Andreas von Bonin, LL.M. '98
© Copyright Andreas v. Bonin
The End of Broadcasting
The Influence of Convergence on German Broadcasting Doctrine
LL.M. Research Paper for Prof. Lance Liebman,
Table of Contents
I. The Trend: On-demand 1
II. Reasons for this Trend 2
1. The 1980s 2
a. From the Public-Law Monopoly to the "Dual System" 2
b. From Purely Terrestrial Distribution to Multichannel TV 4
c. From the Full-Service Station to the Niche-/Single Interest Channel 6
2. The Present 6
a. The Technical Aspects of Convergence 7
aa. Digitization 7
bb. The Internet 8
cc. Conditional Access 11
b. The Economic Aspects of Convergence 12
aa. Internationalization 12
bb. Maximizing Profit through Rivalry in Use 13
c. The Democratic Aspects of Convergence 14
aa. Activation and its Effects on the Process of Opinion Formation 14
bb. The Declining Integrative Function of National Broadcasting 15
3. The Future 15
a. The Customized Channel 15
aa. Plurality of the Server Structure 16
bb. Decline in Vertical Integration 17
cc. Decline in Mainstream Content on Commercial Channels 17
National Culture v.
b. New Duties for Government 19
III. The Consequences of this Trend 20
1. Emptiness under the Definition of Broadcasting 20
a. The Approach of the Bundesverfassungsgericht 21
b. The Academic Approaches 23
c. Comment on these Approaches 24
2. The Change of Regime for On-Demand Information Content 26
3. The Lack of reasonable Characteristics individualizing Near-on-Demand Services and the remaining "Broadcasting" 27
a. Near-on-Demand Services? 28
b. Classical Broadcasting ? 29
IV. Conclusion 32
Archiv für Presserecht
Archive for Press Law (LJ)
Arbeitsgemeinschaft der Rundfunkanstalten in Deutschland
Association of Broadcasters in
The German Constitutional Court
Collection of Decisions of the Bundesverfassungsgericht
Collection of law articles to the honor of someone
Kommunikation und Recht
Communication and Law (LJ)
State Treaty on Media Services
State Treaty on Broadcasting
Federal Tele Services Statute
Zweites Deutsches Fernsehen
Second German Television-Public-Law TV channel
Zeitschrift für Urheber- und Medienrecht
Journal for Intellectual Property and Media Law (LJ)
The Influence of Convergence on German Broadcasting Doctrine
I. The Trend: On-demand
The Internet offers today what was never possible in broadcasting. From an unlimited supply of information, the user can chose what he is interested in with a mouseclick. Instead of depending on a routine broadcast programming, viewers choose what and when to receive certain content. This form of media use is technically not limited to the downloading of text and still pictures. Also the content of the medium that is known today as broadcasting is increasingly distributed not by the bulk of an unrequested overall 24-hour programming, but by the piece (sliced up television)(1). In Germany it is the organization of continuously running, well-balanced content under a common editorial control(2) that brought broadcasting under the special regime of the "Augewogenheitspflege" (protection of balance)(3) that was mandated by the German Constitutional Court. On the contrary, sliced-up media content such as videotapes, books or press products has always been treated under the law of ordinary private commercial relationships. If a film no longer reaches its customers as part of an overall programming supply, but as a single product on demand, it should make no difference if it comes to the customer physically on a tape or electronically over the Net.
This paper will show that German Broadcasting doctrine is geared to a situation where -out of technical and economic reasons- the whole range of receivable content was offered by only a few public-law broadcasters. It will be emphasized what problems this doctrine is already creating in a world of multichannel television and how completely useless it is when everybody will put together his or her own "customized channel".(4) The Bundesverfassungsgericht(5) has said that modern developments belong "to the concrete fact situation to which the basic law is related and without whose taking into consideration no interpretation of the freedom of broadcasting seems to be possible that unfolds its normative effects." The content of the constitutional term of broadcasting "can alter in the light of change within the area of social conduct that is protected by Art. 5 I 2 GG."(6) This paper intends to show that the "modern developments" that are currently underway leave little room for an interpretation of the freedom of broadcasting that illustrates the particular "normative effects" of this basic rights'.
II. Reasons for this Trend
1. The 1980s
a. From the Public-Law Monopoly to the "Dual System"
World War II until the 1980s, broadcasting in
Although the participation of private broadcasting caused the number of broadcasters to increase and extended the diversity of speakers involved in the process of the formation of public opinion, the Bundesverfassungsgericht did not change its requirements(8) concerning the laws that shape Art. 5 I 2 GG. Moreover, its decisions portrayed a deep skepticism as to the contribution(9) that private broadcasters made to the process of opinion formation. But the Court did not shut its eyes completely to the realities of private broadcasting. It's proliferation - besides other reasons - causes the requirement of "well-balanced diversity" to stop functioning absolutely(10), because private broadcasters were economically unable to fulfill the same standards of minority and niche programming as public-law broadcasters. Creating the task of "basic supply" for the public law broadcasters, the Bundesverfassungsgericht indicated on the one hand that private broadcasting and broadcast programming from European neighbor countries will increase and on the other hand that these channels cannot be required to offer an equally well-balanced programming structure in terms of content. For the Bundesverfassungsgericht the constitutionally mandated goal is that "the broadcasting system as a whole meets constitutional standards as well as possible."(11) To reach this goal in a "dual order" of private and public-law broadcasting, the Court constructs a twofold condition: As long as it remains impossible during the enlargement of the overall broadcasting supply for private and European stations to reach the "whole breadth of complete coverage, as long the "basic supply" is the duty of the public law broadcasters. And as long as they offer "basic supply" programming, the deficiencies of other channels are constitutionally tolerable.
The introduction of private television in Germany has proven to be a decisive factor for the formation of entrepreneurship in broadcasting. This is a prerequisite for the development of new services that focus on exploiting the economic potential of the distribution of audiovisual content in the most efficient way.
b. From Purely Terrestrial Distribution to Multichannel TV
At the beginning of the 1980s an increase of transportation capacity could be expected as a result of the construction of pilot cable projects and the advent of satellite broadcasting. This already had an influence on the dogmatic justification for the notion that the freedom of broadcasting needs further shaping through legislation. In 1981 the Bundesverfassungsgericht abandoned the "scarcity argument" as an important element of reasoning on this issue(12):
"... The need for additional legislation to shape the Freedom of Broadcasting exists also if in the course of modern development the special situation that is characterized by the scarcity of frequencies and the high financial efforts necessary to broadcast comes to an end. The Bundesverfassungsgericht has always assumed this special situation in its previous jurisprudence (BVerfGE 12, 205 (261); 31, 314 (326)); it has left open what the law should be after its disappearance (see BVerfGE 314 (326)). Also in this case, the constitutional duty remains to enact legislatory safeguards for the Freedom of Broadcasting. They might be necessary to a greater extend in a situation were broadcasting is inevitable limited to a small number of senders than at a time where this limitation no longer exists. But even then, the necessity remains to secure the guarantee of the Freedom of Broadcasting through statutory precautions..."
In 1981, the Bundesverfassungsgericht dealt only abstractly(13) with the end of scarcity in transportation means. It was not until 1986 that the Court discussed cable and satellite technology explicitly.(14) Again, its judgment is skeptical as to the future proliferation of these new technologies. In particular, the Court seemed to be convinced that because of the high consumer costs cable or satellite reception ("some thousand marks"(15)) the impact of these new distribution capacities will me minimal in Germany. In the mid-1990s, over 6% of all German households were connected to the cable network. Over 15.8 million households(16) use cable TV today. These figures are not higher for the sole reason that the costs of satellite reception today only requires a single investment of about 20DM. In cable 34 channels are delivered today. This limit is not a technical one(17) but a political problem. Out of various reasons DBP / Telekom AG refused for a long time to make available the maximum capacity of its broadband cables. The number of German TV channels from direct broadcasting satellites today is much higher than the number of five, forecasted by the Bundesverfassungsgericht in 1986.(18) In all Europe, 200 satellite channels are available.(19)
These largely enhanced possibilities to reach the TV-viewer create the basis for offering alternative content through alternative services in broadcasting. When the Bundesverfassungsgericht predicted in 1986 that only two or three nationwide private stations would survive depending on advertising revenue(20) it might have been right. It certainly underestimated, however, the fact that a full service program is not the only let alone the most economically desirable way of using a broadcasting frequency.
c. From the Full-Service Station to the Niche-/Single Interest Channel
A major trend in recent years has been the advent and rise of niche and single interest channels. While a full service provider might be willing to serve the viewer with 24-coverage on politics, business, and arts as well sports and entertainment, the single interest programmer has a different goal. He knows that just a small fraction of the audience will follow sports-only programming (in part repeated features) for 24 hours. He wants to supply certain special interest groups at certain times and to build competence in the field of sports coverage. A fencing tournament, which would receive about two minutes of airtime in a full service program, can be broadcast at full length in this channel because reaching a segmented and wealthy target group (fencing addicts) is attractive for advertisers. Each single program is calculated individually and positioned in the daily schedule. The sequence of the single programs is no longer following some editorial concept that is designed to keep the viewers with the channel but rather attempts to segment the potential audience.
The Bundesverfassungsgericht has sustained legislation allowing niche and single interest channels and has welcomed them as broadening the overall program supply.(21)
2. The Present
Present developments in global media are accelerated by a process of technical innovations that enables new economic opportunities and new media services. This process is described as "convergence". It entails the unlimited compatibility of formerly separated technologies, services and user habits.(22) Following recent activities by the EU(23), this phenomenon receives increasing attention now in Germany.(24) The challenge that convergence poses to media law lies in the fact that the converging of media questions the existing "balkanization of the law". Some aspects of convergence should be examined in more detail:
a. The Technical Aspects of Convergence
The digitization of information signals influences the shape of broadcasting. At first, the compression of digital information enables a more intensive use of the existing transmission capacity without the need to build new infrastructure.(25) Digital broadcasting again creates more space for new and alternative services and broadens the options available to the media consumer.
Moreover, digitization changes the way in which media products are used. The TV that is supplied with digital signals becomes a switch in a universal distribution network. It thereby offers the same possibilities of information selection and information management as a computer does. Desktop surfaces and browsers, which yesterday were only known in the world of computers are facilitating the use of a TV set today. In the United States, a debate rages on about the question with which operating system the set-top boxes of digital TV are going to be equipped. A TV set that speaks the language of bits and bytes can be programmed like a computer, can be hooked up to the Internet, or can be used as a video conferencing tool. It can process additional information sent along with the video signal like billing data, it can recognize advertisement and -consequently- is able to block(26) it. It is also capable of automatically choosing the channel on which news is being broadcast at any given time.
bb. The Internet
The Internet speeds up the changes in media usage in two aspects: At first, it functions as an additional delivery medium for any kind of digital information. News coverage, movies or other content elements that are today seen as a part of broadcasting can be packaged and requested over the Internet by any single receiver or by a group of receivers of variable size(27). Which physical means of transportation is used to fulfill the request, if the signals travel wireless, e.g. via satellite(28), does not matter at all. A single twisted copper wire is sufficient for the transmission of complete motion pictures.(29) Problems are still being experienced today when it comes to real time distribution of data intensive content over the Internet. This is because real time content depends on the arrival of the data packets in a fixed order at the receiving end ("streaming"(30)). Structurally, the Internet is not made for a timely, but for a secure arrival of the packets. That is why high traffic rates on the Net, congestion, or the need to pass through bottlenecks can cause delays. Nevertheless, "Webcasting" is already in existence(31) and will spread quickly as soon as these problems are solved. One way to expand the downstream-bandwidth of the Net is the use of ATM.(32) The disadvantage of this particular technology is, though, that it uses a protocol that is slightly different from the well-established TCP/IP. The ATM transfer protocol cannot use the existing routing machines in the Net. Similar progress is envisaged by plans to implement "gigabit"-Ethernet technology, which is a, upgrade of the existing TCP/IP.(33)
Transmission speed is already increased by the use of ISDN-lines and becomes comfortable for multimedia applications through the use of ADSL. While American telcos are currently marketing ADSL technology on a mass subscriber basis, Deutsche Telecom just entered the stage of field tests.(34) ADSL downstream bandwidth of 6 Mbps is sufficient to deliver a high quality MPEG-2(35) video signal. Even digital HDTV format, normally requiring at least 1 Gbps, can be compressed to fit ADSL capacity.(36) Another solution proposes to broadcast web data in the "vertical blanking interval" (VBI) of terrestrial TV signals.(37) Any PC, equipped with a 10$ tuner card, can filter out the HTML files and store them on a local hard drive or display them directly on the screen. The necessary software is free and only financed by advertising. It is supposed to come with the next Microsoft Windows 98 packet and can thus be expected to flood the market rapidly.(38) US broadcasters welcome data broadcasting as a new and promising business opportunity.(39) On the whole, "real video" over the Internet is still in its infancy. But "like a dog that is speaking with a lisp, it's fascinating though not yet perfect".(40)
Secondly, the Internet imposes a different way of accessing and using media content. In doing so it has a model function for what will occur in the medium that is today called broadcasting. No unsolicited information, no program that just happens to please the "passive" viewer at any given time will be delivered anymore. On the contrary, the user deliberately accesses the information he wants to obtain.(41) Additionally, the distinction between sender and receiver is blurred. The medium allows all users to offer content on demand for others. It is because of these structurally low entry barriers that there is no concentration problem in Internet content supply.
The Internet plays a central role as an alternative, easy accessible and cheap transportation medium for all kinds of media products. It clearly shows the advantages of a worldwide and world accessible data storage unit. With respect to the sort of data stored, no restrictions apply. "Sliced-up" television is obviously an excellent option.(42)
cc. Conditional Access
While the Internet still offers most of its information for free, meaning without the payment of a fixed amount of money as a condition of use, it can be expected that piece-by-piece programming will only become available at a fixed price.(43) Technically, conditional access systems can be located at the user as well as at the server end. For both alternatives, solutions are available on the market. As for TV distribution, the first alternative continues to be more commonly used. One reason for this is that TV is still perceived as a "push"-medium and conditional access still means that the individual user can access a stream of data floating by.(44) Another reason is that today, single feature requests are served almost exclusively over the cable network. This tree-structured network has only limited upstream transportation capability. In most cases, the customer has to place a request over a second network, in most cases the telephone network. This is called a "hybrid solution". In Germany, Deutsche Telekom AG is the only cable network operator.(45) As it will in the future also manage the user based conditional access system for the Kirch/Bertelsmann (and any other) digital television(46) channels, Telekom AG has no incentive to upgrade the cable network to bi-directional capacity(47) and thus to open it to new services and easy Internet access. Finally, the sender will not deliver his product without encrypting it. This means that there has to be decryption software installed somewhere at the user end anyway.
On the Net, most conditional access systems are located on the server side of the connection. Technically, this is the easier solution. Due to the Internet's inherently bi-directional structure, the accessing user can proceed directly from the log-in / access sites to the desired content or he or she can start to download it. As regard to the question of security, problems have been solved by the universal availability of free and standardized encryption software(48). Consequently, the users can locally decrypt the content they download without being dependent on any special software supplied by the server.
The existence of practicable systems of conditional access facilitates the piece-by-piece distribution of movies, documentaries, and other programming on demand no matter what transportation medium is being used.
b. The Economic Aspects of Convergence
The international marketing of media products becomes increasingly attractive in a world where distances do not matter anymore. Even Germany is beyond the stage where foreign newspapers were only available in station bookstores. Cable networks increasingly transmit foreign language programming, movie theaters increasingly show films with their original soundtracks. With CNN and BSkyB, for the first time truly worldwide television channels are in existence. With increasing mobility, with better knowledge of foreign languages and with increasingly international information habits, direct marketing becomes feasible for content producers. The Internet and satellite technologies offer excellent possibilities for them to cut intermediaries out of the distribution chain.(49) The only way to market larger amounts of content directly and to tap into the hidden revenue sources that become visible is through on-demand distribution.
bb. Maximizing Profit through Rivalry in Use
An even greater incentive for direct distribution of single media products is the prospect of creating rivalry in the use of audiovisual media content. The whole market segment of electronic information distribution is characterized by low marginal costs meaning the costs to supply an additional customer with the same content. As opposed to that, profit margins are extremely high if each additional customer can be charged the full price, as for example when selling a movie ticket. So far, this has never been possible in broadcasting. Larger audiences can only vaguely be transformed into higher advertising revenues. The consequence of this pricing model is that even high-class TV events, like the "superbowl" only generate a revenue of below $ .5per viewer per hour.(50) Even if the costs of specific expensive programs can not be covered entirely by the "issuing of tickets", their supply can be financed by additional advertising that can be sold more expensively due to the presence of a highly segmented audience.(51)
The economic potential created by this new form of distribution which was made possible by new technologies and by the Internet as a usage model will not remain unused.
c. The Democratic Aspects of Convergence
aa. Activation and its Effects on the Process of Opinion Formation
Instead of endorsing the passive user habits of a TV viewer, convergent media like the Internet and the "customized channel" require active decisions on selection. The viewer gets bargaining power with regard to every single piece of programming that he selects because he has to pay for it separately. He gains freedom and responsibility with respect to the compilation of his personal TV program. Broadcasting that is "sliced-up" in this way, possesses an even lower function as a "factor"(52) of public opinion formation than an average daily newspaper which is at least composed as a combined product under editorial rules and biases.(53) Piece-by-piece distribution of broadcast programming lacks this very criterion of broadcasting in a constitutional sense.(54)
Through its content itself, this means of distribution will contribute to the market place of ideas in a way comparable to the press or the Internet. But the regulation regime of these media has -neither in Germany nor in the US- been characterized by a "positive order", but by an attempt to secure openness and competition.
bb. The Declining Integrative Function of National Broadcasting
National broadcasting to a much lesser extent than some years ago fulfills its integrative function on a national level, let alone on a state level, which would be congruent with the states' legislative power in the area of broadcasting.(55) The driving force of the technological development that is currently witnessed in electronic media is the ease with which distances can be overcome and borders crossed.(56)
It has to be taken into account, though, that the capacity of local and regional coverage are not at all diminished but rather improved by the new technologies. Start-up companies in Silicon Valley and local heritage groups in Bavaria benefit equally from the opportunities to offer new services on new channels to new audiences. Both can take profit from the same technology. In "cyber TV" localism will not be extinguished, but distances will become meaningless, because "cyber TV" -like the Internet- is decentralized and "dislocalized".(57)
3. The Future
a. The Customized Channel
One consequence of the considerations mentioned above and the developments already underway(58), is the "customized channel"(59). The media world of the "customized channel" poses much less of a threat to the elements of the freedom of opinion formation identified by the Bundesverfassungsgericht as protected by Art. 5 I 2 GG(60) than today's multichannel television. In particular, the "prohibition to surrender the means of the media to one group in society" and the guaranteed supply of non-mass-attractive programming are easier to achieve here than in a world of an exploding number of commercial channels.
aa. Plurality of the Server Structure
On-demand television is not only characterized by more international players but also by lower entry barriers due to the availability of alternative distribution avenues. Herein lies the opportunity for the market for audiovisual content to reach a degree of diversification comparable to the press. The press market and its less restrictive legislation regime enacted to secure the openness of entry and coverage, has been deemed appropriate by the Bundesverfassungsgericht(61) in order to fulfill the duties of the mass medium "press" in the process of free opinion formation. But this opportunity can only be used if the legal treatment of the new services follows the factual changes, i.e. if the individualized broadcasting services(62) are released quickly from the structure of "positive order". The organizational, procedural requirements as well as the content restrictions that the Bundesverfassungsgericht imposes on broadcasters actually impede new entry for small players and promote concentration of the industry. The German broadcasting doctrine is in fact responsible for a major part of the costs of broadcasting that is used to justify this doctrine.(63)
bb. Decline in Vertical Integration
Concentration in the media is extensively criticized in Germany. But this concentration is clearly facilitated by the absence of an open competitive market for audiovisual products. In an open market, the joint control over content production and distribution is not the most effective company strategy.(64) Instead, an open market forces companies to focus more closely on their core areas of competence, a process which can in itself promote the development of a functioning market that creates diversity and variety.
cc. Decline in Mainstream Content on Commercial Channels
The Bundesverfassungsgericht kept emphasizing the danger to content diversity that results from the assumption that commercial television will only serve the needs of mass audiences and will neglect niche topics because those productions are not commercially marketable.(65) This might be true in an environment where competing full service programmers depend on mass audiences in order to be able to keep advertising revenues high. But such a calculation is already flawed in multichannel television because the decline in shares in the market for eyeballs is inevitable. Broadcasters are not able to reduce advertising prices to an extent that allows advertisers to reach the same audience as in a 4- or 5-channel environment with the same amount of money. Accordingly, advertisers cannot afford synchronous advertising on all channels in order to reach audiences as in the early 1980s. This simple rationale has encouraged the number of US non-advertising channels to rise as the overall number of channels exploded.(66) On the other hand, the dependence of powerful consumer goods manufacturers on mass audiences continues to prevent the development of an optimal diversity of programming.
In on-demand television mass attraction is not a necessary vehicle for advertisement. Moreover, it is not only possible there to further segment(67) audiences through the creation of more niche and single interest offerings, but also to separate advertisement from program content. Two individuals requesting the same programming can get different commercial messages.(68) Advertising will also change in character. By more accurate targeting, informational advertising will dominate over mere "eye-catchers", because the audience is already interested in the product and does not have to be "seduced" first. Because of the new possibilities of interactivity, advertisers will not primarily try to persuade customers or to create a certain image but to "close" and consummate a deal(69). Eventually, the customer will be able to control which advertising he or she wants to receive. Some advertisers will pay for the single consumers' attention through discounts, vouchers, or bonuses(70).
dd. National Culture v. Hollywood
The sufficient representation of national or regional content in an internationalized media world is not just a political claim(71), but has also entered the jurisprudence of the Bundesverfassungsgericht. The principle of "basic supply" is largely grounded on the rationale that the public-law broadcasters have to supply the audience with local, German or European content.(72) The "customized channel" will urge Hollywood producers to focus less on American culture but more on "western" or "atlantic" traditions in order to be able to market their products directly to a worldwide audience.(73) Moreover, even large producers will be oriented more on individual viewer preferences because the marketing power of integrated intermediaries (TV networks, movie theaters) will no longer be available. On top of that, cultural programmers will face lower entry barriers (see supra 2.c.bb.).
b. New Duties for Government
When the German broadcasting concept of mandated diversity and full service 24-hour programming(74) will be replaced by individual on-demand purchase of single products, the regulatory state will be faced with a different situation. If in theory everybody (and in practice an unprecedented number of individuals) could become broadcasters, the footprint of the freedom of broadcasting guarantee would broaden tremendously. In this situation, governments would no longer be allowed to shape -under the justification of diversity- the basic right of Art. 5 I 2 GG in a way that only public interest institutions financed by a user flat rate fee or deep-pocketed companies can use it. Instead, governments will have to positively secure access of as many speakers as possible to the distribution media, so that the potential of the new technologies can be fully realized in favor of the goals of the diversity of opinions that Art. 5 I 2 GG wants to reach.
Consequently, the German government should not have permitted the privatization of Deutsche Telekom AG without substantial guarantees that the broadband cable network would be rapidly enlarged and upgraded. Instead, the government should have kept the option to order a "spin-off" of the cable network branch in order to be able to invite private capital into this venture. Furthermore, terrestrial frequencies should be made available to promote wireless competition in the so-called "natural monopoly" cable.(75)
The media ownership provisions in the new media concentration law ( 26 II RStV) permit a market share of 3% for single owners. This might prove to be too high. The model provision for this rule, the US Telecommunications Act of 1996, deals with a country in which geographical circumstances require much larger companies and where barriers to entry in alternative media are even lower.
III. The Consequences of this Trend
1. Emptiness under the Definition of Broadcasting
How can the German broadcasting doctrine react to these changes?
Theoretically, there are two ways, each of which provokes different consequences. On the one hand, one could attempt to include the new forms of media distribution into the constitutional term of broadcasting.(76) In favor of this approach, the argument could be made that also single films, news reports, and shows and not only the whole program of a station has a media-specific influence on the process of opinion formation. On-Demand-TV, like broadcasting streamed over the Internet, would be "broadcasting" and thus -by constitutional mandate- subject to the "positive order" regulations of licensing, surveillance, organization and content.
On the other hand, on-demand content could be separated from traditional broadcasting. Even if the content of single features, one could argue, is the same, this form of distribution lacks the typical editorial oversight, the composition of an overall programming that is typical for the power of broadcasting among other media. Following this line of argument, it has to be decided, if these services that are no longer embraced by the broadcasting definition should become part of a new category in-between individual and mass communication(77) with its own regulatory principles or if they should fall directly into the regime of individual communications governed by the general contract, corporations, and competition law.
a. The Approach of the Bundesverfassungsgericht
After the Bundesverfassungsgericht had abandoned the scarcity argument as a justification for the special situation of broadcasting in Germany(78), it offered its "factor function"(79) and the high costs of its undertaking (80) as typical characteristics of the constitutional definition of broadcasting. The Court has always refused to fix a definition of the term broadcasting.(81) Nevertheless, in the course of scrutinizing the State Media Statute of Baden-Württemberg, it has emphasized that an exclusion of "services similar to broadcasting"(82) from broadcasting will not pass constitutional muster.
The Court states:
"(The) inclusion (of services similar to broadcasting) into the guarantee (of Art. 5 I 2 GG) seems appropriate, because the services at issue here, do not differ significantly from broadcasting... If looking at the positive characteristics (of the communication similar to broadcasting) it is obviously using the same transmission technology. The difference that broadcasting is "addressed to the general public", while programming on demand is transmitted to "every individual" ( 1 par. 3 No.1) and near programming on-demand is accessible "to anyone" at anytime ( 1 par. 3 No. 2) can hardly be considered to make a difference. The same is true for the additional difference that "broadcasting" under the statutory definition of the State Media Statute is designed to be received "at the same time", while in the area of services similar to broadcasting the receiver is able to select the time of reception. No difference between classical "broadcasting" and the services called "similar to broadcasting" is detectable for the purposes that alone can be decisive for the constitutional determination: the content of the programming and the parties to the communication process. In both cases programming of the same content is distributed; here and there the sender and a undetermined number of viewers or listeners are involved here and there the receiver makes a selection by switching on or off. Whether hereafter an exclusion of services similar to broadcasting from the broadcasting definition is justifiable, may remain open. In any case, the merely descriptive distinction in the statute cannot prevent the application of the constitutional guarantee of the freedom of broadcasting on the business of videotext and on- demand services for sound and moving images. Consequently, a constitutional violation is not impossible in the present case only because Art. 5 par. 1 cl. 2 GG is not applicable."(83)
The Bundesverfassungsgericht thus holds that services which are comparable to broadcast programming in the technology of distribution, in content, and in relation to the parties to the communication are embraced in the guarantee of Art. 5 I 2 GG.
b. The Academic Approaches
Legal scholars partly welcome the broad meaning of broadcasting defined by the Bundesverfassungsgericht.(84) Those who are in favor of a broader meaning argue that on-demand and near-on-demand services only enhance the selection of the viewer. Hence, the danger for an unbiased process of opinion formation remains the same because the viewer still cannot influence the content of the programming.(85) Some propose to lower the constitutional requirements gradually depending on the service in question. Thus, the guarantees of Art. 5 I 2 GG should be seen as examples on an uneven slope of a universal media liberty.(86) Seldom, is it proposed to treat differently single pieces of information that are not embedded into a surrounding program framework. This would at least permit to exclude electronic traffic control systems from the broadcasting definition.(87)
On the other end of the academic spectrum it is argued that Art. 5 I 2 GG was historically meant to apply to the institutional distribution of audiovisual content and to mandate additional legislation to regulate these institutions.(88) In opposition to this, amateur radio and "Bildschirmtext" (a form of teletext) - it is contended - have never been categorized as broadcasting, although the first example is even a form of unsolicited distribution like broadcasting and the second example content is addressed to the general public. Both services could deliver content that is relevant to the process of opinion formation. The decisive point - in the opinion of these scholars - is just that these services lack the institutional element on the server side.
c. Comment on these Approaches
At least the opinion that all on-demand services are part of the broadcasting definition is now vulnerable to the argument that the new German Internet statutes ("Federal Tele Services Statute" and "Media Services State Treaty" between the Laender) regulate on-demand and even some distribution services outside the realm of broadcasting. Both statutes were supported by a broad majority across the political spectrum.(89)
At the beginning of its jurisdiction, the Bundesverfassungsgericht appeared to understand broadcasting in that institutional form. This is not surprising because no other form of distribution of audiovisual content existed at that time.(90) To mention amateur radio as a contradictory example has some merits. But it must also be taken into consideration that amateur radio is not and has never been an anarchic event, but a highly regulated medium. Amateur radio operators have to show special training, have to be licensed and their communication is restricted to leisure time activities. Because of the limited number of amateur radio operators, strict control and enforcement is possible and exercised.(91)
But it is less understandable that the Bundesverfassungsgericht bluntly denies the difference between services that distribute content unsolicitedly, once, and simultaneously to everybody on the one side and services whose content the "receiver" has to request affirmatively on the other. The observation "here and there, the user makes selections by switching on and off" is not accurate. The Court thereby denies its own criterion of the "factor function" which it calls decisive for broadcasting.
On the whole, the Court in 1987(92) clearly aimed at including on-demand and near-on-demand services without differentiation in the regime of Art. 5 I 2 GG. In 1991, the Court did not affirmatively repeat these statements and neither cites the passage in question in a later opinion.(93) Therefore it is possible that the Court - if confronted with a presentation of the Internet similar to the that made by the American Civil Liberties Union (ACLU) in it's oral argument before the Supreme Court in 1997 - would decide this question differently today.(94)
Finally it has to be taken into account that the amended version of the European Broadcasting Directive excludes individual on-demand services from broadcasting and subjects them to the open regime of the Freedom of Services. Whether it is permissible for member states in this situation to regulate the same services more rigorously under the broadcasting rationale, is at least questionable.(95)
Summing up, it can be concluded that the discussion on the definition of broadcasting can only be an intermezzo of limited relevance. The effects of convergence on those services which even fall within the most limited definition of broadcasting, are of such a variety that all abstract descriptive attempts will prove to be impracticable in the end (see infra 3.b.)
2. The Change of Regime for On-Demand Information Content
The individualization of the consumption of media products that were formerly distributed as broadcasting is presently taking place. Technological changes and economic incentives make it more than probable that in a few years the "customized channel" will be reality. Content that is individually requested from on-line data storage facilities should be treated like individually distributed print products (books) or individually requested content from off-line data storage facilities (videocassettes). Securing openness is here and there sufficient to guarantee an open market place of ideas. The new services have outgrown the confines of their former regime without threatening its objectives and can therefore be released from it without damage.
Offering on-demand informational content bears none of the risks, the Bundesverfassungsgericht mentions as justifications for the special treatment of broadcasting under Art. 5 I 2 GG. It can -on the contrary- be expected that such services will be cheaper and will be able to use many times the number of transmission facilities formerly available, including license-free transmission lines. Both aspects promote diversity and a well-balanced spectrum of opinions, which are elements of the world Art. 5 I 2 GG wants to realize. Both aspects lower entry barriers for small, local "senders" and prevent by themselves the "surrender" of the audiovisual market to one or a few groups in society.
The positioning of on-demand services outside the broadcast realm is also compatible with the Court's statement that public-law broadcasting has to be able to adapt if new services take over "functions of classical broadcasting". Thereby the Court does not subject the new services to the broadcast regime, but merely allows the public-law broadcasters to conduct business in a field ancillary(96) to broadcasting. This is more than justified because it can be said - citing the Court's test for ancillary business by public-law broadcasters - that "especially by them (the ancillary services) the function of broadcasting as a medium and a factor in the process of free opinion formation is furthered".(97) Currently, the two German public-law broadcasters ARD and ZDF have voluminous Internet presence.(98)
3. The Lack of reasonable Characteristics individualizing Near-on-Demand Services and the remaining "Broadcasting"
This paper assumes that eventually broadcasting as it is technically conducted today by full-service federal and regional broadcasters and by niche programmers will cease to exist. This will not happen overnight. Legislative review or constitutional adjudication of the matter will have to consider if the changes in media reality as stated above are reflected completely by only moving on-demand services from the broadcasting regime into the regime of private transactional relationships.
Therefore, it is necessary to look at the influence of convergence on the not fully individualized services (e.g. near-on-demand services) and on the remaining portion of classical broadcasting.
a. Near-on-Demand Services?
Near-on-Demand services are forms of media usage that are not yet fully individualized. They represent a middle category between on-demand services and distribution services. A near-on-demand service is characterized by a sender who sends the same content, e.g. a movie, repeatedly at short intervals, e.g. the movie starts every 1minutes. The viewer can choose the starting time that is most convenient for him. A request in the technical sense from a third-party's data storage unit does not happen. The viewer stills waits for something to come by. He is just not waiting as long as he used to wait. The Bundesverfassungsgericht views these services as broadcasting.(99) The academic literature does not reflect a clear picture. The promoters of a wide broadcasting definition who even want to include on-demand services do so with the near-on-demand services as well (argumentum a maiore ad minus). Some say that the line runs sharply between on-demand and near-on-demand services. The approach that focuses on the impact of an overall editorially controlled program in which the individual features are embedded, also excludes near-on-demand services from the broadcasting definition, because these services clearly lack an overall editorial program. This seems to be the appropriate approach.
Moreover, like in the sphere of on-demand services, it is incomprehensible why the application of different legal regime should follow from the fact that the content distributed is intangible.
b. Classical Broadcasting ?
The narrowest approach presented in German legal writing argues that the broadcasting regime will have to be reduced to the business of institutionally organized stations that broadcast programs under a common editorial rationale and thus manage to have a psychological effect on the viewer by preventing him from changing channels and keeping him in something like a virtual world.(100)
In the light of the changes in the media world which have been depicted above it is questionable if even these narrow criteria continue to describe a medium today, that bears such risks for the process of public opinion formation that could justify the continued application of classical broadcasting regulation.
It is all but clear at first if even full service stations are able to place audiences under the influence of the fascination of their overall programming. More and more private broadcasters market the single program. Programs are positioned in the schedule with regard to certain target audiences that preferably watch TV at this time.(101) In fact, the daily program plan is composed according to the increase in potential audience over the day, so that the audiences of one program function as the basis for the audience of the following program. But this is more a dream of marketers than a reality because admittedly it is "impossible to reach the same audience over the whole day".(102) From an economic perspective, this is not even desirable. US broadcasters tend to adapt their programs to a certain, segmented audience, because advertising sells better if you can sell to an even smaller group that has common characteristics.(103) These broadcasters have long given up the goal to "lock the masses in front of the same station all day".(104)
Public-law broadcasters even consider themselves to be constitutionally prevented from attempting to reach the same audience all day long. Allegedly, their duties of diversity and basic supply do not allow such programming.(105) A considerable part of their broadcasting is dedicated to various minorities and is not able to keep other groups tuned to the respective station.
To reach the embedding of the viewer in a virtual world, a purposefully designed consecutive order of single programs is unnecessary. For example, well made movies have the same effect. The effect is even emphasized if the movie is not shown on a TV screen, but in a movie theater - a medium entirely different from broadcasting. News or music video channels that run in a way similar to broadcasting can also be managed to create such a "virtual entrenchment". However, they are not reached by the above mentioned definition, because they are not composed of different individual programs, but of constant variations of the same genre. On the other side, this criterion only serves to formally differentiate between broadcasting and "media services": A teleshopping distribution service under 2 II No. 1(106); 4 (107) "Media Services State Treaty" does not need a license to operate although it can be organized in the format of an overall running program. This teleshopping service will have a certain "locking effect" on people who eagerly wait for the next product to be presented.(108) Is this effect - that is statutorily tolerated without special safeguards from broadcasting law - significantly increased if the programmer adds "additional entertainment and show elements as well as information content and journalistic forms of presentation that are likely to contribute to the formation of opinions and that are not exclusively related to the presented goods and services"(109)? Does this addition justify the sudden switch from a fairly unregulated environment to the much more restrictive broadcasting realm ?(110)
Finally it has to be taken into consideration that every possible "locking effect" and thus every alleged justification of the application of broadcasting rules cannot occur independent from the individual way of reception. The user who only logs into a running TV program via the Internet or pay-per-view television(111) for the two minutes of weather forecast can not be a victim of any "locking effect".
That means that even the narrowest definition of broadcasting can only be used to exclude services from the application of broadcasting law but not to positively describe the services that remain within the definition. Eventually, there will be no other way than to return to the First Television Opinion of the Bundesverfassungsgericht:
"...Thereby nothing is said about the way on which this freedom of broadcasting in general and the one of coverage through broadcasting in particular have to be safeguarded to fulfill the requirements of Art. 5 GG. Here, the particularity becomes important, by which broadcasting distinguishes from the press. It is certainly not true that newspaper publishing and printing companies as well as newspapers can be founded and maintained in unlimited numbers. But the difference between press and broadcasting lies in the fact that there is considerable competition between a high number of independent newspapers and other press products within the German press. Papers compete by their tendency, political color and overall editorial attitude while in the area of broadcasting the number of senders has to remain comparatively small."(112)
The Bundesverfassungsgericht expresses in this passage that competition and the market place of ideas are appropriate means to reach the goal of Art. 5 I GG. The press is mentioned as an example. Any positive, "shaping" legislation is conceptually a substitute for the competition that is missing in broadcasting. Mandated well-balancing of program content must replace the competition "by their tendency, political color and overall editorial attitude"(113) between broadcasters. In the world of the "customized channel" there is no need for substituting competition with regulation anymore. To recognize this is now the duty of the constitutional Court.
In reaction to the media world of its time, the Bundesverfassungsgericht in 196gave broadcasting doctrine a different direction than the press. What was -according to the words of the Court- an intermediary solution developed its own dynamics by now. Sixteen state media statutes, a Broadcasting State Treaty, a federal Information and Communication Services Statute and a Media Services State Treaty, fifteen supervisory agencies in the several Laender and several hundred feet of academic literature depend upon the assumption that competition in the distribution of audiovisual media products is impossible.
The media environment at the turn of the century has a different face. As soon as it has an opportunity, the Bundesverfassungsgericht should -again- take reality into account and find that today such competition is feasible, at least in the same way as in today's press. The end of broadcasting regulation would neither mean the end of broadcasting nor result in a detrimental effect on the guarantees that Art. 5 I GG wants to give for the maintenance of a free process of opinion formation.
2. See the definition of broadcasting in Sec. 2 (1) Broadcasting State Treaty: "Broadcasting is the undertaking and distribution of programming of all kind in word, sound and pictures addressed to the general public by the use of electromagnetic waves with or without a connecting wire. The term shall entail programming that is distributed in an encrypted way and programming that is distributed for a special compensation as well as videotext."
4. See Eli M. Noam, Towards the Third Revolution of Television, 1995, http://www.vii.org/papers/ citinom3.htm; -, Three Stages of Television, 1995, http://www.citi.columbia.edu/vir8210/media/ article.txt.
9. BVerfGE 73, 118 (155) - Lower Saxony: Because of their at that time limited reach and commercial financing as well as the presumed focussing on mainstream-content, the BVerfG held that "private broadcasters cannot fully fulfill the duty of universal information".
16. Deutsche Telekom, Business Report, http://www.dtag.de:80/cgi-bin/multigate/retrieve?u=z3950r:// www.dtag.de:2100/DTAG!F144194%3a892760024%3a%28Kabelnetz%29;esn=FT%5fTEXT%20HTML%200;ct=text/html&l=FULCRUM/lang.txt.
21. Notably, the Court only holds that for cultural and educational channels of public-law broadcasters. See BVerfGE 74, 297 (345 f.) - Baden-Württemberg decision. Why anything else should be true for private sports or entertainment channels is not obvious, especially because the Court has repeatedly held that these areas belong to the spectrum of content relevant to the formation of public opinion. See BVerfGE 59, 231 (257f.) - Broadcasting Freelancers, BVerfGE 73, 118 (152).
22. "Convergence is an on-going process whereby the scarcity of the distribution of information, communication and entertainment services diminishes over time. This process entails the coming together of:
See KPMG, supra at 87.
23. See the "Green Book" on Convergence, http://www.newsroom.de/eu-kommission/dokumente/kom-97-623.rtf
24. See most recently Knothe, Konvergenz und Medien aus nationaler Sicht (Convergence and Media from the National Viewpoint); K&R 1998, 95; Ulbrich, Konvergenz der Medien auf europäischer Ebene (Convergence of the Media on the European Level); K&R 1998, 100.
25. Peter Huber, Law and Disorder in Cyberspace, 1997 ,17, 19 explains, that digital enables the transmission of hundreds of TV channels on a coaxial cable. The same is true for the use of satellite transponders. See for a German view of the US efforts to digitize terrestrial broadcasting until 2006 Hans Hege, Wem gehören die Frequenzen? Eine strategische Betrachtung zu den Ressourcen des 21. Jahrhunderts (To whom belong the frequencies ? A strategic look at the resources of the 21st century), speech in Berlin September 3, 1997, http://www.mabb.de/aktuell/ statement-1.html.
26. Such plug-ins are already available for Internet browsers and will spread even faster now that Netscape published the source code of its Communicator browser software. Advertising ceases to be something that the consumer has to tolerate. He can now explicitly agree to receive advertising in return for some other benefits.
27. The German public-law broadcaster ARD offers news programming of its main news for download at http://www.tagesthemen.de.
28. See the plans of Bill Gates and Craig McCaw as well as of the ASTRA-group concerning satellite Internet in Abschied vom Nadelöhr (Goodbye to bottlenecks), SPIEGEL ONLINE 32/97, http://www.spiegel.de.
29. Since 1996 local telcos are allowed to offer private video services (video on demand) over the telephone network. This connection is circuit-switched, though, as opposed to packet-switched Internet connections.
30. See Toss Your TV, How the Internet Will Replace Broadcasting, BYTE Magazine, February 1996, http://www.byte.com/art/9602/sec8/art1.htm.
31. See Gleick, Pushy, Pushy, New York Times, March 23, 1997, http://search.nytimes.com/search/ daily/bin/fastweb?getdoc+site+site+12275+3+wAAA+webcasting
33. Red Herring Online, July 1996, http://www.herring.com/mag/issue33/atm.html.
34. ADSL=Asynchronous Digital Subscriber Line, see KPMG, supra. The technology works with a splitter that splits out a 6 Mbps downstream data stream from the phone line and transmits it to the PC. On short distances up to 5Mbps are possible. Upstream capacity is about 384 Kbps, Bruce Egan at Columbia Business School, April 15, 1998.
37. In Germany, public-law broadcaster ZDF already uses this technology, see Kreile/Neuhahn, Online-Angebote öffentlich-rechtlicher Rundfunkanstalten (Online presence of public-law broadcasters); K&R 1998, 41 (42).
38. Cyber Times Januar 11, 1998, http://www.nytimes.com/library/cyber/week/011198television.html.
39. See Richard V. Ducey (Senior Vice President National Association of Broadcasters), Multimedia Broadcasting and the Internet, http://www.jargo.itim.mi.cnr.it/inet96/b3/b3_2.htm.
42. The US company Worldwide Broadcasting Network offers old TV news via Internet. C-SPAN has already licensed the use of its archives. CNN is likely to do so, too. See Web Service Would Offer Old TV News Broadcasts, Cyber Times of February 16, 1998. See also Doug Mohney, Plug-in-less video, industry updates, Internet Broadcast Providers, , Boardwatch Magazine online, http:// www.boardwatch.com/mag/98/apr/bwm68.html
43. It does not have to be like this. First, low prices permit that video clips will be offered for like Homepages are today. Second, in a digital world where copyright enforcement is hard to do, it could turn out to be more reasonable to let the connecting computers negotiate an individual price or to accept voluntary donations.
46. See the agreement between Kirch and Bertelsmann on Digital TV, http://www.spiegel.de/netzwelt arc/jump.phtml?channel=netzweltarc&rub=02&cont=themen/digital-tv.html
47. Therefore, the tree-architecture must be modified (segmented) so that upstream signals do not create congestions at the headpoint. Moreover, routers would have to be installed within the network. In the US, this upgrading is currently under way. The costs are about $ 15per household. Information: Bruce Egan, supra.
48. Public / Private key encryption. The software is available for free, see http://www.pgp.com/ products/pgp-email.cgi.
49. See the plans of Disney to distribute video on demand directly but only to households whose hardware guarantee that no recording storing or copying devices are attached. This guarantee should be given by communication between the server and a chip in the TV set. See also Eli Noam Towa