Anyone looking for a relaxing read would be advised to avoid communications regulator Ofcom's report, Extension of the Television Without Frontiers Directive: Impact Assessment. But it would pay any company about to introduce video-on-demand - in reality, most media owners or budding internet entrepreneurs - to work their way through this weighty tome.
The report summarises the conclusions of the European Council of Ministers, which last week revealed how it is likely to regulate audio visual content in EU member states - including linear television, broadband television or video-on-demand. The regulation includes ethical issues, but also how and when advertising should take place.
Television Without Frontiers has been in existence for years and was last amended in 1997. But since then, broadcast has changed fundamentally due to the rise of the internet, and the European Commission is deciding how best to regulate the proliferation of new content.
Creative damage
Creative industries minister Shaun Woodward hailed the council's conclusions as a victory for advertising. He pointed out that a year ago the EU intended to extend regulation to all online moving images, potentially including services such as MySpace or YouTube, or a local football club with commercial sponsorship.
He says the Department for Culture, Media and Sport and Ofcom have been trying to persuade their European partners this would have been "very foolish" and "would have damaged our creative industries". They argue that regulating all audiovisual content across all platforms is simply unmanageable.
At present, media owners such as ITV and Channel 4 have teams that ensure broadcasters comply with regulators such as Ofcom and the Advertising Standards Authority. But as the number of broadcasters in the UK mushrooms, such regulation could stifle the development of any start-up that features audiovisual content.
If such regulation is ratified, the danger is that EU countries will become over-regulated and costly for broadcasters. As Nigel Walley, managing director of digital media consultancy Decipher, says: "It (the Commission) can't enforce the regulation of everything. We could end up with a similar situation to online gambling, where companies end up moving to a lighter regulatory environment such as Gibraltar."
The European Council of Ministers' proposals state that only video-on-demand audio-visual content should be regulated. This excludes areas such as user-generated content or content where the media company has "editorial responsibility".
Regulation should apply to video-on-demand when there is "consumer expectation" that content is monitored. A DCMS spokesman explains that what you watch at 9pm at night on TV should be regulated in the same way as what you download from the web the next morning.
However, the definition of video-on-demand is still hazy. Lucy Cronin, executive director of the European Digital Media Association, which represents online media and technology companies in Europe such as Google and Yahoo!, says video-on-demand has yet to be defined by the European Commission. "What if half your site is video-on-demand and the other half user-generated content?," she asks.
I-Level chief executive Andrew Walmsley is concerned that the pace of change in the digital world and consumption patterns will move quicker than the regulatory environment. He says: "The legislation they are talking about now won't pass into law until 2012. Given the pace of change, it's like making false teeth for someone you've never met."
Another area of concern among media owners is that some member states want regulatory obligation to pass from the present country of origin to the country of destination.
Extra cost
At present, Ofcom regulates anything broadcast from the UK, in line with EU expectations. But as it is easier to broadcast country to country via broadband, some EU states want regulation by the country receiving the broadcast, which could see media owners dealing with numerous regulators in different countries - again at extra cost.
Despite the extra regulation of video-on-demand services, if the proposals are ratified, the news isn't totally negative for advertisers.
The European Council suggests that individual territories be allowed to make their own decisions on product placement. It has also agreed to scrap the rule that there must be a 20-minute period between ad breaks.
Last week's meeting of ministers agreed the general approach. It still has to go before the European Parliament next month for the first in a series of votes.
But whatever is decided will have profound effects on TV and online media owners.
As Cronin says: "The political statement that this would not be regulation of the internet has to be called into question. It is regulation of the internet."
EU MOVES TO REGULATE TELEVISION CONTENT
- The last amendments to the Television Without Frontiers Directive were in 1997
- Given the development of online media, the European Commission realised that the Directive, which tries to ensure a quality standard for European TV, needed to change
- Last December, the EU Commission proposed that all online audio-visual content should be regulated. Ofcom and the DCMS have been campaigning against that proposal and last week the European Council of Ministers proposed that only video-on-demand should be regulated
- These proposals will go to a vote in the European Parliament next month. This will then be followed by another vote in the co-decision process by the Council next May.
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