| Summary
Conditional access is a
technical solution for managing access to electronic
information. The operator of a conditional access system can
determine who has access to which information under which
conditions and terms. Conditional access in digital
broadcasting is the subject of this study, which examines its
regulation within European competition, media and
telecommunications law. Although this study discusses
electronic access control in digital broadcasting, its
findings could provide useful input for the discussion of
similar problems in other sectors, such as the online sector,
and certain DRM services.
Using the example of pay-TV,
this study finds that electronic access control in digital
broadcasting challenges some of the fundamental principles of
traditional broadcasting regulation, meaning
technology-dependent definitions, the strict separation
between content and transport, and the primacy of public law
regulation. Access-controlled digital broadcasting brought an
end to the idea of the anonymous consumer and the undirected
transmission of 'free' broadcasting services to whoever
decided to watch. The pay-TV model is based on commercial
relationships with individual subscribers, and contractual and
technical conditions overrule the free-TV culture that
broadcasting law guarantees. Digital broadcasting also brought
an end to the idea that broadcasting is broadcasting and
information society services are information society services;
convergence rules! Finally, the example of conditional access
in digital broadcasting demonstrates that the role that
technology plays in broadcasting is more than a mere carrier
role, in particular in pay-TV where the technical and
marketing platforms are closely intertwined. Conditional
access, therefore, challenges the traditional distinction
between infrastructure and content regulation. The study shows
why, as a consequence, the current provisions dealing with
electronic access control in European broadcasting and
telecommunications law do not respond to the interests of
competitors and consumers in maintaining functioning
competition and access to content. The study also identifies
aspects that are critical in this context. It develops
suggestions on how to improve the conditions for competition
and the broad accessibility and availability of electronic
content at fair, non-discriminatory and affordable conditions.
Conditional access introduces
new features to the broadcasting world as we know it. For
example, the transition from traditional 'broadcasting' to a
point-to-point mode of transmission where the distribution of
signals is organized via intermediary platforms and is
restricted to recipients that have previously qualified for
access. With the aforementioned changes to the general
distribution structure of broadcasting, access to broadcasting
content is no longer 'free'. Viewers become consumers who
receive services on the basis of a contractual and factual
relationship with the service provider. Elements of
individualization and interactivity shift the distribution of
broadcasting from a previously public sphere to a more
personal sphere, where the conditions for access to electronic
services are directly negotiated between the service provider
and the requester, and where consumers pay for access to
digital broadcasting. These are changes that increase the
choice and diversity of the broadcasting offering, and add to
the responsiveness of access-controlled digital broadcasting
through its demand orientation. New sources of financing can
result in new and more diversified services that were not
economically viable before. The joint marketing of digital
services via intermediary platforms, bundling strategies and
the combination of control over different steps in the
vertically organized distribution chain can enhance the
popularity, efficiency and compatibility of a pay-TV platform.
On the other hand, electronic
access control, paired with exclusive rights to content and
the right marketing strategy, can be a powerful tool to
monopolize the most precious resource in electronic content
markets—paying customers. In this context, the role of
electronic access is to enforce exclusive contractual
relationships with consumers and secure a share of the market.
In so doing, the technology affects the way consumers access
content that is presented within and/or outside the
access-controlled platform and the way competitors access
consumers. Using the example of pay-TV, this study examined
the resulting challenges for competition and public
information policy, and how they are addressed in European
law.
Conditional access in
broadcasting presents a number of challenges for regulators.
First, regulators must identify the situations in which
electronic access control can lead to anti-competitive
situations, meaning situations in which a monopolization of
the consumer base is anti-competitive. Second, they must
formulate rules that address the problem and are effective and
sufficiently flexible to remedy anti-competitive situations
without having an overly negative effect on innovation,
efficiency and welfare. The study identified four major
categories of effects of how conditional access in digital
broadcasting affects competitors and consumers. The first
category groups bottleneck situations. With the ongoing
technical and organizational sophistication of electronic
services, market entry into digital broadcasting markets
depends on an increasing number of facilities such as control
over conditional access or control over other elements of the
technical distribution platform, including APIs, EPGs, billing
systems, and exclusive content rights. Access to bottleneck
facilities is highly interesting for newcomers who lack the
expertise or financial means to establish their own facilities
and thus depend on access to existing resources. This study
defined the term 'bottleneck' as a situation of monopoly
control over a particular facility or service. 'Bottleneck'
can refer to services or facilities at each level of the
distribution chain, be it the transmission network,
conditional access, the marketing platform or exclusive
programme rights. The real bottleneck in pay-TV markets,
however, is access to the installed consumer base. Exclusive
control over a dominant technical and marketing platform for
pay-TV is an important means of monopolizing the consumer
base, meaning binding subscribers and service providers to a
particular platform and excluding competing service providers
from gaining access to the installed consumer base.
Monopolization of the consumer base is the result of a
combination of control over and the strength of a particular
conditional access standard and associated facilities and the
way access-controlled services are marketed through service
platforms. There are different instruments that pay-TV
providers can use to keep consumers in 'walled gardens' and
discourage them from switching to competing providers. They
form the remaining three categories of potential effects on
consumers and competition. There are technical lock-in or
lock-out situations where, due to the lack of interoperability
solutions, subscribers to one platform cannot easily switch to
a rival's services, and where the dominant standard embodied
in a technology can create bottlenecks for market entry. There
are contractual lock-ins in the form of long-term subscription
contracts or bundling strategies. Technical and contractual
lock-in/out situations can also exist in a transborder
context, with the result that consumers in one Member State
are not able to receive services from another Member State.
Finally, there is what this study calls the 'information
problem', meaning the role that the availability of
comprehensive and comparable service information plays in
transactional consumer decisions.
But the regulation of pay-TV
is not only a matter of competition. Public information policy
considerations play an important role, too. The fragmentation
of the audience into subscribed and unsubscribed consumers can
result in social inequalities and electronic exclusion. Other
important public information policy questions revolve around
the issue that is often, and misleadingly, referred to as an
individual 'right of access to information'. This study shows
that there is no such thing as an individual 'right of access
to access-controlled information' towards pay-TV operators,
neither in European law, nor as a right that flows directly
from Article 10 of the ECHR (freedom of expression). On the
other hand, regulators have a strong case in favour of
creating the conditions for the public to benefit from equal
access opportunities, obtain access to general interest
information, and obtain access to electronic information
services across national borders irrespective of their place
of residence. This creates a more general, protection-worthy
interest in the functioning of the media as a source of
information and critical debate.
For the purpose of the
analysis, the study distinguished between two major issues:
the impact of electronic access control on a) competition and
b) on consumer access to access-controlled content. The study,
however, also emphasized that both aspects can be two sides of
the same coin. The impact of electronic access control on
competition is a matter that is dealt with at European level
under general competition law and telecommunications law, or
more specifically Articles 5(1)b and 6, Annex I of the Access
Directive. The issue of consumer access to access-controlled
broadcasting content is addressed by European broadcasting
law, and here more specifically by Article 3(a) of the TWF
Directive and Article 9 and 9bis of the European Convention on
Transborder Television.
The study found that European
regulators mainly respond to competition problems that revolve
around conditional access with mandated access. Mandated
access is the obligation to share a facility with rivals and
let them use a proprietary conditional access system, EPG or
API to reach new consumers or the installed consumer base of
the first platform provider. The study has shown that access
obligations can, under certain circumstances, be an adequate
response to bottleneck control, and that such occasions are
probably the exception. The competitiveness of the technical
solution and the pay-TV markets, the existence of alternative
solutions, the ease with which facilities can be duplicated as
well as the incentives for and profitability of exclusionary
behaviour, are factors that must be taken into account. They
are not, or insufficiently, taken into account by Article 6 of
the Access Directive. Article 6 of the Access Directive
stipulates access obligations for conditional access
operators. The reason why access obligations should be applied
with care is not only the danger of overregulation and
negative impulses for investment and innovation. Access
regulation can also prove detrimental to the realization of
competition and public information policy goals for the
digital broadcasting sector. This is particularly true in
areas in which the competitive impact of a bottleneck
situation is the result of dominance over a proprietary
standard, and where first-mover advantages and indirect
network effects are strong, as in the case of control over
conditional access. In such situations, mandating access to
the already established facility further re-enforces the
competitive and editorial dominance of its operator. A lot
also depends on how effectively the fairness and adequacy of
access terms can be supervised once access obligations have
been imposed. This study does not believe this is possible
because of the restricted scope of Article 6 of the Access
Directive, which deals neither with content-related matters,
nor considers non-broadcasting services, problems of
transparency or the lack of flexibility in choosing the right
remedy. More generally, this study criticizes the principle of
strict separation between questions of content and transport,
as well as the technology-dependent way the Communications
Framework is formulated. Hence, one of this study's
conclusions is that, for pay-TV, more flexible tools and tools
that stimulate competition in the technical pay-TV facility
and pay-TV service markets are the preferable choice. General
merger law control would be a useful tool in this context.
Other tools that should be included in the regulatory toolbox
are mandated standardization, transparency enhancing measures
and, last but not least, initiatives that promote the freedom
of consumers to switch between alternative platforms.
This study concludes that it
is the individual subscriber-service-provider relationship
that is key to the effective treatment of competition and
public information policy problems in pay-TV. Ultimately, it
is the monopolization of the consumer base that diminishes the
rivals' prospects for market entry and competition. The
competitiveness of pay-TV markets depends largely on whether
consumers are free to choose and switch between competing
offers. Moreover, consumer demand can be an important
instrument to control the quality and consumer friendliness of
access-controlled services, providing consumers are in a
position to express their preferences effectively. This is why
the study suggests giving NRAs instruments with which they can
remedy the monopolization of the consumer base and create the
conditions that enable consumers to access diverse services of
their choice at fair, affordable and non-discriminatory
conditions. More specifically, the study underpins the
importance of
- The ability to mandate
interoperability solutions.
- The ability to prohibit
anti-competitive bundling practices.
- Transparency enhancing
measures, including the public availability of comparable
service information.
- The ability to monitor the
adequacy of contractual conditions, pricing, etc. in pay-TV
provider-consumer contracts at the retail level.
When complying with their
tasks, NRAs should have the flexibility to take into account
efficiency and welfare considerations as well as convergence
and the functional and economic links between the service and
the transport level. First, this study advocates abandoning
Article 6 of the Access Directive, which is still based on
technology-dependent distinctions and which does not give NRAs
a lot of flexibility. Instead, the more flexible approach in
Articles 8 to 13 of the Access Directive should apply. Second,
it suggests interpreting Article 5 (1)b of the Access
Directive in the sense of the flexible concept under Articles
8 to 13 of the Access Directive. Third, it recommends putting
an end to the exclusion of the broadcasting sector from the
application of the Universal Service Directive, and in
particular its provisions on consumer protection in Articles
17, 21 and 22. Rules that strengthen and protect the position
of consumers are an important tool to respond to the interests
of competitors and consumers alike. Key to the realization of
competition and the broad accessibility and availability of
access-controlled content is to ensure that consumers have
access to access-controlled services at fair, affordable and
non-discriminatory conditions. Discrimination on grounds of
residence should also be tackled as a form of discrimination
that is detrimental to the realization of Internal Market
principles. Doing this would be a first step to ensuring that
consumers within the EU have equal access opportunities when
confronted with electronic access control. Ideally, this
approach could tackle major competition and public information
policy concerns at the same time.
Yet, the potential of rules
on consumer protection to acknowledge the democratic,
cultural, social and individual value of content for consumers
is still unclear and needs further research. Unless the
opposite is proved, the author believes that there will be a
continuing role for some form of public broadcasting law
intervention in access-controlled digital broadcasting. The
same is true for initiatives that stimulate the creation and
distribution of content, regardless of consumer demand. As
previously mentioned, there are valid reasons why, from a
public information policy point of view, it is desirable that
certain general interest content is not only subjected to
exclusive, private electronic access control. This can concern
content of general importance to the public, content in the
public domain or content for which the public has already paid
once. Another aspect is that electronic access control should
obstruct neither the competition between free-TV and pay-TV,
nor the functioning of the media in general and public
broadcasting in particular. Electronic access control must not
prevent the media from complying with their task to inform the
public properly.
Forms of intervention do not
have to consist only of legal measures. The study provides
examples of possible non-legal initiatives to overcome
electronic exclusion and stimulate the public accessibility
and availability of general interest content. Examples of
non-legal initiatives that have already been experimented with
in some Member States are the granting of financial support to
socially weaker citizens so they can acquire the necessary
hardware, promoting interoperability, providing consumers with
comparable service information and providing electronic
'public spaces' where content is freely accessible to
citizens.
As far as legal initiatives
are concerned, the study points out two interesting solutions
that have been developed at the European level: the
list-of-important-events regulation and the right to short
reporting. The list-of-important-events concept is regulated
in Article 3(a) of the TWF Directive as well as in Article
9bis of the European Convention on Transfrontier Television of
the Council of Europe. The list-of-important events concept
recognizes the right of Member States to draw up so-called
'lists of important events', meaning lists that identify
events of particular public importance that should be shown
entirely or partly on free-TV. The underlying idea is to limit
the exclusive exploitation of transmission rights for the sake
of a general public interest in the wide accessibility of
certain content. The role of free-TV in this context is to
transport general interest content and to make it publicly
accessible, even if it is subject to exclusive transmission
rights. Although the list-of-important-events concept could,
in theory, be a helpful tool to overcome electronic exclusion
and a fragmentation of the public into subscribed and
unsubscribed consumers, the study also concludes that the
list-concept and the way it has been implemented is flawed in
many respects. One major problem regarding the
list-of-important-events concept is the need to find more
democratic, transparent and participatory procedures to
identify which events are of high or major interest to the
public, and who should be able to make this decision. The
concept's present restriction to (mainly) important sports
events and some cultural events fails to cover newsworthy
events in general, content in the public domain or content
that has been financed by the public. It is difficult to see
why the public should have a protection-worthy interest to see
only the first two categories on free-TV. More generally, the
study criticizes that protecting consumers, alias citizens,
from pay-TV, but not addressing the situation regarding
content that is offered on pay-TV platforms, fails to respond
to market realities. It is very probable that this will fail
to respond to the likely proliferation of conditional access
in digital broadcasting. It also ignores, however, that
access-controlled broadcasting can be a desirable addition to
the existing programme offer, providing it is guaranteed that
access controllers do not abuse their power to the detriment
of consumers and competition. This is a point of criticism
that reaches deep into the roots of broadcasting law and
sector regulation. Broadcasting regulation still starts from
the 'once-sent-accessible-for-all' concept of traditional
broadcasting services. It ignores that, like in other
communications sectors, access in broadcasting markets has
become a matter of individual negotiation and contracts, too.
The second instrument, the
right to short reporting, is laid down in Article 9 of the
European Convention on Transfrontier Television. At the time
of writing, there was a discussion on whether the right to
short reporting should also be implemented in the European TWF
Directive. The author believes that the right to short
reporting is a useful instrument that facilitates the task of
a well-informed and well-informing media in an environment of
electronic access control. The right to short reporting
entitles all broadcasters to inform their audience about
particular news, sports, cultural or social events, even if a
third party holds the exclusive rights to the transmission of
that event. A precondition is that the broadcaster considers
the event to be of high public interest and newsworthy, and
that the transmission complies with the requirements of a
'short report'. In contrast to the list-of-important-events
concept, the right to short reporting does not aim so much at
ensuring consumer access to a particular content as at
ensuring that consumers are informed about the essence of the
content to the extent that it is newsworthy and of public
interest. Another difference is that, for the right to short
reporting, the broadcaster first determines which information
is of public interest. In contrast, for the
list-of-important-events concept this task is reserved to the
governments and subjected to lengthy preliminary procedures.
The efficiency of the right to short reporting, however, is
endangered by the lack of explicit obligations for the
controller of access-controlled platforms to make the service
signal available in unencrypted form. The lack of such an
obligation puts third-party broadcasters at the mercy of
access controllers. They depend on the voluntary co-operation
of the access controller and its willingness to avoid timely
delays that could render this right meaningless—none of which
is necessarily in the access controller's own interest.
This study also concludes
that the right to short reporting and the
list-of-important-events concept need improving before they
can effectively respond to the electronic exclusion from
access to general interest content and the inequalities of
access opportunities. Electronic access control must not
hamper the functioning of the media.
The fact that this study
deals with conditional access in digital broadcasting in no
way means that electronic access control is restricted to the
digital broadcasting sector. That fact that electronic access
control is not restricted to the digital broadcasting sector
is a consequence of convergence and the multiplatform approach
that is promoted in Europe, and the fact that its
characteristics make electronic access control solutions
equally attractive for the internet and mobile domains.
Examples of these characteristics are the electronic
management of access to digital content and the ability to
target niche areas, control content and maintain individual
commercial relationships with consumers. In the context of DRM
technology (electronic solutions for the electronic
protection, management and marketing of digital content) in
particular, very similar concerns regarding bottleneck
control, the monopolization of the consumer base and the lack
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