In August, Israel’s Ministry of Communications published for public review a legislative proposal for the regulation of the provision of audiovisual services to the public. Comments are requested by October 23, 2022 (Hearing – Audiovisual Content). The draft bill represents a radical change in the regulatory regime governing broadcasting and streaming services.
The existing legislative framework relies heavily on a media-centric approach, in which broadcast channels and cable and satellite distribution platforms are each separately regulated, whereas internet-based content is not regulated at all. Not only do separate laws and regulatory authorities govern each of broadcast television and multichannel distribution platforms, respectively, but the existing legal framework dictates the revenue models for each, with commercial advertisement being mainly the province of the broadcast channels, while the multichannel distribution platforms are based on subscription fees. The current regulation also restricts the provision of news content to broadcast channels. The major broadcast channels are carried by the multichannel platforms on the basis of must-carry, royalty-free provisions.
The new proposal is an attempt to adapt the local legislative and regulatory framework to the current industry environment, in which a wide variety of streaming services compete with traditional broadcast services and multichannel distribution platforms, which themselves are migrating to internet-based services. The media-neutral approach to content provision is in line with the European Union Audiovisual Media Services Directive (2010/13/EU).
The proposal would overhaul the existing system, with the goal of eliminating the old media-based distinctions between content providers. According to the draft bill, limitations to commercial advertisement on multichannel platforms will no longer apply. Conversely, the draft bill does away with the royalty-free, must carry system, so that all content providers, including broadcast channels, will be allowed to demand license fees from all distributors. Broadcast channels as such would no longer require licensing, with only medium and large content providers (with revenues exceeding NIS 300m.) would require registration with a registry of content providers. Licensing will be required only for providing news content, which will be open to all content providers, subject to competition considerations. Non-Israeli content providers, including popular international streaming services like Netflix and Disney+, would be subject to quotas for investment in local content productions.
The old regime would continue to apply to content provided by multichannel content providers to the extent it is being provided via cable or satellite systems, but would not apply to content which the same providers are offering over the internet. In this manner, the natural migration of these providers to internet-based content provision, assumed to be completed within 3-5 years, would act as a transition period allowing all players to adapt to the new regulation.
While the proposed legislation would provide for a less regulated regime, it poses several problems. It is not clear that the proposed regime will increase competition or content quality in the market. Theoretically, over-the-top (OTT) internet distribution lowers the entry barriers for content provision, but in practice, it is doubtful that such OTT content services will be sufficiently attractive to either distribution platforms or commercial advertisers to generate sufficient income to maintain expensive content production at a high level.
In any case, the Knesset elections scheduled for early November all but ensure that the legislation process will take its time, and the actual law, if eventually passed, may bevery different than the draft bill.
