Pay TV, VOD rules under EC microscope


BRUSSELS -- The European Commission on Monday unveiled plans to revise the 10-year-old rules governing pay TV and video on demand in the EU.

The commission kicked off the process by launching a consultation with governments, broadcasters, telecoms operators, rights holders, sports bodies and consumer groups on how to reform the 1998 EU directive on conditional access services.

The consultation will be open until April 4 and cover issues including the development of cross-border services; implementation in the EU member states; whether the directive can cope with new services like the Internet and mobile broadcasting; whether it can offer adequate copyright protection; and digital rights management systems.

The contributions will feed into the commission's eventual policy proposals, which should be published by the end of 2008.

The 1998 directive set a common standard of legal protection for conditional access systems across the EU. The commission says it has boosted the supply of audiovisual services, helping producers and rights holders, who have seen demand for their productions and events increase.

"However, the substantial value of these markets has also stimulated a new type of piracy: sales of illegal equipment enabling users to decode programs without paying the broadcaster," the EC said.

The commission also admits that the EU broadcasting market has remained fragmented. "In nearly all cases, pay TV channels are broadcast exclusively within the country in which they are based," it said. "Broadcasters have continued to only buy rights to broadcast in their own country, mainly because they see no commercial interest in broadcasting beyond their national boundaries."

Consumers seeking services from outside the EU country they live in often obtain subscriptions using fictitious addresses (those of family members or friends) or use new technologies enabling them to use an existing subscription at home while they are on the move abroad. Known as the "grey market," this breaks the territorial restrictions in contracts between rights holders and audiovisual broadcasters.

The commission's initial view of the directive already has been shaped by a special impact assessment it ordered, which says that strengthening the existing regulatory framework would help improve copyright protection. The study says that the fragmentation of the European audiovisual industry as well as the competition between free-to-air and pay TV versions create many more incentives for hacking or piracy, compared with the U.S. It also says that sanctions and enforcement differ across EU member states.