The communications regulator made the recommendation in a ruling concerning VOD services that appeared on the Virgin Media platform on behalf of three entertainment companies. Ofcom upheld a decision by VOD regulator the Authority for Television on Demand (ATVOD), which had ruled that the entertainment producers, not Virgin, were editorially responsible for the VOD programmes.
"It is conceivable that more than one party may have a role in determining the range of programmes offered and the organisation within that range. In those circumstances, parties may wish to settle the ambiguity with clear contractual wording," Ofcom said in its ruling (15-page / 263KB PDF).
The UK's Audiovisual Media Services (AVMS) Regulations force companies to inform ATVOD when they operate an on-demand video service online. Only companies with editorial responsibility for the content are required to provide this notification. Those companies must pay a licence in order to broadcast the material and are bound by the terms of the AVMS Regulations.
The AVMS Regulations were introduced in the UK to update the Communications Act in order to meet the requirements of the EU's AVMS Directive. The Directive provides a European-wide standard on governing audio and visual content that is under the editorial responsibility of a media service provider.
Ofcom appointed ATVOD to be the primary regulator of VOD content in the UK in 2010. Material subject to regulation does not include all internet video. The rules apply only to television-like services delivered on demand, not to user-generated videos such as those that appear on YouTube.
The law states that video services qualify for regulation if "its principal purpose is the provision of programmes the form and content of which are comparable" to that "normally included in television programme services"; if it has a person who is editorially responsible for it; is based in the UK; and is available on an on-demand basis made available for use by members of the public.
Under the Act an organisation with editorial responsibility is one with "general control over what programmes are included in the range of programmes offered to users; and over the manner in which the programmes are organised in that range". The companies do not have to have control of content for individual VOD programmes or over how they are broadcast or distributed in order to be deemed as editorially responsible for the material.
The material that does fall under ATVOD's regulation must conform to some of the standards expected of broadcast television. It must not incite racial hatred; harm under-18s; or break rules on sponsorship or product placement.
In 2010 Nickelodeon UK Limited, The Paramount Partnership and MTV Networks Europe notified ATVOD of the VOD content they were providing through Virgin but subsequently told the regulator of their intent to withdraw that notification based on their belief that Virgin, not them, had editorial responsibility for the material. The companies shared control over the content of what was shown through the services with Virgin, the Ofcom ruling said.
Last year ATVOD ruled that the VOD services were under the editorial control of the three Viacom-owned producers. ATVOD had said that the terms of the contracts between Virgin and the companies were "ambiguous" over which party had "general control" of the organisation and selection of content.
However, it said that there were "clear contractual agreements" over the "obligations" that applied to the service which helped it determine the outcome of its ruling.
The Viacom companies appealed the ruling to Ofcom claiming that they did not make the VOD service available to the public and were not editorially responsible for the content. They said ATVOD had been wrong to determine the outcome of the case by giving more emphasis to which party was editorially responsible as opposed to which party had made the material publically available.
However, Ofcom ruled that an opposing standard whereby editorial responsibility and the provision of the service were considered equally could inadvertently allow VOD content to avoid regulatory oversight altogether.
"A service which has the principal purposes of offering on-demand programmes which are comparable in form and content to those on linear television could place itself outside regulation simply by ensuring person A makes the service available ... but person B has editorial responsibility," Ofcom's ruling said.
"We note that this is not [the Viacom companies'] position on these particular cases (they argue that Virgin Media [is both editorially responsible and makes the material publically available]). However, it flows from the logic of [their] position. In particular, it is quite possible to envisage a situation in which party A 'makes a service available' in all the senses raised by the [Viacom companies] (controlling restricted access, entering legal contracts for access with consumers, collecting subscriptions, maintaining technological aspects, controlling servers and providing technical support) yet party B retains 'general control' over programmes included in the range offered to consumers and the manner of organisation within that range. This cannot be the intention of the statutory provisions, and would not be consistent with the purposes of the AVMS Directive," the regulator said.
The wording of the amended Communications Act expressly states that only those with editorial responsibility for on-demand services should be treated as providing the service, but there is no equal weighting given to those who make the material publically available. Because of this, ATVOD was right to determine the outcome of the cases on the basis of editorial responsibility, Ofcom said.
"[The wording of the Act] implies that, whereas only one person can have editorial responsibility, more than one may make the [service] available. We consider that to be the case here; there is no question but that both Virgin Media and each [Viacom company] intends to make available content for use by members of the public, and this is the clear intention of the relevant agreements (and what happened in practice)," Ofcom said.
The contracts between the Viacom companies and Virgin contained terms that made it clear that the Viacom companies were editorially responsible for content on the services provided, Ofcom said.
"The agreements ... include a clear statement as to the intention of the parties regarding the allocation of 'editorial responsibility' and say that the term is intended to be read as it is under the Act. They specifically make mention of ATVOD and responsibility to notify," the ruling said.
Ofcom rejected claims by the Viacom companies that placing a reliance on contract terms would allow organisations to draft agreements that enable them to avoid regulatory responsibilities laid out in the law.
"It is entirely proper that parties to a contract may wish to settle ambiguity regarding 'editorial responsibility'. Where this does not frustrate the purposes of the Act and the AVMS Directive by allocating responsibility where it plainly does not lie thus inhibiting effective enforcement ... it is not at all 'an arbitrary legal standard' to take as a starting point that the parties' intention was that their relationship should operate as clearly stated on the face of the contract, in the absence of strong and compelling evidence to the contrary," Ofcom said.
"The [Viacom companies] are in the unattractive position of asking Ofcom effectively to strike out a clause in a contract which they, as sophisticated commercial broadcasters, appear freely to have agreed. They have not provided strong and compelling evidence, either to ATVOD or to Ofcom, that the intention of Virgin Media and themselves was other than that clearly stated on the face of their contracts," the regulator said.