Regulation
The regulatory background for electronic communications is defined by a set of Directives which have been negotiated and agreed upon by the EU Member States and the European Parliament. Those Directives currently in force in relation to telecommunications are about to be replaced by a new consolidated set, which will continue the de-regulatory liberalising stance of the present ones and extend these principles to broadcasting and other forms of electronic communication. So, while the concept of liberalised communications may be said to have been tried and tested in the telecommunications sector, the extensions beyond that sector will trigger some major practical considerations of crucial importance. The process of telecommunications liberalisation is by no means complete, and the pattern so far developed in that sector does not fit exactly with the procedures of broadcasting as currently practised. Furthermore, technological and commercial developments in both sectors require the process of regulation to be subject to constant review as service innovations introduce new priorities and alter expectations. The new set of Directives, in an attempt to achieve 'future-proofing', provides in the main a broad framework of de-regulation. Such detail as is included relates in the main to the experience gained from de-regulation in the telecommunications sector. Member State Governments and their regulators will therefore have to interpret these broad requirements in a way which suits their national policies - the 'subsidiarity' principle - while adhering to the essential liberalisation objectives as agreed in the Directives. The draft Communications Bill sets out the proposed United Kingdom approach.
The present Directives concerned with telecommunications deal only with network services. The content that is carried over telecommunications networks is almost entirely a private matter and the terminal equipment - that is, the sending and receiving apparatus that customers connect to the networks - has been separately de-regulated so that it is now treated as a category of general consumer products. Inclusion of broadcasting, by the extension of the scope of the Directives to cover electronic communications of all kinds, brings in content provision as a third element. The new Directives therefore recognise horizontal separations of electronic communications to produce the three levels of content provision, transmission networks and receiving equipment. As these are essentially Single Market Directives, they are aimed at ensuring free and fair competition, with constraints on monopoly power, while providing adequate measures of consumer protection. They will aim to ensure that content providers have ready access to the networks; that anyone who has obtained radio spectrum allocations or landline wayleaves is entitled to operate a network; and, as a separate matter, that a free market in receiving apparatus gives consumers a wide choice of equipment with which to utilise the network services.
As noted earlier, the communications regulator OFCOM will have a very limited role in respect of receiving equipment. Radio and telecommunications terminal equipment (RTTE) has been de-regulated by a separate Directive which allows Member States little scope for applying national requirements. Apart from spectrum management considerations for radio terminals, the regulator will have no power to intervene. Domestic radio and television receivers are exempted from the RTTE Directive, however, because they were already treated as electrical consumer goods and OFCOM does have a role here by contributing to the setting of standards for digital receivers. In particular, common European Standards for digital television sets need to match the technical standards adopted for the transmissions, without creating a situation where receivers become specific to particular networks, or where special receivers become necessary to obtain accessibility features such as subtitling or audio description.
In order to achieve their aims, the Directives create obligations for monopoly owners of communications infrastructure to share that resource, at charges for interconnection which are freely negotiable subject to the regulator's intervention if there appears to be any abuse of market power. This requires a major culture change, especially where that monopoly owner is itself an agency of the State. To a greater or lesser extent, this has already been brought about across the telecommunications sector in the EU, although there are some notable areas of difficulty. Even in the UK, where British Telecom has long been privatised, the difficulties in providing open access to the 'local loop' circuits demonstrate the kind of real procedural problems that can delay the process. When a vital part of the infrastructure has traditionally been 'owned' by a single organisation, and when duplicating it would be prohibitively disruptive and expensive, finding an equitable means of permitting shared use may be no easy matter. Applying this principle to terrestrial broadcasting, where the transmission networks have long been associated with specific broadcasters, is likely to cause much argument.
The new Directives permit national regulators to apply 'must carry' conditions to transmission networks, and this feature is carried through into the draft Communications Bill. As drafted, the 'must carry' requirements are for transmission of the digital services of the BBC, Channels 3, 4 & 5 and the Teletext service. No mention is made in the draft Bill of accessibility features such as subtitling, audio description or signing, although obligations to provide these are applied to the content providers. Since additional channel space is needed to transmit these features if they are to be available on demand, they will need to be included in the 'must carry' list so that, in conjunction with receivers designed to an appropriate common European Standard, an end-to-end service that is accessible can be offered.
The facility to apply 'must carry' obligations derives from the new Directive on Universal Service and Users' Rights, which sets out the scope for national regulators to apply various important consumer protection measures in the electronic communications sector. The concept of universal service in fixed line telecommunications is familiar, but its extension to mobile networks and broadcasting breaks new ground. The principle is that the regulator may designate a service provider to deliver an essential element of service if commercial market forces fail to provide. If the designated provider incurs a net financial loss in delivering that part of the service, there is a mechanism for cost recovery by means of a levy on the other operators in the sector, although OFTEL has so far concluded that its designated providers of universal service in telecommunications do not experience any net loss. The new Directive expands this principle, not only by removing the limitation to fixed telecommunications networks, but also by stressing that consumers who are reliant upon universal service should be entitled to some freedom of choice in their supplier. It also allows for other funding mechanisms, such as Government subsidy, in addition to the possibility of a levy, and it creates the possibility of various universal service packages, with several providers each undertaking a set of the functions rather than the whole.
These changes to universal service are significant. If consumers are to be given some freedom of choice in their designated provider, it follows that universal service designation would be triggered in circumstances where market forces are delivering but there is no choice of operator. Universal service then ceases to be the fall-back when there is no provision, but becomes instead a form of subsidy to encourage competition for marginally viable operations. A universal service issue which has been raised in telecommunications is the matter of provision of accessible terminal equipment. If terminal apparatus needed by disabled users is not available in the market-place at affordable prices, can the regulator invoke the universal service mechanism to redress the situation? This question is not resolved and it will doubtless appear on OFCOM's agenda.
Universal service in the context of broadcasting is virgin territory. It may become necessary to invoke some form of universal service designation to protect the position of the BBC in public service broadcasting, for otherwise it would be hard to justify the imposition of a tax on consumers (the licence fee) which was applied exclusively for the benefit of one selected broadcaster. There are implications here which go far beyond the scope of this paper, but in a liberalised European environment there have to be good reasons for giving favourable treatment to one player. The good reasons might be that the player provides a necessary set of services that a purely commercial market could not support.
The provision of accessible broadcast services is not of itself a universal service matter. It is not sufficient to have facilities such as subtitling and audio description offered only by a few designated providers. The setting of quotas for these services by the regulator forms part of the content regulation function and, as such, it serves to demonstrate what is reasonable. Other broadcasters should follow that lead and make reasonable adjustments in the delivery of their own services. Experience with telecommunications has shown that the universal service fall-back does not operate when there is a legal requirement to provide the facility concerned. Compliance with the law is part of the normal commercial market scenario, the market-place delivers - albeit unwillingly - and so designation is not called for and the costs of compliance are not recoverable through universal service mechanisms.
Because of these uncertainties, it is to be expected that the format of regulation in the era of liberalised broadcasting will develop slowly. A significant imponderable is the degree to which electronic communications originating outside the territory, such as satellite and Internet transmissions, can be regulated effectively. Over-regulation of territorial providers in comparison to others could damage national and European interests. What is most important for disabled people is that OFCOM should consider their needs throughout the developing processes and act appropriately, rather than defer consideration to a quieter moment when other priorities have been addressed.
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