UK’s New VOD Regulator Ruffling Operators’ Feathers

Twenty-two online services have broken the law by not consenting to be regulated by the UK’s new VOD co-regulator and by not paying tens of thousands of pounds for the privilege, according to the body itself.

Most recently, the Authority for Television On-Demand (ATVOD) ruled The Telegraph, Sun Online, News Of The World and The Sunday Times have contravened the Communications Act 2003 by not notifying ATVOD they were operating VOD services.

When pressed by ATVOD last year, Telegraph Media Group eventually notified it as such. But, when ATVOD invoiced the publisher the £2,900 flat fee it is requiring of operators for the privilege of being regulated, Telegraph Media Group withdrew its notification and instead issued a legal response protesting that Telegraph web videos are merely part of a multi-media service that is heavily text-based.

But ATVOD rejected the argument, meaning it may issue an enforcement notice against The Telegraph and may ask Ofcom to issue a further penalty and to force suspension of Telegraph TV. ATVOD has made the same declaration in respect of The Sun, The Times and News Group, though non-payment of fees was not flagged as an issue.

ATVOD was, in 2010, named to co-regulate some UK VOD services along with Ofcom, because European Union members were charged with doing so by the European Commission’s 2007 Audio-Visual Media Services directive (AVMS). The directive says “TV-like” services “must not contain any incitement to hatred based on race, sex, religion or nationality”; “must provide appropriate protection for minors against harmful material” and “sponsored programmes and services must comply with applicable sponsorship requirements”.

“TV-like” is open to interpretation, but the rules were generally intended to apply to TV broadcasters’ own VOD services like 4oD and ITV (LSE: ITV) Player.

These services must nominate themselves to pay – but ATVOD didn’t achieve its projected £426,388 running costs from fees in its debut year of 2010/11 because not enough services nominated themselves to pay. To make up the difference, ATVOD has been given further UK government funding and is hiking its fees for 2011/12.

In the process, ATVOD is bringing under its auspices more than just TV broadcasters‘ catch-up services. It has also ruled against Volkswagen, Tesco, Elle magazine,, The Community Channel and three adult video services. Determinations against BNP TV and video service Coolroom and Playboy are the first to be referred to Ofcom for actual sanctions.

On this battleground is fought some of the first real skirmishes on the issue of how newspaper and magazine publishers should be regulated now that they are cross-media proprietors.

And there is scope for far more services to be caught out. Back in 2007, the European Commission told paidContent:UK YouTube (NSDQ: GOOG) was exempt because it did not offer “TV-like” content. Since then, YouTube and its ilk have arguably strayed firmly in to the AVMS’ scope – but ATVOD has not yet ruled against it.

There is plenty of industry anger and confusion from some who regard ATVOD as a racket. One concerned operator of an adult video site which ATVOD has ruled against contacted paidContent:UK to say: “We have a very small (loss-making) website with VOD and are being asked to pay the same charges as the big boys like Sky and BBC. We are about to have to stop the website unless we can either get out of the charges completely or obtain a reduced rate. The difficult thing is that there is no governmental or non-governmental body to take the complaints to, apart from ATVOD themselves.”

Independent filmmaker Chris Gosling, whose online programmes bring in only around £12,000 per year, says he is “scared and seriously worried” by the fees, protesting at being “threatened by an organisation which is not only setting the rules, but judging them as well“. Failure to voluntarily notify ATVOD can lead to an enforcement against service providers – but there has hardly been a big awareness drive from ATVOD, and ignorance of the new body appears to be no defence. Gosling is protesting what he calls the “scam” of ATVOD at his website.

In its first five months of operation, ATVOD received just 17 complaints about VOD services, none of which were upheld. Annual running costs for ATVOD have risen to £520,377. ATVOD has proposed charging operators up to £25,000, depending on their revenue.