Digital Single Market Strategy

In May 2015, the EU Commission announced its Digital Single Market Strategy for Europe, highlighting a number of initiatives which supported the Commission’s aim to create a connected digital single market and to encourage e-commerce throughout the EU. The EU Commission also announced that it was to investigate the restrictions that prevent the cross border provision of pay TV services, such as Netflix’s and Sky TV.

On 9 December 2015, the EU Commission announced its first new legislative initiatives to be adopted under the Digital Single Market Strategy, with the intention that these initiatives would address some of the barriers to e-commerce and the distribution of online content within the EU. One of the initiatives proposed is a new regulation on the cross-border portability of online content services to ensure the cross-border portability of online content (“Regulation”).

Background

It has long been the case that Europeans travelling within the EU have been restricted from online services providing films, sports, music, e-books or games that they have paid for in their home country. For example, subscribers in the UK to Netflix are unable to view the content available if they are to temporarily visit another European country. In 2014 alone, 49% of European internet users accessed music, video and games online and this figure is expected to grow, especially with the increased use of tablets and smartphones. The dramatic increase in the use of online content services has meant that Europeans today expect to use online content services from wherever they are in the EU.

There is a strong belief that if a EU citizens pays for online services in their home country, they should then be entitled to receive the benefit of this service if there are to then temporarily visit another EU country. It is this belief which has led to the proposal under the Digital Single Market Strategy to remove the barriers to cross-border portability.

Analysis

The proposed Regulation, one of the Commission’s first steps to create a digital single market, aims to broaden the access to online digital content abroad, allowing EU travellers to access digital content they have purchased in their home country. Whilst the Regulation has been proposed, the reality is that cross-border access to online content will not be fully available until 2017, coinciding with the removal of mobile phone roaming charges in the EU.

The new rules announced under the proposed Regulation outlines its vision of a modern EU copyright framework, which will be needed to achieve the Commission’s aim that European citizens will be able to access a wide range of legal online content. The Commission and proposed Regulation however does recognise that in achieving their objective, they still need to ensure that authors and rights holders are protected and reimbursed accordingly for their work. Additionally, there is the understanding that for the digital single market to be a success, film and music subscription providers and the owners of rights in online content will be required to change their subscription contracts to allow users to access the content outside the EU country they subscribed to the service in.

There is therefore a lot of work that needs to be undertaken before the proposals can be implemented , leading commentators to state that this is an ambitious reform. Allowing viewers to view online pay services whilst temporarily abroad is not something that can be achieved over night and further work and investigation is needed before we can be certain that this Regulation will happen. However, the progress made in December 2015 does demonstrate that steps are being taken towards the Digital Single Market and by 2017 there is a strong belief that cross border restrictions may be a thing of the past.

Observations

Content providers will hardly welcome these proposals with open arms, but may at least be comforted by the knowledge that it could have been a lot worse. When the subject was first raised it appeared to compel a move towards pan-European licensing of Audio Visual content by whatever platform or means of distribution. The initiative is now limited to online delivery systems. However a notable sting in the tail is the proposal that the Regulation would apply retrospectively, overriding contracts entered into (and rights acquired) prior to its implementation. For rights purposes, accessing of content services whilst “on the road” elsewhere in the EU would be deemed to occur in the subscriber’s member state of residence. That assumes of course that an adequate definition of “temporary presence” can be developed.

This article was written by Paul Herbert, Partner, Corporate department with assistance from Caroline Mathews, trainee solicitor.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice.  If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.