Understanding the EU Portability Rules for Digital Services

For media companies, intellectual property assets and the ability to exploit these assets remain at the core of their business. Attending to changes in copyright law within the jurisdictions they operate is key to managing their unique risks. With changes on the horizon, one area of European copyright law is set to impact media companies.

Current European Union Copyright rules date back to 2001. Since then, the European Union Commission recognizes that digital technologies, widespread broadband connections and reliance on the internet in daily life have transformed the way creative content is produced, distributed and used—and the internet has become a key distribution channel. The Commission believes rapid evolution of new technologies, consumer behaviour and market conditions have accentuated the need to modernise European copyright rules whilst ensuring they continue to reward creation, nurture cultural diversity and boost innovation in the digital age.

In one of the first steps toward a digital single market, the EU has proposed a regulation on the “portability” of online content services to ensure that users who have subscribed to or acquired content in their home country can access it when they are temporarily in another Member State.

Commission Vice-President for the digital single market, Andrus Ansip, explained:

We want people to be able to carry their subscribed music, TV or sports wherever they go—as we did with roaming. This is another step bringing Europe closer to a borderless digital society and economy.

Cross-border portability enables consumers to use their home online subscription while they travel abroad. This differs from cross-border access which means that users, from their home country, may access online services available in another Member State.

Generally, cross-border portability is possible today in the music and e-book sectors, but traditional distribution networks for audio-visual content are largely national in scope. The EU identified three trends justifying the need to act on portability:

  • Projected growth of online content services (notably legal subscription-based services)
  • Increasing mobile use of content
  • High interest in cross-border portability expressed by young Europeans

The EU’s objective is to swiftly approve portability regulation in order to be fully operational in the course of 2017—the same year that roaming charges end in the EU.

Media Reaction and Implications

There will be many who welcome the cross-border portability of digital services. Sky, for example, will “…welcome anything that helps customers get even more value from their subscriptions.”

Jean-David Blanc, the co-founder of Molotov.tv, a newly-launched streaming service distributing most French TV channels, said portability “would logically benefit national platforms and their subscribers, allowing them to keep using their local subscriptions while traveling.” He has commented that “denying them access to their local platforms encourages people to sign up for global, multi services such as Netflix and Amazon, or find illegal alternatives.”

The chairman of the Alliance for Intellectual Property, Richard Mollet, called the portable subscription proposals a “huge opportunity for the UK’s creative industries, which are globally successful and are enjoyed by hundreds of millions of European consumers every day.”

There will, however, be cost implications in implementing the regulation:

It has been noted that cross-border portability could make the service more valuable to frequent travelers. Providers of these paid services may be able to monetise this, but free-to-air (FTA) providers may not.

Moreover, the benefits of portability for rights holders are uncertain. Some contracts already provide an option for portability, which typically triggers additional payments. However, this will change if portability becomes mandatory.

Digital Rights Management Implications of the Portability Regulations

The portability rules will also have implications with respect to digital rights management (DRM)—the practice of imposing technological restrictions that control what users can do with digital media. DRM systems will have to be adapted to continue to prevent unauthorised redistribution of digital media and restrict the ways consumers can copy content they’ve purchased, but also to allow users to access this content across Europe.

Advocates of DRM believe DRM technology protects intellectual property, focusing on making it impossible to steal content.

Critics, however, believe DRM creates an opportunity to bring an end to personal media ownership. These critics believe that, rather than having services that can stream a user’s media to any device using whatever software they choose, DRM consolidates distribution and services, such that all access to media must be provided through these services. This may lead to further dominance by the major companies providing media streaming and prevent smaller providers from entering the market.

Technical Concerns

Concern has also been raised with respect to the technical wording of the released draft regulation. There remains ambiguity around definitions of “temporary rights of access.” For example, would temporary right of access include someone on secondment, or is access for only a set period of time? There is concern that if left in its current form, individual broadcasters will be forced into making their own rules, which could lead to consumer misunderstanding.

There is also a concern about the suggested retrospective applicability of the regulation, leading to further confusion. Will a contract signed one week be subject to the new regulation, but one signed the week before will not?

Critics have also raised concerns about the potential knock-on effect the portability rules could have on territory-based content distribution models. “The Commission’s proposals to mandate cross-border access to digital content remain a significant concern for producers, distributors and broadcasters of film and TV content in the UK and across the EU,” said John McVay, CEO of U.K. producers’ body PACT. “Any intervention that undermines the ability to license on an exclusive territorial basis will lead to less investment in new productions and reduce the quality and range of content available to consumers.”

The moves are being opposed by rights holders across the world, including the major Hollywood studios, which fear it would undermine their ability to stagger releases across territories and charge different prices depending on the level of demand for a film.

Amanda Nevill, CEO of the British Film Institute, has stressed:

It remains crucial that the EU does not seek in any way to undermine the principle of territorial exclusivity that is fundamental to the financing model for independent films in the U.K. and across Europe, and allows audiences to see and enjoy films that reflect their own distinctive cultural identity.

This is not just a pertinent issue for film producers. Although the Premier League welcomed the new portability rules, they said there were “significant benefits to consumers of selling rights territory by territory.”

The Commission has responded saying it does not want to change this principle and understands it is important for the creative sector, especially for the film industry. The Commission says it aims to facilitate the licensing of rights and ensure a better access in the digital world. This means, for example, that if a film is available on a video-on-demand service in an EU country, Europeans outside the country can also pay to see it. They note that this is not about opening access to all content for free. It is about a win-win situation for creators and users.

Liability and Insurance

The cross-border portability rules will inevitably increase content exposure. Although the rules confirm that copyright must only be cleared in the country first disseminating the content, the rules are silent with respect to other laws, such as defamation and privacy rights.

Clarity is needed as to whether legal clearance in the Home Member State where the content is being disseminated will be sufficient clearance for content that may ultimately be consumed across the EU. If not, gaining legal clearance in all European Member States could be prohibitively expensive, and insurers covering these liabilities will need to work with content providers to agree on a practical legal clearance procedure.

Conclusion

The EU portability proposals have sparked mixed reactions from the world’s film and television industry, many referring not so much to the portability proposal itself, but to fear of slippage towards a renewed push for cross-border access.

As Jean Prewitt of the Independent Film & Television Alliance has noted:

Any regulation to mandate “portability” should be clear that it extends availability of online content only to paying subscribers of a service who are temporarily away from their home country. Unless the definitions are specific, there will be unintended damage on the ability to produce the very films and programs consumers want to see.

The ultimate objective of full cross-border access for all types of content across Europe mustbe balanced with the readiness of markets to respond rapidly to legal and policy changes and the need to ensure viable financing models for those who are primarily responsible for content creation.

About Tina Lee

Tina Lee, LLB (Hons), is a Technology, Media and Telecommunications Industry Specialist, based in Willis Towers Wat…
Categories: Tech Media Telecom | Tags:

Leave a Reply

Your email address will not be published. Required fields are marked *