At the end of May 2016 the Council of the European Union agreed a “general approach” to the proposed draft Regulation on ensuring cross-border portability of online content services in the internal market. The Council has confirmed the main principles of the proposed Regulation and has attempted to fill the gaps in the European Commission’s rather light original proposal, which was published in late 2015.
A key purpose of the proposed Regulation is to allow consumers to take their online content, to which they have lawfully subscribed in their Member State, with them when travelling to another EU Member State. The Council has introduced a mechanism by which service providers must verify a subscriber’s “Member State of residence”, while allowing holders of the rights in the content to derogate from this and to authorise portability of their content without verification. Further, the Council has provided clearer definitions of “temporarily present” and “Member State of residence”, as the Commission’s draft left too much scope for a wide interpretation.
The Council’s agreement enables it to start negotiations with the European Parliament, which is expected to deliver a report later this year.
The compromise text and the Council’s general approach are a considerable improvement on the Commission’s original draft, which set out an insufficient definition of “temporarily present”, defining it as merely “a presence of a subscriber in a Member State other than the Member State of residence”. How the Regulation would work in practice remains to be seen; a temporal criterion to avoid excessively broad interpretations may yet find its way into the Regulation in order to strengthen the revised definitions of “temporarily present” and “Member State of residence”.
Traditionally, territorial licensing is the basis on which the creative sector ensures sustainability of its financing. Removing such territorial restrictions could cause smaller content providers to be pushed out of the market, as only the largest providers have the resources to afford EU-wide licences. No doubt the cross-border portability of online content will have an effect on broadcasters, producers and distributors. Both rights-holders and service providers will need to ensure that, going forward, geo-blocking restrictions in licensing agreements do not affect or exclude mandatory cross-border portability. Further, content providers need to ensure that an effective mechanism is implemented to verify subscribers’ Member State of residence.
For consumers, who have an increasing demand for access to content, not only when home but also when travelling, this will be a welcome change. The Regulation will eliminate the territorial barriers and will enable consumers to access music, films, sports and games when travelling just like when they are at home. The proposed Regulation strikes a balance; cross-border portability would neither weaken nor remove the traditional territorial principle, but would ensure that consumers can access their legally purchased content while travelling to other Member States on a temporary basis.
The Regulation may come into effect as early as 2017, depending on the length of negotiations. Once in force, it will apply to any licensing agreements concluded before the Regulation comes into effect. So any geo-blocking restrictions that might affect cross-border portability contained in licensing agreements entered into before the Regulation would be unenforceable.
To read the full article, click here. Article written for Entertainment Law Review.