Goodbye to the Services Directive

Michael Hedges March 24, 2005

No need to wind-up about country of origin or cultural exclusions for audiovisual services. The Bolkestein Directive on services is DAB (No, not that one. Dead And Buried)

“Unacceptable” was the term French president Jacques Chirac used to put an end to the Bolkestein Directive, a set of European Commission rules intended to de-regulate the European services sector, updating the 1990 EC Services Directive. Swimming with the political tide, German Chancellor Schröder jumped in two days later saying the rules should not simply be amended but “replaced by a new one.”

The basic offering of the Bolkestein Directive, named for former EU internal markets commissioner and general author Fritz Bolkestein, would allow companies offering services in any of the 24 EU member states to operate under rules and regulations of their country of origin. All service sectors not specifically excluded would find themselves de-regulated, like it or not.

Banks and transportation are specifically excluded. Audiovisual media is not. Neither are lawyers, accountants or travel agents.

The most stretched out – but not far-fetched – consequence of “rights of establishment” might allow a, for example, a Dutch company to set up a Slovenian broadcasting company and apply for a French radio station license. If the Slovenian subsidiary of the Dutch company met all other criteria for a Slovenian broadcasting license it would be able to operate in France – or any other EU country, under Slovenian rules. As Slovenia has no rules specific to Slovenian or other “cultural” content, the station must then be allowed to operate – offer its services – without paying heed to the French music quota rules. Of course, a French company can operate a broadcasting company in Slovenia without suffering French rules.

Is this going to fly? Not a chance!

The Committee on Culture and Education held hearings last week and chairperson Marie-Hélène Dechamps gave the opinion that including audiovisual services in the directive would threaten “cultural diversity” and “media pluralism.” There was virtually no dissent. Conveniently, the European Broadcasting Union’s 5th conference on public service broadcasting in Brussels took place the same week.

Media pluralism is a term often used by supporters of public service media for maintaining constraints on private sector media, particularly ownership. Elimination of “must carry” rules - requiring cable operators to distribute certain channels deemed in the interest of “media plurality” or “cultural diversity” - could be one tangible – and painful – consequence for public sector broadcasters.

Viviane Reding, EC Info Society and Media commissioner, speaking at the EBU conference, made clear that the audiovisual sector – public, specifically – needs to get with the times: “The Commission accepts the need for the public service to incorporate technical innovation and the evolving media through which the public enters into contact with audiovisual content.”  

Barosso’s Lisbon Strategy screeches to a halt.

European Commission President José Barroso has called for strengthening Europe’s audiovisual and telecom sectors through de-regulating and market liberalization.

 

 

EC President Barroso

Barroso has no intention of budging on the country of origin liberalization. He is resistant to a multitude of sector-specific directives as unworkable. And harmonizing every member states services sector regulations would be impossible. 

One set of sector-specific rules due for revising this year is the Television Without Frontiers (TWF) directive. Passing the Bolkestein Directive without excluding the audiovisual sector effectively scraps TWF. A good part of the reasoning behind the Bolkesetin Directive is to get rid of tons and tons of sector-specific EU rule making in the hope of making the European services sector more competitive and dynamic. Estimates from the Netherlands Bureau of Economic Policy Analysis, recently released, suggest de-regulation of services could increase trade by as much as 35%.

The heft of Chirac and Schröder – and their particular national political needs – is based on protecting labor markets and “social standards.” Schröder called the problem “social dumping,” fearful that less restrictive labor rules found in the new 10 EU members would run rampant. Last week the French National Assembly resolved to review the proposal on EU services in light of the national referendum scheduled for May on the European Constitution. Mr. Schröder announced that the rest of the European Union needed to pay attention to France. Mr. Barroso denounced the French and German complaints as “political.”

cartoon ©PLACIDE, used with permission www.leplacide.com