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7 Topics, 7 Weeks

5. EU CabSat Directive forces European providers to subsidize the Internet giants

 

Ladies and Gentlemen,

An economic system in which it is the Internet giants rather than the producers themselves that control access to clients, and digital intermediaries profit from others’ investments – how can that be the objective of European digital policy? Internet giants based in the United States are increasingly gaining market power. Google, for instance, reigns supreme in the German search engine market, with a share of over 90 percent. As a result, algorithms determine what shopping offers, news items and information are found. Now, the disproportionate influence exerted by the global Internet imperialists is catching up with the German media market. In Brussels, the new regulations on TV platforms, known as the EU Satellite and Cable Directive (CabSat), is in the pipeline.

 

» The CabSat Directive will give some market participants an advantage over others.«

This amendment will force European media companies to make their TV stations available to all digital platform operators – including the global Internet corporations. For viewers, this may initially sound attractive and progressive since they will be able to access content whenever and wherever. It is, however, short-sighted and ignores the complex and serious repercussions, which will ultimately impact audiences, too. The directive’s amendments to and expansion of the existing legislation not only water down territorial licensing for content but also threaten the entire media system.

ProSiebenSat.1

In commercial terms, the directive obliges us as media production companies to pass our content on at a low, regulated rate. At the same time, the new directive gives Google, Amazon and all the rest the right to broadcast our TV programs – but entails no obligations. If the new CabSat Directive is passed in its current form, we will no longer be able to decide or negotiate independently and according to reasonable economic criteria whether to release content online and on which platform.

» U.S. Internet companies have never invested in infrastructure in Germany but are nevertheless generating value from it on a large scale.«

Advocates of the directive justify this modification of the rights system governing the current regulations on cable retransmission. It’s only right that a company which operates network infrastructure – i.e. has made considerable investments to create and maintain a TV cable network, for instance – should be assured that they can operate these assets profitably. The problem with the new directive is that U.S. Internet companies have never invested in infrastructure in Germany but are nevertheless generating value from it on a large scale. By harnessing the freely available Internet, they are able to earn capital from our financial expenditure. In short, the Cable and Satellite Directive forces us to subsidize the Internet giants.

A level playing field is the basis for fair and sustainable competition. But the CabSat Directive will give some market participants an advantage over others. It will shift the balance of power even more in the American players’ favor. Thanks to their financial strength and related cross-subsidization options, they will be in a position to take any market by storm. This is not in Germany’s or the European Union’s best interest. The way Brussels is planning to intervene in our business model will also have a sociopolitical impact on the independence of our creative industry. That’s because, in contrast to the global Internet giants, local media organizations are not driven exclusively by self-serving profit motives. Private broadcasters fulfill a public service that is guaranteed in Germany’s constitution: We promote diversity of opinion. This is a cornerstone of democracy. And, as the medium with the greatest reach in Germany, TV has a pivotal role to play. 

Make no mistake: If Germany does not unite across party lines to object to and vote against the Satellite and Cable Directive, we are in effect handing our TV market to the Internet giants on a silver platter. We cannot allow international Internet corporations to institute a platform capitalism that will jeopardize the constitutionally protected right of our country’s citizens to form their own opinions. We are therefore calling on politicians to present a decisive, united front against the new directive.

Sincerely, Conrad Albert