Opinion of May 27, 2003 on draft legislation on electronic communications

Following the adoption in 2002 by the Council of Ministers of the European Union and the European Parliament of six directives and one decision concerning the regulatory framework applicable to "electronic communications" (the "telecom package"), the government drew up draft legislation on electronic communications, on which the Minister of Culture and Communication sought the opinion of the French Superior Audiovisual Council.

The French Superior Audiovisual Council's opinion on this draft is divided into eight parts, which essentially follow the order of the text:

I. Amendments to the French Post and Telecommunications Code
II. The French Superior Audiovisual Council's remit
III. Terrestrial authorizations
IV. TDF's status
V. Non-terrestrial radio and television services
VI. Service distributors
VII. The anti-concentration scheme
VIII. Exercising regulation

I - AMENDMENTS TO THE POST AND TELECOMMUNICATIONS CODE

The amendments made to the French Post and Telecommunications Code relate first and foremost to electronic communications networks, whether wired or wireless, which are now essentially governed by this code. The French Superior Audiovisual Council approves the unification of the legal regimes governing the establishment of telecommunications networks and cable networks, as set out in article L33-1 of the French Post and Telecommunications Code, as amended by article 9 of the draft legislation.
He believes that the draft legislation's transitional provisions could usefully set an appropriate deadline for bringing cable operators' current agreements with local authorities into line. A specific measure would also be useful for public service delegation agreements, to enable them to be terminated or adapted at the initiative of the local authority granting the concession, outside the cases provided for in the agreement for fault.
The French Superior Audiovisual Council is also pleased to note that its competence to allocate and manage audiovisual radio frequencies, an essential element in the regulation of audio and video content, has been maintained.
The draft legislation also includes provisions relating to electronic communications services, which do not concern the French Superior Audiovisual Council.
Finally, it extends the powers of the Autorité de régulation des télécommunications in a number of areas. The French Superior Audiovisual Council summons the government's attention to the importance of ensuring that the powers granted to the ART in respect of operators of electronic communications networks or services do not extend to commercial providers of radio or television services, which fall within the competence of the French Superior Audiovisual Council.
In this respect, it would be desirable for the relevant markets to be determined by the ART (article L.37-1 of the Code introduced by article 28) not to cover the entire electronic communications sector, but only electronic communications networks and services, thus excluding the publishing and commercial distribution of radio and television services. Similarly, article L.36-11 of the Code (amended by article 26 of the draft legislation), concerning the ART's power to impose penalties, should refer to infringements of"the prescriptions of an allocation decision taken by the Autorité de régulation des télécommunications (1) in application of article L.34-10 or article L.88-1 or article 26 of law no. 86-1067 of September 30, 1986 relating to freedom of communication", so as not to be likely to apply to frequency allocation decisions taken by the French Superior Audiovisual Council.
Furthermore, when the ART and the Minister in charge of telecommunications are called upon to take decisions, on the basis of articles L.32-1, L.33-4 or L.34-8-1 of the French Post and Telecommunications Code, with regard to operators of networks used for the diffusion of radio and television services and cable television networks, it would be desirable for these decisions to be taken after consultation with the French Superior Audiovisual Council. Article L.36-11 of the French Post and Telecommunications Code could also make provision for the French Superior Audiovisual Council to be consulted in dispute settlements falling within the competence of the ART, when the facts giving rise to the dispute are likely to restrict the supply of audiovisual communication services, as is the case under article 50 of the draft legislation (consultation of the ART by the French Superior Audiovisual Council in dispute settlements falling within its competence).
As the French Superior Audiovisual Council's opinion will be required in certain cases specified by decree for the definition of relevant markets (article L.37-1 of the Code), this opinion could also be required under certain conditions for the establishment of the list of operators exercising a significant influence on these markets and for the setting of their obligations (article L.37-2 of the Code). The law could also make provision for the French Superior Audiovisual Council to give its assent if the measures envisaged are likely to undermine one of the principles mentioned in articles 1 and 4 (as amended) of the law of September 30, 1986.

II - THE FRENCH SUPERIOR AUDIOVISUAL COUNCIL'S REMIT

The amendments made by articles 39 and 43 of the draft legislation complete the provisions of the draft legislation on confidence in the digital economy concerning the definition of online public communication services as a subset of audiovisual communication services. They also clarify the scope of the French Superior Audiovisual Council's regulation of the subset of audiovisual communication services made up of radio and television services.
In addition, radio and television services accessible via electronic communications networks other than terrestrial radio will be subject to an identical regime, whatever the medium used. The French Superior Audiovisual Council welcomes this identical regime, which will now cover not only cable and satellite radio and television services, but also those accessible via all other electronic communications networks, whether terrestrial or wired.
The French Superior Audiovisual Council's observations on this new manager concern the necessary definition of radio and television services, and the regulation of radio and television services with partially interactive content.

- Defining radio and television services
On several occasions, the Conseil has expressed the wish that the legislator should define radio and television services. This demand is repeated in the light of this redefinition of the Council's remit, in order to provide greater clarity and guarantee legal certainty for all players concerned by the extension of this regulation to new networks.
It also considers it desirable that the term "radio", used in several "telecom package" directives, be substituted for the expression "radio broadcasting", which is a source of confusion in that it refers to a broadcasting method.
The following definition could be added to article 2 of the 1986 law:
"Is necessarily considered as a television service any audiovisual communication service accessible in real time and simultaneously for the whole of the public or a category of the public and whose main program is composed of an ordered sequence of broadcasts comprising images and sounds, with the exception of images consisting essentially of letters, numbers or still images.
"Any audiovisual communication service accessible in real time and simultaneously to the entire public or a category of the public, the main program of which consists of an ordered sequence of broadcasts containing sound, is necessarily considered to be a radio service."
In the absence of a legislative definition, the players concerned could be seriously handicapped by the legal uncertainty which would affect the regulation of their activity, and which could only find a remote outcome in the settlement of a possible dispute against a French Superior Audiovisual Council decision.

- Regulation of radio and television services with partially interactive content
Now that its remit has been refocused on radio and television services alone, the French Superior Audiovisual Council summons the government's attention to the disparities in treatment that could arise between services with very similar content. For example, a single website could be classified as a radio or television service for part of its content, and therefore subject to regulation, while the rest of the site, with very similar content, would remain outside the scope of regulation.
In addition, the development of interactivity is leading to the appearance of a growing number of services offering content identical to that of radio or television services, but whose access method is moving away in part from simultaneous diffusion outside of any individual demand. It is important that such content does not escape regulation.
Consequently, to avoid disparities in treatment that could lead to circumvention, it would be desirable for the new legal manager to also apply to the interactive content of radio and television services.
Given the foreseeable development towards greater diversification of audiovisual communication services, in terms of both form and access, it seems essential that the French Superior Audiovisual Council should be able to exercise this regulation with flexibility, by qualifying services on a case-by-case basis, under the supervision of the Conseil d'Etat.
The following words could therefore be added to the first paragraph of article 33 of the 1986 law:"as well as for services of the same nature comprising a proportion of interactive content, as of the French Superior Audiovisual Council considers that these services are comparable to radio or television services".
In addition, such interactive content, as well as the "data associated" with the service, should be covered by the agreement concluded with the French Superior Audiovisual Council on the basis of article 33-1 of the law of September 30, 1986.

III - TERRESTRIAL AUTHORIZATIONS

- Calls for applications
The French Superior Audiovisual Council approves all the schemes designed to reduce the time taken to process calls for applications and to improve the procedures involved:
- launch of radio calls on predetermined frequencies (article 29 of the 1986 law, amended by article 59 of the draft legislation),
- involvement of radio technical committees in local television stations (article 29-1 of the 1986 law, amended by article 60 of the draft legislation),
- inclusion in the law of the admissibility phase for television (articles 30 and 30-1 of the 1986 law, amended by articles 61 and 62 of the draft legislation),
- introduction of an 8-month time limit for appraisal (article 31 of the 1986 law, introduced by article 66 of the draft legislation),
- possibility for the French Superior Audiovisual Council, in radio, to give reasons for rejection by reference to a summary document (article 32 of the 1986 law modified by article 67 of the bill),
- deadline for overseas France regional councils to issue an opinion (article L.4433-30 of the General Code of Local Authorities, amended by article 102 of the bill).
It nevertheless makes three proposals concerning these articles.
The first concerns article 29: since radio candidacies will be summoned for predetermined frequencies, it would be useful to mention, in the fourth paragraph of this article, that the candidacy file must specify which frequency the candidate wishes to use.
The second concerns article 31: the "authorization" directive of the telecom package takes as the starting point for the investigation period"receipt of the complete demand by the national regulatory authority". However, the French Superior Audiovisual Council considers that a demand can only be considered complete once it has been declared admissible by the Council.
It is therefore advisable to take as the starting point of the eight-month period the date of the plenary meeting which adopted the list.
Article 31 would then read as follows
"Authorizations for the use of radioelectric resources and their summonses under articles 29, 30, 30-1, 30-2 and 33-2 shall be served by the French Superior Audiovisual Council within a period of not more than eight months from the date of the decision adopting the list of candidates admitted to the competition."
The third proposal concerns article 32: the French Superior Audiovisual Council would like to see the possibility of giving reasons for a rejection decision by listing a summary document also made available for television.

- The holder artificial person
In both radio and television, experience has shown that the economic and legal structures of companies are not always finalized when the application file is submitted. In order to provide greater flexibility, and to prevent unsuitable situations from becoming entrenched, a provision could be included specifying that the authorization must in principle be issued to the applicant artificial person, but may also, in the case of an applicant company, be issued to the company which controls or is controlled by the applicant company, control being assessed in the light of the criteria set out in article L.233-3 of the French Commercial Code. In order to cover all types of services, this provision could be introduced into article 32 of the 1986 law.
Furthermore, while the French Superior Audiovisual Council welcomes the flexibility introduced into article 42-3 of the September 30, 1986 law (article 83 of the draft legislation), which will enable it to authorize changes of category in radio, it considers that it should also be able to authorize changes of artificial person within a group, which would provide greater flexibility without jeopardizing the balance between groups.
Article 42-3 could therefore be worded as follows:
"The authorization may be revoked, without prior notice, in the event of substantial modification of the data on the basis of which the authorization was issued, in particular changes in the composition of the share capital or management bodies and in financing arrangements.
"The French Superior Audiovisual Council may give its approval to a change in the authorization holder, when this change benefits the artificial person who controls or is controlled by the initial authorization holder, with regard to the criteria set out in article L233-3 of the French Commercial Code.
"For the services referred to in article 29, the French Superior Audiovisual Council may authorize a change of category, in compliance with the criteria mentioned in article 29 and in particular that of a fair (2) balance between national networks and independent local, regional and thematic services.
"The possibility opened up in the previous paragraph is not applicable to the services referred to in article 80 and to independent local, regional and thematic services."

- Radio services
In view of the French Superior Audiovisual Council's power to approve changes in radio categories, it considers that Article 28-1, I, 5° of the 1986 Act should read as follows:"5° for radio services, if the service no longer meets the criteria for the category for which it is authorized".
Still on the subject of radio, the French Superior Audiovisual Council considers that articles 41 and 41-3 (4°) of the September 30, 1986 law should be supplemented to exclude the provision of unidentified on-air programs from the scope of radio networks.

- Public hearings for local television stations
In view of the large number of calls for bids that the French Superior Audiovisual Council will shortly be launching for local television stations, in both analog and digital formats, and the advantages of organizing some of the public hearings on site, particularly overseas France, the French Superior Audiovisual Council considers that the quorum of six members present out of nine, provided for in article 4 of the 1986 law, could be waived for public hearings organized with a view to issuing such authorizations, and that where appropriate, the French Superior Audiovisual Council should be able to delegate the holding of such hearings to the technical radio committees, whose remit has been extended to local television stations.

- Involvement of local authorities
The French Superior Audiovisual Council notes that articles 61 and 62 of the draft legislation, amending articles 30 and 30-1 of the 1986 law, expressly make provision for a local semi-public company to edit a television service, in both analog and digital modes, and that article 101 of the draft legislation, amending the general code of local authorities, authorizes local authorities or their groupings to edit directly or indirectly a television service shown on a network other than satellite.
With regard to Article L.1425-1 of the General Code of Local Authorities, introduced by Article 101 of the draft legislation, the French Superior Audiovisual Council believes that a clearer distinction should be made between the legal managerial framework for local cable channels and that of local public broadcasting.
Indeed, for the latter, the direct publication of a service by a local authority or group of local authorities does not seem desirable, and is not made provision for in articles 30 and 30-1 of the 1986 law. It would therefore be useful to bring the two texts into line on this point. In addition, for these services, it would be useful to specify that the local authority's intervention is subject to a finding of a lack of private initiative, and that the service's coverage area must correspond to the local authority's territorial limits.
In addition, the French Superior Audiovisual Council considers that, for both local cable channels and local public terrestrial television stations, the publication of the service by a separate artificial person must give rise to the conclusion of a contract of objectives and means, defining the obligations of the service and guaranteeing its long-term financing.
Article L.1425-1 of the French General Code for Local Authorities could therefore be worded as follows:

"In abiding by the provisions of law no. 86-1067 of September 30, 1986 on freedom of communication, local authorities or their groupings may, directly or indirectly, publish a television service devoted mainly to local life on a network mentioned in article L. 33-1 of the French Post and Telecommunications Code, other than satellite. They may also, in the event of a lack of private initiative, publish or participate in the publication of a television service shown by terrestrial hertzian means in the territory for which they are responsible, devoted mainly to local life.
" When the production of a television service created within the framework provided for in this article is entrusted to a legal entity, the local authority or group of local authorities shall enter into a contract of objectives and means with this entity, defining public service missions and the conditions for their implementation, for a period of between three and five calendar years."
The French Superior Audiovisual Council also points out a purely formal difficulty: article 101 of the draft legislation introduces an article L.1425-1 into the Code général des collectivités territoriales, whereas the draft legislation on confidence in the digital economy, as passed by the French National Assembly on first reading, uses the same article number for another provision.
Finally, the French Superior Audiovisual Council believes that the direct or indirect participation of local authorities in the production of local channels should not be their only possible mode of intervention, and that the General Code of Local Authorities should also expressly authorize them to contribute to the financing of private local channels, within limits compatible with the preservation of the independence of the service.

- The impact of simulcast on the duration of analog television licenses
The French Superior Audiovisual Council believes that the legislator could seize the opportunity offered by this draft legislation to clarify the wording of article 82 of the law of August 1, 2000, which makes provision for a five-year extension of analog broadcasting authorizations for any television service which"is the subject, in the area in question, of a full and simultaneous digital takeover at the time of the first authorizations for the use of radioelectric resources issued in application of article 30-1".
The question arises as to how this provision is to be applied in practice, and in particular the date on which it is to have an effect, as well as the preliminary observations it presupposes, in particular as regards the extent of the effective diffusion zone for national services, whose territorial coverage will be spread out over time.
The following wording could be adopted: "For any television service authorized prior to the entry into force of law no. 2000-719 of August 1, 2000, which has already benefited from a renewal authorization outside of a call for tenders on the basis of article 28-1 of law no. 86-1067 of September 30, 1986, and which benefits from an authorization with a view to its full and simultaneous takeover in digital mode, for long-term coverage corresponding to the national or local nature of the service, issued following the first call for applications concerning this coverage zone, under the provisions of article 30-1 of the same law, the term of the authorization issued under article 28-1 is extended by five years, under the conditions set by the French Superior Audiovisual Council. Should the digital service not be resumed by the date set by the French Superior Audiovisual Council, the benefit of this provision will be cancelled. However, the authorization will be extended until the end of the call for applications for the use of analog frequencies previously used by this service".

- Services other than radio and television
The French Superior Audiovisual Council is pleased to note that the draft legislation will enable it to authorize over-the-air electronic communications services (article 23 of the 1986 law, amended by article 54 of the draft legislation) and audiovisual communication services other than radio or television (article 30-5 of the 1986 law, amended by article 65) on the frequencies allocated to it.
With regard to the latter, the French Superior Audiovisual Council considers that the draft legislation should be supplemented so that the regulation authority has the power to sanction any breaches of legislative or regulatory obligations (articles 42 and 42-1 of the 1986 law) and to issue notices (article 4 of the 1986 law, amended by article 43 of the draft legislation).

IV - TDF'S STATUS

The draft legislation puts an end to TDF's monopoly for broadcasting public channels in analog mode, and removes any reference to this company in the law.
Article 98 of the draft legislation thus makes provision for the deletion, as of January 1, 2004, of article 100 of the 1986 law concerning the employment by the French Superior Audiovisual Council of TDF personnel placed at its disposal.
On this point, the French Superior Audiovisual Council wonders how the entry into force of this provision fits in with the timetable for preparation of the draft legislation on the 2004 budget. It summons the government's attention to the need to put in place appropriate solutions to ensure that this change in situation, which concerns 46 employees, does not affect the continuity of its missions.
Finally, the French Superior Audiovisual Council questions the conditions for enforcing a law on current contracts between TDF and national program companies.

V - NON-TERRESTRIAL RADIO AND TELEVISION SERVICES

- The conventional system
The draft legislation makes provision for a conventional regime for radio and television services accessible via electronic communications networks other than terrestrial hertzian, with the exception of those subject to a simple declaratory regime.
The French Superior Audiovisual Council believes that the absence of explicit criteria for accepting or refusing to accept a service is a source of legal uncertainty. It would therefore like to see such criteria, which should be linked to the principles set out in article 1 of the law, included in article 33-1 of the 1986 law.
The first paragraph of this article could be completed as follows:"The French Superior Audiovisual Council may refuse to grant such an agreement when it considers that the project is likely to abide by one of the principles recalled in article 1 of the present law, or appears incompatible with respect for the legislative or regulatory obligations applicable to the service."

- Declaratory system
Services with annual net sales of less than 75,000 for radio and 150,000 for television will be subject to a simple declaration system (article 43 of the 1986 law, amended by article 86 of the draft legislation).
Such a declaratory system for small-scale services may seem appropriate, particularly for services accessible via the Internet. However, three difficulties need to be pointed out:
- to avoid abuses, services benefiting from the declaratory system should be required to justify to the French Superior Audiovisual Council on a regular basis (e.g. every year) that their sales have not reached the threshold above which they must be licensed; when service editing is only one of the publisher's activities, the French Superior Audiovisual Council should be able to request information on the revenues generated by the service;
- they should be required to justify to the French Superior Audiovisual Council, on demand, that they are complying with their legislative and regulatory obligations;
- local cable services should, for the most part, fall below the threshold, and thus escape the obligation to sign an agreement; however, these services, which have a monopoly on local information on cable, often have very close ties with communes or groups of communes, and their agreements include, as such, strengthening obligations in terms of plurality, which would disappear with the declaratory regime; in addition, the sales criterion would create, among local cable channels, a duality of regimes for services with strong similarities; the French Superior Audiovisual Council therefore wishes local services distributed over wireline networks to remain, in any case, subject to agreement.

- Necessary flexibility
For new online services, the current uncertainties surrounding future innovations in technology and service content should lead the legislator to favor a flexible, evolutionary approach to regulation.
Foreseeable developments are moving away from the terrestrial model towards the development of a wide variety of services, some of which are aimed at a highly targeted audience. Technological neutrality dictates that the legislator abandon the establishment of legal managers determined by the medium, in favor of an approach that takes account of the impact on the public.
The regulatory authority should be able both to qualify each new service likely to meet the provisions of the definition of radio and television services, and to take account of its impact in terms of sales and audience.
Given that the scope of the current "cable and satellite" decree will be extended by article 68 of the draft legislation to radio and television services using other media (notably Internet access), including those subject to the declaratory regime, the French Superior Audiovisual Council believes that the obligations it contains should be modulated, depending in particular on sales figures.
Indeed, it would be paradoxical if services governed by a simple declaratory regime, because of their low sales, were nonetheless subject to all the regulatory obligations laid down for contracted services.
The French Superior Audiovisual Council believes that a lighter regime should also be made provision for services intended exclusively for international broadcasting (outside the European Community and States party to the European Convention on Transfrontier Television). In order to remove obstacles to the development of these services, the CSA considers that they should be exempted from a certain number of obligations, notably concerning the sectors forbidden to advertising and the diffusion schedule for cinematographic works.
The proposed relief could take the form of the addition of two paragraphs to article 33 of the aforementioned law of September 30, 1986:
"It [the decree] may also make provision for derogations from the schemes set out in 3° to 10°, as well as from the provisions of article 70 of the present law, for services exclusively intended to be shown outside the national territory, subject to the international commitments entered into by France.
"Lastly, it may allow the French Superior Audiovisual Council, by agreement, to make provision for derogations from all of its schemes, for radio and television services whose sales are below the thresholds mentioned in article 43."

- Legal and accounting separation of contracted services
The French Superior Audiovisual Council would like to draw the government's attention to the difficulties involved in establishing the basis for production obligations and the ceiling for legal sanctions, when several services are edited by the same company; in order to resolve this difficulty, it would be desirable for the law to make provision for a single artificial person to edit only one agreed television service.
Similarly, when the same company simultaneously publishes and distributes a contract television service, it is important that these two activities be legally and accountably separated, so that the sales figures for each activity are clearly identified.
The transitional arrangements should also make provision for an appropriate compliance period for current agreements.

VI - SERVICE DISTRIBUTORS

- DTT multiplexing and commercial distribution
Article 63 of the draft legislation amends article 30-2 IV of the 1986 Act, concerning commercial DTT distributors, in two respects:
- it makes provision for the French Superior Audiovisual Council to be notified of any changes to the information provided at the time of declaration (information to be determined by decree);
- it excludes commercial distributors from the multimedia anti-concentration scheme, from which multiplex operators are also rightly excluded (articles 79 and 80 of the draft legislation).
It would be desirable for this article 63 to also make provision for an appropriate scheme for the operation of the multiplex in the event of the subsequent arrival of a new publisher on that multiplex; thus, article 30-2 of the 1986 law could be supplemented by a VII worded as follows: "The authorization issued to the company responsible for ensuring the technical operations necessary for the transmission and diffusion of programs to the public is not called into question by the granting of the right to use the radioelectric resource to a new publisher. In the event of a dispute concerning the contractual conditions offered by this company to a new publisher, or in the event that a new publisher wishes to designate a new company, the French Superior Audiovisual Council shall be seized of the dispute, in accordance with the conditions laid down in article 17-1".

- Declaratory regime for non-terrestrial distribution means
With regard to commercial distributors on networks other than terrestrial hertzian networks, the French Superior Audiovisual Council is in favor of the declaratory regime made provision for (article 34 of the 1986 law, amended by article 72 of the draft legislation), which will lighten the obligations of cable operators. This declaration will have to be made for each geographical area covered by a separate commercial supply, to enable the French Superior Audiovisual Council to assess the compliance of each supply with legislative and regulatory obligations.
A clarification of the wording would also be desirable; indeed, while the explanatory memorandum indicates that this declaratory system is intended to apply to both cable operators and satellite channel package operators, the wording chosen refers to the networks mentioned in article L.33-1 of the French Post and Telecommunications Code. However, satellite networks using frequencies that fall within the competence of France will not be subject to the provisions of article L.33-1 of the French Post and Telecommunications Code. It would therefore be advisable to refer to"electronic communications networks other than those mentioned in 2° of article L.33 of the French Post and Telecommunications Code", so as to cover all networks, with the sole exception of terrestrial networks falling within the competence of the French Superior Audiovisual Council.
The French Superior Audiovisual Council also notes that this regime should not apply to Internet service providers who do not enter into contractual relations with radio or television service editors, and therefore do not fall within the definition of service distributor set out in article 2-1 of the 1986 law.
Nor should it apply to technical operators of satellite networks. However, the French Superior Audiovisual Council notes that it currently has no power over such operators.
However, the jurisdictional criteria laid down in the Television without Frontiers Directive and set out in articles 43-2 to 43-6 of the 1986 Act mean that the French Superior Audiovisual Council has jurisdiction over all non-EU channels shown on satellite capacity under French jurisdiction. It is therefore essential that the French Superior Audiovisual Council be able to control the supply of satellite services, even if the French Superior Audiovisual Council would like to see a revision of these jurisdictional criteria, which result in two States (France and Luxembourg, respectively responsible for Eutelsat and Astra) being entrusted with the control of all non-Community channels received within the territory of the European Community.
It is therefore important that the French Superior Audiovisual Council should be able, on the one hand, to request these operators to provide information enabling it to identify, with a view to licensing, satellite services falling within the competence of France which are not included in a commercial channel package and, on the other hand, to require the withdrawal of a service which is neither licensed nor declared.
The French Superior Audiovisual Council also considers that the activity of commercial distributor should be open to artificial persons other than those mentioned, and in particular to public establishments (as in the case of the Office public des postes et télécommunications, a public establishment which markets a satellite channel package in French Polynesia).
In addition, it would be necessary to separate the accounts of technical network operations from those of the commercial distribution of audiovisuel services. Such a separation would provide a clearer picture of the economic situation of audiovisual service distribution. It would also make it possible to identify the sales specific to the audiovisuel distribution business, which is liable to financial sanctions capped as a percentage of sales.
Lastly, it is important that contracts concluded between service editors and distributors do not conflict with the conventional obligations of the editors. An express provision could therefore usefully make null and void any clause likely to prevent publishers from complying with their contractual obligations.

- The obligation to take back certain services
With regard to the obligation to carry certain services, the French Superior Audiovisual Council notes that the scheme adopted (articles 34-1 and 34-2 of the 1986 law, amended by articles 73 and 74 of the draft legislation) maintains a major disparity between operators, depending on whether the networks are wired or satellite, which is likely to distort competition between the two types of network.
In line with the principle of technological neutrality, and given the similarity in the number of households reached by each medium, the Conseil's notice recommends that wireline and satellite networks should be subject to an identical regime, with the exception of local channels, for which the takeover obligation should be reserved for wireline networks.
The CSA also believes that broadcasters who benefit from the right to use terrestrial frequencies, a scarce public resource, should not be able to oppose their takeover by a distributor, notably in order to cover shadow areas. The French Superior Audiovisual Council therefore considers that, for all networks, the takeover obligation should apply to all free-to-air terrestrial channels normally received in most of the coverage area, without publishers being able to object.
Since cable must-carry would be limited to free-to-air terrestrial services, the access of a self-distributing television service like Canal+ to networks governed by article L.33-1 of the French Post and Telecommunications Code would have to be surrounded by guarantees.
The French Superior Audiovisual Council also considers that the notion of a "significant" number of viewers using the network as their main means of accessing television, as is the case for wireline networks, will be delicate and a source of legal uncertainty; it could also lead to the exclusion from the scope of this obligation of cable networks with a low penetration rate, even though these networks would be the only means of accessing television for their subscribers. This situation would be all the more damaging in that it could deprive the viewers concerned of access to the local cable channel.
In this respect, the French Superior Audiovisual Council points out that the "telecom package", which retains the notion of"significant number" for universal service, is not applicable to the commercial distribution of audiovisual services, for which the legislator retains full latitude. It considers that the principle of subjecting all networks"used as a principal means of receiving television" to the obligation laid down in article 34-1 of the 1986 law, as it results from article 73 of the draft legislation, could be retained in this respect, and that the last paragraph of this article should consequently be deleted.
Lastly, the French Superior Audiovisual Council regrets that the draft legislation does not specify who bears the cost of transmission on wireline networks.

- Consumer protection
The French Superior Audiovisual Council considers that commercial solicitations sent via television or radio services, or via other audiovisual communication services (notably interactive services on satellite platforms) directly associated with a television or radio service, should be better regulated.
Indeed, audiovisuel service editors are increasingly developing telecommunications services (such as premium-rate telephone services) directly linked to the program. These practices raise real consumer protection issues, due to the high cost of these services and their appeal to children and teenagers. These difficulties are compounded when pay services can be accessed directly via the remote control, which entails particular risks for unsuspecting viewers.
While the French Superior Audiovisual Council is able to limit these practices on radio and television services, by means of agreements or notices, its powers are nevertheless limited. In addition, it has no means of action with regard to audiovisual communication services other than radio and television, and re-establishing the obligation for these services to present advertising messages as such, which includes at least in part incentives to use paid electronic communications services, is not sufficient to protect consumers against the abuses to which such solicitations may give rise.

VII - THE ANTI-CONCENTRATION SCHEME

- General comments
Generally speaking, setting absolute anti-concentration thresholds by law, and therefore on a long-term basis, is a tricky business, as economic developments can quickly render such thresholds unsuitable for new industry structures. The scheme set out in the 1986 law supplies numerous examples of this.
Whenever possible, therefore, absolute thresholds should be replaced by relative thresholds, which can be more flexibly adapted to the development of the populations served (potential audience) or the markets concerned.
In addition, it would seem appropriate to consider a scheme which, as of the existence of powerful operators on an audiovisual market, instead of automatically limiting the development of their activities, including in sectors where their intervention would appear justified or reasonable, would give the regulation authority the power to impose specific obligations on these powerful players, in order to guarantee plurality while promoting the industrial development of the audiovisual industry.
The French Superior Audiovisual Council is already responsible for ensuring operator diversity and plurality, not only when selecting services in response to calls for tenders, but also when negotiating agreements or examining requests for changes in ownership structure. This mission allows us to look favorably on the possibility of making the anti-concentration scheme more flexible.

- Local television stations
With regard to local television stations, the relaxations provided for in articles 77 and 78 are designed to encourage their necessary development.
However, this development cannot be achieved without the simultaneous adoption of regulatory measures to ensure the economic viability of these services, which must benefit as soon as possible from the targeted and gradual opening up of sectors prohibited to television advertising.
Article 77 removes the limit on the number of shares that can be held by any one person in the capital of a local television company, a measure that should encourage investment in this sector. However, the French Superior Audiovisual Council considers that the 50% threshold should be maintained for shareholders who are in one of the situations referred to in 2° and 4° of articles 41-2 and 41-2-1 of the 1986 law (publishing radio services representing at least 10% of the potential audience in the area, and publishing one or more daily political and general news programmes shown in the area).
Article 78 authorizes the combination of a national authorization and one or more local authorizations, with the exception of the combination of a national channel whose average annual audience exceeds 2.5% and a local analog channel. This restriction summons the swift publication of the decree mentioned in I of article 39.
The same article raises the maximum population catchment area that can be covered by a single local television service editor from six to ten million, enabling editors to envisage regional development and coverage of a population catchment area likely to attract a greater number of advertisers for commercial services.
Article 81 also revokes the six-million-inhabitant threshold in article 41-3 of the September 30, 1986 law, above which a television station is considered national for the purposes of enforcing the anti-concentration scheme. The expression of a threshold in article 41-3 may well appear unnecessary; indeed, it follows from the fifth and sixth paragraphs of article 41 of the same law, as amended by article 78 of the draft legislation, that a local television station may not cover more than ten million inhabitants, which necessarily leads to any television station exceeding this catchment area being considered national. However, the reminder of this threshold in article 41-3 is likely to make the anti-concentration scheme easier to read, and could therefore have been retained.

- National terrestrial television channels
With regard to national digital television stations, article 78 increases the maximum number of licenses that can be held by a single group from five to seven.
This flexibility could prove useful if one of the channels currently reserved for public-sector channels, national channels preselected on October 23, 2002, or local channels subject to a forthcoming call for applications, is freed up.
Indeed, due to the high concentration of special-interest channels, the threshold of five authorizations was reached by certain groups in the course of the preselection process carried out on October 23, 2002. The limit of seven authorizations would appear to preserve plurality, given that of these seven, only two would concern free-to-air TV channels.

- The share of non-Community capital
The French Superior Audiovisual Council summons the government's attention to the difficulties of applying article 40 of the law of September 30, 1986, which sets at 20% the maximum share that may be held by persons from outside the European Union in the capital of companies holding terrestrial authorizations for French-language services.
These difficulties are due, on the one hand, to the large number of companies listed on the stock exchange, with a high proportion of free-float capital, a significant proportion of which is held by financial intermediaries. They are also linked to the difficulty, for the French Superior Audiovisual Council, of requesting capital information enabling it, in accordance with the opinion issued by the Conseil d'Etat on June 27, 2002, to trace the chain of shareholders to determine the nationality of each of them, even if the law of May 15, 2001 on new economic regulations seems likely to improve the possibilities of identifying the capital for broadcasting companies.
The French Superior Audiovisual Council considers that at least three measures could facilitate the application of this article:
- make provision for the publisher to provide evidence that the company meets the threshold stipulated in article 40;
- the introduction of a compliance deadline enabling the French Superior Audiovisual Council, if the threshold is exceeded, to give the publisher a reasonable time to bring the company into line with the provisions of the law;
- the decriminalization of this article, and consequently the deletion of the reference to article 40 in article 77 of the law; this decriminalization seems necessary given the reversal of the burden of proof; moreover, the criminal sanction seems inappropriate in this case, since the person liable to punishment would be the one who caused the 20% threshold to be exceeded, an offence which in the vast majority of cases lacks the element of intent.
In any case, the possibility of exceeding the threshold and the assessment of its consequences must be taken into account in any consideration of amending article 40. It is up to the Government and the legislator to assess the scope of the issue, and in particular to examine, where appropriate, the relevance of modifying the threshold of 20% of capital or voting rights, or of replacing or adding to this criterion a rule relating to the nationality of directors and corporate officers of companies holding authorizations, and to the location of the company's registered office within the Community, Given the heavy reliance of these companies on stock market financing, compliance with this rule would be easier to monitor, while maintaining the same objective of controlling the management of these companies.

- Service distributors
The French Superior Audiovisual Council is in favor of abolishing the 8-million-inhabitant threshold for cable operators set out in article 41 of the 1986 law (article 73 of the draft legislation) and removing cable distribution from the multimedia anti-concentration scheme (articles 74 and 75 of the draft legislation).
At the same time, however, it considers it essential to introduce an appropriate scheme to limit vertical integration, and in particular to avoid the control of a large number of cable and satellite channels by distributors belonging to groups that control national private channels, a situation that carries the risk of disparities in treatment between publishers and of undermining plurality. The proportion of independent channels to be included in each supply, the principle of which is maintained in article 75 of the draft legislation, does not appear to be a sufficient measure in view of the scale of the phenomenon.

VIII - THE EXERCISE OF REGULATION

- Dispute resolution
Article 50 of the draft legislation introduces a new article 17-1 into the law of September 30, 1986. This extends to the entire audiovisual industry the French Superior Audiovisual Council's power to settle disputes, which under the Act of August 1, 2000 was limited to digital terrestrial television (article 30-5 of the 1986 Act).
The French Superior Audiovisual Council welcomes this important step forward, which is likely to meet the expectations of a large number of operators, and which strengthens its capacity for economic intervention.
In particular, it is pleased to note that the draft legislation will enable it to settle disputes relating to the application of article 95 of the 1986 law, concerning terminal interoperability, thus ensuring full transposition of article 4 of the "Standards and Signals" Directive 95/47/EC, paragraph e) of which makes provision for"Member States shall ensure that any party having an unresolved dispute concerning the application of the provisions covered by this Article has easy and, in principle, inexpensive access to appropriate dispute resolution procedures, in order to settle such disputes in a fair, transparent and timely manner".
However, the French Superior Audiovisual Council considers that it would be desirable to include, among the articles on the basis of which the French Superior Audiovisual Council could oppose a modification to a distributor's service plan, the amended article 4 of the 1986 law (in the wording resulting from article 43 of the draft legislation), which lays down the principles on which the French Superior Audiovisual Council's regulation must be based: equal treatment, free competition, non-discriminatory relations between service editors and distributors, quality and diversity of programs.
Furthermore, the experience of authorities vested with the power to settle disputes demonstrates the need for relative flexibility in terms of investigation deadlines, notably to guarantee the adversarial nature of proceedings. In this respect, the firm two-month deadline set for the French Superior Audiovisual Council to issue its decisions is likely to undermine their legality in the event of the production of documents by one of the parties shortly before the deadline expires; indeed, in such a case, the French Superior Audiovisual Council would not be able to respect both the adversarial nature of the proceedings and the prescribed deadline.
It seems essential that the option of extending the time limit under ordinary law, available to the ART and CRE, should also apply to disputes that may be referred to the French Superior Audiovisual Council.
Lastly, the scope of this scheme needs to be clarified, as it covers both television services and audiovisual communication services, a broad notion that includes all websites.

- Information requests
Article 51 of the draft legislation is a useful addition to article 19 of the September 30, 1986 law, extending the French Superior Audiovisual Council's right to request information to producers of audiovisual and cinematographic works, as well as to the persons mentioned in article 95 of the 1986 law.
However, the French Superior Audiovisual Council considers it essential that this article be amended on three other points:
- Article 19 of the 1986 Act, as amended, only allows the French Superior Audiovisual Council to request information from producers, publishers and distributors"to ensure abide by the obligations imposed" on publishers and distributors; this wording appears too restrictive, in particular in that it will not allow the French Superior Audiovisual Council to request the information it needs to exercise the power to settle disputes provided for in the new article 17-1 of the same Act;
- as mentioned above, the French Superior Audiovisual Council needs to be able to check with satellite network operators that they are not showing services that have not been the subject of an agreement or declaration;
- Lastly, the French Superior Audiovisual Council would need to be able to request other types of information from the shareholders of companies holding authorizations, in addition to that currently provided for in article 19, notably on their activities in the communications sector, developments in their shareholding, etc. Such information is likely to facilitate the exercise of economic regulation powers; moreover, it may be essential to ensure compliance with the anti-concentration scheme, in the case of a controlling shareholder subject to the same rules as the licensee, in application of article 41-3 of the 1986 law.

- Extending legal sanctions powers
With regard to the French Superior Audiovisual Council's power to impose legal sanctions, which has been the subject of useful modifications under the draft legislation on confidence in the digital economy, the Council considers that it would be desirable to extend it on three points.

- The Council would like the scope of this power to be extended to the persons referred to in article 95 of the law of September 30, 1986, concerning the interoperability of decoders. These persons should also be mentioned in article 42 of the 1986 law, among those who may request the French Superior Audiovisual Council to issue a formal notice to an operator failing to abide by its obligations.

- The French Superior Audiovisual Council's power to impose legal sanctions on commercial distributors, in application of articles 42 and 42-1 of the law of September 30, 1986, can only be applied in the event of a breach of"theobligations imposed on them by legislative and regulatory texts and by the principles defined in article 1 of the present law".

One of the French Superior Audiovisual Council's essential missions is to protect youngsters. In this respect, the French Superior Audiovisual Council considers it essential to strictly control access to pornographic or highly violent programs, which are likely to harm the development of persons under 18.
This control involves measures which are largely the responsibility of commercial distributors, such as supervising the marketing of TV channels showing pornographic or extremely violent programs, and setting up schemes to control access to these programs. These measures come under article 15 of the law, not article 1, which makes no mention of the protection of youngsters. This makes it impossible to initiate legal sanctions proceedings against commercial distributors who fail to abide by French Superior Audiovisual Council regulations in this area.
It would therefore be desirable, on the one hand, for article 1 of the 1986 law to expressly refer to the protection of children and adolescents, which appears to be one of the essential principles to be recalled in this article and, on the other hand, for article 42 of the same law to enable the French Superior Audiovisual Council to issue formal notices and, where appropriate, to initiate sanction proceedings against service distributors on the basis of article 15 of the law.

- The Act of August 1, 2000 extended the French Superior Audiovisual Council's power to impose legal sanctions, under article 42-1 of the 1986 Act, to cable and satellite channels and service distributors, without making provision for all the consequences of this extension. Thus, each of the legal sanctions listed in 1° to 4° of this article refers to "authorization", whereas cable and satellite channels are subject to an agreement-based system, and satellite service distributors are subject to a declaratory system, extended to cable operators by the draft legislation covered by the presenter's opinion.
This article should be adapted accordingly.

- Other changes to the French Superior Audiovisual Council's powers
Following the example of article 6 of the draft legislation in favor of the ART, the French Superior Audiovisual Council's investigative powers could usefully be strengthened, in particular to facilitate the exercise of the new dispute settlement powers.
Similarly, by analogy with the powers granted to the ART by article 23 of the draft legislation (article L.36-6 of the French Post and Telecommunications Code), the French Superior Audiovisual Council could be given regulatory powers, under article 25 of the 1986 law, over the technical conditions of use of audiovisual frequencies, which can currently only be defined on a case-by-case basis (3).
Finally, as this draft legislation amends a large number of provisions of the 1986 Act to specify the French Superior Audiovisual Council's scope of jurisdiction, it would be useful if it also adapted article 14, which gives the French Superior Audiovisual Council jurisdiction to exercise control over advertising programs"shown by national program companies and by holders of authorizations issued for audiovisual communication services under this Act". This power should expressly cover all radio and television services.

(1) Parts in bold correspond to modifications proposed by the French Superior Audiovisual Council.
(2) Under the provisions of article 29 of the 1986 law.
(3) Cf. parliamentary debates and in particular the Péricard AN n° 339 report, which states that the technical conditions of diffusion"will henceforth be set by the CNCL, at the same time as the corresponding authorizations are issued".