Description of Sector

The broadcasting sector covers the production of audiovisual or audio (radio) content and its distribution, which is subject to the framework of regulation overseen by Ofcom (or, for TV stations based elsewhere in the European Economic Area (EEA), by another EEA regulator).

This report primarily covers linear (or live) visual broadcasting services (digital TV,live streaming, webcasting, near video-on-demand) and non-linear services (video on demand services such as the BBC iPlayer, All4, etc, or subscription video on demand services such as Netflix). Radio is part of the broadcasting sector and is a predominantly domestic-focused industry subject to national licensing. Though the main focus of this document is on visual content, radio is discussed where relevant.

There is a significant overlap with the creative industries (television and radio production and distribution is designated as a creative industry) as well as with the telecommunications, manufacturing and technology sectors.

The current EU regulatory regime

The Audiovisual Media Services Directives (AVMSD)

The main framework creating a single market for broadcasting (including video on demand) and setting out standards on a minimum harmonisation basis is theAudiovisual Media Services Directive (AVMSD).

The AVMSD is the European framework for television and television-like services. It amended and extended the EU’s 1989 Television Without Frontiers Directive(TVWF), providing less detailed but more flexible regulation. The proposal to update TVWF was tabled by the European Commission in December 2005. Essentially, the AVMSD was introduced to create a “level playing field” between traditional TV-based broadcasts and online broadcasts. Renamed as the AVMSD, it entered into force on 19 December 2007 and had to be transposed by Member States by the end of 2009.

The primary objective of AVMSD is to ensure the effective operation of the internal market for television broadcasting services by ensuring the freedom to provide broadcasting services throughout the EU. It sets out basic content standards for service providers, including rules on advertising. AVMSD requires TV services broadcast in the EU to be regulated by an EU Member State and for channels to be physically based within an EU Member State. The legal requirement is for the head office and the “significant” part of the workforce to be based in the country of jurisdiction.

The central principle that underpins the single market for audiovisual media services is the Country of Origin principle (COO) first created under the TVWF directive. This acts as a system of mutual recognition of establishment and licensing which enables broadcasters to operate across the EU from a licensed establishment in any one EU country. Each national regulatory authority (in the UK, this is Ofcom) is responsible for ensuring the compliance of broadcasters with the minimum broadcast standards set out in the AVMSD (for example, as to advertising content or the prohibition on audiovisual media services containing any incitement to hatred based on race, sex, religion or nationality). The AVMSD was implemented in the UK by a series of regulations which primarily amended broadcasting legislation (the Communications Act 2003 and the Broadcasting Acts 1990 and 1996).

As part of the Digital Single Market Strategy, the Commission is proposing changes to AVMSD to reflect the impact of technological developments since the original Directive was negotiated in 2010. The file is currently subject to trilogue talks between the European Parliament, the European Commission and the Council of EU are expected to finish in late 2017 or early 2018. The proposed changes are mostly focused on including more services to level up content standards throughout Europe or to strengthen procedures. The UK already has stricter rules than the Directive in certain areas (for example on child protection and advertising). The current revision would not result in any major changes to the UK regulatory framework, although it will introduce some regulation of video-sharing platforms (such as YouTube) for the first time.

EU Digital Single Market

The EU Digital Single Market strategy aims to remove digital trade barriers between EU countries. As well as the AVMSD review, this includes reforms in several areas of substantial interest to the broadcasting industry, including:
– The Cable and Satellite Directive48 is being reviewed in order to assess if its scope needs to be enlarged to cover broadcasters’ online transmissions and
whether further measures are needed to improve cross-border access to broadcasters’ services in Europe; and
– Portability Regulation49 is important for the the sale of distribution rights to content across the EU (allowing consumers to continue to use digital content when traveling within the EU) and the Geoblocking Regulation.

State Aid Rules

State aid rulesare generally applicable and restrict government’s ability to sponsor the domestic broadcasting industry. However Protocol No 29, annexed to the Treaty of Lisbon, asserts that public service broadcasting in the Member States is directly elated to the democratic, social and cultural needs of each society and to the need to preserve media pluralism. To support these principles, Member States may therefore provide for the funding of public service broadcasting in so far as such funding is granted for the fulfilment of the public service remit as defined by each Member State, and such funding does not affect trading conditions and competition in the Union. For the UK, the TV Licence is the core revenue stream for the BBC to produce its content on all of its platforms and discharge their remit as a Public Service Broadcaster.

This and other flexibilities within state aid rules have been applied to schemes to establish and support (a) UK/Ireland cross border TV services (2012) local TV services (which required approval granted in Dec 201256) and to extend local DAB radio services (completes end 2017).46. State aid for films and other audiovisual works must be granted in accordance with the Commission’s Communicationon aid for films and other audiovisual works. In summary, aid must be directed towards cultural works (assessed by national criteria – in the UK’s case this is commonly via statutory ‘cultural tests’) and limits are placed
on aid intensity and on required territorial spend for production activities. HMT have overall responsibility for the operation and reporting of the creative industries tax reliefs. State aid rules also cover investment in infrastructure, for example funding to create a transmission network for local TV provided by the BBC required full approval which the EU granted in December 2012.

EU employment law and free movement of people

EU employment law and the free movement of people is also used to obtain and retain talent in this sector. The Council of Europe’s Convention on Transfrontier Television (CTT)
The UK is party to the CTT, which provided the basis for subsequent EU Directives (AVMSD and its predecessor the Television Without Frontiers Directive) in this area. It was negotiated in parallel with the European Communities Directive on “Television Without Frontiers” in 1989. The Convention aims to foster and strengthen the rights of citizens by strengthening the free exchange of information and ideas, for example freedom of expression, and sets out a number of rules for the free circulation of television programmes across countries, which are parties to the Convention.

The Convention also commits all signatory countries to a ‘European Works’ quota, which requires parties to ensure that broadcasters based in their territories reserve over 50% of their transmission time for European works. The provisions in the Audiovisual Media Services Directive60 relating to European works apply not only to works originating in Member States but to works originating in countries that have signed and ratified the Convention. There is a disconnect clause in CTT which requires EU Member States to implement EU law, i.e. AVMSD, rather than CTT.

International Standards

The International Telecommunication Union (ITU) is the United Nations’ specialised agency for information and communication technologies. They allocate global radio spectrum and satellite orbits and develop the technical standards that ensure communication networks and technologies seamlessly interconnect. They have developed rules on how the spectrum needed to transmit TV and radio should be used, as well as international standards on how communication equipment interact (along with other International standards bodies).

WorldDAB, the global industry forum for digital radio, facilitating the adoption and implementation of broadcast digital radio based on DAB / DAB+ (Digital Audio Broadcasting) have developed the digital radio standards of choice for broadcasters across Europe, Asia Pacific and other regions.

There are also technical standards for the production and distribution of TV which are overseen by European groups such as the Digital Video Broadcasting Group (which oversees the base technical standards used on all TV platforms) and whose standards are approved by recognition bodies such as the European
Telecommunications Standards Institute (ETSI) which are recognised by the EU. (Both these radio and TV standards feed into EU standards and show up in theFramework Directive, which is also being reviewed as part of the Digital Single Market strategy). Other standards bodies are managed by international bodies that are independent of our EU status and are usually industry led.

Finally, the European Broadcasting Union (EBU)63 is an allegiance facilitating collaboration of public service media services in 56 countries in Europe (and an additional 34 associates in Asia, Africa and the Americas) to promote public service broadcasting. The BBC currently chairs the Radio Group.

Existing frameworks for how trade is facilitated between countries in this sector

The arrangements described in this section are examples of existing arrangements between countries. They should not be taken to represent the options being considered by the Government for the future economic relationship between the UK and the EU. The Government has been clear that it is seeking pragmatic and innovative solutions to issues related to the future deep and special partnership that we want with the EU.

Broadcasting is a highly regulated sector. As set out in the section above, in the EU audio-visual services are subject to the Audiovisual Media Services Directive (AVMSD). In relation to third countries , the EU maintains a principle of  cultural exception’, justified on the grounds that cultural goods and services should be treated differently to commercial goods and services in trade with third countries, because of the importance of preserving cultural diversity. The UK’s regulatory regime, which is underpinned by AVMSD, provide safeguards and protections to citizens and consumers, through advertising standards, and the Ofcom broadcasting code which includes requirements on accuracy and fairness or preventing incitement to hatred.

The EU excludes AV services from its trade agreements, starting in the WTO General Agreement on Trade in Services (GATS)65, both by carving the sector out from its schedule of commitments and by maintaining a series of Most Favoured Nation (MFN) exemptions. All WTO Members are parties to GATS which sets out a framework for trade in services including general rules, principles and obligations, which the parties must abide by, and a schedule of commitments in which each party sets out how open and non-discriminatory it intends to be across the service sectors covered.

The EU has no precedent for including trade commitments on cross-border broadcasting with third countries, however it has pursued cooperative measures as part of a range of its trade agreements The Deep and Comprehensive Free Trade Agreement between Ukraine and the EU68 provides that cooperation on broadcasting and audio-visual services should lead to a gradual alignment with the EU acquis. The EU Korean agreement includes a Protocol on Cultural Co-operation, which includes limited provisions on audiovisual works, as does the CARIFORUM-EU Economic Partnership Agreement69. Both cultural cooperation agreements include commitments to recognise joint productions as counting towards the respective

There are some limited precedents for extending the AVMSD definition of European Works to include non-European countries (see section 2.5). For example, the EUKorea Protocol on Cultural Co-operation includes provision for some Korean- EU coproductions to count as European Works. This was included as to foster the circulation of audiovisual works for the mutual benefit of the EU and Korea70, and in recognition of Korea’s domestic policies on cultural diversity and measures to promote local content in Korea.

The UK has a series of bilateral audio-visual co-production agreements with non-EU countries including China, Brazil and South Africa. These secure various benefits for qualifying films and television programmes produced jointly by co-producers based in the UK and other countries. Such benefits include access to shooting locations, visafree entry for personnel and tax benefits subject to adherence to certain criteria.

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