Audiovisual Regulation under Pressure

Comparative Cases from North America and Europe

Thomas Gibbons, Peter Humphreys

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136502095
• Edition: 1
• Topic: Diritto
• Subtopic: Diritto dei media e dell'intrattenimento

In the face of globalization and new media technologies, can policy makers and regulators withstand deregulatory pressures on the 'cultural policy toolkit' for television? This comparative study provides an interdisciplinary investigation of trends in audiovisual regulation, with the focus on television and new media. It considers pressures for deregulation and for policy in this field to prioritise market development and economic goals rather than traditional cultural and democratic objectives, notably public service content, the promotion of national and local culture, media pluralism and diversity. The book explores regulatory policy in the United States, Canada, the United Kingdom and Europe. The book focuses on a range of instruments designed for promoting pluralism and cultural diversity, particularly the role of public service broadcasting and the range of measures available for promoting cultural policy goals, such as subsidies, scheduling and investment quotas, as well as (particularly national) media ownership rules. The book draws on findings of two research projects funded by the UK Economic and Social Research Council and is written in an accessible style by leading scholars of media law and policy, who bring to bear insights from their respective disciplines of law and political science.

1 Television Regulation and the ‘Cultural Policy Toolkit’

The Analytical Framework

The transformation of the international audiovisual media industry has posed a major challenge for national policy-makers and regulators. Do they have the capacity to withstand pressures to remove formerly valued local standards and to open their markets to transnational products and services? This book draws on the findings of two research projects funded by the UK Economic and Social Research Council (ESRC), which were conducted by the authors between January 1996–December 1999 and January 2005–July 2008. The book is based mainly on the more recent of these, which examined the impact of globalisation, new media technologies and pressures for deregulation on the ‘cultural policy toolkits’ (Grant and Wood 2004) for the television sectors of France, Germany, the UK and Canada; it also looked at the USA as the archetype and motor of deregulation.¹ The book focuses on television. This is not because we underestimate the importance of radio as a medium. It is simply that to treat radio in the detail that it deserves would exceed the capacity of a book of this size; especially because of the need to pay attention to the development of new digital and online media, we have restricted our main focus to television. Herein, as well as chapters examining television regulation in the aforementioned countries, for reasons that we will explain, we also provide a chapter on small countries in Western Europe (Chapter 8), and another chapter on the European Union (EU) (Chapter 7). The focus is on public service broadcasting (PSB) and other elements of the ‘cultural policy toolkit’ such as TV subsidies and quotas, and media ownership rules.

Globalisation, New Technologies, Deregulation and the ‘Cultural Policy Toolkit’

Broadly, the book is interested in determining whether countries’ cultural policy toolkits in the television sector have been prone to deregulation in the multi-channel, more commercial era of the past two decades or so; and we are particularly interested in the impact of the digital era. Following Kuhn (2005, 2006, 2011), television policy can be divided into three ages. The first was the age of spectrum scarcity. In Western Europe, though not in North America, this was the era of public service monopoly (or in the UK case, public service duopoly). The second age was the period from the end of the 1970s up to the mid-1990s, which saw the arrival or expansion of multi-channel television due to the spread of more advanced analogue delivery systems, notably cable and satellite; in Western Europe this age saw the abolition of the public service monopoly (or duopoly) and the introduction of commercial competition. The third age, the current one with which we are mainly concerned, is that of the transition from analogue to digital technology. This not only has increased further the number of channels available, but has also contributed to a ‘convergence’ of communications systems, introducing new delivery possibilities including the Internet and mobile telecommunications. The third age of television is also characterised by an increase in the impact on national media systems of global media.

As has been well covered in the academic literature, deregulatory pressures have become acute since the second age. The policy response to the new technological possibilities of multi-channel and transfrontier broadcasting was what was widely referred to as a cross-national trend towards broadcasting ‘deregulation’. In fact, this was more accurately described as a ‘liberalising re-regulation’, in that new regulatory authorities were being created to supervise the operation of a sector undergoing far-reaching marketisation (Siune and Truetzschler 1992; Hoffmann-Riem 1996; Humphreys 1996). The element of re-regulation was pronounced. Media laws and regulations were more numerous, they were more specific, and they were being enacted at more levels: at the international, notably the European, as well as the national one. Media policy involved an almost frenetic amount of activity, including commissions of inquiry, official reports, public consultation, discussion of legislative proposals, and so forth. The state had not withdrawn from the sector, rather it had become an active ‘re-regulator’ (Humphreys 1996: 306).

In one sense, though, a very real element of substantive deregulation occurred. Under the new regulatory framework, those private sector broadcasters that had been hitherto accustomed to fulfilling extensive public service obligations (as in the UK) saw these obligations relaxed, and everywhere public service broadcasters (PSBs) found themselves under pressure to adapt to the ‘marketised’ new realities; in the view of some, in the current, digital era this adaptation should involve a refocusing on the core PSB mission, leaving the rest to the market (see e.g. Armstrong and Weeds 2007). The transformation could be analysed in terms of a historic paradigm shift in communications law and policy (Hoffmann-Riem 1986; van Cuilenburg and McQuail 2003). In the new communications policy paradigm, it was held, ‘governments [were] retreating from regulation where it interfere[d] with market development and giving relatively more priority to economic over socio-cultural and political welfare when priorities ha[d] to be set’ (van Cuilenburg and McQuail 2003: 198).

At the same time, the structural power of (largely US-based) global communications corporations has been seen as a relatively new constraint on nation states’ abilities to pursue media policies that promote public service goals and protect a diversity of national, regional and local identities (see e.g. Herman and McChesney 1997).

This paradigm shift has placed a question mark beside the future of the audiovisual cultural policy toolkit. The impact of the digital era has so far mainly been addressed in terms of the future of PSB (for recent contributions to the debate, see Iosifidis 2007a, 2010a). PSBs in Western Europe, hitherto generally conceived as providers of an important and comprehensive service, are facing a set of existential challenges in the age of digital convergence and global media markets. There are questions about the extent and future basis of their funding, about whether there should be a redefinition (a narrowing) of their public service mission, and about restrictions on their scope for expansion into new media activities. All these policy issues are being debated in the context of a fragmenting media landscape that is increasingly competitive and commercialised as digital ‘convergence’ between old media (press and broadcasting), new media (cable, satellite, digital broadcasting) and the Internet (on-demand services) dissolves boundaries and throws up major challenges for regulatory policy-makers and media practitioners alike. The case for continuing generously to ‘subsidise’ an institution that was the product of an era of scarcity of frequencies is being exposed to increasingly fierce and sustained questioning.

It is important to understand that technology has not been the only driver of change. As Steven Barnett (2006) has put it, the challenges have arisen:

partly because of the widespread acceptance of liberal market ideology as the dominant political ideology for governments of the left and right; and partly because global market pressures make it increasingly difficult for governments to intervene to regulate these market forces.

Quite simply, media policy-makers find themselves constrained both by free market ideology and by new global market pressures. In this context, as Barnett explains, public service broadcasters ‘are perceived as significant inhibitors of private sector expansion and therefore seen as legitimate targets for the advocacy of greater restrictions and smaller scale’.

There is a lively policy debate about the future direction of public service broadcasting (PSB). Some see the future for PSBs as PSMs, public service media organisations, engaged in the delivery of a range of new digital and online media services beyond traditional radio and television programmes (see e.g. Curran 2005, Ferrell Lowe and Bardoel 2007; Iosifidis 2010a). Some have stressed the need for PSBs to be more engaged with their publics in the process, as builders of a ‘digital commons’ in the Internet age (Murdock 2004). The PSBs themselves have embarked as enthusiastically as resources and political constraints allow upon the development of PSM services. Others, however, question the role for PSB organisations in becoming public service media providers – and even in providing an extensive service – in an age of communications abundance (see e.g. Elstein et al. 2004; Armstrong and Weeds 2007; Elstein 2008). Private media and communication groups have argued strongly against any significant engagement of PSBs in new media activities, seen as a harmful distortion of the market (see e.g. ACT et al. 2009). This, then, is the broad context and scope of our inquiry, the focus being our interest in the impact of this paradigmatic shift on the ‘cultural policy toolkit’. But our book also has a more specific theoretical and empirical dimension: it examines whether and to what extent there has been a dynamic of deregulatory competition at work, construed broadly as a trend towards media policy-making with an eye on gaining economic advantage from deregulation.

Deregulatory Competition: Three Hypotheses

Right at the outset, it is important to emphasise that we treat the concept of deregulatory competition in the round, rather than literal, sense as reflecting the insights that policy-makers are sensitive to the threat, real or just perceived, that firms might engage in regulatory arbitrage to seek out the most favourable regulatory location; and that their policy-making is influenced by this calculus. To be precise, the book explores the three hypotheses that:

1 Within a context of globalisation, commercialisation and technological change, regulatory competition between jurisdictions keen to maximise media investment is leading to substantive (if not formal) deregulation (a ‘race to the bottom’).

2 ‘Politics’ can significantly constrain deregulation and even produce more effective and innovative regulation (a ‘race to the top’); deregulatory competition will certainly least affect highly politicised regulations that prevent harmful effects or promote the public good, such as public service broadcasting (PSB) and other cultural policy toolkit mechanisms.

3 The European Union can amplify or moderate pressures of globalisation and deregulatory competition between its Member States; it has a problem-solving potential at least.

The first hypothesis assumes that media policy-makers will see the global market and the new technological developments as opportunities and that they will accordingly prioritise investment, trade and industrial policy with regard to audiovisual regulation, even at the expense of the traditional media policy goals of pluralism, diversity and cultural policy. Media policy-makers will be inclined to be sensitive to private sector demands that PSB and other cultural toolkit instruments be reined in on the grounds that they interfere with the operations of the market. The second hypothesis assumes that concerns about public service and cultural identity, traditions of public service and cultural promotion, and a general policy ‘path dependence’ that makes future policy resemble past policy of public service and cultural promotion, may counter pressures for deregulation and may even lead audiovisual policy-makers to develop more effective and innovative regulatory instruments to promote public service goals and protect cultural identity. The third hypothesis reflects the fact that, as a supranational/international regime, the EU has the potential to act either as a promoter or an inhibitor of deregulation, and in particular of any pressures for (de)regulatory competition between its Member States. This depends upon the outcome of EU-level politics and policy-making (Scharpf 1997; Schmidt 1999).

In this more specific inquiry, we are informed by the scholarly literature on regulatory competition. Internationalisation of markets has been regarded as encouraging competition between ‘competition states’ (Cerny 1997), eager to attract investment within their regulatory jurisdictions. It has been argued that, in order to attract investment, states will engage in a deregulatory ‘race to the bottom’. This is the ‘Delaware effect’, so called after the US state that attracted corporations and gained their tax revenues through offering lax incorporation standards (see Carey 1974). Some see the deregulation that arises from capital mobility in a positive light (McKenzie and Lee 1991), others view it more negatively (Scharpf 1999: 84–120). A prescient exposi-tion of this thesis applied to the communications sector was made over two decades ago, as communications ‘deregulation’ was taking off in North America and Western Europe, by Dyson (1986: 28):

The threat of location of investment by multinationals in more deregulated environments promotes a process of competitive deregulation. Deregulation offers the prize of investment and jobs in financial services, telecommunications and broadcasting and increased tax revenues from these sources. In order to achieve these glittering prizes governments are encouraged to view domestic communications policies as ‘international gamesmanship’ and deregulation as a prime national instrument of international economic policy.

From their comparative study of communications policy in the USA and Europe a few years on, Hills and Papathanassopoulos (1991: 201) arrived at the same conclusion: ‘Market restructuring and [technical] standardisation are all facets of a supply side industrial policy on the part of governments, which is intended to place their economies ahead in the race for international competitive advantage and international power.’

However, others have rejected any inevitability of a deregulatory race to the bottom and instead believe that politics can even adjust regulatory standards upwards. Thus, in his well-known study of consumer and environmental regulation in the USA and in the EU, Vogel (1995) pointed to the ‘California effect’ whereby rules had been ‘traded upwards’ (in his words) in the political process. In his influential book, he points, for instance, to the way that producer and consumer coalitions, which he famously referred to as ‘baptist– bootlegger’ alliances, prevailed in the politics of regulation, whereby the green lobbies and the rent-seeking domestic producer lobbies in California and in Germany combine (in the latter’s case with other Green elements in the EU) to achieve stricter standards for automobile emissions with which foreign producers will have difficulty in complying.

From an economic perspective, Murphy (2004, 2005) offers three perspectives that are particularly helpful in identifying the variables which underpin the structure of regulatory competition. One is the focus of regulation which, for the purposes of analysis, may be seen as directed towards the process of production or at market access. In relation to production, it is in the nature of firms’ regulatory preferences that they will seek the lowest cost, so they will threaten and may be willing to relocate in order to pressurise governments to relax standards. In relation to market access, however, which covers sales and distribution, domestic firms will tend to endorse tight regulation because restricting access to the market will benefit them and offer advantages compared with foreign competitors. Here, Murphy suggests that larger and more powerful markets are able to raise standards while still attracting investment (in other words, causing a California effect). Murphy’s second set of factors recognises the political salience of industrial structure. He makes the obvious point that powerful firms will lobby governments in their own interests to secure the optimal combination of process and market-access regulations that will give them a competitive regulatory advantage in world markets. Third, Murphy points to the ‘specificity’ of economic assets: the easier they can be deployed across many jurisdictions, the more likely it is that firms will support common, transnational regulation. Where economic assets are specific to particular domestic markets, firms will want regulation to protect their local investments. Murphy’s approach has been illuminating in articulating important economic variables involved in regulatory competition, and his own study demonstrated their empirical significance. Our analysis is different, in not attempting to quantify deregulatory effects, but we have a similar albeit qualitative interest in the behaviour and motivation of the significant actors in the media industry. Furthermore, we are as much concerned with the influence of political groupings and regulatory institutions as of strategic corporations.

Further insights into that process are offered, from a socio-legal perspective, in the survey of global business regulation by Braithwaite and Drahos (2000). Reporting mixed findings about the range of tools and their potential to affect regulatory competition across a wide range of industries, they emphasised the complex regulatory contexts of the different commercial activities. Of particular interest to us is their idea of a ‘web of influence’ that is peculiar to specific domains of activity and supporting regulation. This connotes the existence of epistemic communities, networks of experts from industry, the professions, the sciences, and non-government organisations including regulators, who engage in high-level dialogue about problems, methods of enforcement, and possibilities for reform of regulatory principles. In implementing such principles, economic coercion and systems of reward or reciprocity appear to have an important role, but what they call ‘modelling’, which is analogous to ‘policy transfer,’ reflects the epistemic community’s capacity to define the parameters of regulatory action in ways that are removed from political interests. On the one hand, this may produce regulation which only reflects the intellectual trends. On the other hand, it may allow less powerful actors to engage with policy issues through processes of consultation and dialogue.

A third perspective, from political studies, is represented by Radaelli (2004). His work on regulatory competition emphasises policy transfer (modelling) and networking, the importance of analysing the interactions between actor and institutions in the process, and the social construction of policy proposals. The approach is consequently nuanced, producing a complex picture in which there is not strong evidence of firms choosing location on the basis of regulation or of governments competing with each other to provide lax regimes.

In addition to considering the motivations and behaviour of those involved in the process of regulatory competition, it is also important to analyse the regulatory measures that are deployed in different jurisdictions. In media and communications, they include public service broadcasting, scheduling quotas for types of content, subsidies for production, basic content obligations, and ownership and competition rules. When these techniques are combined with firms’ motivations, political pressures and epistemic communities’ preferred thinking, it appears likely that the ability for regulatory competition to outflank states’ cultural policies is dependent on regulatory capacity to construct national media products. If national cultural policy can be associated with national markets, it can provide firms with an interest to supply it and to resist external pressures for deregulation.

Here politics is crucial because, through regulation, it can construct the boundaries of the market place. In addition to evidence that national institutions are significant in determining policy responses to the economic and political pressures associated with globalisation (see e.g. Swank 2002), Scharpf has highlighted the political salience of regulatory purposes in explaining variations in intensity and direction of competitive pressures on jurisdictions. In that light, it is plausible to suppose that international economic competition will least affect regulation which is very politically ...