory package opens new opportunities to benefit from this widening choice of networks, platforms and technologies. The package will stimulate competition between pipes. The longer-term interest of broadcasters and others lies in having a healthy and competitive network sector.
The Radio Spectrum Policy Decision is another interesting feature of the Communications package for broadcasters. One of its main objectives is to introduce greater transparency into radio spectrum usage. The process whereby radio spectrum is allocated to different user groups needs better linkage with public policy.
The new mechanisms and structures set up in the Decision will contribute to improved management of spectrum. The spectrum policy platform will take into account the needs of all spectrum users, both commercial users and non-commercial users like radio astronomers. Of course broadcasting will be included in the group's remit.
The new Framework contains many new ideas, both in terms of regulation and policy. Therefore it also demands new thinking. Instead of regulation which mixes both infrastructure and content, the two are now separate. Separation means that broadcasters must think more about the network component in their strategies.
A new style of regulation to fulfil the Lisbon objective
The underlying idea behind the new Communications Directives is to only regulate where necessary, and to roll back regulation once competition becomes effective in a market. The aim is to focus regulation where it is needed, usually by controlling bottlenecks due to significant market power of individual operators.
The new Directives therefore leave many matters to commercial negotiation. This is very different from the historic approach in broadcasting.
Market power in digital television is based on control of "associated facilities". These are gateways like conditional access, applications program interfaces and electronic programme guides. The new Directives guarantee that broadcasters will continue to benefit from access to conditional access systems on fair, reasonable and non-discriminatory terms. National regulatory authorities can also take steps to ensure access to applications program interfaces and electronic programme guides under similar terms.
A key benefit for broadcasters is that the new framework gives regulators the possibility to address any new gateway immediately without new legislation.
The new framework is more a mechanism than a static set of rules. It uses competition law tools so these Directives can keep up with technology. If a new technical gateway appears, national regulatory authorities may define it as a market and assess significant market power. Then they apply any necessary access remedies.
We have already included Application Programme Interfaces and Electronic Programme Guides in the new framework. Potential future gateways like personal video recorders or digital rights management systems can be addressed in due course - if necessary.
With the new framework, regulation is like town-planning: all the land is shown on the map but one does not construct buildings everywhere. Markets need open spaces, just like we do.
Interoperability: an important user right
Interoperability is an important user right, addressed in the framework's Universal Service and User Rights' Directive.
Today, consumers cannot receive all digital televison services on one piece of equipment. None of the current proprietary systems are interoperable. There was no agreed open standard for interactive digital TV when the market started; so players had to select whatever was available at the time.
Now industry has developed the Multimedia Home Platform standard (MHP). This a standardised Applications Program Interface (API) developed to replace proprietary ones. For interactive television, API software performs a similar task to Windows on PCs, Apple Mac operating system and Linux in the computing world. MHP standardisation is based on the consensus building approach that resulted in the success of Europe's digital television standards in the transmission field.
Making MHP successful requires the willingness of all market players to work towards voluntary migration.
I took two commitments in the European Parliament, to strengthen the implementation of MHP:
In addition we are also actively encouraging the industry to develop a Memorandum of Understanding, to act together for the speedy implementation of MHP in Europe.
If the Commission finds that there is insufficient interoperability and choice for users, the possibility exists under the new framework for making standards mandatory. I hope this will not be necessary !
Interactive TV, Internet & social inclusion
I will complete my talk by explaining the potential of interactive television for our overall Information Society policy, that is eEurope.
The eEurope 2002 Action Plan has become a main pillar of the Lisbon strategy. It has successfully delivered so far. Decision making in key areas such as telecoms and e-commerce, network security, etc has been accelerated. Internet take-up has exploded. The Internet is now on the top of the political agenda. eEurope has become an example across the world.
At the Vitoria informal telecoms council meeting, I listed my priorities for the next step to be taken, which is eEurope 2005. They are:
I want to talk about number three, digital inclusiveness for all Europeans. All Europeans should be given the ability and opportunity to draw the benefits of the knowledge society. Digital inclusion is a social imperative and a duty of the welfare state. But it is also a condition for economic growth.
Access for all begins with proper education and the development of skills to make use of the Internet. This holds for schools and for training on the job. At the individual level we have to ensure through pro-active policies access for people with special needs such as the elderly and disabled.
Access for all should also become a geographic reality. No part of the EU territory can be excluded from the knowledge society.
Finally, access for all has a social dimension. Digital exclusion is often a reflection of discrepancies in income and education levels. The multiplication of public Internet access points and cybercafés is part of the answer. Reaching everybody means promoting alternative access terminals that are in people's pockets like mobile terminals and in their homes the TV set.
Interactive television offers the prospect of Internet on television and extending Internet penetration beyond those who own computers. Interative television and 3G mobile terminals closely fit the lifestyle of many people who are not PC-oriented. They too will then be able to make use of online public services and attractive interactive content provided by the private sector.
Migration towards a common standard would make it easier for content providers and equipment manufacturers to invest in interactive television. MHP could make a major difference here.
Of course we need to be careful with this kind of policy objective. Interactive television is a nascent activity and many market players seem uncertain of its future direction: walled garden content or full Internet access? Who knows? Probably both will co-exist.
Many people easily become excited by new technologies, but are quick to tire when their hopes are not immediately realised. Typically commentators exaggerate short term potential and underestimate long-term impacts. Even some market players have exaggerated the short term interactive TV and are scaling back their expectations.
Commissioner Reding pointed out that developing technology is one thing there is always a lot of hype - but getting the public to accept new technologies is quite a different challenge. Indeed, consumers will need time to become accustomed to interactive television.
But the longer term looks promising for Internet on TV: broadcasters will increasingly be using Internet protocol in their transmissions over the next few years; consumers will be buying many new innovations that could help Internet on television. High capacity hard disk drives that act as personal video recorders are an example.
We will not be regulating to impose Internet on TV. Regulation and promotional policies are separate. A socially inclusive Information Society demands that we should strive to stimulate Internet on digital television through all promotional means, especially research projects to fill any technological gaps.
To conclude, I summarise my main messages.
Broadcasters will derive important benefits from the new Communications Directives.
What do broadcasters have to do in order to get the best out of the framework?
What will we do to ensure that broadcasters enjoy these benefits?
The Commission is completing its work on the secondary measures necessary to complete the package, like the Recommendation that will identify markets that may be subject to ex-ante regulation.
The Commission will publish a list of standards later this year in the Official Journal; Member States must encourage use of these standards following transposition. MHP will be included.
We will deliver a review of interoperability and user choice in interactive television in 2004, in line with our regulatory responsibilities.
We will also deliver upon the requests from the Barcelona Summit, which gave top-level political commitment to eEurope 2005. We will develop an eEurope 2005 Action Plan by May.
The Summit also called upon the Commission and the Member States to foster the use of open platforms for access to applications and services of the Information Society, mentioning notably digital television and 3G. The Commission is invited to present a comprehensive analysis of the remaining barriers at the Sevilla Summit in June.
We therefore have a clear commitment and roadmap to realise the potential of the Internet and digital television for widespread access to the Information Society in Europe.