Annamária Szalai Issue: EMEA 2011
Article no.: 1
Topic: OTT video from a converged regulator’s perspective
Author: Annamária Szalai
Title: President
Organisation: National Media Infocommunications Authority, Hungary
PDF size: 377KB

About author

Annamaria Szalai is the President of the National Media and Infocommunications Authority, Hungary). Ms Annamaria Szalai was born in 1961 in Zalaegerszeg (Hungary). She graduated as a teacher in 1982, and earned an MA in Cultural Management in 1990. She studied at the College of Finance and Accountancy, where she obtained her BS (1998), majoring in Finance and specialising in Business Management. Ms Szalai served as a Member of Parliament during 1998–2002. She was first appointed by Parliament as a Member of the National Radio and Television Commission in 2004 and was re-appointed in March 2008. As of August 2010, she is President of the National Media and Infocommunications Authority and since October 2010 Ms Szalai is the Chairperson of the Media Council.

Article abstract

Reports show a marked change in viewing habits towards Internet based Video-on-Demand, especially among the Internet-literate younger population. This raises regulatory issues of net neutrality as well as protection of children from harmful content. The EU directive for Audio-Visual Media Service is now implemented in Hungary, providing for children protection through ‘light-touch’ guidance to VoD providers. The new guidelines also require ISPs to advise consumers of any restrictions on OTT video service, to gain transparency and some measure towards neutrality.

Full Article

“Video Killed the Radio Star” by “The Buggles” was the hit of the early ‘80s, about a radio performer whose career is cut short by the advancement of television. The question is – how far we are from a new synthpop hit depicting the rapid transformations taking place in the linear television industry (scheduled TV programmes at pre-defined times and channels). Although a song entitled “Over the Top Video killed Linear Television” may sound a bit awkward, it reflects the current process underway. What are the implications of this trend for a newly formed converged Media and Telecommunications authority?

NMHH, the National Media and Infocommunications Authority in Hungary, is the merged successor of the former Radio and Television Commission and the former National Communications Authority. In its new role, NMHH has been granted total independence from the Government, with extensive rights not only to issue resolutions, but was also to regulate the telecommunications market by virtue of decrees. Naturally, when OTT (Over-The-Top) video is debated from a converged telecommunications regulator’s perspective, one of the fundamental issues is the ever–growing demand for bandwidth for streaming.

Internet service providers are constantly emphasising how new media Internet services eat up network capacities, forcing them to invest more in network infrastructure development. This argument is corroborated by the Sandvine report published in spring 2011, which illustrates the trend of Internet bandwidth being filled up by streaming video content.

One staggering example is taken from North America, where continued growth of on-demand applications is largely fuelled by the immense success of Netflix, an OTT video streaming service, which now accounts for 29.70 per cent of peak period downstream traffic. Netflix, says the report, is now ‘the unquestioned king’ of North America’s fixed access networks. Even when measuring total traffic and averaging over 24 hours, Netflix, with 22.2 per cent of traffic, has overtaken BitTorrent (21.6 per cent) as the largest component of Internet traffic on North America’s fixed access networks” . According to the Sandvine report, the Real-Time Entertainment category has been growing steadily in Europe, accounting for 33.2 per cent of all traffic. ”Subscribers are embracing on-demand entertainment applications and the continent’s service providers should expect to see this trend continue”.

Over time television came to dominate over radio, just as mobile telephony decreases wired telephony use. Internet is similarly taking over all other mass media, including mobile phones. A representative nationwide research conducted at the end of 2010 by the NMHH amongst 3400 participants showed that in Hungary, only those who never or very rarely use the Internet consider television as their main platform for entertainment. Internet-literate people have shifted from television to Internet when it comes to entertainment or communications. According to our survey, Internet becomes as important as television and telephone as soon as the average Internet-literacy is acquired. The survey fully confirms that TV viewing habits of the younger generations have fundamentally changed compared to older generations.

The problem is then if internet service providers are left out from the revenues of the content industry, yet their networks are largely affected by it, their efforts to constrain net neutrality is understandable from their own perspective, although unacceptable from a regulator’s one. To prevent anti-competitive behaviour, under the EU 2009 regulatory framework for electronic communications (recently transposed by Hungary in July 2011), NRAs (National Regulation Authorities) are allowed to set quality of service parameters on public communications network providers to prevent degradation of service or the slowing down of traffic across networks. In addition, consumers must be informed — before signing a contract — about the nature of the service to which they subscribe, including traffic management techniques and their impact on service quality, as well as any other limitations.

NMHH is involved in the BEREC’s Net-neutrality workgroup and is committed to monitoring local ISPs’ practice closely. The former Government Decree 229/2008 will be replaced by an NMHH presidential decree by the end of 2011 with special attention to net neutrality transparency issues. Before any regulatory intervention though, NMHH will examine the findings of the European Commission’s survey of member states and the international examples available by then.

From the Telecommunications regulation standpoint, competition rules may be adhered to by applying net neutrality transparency rules, but there are plenty of media-side regulation problems to OTT video as well. As shown by NMHH’s own surveys, changes in media consumption are trivial for younger generations. They can adapt to new media as they are not so accustomed to traditional media. Smart phones, smart or connected televisions, all sorts of media-players, tablets and other consumer electronic devices are all the new means for watching or rather consuming content, to which almost none of the stricter content regulation rules can or should be applied.

Whereas intellectual property rights’ holders are worried by the effectiveness of Digital Rights Management (DRM) – meaning that to them content protection is more or less a technological issue – a converged media regulator will seek protection of the audience, most importantly protecting children from involuntarily accessing improper or harmful content. More precisely, a somewhat greater protection is likely to be the main issue in the era of smart or connected television because soon, viewers will be able to move seamlessly between programmes covered by the stricter linear regulations and the lighter VoD (Video on Demand) regulations.

Regulation of VoD is required in all European Union member states in accordance the Audio-visual Media Services (AVMS) Directive introduced by the European Commission in 2007. The European directive prescribes that “Member states take appropriate measures to ensure that on-demand audio-visual media services provided by media service providers under their jurisdiction which might seriously impair the physical, mental or moral development of minors are only made available in such a way as to ensure that minors will not normally hear or see such on-demand audio-visual media services”. Some European countries, such as France, have already announced stricter Video on demand regulation, based on content labelling and categorisation, whereas others, such as the UK, apply a light-touch interpretation of the European legislation, using co-regulation.

In Hungary, the transposition of the AVMS directive (the Media Act) entered into force on 1 January 2011. Six months later, on 1 of June 2011, NMHH issued its first ever guidelines to help content providers to adhere to a minimum set of rules to meet legal requirements. These “Guidelines for the protection of children” had been consulted with all the major content providers and broadcasters well in advance so that their co-operation is assured to the greatest extent.

Another form of protection is the “Content classification guidelines” governing the labelling of content. This protection was again issued as a guideline so that content providers can classify and age-validate content by themselves for VoD and linear television. This type of guideline-based soft law regulation is largely based on co-operation with content providers. In Hungary this co-operation is further enhanced by the co-regulatory system — again a novelty of the Media Act — protecting basic human rights in the media.

As well as monitoring international developments, NMHH will continue assessing the effectiveness of this light-touch Video on Demand regulation and make regular adjustments if necessary. Only time will tell whether this kind of regulation provides sufficient protection from harmful content for children and minors.