Since our Client Alert on June 18 2009 setting out the key features of the Digital Britain Report (the "Report"), the Government has issued an implementation plan outlining how it intends to deliver the proposals set out in the Report.

The proposals requiring legislation will be dealt with in a Digital Economy Bill (the "Bill"). Set out below are the key changes due to be implemented by the Bill:

Classification of Video Games

  • A new scheme for the classification of boxed video games incorporating the Pan European Game Information System (PEGI) will be introduced. This will replace the current hybrid system utilising two sets of symbols.

Gregor Pryor, a Partner in the Digital Media team, says:

"This is a welcome and unsurprising change, given the tension in the games sector concerning the dual-ratings system. However, much more work is required on a pan-European basis to standardise and simplify the content ratings systems for audiovisual content online."

Copyright Infringement

  • The Bill will match the penalties for online copyright infringement to those for physical copyright infringement.
  • Backstop powers will be given to Ofcom to place additional conditions on Internet Service Providers to prevent illegal file sharing. No sooner had this been announced than the Government announced much more stringent proposals. We give more detail on this below.

Orphan Works

  • The Bill will give the Secretary of State powers to authorise the setting up of regulated schemes for the granting of rights to use orphan works.
  • We understand that the Bill will also give the Secretary of State powers to authorise extended collective licensing schemes, as envisaged in the Report.

Stephen Edwards, a Partner in the Media team, says:

"These are very welcome developments. While there is still work to be done on the details, it must be right to leave those to secondary legislation."

Public Service Broadcasting

  • The Bill will update Channel 4's statutory remit.
  • Following a consultation, there will be legislation aimed at ensuring that the Channel 3 licensees for Scotland and Northern Ireland (STV and UTV) are given full and fair opportunity to supply programming to the BBC, Channel 4, ITV plc and five in the UK wide market.
  • Ofcom is to be enabled to make amendments to the Channel 3 licensees' obligation to provide regional news so as to allow for the development of Independently Funded News Consortia.

Stephen Edwards comments:

"Channel Four set out its vision for its role in the digital age in its Next on Four document last year. It will be good to see its remit statutorily re-defined in line with that vision."

Radio: Going Digital

  • Licence renewals of up to seven years will be granted to analogue radio licensees who are also providing a Digital Audio Broadcasting (DAB) service.
  • Adjoining radio multiplexes will be encouraged to merge and extend into areas which are currently not served. Ofcom will be granted powers to alter the licences of multiplexes who have agreed to merge.
  • New powers will be granted to Ofcom to insert two year termination clauses into radio licences awarded or renewed prior to the Digital Radio Upgrade.
  • There will be a change to the current legislation in relation to the localness regulatory regime which governs the amount of local content required on local radio stations.

Stephen Edwards says:

"Early implementation of these proposals can only help the further development of commercial digital radio. The long list in this latest document of further action points not ripe for or in need of legislation shows the effort the Government is putting into this area."

Other issues

  • The Government will reserve powers to regulate the domain name industry where necessary, which may include granting Ofcom the power to regulate the distribution of domain names within the UK.
  • There will be a consultation on the penalties Ofcom can impose for failure to comply with the Communications Act 2003.
  • Promotion of investment in communications infrastructure and content will become one of Ofcom's principal duties under an amendment to the Communications Act 2003.
  • Ofcom will be under a statutory obligation to alert the Secretary of State to any significant developments affecting the UK communications infrastructure, and to provide an assessment of the infrastructure every two years.

Sachin Premnath, an Associate in the Digital Media team, says:

"In the Digital Britain Report, Lord Carter suggested extending the regulatory role of his former employers, Ofcom. The Digital Economy Bill implements many of these suggestions and will inevitably result in Ofcom becoming more influential. The explicit inclusion in the Communications Act of Ofcom's duty to promote investment in infrastructure is of particular interest. This is a result of the Government's view that Ofcom's efforts to promote the interests of consumers have concentrated on short term cost reduction rather than long term infrastructure investment. It will be interesting to see if Ofcom is able to carry out this new core duty effectively."

P2P Copyright Infringement Update

The Government has made a surprise announcement of tough new measures against unlawful peer-to-peer (P2P) file sharing, going much further than had been proposed in the Digital Britain Report.

Digital Britain Proposals

The Report indicated that serial infringers would be subjected to a three-pronged notification scheme under which:

  1. Internet service providers (ISPs) would issue warning letters threatening prosecution;
  2. Rightsholders would pursue court cases following subsequent disclosure by the ISPs of the identity of persistent infringers; and
  3. Ofcom would receive powers to compel ISPs and broadband suppliers to deploy "technical measures" if legal action did not lead to a 70% reduction in piracy after a year.

The latter measures were predicted to be in place by 2012. One such proposed action was the slowing or "throttling" of an unlawful filesharer's Internet connection. Alongside those proposed measures, the Department of Business, Innovation and Skills (BIS) launched their Consultation on Legislation to Address Illicit Peer-To-Peer File-Sharing to end on 15 September 2009, to collect views across all industries.

Tough Measures

Within days of publishing its implementation plan for the proposals in the Report, BIS, now led by Lord Mandelson, made a surprise announcement that sets out considerably more stringent proposals. In short, BIS wants to introduce tougher action against unlawful activity sooner. The consultation period has therefore been extended until 29 September. In the face of the strong campaign by the music and film industries, the Government is seeking opinion on tougher procedures in relation to repeat infringers, which include:

  • The blocking of user-access to certain sites.
  • The temporary suspension of Internet connections, so that serial infringers will retain basic online access only.
  • Most surprisingly, the administration of these tougher measures will no longer be within Ofcom's remit, but will be subject to ministerial authority.

A new European approach?

This call for a tougher stance on repeat infringers echoes the so-called "three-strike" approach taken in the Creation and Internet Bill passed in May by the French National Assembly. Under that legislation, a Government agency was created with the power to disconnect repeat infringers after failure to heed two warnings to cease sharing content illegally. In Ireland, following a legal settlement in which Irish ISP, Eircom, agreed to comply with a three-strike procedure, major record labels have now demanded that other Irish ISPs follow suit. However, the Irish ISPs are united in their dissenting view – they say that in addition to having a detrimental effect on e-business and jobs, such an approach contravenes European privacy legislation.

Indeed, it is likely that the new proposals made by BIS will spark fresh debate over privacy laws in the UK. In the process of implementing action against users, ISPs will undoubtedly be compelled to hand over personal data to enable further action to be taken.

The British Government's announcement indicates that it is taking notice of the creative industry lobbyists. Following the high-profile Pirate Bay trial in Sweden, and the very recent custodial sentence handed down by an Australian jury to a repeat infringer, the new proposals are perhaps mirroring a worldwide trend that uncompromising action needs to be taken to protect the ailing content industries.

It remains to be seen what the extended consultation reveals, particularly in relation to the suggestion that the hardline technical measures be imposed at the discretion of the Secretary of State as opposed to Ofcom. Before the French bill was passed, France's Constitutional Court ruled against even an independent agency having the power without judicial recourse to sever Internet connections for up to a year. The ISPs are unlikely to support measures that will inevitably cost them money, while many rightsholders will welcome the hardened stance. What is striking is the palpable shift in official opinion. Measures that were discounted as being too draconian in June's Report under Lord Carter have now been championed and bolstered by a Government looking to assuage the creative industries in a Bill that looks set to address the problem of illegal filesharing as early as autumn this year.