07 Jan 2008, Posted by Eric Karstens in Media Policy, 0 Comments

Risk management in media policy (2): The context of EU politics

In the first article of this series, I discussed how the concepts of risk and risk management have influenced the notion of what public policy can achieve, and how media interact with these concepts. The purpose is to better understand why the European Commission has ordered a study which is supposed to develop the basic elements of a risk-based media regulation. Now, I will explore the political context of this initiative.

Regulation is one of the cornerstones of risk management in modern society. It imposes and enforces rules on different aspects of public and private life, on business and political actions. The intention of regulatory activities is normally, of course, to either benefit the entire society or to protect and assist groups whose rights would otherwise be infringed. But at the same time regulation frequently also runs the risk of hampering new or collateral developments which may actually turn out to be desirable.

Over-regulation, for instance, can increase the cost of doing business or the struggle with red tape to a level that effectively precludes enterprises, non-profit and volunteer organisations or even governmental agencies from taking on innovation challenges and opportunities. This issue has inspired an international debate in search of more efficient and flexible ways of law- and rule-making.
Another aspect that features prominently within this context in general and concerning media policy in particular is the fact that the three main European Union institutions, the Commission, the Parliament, and the Council, have been known to place different emphases on policy objectives and to prefer different means in order to achieve them.

In media policy, the European Parliament focuses on pluralism and on cultural issues, therefore minding actual content. The European Commission, on the other hand, strongly advocates the functioning of the internal market. It wants to ensure a level playing field for business competitors, and if this can only be achieved through tough regulation, so be it. The European Council has in recent years adopted an increasingly market-oriented approach as well, yet sometimes blocks Commission initiatives that it deems too regulatory. True to its tradition, the Council has expressed the intention to safeguard national souvereignty in many aspects of media regulation.

Within this triangle of institutions and political priorities, it is very difficult to come up with a kind of regulation that manages to reconcile these diverging interests. Therefore, in recent years, two major options have emerged, which are also conceptually intertwined: co-regulation and risk-based regulation.

The fundamental thinking of both concepts is quite similar. They acknowledge that by imposing detailed directives from above, governments risk stagnation in development and in many cases even active or passive resistance by the regulated parties. Co-regulation and risk-based regulation suggest that policy objectives could be much better served if rules incorporate expert advice from the field and are negotiated with the pertinent stakeholders. Thus, regulation would be based on understanding and conviction rather than enforcement. This also means that sanctions should first and foremost be social, i.e., increased public awareness resulting in changing consumer behaviour, with state penalties only as a last resort.

A second aspect to this is the idea of process-based vs. item-oriented rulemaking. The former prescribes exactly how a requirement must be met, while the latter only defines the overall objectives to be reached and leaves all procedural detail – sometimes even the development of criteria and benchmarks – to the regulated parties.

For example, the government could regulate that all motor vehicles must be equipped with catalytic converters in order to reduce emissions. This would not offer much incentive to the industry to optimise other factors contributing to air pollution, such as fuel consumption or engine efficiency. Alternatively, the rule could merely impose general limits on auto exhaust. This would encourage manufacturers to develop better engines, find more environment-friendly fuels, or implement methods to effectively prevent traffic congestion. A side effect might also be that customers become more sensitive to environmental concerns when buying a new car and therefore, in turn, exert a demand-oriented influence on the market.

This means that risk-based regulation is the result of a collective process of creating standards of acceptable risks and then imposing rules accordingly. The practical side of risk management is then left as much as possible to the affected stakeholders.

As a consequence, risk-based regulation might well turn out to be very appropriate in order to assist with the integration of diverging political philosophies within the EU: consistently maintaining high standards (such as media pluralism), yet not through restrictions and constraints, but in such a way that innovative developments and competition are stimulated and the autonomy of the member states is retained as much as possible.

However, this rather open approach raises much more complicated issues with auditability – i.e. checking on whether the agreed-upon standards are, indeed, met – than the classical, deterministic way of regulation. While the conventional approach, which in its core is designed to reduce uncertainty, lends itself to relatively simple control measurements (catalytic converter in place, yes or no; different shareholders behind two dominating television channels, yes or no), risk-based regulation requires a much more differentiated set of criteria to be applied. It frequently must even extend the scope of control mechanisms to a much wider public than before. Rather than merely containing hazards, flexible risk-based regulation hence aims for sustainability and self-healing powers in the complex structures of civil society.

The next article of this series will examine at the current challenges to preserving media pluralism in the EU.