January 2006 – AER SUBMISSION ON THE FORTHCOMING REVIEW OF THE EU REGULATORY FRAMEWORK FOR ELECTRONIC COMMUNICATIONS AND SERVICES
The Association of European Radios (AER) is a Europe-wide trade-body of private and commercial radio broadcasters in France, Germany, Italy, the UK, Greece, Spain, the Netherlands, Denmark, Finland, Sweden, Switzerland and Romania. As such, AER represents the interests of over 4.500 private and commercial radio operators.
Since its creation in 1992, AER has actively contributed to the Commission’s work on electronic communications and services (Telecom Package) and spectrum policy initiatives and thanks the Commission for its invitation to comment on the forthcoming review of the EU Regulatory Framework for Electronic Communications and Services.
AER welcomes this review taking place in the framework of the i2010 Initiative as an opportunity to remind the European Commission of the central role played by radio broadcasting in Europe and to alert DG Information Society and Media to the adverse effects that some of its policies could have on the future of the radio industry in Europe.
There are currently approximately 10.000 privately and commercially-funded radio stations broadcasting news, music, weather and entertainment programmes to over 456 million listeners across the 25 EU Member States. Most are SMEs broadcasting to local and regional communities and offering free-to-air programmes. These are programmes which public service broadcasters, TV or even telecom operators do not provide or provide only against a fee. These radio stations are financed by advertising revenues which are currently their only source of income.
Radio – and indeed commercial radio – offers services of general interest free of charge and serves the public in particular at local and regional level. AER would like to point out that when all other technology fails, radio still functions (in emergency situations for example). Radio stations across Europe are currently finding themselves in regulatory turmoil and uncertainty provoked by liberalisation (in the new EU Member States in particular), EU regulatory initiatives such as the current “telecom package” (still not implemented in many Member States) and inescapable pressures to “go digital”.
These pressures are taking place in difficult and sometimes even adverse conditions which include:
- the absence of adequate regulatory frameworks – and indeed of digital radio strategies – at national level for digital radio;
- the development of digital technologies leading to a diversity of sometimes conflicting digital strategies by radio broadcasters;
- uncertainty regarding advertising revenues in the long term and thus sufficient means to invest in new technologies;
- the privileged position of public service radio broadcasters in terms of access to funds allowing public radio to be present on a variety of analogue and digital platforms;
- the privileged position of public service radio broadcasters with regard to access to digital licences;
- the privileged position of public service radio broadcasters with regard to access to analogue and digital spectrum;
- most importantly – the announced competition for spectrum between players who are not in a position to compete on equal terms: telecom operators and commercial radio broadcasters, in particular the small and medium-sized broadcasters representing the vast majority of radio stations across the EU.
AER extensively commented on the Commission’s proposals (AER submission dated November 13th, 2000) and has always supported the liberalisation of the electronic communications sector as a means to achieve the Lisbon Agenda.
AER however regrets that virtually none of the concerns of the radio industry have been taken into account and believes that the current situation in this industry is, in part, a direct result of the Commission’s policies for electronic communications and its intentions regarding spectrum.
Free-to-air radio broadcasting is at risk and this surely cannot be the intention of the European Commission.
We therefore trust that the specificity of radio broadcasting will find its way into the Commission’s review, future proposals and more generally into the i2010 Initiative.
While we are happy to submit preliminary comments, we trust that this will be only part of the dialogue which the radio industry intends to continue developing with DG Information Society and Media to ensure that final proposals are well-balanced, take fair account of the realities of radio broadcasters and help rather than hinder the development of a vibrant radio industry in Europe with a strong footing in tomorrow’s digital technologies and the expanding Information Society.
Scope and objectives
The current Regulatory Framework has not been implemented across all Member States. In some EU Member States (ex. Greece and some new EU Member States), the previous framework is still in the process of being implemented thus making it difficult to assess their impact on the radio industry across the EU25.
While the “Telecom Package” has certainly delivered in terms of liberalising the telecom sector, it has so far had little impact on regulatory frameworks for digital radio. Although in some Member States such regulatory frameworks have been implemented (UK, Italy, France) and are setting the stage of the roll-out of digital radio, in most EU Member States, the status quo remains.
AER understands why the Commission wishes to accelerate the transition to an ICT-led economy in the EU but warns that industries such as the radio industry might be unable to compete on equal grounds with telecom operators thus jeopardising the right of citizens to receive “free-to-air” radio services.
AER therefore suggests that:
- the Commission make an impact assessment of the current and future effects of the implementation of the current regulatory framework on radio broadcasting and in particular free-to-air radio broadcasting – whether public or commercially-funded;
- the Commission take into account the direct link which exists between content and networks in the case of broadcasting. The regulatory frameworks under discussion are based on telecom regulation and do not properly weigh the value and importance of the content transmitted through broadcasting networks – in particular for the 465 million listeners across the EU who listen to the radio.
Convergence and technological developments
AER endorses technological neutrality for all electronic media, including radio. Nevertheless radio broadcasters are in the process of making difficult choices for their primary broadcasting technology, based on investment opportunities, regulatory frameworks, technology most adapted to needs, spectrum availability and pressure from other spectrum users (TV, telecom, etc…).
While presence on multiple digital platforms seems fairly obvious and affordable for public service radio, this must be checked against their public service remit. Commercial radio by and large will be unable to afford similar investments hence jeopardising the dual model of public and commercial radio broadcasting in Europe.
While radio – contrary to TV – has always been the mobile medium “par excellence”, new technologies now allow all kinds of services – including multimedia and “mobile” radio – to be offered to consumers “on the move” via their mobile telephones, PDAs or laptops. The regulatory frameworks in place favour this and should continue to do so.
AER however wishes to remind the Commission that – unlike services bundled and offered by telecom operators or some TV broadcasters to their customers for a fee – commercially funded radio broadcasters by and large will offer their services to their listeners for free.
Spectrum allocation should remain under the responsibility of the Member States following the subsidiarity principle.
AER however understands the need for possible new procedures for spectrum management, like combinatory auctioning and bidding. However AER would like to underline once again the enormous differences which exist – and which must be respected – between spectrum allocated to broadcasting and spectrum allocated to telecommunication.
We believe that in the digital age spectrum for broadcasting might still be scarce. In order to help speed-up transition towards digital radio, access to radio spectrum for radio broadcasters must therefore be guaranteed. In AER’s view, such guarantee cannot be provided by “spectrum trading”.
Fair and transparent allocation mechanisms are essential – and flexibility in the broadcasting bands is desirable. “Technological neutrality” however cannot be conducive to fair allocation to radio broadcasters when sharing the same bands with other spectrum users such as TV or telecommunications. Nor can it be an obvious choice, technically speaking. Many examples of mutual interference between different broadcasting technologies on the same band are reportedly generated along borders by the coexistence of different radio-communication services (e.g. broadcasting and fixed, broadcasting and aeronautical) and could only become more acute should broadcasting share bands with, for example, telecom operators.
At this stage the most crucial issue for private and commercial radio broadcasters is fair access to spectrum for digital radio broadcasting in a highly competitive environment where spectrum is likely to become a commodity like any other. Radio broadcasting cannot compete at market level for spectrum with other spectrum users such as telecom operators because of the different kind of services it provides. Telecom operators charge for each connection set-up. Commercial radio broadcasters are free-to-air and revenues are generated by advertising and sponsorship carried alongside editorial content subject to a complex system of audience measurement.
As radio broadcasters, we believe that the content dimension is crucial and that servicebased criteria which guarantee choice and plurality of provision should be favored when awarding radio spectrum rather than purely economic valuation of spectrum such as auctions or spectrum trading in which any party can participate, including those with no wish to use the spectrum for free-to-air broadcasting.
In AER’s view, a European coordination of Member States’ spectrum policies could be helpful in ensuring that policy-makers and regulators are aware of the value of keeping spectrum available for radio broadcasters and helping ensure equal rights access to spectrum for private and public radio broadcasters. Migration to digital radio cannot be sustained by one player only – neither can it be only market driven.
Standards and interoperability
The Eurêka 147 system – DAB developed by a consortium of European operators with EC financial support – was listed in the “Telecom Package’s” lists of standards and is perceived as one of the most appropriate technologies for digital radio.
As mentioned earlier, radio broadcasters are in the process of making difficult choices regarding their “primary digital broadcasting technology”. There will probably be no “universal” standard for digital radio but a variety of digital technologies and platforms – sometimes competing and sometimes complementary – such as DAB/DMB/DxB, DRM, DVB-H, HD Radio/Iboc, etc…, allowing radio to go digital.
In this context, AER wishes to underline the need for a common European technological platform and a common European receiver market in order to keep implementation and diffusion costs at an acceptable level. The private and commercial radio industry and its 400+ million listeners should not be the ones to bear the full burden of digitisation (ie. having to pay for otherwise free-to-air services).
AER believes that interoperability of digital radio equipment should be ensured as should interoperability between analogue FM and digital broadcasting services. Likewise, interoperability between digital radio services and other services – such as those provided by other digital technologies – should be guaranteed. Therefore a set of standards to be used at European level, according to article 17 of the Framework Directive, is an important instrument for the development for the Internal Market.
AER also believes that any barriers to free equipment movement across national borders should be removed. It is an inherent part of radio broadcasting as a universal activity that offers freedom of choice in different countries. Considering that one of the most important features of radio is mobility, the use of radio receivers outside the countries where they were purchased (including in cars) should be possible.
Finally, while listening to the radio is done in a variety of ways and places (home, car, office, public transportation, etc.) via an increasing variety of mobile and non-mobile devices (stereo system, car radio, mobile phone, PDA, computer, etc…), it also well-known that consumers replace their radio receivers less frequently then their TVs. In order for consumers to listen to their favourite radio programmes without having to worry about technology, AER recommends that radio receivers are equipped to receive all existing and future digital radio technologies.
Radio is increasingly made available on a variety of platforms (cable, satellite, Internet, mobile phones) and rules should be adapted accordingly.
As regards digital radio, AER believes that “must carry” obligations should apply to multiplex operators. All radio broadcasters – whether public or private – holding a content licence relevant to a defined geographical area should be able to broadcast their programmes and services via multiplex facilities.
Consumer protection, citizen’s interest and users’ rights
It has been questioned whether it is necessary for general interest objectives to extend to transmission networks (as opposed to content already covered by the Regulatory Framework) in a scenario where, for example, mobile reception would be included in digital coverage obligations. It has also been suggested that there is a case for the separate treatment of existing general interest broadcast services and purely commercial content provision and that the latter should have no greater claim to access limited spectrum resources than any other commercial application (mobile telephony or data casting).
Europe enjoys a leading role in the development of digital broadcasting techniques for international, national and local digital radio broadcasting. These standards are particularly well suited to radio broadcasting which is characterized by an essential “content” dimension and a “one-to-many” as opposed as to a “one-to-one” capacity which characterizes telecommunications. DAB for example can provide “one-to-many” communications (audio and data) of all kinds, free-to-air, robustly, in the fixed, wireless and mobile environments.
In spite of these possibilities and unlike some television services, radio will to a very large extent remain free-to-air whatever additional services it might decide to offer to its listeners. Such services, which could include emergency services, travel, traffic and weather information or even interactive radio, are of general interest. For commercial broadcasters, revenues will continue to be generated by a mixture of advertisement and editorial content which itself is based on the evaluation of the audience in a complex research process.
The enhancement of transmission quality should be considered as a natural evolution of the medium not as services exceeding the services of general interest concept. Furthermore, there is a frequent misinterpretation that other telecommunication or even broadcasting systems can easily do what radio normally does. Yet radio broadcasters are the only ones to have the skills, experience and expertise, to create services and content which will be popular with their listeners as well as advertisers.
All European citizens – including Commission Vice-President Margot Walström – listen to the radio for news, music and entertainment as well as local weather, traffic and available services – whatever means they chose to do it. These programmes are free-to-air. Telecom operators and other spectrum users are suggesting that all content will be bundled and offered as packages to consumers – against a fee.
AER warns the Commission that its current policies could provoke the end of free-to-air radio thus representing the loss of thousands of jobs across the EU, the disappearance of our radio heritage and most importantly a huge loss in pluralism and diversity of content for European citizens.
Call for Input on the Recommendation of Relevant Markets
The European Commission Framework Directive and the EU-Commission Recommendation on Relevant Markets are key for the Members States´ analysis of the relevant product and services markets of the electronic communications sector, by listing markets where there is a lack of competition and where ex-ante regulation is still necessary.
One of the markets needing sector specific ex-ante regulation is Market number 18: “Broadcasting transmission services, to deliver broadcast content to end users”.
AER welcomes the fact that the European Commission has recognized the urgent need for an ex-ante regulation of this market. At the same time AER laments that Member States have not yet finalized their market analyses’ in a large number of Member States. In Germany, for example, the market definition is not expected before the end of 2006. As a result, commercial radio broadcasters had to conclude interim contracts for Hertzian tariffs (UKW-Entgelte) with the infrastructure provider T-Systems with little legal security.
As already stated above, the move to digital will not end scarcity of spectrum for broadcasting in general and radio broadcasting in particular in the mid or even long term. In Germany as in most other Member States, terrestrial transmission is the most important transmission platform for radio which cannot be easily replaced by other infrastructures and which has limited capacities even when digitized. In Germany for example, 79 % of radio broadcasting is Hertzian/ terrestrial.
AER therefore believes that markets must be defined in more detail as in most of the Member States radio transmission via satellite or cable is not a substitute for terrestrial radio transmission and calls on the European Commission to consider these specificities when evaluating the Recommendation.
AER is of course available to elaborate on this position if this should prove helpful for the European Commission.
NOTES: Brussels-based AER (the Association of European Radios) represents the interests of 14 national private and commercial radio associations in 11 EU Member States, Switzerland and Romania. The combined membership is of over 4,500 private/commercial radio stations broadcasting to millions of daily listeners across Europe. The AER web site provides further information at www.aereurope.org