II-3.2: On May 27, 2010, Ofcom (The British Office of Communication)’s Broadcasting Sanctions Committee fined Teletext Limited £225,000, following Ofcom’s revocation of Teletext’s public license for teletext services on January 29, 2010, which was necessary after Teletext Ltd. unilaterally ceased broadcasting teletext services on December 15, 2009.

http://www.ofcom.org.uk/tv/obb/ocsc_adjud/teletext.pdf

Context and Summary

• Teletext Ltd. had a good compliance record during the period when it held the public teletext service license;
• that the provision of the service was structurally loss-making;
• that Teletext believed its license would not be renewed beyond 2014;
• that the digital capacity allocated for the carriage of public teletext services was not sufficient to allow enough commercial content to be broadcast in order to subsidize the cost of providing the service;
• that over the past four years, Teletext incurred significant losses;

• the cessation of teletext services has caused and will continue to cause harm to customers unless and until a new license is accorded;
• teletext is an essential means for deaf and hard-of-hearing people to access subtitling of television programs;
• that more than 2 million people in Britain accessed weather, regional and national news per week using teletext;
• and that Ofcom had estimated that the license was overall profitable between 1996 and 2014.

Brief commentary

This decision is interesting for several reasons.

Firstly, it reveals issues with the allocation of limited resources and the Europe-wide switchover from analogue to digital television broadcast. Indeed, there is a limited band of frequencies available for digital television broadcast. Although digital broadcast provides higher quality to viewers than analogue broadcast, this decision is a result of the ‘growing pains’ of technological modernization: following the switchover to digital broadcast, Teletext Ltd. no longer had enough carriage space available to carry its advertising content, which made its service profitable.

Secondly, the lack of flexibility shown by Ofcom in the events leading up to the aforementioned sanction seems to reveal a decision by the regulator that teletext services, invented in the 1970’s, are no longer necessary to ensure quality public television services. This may be one of the reasons that it did not allocate more frequency to Teletext Ltd. in 1996. In any case, this issue is one that will be faced by all countries in one way or another as they accomplish their changeover from analogue to digital television broadcasting.

Thirdly, the technique used by Ofcom to evaluate the ‘damages’ caused to consumers—and to public service as a whole—by Teletext Limited’s decision to stop broadcasting teletext services before the expiration of its license, is a technique of appraisal, or assessment, of a situation that is commonly employed by regulators and competition authorities, in general. In this case, Ofcom’s appraisal of the situation led to a sort of ‘half-sanction’. This can be interpreted as a form of rational punishment, because it does not examine the offender’s intention to harm; but rather examines the effects and reasons for the offender’s behavior: this reveals the very strong divergence between classical criminal law (which punishes the seriousness of the perpetrator’s intentions), and sanctions handed down by economic law, of which this affair is an example, and of which regulation is a part.

Furthermore, this decision is a perfect example of the use of economic analysis in legal reasoning, since the regulator’s reasoning in imposing the fine is a {de facto} use of this type of analysis (Cf. Posner, Richard, {The Economic Analysis of Law, 7th Ed}, Aspen Publishers, New York, 2007).

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http://www.regulatorylawreview.com/spip.php?article318