The cross-border portability of online content: progress report on the EU draft Portability Regulation

The European Commission published its draft Regulation on the cross-border portability of online content back in December 2015 (see here for our comments on the draft regulation at the time). It is now making its way through the EU’s legislative process: we summarise below how the draft Regulation is progressing, the likely timetable for its implementation and the outstanding issues.

What the draft Regulation says

The main provisions of the draft Regulation are as follows:

• Obligation to provide cross-border access: providers of portable online content services will be required to give their subscribers access to their service when they are temporarily present in other Member States.
• Service deemed to occur where subscriber usually resident: the provision of an online content service to subscribers temporarily present in other Member States will be deemed to occur solely in the subscriber’s Member State of residence. This is intended to avoid copyright and regulatory concerns in providing the service cross-border.
• Override of contractual provisions: any contractual provisions that are contrary to the operation of the Regulation will be unenforceable, including contractual provisions between copyright holders and service providers.
• Quality of service required: the obligation to provide the online content service cross-border will not extend to any quality requirements that the provider is subject to when providing this service in the Member State of residence, unless otherwise expressly agreed by the provider.

The draft Regulation’s progress

The EU’s legislative process allows the other two legislative organs of the European Union – the Council of the European Union (composed of ministers from the EU’s Member States) and the European Parliament – to review and propose amendments to the Commission’s proposal.

The Council completed its review and agreed a revised draft in May 2016. A number of amendments have also been proposed by the European Parliament’s Legal Affairs Committee, with these amendments due to be voted on by the European Parliament on 17 January 2016.

Once the European Parliament has voted, it will still be necessary for the various EU legislative organs to agree on a final text before it is adopted and comes into force.  It seems likely that the earliest this could happen would be towards the end of the first quarter of 2017.

When will the Regulation start to apply?

The Commission’s original proposal was that the Regulation would start to apply 6 months after it came into force.  However, the Council has proposed a longer 12 month period.  Conversely, some amendments under consideration by the European Parliament would see parts of the Regulation start to apply as soon as it came into force.

It seems likely, therefore, that the Regulation will start to apply towards the end of 2017 or first half of 2018.

What is still to be decided?

The main outstanding issues are:

• Which online content service providers will the Regulation apply to? The Commission’s original proposal extended to all “portable” online content services, encompassing:

  (a) online audio-visual media services within the meaning of Audio-visual Media Services Directive;

  (b) online services the main feature of which is the provision of access to and use of works or protected subject matter; and

  (c) online transmissions of broadcasting organisations, whether in a linear or on demand manner.

  The Council’s proposed amendments would see the obligation to provide cross-border portability limited to paid-for online content services, so excluding many public service broadcasters and services funded by advertising revenues or other models.

  Under the Council’s proposals, if such service providers wished to provide their service cross-border, even though they were not obliged to do so, then they would still be able to take advantage of the provisions by which their service would be deemed to occur solely in their subscriber’s Member State of residence (avoiding, for example, copyright concerns in providing their service cross-border).

• Meaning of “temporarily present in another Member State”: Key to the practical effect of the Regulation will be how the final text defines “temporarily present in another Member State”. The Commission’s initial proposal appeared to define “temporarily present” as any length of absence from a subscriber’s Member State of residence.The Council has proposed amendments that would narrow that definition, in particular by requiring that a subscriber has to return regularly to their Member State of residence.  A number of amendments are also being proposed in the European Parliament, so it is still not yet clear what the final definition will be.

• Verification of a subscriber’s Member State of residence: The Commission’s initial draft was largely silent on how service providers were to determine an individual subscriber’s Member State of residence, but the Council has proposed further clarification, with a list of possible verification means.The Council’s amendments also propose that service providers and content owners can agree what verification means should be employed.  Again, a number of amendments are also being proposed in the European Parliament, including provisions requiring service providers to verify that any absence from the Member State is temporary through random checks on the IP addresses of subscribers, so we wait to see what the final text will be.

What should you be doing now to prepare?

Content owners and providers of online content services should review their contracts, as provisions that prevent the delivery of content cross-border within the EU may well become unenforceable once the Regulation starts to apply.  Content owners are likely to want to address how subscribers’ Member State of residence is to be verified and include provisions that seek to ensure that cross-border access is only granted to subscribers who are only present in another Member State on a temporary basis.

At some point, online content service providers should also review their terms and conditions with subscribers (it may be that the appropriate time for this will be after the final text of the Regulation has been agreed).  Issues that will likely need to be addressed are the expected quality of service when content is provided cross-border, and the approach that will be taken to verification of the subscribers’ Member State of residence and that any presence in other Member States is temporary.