Kate Bulkley, Media Analyst.

Joined-up media: Industry under scrutiny

By Kate Bulkley

The Guardian

January 14th, 2008

It's going to be a hectic year for Ofcom. The regulator, still busy looking into pay TV, is now due to review public service broadcasting

There is a lot on the regulatory plate in 2008. The next 12-18 months will see the implementation of the new Audiovisual Media Services (AVMS) directive from Brussels in member states across Europe; Ofcom's public service broadcasting review will begin in earnest and its review of the pay TV market will continue; and a report on protecting children from harmful internet and mobile content will be published.

There is also likely to be pressure from the UK government for stricter TV advertising rules, plus moves in Brussels to create a "super-regulator" for all telecommunications regulations across Europe.

The next 12 months is crunch time for the directive as national regulators decide how closely to follow Brussels' lead on a wide variety of topics - from TV product placement to increased advertising minuteage to how to implement rules on "TV-like" services on the internet.

As far as Brussels is concerned, under AVMS, TV broadcasters can have 12 minutes per hour of advertising throughout the day, but Ofcom must decide if this makes sense for the UK culturally and whether more ad time favours ITV, the biggest commercial broadcaster, against the rest. How Ofcom decides could have a profound impact in the medium term on financing of the TV industry.

Meanwhile, the UK government seems intent on further restrictions on ads for socalled "junk food" and alcohol at the very time when, according to Group M, part of WPP, TV ad spend is projected to grow only by 1% over the course of the year. As to the directive's call to regulate ondemand "TV-like" internet content, many observers think this is more an aspiration than a practicable rule. "A lot of the concepts in the AVMS directive are likely to be obsolete by the time it gets implemented," says Ingrid Silver, media partner at Denton Wilde Sapte.

"For example, the directive doesn't apply to non-commercial activities on the internet, but remember the Mentos and Coke videos on YouTube that were begun by a couple of guys? Then, Coke came in and started to sponsor these videos, so at what point did they become commercial? Things are changing so fast that the regulators may have to go back to the drawing table and start again before the rules are even implemented."

This year will see Ofcom start phase one of the new public service broadcasting review, and by the end of 2008 we might be a little closer to knowing if Ofcom's proposed public service publisher (PSP) has a future in providing plurality of provision in public service broadcastng. Ofcom's related review into the funding of Channel 4, set to be completed by this spring, will also shed more light on its future.

In addition, Ofcom will continue its investigation into the pay TV market following a request from Virgin Media, Top Up TV, Setanta and BT Vision, which complained that BSkyB abuses its dominant position. Although the petitioners have called for a structural separation of Sky's platform business from its content business, not everyone is convinced that this is a logical step.

"The sources of market power in pay TV are quite complex - the consumer detriment is not something that people widely perceive, and the unintended consequences of structural separation could be substantial," says Kip Meek, managing director of Ingenious Consulting. Ofcom will also decide on what terms it will allow Sky to launch its proposed Picnic DTT TV service, a subscription service aimed at Freeview users.

Broadband penetration and usage will keep growing, but there is a problem: who and what will pay to upgrade the networks that connect residences to the internet, known as the "last mile", if retail access prices for broadband continue to fall? "Regulators tend to think access prices will continue to go down. But in relation to access - the last mile - we think falling prices are likely to be a very uncomfortable position as it drives down investment incentives," says David Thomas, KPMG's head of communications regulation. "Prices for access, not usage fees paid to content providers, need to go up to ensure upgrade investments."

As broadband penetration increases, Tanya Byron's report on harmful and offensive internet and mobile content directed at children is timely. The report is very likely to call for signposting and help for consumers around potentially offensive online and on-mobile material.


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