The Regulation on cross-border portability of
online content services in the internal market enters into force on 20 July
2017 and applies from 20 March 2018 (Regulation (EU) 2017/1128). This represents
another deliverable under the European Commission’s Digital Single Market
program. The Regulation will facilitate access by residents of Member States of
the EU to their home country services such as Netflix and Audible and,
potentially, content such as that provided by the BBC’s iPlayer service when travelling
within the EU.
It is indicative of the fast-moving nature of
this industry that the original policy initiation documentation from the Commission
from 2014 appears dated in 2017. For example, it may be hard to recollect that
Netflix, now ubiquitous, wasn’t available in many countries in Europe at the
start of 2014, when action on this issue was first proposed.
The growth in the use and number of online
content services has been significant and the Commission was correct to
identify that the territorial nature of content licensing was causing some irritating
access issues for residents of the EU when travelling.
This Regulation represents a relatively ‘easy
win’ when compared to the long-running project of further tackling the
intricacies of European copyright and related rights rules. It must be noted,
however, that the Regulation also affects content which may not be protected by
copyright and related rights under EU law, such as sports events.
So how does this Regulation work? It employs
the legal mechanism of deeming that the provision of, access to and use of
online content services occurs in the subscriber’s Member State of residence,
even when such services are temporarily provided in another Member State
(Article 4).
Paid-for and free online content service
providers are treated differently. The cross-border provision is mandatory in
the case of paid-for services and optional (the service provider must decide to
opt-in and must verify the subscriber’s Member State of residence) in the case
of free services. Recital 18 clarifies that a payment for TV licence fees for
public service broadcasting should not result in the relevant online content
service being regarded as ‘provided against a payment of money’.
For paid-for services, extra charges for facilitating
cross-border portability are prohibited. In addition, the quality in delivery
of the service accessed from abroad does not have to match the home services
but the online content service provider is prohibited from deliberately
reducing the quality of delivery of the service when it is accessed from
outside the home Member State.
The Regulation does not affect cross-border
access to online content services by consumers from within their Member State
of residence. An issue for another day.
Notably, the Regulation is not overly
prescriptive on what exactly constitutes temporary provision of online content
services. It only goes so far as to state that the temporary presence in a Member
State which is not the Member State of residence be ‘for a limited period of
time’. The Member State of residence is the determining factor. The main
feature of the temporary absence is that it must not result in a change to the subscriber’s
Member State of residence. Verification, as permitted under the Regulation
using ‘reasonable, proportionate and effective means’, is sufficient ground to
determine the Member State of residence.
Of course, the verification of a subscriber’s
Member State of residence provides some thorny complications for providers of
online content services and the provisions for verification of Member State of
residence clearly have been drafted with data protection concerns in mind. For
example, verification is not continuous but limited to occurring at the
conclusion and renewal of a paid-for content contract. Data processed in the
verification process is to be ‘immediately and irreversibly’ destroyed once the
verification has occurred and online content providers are restricted in the
number of verification means it may employ with any customer. The result is
that the provider may not use all 11 verification means to identify a single
customer.
The treatment of IP addresses is particularly
interesting. It is stated that IP addresses may not be stored for the purposes
of the Regulation, although storage may be required for other purposes, and a
binary format applies. While not specifically outlined in the Regulation, it
appears two categories of data will be stored relating to the IP address:
- IP
address confirmed access from the Member State of residence (yes/no); and, if
no - IP
address confirmed access from Member State that is not the Member State of
residence (yes/no).
Holders of any rights relating to an online
content service may permit that the content be provided without verification of
Member State of residence. Where that is the case, the contract between the
provider and the subscriber will determine the Member State of residence. Such
holders of rights may withdraw this authorisation provided the rights holder
gives reasonable notice to the provider. This is a right which may not be
removed in contract (Article 5(4) and 5(5)).
For paid-for services, verification of Member
State of residence of subscribers is required to occur prior to 21 May 2018.
For free services, the provider is required to verify Member State of residence
of subscribers within two months of the date the provider first provides the
services under Article 6 of the Regulation (Article 9).
Contracts between online content service
providers and subscribers will be affected as many will contain a provision on
the territorial restrictions for use of the service which flow down from the
content licences. Article 7 states that contractual provisions which prohibit
cross-border portability, or limit such portability to a specific time, shall
be unenforceable. Use of third-country laws for such contracts does not circumvent
the provisions.
Also of note is that Recital 32 states that, where
content is provided as an add-on or package with an electronic communications
service, changes to the contract with subscribers that are strictly to comply
with the Regulation should not trigger the right of withdrawal relating to
electronic communications services regulation.
The Regulation will apply retrospectively to
contracts concluded prior to 20 March 2018. This was considered appropriate
given the lengthy terms that can apply to contracts relating to content.
Implementation of the Regulation will require
some effort with respect to the verification procedures for subscribers and, if
not already in train, the project should be soon commenced. Privacy
implications will require additional thought and care should be taken to
incorporate protections for personal data within the implementation programme.
Elizabeth Fitzgerald is a freelance technology and commercial law solicitor,
co-founder of Dublin Legal Hackers and member of the Technology Committee of
the Law Society of Ireland. Elizabeth greatly enjoys her work on commercial and
regulatory issues in the technology sector. @freelancelawie
