The regulation of digital conditional access systems: A case study in European policy making

Telecommunications Policy

Volumn 21, Issue 7 SPEC. ISS., 1997, Pages 661-676

  Levy, David A L ^a  

^a BBC RESEARCH AND DEVELOPMENT   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

DIGITAL COMMUNICATION SYSTEMS; INDUSTRIAL ECONOMICS; PUBLIC POLICY; TELECOMMUNICATION CONTROL; TELEVISION BROADCASTING; TELEVISION STANDARDS;

DIGITAL TELEVISION;

SUBSCRIPTION TELEVISION;

EID: 0031207811     PISSN: 03085961     EISSN: None     Source Type: Journal    
DOI: 10.1016/s0308-5961(97)00035-9     Document Type: Article

References (63)

1. The Directive (95/47/EC) was passed in 1995 but implementation in Member States only started in later 1996 and early 1997. It is referred to hereafter as the Directive.
2. The IRD will contain many other features as well as the conditional access system, eg the Electronic Programme Guide and will, in time, be incorporated into the TV itself.
3. European Commission, Communication on Digital Video Broadcasting: A Framework for Community Policy, 1993 (17.11.93), p. 14 stressed the single market arguments for regulation, but these were not fully reflected in the subsequent Council/Commission regulatory proposals.
4. The proliferation of options and subsets within DVB specifications means that different sets of equipment marketed as 'DVB compliant' will not necessarily be compatible.
5. Nolan, D., Bottlenecks in pay television. Impact on market development in Europe. Telecommunications Policy, 1997, 21(7), 597-610. Nolan offers a striking analysis of the number of new bottleneck technologies that are emerging.
6. Currently most analogue pan-European channels survive with relatively low market shares across the EU. In 1996, of 14 pan-European channels only four had a daily reach of more than 2% - Arte, CNN, Euronews and Eurosport. The prospects for digital pay channels with 0.5% or 1% penetration, outside the home market for their chosen conditional access system, do not look good. Multichannel News, July 1996.
7. Europe and the Global Information Society: Recommendations to the European Council. Report of the High Level Group on the Information Society, (The Bangemann Report), Brussels (26 May 1994).
8. It is true that at the time the Directive was being framed there was no obvious candidate standard and the legitimate concerns of Pay TV operators about piracy meant they would have been reluctant to use such a standard. On the other hand, the case of GSM shows that standardisation is possible even where piracy is a risk
9. Instead the Directive forbids an operator from prohibiting a manufacturer from including a common interface. In practice its inclusion seems unlikely where the bulk of the orders come from the conditional access operators themselves, since they would be free to use their power as customers to decide which features would be included in the boxes they ordered.
10. While the Directive specifies the conditions that should apply when such a licence is granted, it does not oblige an unwilling conditional access operator to grant such a licence to a third party.
11. Cawson, A., Business interests and the regulation of new technology in Europe: the case of television. Business and the Contemporary World, 1994, 4, 73, 70.
12. See also Cawson, A. and Holmes, P., Technology policy and competition issues in the transition to advanced television services in Europe. Journal of European Public Policy, 1995, 2(4), 650-671. References to the MAC Directive are to Directive 86/ 529/EEC.
13. In 1988 Rupert Murdoch announced his intention to start broadcasting in February 1989, using PAL. Later in 1989, four German channels also decided to broadcast in PAL from ASTRA. Peterson, J., High Technology and the Competition State: An Analysis of the Eureka Initiative. Routledge, London/New York, 1993, p. 184.
14. Majone, G., Regulating Europe. Routledge, London, 1996, p. 24.
15. Farr, S., Harmonisation of Technical Standards in the EC. Wiley, Chichester, 1996, p. 3.
16. European Commission, Standardization in the European Economy. COM (91) 521 Final, Brussels (16.12.91) (Follow-up to the Commission Green Paper of October 1990), 1991, p. 3.
17. ETSI has been described as "in essence a trade association established to develop the standards to meet the needs of its members" Farr op cit Ref 14, pp. 39-40.
18. Nicolas, F. and Repussard, J., Common Standards for Enterprises. European Commission, Luxembourg, 1994, pp. 34-5; David, P.A. and Shurmer, M., Formal standards-setting for global telecommunications and information services: towards an institutional regime transformation? Telecommunications Policy, 1996, 20(10), 809. ETSI proposals are also sent to national standards institutions for approval.
19. Nicolas, F. and Repussard, J., Common Standards for Enterprises. European Commission, Luxembourg, 1994, pp. 34-5; David, P.A. and Shurmer, M., Formal standards-setting for global telecommunications and information services: towards an institutional regime transformation? Telecommunications Policy, 1996, 20(10), 809. ETSI proposals are also sent to national standards institutions for approval.
20. David and Shurmer op cit Ref 14, 797-798 comment on how developments in the IT sector both "strengthened the case for achieving inter-operability, and hence for timely agreement on standards...(but) also...exacerbated the problems of reaching consensus" within standardisation committees. They point out how some firms will "seek to thwart adoption of a standard over which they would not enjoy unrestricted proprietary rights" and ask whether there may be a need for a move away from the consensus process in order to resolve such disputes (p. 798).
21. European Commission op cit Ref 15, 1991, p. 28.
22. Majone op cit Ref 20, p. 26.
23. Esser, J. and Noppe, R., Private muddling through as a political programme? The role of the European Commission in the telecommunications sector in the 1980s, West European Politics, 1996, 19(3), 558.
24. Economic and Social Committee, 1991, 91/C 120/09 6.5.91, Opinion on the Commission Green Paper on the Development of European Standardization: Action for Faster technological integration in Europe, expressed concern "about the almost total absence of the social partners from the process, the lack of consumer representation in the majority of Member States, and the current impossibility for the standardization bodies to involve all interested parties in their work" and called for action to redress "any possible one-sided influence" in standardisation (Paragraph 53).
25. European Commission op cit Ref 15, pp. 18-20 proposed a European Standardisation Forum, combining trade union and consumer representatives, but this was never created.
26. European Association for the coordination of consumer representation in standardisation, (ANEC), Annual Report, Brussels, 1995, p. 12. There was no consumer representation in ETSI before 1995. For an overview of consumer activity in the EU and a description of ANEC's role see Young, A.R., European consumer groups: multiple levels of governance and multiple logics of collective action, in Collective Action in the European Union: Interests and the New Politics of Associability, ed. J. Greenwood and M. Aspinwall. Routledge, London, 1997, (in press).
27. European Commission, Standardization and the Global Information Society: The European Approach, Brussels, July 1996.
28. David and Shurmer op cit Ref 17, pp. 803, 808.
29. DVB followed on from the European Launching Group for Digital Broadcasting which had been established in 1991, also at the initiative of Peter Kahl. See Kahl, P., Digital Television: Dawn of a New Communication Age. La Nouvelle Frontiere/ The New Frontier: 16th International Conference on Telecommunications, Data Processing and Media. IDATE 94, Montpelier and Cowie, C., The evolution of digital television in Europe and the regulation of conditional access (1991-1995). Vierteljahrshefte zur wirtschaftsforschung, 1996, 65(4), 471-481.
30. DVB followed on from the European Launching Group for Digital Broadcasting which had been established in 1991, also at the initiative of Peter Kahl. See Kahl, P., Digital Television: Dawn of a New Communication Age. La Nouvelle Frontiere/ The New Frontier: 16th International Conference on Telecommunications, Data Processing and Media. IDATE 94, Montpelier and Cowie, C., The evolution of digital television in Europe and the regulation of conditional access (1991-1995). Vierteljahrshefte zur wirtschaftsforschung, 1996, 65(4), 471-481.
31. See also Cave, M. and Cowie, C., Regulating conditional access in European pay broadcasting. Communications and Strategies, 1996, 3(23), 119-142.
32. According to a DVB press release (28 September 1994) membership was divided up into different constituencies, including 45 broadcasters, 66 manufacturers, 27 network operators and nine regulatory bodies. Peter Kahl was quoted then as saying, "DVB now represents almost all the major European organizations involved in the television area".
33. European Commission, Technical Papers on DVB, 1993, includes DVB Memorandum of Understanding, pp. 416-428.
34. Cowie op cit Ref 27, p. 475. The strong commercial emphasis of the DVB was clear from the Article 6 of the original Memorandum of Understanding which stated that the Satellite/Cable commercial module should only be open to "senior managers from any signatory making significant financial investment in the implementation of services/products targeted to come to market by 1995". This feature of the DVB, along with others, was later modified.
35. David and Shurmer op cit Ref 17, comment on p. 804 that the inclusive nature of the DVB and the fact that ETSI ratified its standards had "the advantage of maintaining most, if not all, of the public interest safeguards of the formal process". Given the absence of consumer representation in the DVB and (until recently) ETSI, this is questionable.
36. News Datacom is a subsidiary of News International which in turn owns 40% of BSkyB. The drafting of the Code of Conduct was conducted by BSkyB's legal department.
37. The code only covered technical services, a term which could be construed in a very narrow way.
38. Other unusual features of the code included: (1) broadly defined technical, administrative and other grounds on which access could be refused; (2) no obligation on conditional access providers to comply in any EEA territory where all other providers had not signed the code; (3) an obligation not to release information linked to commercial discussions to any third party (this effectively meant that broadcasters would be negotiating access terms 'blind', and in the event of anti-competitive behaviour, would be unable to provide information to a regulator); (4) all signatories being obliged to support the code in dealings with regulators and other official bodies; and (5) the removal of any right to claim damages for breaches of the code.
39. The ad hoc group's membership was made up of: BSkyB, Canal Plus, Filmnet, BBC, TF1, ARD/ZDF and other German broadcasters, CLT, Fininvest, UK Cable Television Association, France Telecom, Deutsche Telecom, and SES-Astra. The group met four times, on 8-9 June, 6-7 July, 28-29 July and 31st August.
40. Other problems with the Final Code included the fact that it: (1) was limited to subscription TV and did not initially include pay-per-view or video-on-demand; (2) contained many technical and administrative grounds on which access could be refused; (3) imposed extensive confidentiality constraints designed to make complaints to regulators or comparison of tariffs and terms very difficult; (4) weakened normal legal rights to damages; and (5) had no effect in any EEA territory where another CA provider had not signed it.
41. DVB members were given an unusual choice of responses, which may have explained the low vote: • I will sign the Code as a CA-Provider. • I will sign the Code as a Broadcaster. • I am likely to sign the Code as a Broadcaster when I am ready to enter the digital pay TV market. • I support the Code, but I will not sign it, because I am neither Broadcaster nor CA-Provider. • I will not sign the Code because it is not useful nor necessary.
42. ATM, October 1994, pp. 1-2. Among those broadcasters voting in favour, about half were reckoned either to be CA providers themselves or to have close links with CA providers. It was alleged at the time that some had not responded because they disapproved of the way in which the voting process had been organised. See also Cowie op cit Ref 27, pp. 477-478. DVB press release 5, 29 September 1994.
43. The UK, France and Germany were particularly opposed to any vigorous regulation of conditional access.
44. European Commission, Communication, 1993, pp. 2, 23.
45. European Commission, Communication, 1993, p. 14. The Communication outlined the approach which the Commission was adopting to the DVB discussions as follows (p. 26) ‡Progress within the Digital Video Broadcasting Group on a common approach to conditional access will also be followed closely by the Commission, which will seek to ensure that the broad public interest is served by any outcome arrived at. Community policy in this area should be based on ensuring fair and open competition, on the one hand, and on protecting the interests of the consumer on the other. This would be achieved through the creation of a conditional access environment which would facilitate rather than inhibit new market entrants to the pay television field and which would avoid the need for views to acquire a multiplicity of 'boxes' to gain access to different services. In practical terms such an environment would require a sufficiently high degree of commonality between the conditional access systems used in European markets".
46. The Communication went to some lengths to distance the Commission from the DVB process. "To the extent that this output achieves a consensus among the relevant market parties, which is compatible with the requirement of appropriate long term perspectives and which does not conflict with aspects of the public interest, the Commission will in general consider this as a positive input into Community policy formulation". European Commission, 1993, Communication, p. 25.
47. European Commission, Proposal for a Directive on the Use of Standards for the Transmission of Television Signals, OJ C 341/18-19, 18.12.1993.
48. European Parliament Report, 29.3.94, A3-0198/94.
49. Debates of the European Parliament, 18.4.94, No. 3-447, pp. 11-16.
50. Council Resolution of 27 June 1994 on a Framework for Community Policy on Digital Video Broadcasting, OJ 94/C 181/02, 2.7.94. The Resolution followed closely the Commission draft that had been published with the November 1993 Communication. But the final resolution omitted references to the need for measures in Conditional access that would "facilitate rather than inhibit new market entrants to the pay television field" and to the need for "standardised customer interface equipment".
51. The November 1993 Communication had mentioned that some operators were intending to launch digital services from the second half of 1994. In fact Canal Plus didn't launch until April 1996 and BSkyB are not due to launch before 1998. Had the eventual launch dates been known in 1994, there might have been more strenuous efforts to get the common interface option discussed, both in the DVB and by the Commission.
52. The Commission's position was contained in Amended proposal for a European Parliament and Council Directive on the Use of Standards for the Transmission of Television Signals, COM (94) 455 final, Brussels 25.10.94 94/0476 (COD).
53. The formal text of the common position was reached on 22 December 1994. See Common Position (EC) No 48/94 adopted by the Council on 22 December 1994. OJ C 384/36 31.12.94. It was clear, long before November that the idea of a DVB consensus on conditional access was highly questionable. One DVB representative stated later that "Although a major success of DVB was to agree a common scrambling algorithm, the sole area where unanimity was not achieved was in regard to conditional access". Forrest, J., The European Digital Video Broadcasting Project (DVB). Paper presented at IBC Conference on Digital terrestrial Television, 7-8 March 1996, London.
54. One MEP commented on how "The number of lobbyists involved in this game of poker has mushroomed almost out of control". Hoppenstalt, European Parliament Debates No 4-464/7 12.6.95.
55. Caudron kept in close touch with the Commission and Peter Kahl of the DVB through this period, and hearings were arranged in the EP which were addressed by the key players.
56. The Directive (95/47/EC) was adopted by a Council of Ministers meeting in July, but only published in the Official Journal in November 1995, OJ 23.11.95 No L 281.
57. El Pais, (Madrid) 7.3.97, Reuters 20.3.97, Les Echos, (Paris) 10.3.97.
58. DTI, The Regulation of Conditional Access services for Digital Television: Final Consultation Paper on Detailed Implementation Proposals. London, 27 November, 1996 and previous drafts of January and June 1996. OFTEL, The Regulation of Conditional Access for Digital Television Services: OFTEL Guidelines, OFTEL, London, 1997.
59. DTI, The Regulation of Conditional Access services for Digital Television: Final Consultation Paper on Detailed Implementation Proposals. London, 27 November, 1996 and previous drafts of January and June 1996. OFTEL, The Regulation of Conditional Access for Digital Television Services: OFTEL Guidelines, OFTEL, London, 1997.
60. Reuters 10.6.96. According to Les Echos, 12.6.96, the meeting took place on 8.6.96 and included representatives of Canal Plus, BSkyB, Bertelsmann, Kirch, Deutsche Telekom and Vebacom.
61. More recent discussions within the DVB on the issue of a common API specification have also made little headway.
62. European Commission, Standardisation and the Global Information Society: The European Approach, Brussels, 24 July 1996 COM (96) 359 refers to set-top boxes as follows: "Without agreement on such systems and their common implementation, the compatibility may be jeopardized and markets segmented.... It remains to be seen if the common implementation of... standards in set-top boxes can be quickly achieved with the help of all economic actors. The importance of the stake explains the interest of the Community to ensure equality of access and interoperation of systems".
63. This is, after all, exactly what the Commission had suggested should happen in the DVB. See p. 10 above and European Commission, Communication, 1993.