IGF 2023 – Day 2 – WS #149 VoD Regulation: Fair Contribution & Local Content – RAW

The following are the outputs of the captioning taken during an IGF intervention. Although it is largely accurate, in some cases it may be incomplete or inaccurate due to inaudible passages or transcription errors. It is posted as an aid, but should not be treated as an authoritative record.

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>> All right, everyone, this is Workshop number 149. Video Regulation, Fair Contribution and Local Content Contributions. Okay?

So let's start the workshop. I wanted to ‑‑ thank you. Here are the speakers of this session. Local speakers from here in Kyoto, Dr. Nami Yonetani, and I'm Ichiro Mizukoshi, also the session organiser of this session, and remote speakers, Toshiya Jitsuzumi from New York, can you hear me?

>> TOSHIYA JITSUZUMI: Yes, but (indiscernible).

>> ICHIRO MIZUKOSHI: Thank you. And Cho Changeun from Seoul. Can you hear me?

>> (indiscernible).

>> ICHIRO MIZUKOSHI: Hello. I can't hear you.

>> Hello.

>> ICHIRO MIZUKOSHI: Today we discuss about Fair Contribution and the other is Local Content Contributions. This is very ‑‑ these regulations. Fair Contribution is distribute money from VoD to ‑‑ the Local Content Contribution is distributing the money from the VoD to the ‑‑ from VoD to produce local content and ordering them to promote local content. Again, this is very, very ‑‑ so after this workshop I hope everyone gets more correct understanding of these regulations.

So we want to make this workshop a bit interactive with polling. So if you have internet access, please access the slido, code 3965076. And the URL is posted in a moment. I'm sending the URL. Could you click that URL and make the polling?

This is a practice. Please choose one before this workshop, we want to know your background, have you ever had a Fair Contribution and the Local Content Contribution, or both, or none? We'll wait for polling. Polling is coming, just a moment. The result? Five people are voting. Everybody those about this ‑‑ one is Fair Contribution, one knows nothing. Okay.

So this is a practice, so I switch to the real polling now. Just a moment. I want to hear your opinion about ‑‑ you can see it in this display, just a moment. Just a moment, please. This is the question that ‑‑ wait a moment. The polling question is, do you think the government should make rules for VoDs to redistribute some of their profit with local telecom industry, or the local content industry, or both local telecom and content industry, or none of them? Even if you leave in the middle of the workshop, please poll. And you can edit or change the poll at any time.

We will show you the result at the end of the sessions.

So going go back to the agenda. Here's today's agenda. First Toshiya Jitsuzumi, about ‑‑ will talk about the Fair Contribution, next item is Ichiro Mizukoshi, case study in Japan, and Cho Changeun, Fair Contribution and Local Content Contributions contribution in Korea, and Nami Yonetani will talk about Local Content Contribution. If we have time for Q and A and discussion.

So ‑‑ is it okay?

>> Let me share my slides.

>> TOSHIYA JITSUZUMI: Let me share my slides. Can you see my slides?

>> ICHIRO MIZUKOSHI: Yeah. We can see them.

>> TOSHIYA JITSUZUMI: Okay. So let me start.

Hello, rage. My name is Toshiya Jitsuzumi, currently I'm at Georgetown University.

While I deeply regret not having the chance to meet you in person at Kyoto, I'm grateful for this opportunity to present brief summary of Fair Contribution debate.

But let me first introduce myself very briefly.

After 18‑year tenure at the Japanese ‑‑ Ministry of Communications I'm now a faculty member and teach ‑‑ focusing on ‑‑ my research includes AI integration, fragmentation of the internet, and Fair Contribution, which is the center of today's panel discussion.

Let me summarise the background, internet use ‑‑ the first ‑‑ global internet usage. This is not driven by the ‑‑ which according to ‑‑ 2018, has ‑‑ consumer usage and ‑‑ since 2017. This is ‑‑ strain on the operation of the network. According to the estimated, the cost to ‑‑ billions to tens of billions of euros per year. Tracing such network utilization, telecom operators worldwide are ‑‑ investment into the network to uphold and where possible ‑‑ the quality of internet experience for the users. However, in Japan, the gross investment by telecom carriers has not resulted in a proportion improvement in network quality. Leading to challenges in ‑‑ higher network standards. ‑‑ on the left‑hand side, investments by Japan operators ‑‑ improvement in latency and global enhancement in effective download speeds. Unfortunately, as the right hand graph shows ‑‑ effective speed and actual speeds, advertised speed has been declining. Indicating that the Japan operators need to further expand investment side in order to accommodate demand of broadband users.

As you can understand, this is just one example of the difficulty faced by telecom operators in many countries, which is one of the biggest backgrounds of the Fair Contribution controversy.

The second one relates to the fact that in most countries ‑‑ digital gap in rural and poor areas. In the report the broadband commission, which will establish by UNESCO and was lingering ‑‑ called for additional investment of network operators, which included ‑‑ the ‑‑ pertain the sustainability ‑‑ currently, many governments bear the responsibility of ensuring essential critical ‑‑ this policy necessitates ‑‑ which supports ‑‑ remote regions. And the ‑‑ corrected from user ‑‑ however, unfortunately the procreation of broadband ‑‑ significant decline. Raising concerns about long‑term sustainability of such schemes. Therefore, in the U.S. this has prompted discussion regarding our funding sources, which I believe have a very ‑‑ with Fair Contribution concept.

In order to ‑‑ three challenges. They must find new sources of revenue, but in the real world, numerous constraints ‑‑ capacity to ‑‑ first, carriers are usually bounded by rate and traditional restrictions on natural Monday ‑‑ second, considering people download (indiscernible) even bigger ‑‑ constraints, another example involves a significant ‑‑ mobile prices in Japan, influential statement of the ‑‑ came our prime minister.

The graph on the right, the ‑‑ diminished in recent years, indicating any increase ‑‑ telecom operators, demanding further investment to secure accesses and ‑‑ natural resources or physical ‑‑ other result, telecom carriers ‑‑ just two options. First, augmenting revenue by using ‑‑ I think this is pursued by Japanese mobile operators. Second, charging usage fees, broadband networks or content distribution to make money. Which is of course a heart of the Fair Contribution debate.

The debate has gained momentum due to the noticeable difference in profit between (indiscernible) ‑‑ OTT and telecom operators. This is illustrated in ‑‑ a group of mobile operators which stated ‑‑ operated profit has been declining ‑‑ continue to make high profit.

Yet the remedy for this issue is remarkably straightforward. The crux of the matter lies in the reality that ‑‑ operators ‑‑ yet ‑‑ important to avoid ‑‑ the resolution, in theory, in ‑‑ can involve two approaches. The first, appropriate OTT operators, this is an approach proposed by ‑‑

The second, both around the negotiation between parties, in our case we ‑‑ OTT players. This approach was ‑‑ economist.

Investment by OTT players ‑‑ content application can drive greater demand for ‑‑ resulting in a positive effect on telecom carriers. ‑‑ need to take compensation ‑‑ so given this instance of ‑‑ telecom operators bears a burden best on a case‑by‑case basis.

First, the model ‑‑ agreement that makes up global internet are either ‑‑ we are ‑‑ where nobody pays usage of other network or you need ‑‑ agreement we are lower tier network. Query, most of them do not work well with ‑‑ forces payment based on usage. Second ‑‑ tax ‑‑ to succeed. Parties must possess efficient information ‑‑ exceedingly difficult.

Last but not least ‑‑ net neutrality principles. Prohibits network operators from charging users outside direct ‑‑ relationship and forbids (indiscernible). So under strict net neutrality, it cannot be realized.

Europeans ‑‑ ahead of the Global (indiscernible). And just before the World Conference on International Telecommunication in 2012, European operators considered introducing a new approach, sending (indiscernible) pay to ‑‑ dynamics, which consists of (indiscernible). However this proposal ‑‑ uniform ‑‑ and after this attempt, we ‑‑ for this discussion. However, discussion ‑‑ stakeholder, all stakeholders make a fair and proportionate crews to the cost of public goods, services, and infrastructure are the means of achieving the ‑‑ by '27. Of course this proposal sparks ongoing debate with ‑‑ as a concern ‑‑ broadband, disproportionate usage charges and potential negative impact on broadband adoption.

And while policymakers, industry ‑‑ and academia from various countries were engaged in discussion here, (indiscernible) September 18th of this year. That is, after three years of heated disagreement ‑‑ SK Broadband and Netflix ‑‑ the detailed terms of the agreement is unclear, but in any case, (indiscernible) to appoint. But very interestingly, however, the issue of (indiscernible) is hardly discussed in neighbouring countries across the sea of Japan. (indiscernible). The first one is that Japanese carriers have already installed a network of existing capacity and coverage, so that the impact of internet (indiscernible) is not severe. In fact, the average speed of over (indiscernible) 2019 is ‑‑ video viewing and the fibre optic network ‑‑ nationwide. Therefore, there are no need to ask operators to fund new investment of this stage. However, this decision ‑‑ has no ‑‑ pow per regarding operating the newer cost of the network.

Furthermore, investment would continue to be ‑‑ mobile network because the mobile traffic is expected to skyrocket with 5g. I think this hypothesis is not sufficient.

Second, because of a high degree of (indiscernible) telecom market ‑‑ earnings sufficient profit. And thus do not feel the need to ask OTT to share the cost. At the very least, I feel this ‑‑ well on the ‑‑ companies and ‑‑

On the other hand, this limited ‑‑ power ‑‑ small and medium size players. The last but not least hypotheses of Japan's mobile operators heavy ‑‑ by fry ‑‑ huge amount of traffic. Thus, if ‑‑ contributions end up paying large usage fees to fix network operators.

Japan which ‑‑ career, this is a topic for my future research.

The ‑‑ more resources have conjured the fairness of cost of execution within the context of net neutrality discussion, but later implement actions. Even ‑‑ amendment of ‑‑ which identified bullet one ‑‑ failed to incorporate ‑‑ procure ‑‑ so I make key interest in the Japan ‑‑ with that I conclude my presentation. Now I yield the floor. Thank you very much.

>> ICHIRO MIZUKOSHI: Thank you. The next presenter is me, just a moment.

You are again ‑‑ please poll your opinion. Okay. Let me start my presentation with a study in Japan about these ‑‑

First of all, my name is Ichiro Mizukoshi, I am an internet engineer especially for the operation of packet forwarding and security. I'm working for an entity ‑‑ the ‑‑ this presentation is solely my opinion and doesn't show my company's position, okay?

First of all, VoD is also growing in Japan. This is market size of VoD in Japan. It grew by 18% in the three years, $3.5 billion in year 2022.

Here's a detail ‑‑ no, no. Getting more popular in Japan, seven years ago on the 15% of the people had to use VoD, but now almost 40% have used it.

This is ‑‑ here's a detail of the Japanese subscriber Video‑on‑Demand market. You're familiar with the players, such as Netflix, Amazon Prime, those have the share of more than half of the market. Then how is it ‑‑ how about this, as the professor said, Fair Contribution is very inactive, and also the Local Content Contribution is also inactive.

Fair Contribution is ‑‑ occasionally talks in the ISP industry, but is going on the year ‑‑ how about the ‑‑ there's no concrete actions as far as I know. And about the Local Content Contribution, I'm not ‑‑ based on my understanding, this topic is rarely discussed in Japan, partly because broadcasting regulations are nonexistent. So why?

It's my humble opinion the (indiscernible) this is hypothetic, government stance, market size, and numerous stakeholders. First, government stance to the big tech. The Japanese government has much more stance compared to the EU. Here are the two recent activities in Japan. First one is, (indiscernible) the companies in Japan legally required to register not only their local arm, but also their global headquarters with authorities here. But such request has ‑‑ it means before June 2022, even Microsoft, Google, and Meta, such a global company, big tech, had not registered in Japan. Just requested, and some of them are going out, but almost ‑‑ almost all are registered now.

The second one is the subject to the regulation. This year search engines and social media was more than 10 million users, subject to regulation. But there's no heavy ‑‑ Japanese government, mostly ‑‑ those two activities mainly focused on the promoting ‑‑ protecting the information, so they're not so much care about the market ‑‑ anyway, this approach is much more restrained.

The second one is ‑‑ this was also mentioned, market size. As I showed in the previous slide, the VoD market is 3.5 billion, but the ‑‑ telecommunications, television, and video production, compared to VoD, these ‑‑ larger.

The last ‑‑ numerous stakeholders. It's not easy to define the ISP, however, assigning IP address is a customized function of ISP. Currently over 500 organisations in Japanese has been ‑‑ IP address. It's ‑‑ hosting ‑‑ however, fairly large number of ISP exist in Japan.

The television stations, there's so many television stations in Japan, more than 120, and cable, 450, and satellite, are 40 or more. And the all sizes ‑‑ the size of these stakeholder ISP and telecommunication sectors tend ‑‑ television sectors is too wide to define. Large one targets national market. And the small one target rural. So it's hard to discuss the issue in one table. There are too many stakeholders to cope with the video industry together.

And video industry ‑‑ also the kind of ‑‑

This is my last slide, I have been thinking about Fair Contribution for more than 10 years, this statement ‑‑ in year 2010s, my friends, the executives of mobile operators said, "We charge end users based on the volume of packets, so OTT is the goose that lays a golden egg for us."

I think this is an important message to hold. Thank you.

So let's pass to the next presenter.

>> CHO CHANGEUN: Can you hear me? Okay. I'll start.

My research focused on the related policies, I have been writing about this for ‑‑ newspaper. Until Japan. Today I will be speaking about Fair Contribution and worker contribution in Korea.

Korean dramas, K‑pop and contents are gaining popularity in the world these days. Korea is not only a great content creators, but are also an internet powerhouse. It was the first country in the world to ‑‑ be ordinary households, and it had the highest broadband ‑‑ rate among ‑‑ in 2022. It created new industry, such as internet broadcasting, online game tournaments, and web tunes. When it comes to the internet, there are many instances where Korea ‑‑ influences the rest of the world. ‑‑ debate over network fees. In Korea ‑‑ usually pay network fees for ISPs. It has been taken the programme ‑‑ users and service providers pay for the network. There are many companies left want to provide services in Korea, but there are only four ISPs in Korea. The situation has changed ‑‑ tech companies like Google, YouTube, and Netflix launched their services in Korea. We ‑‑ using Google, YouTube, and net anaphylactic shocks a daily basis, the platform began to become more popular than ISPs. In April 2020, Netflix filed a lawsuit against SK Broadband, we shared a significant impact on the Fair Contribution debate in Korea.

First ‑‑ Netflix asked the ‑‑ court to rule that it was not obligated to negotiate or pay network fees for the delivery of content over SK Broadband's networks, and for the operation and expansion of the network.

Netflix argued network neutrality, but the source ‑‑ court ruled that net neutrality is a principle that prohibits telecom companies from unreasonably discriminating against local traffic on their network. And is not directly relevant to network (indiscernible). The court also recognised that Netflix was obligated to pay a ‑‑ for the pay the service of assessing, connecting to, and remaining con‑‑ connected to SK Broadband network. The court also moved that the two companies should renegotiate how the network fees will be paid.

Netflix was in court and that all business with services in Korea must pay network fees. To understand how Netflix ‑‑ began, the court upheld fees, we need toe go back to 2006.

In 2006, Korean ISP had a telecom ‑‑ IPT service, allows users to stream video over the internet with a set‑top box on their T.V. It was the first IPTV in Korea and gained a lot of popularity due to convenience of being able to watch video on T.V. using remote control.

However, other ISPs did not like this, and shut it down. Claiming that it increased the [indiscernible] subscribers who were using VoD. (indiscernible) still in service ‑‑ by regulating the internet ‑‑ in February 2008, reach companies and ISPs and should close ‑‑ IPTV services for their own subscribers.

With these three components offering combined internet, and IPTV discounts, most households now subscribe to IPTV. In 2012, (indiscernible) relates to smart T.V.s become our problem. (indiscernible) allows smart T.V. to access from various companies, ISP ‑‑ smart TV from ‑‑ internet, increased traffic. Paying something if it wasn't ‑‑ then in 2016, Netflix launched in Korea, and ‑‑ started to grow and YouTube users skyrocketed, (indiscernible) most use nurse Korea, rise the interview of network fee. Neighbour ‑‑ how much YouTube paid for network fees, which account for (indiscernible)% of video viewing time in Korea. They argued the network fee strictly applied to the Korean companies, not ‑‑ problematic.

It was not fair to discriminate between Korean companies and global companies, the debate started over paying network fees fairly. The discussion on Fair Contribution to internet network maintenance and investment began in earnest. Netflix subscribers grew, so did the traffic for networks VoD. Netflix launched in Korea, two ‑‑ Netflix available, using their IPTV remote instead of network fee. They chose to share the profit when their subscribers signed up Netflix.

SK Broadband decided to take network fees. Starting in 2018, SK Broadband expanded its network because it felt the traffic from the big subscribers was ‑‑ users who didn't subscribe to Netflix. Since it expand its network for Netflix, it proposed to Netflix would share the cost (indiscernible) Netflix ‑‑ open connect inside ‑‑ facilities claiming that it could reduce 95% of traffic. SK Broadband refused and said that open connect would not solve the problem and asked the Korean communication commission to mediate to make Netflix negotiate their network fee.

Netflix rejected that arbitration and asked the court to rule that it did not have to pay the network fee and did not have to negotiate.

The result was ‑‑ defeat for Netflix. In September 2021, SK Broadband sued Netflix ‑‑ enrichment ‑‑ it claimed that Netflix had ignored the first judgment, refused to pay network fees and to negotiate. Netflix appeared in December 2021, Netflix claimed SK Broadband could not ‑‑ Netflix for the increased traffic because it ‑‑ based on internet speed to their subscribers. Google and YouTube sided on Netflix, the National Assembly was considering a change that would require cities to sign contracts with ISPs stating they must pay for network uses which they opposed.

In September 2023, Netflix, SK Broadband, and SK Kell come formed a partnership and ‑‑ the three companies announced they would work together for good of their users. Korean media reported that following reasons for the end ‑‑ Netflix had paid SK Broadband for its network behind closed doors because it was likely to lose on appeal. And (indiscernible) triggered ‑‑ in other countries. Experts can ‑‑ Netflix ‑‑ network fees which could have been $180 million.

In Korea, why do we have pay ISPs for network fees? Korean Kell communication business Act defines it as ‑‑ interconnection between ISPs is also paid peering. ISPs are connected to contracted on ‑‑ base so Is they can pay each other, but it's not free.

In Korea, there are only four ISPs, but there are many (indiscernible). The most popular in Korea is Netflix, in September 2023, it was reported that more Koreans use Netflix than all other Korean OTT combined. For ISPs, the most important question is, what kind of agreement they have with Netflix (indiscernible) network fee and Fair Contribution issues. Korean ISPs are working with European telecom companies who have the same concerns in Europe. The majority of traffic is dominated by tech companies.

But 19 Korea, some people are questioning network fees. (indiscernible) subscribers pay for internet every month, and ISPs is correct fee from service providers. This is like a (indiscernible). Does this mean a pop layer ‑‑ should pay network fees to ‑‑ because it has a lot of overseas users? (indiscernible) considering amending the telecom business to the American network agreement mandatory.

However, the registration has stored ‑‑ growing public ‑‑ it should be left to negotiations between ISP and other companies.

In Korea, the networks act was enacted in December 2020 following a lawsuit by Netflix stating that big tech platforms are also obligated to keep internet network safe. Apart from network fees, (indiscernible) liable if they cause excessive traffic and disrupt services.

From here, I talk about local content. (indiscernible) has become a global phenomenon, global entities like Netflix and Disney+ are investing in Korean local content. They are competing to possess Korean dramas. The government has given more tax deductions to video content produced in Korea, or even productions are happy.

But politicians think that Koreans shouldn't be a content production ‑‑ subcontractor for Netflix. For the sake of more ‑‑ for Korean companies, they are not ‑‑ 14 content and want to support ‑‑ worldwide expansion of Korean OTT platforms.

Finally, who should pay for sustainable internet service? In 2020, the Korean government designated 100Mbps broadband as universal service. In any region, telecom companies must provide internet at the speed of at least 100Mbps to all subscribers. This requires ongoing investment.

There are a number of people using video services is growing, and a small number of companies are generating huge amount of traffic. We need to think about whether a telecom companies and ISPs should take all responsibilities for the traffic or whether the business ‑‑ traffic is also responsible ‑‑ in the future, not only ‑‑ AI may cause problems. In the case of local content, Korea invest more contents to maintain the economy effects driving from ‑‑ global OTTs that distribute Korean content are also important, so corporation is not important. In ‑‑ in order to create an environment, where everyone makes a Fair Contribution, whether they are ‑‑ environment, where someone has to sacrifice, I think there should be more communication between companies like the workshop we are doing today.

Thank you for listening.

>> ICHIRO MIZUKOSHI: Thank you. We'll switch to Dr. Nami Yonetani.

>> NAMI YONETANI: Thank you. Hello, everyone. Hi. I'm Nami Yonetani, today in my presentation I would like to talk about the regulatory responses around the world through the rise of global video streaming giants with a particular focus on the discussions on Local Content Contribution.

Before getting down to the main point, please allow me to introduce myself briefly. Again, my name is Nami Yonetani, I'm a researcher at the Foundation for Multimedia Communications in Tokyo, Japan. This is my actually this is my very first time attending IGF. And I'm very excited to share my research findings today.

So let's move on to our main topic.

First of all, I would like to give you a quick overview of the current state of video streaming. Although there are many types of video streaming services, they can be classified into five categories by their revenue model and distribution model. And the five categories are AVOD, fast, SVOD, have MVPD, and TVOD. Among all of these ‑‑ leading the video streaming market.

As you can see in this table, SVODs based in the U.S. and Asian countries have a great number of global subscribers. Especially with three major U.S. SVODs, which are Netflix, Amazon PrimeVideo, and Disney+ have targeted global expansions since early stage.

One of the reasons for their global popularity is their original and exclusive content. For example, Netflix's original series called Wednesday became a global smash hit last year and it's reported that it has been watched for more than 1 million total hours by over 115 ‑‑ 150 million households. In various previous studies have shown that such popularity of U.S. SVODs is having a great impact on the traditional video industry. For example, in the broadcasting industry, consumers are moving away from paid TV, from pay TV to US exports, this are rich in content and much cheaper.

The same thing is also happening in the film industry. Recent studies have discovered that consumers, especially the younger generation, are moving away from the cinema to watch films on U.S. SVODs.

Given this situation, more countries are regulating video streaming platforms to counter U.S. SVODs. There are several points of contention, but one of the biggest points is possible unfair market competition led by regulatory (indiscernible) between broadcasting and video streaming platforms. Although broadcasters ‑‑ though broadcasting and streaming are similar in the fact that they both distribute videos, (indiscernible) behind video streaming, which is a related ‑‑ relatively new technology.

So since around 2020, to reduce such regulatory asymmetry, some countries have imposed similar regulations on video streaming platforms to the ones that they have done on broadcasting platforms. Especially regulations on Local Content Contribution which is the subject of this presentation, are being introduced mainly in European and British commonwealth countries. As you can see in this figure, governments are applying or trying to apply local content requirements such as content (indiscernible) and financial contribution obligations not only to broadcasting platforms, but to ‑‑ but also to video streaming platforms.

This table shows you the countries which introduced or are in the process of introducing local content requirements on video streaming platforms. As a side note, as was mentioned in the last presentation, South Korea takes a quite different approach from these listed countries. While these countries are taking a defensive approach to protect their local audio visual industry against U.S. SVODs, South Korea is adopting a more aggressive approach to foster local industry that can compete with U.S. SVODs. So hear I want to point out that there are more than one policy approach towards large industry platforms and my presentation is focusing on the defensive approach taken by the countries listed in the table. And in the next few slides I would like to share the regulation discussion in the countries highlighted in sky blue, which I considered to be important and distinctive.

We'll start with European ‑‑ (indiscernible) regulating Local Content Contribution. In response to the accelerated influx of U.S. content in the 1980s, the European Union introduced the Television Without Frontiers Directive in 1987 with the aim of protecting the European Dr. From the U.S., and required broadcasters to contribute to European (indiscernible). Subsequently, in 2007, the Audio‑Visual Media Services Directive, AVMSD, was introduced to regulated Video‑on‑Demand, VoD platforms, and the directive was revised in 2018 to require the platforms to contribute to (indiscernible) as well.

Revised ‑‑ instructs member states to make VoD providers under their jurisdiction secure at least in ‑‑ European works in their catalogues, and ensure permanence of those works.

It does not mention exactly how to ‑‑ give or measure permanence, but it is expected that Europe (indiscernible) should be (indiscernible). For example, on the home pages, recommendations and search results. And secondly ‑‑ says that member states may require both domestic and foreign providers targeting audiences in their directories to contribute financially to European (indiscernible). And among all member states, France is the one with strictest requirements on VoD platforms. France transposed the revised AVMSD into national law in 2021, but with further strict requirements. Moreover, they have their own system called Video Chronology Rule an industry agreement on the release window of films which is formed in the government's presence. The latest version of ‑‑ came into effect last February and it was decided that SVODs can distribute films 17 months after cinematic release. However, it may be shortened to six months with agreement of film industry. And in fact, Netflix has succeeded in shortening the distribution period from 17 to 15 months in return for investment in French films. On the other hand, Walt Disney is raising extraneous objection to this rule, arguing it's outdated, and they are protesting by refusing to release some new Disney films in French cinemas, and distributing them exclusively on Disney+.

In contrast to France, the United Kingdom transposed of revised AVMSD international law with minimal requirements before Brexit. And after Brexit, they started to explore its own regulatory framework to ensure the Britishness of content and announced the draught media bill this March. The focus of this bill is to maintain and strengthening why public service broadcasters, PSBs, so what ‑‑ PSBs are broadcasters intended for public benefit rather than to serve purely commercial interests, and they are granted privileged access to spectrum in return for various content obligations. So returning to the bill, there are a number of proposals in strengthening the presence of PSBs, but one of the newest eye‑catching proposals is to give prominence to PSBs video streaming services on connected devices, including smart T.V.s and streaming devices such as Amazon Fire Stick. What is more, the BBC has sent a letter to the Parliament calling for dedicated (indiscernible) to provide a shortcut to PSB streaming services on all television remote control so the current regulatory discussion in the UK affects not only video streaming platforms, but also manufacturers.

Now I would like to turn our attention from Europe to the British commonwealth country Canada. Canada is a country of immigrants, and a neighbour of the super power, the U.S.

Therefore the overriding issue of Canada has always been how to shape its identity as a nation. With this in mind, the broadcasting (indiscernible) amended in 1991 to protect Canadian culture from the arrival of American television. The act implements the so‑called Canadian content rule for broadcasters, and requires (indiscernible) financial contribution. However, in 2015, the government expressed concern that Canadian content rules for broadcasters were becoming a dead letter, as video streaming services grew in popularity.

And they argued that the need to support the discoverability of Canadian content.

Finally, the Online Streaming Act was passed this April to modernize the broadcasting act. And this act will expand the definition of broadcasting to include video streaming. And apply Canadian content rules to both domestic and foreign video streaming platforms.

And now they are currently in the process of public consultation ‑‑ public hearing to finalize the regulatory framework.

Finally, it is neither Europe nor the British Parliament but I would like to mention Israeli, and for most I would like to ‑‑ Israel, I would like to extend my deepest sympathies and condolences to the victims and their families in Israel, in Gaza. The situation is absolutely heartbreaking.

So let me get back to their regulatory discussion.

Pay T.V. operators are already obliged to make financial contribution to local content in Israel. And the Netanyahu government that was formed last November introduced the broadcasting bill this August to apply the same obligation to video streaming platforms. However, there are voices predicting that the government, which is set to be the most far right and religious in Israel's history, might introduce stricter video streaming regulations, including content (indiscernible) for political reasons in the future. So here in this slide I wanted to find out that there are possibilities that local content requirements may be imposed not just for cultural or economic reasons, but also for political reasons. And of course this could apply to any of the countries, not only Israel.

The video streaming platforms are of course trying to push back against such regulatory actions. Netflix claims legal compulsion to contribute local content would be anticonsumer. Firstly, they point out that content quotas would merely avoid spending on quantity over quality, and result in mass producing cheaper and lower‑quality works. Secondly, they argue that tweaking recommendations in ways that undermine viewer choice and preferences to meet the prominence obligation would lead to a disappointing viewing experience.

So let's say there's a viewer out there who loves a romantic comedy, but Netflix recommends a zombie film to them, to him or her, only because it's local content. Then it is easy to imagine that the viewer would be less satisfied, and may give a low rating to the zombie film. What is more, he or she might even cancel Netflix.

So Netflix is saying that prominence obligation would make no one happy, neither the viewers, the creators, nor the video streaming platforms.

And thirdly, Netflix insists that the market forces have already made Netflix spend significant money on content, thus there's no need to [indiscernible] obligate.

Finally, the point ‑‑ they point out it is discriminatory that foreign video streaming platforms are often obliged to contribute to a local content fund that are not allowed to use it.

On another front, Walt Disney mentioned ‑‑ expansion strategy for Disney+ this August. They revealed that they are thinking to prioritize markets to make it profitable by 2024. To the specific ‑‑ while they're going to continue to invest in local content in high potential markets, they will invest less in local content in mid‑potential markets, and may even shut down Disney+ in low potential markets. So this means that in some countries, Walt Disney might decide that following local content requirements is unprofitable and shut down Disney+.

So far I've shown the discussion in European and British commonwealth countries, but from now on, I'd like to specifically look at what is happening in Japan.

In Japan, so far, there has been no regulatory discussion regarding the contribution to local content by video streaming platforms. I hypothesize that there are two reasons for this. Firstly, the playing field between broadcasting and video streaming platforms is relatively level in Japan. And secondly, Japan is a Galapagos market, where broadcasters are not much damaged by U.S. SVOD giants.

So let me explain from the first reason. While broadcasting falls under the broadcasting act of 1950, video streaming is exempted from the act. Therefore, I think it's safe to say that regulatory asymmetry does exist between them. However, such asymmetry is slight in Japan, as broadcasting regulations, especially content regulations are much more relaxed than in other countries. For example, we do not have local content requirement for broadcasters, like the European and British commonwealth countries. In this sense, broadcasting and video streaming are already placed in a fair regulatory environment in Japan.

The second reason is based on the (indiscernible) of the broadcasting market in Japan. And there are two unique aspects. Firstly, unlike many developed countries, including the ones we've seen in this presentation today, pay TV households remain in the minority in Japan. 80% of T.V. households watch T.V. via OTA signals, and private‑owned OTA broadcasters are the most popular television stations. So this means that there's no direct conflict of interest between popular broadcasters and U.S. SVOD giants due to the difference in their models.

Secondly, a Japanese viewers prefer to watch local content, Japanese content on U.S. SVOD giants platforms. The table on the left shows the result of a nationwide questionnaire I conducted in Japan in 2021. It was revealed that people, both young and old, highly prefer to watch Japanese content, especially T.V. programs and animes on U.S. SVOD platforms. The figure on the right is from (indiscernible) last year, it shows the share of the top 10 programs in major Netflix markets that also appear in global rankings. While the (indiscernible) the more overlapping their tastes, Japan is at the left end, which means that Japanese viewers have quite different tastes from global trends. And so when U.S. SVODs arrived in Japan around 2015, most of us thought that they would be a significant threat to the broadcasters, to the domestic broadcasters. But it turns out that U.S. SVODs are now just new channels to broadcasters to distribute Japanese content to Japanese viewers.

However, does this mean that Japanese broadcasters are able to keep enjoying easy days? In my opinion, U.S. FAST platforms, which are gradually expanding globally, could enlarge as a potential threat to Japanese OTA broadcasters if launched in Japan, as they are both based on the free advertising business model, and thus have a direct conflict of interest. If that happens, some sort of regulatory discussions on video streaming might finally occur in Japan.

And that brings us to the end of my presentation. Thank you very much.

>> ICHIRO MIZUKOSHI: Thank you so much. All the presentations have been done. So just before going to the Q and A, just check the polling result. Unfortunately only five voted. Most of them are ‑‑ disagree to regulators by government. Hmm.

So we wanted to know the presenters polling result, or the ‑‑

>> (indiscernible).

( audio quality poor ).

(inaudible) instead of asking government to introduce ‑‑ on these matters, I ‑‑ commend the government to make those negotiations as easy (inaudible) according to the (indiscernible) start make contact with Netflix and YouTube. So ‑‑ maybe the government can dispatch some expert to start negotiation, to make contact with content giant to start negotiating (indiscernible) or they can make (inaudible).

>> ICHIRO MIZUKOSHI: Thank you. (indiscernible) money is essential, and I'm not content guy, I can't say much about the content. But about Fair Contribution, as I said in my last slide, based on the wrong speaker however, it's the purpose of the Fair Contribution is for the (indiscernible) to invest in rural areas, so I could agree that's my opinion.

>> Yes, I can hear you. I think government needs to play a role in helping to negotiate between companies, rather than creating new regulations. Because the exposure to developing (indiscernible) but it takes time for governments to set the regulations, when the government tries to regulate (indiscernible) the issue of traffic related to video or something, and the need for fair (indiscernible) in network in structures investment and maintenance is the need for ‑‑ (indiscernible) I don't think ‑‑ just the government needs to play a role in negotiate, helping negotiate.

>> NAMI YONETANI: I do think that the government has a role to play to make VoDs promote local content, because I believe in creating accessibility to local content on digital platforms is one of the key elements to develop local digital economy. And it is hard to achieve by market forces alone. We've already seen in the broadcasting market that it is very difficult to achieve content diversity when there's a flood of cheap and exciting U.S. content in front of us. However, I also believe such requirements should only be imposed in two conditions. First, it should be imposed when the broadcasters are already under similar requirements, and there is a need to reduce regulatory asymmetry.

Second, the minimal requirements should be imposed on VoDs, otherwise the requirements would be an unreasonable barrier.

In terms of Fair Contribution to network costs, I think legally forcing VoDs to negotiate deals with local telecoms would be enough for now, because I'm actually I'm not sure if the government is able to define the fairness. But also I have to point out that some countries are currently discussing to impose public interest requirements on video streaming platforms, including VoDs. For example, some are debating whether to obligate video streaming platforms to distribute disaster alerts. And some are debating whether to include video streaming technology to ensure universal access to measure sports content.

So if such requirements are imposed on video streaming platforms in the future, we would need even more robust networks than we have right now. So considering such possibilities, I am open to the idea to widen the scope of contributors of network costs.

>> ICHIRO MIZUKOSHI: I'll say (indiscernible) partially [indiscernible] content.

>> NAMI YONETANI: Yes, but ‑‑ partially. Minimal requirements.

>> ICHIRO MIZUKOSHI: Hmm. Most of them ‑‑ (indiscernible).

So let's ‑‑ discussion the sessions, do we have any comment or questions? Anybody?

>> Hi. I'm (indiscernible).

Thank you for your presentation and discussion. It's a very informative issue.

I ‑‑ (indiscernible).

>> ICHIRO MIZUKOSHI: Is there any new regulations for ‑‑

>> Yes.

>> ICHIRO MIZUKOSHI: All right.

>> NAMI YONETANI: In terms of media policy, I think that most of the broadcasting regulations could potentially be applied to VoDs. Because there's even countries that have introduced licensing for VoDs. But as a global trend, the most prominent discussion currently revolve around content regulations and accessibility rules.

In this case, content regulation means prohibiting obscenity and violence and introducing age rating systems for the content. And accessibility rules requiring closed caption and video description.

>> ICHIRO MIZUKOSHI: All right. Cho?

>> CHO: About regulation, in Korea, Korea has a duty to secure internet stability of content provider, according to the Netflix act. (indiscernible) platforms and the video service providers which have more than 1 million users, and account for more than 1% of (indiscernible) in Korea, also obligated to maintain stability in the quality of the internet network, (indiscernible) Netflix has never been a problem only in Korean companies failed to comply with Netflix act. So I think regulation is possible, but not ‑‑ technology is also possible, there are new technologies have already come out and served the problems about traffic. So I think we don't need new regulations.

>> ICHIRO MIZUKOSHI: M‑hmm. (indiscernible).

>> TOSHIYA JITSUZUMI: Introducing the new regulation or the measure (indiscernible). Let's focus on the discussion on the Fair Contribution. ‑‑ thinking what happened if the (inaudible) what happened is that the ‑‑ local viewers deteriorated because even if the ‑‑ Fair Contribution to local ‑‑ it cannot ‑‑ local operators cannot (indiscernible) so the incentive for the video operators to pay the Fair Contribution is required, so the ‑‑ incentives to (inaudible) so from the viewpoint of (indiscernible) this situation is equivalent to providing a paid (indiscernible) content providers. So that the ‑‑ which is ‑‑ can be a very controversial issue. So the ‑‑ from the viewpoint of policy (indiscernible) it might be good thing for the local government to introduce such a regulation, but from a viewpoint of net neutralities, it's a very questionable. I have to say I'm not a strong supporter of net neutrality, but there's some supporter for ‑‑ they have a huge discussion again ‑‑ which is ‑‑ (indiscernible) that's my impression.

>> ICHIRO MIZUKOSHI: All right. Thank you. Thinking about net neutrality around the world, and the ‑‑ in the country, right?

>> TOSHIYA JITSUZUMI: No, no, I ‑‑ (inaudible) can be providing the better quality to the net operators, otherwise they just refuse to pay the Fair Contribution and to let the (indiscernible) (inaudible).

>> ICHIRO MIZUKOSHI: All right, thank you.

My opinion is, hmm, if the VoD goes to the ‑‑ the ‑‑ I'm not sure about other things. My feeling is such ‑‑ has a strong power to the local countries, the kind of network or the content ‑‑ should be apprised. That's my feeling.

Is there any comments? All right.

>> Thank you very much.

>> ICHIRO MIZUKOSHI: Any other questions?

>> Can you hear me?

>> ICHIRO MIZUKOSHI: Yep.

>> I'm from the internet society in Japan, here I'm speaking in my own capacity.

My question is about regulations. So I already had some ‑‑ in the discussions, but I want to know is there any potential drawbacks or ‑‑ (indiscernible).

>> ICHIRO MIZUKOSHI: All right, thank you. So the ‑‑ how about the ‑‑

>> (inaudible) ‑‑ asked by (inaudible) if they come up with some numbers (indiscernible) video operators think this market is not high potential market. Especially in Japan, which is an aging population and lower income ‑‑ perspective, if the government introduced too strong (indiscernible).