Review of 2011

There have been a number of significant and interesting developments in the UK TMT sectors over the course of 2011. The summary below sets out some of the highlights:

  1. Technology
  • The provisions of the Digital Economy Act relating to ISP enforcement of online copyright infringement continued to cause controversy in 2011: (i) BT and Talk Talk's judicial review was rejected (other than in relation to costs) and they were initially refused leave to appeal but then subsequently granted such leave (although the appeal has not yet taken place); (ii) the draft costs order splitting the cost of administrating the enforcement regime was amended following the initial judicial review (although it has not yet been finalised); (iii) the Government indicated that a final version of Ofcom's "initial obligations" code would be published setting out the way in which the enforcement regime would operate, although no such final version of the code has yet been published; and (iv) the Government announced that it would not, for the time being, be implementing the provisions of the DEA ordering the blocking of copyright infringing websites following an Ofcom report which stated that the procedure would be impractical and too slow to implement.
  • In the Newzbin case, BT was ordered in July 2011 to implement technical measures to block user access to the Newzbin website, which indexed and enabled searching of digital content, including infringing copies of films and television programmes. Sky subsequently received a court order in December 2011 ordering it to also block access to the site and it is possible that the use of such court orders under s.97A of the CDPS could become an alternative to the blocking measures contained in the DEA (which Ofcom found to be too slow – see above).
  • Meanwhile, in Europe, the ECJ ruled in November 2011 that an order imposed by a Belgian court in 2004, requiring a Belgian internet service provider to filter and block access by its customers to copyright infringing material was incompatible with certain European law, including the E-Commerce Directive and the Charter of Fundamental Rights.
  • In November 2011, the Advocate General issued his opinion in the on-going case of SAS Institute. In his opinion, the Advocate General stated that the functionalities of a computer program and the programming language cannot be protected by copyright. However, the means for achieving the expression of the functionalities could be protected. The ECJ has not yet delivered its judgment in the case.
  1.  Media
  • In September 2011, the European Commission adopted a new Directive extending the copyright term for sound recordings to 70 years (previously it was 50 years).
  • The ECJ gave its judgment in the Football Association Premier League case in October 2011. It ruled that a prohibition on the sale and use of decoder devices in one Member State to enable viewers in another Member State to access encrypted satellite broadcasts was contrary to competition and free movement provisions of EU law. However, the transmission in a pub of broadcasts containing protected works constitutes a communication to a "new" public requiring the prior authorisation of the author of the works. As a result, although individuals may now be able to buy foreign decoder cards to watch Premier League games, landlords will not be able to show those games to the public if they are protected by Premier League copyright (e.g. including the Premier League opening video sequence and music).
  • In July 2011, News Corporation aborted its attempt to acquire the remaining shares in BSkyB following political controversy concerning media plurality (including Vince Cable being stripped of his decision-making responsibility after being secretly recorded claiming that he was waging war on Rupert Murdoch) and the phone hacking scandal involving the News of the World.
  • The News of the World phone hacking scandal resulted in the launch of the Leveson inquiry (led by Lord Justice Leveson) into the ethics and regulation of media organisations, including the press, broadcasters and social media. The inquiry opened in November 2011.
  • The News Corp/BSkyB controversy also resulted in the Secretary of State asking Ofcom to assess how practical it would be to set limits on media ownership to protect plurality and to recommend a framework for measuring plurality across different media. Ofcom sought comments from interested parties by 18 November 2011.
  • The Government launched a review of media and communications regulation in May 2011, which is intended to lead to a new Communications Act, to be in force by 2015. The consultation had three key themes: (i) promoting growth; (ii) media plurality and freedom of expression; and (iii) protecting consumers from offensive and unlawful content.
  1. 3. Telecoms
  • The EU telecoms reform package was implemented in the UK for the most part via the Electronic Communications and Wireless Telegraphy Regulations 2011, which came into force in May 2011 and amended the Communications Act 2003 and Wireless Telegraphy Act 2006, as well as other legislation. Key changes were:
    • Security – new obligations on communications providers to secure their networks and report breaches in security to Ofcom.
    • Information – new information gathering powers for Ofcom to enable it to evaluate future network or service developments that could have an impact on wholesale services made available to competitors.
    • Dispute Resolution – removal of the obligation on Ofcom to resolve network access disputes and a new discretionary right to intervene in such disputes.
    • Enforcement – amended enforcement powers for Ofcom to deal with breaches of regulatory obligations, including power to impose daily fines and an increased fine of £2 million available for information-gathering breaches.
    • Infrastructure Sharing – new powers for Ofcom to impose infrastructure sharing obligations even on providers without SMP.
    • Net Neutrality – new power for Ofcom to impose a general condition requiring operators to comply with minimum service obligations in relation to broadband (note Ofcom has not yet imposed any such obligations).
  • Further implementation of the EU package was achieved in May 2011 via amendments to the General Conditions of Entitlement and Universal Service Conditions. These changes included requirements: (i) for additional information to be included in consumer contracts; (ii) regarding the length of consumer contracts; (iii) regarding the conditions for termination of consumer contracts; (iv) to provide location information to emergency organisations; (v) mandating emergency SMS; and (vi) regarding number porting.
  • A new PhonepayPlus code of practice came into force in September 2011 and required, for the first time, PRS providers at all levels of the value chain to register with regulator. Ofcom also extended the PRS condition to apply to the same PRS providers who are subject to the code of practice.
  • In January 2011, Ofcom varied the spectrum licences of the UK’s three 2G spectrum licensees (Everything Everywhere, Vodafone and O2) to permit them to use those frequencies for 3G services (such as mobile broadband) as well as 2G services (namely voice and SMS). In July 2011, the Wireless Telegraphy (Mobile Spectrum Trading) Regulations 2011 also came into force, allowing trading of the radio spectrum used for mobile communications for the first time.
  • The Government launched a review of media and communications regulation in May 2011, which is intended to lead to a new Communications Act, to be in force by 2015 (see Media section above for further details).
  1.  Data Protection
  • The Data Protection reform legislation was promised but not delivered, albeit that a copy of the proposed Regulation was leaked in December 2011.
  • In April 2011, the European Commission published its first evaluation report on the Data Retention Directive. The report was critical of the Directive and the Commission said that it would review the current rules.
  • The EU reforms to the ePrivacy Directive (part of the EU telecoms reform package) were implemented in the UK via the Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011 which came into force in May 2011 and amended the previous 2003 Regulations. Key changes were:
    • Cookies – website operators now need to get consent from end users if they want to use cookies (although note that the Information Commissioner has granted a one year moratorium on enforcement of the new cookie rules to allow companies to develop ways of complying with the rules).
    • Data Breach Notification – electronic communications providers are now required to inform the Information Commissioner (and possibly the end users) of any personal data breaches.
    • Audit – new powers for the Information Commissioner to audit compliance with the data breach notification requirements described above, and issue £1,000 fixed penalty notices for failure to notify a personal data breach.

Preview of 2012

With all that excitement taking place in 2011, the summary below sets out some of the developments we might expect to see in the UK in 2012:

  1. Technology
  • The provisions of the Digital Economy Act relating to online copyright infringement have been left in a state of uncertainty following the events of 2011. However, in 2012, we can probably expect to see: (i) a final version of the "initial obligations" code published by Ofcom; (ii) a final version of the costs order relating to the splitting of costs for administrating the enforcement regime; and (iii) the outcome of the BT/Talk Talk judicial review appeal.
  • The ECJ is likely to publish its judgment in 2012 in the SAS Institute case regarding the scope of copyright protection for computer software in the Software Directive. The Advocate General's 2011 opinion is not binding upon the ECJ.
  1.  Media
  • On 5 January 2012, Ofcom published the responses received to its invitation to comment on measuring media plurality. It expects to publish its final report on the issue in 2012. The responses received are available here.
  • The Leveson inquiry report is likely to be published towards the end of 2012.
  • The Government is expected to publish a green paper setting out key policy goals for its review of media and communications regulation in January 2012. A white paper is then expected towards the end of the year or the start of 2013.
  • Secondary legislation to provide a new framework to allow for local television services on digital terrestrial television across the UK is expected to be made by February 2012. The legislation will direct Ofcom to make appropriate spectrum available; to award licences to a multiplex operator and individual local television services; and to add local television services to the list of channels to be given prominence on electronic programme guides. The first local television licences are then expected to be awarded towards the end of 2012.
  1. Telecoms
  • The telecoms appeals framework will probably be amended in 2012 following a consultation undertaken by the Government in 2011. The proposals involve the removal of the requirement for an appeal case to be decided on the merits, and the insertion instead of a requirement for the case to be decided by applying the same principles that would be applied by a court on an application for judicial review. The amending legislation is intended to enter into force in July 2012.
  • The EU Roaming Regulation is likely to be revised and extended in 2012. The Roaming Regulation fixes the maximum wholesale and retail charges for international roaming the EU and expires on 30 June 2012. The European Commission reviewed the Roaming Regulation in 2011 and published its proposals in July 2011 to extend the regulation until 2022, and introduce structural market intervention measures to try and reduce the differential between national and roaming tariffs to zero by 2015.
  • The auction of 800 MHz and 2.6 GHz spectrum frequencies is due to take place towards the end of 2012. The spectrum is suitable for high-speed mobile data (i.e. mobile broadband) and would be available for use from 2013. However, the auction has already been postponed a number of times due to legal challenges and could be postponed again.
  • The Government is expected to publish a green paper setting out key policy goals for its review of media and communications regulation in January 2012. A white paper is then expected towards the end of the year or the start of 2013.
  • The Law Commission is expected to launch a review of the law on accessing land for infrastructure such as mobile phone masts and telecoms cables in September 2012. The Electronic Communications Code governs the rights of electronic communications network providers to install and maintain infrastructure on public and private land and the Commission's review will address two key issues: (i) the drafting of the Code following criticism from courts and lawyers that it is “unclear and inaccessible”; and (ii) considering the way disputes are resolved.
  1. Data Protection
  • The European Commission's legislative proposals for the data protection reform are expected in January 2012.
  • The Commission may also publish plans to reform the Data Retention Directive in 2012.
  • The Information Commissioner's moratorium on enforcement of the cookie consent rules expires in May 2012, from which time, website operators will be expected to comply with the rules requiring users' consent to store cookies.