Canadian Radio-television and Telecommunications Commission
Symbol of the Government of Canada

A Selected International Survey of Industry Practices, Regulations, Policies and Plans with regard to the Distribution of Program Services

Commissioned in July by the CRTC for background information and informed public discussion (See Appendix One for terms of reference)

Michael McEwen
Media Asset Capital
August 2007


Context

This paper will review and discuss the range of obligations, regulations etc. with regard to the distribution of program services in the United States, Australia, The United Kingdom, France, Germany, Belgium, Austria, and the European Union. The specifics of each country are instructive and will be explored. However, there are a number of common elements, which are worth noting before dealing with the particulars of each country.

1. Regulatory Environment

Generally, the regulatory environment for both the equivalent of "broadcasting distribution undertakings" (referred to in this paper as "distributors") and for the equivalent of Canadian pay and specialty services (referred to as "distributor-dependent channels") is not onerous. Distributor-dependent channels are created with a range of regulation from none (the US) to a simple application and fee payment (the UK). Distributor-dependent channels are often licensed according to simple business and competition rules of a country (the UK) and, in some jurisdictions, distributors are licensed as a service by the telecommunications regulator including their channel offerings (Australia). As an official from Ofcom noted in an interview with the author:

In the UK there is relatively little specific regulation of satellite and cable distribution. However, Ofcom does have Competition powers and could investigate any issues around distribution using those powers.1

In fact, the Competition authorities in most of the countries seem to exercise most of the regulatory concerns about carriage, access, consumer protection and general competition rather than the Broadcast regulator with notable exceptions like the FCC in the US. To the degree, that the respective regulators play a role regulating content and licensing the channels it is usually modest and generally confined to advertising standards, violence, pornography, etc. There is little in terms of genre protection or regulations that ensure domestic services have preference over foreign or international "brand" services. For example in Australia:

ACMA does not deal with 'distribution rights' but we do deal with programming obligations for commercial free-to-air and pay TV. Responsibility for these matters is spread across different sections of ACMA:

  • The 'new eligible drama expenditure' requirements (pay TV)
  • The Children's Televisions Standards (free-to-air)
  • Local (regional) content obligations
  • Classification (censorship) of free-to-air and pay
  • Other obligations set out in the Commercial Television Code of Practice (e.g. advertising time).2

The important point to note is that, compared to over-the-air broadcast services (often referred to in this paper as terrestrial services), the regulatory obligations for distributors and distributor-dependent channels are very modest. This is not as a surprise and is rooted in both history and the implicit benefits inherent in spectrum given to terrestrial broadcasters, and the associated market privileges. Cable and satellite providers often portray themselves as competing in an unfair environment next to the traditional terrestrial broadcasters and argue they need a relatively free market to help foster their competitiveness particularly in relatively new distribution markets like Australia and parts of Europe.

It is not remarkable that both distributors and distributor-dependent channels want to remain as unregulated as possible: who wants to be regulated if there is a choice? This is evidenced by public positions taken by trade associations and many individual cable and satellite companies who argue that co-regulation and a regulatory "light touch" is the appropriate way to manage the industry to the benefit of the consumers it serves and its potential growth of services.

The Satellite and Cable Broadcasters' Group (SCBG), based in the UK, best articulates this view, representing those channels and services carried on satellite and cable only:

Satellite and cable broadcasters operate in an extremely competitive and volatile environment, without privileged access to scarce Government-controlled spectrum or to the must-carry status afforded to terrestrial networks. They are therefore unable to attract mass advertising revenues, and do not benefit from public funding.3

All countries have their own rules and policies that suit their national interest and history. For the most part the carriers are domestic in ownership (although this is changing, particularly in the satellite area with NewsCorp's Sky, Star and Foxtel services). All distributors distribute international brand services, along with a limited number of specific domestic distributor-dependent channels. In the US, Germany and Belgium, cable has been around for many years and is very much a part of an established communications infrastructure in those countries. In Australia and the UK, cable is a relatively new entry and struggling to build a viable market. Satellite, at first analogue and then over the last decade digital, has become a major distributor in Europe and the US, and is starting to catch on in Australia and New Zealand.

Whether domestically or foreign owned, the distributor-dependent channels are licensed and/or registered for domestic carriage (sometimes with local content). The same process exists for domestic or local channels and these channels negotiate for carriage along with the major brands. Some countries, like the US, regulate the distributor but not the distributor-dependent channels; others, like the UK, license the channel but not the carrier. All of the regulation assigned to the distributor and the channel is modest and does reflect a "light touch".

The reader may want to contemplate the above generalization in light of Canada's regulatory environment for distributors and pay and specialty services. It is author's view that for particular geographic and economic reasons Canada's regulatory, policy framework is far more demanding than the countries under review, and this will be borne out throughout this paper.

2. Satellite and Cable Channels and Content Rules

There is, however, a major difference between distributors and channel providers and it expresses itself in two ways. The distributors are usually domestically owned and registered, whereas major media conglomerates like Disney, Time Warner, NBC/Universal, etc have major brand channels that are carried in virtually all the countries reviewed and in fact in most countries in the world. Channels like Discovery, National Geographic, FOX, CNBC, CNN, Cartoon Network, Disney, etc find their way on to most distributors. The domestic distributor is encouraged (although not generally required) to include domestic distributor-dependent channels to supplement their international offerings, and generally does so for good economic reasons.

There are local content rules ranging from none (the US) to a percentage of programme expenditures on production (Australia), to a percentage of content from the country or region in which the channel is distributed (the EU) through to a language and production requirement of substantial proportion (France). Mostly, for distributor-dependent cable and satellite channels, the content rules are similar, and are largely based on cable distribution since Direct to Home Satellite was a later technology. Historically, cable has some local requirements for community programming that exist and form a part of the service requirement for cable licensing in most countries. Satellite for the most part does not have the same requirements because of its national or regional footprint. It should be noted that local or national programming is attractive to subscribers but in the battle for more bandwidth and aging technologies requiring upgrades (particularly cable) there is some tension over these service requirements.

Australia's content rules are:

Local content legislation requires pay TV drama channels to spend 10 per cent of their total program expenditure on new eligible Australian and New Zealand drama programs. The drama services spent $17.7 million on Australian production in 2003/04 - $9.25 million short of the requirement, which included a $9.1 million shortfall carried over from the previous year.4

The European Union has content rules that generally cover all member states as found in the Television Without Frontiers (TVWF) document and the newly adopted Audiovisual Media Services (AVMS) Directive:

Article 4 of the Directive requires broadcasters to reserve a majority proportion of their transmission time, excluding the time appointed to news, sports events, games, advertising, teletext services and teleshopping, for European works. A certain flexibility is allowed for the implementation of this provision by the "where practicable" approach.

Article 5 requires broadcasters to reserve a minimum proportion (at least 10%) of their transmission time, excluding the time appointed to news, sports events, games, advertising, teletext services and teleshopping, for European works created by independent producers. Alternatively, Member States may require broadcasters to allocate at least 10% of their programme budget to independent productions. An adequate proportion of works by independent producers should be recent, i.e. less than five years old.5

France has slightly higher requirements in both language and production of content. These figures look impressive but are subject to considerable debate. Distributor-dependent channels often argue (successfully) that the nature of their product is such that it does not lend itself to these goals, leading member states, via bi-annual reports filed with the European Commission, to have them relieved, in whole or in part, from content requirements. Nonetheless the rules have fostered considerable local content on international brand channels in Europe and the creation of language specific services.

The specifics of local content carriage will be discussed in each country but the overwhelming evidence is that the economics of the industry depend on the major international brands and no distributor can hope to make a business without them. It is a symbiotic relationship; the brand channel needs the distributor for distribution, the distributor needs the brand for consumer acceptance and the local or domestic channel, whether niche or general, depends on the brand channels for market penetration.

The European Union has created a second way that distributor-dependent channels differ from the rules that their distributors work under in their domestic markets. Based on the TVWF Directive in 1989 and reinforced with the newly promulgated AVMS Directive in May of 2007 the EU has endorsed the Country of Origin principle. This means that a service licensed in one EU country may be carried by satellite or cable in another European country and is not subject to domestic licensing by that country. The net result has been a tremendous growth of licensed satellite and cable services in the UK including brand channels and niche market services (over 700 licenses have been issued) with many of those channels exported to distributors in European countries. According to the SCBG:

SCBG member companies already provide television and other audio-visual services in more than 100 million homes across Europe, and broadcast in more than 20 European languages. Further new channel launches are in progress or planned.

The UK's business success in this field has been enabled entirely by the provisions of the TVWF Directive, and in particular by its application of the fundamental Country of Origin principle. UK is the acknowledged leader in pan-European satellite and cable services, with a number of major UK companies providing high-quality broadcasting throughout the EU.6

While the Country of Origin principle is a source of some controversy among member states (notably France) it nonetheless has proved valuable in creating a number of European services, which are language specific and reasonably economic. The UK has provided a favourable licensing environment resulting in a very strong distributor-dependent channel industry, along with an independent production sector to support it.

Each UK licensed distributor-dependent channel needs to find a licensed distributor in each country and deal with retransmission and copyright issues pertaining to that domestic market. The fact that it does not have to be licensed in each market is of tremendous advantage and has created not only pan European opportunities for brand channels but also specific European services many of which are country or language specific even though they originate in the UK.

The EU TVWF Directive requires that services distributed in Europe contain a majority of European programming and 10% of the program time be from the independent production sector. There are exceptions to this rule including news and sports and some genre programming. This is a source of considerable dispute between the EU, member countries and the service providers themselves. Certain genres and international brands have difficulty meeting these rules and regulators such as Ofcom in the UK must adjudicate on exceptions, i.e., the regulator must seek an exception (via a bi-annual report) for those distributor-dependent channels who do not meet the obligations within a required time frame in order for those channels to retain their licences (usually 3 years by EU standards but individual countries can lengthen the transition period as was done in the UK; 5 years). Usually, at least partial compliance with the standard requirements is necessary.

3. Copyright and Retransmission

This obligation is virtually the same throughout the world, which is that the right needs to be obtained for the distribution or retransmission of content for distributor-dependent channels in each domestic market. In this regard, international media companies who have purchased global or regional rights have cleared their service(s) for distribution (although it still must be registered in each country where the content is distributed). By contrast, domestic channels who want to export to another country have a significant economic and administrative challenge in order to meet the obligation.

This is why genre or niche market programming tends to be confined to domestic markets and why international brands have not only better market acceptance but also a stronger economic base to bring their content into specific geographic or language markets. Big is better in the cable/satellite channel world by creating economies of scale.

National rights' collectives play a key role in clearing the channels for national distribution and carriage. Terrestrial broadcasters who are seeking cable and satellite retransmission in their own markets often negotiate these "cable" rights with the creators when commissioning the content. As platforms proliferate and include both linear and non-linear content services, administration of these rights' collectives becomes increasingly complex. Rights clearances are the focus of considerable review through the World Intellectual Property Organization, the EU and many individual countries who contribute to the discussion both internally and in international forums.

Fairness for the creators and economic and manageable administrative processes for the content providers and distributors are critical for continued growth in linear distributor-dependent services and the new non-linear platforms. Many of these rights processes began with cable retransmitted or original cable channel services. These principles have been adopted for satellite services; they continue to evolve on new platforms with repurposed content.

The clear obligation of any distributor is to obtain the rights to distribute a channel under the rules of the country where it is providing the service. Even in the EU, which fosters trans-border broadcasting of European services, these rules are explicit concerning the obligations to receive permission from the rights holder (satellite) or the appropriate collective (cable). This is particularly important given the One Country principle for the licensing of these services:

Satellite broadcasting

The satellite broadcasting of copyright works requires the authorisation of the rightholder. The right may be acquired from the rightholder only by agreement.

Performers are granted an exclusive right to:

  • broadcast live performances by satellite;
  • fix (record) an unfixed performance;
  • reproduce a fixation of a performance.

Where a phonogram is used for a satellite broadcast, an equitable remuneration is to be paid to the performers, or to the producers of phonograms, or to both. Broadcasting organizations have exclusive rights over the retransmission, fixation and reproduction of fixations of their broadcasts.

Limits may be imposed on the right to authorise or prohibit broadcasting, for example in the case of private use or the use of short excerpts in connection with the reporting of current events.

Member States may establish more far-reaching protection than that required by the Directive.

Cable retransmission

Cable retransmission of broadcasts is governed by copyright and related rights in the Member States and by agreements between copyright owners, holders of related rights and cable operators.

These rights to authorise or prohibit the cable retransmission of a broadcast are exercised through a collecting society, except where they are exercised by a broadcasting organization in respect of its own transmissions.

Where no agreement can be reached allowing cable retransmission of a broadcast, the parties may call upon the assistance of one or more mediators. The mediators have the task of providing assistance with negotiation and may also submit non-binding recommendations to the parties.

The Directive also lays down rules governing the impact of the new provisions on existing situations, with special reference to current contracts and arbitration systems for disputes over the cable retransmission of broadcasts.7

The business rules are simple; all rights need to be cleared for satellite and cable carriage in all the countries under discussion and even in the EU, which emphasizes a common market approach to these services.

4. Must Carry and Carriage Obligations:

Most countries have rules, which demand carriage of terrestrial broadcast services including public and private broadcasters. National services must be carried, and in many cases, the regional or local expression of those services must also be carried. Independent regional and local services are also carried, as capacity exists, particularly on cable. Where the technology is available for satellite, local carriage is increasingly a feature for those services.

In an international survey of must carry rules, the Australian Film Commission noted that Australia was the only country, as part of this review, which did not have must carry obligations.8 Although the Australian distributor may wish to carry the broadcasters, the issue has been fraught with negotiations about payment for carriage.

In Australia, subscription television licences do not have 'must carry' provisions that require free-to-air television services (commercial, public and/or community) to be carried on pay TV. However, Australian pay TV licensees do re-broadcast some free-to-air services on their cable services. Satellite services do not re-transmit commercial free-to-air channels because of bandwidth constraints.9

It is worth noting that the audiences for the over the air broadcast system in Australia are very high, in excess of 80% of the market, and so distribution is not as critical to their business as in other countries covered by this review. This will change over time as it has in all the markets reviewed, making distributor carriage of over the air broadcasters critical to the broadcasters' business plans. In an era of multi platform distribution, over the air broadcasters need and want to be part of the core linear distribution platforms, before they extend to the non linear on line world.

Payment for carriage has been an issue in most countries but at the end of the day broadcasters want their services carried in an increasingly fragmented platform market, regulatory policies support this carriage and usually the distributor wants the service in order to appeal to the national or regional markets it serves. Payment for carriage by distributors for over the air services may be theoretically possible and certainly is contemplated in many regulatory frameworks but does not seem to be a real option. Promotion, marketing and distribution seem to be the prime motivators for over the air broadcasters in entering into carriage agreements with distributors.

As noted earlier, access to distribution for distributor-dependent channels is generally provided by the relevant Competition laws of the country. Competition laws tend to level the playing field between distributor owned channels, international brands, and domestic niche or genre channels. There are no regulations that favour this last group.

However, access for carriage is always subject to negotiation between the channel provider and the distributor. In addition, it is in the negotiations that many channel providers feel the weight of the advantage of the bigger channel or channel group. The larger more recognizable international brands have an easier time getting distribution because of the audiences their brand names bring. Smaller and niche players, usually domestic in nature, have a more difficult time, often paying the distributor for carriage in the hopes that subscriptions to their service will offset both their carriage and operating costs.

While national (local) distributor-dependent channels are encouraged there is little in the way of legislative requirements in the countries reviewed to tilt the regulatory framework in favour of those channels. There is some requirement for national language expression such as countries like France but usually the market place that decides. In fact, in Europe many of the services exported from the UK into other European countries are redone in the language of the target country. If for no other reason than they wish to cater to and serve that market.

One would think that there would be common positions on carriage issues and content amongst the channel providers but, in fact, it is difficult to reconcile the market needs of the big players and the small niche players in representing their views to the regulators or Government. BskyB Television in the UK, which is both a distributor and a channel supplier, often finds itself in conflict with domestic or niche services like Teachers TV, China TV, the Community Channel and others. These are not easy relationships and they serve as an example of similar relationships in all the countries under review. Again, bandwidth issues, particularly in old cable and satellite technology exacerbate the friction in these relationships.10

5. Who is Watching What?

It is important to understand how distributors have grown in the last number of years. When exploring this data, the growth of Satellite DTH is clearly apparent and cable as a mature system in most countries is clearly apparent. Yet on both systems, the channels available are virtually the same. In most countries, there are not competing cable systems although there have been some overlaps in markets like the US and Germany. Therefore, competition amongst cable systems is modest. Satellite competition in the US, Germany and France is more pronounced. However, competition between cable and satellite for the subscriber is increasingly becoming fierce and prevalent in the marketplace.

The reader is encouraged to go to the footnoted website for a complete breakdown of TV households, Cable households, and DTH households, since it provides a good picture of each country's television and distribution market.11

6. Final thoughts on Context

In virtually all jurisdictions under review for this paper, there is a policy notion that consumers should be served by choice in what they receive from the distributor with a core affordable basic service that usually carries over the air broadcasters and, from this point, "tiers" of services, which are fairly priced and accessible. Such tiers generally consist of distributor-dependent channels. As noted earlier, for such channels, as well as for distributors, there is an emphasis on the marketplace that is not necessarily found in the licensing requirements for over the air broadcasters. Access by distributor-dependent channels is subject to market conditions and negotiation, even where there are some domestic content criteria or public and community service responsibilities. While domestic channels have had some subscriber success, notably in the UK and France (and of course the US), the international brands, usually localized, are the largest subscriber draw for both satellite and cable.

Official language regulations are, for the most part, not a major focus of the regulatory environment except as noted in France and Belgium. International brands will often offer their services with local language translation, completely or in part, for the domestic market they are serving, for market reasons. If a domestic market does have a large minority language group(s) distributors in those countries often import channels, which are in that language. This is particularly notable in Europe (Arabic, Turkish and some African language services). Community Access Channels on cable distributors will also often have minority language programs. Aboriginal languages in the US and Australia enjoy support with special funding, but usually for over the air broadcasting or as part of some local cable distributor's access channel. There are no specific rules or regulatory incentives for this programming noted by the writer beyond general encouragement for distribution if warranted by the market.

With this contextual framework in mind, it is now useful to examine specific countries, their distributors and their channels. The US, Australia, the UK and the EU will be discussed in some depth, because of the differing regulatory and market environments. A brief summary of France, Belgium, Germany and Austria will follow, focussing on their unique regulatory and market aspects, since most of the regulatory framework in these countries is as set out by the EU.

The United States

Cable began in the United States in the late 1940s to retransmit broadcast services that had signal strength problems. It has grown to spawn an industry worth many billions of dollars and distributor-dependent channels that have become international in scope. The distribution and licensing requirements of these channels is very modest. Satellite DTH has become a market factor in the US over the last 10 years and most of those channels that developed for cable have migrated to satellite.

In general, a cable operator has the right to select the channels and services available on its cable system. With the exception of certain channels, such as local broadcast channels, that are required to be carried by federal law, the cable operator has broad discretion in choosing the channels that will be available and how these channels will be packaged and marketed to consumers. In order to maximize the number of subscribers, the cable operator selects channels that are likely to appeal a broad spectrum of viewers.12

There are more than 110 million TV households in the US and more than 65 million households subscribe to cable. Satellite DTH has had enormous growth going from a little over 2 million households in 1995 to more than 27 million today. Quite remarkable! The evolving regulatory framework in the US reflects that the FCC is gradually harmonizing this competitive marketplace as evidenced by the rules for carriage, copyright, etc. for both systems.

The distribution and licensing rules for these channels are very modest.

The distributor itself is licensed by the FCC and must conform to technical parameters, procedural rules, consumer obligations, copyright and other legal requirements.

For satellite services, many of the cable rules apply to the distribution of channels. The local community content is an obvious exception. The US has gone to considerable length to try to level the playing field between cable and satellite:

The Satellite Home Viewer Improvement Act of 1999 (the "SHVIA"). permits satellite carriers to offer their subscribers local TV broadcast signals through the option of providing "local-into-local." This act also authorizes satellite carriers to provide distant or national broadcast programming to subscribers. The satellite company has the option of providing local-into-local service, but is not required to do so.

This law generally seeks to place satellite carriers on an equal footing with local cable television operators when it comes to the availability of broadcast programming, and thus gives consumers more and better choices in selecting a multichannel video program distributor (MVPD), such as cable or satellite service.13

Shortly after this Act came into place, further initiatives that duplicated the intent of the cable rules were announced:

Network non-duplication, syndicated exclusivity and sports blackout rules have been in existence for many years and involve programs on broadcast television that are retransmitted by cable operators. Today's notice considers how to best apply these cable rules to satellite carriers in a manner consistent with statutory requirements as well as the FCC's goal of facilitating competition in the multichannel video program distributor (MVPD) marketplace.14

Must Carry of local broadcast signals is the cornerstone of distributor regulation in the US and there is a great deal of rule making centred on this issue. As with cable, for satellite, there is little regulation concerning distributor-dependent channels. Over the air broadcasters have the right to refuse distributor carriage, and every three years the must carry situation is reviewed by the FCC, cable and satellite (where applicable). That is, every three years the over the air broadcaster has the right to "opt in" or "opt out". The issue of local carriage is of such primary concern to US policy makers that further rules were announced in 2004 with the Satellite Home Viewer Extension and Reauthorization Act, SHVERA:

SHVERA modifies SHVIA primarily with respect to the way in which "distant" television station signals can be offered to satellite television subscribers. SHVERA also expands the programming available to subscribers by allowing satellite companies to offer certain "significantly viewed" distant signals.15

It is clear from the material above that the satellite and cable systems are regulated in a similar manner to create a competitive environment to the benefit of the consumer. While cable has a great deal more regulatory history and thus more rules, the principles of both forms of distribution are the same and where they are not, Regulators and Legislators are looking to find ways they can be made compatible. It is equally clear that, as the environment moves from linear distributed services to non-linear services, these principles are being used as a road map for future potential licensing and consumer protection.

The FCC provides the regulatory framework for the distributor including registration, necessary technical parameters, procedural rules, consumer service guidelines, copyright and other legal requirements. The FCC does not license the programming or exert editorial control but basic obscenity laws, objectionable programming protection for children (rating system), fairness principles and political broadcasts are all part of the FCC mandate. The actual process of registering a distributor is relatively clear and straightforward. It is clearly documented by the FCC in an information Fact Sheet, which documents all the elements of cable history, current obligations, registration of services, state and local responsibilities, must carry and ownership.16

It is interesting to note that state or local authorities are actually responsible for authorizing the basic cable facilities, wiring to the home and the affordable basic tier, which includes the "must carry" services. Although rooted in history this regulatory situation continues today; but the FCC plays an ongoing role in all of these areas.

Although the Commission issued standards, local franchising authorities are responsible for adopting and enforcing customer service standards. Franchising authorities may also adopt more stringent or additional standards with the consent of the cable operator or through enactment of a state or municipal law.17

As noted earlier, the rate for the basic tier of cable services is set by the local authority, and the cable company set the rates for all the other tiers. No such restriction is in place for DTH.

Your local franchising authority (LFA) -- the city, county, or other governmental organization authorized by your state to regulate cable television service -- may regulate the rates your cable company charges for the basic services tier. The basic services tier must include most local broadcast stations, as well as the public, educational, and governmental channels required by the franchise agreement between the LFA and your cable company. If the FCC finds that a local cable company is subject to "effective competition" (as defined by Federal law), the LFA may not regulate the rates it charges for the basic services tier. The rates charged by certain small cable companies are not subject to regulation. They are determined by the companies.

Your LFA also enforces FCC regulations that determine whether a cable operator's basic services tier rates are reasonable. The LFA reviews rate justification forms filed by cable operators. Contact your LFA if you have any questions about basic service tier rates.18

The FCC certifies the LFA, which must conform to its procedures, standards, etc. The process seems somewhat elaborate but has worked for over 50 years. Even though substantial deregulation has taken place over the last twenty years, the system is still in place.

Ownership provisions are included in the cable rules but they do not seem to be a major barrier to operations. Foreign ownership is allowed, as long as it is not a foreign government or agent. Rules are in place that provide for a maximum amount (30% of all cable subs nationally served by one MSO) a cable owner may control in terms of subscribers to their system.

By limiting the horizontal concentration of the cable industry, the Commission seeks to prevent the concentration of local cable systems into the hands of only a few large operators and to limit the ability of multiple system operators to exercise undue influence in the program acquisition market.19

At the same time, the FCC wishes to ensure that fairness exists in the vertical cable market as well:

To prevent vertically integrated cable systems from unduly favoring their affiliated programmers over non-affiliated program providers, the Commission imposes a 40% limit on the number of channels that can be occupied by video programmers affiliated with the particular cable system. In this context, vertical integration refers to common ownership of both cable systems and program networks, channels, services or production companies. For purposes of determining common ownership, all interests of 5% or greater are recognized unless there is no possibility of such interests exerting control or influence over the cable system.20

Cross ownership is not allowed between cable and phone, and cable and MMDS with a few minor exceptions. Obviously, satellite and cable cross ownership is not allowed since both Anti Trust legislation and issues associated with vertical and horizontal distributor ownership would be raised. Satellite distributors are seen as a competitive player in a cable world and their role and growth have been encouraged. While MMDS and some telephone distribution systems are available, they are not highly competitive to cable and, for linear transmission of video channels, satellite is considered the only real viable competitor to cable. On line, VOD and IPTV (telco TV) services may well challenge these circumstances in the future but today the business models are viable as discussed.

Copyright is an obligation that both Cable and Satellite providers must observe as part of their business obligations:

The Copyright Act requires cable operators to obtain a compulsory license for the carriage of programming. The cable operator pays the fee to the copyright office, for distribution to the copyright holders of the program material. The fee for each cable system is based on the system's "gross receipts" from the carriage of broadcast signals and the number of "distant signal equivalents" a term identifying non-network programming from distant television stations carried by the system.21

Satellite distributors observe copyright in a manner that has a similar effect. Copyright matters do not appear to be in dispute in the world of traditional distribution, but as these cable/satellite channels make their way to the non-linear on line and mobile worlds, the current formulas will be tested and may require different measurements and formulas for payments.

As noted earlier, cable and satellite originated programming is not subject to either licensing or content controls. There are some obligations that cable has for "access channels":

There are two types of access channels. One type is known as leased access channels. Leased access channels are required to be provided by cable operators with 36 or more activated channels. These channels are for commercial use by any person or organization not affiliated with the cable operator.

The other type is the public, educational, and governmental ("PEG") channel. There is no requirement that a cable operator make PEG channels available. However, the 1984 Act specifically allows franchise authorities, if they so choose, to mandate that an operator provide PEG channels.22

For market reasons, the US has been able to create the base for the success of cable and satellite originated channels. The subscription take up for cable and satellite is approaching 85% of US households and these subscribers provide a strong economic base for cable services, plus further revenue from advertising. This has created a programming industry that has a huge and profitable stable platform in the US and provides the basis to export these services to other markets around the world.

By tailoring these services with local content and translation into the appropriate national language, brands like Disney, Discovery, HBO, Fox, NBC/Universal, MTV, National Geographic, Nickelodeon, etc have become the staple of distributors around the world. Many US program providers argue that, without their brands pushing the marketing of distribution services in various national markets, the local distributors would not be as successful and domestic distributor-dependent channels would be less likely to be successful. Given the carriage of these channels and/or their content around the world, it would appear that the local distributors agree.

Australia

Australia is a small market by most standards and cable and satellite services came late to the country. There are a little more than 7 million TV households and, up to the early nineties, there was no distribution service worth noting. This has changed in the last decade, but distributor subscriptions are still very modest with 1.5 million cable subs and 800 thousand DTH subs leaving about two thirds of the market without distribution services. Some of these are duplicated subscribers (subscribing to both satellite and cable) as evidenced by the statement below:

As at Quarter 2 2006 1,728,800 homes out of 7,313,000 homes were subscribing to subscription television. With a typical subscription television home having an average of 3.12 residents, the industry has a viewing potential of nearly five and a half million Australians (i.e. 5,401,200 out of 19,447,000 people). From a household perspective this equates to 23.6% penetration and from a people perspective this means a 27.8% penetration. Source: OzTAM Establishment Survey Q2, 2006.23

The Australians look at distribution services as a totality and refer to them as Subscription Services. The Australia Communications and Media Authority (ACMA) license them:

Subscription television broadcasting services are broadcasting services that:

  1. provide programs that, when considered in the context of the service being provided appear to be intended to appeal to the general public; and
  2. are made available to the general public but only on payment of subscription fees (whether periodical or otherwise); and
  3. comply with any determinations or clarifications under section 19 in relation to subscription broadcasting services.

Subscription television can be provided using any delivery system, for example satellite, cable, MDS (microwave or multi-point distribution system) or other means.

ACMA can issue both satellite and non-satellite television broadcasting licences, under section 96. These licences are issued on the basis of one service per licence. ACMA charges one fee per application, which may be for a single or multiple licences.24

A distributor-dependent channel usually is not individually licensed without a carrier sponsor, and the satellite or cable company will usually apply for license(s) with a list of services, which in turn are licensed, assuming appropriate obligations are agreed.25 As in other countries, Australia is dominated by brand names and in particular FOX (which is owned by Murdoch's Newscorp). Foxtel is the major integrated cable and satellite provider in Australia, including supplying other distributors. Its channel offering is a tour of international services, in some cases with some local content included. The reader is encouraged to go to the attached link, look at the offerings and compare to services in the US or the UK. The similarities are striking.26

The Australian Competition and Consumer Commission has done a great deal of work over the past few years setting the framework for a competitive distribution environment and ensuring an orderly transfer to digital delivery by distributors from analogue delivery. Foxtel is the largest of the Australian distributors and delivers both cable and satellite services. Distribution cross-platform ownership is not an issue in Australia. Foreign ownership is not an issue anymore, with legislation passed a few months ago, that now allows foreign ownership in all media areas.

Foxtel provides at wholesale rates services to other distributors, the two largest of which supply cable services to Metropolitan areas; Optus and Telstra. In effect, they have become resellers of Foxtel's channels, although they may add a few of their own. There is another satellite provider focussing on rural Australia, which provides its own bouquet of services. There is competition between these companies, but since the market is small and Foxtel is the major channel provider, one wonders how competitive the environment is.27

Content for cable and satellite channels is not highly regulated beyond the usual codes of practise, and the industry itself has developed codes of practice (noted earlier) including:

  • preventing the broadcasting of programs that, in accordance with community standards, are not suitable to be broadcast by that section of the industry;
  • methods of ensuring that the protection of children from exposure to program material which may be harmful to them;
  • methods of classifying programs that reflect community standards;
  • promoting accuracy and fairness in news and current affairs programs;
  • requirements for ensuring confidentiality of subscriber information; and
  • complaints handling.28

These codes reflect the practises in most countries in this review and, although they may be expressed differently in each country, the principles are all similar.

As noted in the Context section, Australia does have a 10% content requirement for distributor-dependent (subscription) channels in the drama area:

There are legislative provisions that require pay TV drama channels to spend 10 per cent of their total program expenditure on new eligible (Australian and New Zealand) drama programs.29

Initially, these rules were to be applied to the distributor in the form of a levy, but it soon became apparent that the channels themselves were the profitable parts of the system. It was pointed out by the industry that the distributors were yet to make money and in fact were losing an astonishing amount even just a couple of years ago with billions invested and no profits to date.30 A late start with satellite and cable systems in Australia and a very slow take up rate (estimated at about 20 to 25% of the market today) indicates that the industry was struggling. So in the end the decision was made to turn to the content providers themselves and look to them for the 10% contribution.

There has been some discussion about where in the production process the funding goes, including debates over script development for failed projects and funding carry-overs to the next year. This has been resolved with what the industry felt had to be the necessary flexibility but the funding is still modest as noted earlier and is in the 20 million dollar range. The Australia Subscription Television and Radio Association has noted that the industry contributes much more than just money to Australian drama, but also hundreds of hours of Australian content across many genres of programming. It also underlines the point noted by ACMA that the requirement is a funding requirement, not an exhibition requirement:

The first and most fundamental difference is that the pay TV Australian content requirement relates to program expenditure rather than to the broadcast of programs. That is, it requires the spending of money instead of requiring that specific amounts of Australian programs be broadcast at certain times of the day. the pay TV requirement does not cover the full range of Australian programs. It only creates an obligation concerning new Australian drama programs.31

The point of this is to note that each country has its own methods of trying to enhance domestic and priority content. Drama was picked in Australia because of the cheap dramatic foreign programming being brought in for the subscription services.

Copyright is handled in the normal way as outlined above for the US and other countries. Retransmission and Must Carry was commented on in the opening of this paper. Australia is one of the few countries in this survey, which does not have a must carry provision. The over the air broadcasters are reluctant to provide their services to distributors because of their own strong market position, but as the distributors' subscriber numbers gradually grow and more platforms emerge, it is clear the over the air broadcasters will opt for distribution.

The one issue that makes the Australian Subscription TV people very unhappy is the Anti Siphoning Legislation.

The anti-siphoning provisions, contained in section 115 of the Broadcasting Services Act 1992 , (the Act) empower the Minister for Communications, Information Technology and the Arts to list in a formal notice (known as the anti-siphoning list) events that should be available on free-to-air television for viewing by the general public. The aim of the anti-siphoning list is to prevent these events from being 'siphoned off' by pay TV to the detriment of free-to-air viewers32

The legislation makes major sport properties available to over the air broadcasters and freely available to their viewers. A broadcaster is not obliged to pick up the rights or they may be shared with a subscription service, but the bottom line is that, if an event is on the list, the over the air broadcasters have the right of first refusal. The decision-making on the declared list, the delisting of events and the negotiations for shared rights make for some interesting moments in Australian media life.

Australia is an emerging distribution market and in many eyes is considered an anachronism because of the late entry of subscription services and the prominent role over the air broadcasters still play for viewing time by Australians. How this market evolves and changes, along with the opportunity for innovative regulatory initiatives, make it one worth keeping a "watch brief".

The European Union

The EU has already been the subject of comment in the first section of this paper. In summary, the following principles are enshrined in the TVWF Directive, providing guidance to cable and satellite service providers in Europe:

  • The majority of the program content exclusive of news, sports, games, advertising, teleshopping, etc should be European works.
  • Ten percent of the transmission time (excluding the above noted categories) should be European works from the independent production sector, or alternatively 10% of the channels budget should be spent on these works.
  • The Country of Origin principle applies whereby a licensed channel in one EU country may be broadcast in another without receiving a license from that country.

Since a broadcaster can not comply with the laws in two or more different countries at a time, there is a need to define which national law the broadcaster has to follow. Therefore, the Directive clarifies under which Member State's jurisdiction television broadcasters fall. This is determined mainly by where their central administration is located and where management decisions concerning programming are taken.33

It is confirmed that, as a general rule, the Member States must ensure freedom of reception and must not restrict the retransmission on their territories of television broadcasts from other Member States.

These simple provisions have changed the landscape of European Television. The One Country principle has spawned an industry that is expressed by all the carriers in EU countries. It has also created a remarkable growth in the production community generally in Europe and more specifically in the UK where many of these channels are licensed and distributed throughout EU countries. This as noted by Viviane Reding the Member of the European Commission responsible for the Information Society and Media in a speech last year in a New Media seminar at Brussels:

In 1989 non-satellite commercial television was still in its infancy and ICT- based fixed-line methods of service provisions were not ready for market. EU Member States at that time only had 3-4 mainstream TV channels each. Cable TV existed in just a handful of countries, no-one watched TV-style content on the internet and few had heard of (then) exotica such as digital TV, broadband internet access or digital subscriber lines. Even technicians would have doubted that TV signals would one day travel by phone lines.

Today trans-frontier satellite commercial television has become maybe even more popular than local terrestrial broadcasting. This evolution has been accompanied by exponential change in channel capacity, especially via digital cable and satellite, increased market penetration of multi-channel homes and an increasing number of platforms.34

National regulators are encouraged by the TVWF Directive to manage within its framework and can provide tougher national rules than those expressed by the Directive. For the most part the content rules have become the floor or European standard but a few countries like France have put tougher content rules on language and domestic production in place. However, domestic authorities cannot stop foreign services from entering the country and receiving distribution because of the Country of Origin principle. This has led to considerable debate and some tension.

Over the last few years, the European Commission has been working towards an updated media directive based on the changing and proliferating media industry over the last twenty years:

Keeping the TVWF Directive as it stands now would aggravate increasingly unjustifiable differences in regulatory treatment between the various forms of distribution of identical or similar content. "Traditional" television broadcasting services would remain regulated on the basis of the regulatory approach of the 1980's and 1990's. With the current rules, non-linear service providers have to comply with different - often diverging - national rules applying to the new services. This bears the risk of closing markets for on-demand audiovisual services and creating or reinforcing monopolies. This is in my opinion not acceptable!

The Commission's proposal aims to create a single market framework for all types of television and television like services irrespective of the technology used to transmit or receive them. This common framework provides the legal certainty necessary for the new audiovisual service providers to offer their services on a pan-European basis. Indeed, we cannot expect the European audiovisual industry to lead the way in developing new services if it is confronted with 25 or more different regulatory regimes.35

The new AVMS Directive Without Frontiers was adopted by the European Parliament in May of 2007 and will be implemented over the next two to three years by member states. The point for satellite and cable carriers and channel providers is that it confirmed the existing rules for television services and reinforced the controversial Country of Origin principle. Aside from relaxing some advertising standards and product placement policies, the new agreement encompasses television content in the non-linear world of on-line services, VOD, IPTV (internet), etc. This will bring content requirements to bear on these services and introduce the One Country of Origin principle.

Aside from the obvious debate this initiative caused, it is worth noting that the regulatory principles first applied to over the air broadcasters and to distributor-dependent channels in the EU with the TVWF Directive have now been extended to on-line and on-demand services. Given the earlier comments in this paper about the growing demands for more platforms and a lack of rules beyond what has now become the traditional distribution platforms, it is interesting and perhaps somewhat momentous to see these new rules put into place for non-linear services.

The aim of the new AVMS Directive is to provide a modern pro-competitive framework for Europe's providers of TV and TV-like services by, for example, giving more flexibility for financing audiovisual content by new forms of commercial communications. It will also create a level playing field for all companies that offer on-demand audiovisual media services to profit from Europe's internal market, irrespective of the technology used to deliver their services while continuing to ensure a high level of consumer (i.e.viewer) protection..36

The country of origin principle has already helped Europe's broadcasting industry to flourish since 1989. This will extend the benefits to new on-demand audiovisual services (such as video on-demand), so as to improve their prospects for commercial success. For such services, this principle will apply across Europe with a minimum of necessary harmonisation. This will create a level playing field for audiovisual media services in the EU and increase choice, diversity and investment in Europe's audiovisual media industry.

This Directive is not directed at regulating the internet but only those platforms, which carry television content either in a linear or non-linear manner. This means blogs, websites, etc are not part of the intended regulation. However, it is fair to say many interests in Europe feel this is the thin edge of the wedge and are concerned about what may be next. The Commission has been at pains to note:

The Commission's proposal aims to create a single market framework for all types of television and television like services irrespective of the technology used to transmit or receive them....The Directive provides for a coherent regulatory framework for both linear and non-linear (on demand) delivery of audiovisual content. Linear services as you already heard are scheduled services such as broadcasting via traditional TV, the internet, or mobile phones, a service that "pushes" content to viewers. Non-linear" services, by contrast, are those which the viewer pulls from a network, such as on-demand films and where the viewer decides on the moment of transmission.....The overwhelming majority of blogs would not be covered by the Directive because they would not respond to the six cumulative criteria recalled above: in particular, the following would not be covered: private websites or blogs of a non-commercial nature; Blogs that do not have as their "principal purpose the delivery of moving images.37

This initiative will have an effect on the distributor-dependent channels and will provide further opportunities for exposure and revenue. It provides a framework that creates a stable legal environment for the full exploitation of the content of channels on any platform. Distribution can essentially become technology-neutral. The economics of this may well not be apparent for many years and to some whose concern is today's Return on Investment it may well be considered a bit "blue sky". On the other hand cable and satellite delivery and the 100 plus channel universe supported by subscriptions and advertising was a bit "blue sky" twenty-five years ago. Certainly, in the European context this initiative bears watching for the lessons that may emerge in the wider global context.

As noted with respect to the US and Australia, the EU has basic rules covering children, program standards, diversity and fairness, advertising, etc. They are at pains to encourage individual country regulation, stressing the importance of independent regulators to ensure fairness, diversity and these basic content standards.

One further thought, which relates to copyright for cable and satellite services in the EU. While this has been described in the earlier portion of this paper it is useful to note an interesting paper published four years ago that examines the EU's Cable and Satellite Directive from a copyright perspective. The essence of this report strongly suggests that:

The freedom of choice between collective exercise and individual exercise for cable retransmission and negotiating satellite-broadcasting rights should be maintained.38

Flexibility and choice, in their opinion, should be maintained for satellite and cable operators and should be reinforced at the national level. In large part, this has been achieved.

The United Kingdom

The UK has almost 25 million TV households. There are about 3.4 million cable subscribers and about 7.7 million satellite subscribers. Sky Television has a virtual monopoly in the satellite area and Virgin Media owns most of the cable industry. Digital television is making a very quick transition in the UK with a number of channels, which were only available on cable or satellite now available via over the air digital multiplexes. This is important, as the reader will note that Freeview, the digital over the air service in the UK, is becoming another viable platform for distributor-dependent channels but in an over the air mode. The success of Freeview was noted in a report released by the UK regulator August 23, 2007:

Digital television penetration (available) broke through the 80% barrier in Q1 2007, taking the total number of homes with multichannel television to 20.4 million (80.5% of the total). There are now more Freeview devices connected to the main television set in the home than pay satellite set top boxes. By Q1 2007, 8.4 million homes had Freeview, up 33.3% on the year, while 8.0 million households took pay satellite, up 8.3%.39

This is the first country in the world that has chosen to make spectrum available not only for over the air broadcasters to move to broadcasting digital television, but also to create multiplexes which can provide additional services for consumers. This is sometimes known as the "digital benefit" well known to the satellite and cable world but now available in a more modest way to broadcasters. The channel offerings include the analogue over the air services and additional offerings from the UK over the air broadcast industry. There are some services supplied by independents and a few brand names. It is free and depends on advertising and in many cases direct resource help from the traditional over the air channels, since much of the new channel content is repurposed. It is interesting to compare the channel offerings from Sky TV (satellite), Virgin (cable) and Freeview. The links are noted in the footnote.40

The choice is much greater on satellite and cable services but, at the end of the day, there is a free alternative with less choice using traditional means of over the air broadcast. In fact, UK government policy has created a terrestrial over the air distributor.

The UK regulator defines pay television through the platform it is delivered:

Pay-TV includes subscription and video-on-demand television services on all platforms: cable, digital terrestrial television (DTT), satellite and television over DSL.41

With respect to terrestrial (over the air) broadcasting, distribution is voluntary, but there are legislative tools if required:

Section 64 of the Communications Act 2003 allows for must carry obligations to be included in a general authorisation for an electronic communications network or service such as cable distribution but this has not yet been put into force.

Public Service broadcasters (ITV, BBC, Channel 4 and Five) are available on cable and satellite in the UK as well as via terrestrial distribution (which is more regulated). They generally are not paid and do not pay for carriage via cable. There are charges associated with satellite and terrestrial distribution, which is generally subject to commercial negotiations between the relevant parties. Non-PSB channels negotiate directly with the cable or satellite platforms directly for carriage.42

Distributor-dependent channels negotiate their way on to the platform and are subject to the same pressures in the UK as noted in Australia and other countries. Popular international brands have an easier time than domestic services. However, the UK has been very successful in developing domestic services. Notably Sky TV developed news and entertainment offerings that were a core part of its satellite package from the beginning. This allowed the services to find consumer acceptance at the same time as introducing international brands. A combination of local reference and content as part of the core package and good promotion has established these services as important to UK consumers. Sky services have been made available to cable and other platforms for a fee. Cable wishes to carry the services because of their popularity. There has been controversy when Sky chose not to make them available to Virgin Media, with objections filed with Ofcom:

Ofcom announced in March 2007 that it would investigate the pay-TV market. This followed a submission from BT, Setanta, Top Up TV and Virgin Media, requesting an investigation and that Ofcom should consider whether there were grounds for a market reference to the Competition Commission under the Enterprise Act 2002. Consumer groups, including the Ofcom Consumer Panel and the National Consumer Council, had also expressed concern over one aspect of the pay-TV market: the loss of BSkyB channels on Virgin Media's pay-TV platform.43

The key issue is one of fair access and control of the content market. The current rules are unclear and the Ofcom enquiry will probably result in some guidelines in consultation with the Competition Commission.

For channels that are specifically for cable and satellite, Ofcom has a separate and uncomplicated licensing format.44 These licenses are called Television Licensable Content Services (TLCS). There are three classes of license: editorial, teleshopping and self-promotion (infomercials). There are no foreign ownership restrictions and the service does not have to be broadcast in the UK under the previously discussed Country of Origin for EU members. There are hundreds of channels licensed with only about one hundred broadcast in the UK, a list of all the channels (export and domestic) is noted below.45

Licensing for channels on over the air digital multiplexes, referred to as Digital Television Program Services, has its own process, which is very similar to cable and satellite licensing.46 The range of services on these over the air multiplexes is quite astonishing for a freely available over the air environment - they are noted below.47 They are also beginning to have an impact on satellite and cable subscription revenue as noted in a report from Ofcom this Year.

Subscriptions first exceeded TV advertising revenue in 2003. Over 2006 subscriptions grew by 3.5% (£138m) to £4,029m, while net advertising revenue (NAR) fell 2.2% (£80m) to £3,469m - subscription revenue is now 16% higher than NAR (9.7% in 2005). However, with the majority of new digital homes choosing free digital terrestrial TV, the rate of growth in subscriber revenues is falling, down from 8.5% a year ago.48

The full report is worth reading as it describes a very dynamic and evolving UK television market that has been hugely successful with domestic content and which, next to the United States, has become a huge exporter of both program content and distributor-dependent channels. This is thanks in large part to the EU framework and the country of origin principle, a light domestic regulatory touch and domestic independent production quotas.

Given that there has been an explosion of such channels over the last ten to fifteen years, there has been an equal growth in the production community. Satellite and Cable production and employment is impressive, employing some 6,000 people and with revenues of 10 billion dollars a year.49 Independent production domestically is also impressive, and it is worthy of looking at regulatory policies have encouraged this sector over the last decade.50

Copyright is handled through the various collectives and is monitored by both Ofcom and the UK Copyright Board. A particular focus has been given by Ofcom to the relationship of over the air, satellite and cable broadcasters with the independent production community and how they sort out their rights issues, with an emphasis on cooperation. As platforms continue to multiply, copyright matters will continue to be on the agenda. However, as the industry continues to grow, these issues are handled in a straight forward and business like manner.

Broadcast Codes are administered by Ofcom and include the usual list of areas, among them: advertising, children, access (subtitling etc), editorial fairness, and an overview broadcasting code, which was developed by Ofcom in consultation with the industry and viewers and was contemplated in the Communications Act of 2003. This overview code came into effect in 2005. A list of the relevant codes is noted below,51 and the Ofcom broadcasting code is specifically noted.52

One further area of the codes is worth noting and that is rights for sporting events. Like Australia, the UK has rules to ensure that no one broadcaster or distributor can lock up all the sporting events in a particular sport. This has also been a concern in the EU generally and a number of countries have spent some effort in ensuring that these rights should be fairly distributed between and amongst broadcasters and pay providers.53

France

There are almost 25 million households in France with 24 million of them TV equipped. There are about three and a half million cable homes and close to three million satellite-equipped homes. Satellite began in France in 1986 with Canal Plus and was an early success with almost one million subscribers to the analogue service. Cable services have been in France since the late sixties. It is interesting to note that even with a relative success, particularly over the last decade, subscriptions and viewing to these services is still relatively modest, but increasing rapidly over the last few years.

Viewing to over the air services is still greater than 80%.54 Increasingly more choice is available to viewers with services available from both domestic and international sources, which are registered and carried in France. The French regulator the Conseil Superieur de l'Audiovisuel (CSA) is responsible for licensing and registering these services. There has been some difficulty in France over the previously discussed EU's Country of Origin principle. Lack of French language programming or production has been a concern for the CSA but in the end, it has accepted the EU principle and has not required a separate national licensing regime for these European originated services.

This is all a bit confusing to a non-French observer. While the CSA regulates national satellite carriers like Canal Plus and TPS, and local cable carriers and the content they carry, services that are distributed by Eutelsat (a common carrier throughout Europe) are usually not regulated in most European jurisdictions and are often redistributed by domestic or regional distributors. It is useful to review the CSA's decision not to require separate licensing and registration of Eutelsat services, made in March of 2007, available on the CSA website. All the related cable, satellite, and over the air services are noted on the website as well.55

Must carry on cable has been part of France's regulatory framework since 1966 and requires the cable company to carry the broadcaster in the regions they are serving simultaneous to their over the air broadcast. There are also cable content rules that are over and above the EU requirements:

For films and audiovisual programs at least 60% must be European programs and at least 40% must be original French language programs. This is defined as "French the principle language of production".56

Both the must carry and content requirements do not extend to satellite, but for competitive reasons and market requirements over the air services and distributor-dependent channels with French content are carried on the two major satellite carriers; Canal Plus and TPS. There are a number of international brand channels, which have domestic French material.57 The licensing format for both cable and satellite is straightforward:

The authorisation system for operating cabled networks, the application of which had previously been incumbent upon the CSA, was eliminated by the law of July 9th 2004. Henceforth, cable networks are bound to make a declaration to the CSA (when they set up, they also have to make a declaration to the telecommunications regulation Authority). The operation declaration to the CSA is not necessary for networks serving fewer than 100 homes..

Television and radio services from European Union other member states and non-EU television and radio services, broadcasted by satellite Eutelsat, do not need any kind of licence from the CSA. But they are bound by the obligations of the law of September 30th 1986 and submitted to the CSA's monitoring.

If a non-EU channel within France's jurisdiction broadcasts programmes contrary to any of the basic principles established by the law (respect for the dignity of the human person, for the pluralist nature of currents of thought and opinion and public order, protection of children and adolescents, absence of incitation to hate or violence for reasons of sex, customs, religion or nationality, etc.), the CSA may ask the Council of State to order the satellite operator to stop broadcasting.58

The distribution industry continues to evolve with the two satellite carriers, TPS and Canal Plus, amalgamating earlier this year. The need to lower the costs of distribution and service offering in an increasingly multi channel world is beginning to make itself an ongoing business necessity, as was also noted with respect to Australia and the UK.

The two distributors merged their packages on March 21, 2007. Essentially, TPS merged into CanalSat which was then branded as "Nouvelle CanalSat". All the TPS branded movie channels were merged into the Canal+-owned CinéCinéma package, TPS Star and TPS Foot would be the only channels that still used the TPS brand. Some new channels launched on both platforms. Eventually, the TPS service from the Hotbird satellites will close down and the former TPS costumers will have to change their equipment to receive the CanalSat service from the Astra satellites instead.59

Copyright and general broadcast codes and standards are as they are described above in general, throughout the EU.

Belgium

Belgium is a small country with a complicated Federal system that has two large linguistic groups, French and Flemish, and a small minority group of the German language. The country has about four and a half million households virtually all of them with a TV. Belgium is one of the most heavily cabled countries in the world with more than 4 million cable households and 300,000 satellite households, meaning that virtually 95% of the country receives their television media via cable and satellite. Some would suggest that figure might be closer to 97% to 98%. Cable has been part of the Belgium landscape for over 35 years and, by the number of subscriptions alone, is defined as the main distribution source for television services.

Belgium is the second most dense cabled country in the world after the Netherlands with over 99% of all households connected to cable television networks. Cable television was deployed nationwide in 1972 as a measure made by the government to eliminate the millions of antennas. Currently most cable companies are active on the triple-play market, offering television, telephone and internet services. Currently the analogue services are phased out to make way for digital television services and high definition television.60

Regulators in Brussels regulate within the cultural communities that are defined by language, so there are separate regulars for Flemish and French services. For many years, the public broadcasters had little competition from the private sector but that changed with the introduction of cable. The market then became increasingly fragmented as cable digitized and different service packages became available:

Belgian broadcasting mirrors the unique political and linguistic nature of the country. The cultural communities, rather than the federal authorities, are responsible for regulating radio and TV. So, unlike most other European countries, Belgium does not have a single public broadcasting organisation, but two separate bodies, with their own regulations, running their own radio, TV and external broadcasting. .... Cable services offer dozens of domestic and foreign channels, including Dutch and French TV stations.61

Competition and market definition has been the subject of a great deal of work by the EU. The chapter on Belgium and its market circumstances will help the reader understand the evolution of the market, the focus on cultural and linguistic priorities, why cable evolved as it has and why pay television packages have been slow to develop.62

Channel availability is as great as in any other European country but tends to focus on the two principal cultural groups.63 Registration and licensing is not different from other EU countries. Must carry on cable is a requirement for terrestrial (over the air) services, plus any other government designated services. Domestic pay (distributor-dependent) channels must air at least 5% Belgian content.64 Community access is also part of the cable distributor requirements.

The general rules for cable and satellite distribution are part of each regulator's regulatory framework and conform very much to the EU framework. The Flemish regulator (VRM) received government direction in 2006, which clearly spells out the rules.65 As in other countries reviewed, Belgium has a framework for satellite and cable carriage, codes of conduct and access all well within the EU framework.66

Both regulators look after the interests of the German minority.

Belgium has been slow to grow a variety of distributor-dependent services, perhaps because of its investment in analogue infrastructure. This is clearly changing and cable is poised to be a significant "triple play" player. For the near future, satellite will have a very modest impact in the delivery of services to Belgium.

Germany

Satellite and Cable delivery in Germany is omnipresent. There are some 39 million households in Germany with more than 37 million having Television. Out of this number, approximately 21 million subscribe to cable and a further 14 million subscribe to satellite services. In some parts of Germany, viewing to over the air television is less than 5%.

Germany's regulatory regimes are at the provincial (lander) level as set out in its constitution. There is coordination at the federal level through an agency set up by agreement amongst the lander and federal governments.67

Spectrum issues are managed by a Federal organization. Broadcasting law in Germany is set up to guarantee a free media, but the process of doing that appears to be somewhat confusing. A brief review of broadcasting law from the German Law Archive may help the reader better understand the media environment.68

Public television is an important part of the German landscape and enjoys audience shares in the 50% range. Private television in Germany is an over- the-air service with extensive cable and satellite distribution. It enjoys about 35% of the market share. The remaining 15% market share goes to distributor-dependent channels. It is interesting to note that much of the satellite and cable market was established with free (advertiser-supported) television services (the fee only for delivery), and the growth of pay and specialty has been somewhat slow because of it.

Around 90% of German households have cable or satellite TV, and viewers enjoy a comprehensive mix of free-to-view public and commercial channels. This has acted as a brake on the development of pay-TV services.69

This package of services, which has an emphasis on private TV channels, has become the basic cable and satellite package.

The coverage of the whole territory of the Federal Republic by private channels (receiving licence from the Länder authorities) is mainly realised through cable and satellite distribution.. The following channels with coverage of the territory of the Federal Republic ("Bundesweit") are considered as "national" by the ALM.

Kabel Eins (Licence in Bayern) (also by satellite)
Giga (Licence in Nordrhein-Westfalen) (also by satellite)
ProSieben (Licence in Berlin und Brandenburg) (also by satellite)
RTL (Licence in Niedersachsen) (also by satellite)
RTL II (Licence in Hessen) (also by satellite)
SAT.1 (Licence in Rheinland-Pfalz) (also by satellite)
Vox (Licence in Hamburg) (also by satellite)
XXP TV (Licence in Berlin-Brandenburg)70

This list goes on and includes the two national public broadcasters, sports and premium services. It is illustrative of the unique evolution of cable and satellite services in Germany and the German language region. When the reader reviews this list, it is enlightening with regard to the challenges facing pay and specialty services and packages on satellite and cable in Europe's largest market.

As noted, content is regulated at the lander level and must carry rules are made there for all cable services. Other content rules are as prescribed by the EU, as are codes of broadcast conduct and copyright.

Digital Television has been fast tracked in Germany with planned analogue shutdown for 2010. Competition to satellite and cable platforms from over the air digital multiplexes, such as is happening in the UK, seems not to be happening in Germany. The public television broadcasters have been quick to develop digital multiplex specific services, but the private sector has been slow to embrace the platform; they, along with pay and specialty services, appear to prefer the traditional satellite and cable platforms. This may change in the future, but does not seem likely because of their media evolution and the lack of over the air spectrum in Germany.

German national television also serves the foreign German-speaking markets, including Austria with a spill over from Germany. In addition to the public broadcasters ARD, ZDF and Deutsche Welle, there is a range of German private sector channels available via satellite:

Kabel 1 Schweiz
ProSieben Schweiz
ProSieben Sat.1 Welt
RTL Österreich
RTL Schweiz
RTL II Österreich
SuperRTL Österreich
Viva+ Polska
Vox Österreich71

These have a profound impact in other German-speaking markets.

Austria

Austria has almost 3.5 million households, with 3.4 million households with television sets. Cable subscribers are a little over 1.3 million households and satellite subscribers are approaching 1.8 million subscribers. Almost 90% of Austrian viewers subscribe to cable or satellite television.

As noted above, Austria is dominated by foreign broadcast services from Germany:

The public broadcaster ORF having two channels with more than 50% of the audience dominates the market. This is not surprising for the monopoly reasons discussed previously. Commercial TV has been slow to take hold with less than 7% of the market.

However, these Austrian Channels compete against German television channels, which spill into the country by cable and satellite TV. German public and private broadcasters enjoy 28% of the market directly through these retransmission regimes and it is estimated the viewing to all German originated programming (including subscription services) is 54%. A huge number that is only analogous to the Canadian viewing situation. (Although French Belgium does have similar problems with programming from France as do the Swiss.)72

The big players after ORF, the public broadcaster, are German satellite channels (also redistributed on cable) RTL, Sat 1, and Prosieben. Even with a well-established satellite and cable infrastructure, it is amazing to note the success of the over the air broadcaster ORF.

The broadcasting regulator is KommAustria, which reports to the Austrian regulatory Authority for Telecommunications and Broadcasting. The BBC summed up the environment in Austria with the following note:

Austria's public broadcaster, Oesterreichischer Rundfunk (ORF), has long-dominated the airwaves. Lately, it has faced growing competition for audiences from private broadcasters, particularly in Vienna. Private broadcasting in Austria is a relatively recent phenomenon. Local commercial radio was given the green light in the 1990s. A national TV licence was granted to commercial station ATV which opened in 2000, and licences have been awarded to local TV stations.

Cable or satellite are available in most Austrian homes and are often used to watch German stations, some of which tailor their output for the Austrian audience.73

There is the usual full range of channels available in Austria through satellite and cable services but the emphasis is on German language channels, as noted, tailored for the Austrian market.74

Content regulation is within the EU parameters and there is little regulation beyond must carry of the over the air broadcasters. Satellite and cable channels and companies register with KommAustria75 but are not licensed. Distributor-dependent services are making inroads beyond the above noted "big players". This is a slow process, particularly because of Austria's small size and the copyright challenges it faces in establishing indigenous channels with domestic content:

In 2002 approximately 37% of TV households were supplied by cable. This low level of penetration compared to that in other Member States is fundamentally unsuited to providing the entire population with equal access to television programmes and additional services. This applies in particular to rural areas: in small communities with up to 2,000 inhabitants, only 14.2% of TV-owning households have a cable connection.

The transmission of Austrian programmes by satellite is significantly hindered by local limitations on copyright. The rights to broadcast attractive programmes for the entire German-speaking area are unaffordable or indeed unobtainable for Austrian broadcasting companies because of the latter's size and financial resources. A satellite transmission must therefore be digitally encoded and viewers must have the necessary access-enabling devices (such as smart cards). ORF only began this form of transmission two years ago. While approximately 45% of households have satellite TV, only about 5% of all TV households are able to receive Austrian programmes by satellite because of the circumstances explained above.

The costs of the necessary access-enabling systems include not only those for administration of the necessary devices but also licence costs for the encoding system. Local and regional private television providers in particular simply cannot afford this.76

The importance of this circumstance for Austria and the development of its own market for distributor-dependent channels is obvious. There may well be a preponderance of European programming, but there is not a preponderance of Austrian programming.

Conclusion

It is not appropriate to make sweeping generalizations about the observations noted in this report. Nonetheless, there are some apparent best practices and some challenges:

  • To the degree possible, a harmonization of the regulatory framework for satellite and cable services levels the competitive playing field and creates a transparency for the consumer.
  • A lighter touch on regulation seems to provide an environment for more creativity and entrepreneurship in the development and deployment of both national and trans-national services.
  • Program content requirements plus targeted spending quotas seem to work (the EU) in the development of new pay and specialty services and the registering or licensing of trans-national services.
  • In delivering television content (channels and programs) on non-linear platforms (services which are pull in nature like VOD as noted in the EU's AVMS Directive), regulators and policy makers may look to the frameworks that exist for traditional distributors such as satellite and cable (EU Audiovisual Directive and UK Ofcom platform rules).

This paper provides the reader with information and ideas about distributor's channels and content in selected countries, in the hopes that it will create the background for an informed discussion and debate leading to the CRTC public hearing on this subject in January of 2008.


Appendix One

Terms of Reference

The work shall consist of writing a report describing industry practices, and the regulations, policies and future plans of various countries with respect to the obligations of various types of distributors (broadcasting distribution undertakings), with regard to the distribution of programming services. The programming services in question should include over-the-air televisions stations, the equivalent of pay and specialty services (sometimes referred to as "cable networks"), pay-per-view and video-on-demand services. The report should briefly:

  • describe the extent of distribution rights, if any, accorded each type of service;
  • describe the regulatory obligations of programming services granted such distribution rights, including the extent to which the programming services are subject to limitations as to a "nature of service" or "genre" and the nature and extent of any minimum programming exhibition or expenditure requirements;
  • compare/contrast such limitations and/or obligations to those of programming services not granted distribution rights;
  • to the extent feasible, list the pay and specialty services distributed in each country, specifying the type(s) of distributor(s) in question, the genre/format of the service (if applicable), whether the service is domestic or foreign, the ownership of the service and the scope of actual distribution (i.e., whether local, regional, national or, if applicable, supra-national, e.g., E.U.-wide);
  • where there are no obligations on distributors to carry specialty or pay services, discuss, to the extent that the information can be obtained, how specialty and pay services obtain distribution (for example, payment to the distributor, common ownership with the distributor);
  • note whether the countries in question regulate the distribution of foreign services, and if they do, describe the applicable regulations; and
  • describe any measures taken to preserve a separate national market for foreign programming aired by domestic broadcasters, and the extent to which those measures have proven successful; and
  • discuss provisions, if any, pertaining to the distribution of television services in official language(s), aboriginal language(s) and foreign (ethnic) languages(s).

The countries to be examined will include the United States, Australia, the United Kingdom, France, Belgium, Germany, and Austria, as well as relevant directives/regulations/policies, etc., of the European Union.


Notes:

1 Interview with Ofcom official done by Michael McEwen July 26th 2007. [back]

2 Interview by Michael McEwen with officials from the Australia Media and Communications Authority [back]

3 UK based Satellite and Cable Broadcasters Group Submission to the EU http://www.scbg.org.uk/publications.html [back]

4 ACMA and the Australia Film Commission http://www.afc.gov.au/gtp/wptvanalysis.html [back]

5 European Union Television Without Frontiers Document http://ec.europa.eu/avpolicy/reg/tvwf/promotion/index_en.htm [back]

6 Satellite and Cable Broadcasters Group submission to the UK Department of Culture and Media Services regarding changes in the EU TVWF rules: http://72.14.253.104/search?q=cache:wCzs7ptLNagJ:www.culture.gov.uk/NR/rdonlyres/9E86ABEC-69CE-450C-B8C8-4A28AB0E111F/0/SCBG.DOC+EU+Regulations+ Cable+and+satellite&hl =en&ct=clnk&cd=4 [back]

7 European Union Directive on satellite and Cable Copyright and related rights http://europa.eu/scadplus/leg/en/lvb/l26031.htm [back]

8 2003 ABA Review of Australian Content on Subscription Television: AFC Submission Appendix, February 2003 [back]

9 Australia Film Commission Pay TV Report http://www.afc.gov.au/gtp/wptvanalysis.html. As noted later in this paper, the Australians look at distribution services, both distributors and distributor-dependent channels, as a totality, and refer to them as "subscription services." [back]

10 Interview by Michael McEwen with Petra Wikstrom, Executive Director of the Satellite Broadcast Content Group. [back]

11 TV, Cable and Satellite Households http://www.swivel.com/data_sets/spreadsheet/1007569 [back]

12 FCC Fact Sheet on Cable http://fjallfoss.fcc.gov/edocs_public/openAttachment.do?link=DOC-231469A1.pdf [back]

13 FCC Resource document on satellite arriage... http://www.fcc.gov/mb/shva/ and http://www.fcc.gov/mb/shva/shviafac.html [back]

14 FCC Announcement. http://www.fcc.gov/Bureaus/Miscellaneous/News_Releases/2000/ nrmc0003.html [back]

15 Shvera http://www.fcc.gov/cgb/consumerfacts/shvera.html http://www.fcc.gov/cgb/consumerfacts/shvera.pdf http://www.fcc.gov/mb/policy/shvera.doc [back]

16 Cable Fact Sheet http://www.fcc.gov/mb/facts/csgen.html [back]

17 Ibid [back]

18 Regulation of Cable rates http://www.fcc.gov/cgb/consumerfacts/cablerates.html [back]

19 General Cable TV Framework http://www.fcc.gov/mb/facts/csgen.html [back]

20 Ibid. Note that the 40% limit does not include over-the-air broadcasters. [back]

21 Ibid [back]

22 FCC Fact Sheet on Cable http://www.fcc.gov/mb/facts/program.html [back]

23 Australia Subscription Television and Radio Association http://www.astra.org.au/article.asp?section=2&option=1&content=1 [back]

24 Australia Communications and Media Authority Subscription TV http://www.acma.gov.au/WEB/STANDARD//pc=PC_90201 [back]

25 Licensing for Subscription TV http://www.acma.gov.au/WEB/STANDARD//pc=PC_91809 [back]

26 Foxtel Channel Line Up http://www.foxtel.com.au/channel/lineup.html?pageId=3 UK's Sky Television Line Up http://www.sky.com/portal/site/skycom/channels [back]

27 ACCC Analogue Digital Carriage decision http://www.accc.gov.au/content/item.phtml?itemId=782779&nodeId=27888c400db46361098b206b1baeed06&fn= Final%20Decision%20Paper%20-%20Analogue%20Subscription%20Broadcast%20Carriage%20Service%20March%202007.pdf [back]

28 Codes developed by Australian distribution industry and adopted by ACMA http://www.acma.gov.au/WEB/STANDARD/pc=PC_91419 [back]

29 ACMA Content Rules http://www.acma.gov.au/WEB/STANDARD//pc=PC_91809 [back]

30 Foxtel Submission to ACCC http://www.accc.gov.au/content/item.phtml?itemId=259730&nodeId=7714aec46569de9f04fe41d5787ac203&fn= Session+5+-+Mr+Kim+Williams.pdf [back]

31 ASTRA briefing document http://www.astra.org.au/article.asp?section=4&option=2&content=1 [back]

32 Sport Anti Siphoning http://www.acma.gov.au/WEB/STANDARD//pc=PC_91821 [back]

33 General Provisions of the TVWF Directive http://ec.europa.eu/avpolicy/reg/tvwf/provisions/index_en.htm [back]

34 Reding Speech June 2006 http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/06/352&format=HTML&aged=1&language= EN&guiLanguage=en [back]

35 Ibid [back]

36 EU Press release on the AVMS Directive http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/07/206 [back]

37 Reding Speech http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/06/352&format=HTML&aged=1&language= EN&guiLanguage=en [back]

38 International Communications Round Table report on Copyright for Cable and Satellite services in the EU http://www.icrt.org/pos_papers/2003/030204_BO_IPR.pdf [back]

39 Ofcom report on TV trends http://www.ofcom.org.uk/research/cm/cmr07/keypoints/ [back]

40 Freeview Channels http://www.freeview.co.uk/channels/?__SITE=public&p[0]=channels Sky TV Channels... http://www.sky.com/portal/site/skycom/channels Virgin Media Channels http://allyours.virginmedia.com/html/sorter/channels_full.html [back]

41 Ofcom Broadcasting and Content Report 2007 http://www.ofcom.org.uk/about/accoun/reports_plans/annrep0607/ coreareas/cb/ [back]

42 Interview with Ofcom official by Michael McEwen. For the Communication Act 2003, see http://www.opsi.gov.uk/acts/acts2003/20030021.htm [back]

43 Ofcom reports http://www.ofcom.org.uk/about/accoun/reports_plans/annrep0607/ coreareas/cb/ [back]

44 Ofcom TLCS licensing guidelines http://www.ofcom.org.uk/tv/ifi/tvlicensing/guidance_notes_and_apps/ tlcs/notes300307.pdf [back]

45 Cable and Satellite Licensed Channels http://www.ofcom.org.uk/static/tvlicensing/cs/main.htm [back]

46 Ofcom Digital program Services licensing guidelines http://www.ofcom.org.uk/tv/ifi/tvlicensing/guidance_notes_and_apps/notes/ notes_300307.pdf [back]

47 Digital Multiplex Licensed Channels http://www.ofcom.org.uk/static/tvlicensing/dtt/main.htm [back]

48 Television Market Report http://www.ofcom.org.uk/research/cm/cmr07/tv/ [back]

49 Satellite and Cable Broadcasters Group and Ofcom http://www.scbg.org.uk/downloads/scbg_issue_papers_response.pdf [back]

50 Production Sector Report http://www.ofcom.org.uk/media/news/2006/01/nr_20060110a [back]

51 Broadcasting Codes http://www.ofcom.org.uk/tv/ifi/codes/ [back]

52 Ofcom Broadcasting Code http://www.ofcom.org.uk/tv/ifi/codes/bcode/ [back]

53 Code on Sports and other listed events http://www.ofcom.org.uk/tv/ifi/codes/code_sprt_lstd_evts/ [back]

54 Media assessment the European Journalism Centre http://www.ejc.net/media_landscape/article/france/ [back]

55 CSA website (for English click English button) http://www.csa.fr/index.php [back]

56 International survey of cable and satellite content requirements http://www.afc.gov.au/downloads/policies/append_paytvsub03.pdf [back]

57 List of Over the air, cable, satellite and localized channels http://en.wikipedia.org/wiki/List_of_television_stations_in_France [back]

58 Licensing Framework in France http://www.csa.fr/multi/role/role_autorisations.php?l=uk [back]

59 Announcement of Canal Plus/TPS Merger http://en.wikipedia.org/wiki/T%C3%A9l%C3%A9vision_Par_Satellite [back]

60 http://en.wikipedia.org/wiki/Cable_television#Belgium [back]

61 http://news.bbc.co.uk/2/hi/europe/country_profiles/999709.stm#media [back]

62 Belgium Market study http://ec.europa.eu/comm/competition/publications/studies/media/belgium.pdf [back]

63 Channel listing French http://www.obs.coe.int/db/persky/be_cfr.html Channel listings Flemish http://www.obs.coe.int/db/persky/be_vlg.html [back]

64 http://www.afc.gov.au/downloads/policies/append_paytvsub03.pdf [back]

65 http://www.vlaamseregulatormedia.be/english/ decreet_ENGELS070716.pdf and the VRM Website http://www.vlaamseregulatormedia.be/english/introduction.html [back]

66 Cable and Satellite Distribution http://www.csa.be/questions/categorie/7#question_65 and the CSA General website http://www.csa.be/ [back]

67 National regulatory Coodination.ALM http://www.alm.de/ [back]

68 Broadcast Law in Germany http://www.iuscomp.org/gla/literature/broadcst.htm [back]

69 BBC News summary of German media http://news.bbc.co.uk/2/hi/europe/country_profiles/1047864.stm#media [back]

70 Channel listing for all German over the air, satellite and cable services http://www.obs.coe.int/db/persky/de.html [back]

71 Ibid [back]

72 Michael McEwen Media Diversity Paper for the CRTC July 2007. [back]

73 BBC News Country Profile http://news.bbc.co.uk/2/hi/europe/country_profiles/1032215.stm [back]

74 Channel Listing Austria http://www.obs.coe.int/db/persky/at.html [back]

75 KommAustria website and regulations translated. http://translate.google.com/translate?hl=en&sl=de&u=http://www.rtr.at/web.nsf/englisch/Portfolio_Presseinfos_ nach2BDatum_PresseInfoDatum_PInfo13052005RF&sa=X&oi=translate& resnum=1&ct=result&prev=/search%3Fq%3DKommAustria%26hl%3Den%26rls%3DSKPB,SKPB:2006-42,SKPB:en%26pwst%3D1 [back]

76 Digital Broadcasting in Austria http://72.14.253.104/search?q=cache:yDgIspaI7T0J:ec.europa.eu/information_society/policy/ecomm/ doc/todays_framework/digital_broadcasting/switchover/ a_digitalisierungskonzept_oe_beilage_1_en.doc+site:ec.europa.eu+EU+ Regulations+Cable+and+satellite&hl=en&ct=cln [back]

Date Modified: 2007-09-21