Exciting times ahead for consumers. From 20 March 2018 you will be able to watch your favourite Netflix show anywhere in Europe if you are ‘temporarily present’ in another Member State.
On 14 June 2017, Regulation (EU) 2017/1128 of the European Parliament and of the Council of 14 June 2017 on cross-border portability of online content services in the internal market (‘Portability Regulation’) was published. It entered into force on 20 July 2017 and will become enforceable from 20 March 2018.
We briefly look at the background to the Portability Regulation and the implications of this for online service providers.
Why did this come into force?
On 6 May 2015, the European Commission unveiled its plans to create a Digital Single Market. The motivation behind this stems from the European Commission’s concerns about territorial exclusivity and the ability of online content service providers to hamper access to their services through territorial licensing.
Who is caught by the Portability Regulation?
All paid for online content services will have to enable their subscribers who are temporarily present in a Member State to access and use the online content service in the same manner as in the Member State of residence.
By way of example, if a French consumer subscribes to the French version of Netflix in France and then takes a flight to Italy for a holiday, the French consumer will be able to access the same content with the same range of functionalities as in France without any additional charges. For legal purposes, it would be as if the subscriber was watching the content in France. This is designed to address not just copyright issues but also differences between Member States in content standards, consumer law and data protection.
Free online content services may opt into the Portability Regulation, provided that the consumer’s Member State is verified and it has informed the consumer and the holders of the relevant copyright and associated rights in the online content, of its decision to do so.
How temporary is temporary?
This is unanswered as of yet. The Portability Regulation simply states that it will apply to a subscriber of one Member State who is resident in another Member State for a “limited period of time” for “purposes such as leisure, travel, business trips or learning mobility”.
What verification requirements will need to be implemented?
Online service providers shall have to verify a subscriber’s Member State of residence by relying on two means of verification. The Portability Regulation proposes a number of verification methods including a subscriber’s identity card, payment details, place of installation of a set top box, payment of its licence fee to a public service broadcasting, utility bill, billing address, postal address, or IP address.
Are there any data protection issues?
Yes, the verification procedure will mean that online service providers are collecting and using personal data. Such collection of data must therefore comply with data protection legislation and in particular, Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation). The General Data Protection Regulation comes into force on 25 May 2018 and the penalties for failing to comply could result in fines of €20m or 4% of a company’s total worldwide annual turnover, whichever is greater.
Can rights holders prevent cross-border access to online content?
Rights holders will still be able to buy and sell rights to different territories on an exclusive basis and will not have to clear rights on a pan-European basis. However, rights holders will have to accept that their content will be available ‘temporarily’ in a jurisdiction where they have not granted a licence.
What should online content services do next?
Online content service providers should start preparing for the new Portability Regulation and General Data Protection Regulation. In particular, online service providers will need to consider how they will carry out any verification checks (if not doing so already) – and how to police the period during which a subscriber remains temporarily present in another EU jurisdiction. The Portability Regulation makes clear that neither content service providers nor content rights holders will be able to contract out of the Portability Regulation.