Net neutrality decision U.S. Court of Appeals

On 14th January 2014 the U.S. Court of Appeals for the District of Colombia Circuit decided upon a Petition by Verizon on the 2010 net neutrality Order of the Federal Communications Commission (FCC), the so-called ‘Open Internet Order’. The Order imposes disclosure, anti-blocking and anti-discrimination requirements on broadband providers.

The Court recalled its earlier Decision (2010) in the case of Comcast Corp. v. FCC in which it had determined that the FCC had “failed to cite any statutory authority that would justify its order compelling a broadband provider to adhere to open network management practices”. This time the Court concludes that the FCC was right in assuming that the Telecommunications Act 1996, notably Section 706, vests it with “affirmative authority to enact measures encouraging the deployment of broadband infrastructure”. The Court also concluded that this Section of the Telecommunications Act empowers the FCC “to promulgate rules governing broadband providers’ treatment of Internet traffic, and its justification for the specific rules at issue here..”.

However, the Court stresses that the fact that the FCC has general authority to regulate, does not imply that, in doing so, it may contravene express statutory mandates. As the FCC had chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Court concludes that the Communications Act expressly prohibits the FCC from nonetheless regulating them as such. As the FCC failed to establish that the anti-discrimination and anti-blocking rules do not impose per se common carrier obligations, those rules have now been annulled by the Court.

To learn more about the European position on net neutrality, click here.

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Cross-border access to content in the Internal Market

On 13 January 2014 the European Commission finally announced a long overdue initiative to promote the freedom of movement of electronic content services in the internal market (see also this press release). The initiative is not based on Internal Market principles, but rather on antitrust considerations. The reason for this is, most probably, that the realisation of Internal Market objectives requires legislative action. Such action requires the support of the Council (i.e. the Member States) and the European Parliament and would therefore most likely be bound to fail. Trying to reach the same goal through antitrust action is faster as it can influence the behaviour of market parties directly and does not require new legislation.

The Commission suspects that the right to freedom of movement of the above services is hampered by contractual arrangements between film studios and pay TV broadcasters. The Commission was triggered by a recent Decision by the EU Court of Justice in a case concerning the satellite broacasting of football matches (the Premier League Case, also often referred to as the Murphy Case).

The Commission will investigate whether there are any restrictions in agreements between film studios and pay TV broadcasters that grant ‘absolute territorial exclusivity’ to the broadcasters. Such provisions prevent the selling of content services in response to unsolicited requests from viewers located in other Member States and the delivery of those services to existing subscribers who are located or who travel outside the licensed territory. The Commission believes that such provisions might infringe the EU antitrust rules, which prohibit anticompetitive agreements.

The Commission intends to examine if the principles set out by the EU Court of Justice should also be applied to other types of audiovisual content (apart from sports events) such as the films licensed by U.S. studios.

From a user perspective, the Commission’s initiative should be welcomed; users should not be deprived of access to content services which they are entitled to use for reason that they paid for it. From a rightsholder perspective, there’s no reason to fear that they will no longer be able to sell their rights on a territorial basis; they can continue to do so, but they will have to accept that users who subscribe to a content service under the conditions which apply within a certain territory, should consequently be able to access the service from anywhere within the Internal Market.

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Terrestrial broadcasting slowly coming to an end?

Ten years ago, in 2004, Ad van Loon (Founder and Owner of X-Media Strategies) predicted the end of the broadcasting era. He argued that television programme services are only one out of many different types of electronic content services which, for their delivery to end users, depend on electronic communications networks as a transport medium. He explained that technology had made it possible to deliver electronic content services via any type of electronic communications network (terrestrial, satellite, cable, dsl, fibre). It can be expected that in the near future, the distinction between broadcasting services, voice telephony services and internet services will disappear entirely. What needs to be transported between end users and providers of different services are data. All different types of services basically rely on data; therefore, what is needed is the creation of networks and protocols which are capable of delivering data quickly, efficiently, securely and reliably via competing electronic communications networks. The network operator does not need to know which services are delivered through the data.

Given the above developments, it only makes sense that radio spectrum which was originally reserved for dedicated services (such as voice telephony or broadcasting) is slowly but surely going to be assigned for more general purposes, notably for wireless broadband communications.

The announcement by the European Commission of 13th January 2014 to establish an advisory panel on the future use of UHF spectrum for TV and wireless broadband should be seen in the light of this. The advisory panel will be chaired by Mr Pascal Lamy (former Head of the World Trade Organisation and former Member of the European Commission). For the questions to be addressed by the panel and a full list of members, click here.


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U.S. retransmission case to be decided by Supreme Court

On 10th January 2014, the U.S. Supreme Court decided that it will take on and eventually resolve the ongoing dispute between Aereo and a group of broadcasters.

Aereo provides the users of its service with an individual antenna which is capable of receiving broadcast signals and which is located at a remote location. The signals received by the remote individual antenna are then delivered over the internet to the subscriber in the form of an individual webpage. On that webpage, the user can choose which broadcast channel he or she wants to watch live and/or which of the programmes broadcast by the channels he or she wants to record for later viewing.

The broadcasters argue that Aereos thus engages in an act of retransmission for which it should seek the consent of the broadcasters as, under copyright law, it is a new act of communication to the public (a new public performance). In exchange for their consent, Aereo would then have to pay a licence fee to the broadcasters. Aereo takes the position that it rents to its users remote equipment comparable to what these users could install at home: each user is receiving a distinct transmission generated by their own individually rented antenna.

The court of first instance, the U.S, District Court for the Southern District Court of New York, ruled in favour of Aereo; the appeal court (the U.S. Court of Appeals for the Second Circuit) denied a rehearing of the case. Consequently, the broadcasters and Aereo petitioned the U.S. Supreme Court, which now accepted to decide the case. It may, however, take until next year before a decision is taken.

The case has many interesting elements which are also under discussion in Europe, albeit in different settings:

– the relevance of the distinction between proxy caching and mirror caching;

– the definition of retransmission;

– the relevance of storing and providing a unique playback copy per user rather than a master copy to which multiple users can be granted access;

– interpretation of the notion of ‘public’ in the copyright relevant act of ‘communication to the public’;

– interpretation of the notion of ‘potential audience’;

– the relevance of time-shifting capabilities.

All these questions can only be ultimately resolved in legal procedures in which only the highest courts can give a final decision (which can go either way and therefore the outcome is highly uncertain). It would be better to follow the example of the Netherlands, where the parties in the value chain of production and distribution of audiovisual media services decided that a legal approach hampers or delays innovation. Therefore, they started commercial negotiations on an economic model which benefits all parties and provides fair compensation for the original creators. X-Media Strategies facilitated this process. For detailed information, please feel free to contact us.

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Does AT&Ts Sponsored Data Plan violate net neutrality rules?

On 6 January 2014, AT&T announced its Sponsored Data Plan at the Las Vegas Consumer Electronics Show. In short, the Plan ensures that subscribers to an AT&T dataplan for cellphones do not have to pay for accessing sponsored content or advertising through a 3G or 4G network; the advertiser pays for the capacity required to download the commercial content to the subscribers’ mobile phones. Politicians inWashington have already condemned AT&Ts initiative for reason that it would violate U.S. rules on net neutrality. AT&T has denied any relation between their Sponsored Data Plan and net neutrality principles.

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Home copying levies can only compensate for downloads from legal sources

Amounts paid to rightholders from home copying levies should not be considered as a form of remuneration in exchange for their permission to allow reproductions of their works and/or other protected materials for non-commercial purposes by individuals for their personal use; payment of those amounts should rather be regarded as an indemnification for exploitation losses presumed to occur as a result of such a permission, in cases where the legislator created a legal fiction which presumes that the rightsholders have granted this permission.

Home copying levies are not intended to compensate rightholders for the copying of their works and other protected materials from illegal sources (i.e. from sources which have not obtained the rightsholders permission to make protected materials available). EU Member States cannot permit the collecting of home copying levies to compensate for the reproduction of protected materials which are dowloaded from illegal sources.

Home copying levies can only be collected from individuals who reproduce protected works and other protected materials and can therefore only be levied on devices and information carriers which are made available to users for private use purposes only; i.e., not on computers, smartphones and other devices for professional use!

The above are the opinions expressed by the Advocate-General in his Conclusion in a case referred to the European Court of Justice by the High Court of The Netherlands for a preliminary ruling on 9 January 2014. It remains to be seen whether the European Court will follow the Advocate-General.

An English version of the Conclusion is not yet available. Here you can find the French and Dutch versions.

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