NMHH: Market Opinions on Over-the-Top Content Service Received
The summary of the public consultation on the regulatory issues of the OTT market is now available
nullThe National Media and Infocommunications Authority (NMHH) held a public consultation covering twelve topics, including network neutrality and content integrity, on the effects of over-the-top (OTT) content services on media services the media market in general. The marked opinions offer very useful insights to help the authority to proactively form the Hungarian national opinion when developing an EU regulation on the subject.
In response to the call for a public consultation and the related regulatory summary material on the topic published by the National Media and Infocommunications Authority in November last year, a total of fifteen industry opinions have been submitted by the major infocommunication and media service providers, equipment manufacturers and interest groups and experts of Hungary.
Previously shown only on the television screen, media content now available also over the Internet fundamentally transform traditional media consumer habits, and the dynamically changing market environment calls for a balanced regulatory system. Therefore, in November last year, NMHH published a 12-point questionnaire on the effects of OTT (online) content services on the media system within the context of a public consultation to involve industry players to identify areas where the legislator and the regulatory authority enforcing the law may have certain tasks to complete in the future. The consultation also involved the definition of OTT.
The constructive comments submitted by Allegro Group, Antenna Hungária Zrt., Invitel Zrt., István Littvay, Initiative of European Network Operators, Magyar Kábelkommunikációs Szövetség, Magyar Telekom Nyrt., Microsoft Magyarország Kft., M-RTL Zrt., Nemzeti Műsorterjesztő Klaszter, Pataki Tamás, Telenor Magyarország Zrt., TV2 Média Csoport Kft., UPC Magyarország Kft. and Vodafone Magyarország Zrt. will be used by the authority to formulate a more complex view on this dynamically progressing field. Based on these opinions voiced by industry players, NMHH will be able to proactively represent Hungary’s national opinion at the EU coordination meetings, most specifically at the discussion of the European Commission’s Digital Single Market proposal and the subsequent review of the Audiovisual Media Services Directive (AVMSD).
Almost all of the respondents believed that in the medium term OTT content services will not substitute or fully replace the services offered by traditional broadcasters. The market entry barriers include language and cultural issues, the limited business opportunities due to market size, the legal environment unable to keep up with progress, and that industry players do not see that the technical conditions needed to offer OTT services are given.
The majority of respondents agreed that the media service providers within the scope of AVMSD would be disadvantaged by the obligation under the directive that other companies operating outside the EU but offering services to Europe do not have to fulfil. Another disadvantage they mentioned was that the non-European operators expanding their operations in the U.S. and Europe typically operate in English-speaking countries; therefore, they do not have to pay for translating and subtitling films and they do not have to comply with the strict European programme quota system and the more stringent taxation terms.
The operators could accept a solution where the regulator would allow Internet service providers to develop new business models and new types of contract terms with consumers and OTT players as their traditional revenue sources are being threatened by successful OTT communication and messaging applications. With regards to the European Commission’s initiative on a more detailed regulation of net neutrality, the respondents favoured flexible and differentiated regulation. Internet service providers urge for an opportunity to offer guaranteed service quality for a fee to subscribing content and application providers because this new type of revenue would enable them to sustain current and future network development projects, which would subsequently ensure that non-discriminatory best-effort type services could be operated in sufficient quality. Content providers emphasise that the “last mile”, i.e. the final stage of the broadcasting process should be based on competition neutrality, and it would be a welcome development if Internet service providers did not limit bandwidth for their competitors.
With regards to smart televisions, the respondents agreed that the lack of common standards already affect the present situation. Platforms are closed, applications are non-transparent, “third party” applications cannot be installed, and manufacturers only offer access to content services they prefer in a business sense. However, opinions differed whether the state intervention in market processes would be justifiable.
By synthesising the opinions received, the authority works proactively to gain valuable information on the market of OTT services to facilitate the development of a new digital ecosystem and an up-to-date regulatory environment. Although OTT services still have a modest market share, new players may fundamentally transform the media system, and establishing the relevant regulatory environment will be a complex process.
The anonymised detailed answers to the 12 questions are available among the related materials and at this link. These answers may not be regarded as NMHH’s official opinion as they represent the views of the corresponding survey respondents. The Authority is committed to learning about the needs of the dynamically changing market and to taking into account of the opinions represented by market players in order to establish sustainable competition and more appropriate and balanced regulatory solutions for consumers.