(1)

Over the last three decades, broadcasting has undergone important changes. The abolition of monopolies, the emergence of new players and rapid technological developments have fundamentally altered the competitive environment. Television broadcasting was traditionally a reserved activity. Since its inception, it has mostly been provided by public undertakings under a monopoly regime, mainly as a consequence of the limited availability of broadcasting frequencies and the high barriers to entry.

(2)

In the 1970s, however, economic and technological developments made it increasingly possible for the EFTA States to allow other operators to broadcast. EFTA States have therefore decided to introduce competition in the market. This has led to a wider choice for consumers, as many additional channels and new services became available; it has also favoured the emergence and growth of strong European operators, the development of new technologies, and a larger degree of pluralism in the sector, which means more than a simple availability of additional channels and services. Whilst opening the market to competition, EFTA States considered that public service broadcasting ought to be maintained, as a way to ensure the coverage of a number of areas and the satisfaction of needs and public policy objectives that would otherwise not necessarily be fulfilled to the optimal extent.

(3)

At the same time, the increased competition, together with the presence of State-funded operators, has also led to growing concerns for a level playing field, which have been brought to the Authority‘檚 attention by private operators. The complaints allege infringements of Articles 59 and 61 of the EEA Agreement in relation to public funding of public service broadcasters.

(4)

The previous Chapter on the application of State aid rules to public service broadcasting of the State Aid Guidelines (2) has first set out the framework governing State funding of public service broadcasting. It has served as a good basis for the Authority to handle cases in the field of financing of public service broadcasters.

(5)

In the meantime, technological changes have fundamentally altered the broadcasting and audiovisual markets. There has been a multiplication of distribution platforms and technologies, such as digital television, IPTV, mobile TV and video on demand. This has led to an increase in competition with new players, such as network operators and internet companies, entering the market. Technological developments have also allowed the emergence of new media services such as online information services and non-linear or on-demand services. The provision of audiovisual services is converging, with consumers being increasingly able to obtain multiple services on a single platform or device or to obtain any given service on multiple platforms or devices. The increasing variety of options for consumers to access media content has led to the multiplication of audiovisual services offered and the fragmentation of audiences. New technologies have enabled improved consumer participation. The traditional passive consumption model has been gradually turning into active participation and control over content by consumers. In order to keep up with the new challenges, both public and private broadcasters have been diversifying their activities, moving to new distribution platforms and expanding the range of their services. Most recently, this diversification of the publicly funded activities of public service broadcasters (such as online content, special interest channels) prompted a number of complaints by other market players also including publishers.

(6)

In the 2003 Altmark judgment (3), the Court of Justice of the European Union (hereinafter referred to as the Court of Justice) defined the conditions under which public service compensation does not constitute State aid. In 2005, the Authority adopted a new Chapter on State aid in the form of public service compensation (4) and included it into its State Aid Guidelines. Moreover, in 2006, the Commission Decision 2005/842/EC of 28 November 2005 on the application of Article 86(2) of the EC Treaty to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (5) was incorporated into the EEA Agreement as Act referred to at point 1h of Annex XV to the EEA Agreement, as adapted by Protocol 1 thereto (hereinafter referred to as Decision 2005/842/EC) (6). The EFTA States are currently in the process of incorporation of Directive 2007/65/EC (Audiovisual Media Services Directive) (7), extending the scope of the EEA-wide audiovisual regulation to emerging media services.

(7)

These changes in the market and in the legal environment have called for an update to the Chapter on the application of State aid rules to public service broadcasting. The 2005 State Aid Action Plan (8) announced that the European Commission (hereinafter referred to as the Commission) would ‘榬evisit its Communication on the application of State aid rules to public service broadcasting. Notably with the development of new digital technologies and of internet-based services, new issues have arisen regarding the scope of public service activities‘�

(8)

In the course of 2008 and 2009, the Authority and the EFTA States took part in the Commission‘檚 public consultations on the review of the 2001 Communication on the application of State aid rules to public service broadcasting (9). The present Chapter consolidates the Commission‘檚 and the Authority‘檚 case practice in the field of State aid in a future-orientated manner based on the comments received in the public consultations. It clarifies the principles followed by the Authority in the application of Articles 61 and 59(2) of the EEA Agreement to the public funding of audiovisual services in the broadcasting sector (10), taking into account recent market and legal developments. The present Chapter is without prejudice to the application of the internal market rules and fundamental freedoms in the field of broadcasting.

(9)

Public service broadcasting, although having a clear economic relevance, is not comparable to a public service in any other economic sector. There is no other service that at the same time has access to such a wide sector of the population, provides it with so much information and content, and by doing so conveys and influences both individual and public opinion.

(10)

Furthermore, broadcasting is generally perceived as a very reliable source of information and represents, for a not inconsiderable proportion of the population, the main source of information. It thus enriches public debate and ultimately can ensure that all citizens participate to a fair degree in public life. In this connection, safeguards for the independence of broadcasting are of key importance, in line with the general principle of freedom of expression as embodied in Article 10 of the European Convention on Human Rights, a general principle of law the respect of which is ensured by the Court of Justice (11).

(11)

The role of the public service (12) in general is recognised by the EEA Agreement, in particular in Article 59(2), which reads as follows:

‘楿ndertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in this Agreement, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Contracting Parties.‘�/p>

(12)

The importance of public service broadcasting for social, democratic and cultural life was reaffirmed in the Act referred to at point 33 of Annex XI to the EEA Agreement (Resolution of the Council and of the Representatives of the Governments of the Member States, meeting within the Council of 25 January 1999 concerning public service broadcasting) (13), as adapted by Protocol 1 thereto (hereinafter referred to as the Resolution concerning public service broadcasting) (14). As underlined by the Resolution concerning public service broadcasting ‘�span class="italic">broad public access, without discrimination and on the basis of equal opportunities, to various channels and services is a necessary precondition for fulfilling the special obligation of public service broadcasting