Videos Without Borders

With the arrival of Netflix in Italy, more and more often we hear about OTT, meaning Over The Top operators. Although this notion has no legal validity, it refers to operators using the internet to provide services and multimedia content. But there are other categories, codified by law, close to or sometimes coinciding with OTT. The first is that of Internet Service Provider (ISP). It has an EU origin (the Directive is from 2000) and includes providers of services of various kinds: from search engines to hosting services and user-generated-content platforms which enable content sharing among users. They must respect net neutrality with respect to the content carried. OTTs have usually been considered akin to providers of audiovisual media services, a category introduced by an EU Directive in 2010, which, however, does not deal specifically with the transmission of content via the internet. The notion of media services providers designates broadcasters exercising editorial responsibility. The similarity with audiovisual media services is most common because in most cases OTTs use the net to convey content.

Many of them, however, are not subject to European rules because they are established outside the EU, especially in the US, fertile soil for them set up shop thanks to more favorable legislation. Hence the lack of a common regulatory framework: the applicability of the Directive is limited to the European Union. And the Directive is based on the principle of the country of origin: once the operator fulfills the requirements of the state in which it is established, it can freely distribute (with few exceptions) its programs in the EU's countries. If the operator is based in a third country, however, it will not be subject to the constraints and obligations imposed by the Directive. This situation has led several operators to take advantage of this legal gap, by entering the European market without having to comply with rules set for providers that are EU residents. It has been mainly market authorities, such as AGCOM in Italy, which have indicated the possible distortions of competition that result from this regulatory asymmetry, urging EU institutions to intervene in order to level the playing field, by imposing the same conditions to all business actors involved.

It is no coincidence that a few months ago, the European Commission carried out a public consultation aimed at the revision of the directive on audiovisual media services that could lead overseas OTTs to be subject to European rules. We will find out in the coming months: what is certain is that any change to the legislative framework, if on one hand it must aim to resolve any possible distortion in market competition, reducing the scope for regulatory arbitrage, on the other hand it must not act as a deterrent discouraging OTTs from supplying the European market and establishing their headquarters in the EU.