Ofcom has kicked off 2013 by imposing serious sanctions for the first time on on-demand service providers who fail to comply with Authority for Television on Demand’s (ATVOD) Rules and Guidance. Fines totalling £100,000 were issued against Playboy TV and Demand Adult for “serious, repeated and reckless” failure to implement a system that would restrict under 18s from accessing adult on-demand content.

These sanctions were sandwiched between a series of other rulings from Ofcom that seek to clarify the types of services falling within the “on-demand programme service” (ODPS) definition, regulated by the Communications Act 2003 (CA 2003). In doing so, Ofcom has reversed three of ATVOD’s earlier decisions that BBC YouTube services in relation to BBC Food and Top Gear, as well as on-demand video services provided by Channel Flip Media Limited (Channel Flip), were ODPSs. Instead, finding for the BBC and Channel Flip, Ofcom found the content offered by these services was not sufficiently “TV-like” to fall under the on-demand video regulatory regime.

These three decisions are significant as they restrict the scope of services that are considered an ODPS. It will be interesting to see in 2013 how ATVOD takes on board Ofcom’s decision and interprets the principles relied on by Ofcom in these cases. It should also provide some useful guidelines to service providers when deciding whether they are required to notify ATVOD of their on-demand services and comply with the regulatory regime. The fines issued by Ofcom also make clear that service providers within the regulatory regime do need to take their obligations seriously.

Quick recap

The UK implemented the Audiovisual Media Services Directive (the Directive) through the Audiovisual Media Services Regulations 2009 and Audiovisual Media Services Regulations 2010 (the Regulations). The Regulations introduced a new subset of video on-demand content defined as ODPS to be regulated by Ofcom. Ofcom transferred certain of its regulatory functions to ATVOD including the power to decide what constitutes an ODPS. However, anyone aggrieved by an ATVOD decision has a right to appeal to Ofcom.

Section 368A of the CA 2003 sets out the meaning and defining criteria of an ODPS. One principal requirement for a service to be considered an ODPS is:

"(a) its principal purpose is the provision of programmes, the form and content of which are comparable to the form and content of programmes normally included in television programme services."

Ofcom previously set out the relevant test that should apply when considering whether a service falls within section 368A(a). Ofcom stated the test comprised two stages – the “principal purpose” part followed by the “comparability” part. In that case, it found the principal purpose of the service was not to provide audiovisual material. It did not go on to consider whether the material was “comparable to television programme services”.

BBC and Channel Flip facts

In the appeals by the BBC and Channel Flip, the available services consisted of short audiovisual clips of light entertainment materials that displayed some degree of professional production standards.

ATVOD’s initial determinations considered the BBC and Channel Flip services to be ODPSs. In making its determination, ATVOD considered several features to be “TV-like”, including, among others: the presence of: (i) an opening sequence; (ii) a music soundtrack; (iii) narratives or plots; (iv) closing shots and end credits; as well as (v) an end pictorial logo of the BBC or Channel Flip.

Channel Flip appealed to Ofcom on several grounds, the most relevant being that it met fewer than half the “key drivers” considered “TV-like” in a report previously published by Ofcom in 2009. Of the drivers set out in the report, Channel Flip argued the service was: (i) not broadcast on TV; (ii) had amateur production values; (iii) had relatively unknown programme titles; and (iv) involved short-form content.

In comparison the BBC argued that, although elements of the content of the service may be similar, the form was different. The BBC argued that “links, whether pieces to the camera or otherwise, are a key characteristic of the form of television programmes”. Without them, a programme would be a series of unrelated clips, which is exactly what the services on YouTube were designed to be.

Ofcom’s decision

Ofcom upheld the BBC’s and Channel Flip’s appeals, and replaced ATVOD’s determinations with its own decisions on the basis the services were not sufficiently “TV-like”.

In interpreting section 368A, Ofcom considered the relevant provisions of the Directive. “This is because that section implements the Directive insofar as that Directive defines the scope of on-demand services which should be subject to regulation”. In particular, Ofcom considered article 1(b) and recital 24 of the Directive. Article 1(b) provides a non-exhaustive list of examples of “programmes” for the purpose of the Directive, such as feature length films and original dramas. Recital 24 describes the characteristics of “TV-like” as “(a) whether the material is likely to compete for the same audience as (linear) television broadcasts; and (b) whether the nature of the material and means of access would lead users to expect regulatory protection”.

To further assist it in its analysis, Ofcom commissioned some additional research into consumers’ attitudes and behaviour towards different types of service. The research found that key factors for consumers when considering whether material was “TV-like” included whether it had been broadcast on television before, the quality of its production values, the programme title and its content format (e.g. a feature length programme or short form).

Ofcom determined the Channel Flip service was “not sufficiently comparable with that of programmes normally included in (linear) television programme services…and would not, therefore, compete for audiences of such services”. Ofcom placed particular importance on the duration of the individual items and their production quality. However, it confirmed “any service would need to be considered on all the basis of its relevant characteristics and all the relevant evidence”.

In relation to Top Gear and BBC Food, Ofcom found that, “whilst the content of many clips on the Service did contain elements of high quality broadcast, their presentation as disjointed short clips…means they were not comparable in form and content to television programmes normally found on linear television”.

Ofcom did acknowledge the familiarity of presenters and well-known brands and the heritage of the BBC as a well-known linear broadcaster might create an expectation of regulation. However, Ofcom did not consider that these elements outweighed the differences in the form and content of the services.

Comment

Despite Ofcom’s suggestion the determinative factors of these decisions should not be taken as a set of general principles, the industry is nevertheless likely to welcome Ofcom’s approach, as it appears to limit the scope of the ODPS definition.

ATVOD’s decision focused on the fact that graphics and effects used in the video content were like those of a television programme. This approach suggested that most video on-demand content which contained any production input at all (e.g music, voiceover, title screen or end credits) would be considered an ODPS.

However, on a spectrum of video content ranging from user-generated content at one end to Internet TV streaming services at the other, Ofcom has drawn the line far closer to those TV streaming services. Indeed, Ofcom determined that even content that had previously been shown as part of a linear television programme was not necessarily sufficiently comparable in form to fall within the ODPS definition. In making its decision, it placed specific emphasis on the Directive’s purpose to provide fair competition between: “(a) traditional (linear) television broadcasting services; and (b) on-demand services that are essentially the same or sufficiently similar, and compete for viewers and advertisers”. Ofcom determined that users would not regard the Channel Flip and relevant BBC on-demand services as among competing options when they want to watch television programmes. They therefore did not require regulatory protection. The decision is likely to reduce the number of services that will be considered ODPS to services that directly compete for audience with television broadcasts – this is a far narrower group.

Ofcom specifically referred to the Directive when considering what “TV-like” should mean. In contrast, the ATVOD decisions focused solely on the wording of the Regulations. ATVOD must accept Ofcom’s decision in this case and in practical terms will need to take on board the general approach adopted by Ofcom. ATVOD will need to exercise its own discretion in future cases but it will be interesting to see in 2013 whether it, like Ofcom, begins to consider the Directive as well as the Regulations when considering whether a service is an ODPS and adopts a narrower approach in its determinations.