The EC has presented its proposal and draft regulation on ensuring the cross-border portability of online content services in the EU. This briefing note contains: (i) a detailed Q&A on material detail contained in the proposal; and (ii) a briefing note to be used when discussing this issue with senior management/board.
Board/senior management briefing
The bullet points below are designed to be an outline for you to utilise when presenting this issue to your management team/your board.
- The EC has presented its proposal and draft regulation on ensuring the cross-border portability of online content services in the EU.
- This draft regulation aims to remove barriers to cross-border portability so that users can access in other Member States the content that they pay for (or in some cases receive for free) in the Member State in which they are habitually resident.
- The draft regulation is expected to come into force in 2017.
- If implemented, the regulation will apply retrospectively, meaning any contractual provisions that restrict cross-border portability will be invalid.
- Whilst the draft regulation now needs to be passed by the European Parliament, we fully expect this to happen. We would therefore recommend considering your legal, commercial and technical position in the near future.
The Q&A below is designed to equip you with the answers to questions you may be asked by senior management/your board.
Current media landscape
In today's media landscape, most content service providers prevent their users from accessing online content (on their portable devices) whilst they are outside their home Member State by employing geo-blocking technology (i.e. in the United Kingdom, a British resident cannot access SkyGo to watch content when outside the United Kingdom). Such technology is typically useful to rights owners who wish to ensure that they can preserve the territorial exclusivity afforded to their rights. However, things may be about to change as the European Commission has presented its proposal and draft regulation "on ensuring the cross-border portability of online content services in the internal market" (the Regulation).
What is the aim of the Regulation?
The Regulation aims to remove barriers to cross-border portability so that users can access the content that they pay for (or in some cases receive for free) in their home Member State.
The purpose of the Regulation is to enable users/subscribers habitually resident in a Member State to use the services that they pay for (or in some cases receive for free) in another Member State on a temporary basis, for example, when they are on holiday or when they are on a business trip.
Will the Regulation apply to your company?
- The Regulation will apply to content service providers who are providing a portable service to their subscribers/users to access linear or on-demand content (i.e. giving subscribers/users the ability to access that content on their mobile device within their home Member state).
- The Regulation will apply where: (a) subscribers/users pay for the service (e.g. SkyGo) and/or (b) the service provider verifies the subscriber’s/user’s Member State residence (e.g. BBC iPlayer).
- The Regulation will not require service providers who do not already offer portable services in their home country to do so across borders.
The Regulation will therefore impact:
- licensors/creators of content (such as studios); and
- licensees of content (such as a channel/rights management companies).
What about contracts that you have already entered into or are about to enter into?
The Regulation will apply retrospectively to contracts concluded and rights acquired before the date of its application (if they are relevant for the cross-border portability of an online content service provided after that date).
Does that mean you will have a breached contract?
No. Clauses in contracts designed to prohibit or limit the cross-border portability of online content services within the European Union will instead be unenforceable.
When will the Regulation come into force?
The Regulation will, if passed by the European Parliament, take the form of a regulation rather than a directive. This means that, if passed, it will have binding legal force throughout every Member State on the date set out within the Regulation (this date is likely to be some time in 2017).
What should you do now?
The proposed Regulation is likely to impact your entire business. Of course, there are issues to address in content licence agreements, but there is also a vast array of other considerations such as customer sales terms, technical issues and commercial model that will need addressing.