Documents considered by the Committee on 13 July 2016 Contents

3Digital Single Market: Cross-border portability of online content

Committee’s assessment

Legally and politically important

Committee’s decision

Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Innovation and Skills Committee and the Culture, Media and Sport Committee

Document details

Proposal for a Regulation on ensuring the cross-border portability of online content services in the internal market

Legal base

Article 114 TFEU; ordinary legislative procedure; QMV

Department

Business, Innovation and Skills

Document Numbers

(37394), 15302/15 + ADDs 1–2, COM(15) 627

Summary and Committee’s conclusions

3.1People are increasingly accessing online content services7 through portable devices (such as tablets and smartphones). As a result, demand for access to content on the move, including cross-border, is rapidly growing.

3.2At present, subscribers to online content may find that their access to such services is effectively blocked when travelling abroad given copyright or license restrictions.

3.3In December 2015, the Commission proposed a draft Regulation intended to enable EU consumers who have purchased or legitimately subscribed to online content services in their home Member State access to that service when ‘temporarily present’ in another Member State. It is one of a series of legislative proposals aimed at implementing the Commission’s wider Digital Single Market Strategy to increase cross-border e-commerce.

3.4On 26 May, the Council agreed a General Approach,8 which enables the Council to start negotiations with the European Parliament (once it has set its negotiating position) under the ordinary legislative procedure.

Government’s position (pre-referendum result)

3.5The Parliamentary Under-Secretary of State at the Department for Business, Innovation and Skills (Baroness Neville-Rolfe) has been a strong supporter of this proposal from its inception and has agreed with the Commission’s prioritisation of it, particularly in view of the end of roaming charges next year.

3.6In previous correspondence with the Minister, the Committee sought clarification on key legal definitions such as ‘temporarily present’ and ‘Member State of residence’, and the financial costs to services providers, rights holders and governments of implementing and enforcing the Regulation, including the requirements for verifying a user’s Member State of residence.

3.7At its meeting on 19 May, noting that revisions to the draft Regulation had been in line with UK interests, the Committee agreed to grant the Minister a scrutiny waiver to allow her to support a General Approach at the Competitiveness Council on 26 May. This was subject to the following conditions being met—that:

3.8Previous Report chapters setting out the detail of the draft Regulation, the Government’s position on it and subsequent correspondence between the Committee and the Government are listed at the end of this chapter.

3.9We thank the Minister for her update on the outcome of the negotiations at the Competitiveness Council on 26 May and the adoption of a General Approach. The Committee notes that final revisions to the draft Regulation were in line with the draft text shared with us. We summarise the key revisions to the original proposal as follows:

3.10Following agreement in the Council, we would be grateful for the Minister’s views on which aspects of the Council’s proposal the European Parliament is likely to consider difficult or seek to revise, and to keep us updated on trilogue negotiations.

Brexit implications

3.11Following the vote for the UK to leave the EU, we also ask the Minister to clarify the following:

3.12We would be grateful for a response to the above issues by the end of September. In the meantime, we retain this proposal under scrutiny and draw the Minister’s letter and our conclusions to the attention of the Business, Innovation and Skills Committee in light of their inquiry on the UK Digital Economy and the Culture, Media and Sport Committee.

Full details of the documents

Proposal for a Regulation on ensuring the cross-border portability of online content services in the internal market: (37394), 15302/15 + ADDs 1–2, COM(15) 627.

Background

3.13The detail of the draft Regulation, the Government’s position on it and correspondence with the Committee are set out in the Committee’s previous reports, listed at the end of this chapter.

The Minister’s letter of 7 June 2016

3.14The Minister informs the Committee that a General Approach was agreed on the proposal at the Competitiveness Council on 26 May, and thanks it for agreeing to waive the scrutiny reserve to allow the Minister to reach this agreement, as it “moves us [the UK Government] closer to the speedy implementation of this package I have previously mentioned the UK would like to see”.

3.15She considers that the “final agreed text achieves the UK’s negotiating objectives, providing for a Regulation that provides certainty for rights holders; flexibility for service providers; and a genuinely useful offering to consumers” and “is in the UK’s interests”.

3.16The Minister confirms, as set out in her previous update to the Committee of 18 May, that the draft Regulation was further revised to deal with the two key outstanding issues of the definition of ‘temporarily present’ and the ability for rights holders to ‘opt-out’ of verification of a subscriber’s Member State of residence.

3.17The Minister considers that amendments to the original proposal have balanced consumer interests with service providers’ and rights holders’ interests, and will generate benefits for all stakeholders:

“On balance, I believe the changes we have secured have minimised the impacts on business, while continuing to provide a valuable offering to consumers. We have engaged closely with industry, both services providers and rights holders, in order to understand what changes to the draft Regulation we needed to make to allow portable services to be adopted in the most appropriate way. Stakeholders across the spectrum have engaged with us throughout the negotiation process—we have listened, and taken on board their industry expertise to shape the best Regulation possible. For consumers this means that they will have access to all paid for services on a portable service from late 2017, and for business this means implementation costs that are minimal.”

3.18The Minister reaffirms the Government’s position that the ‘opt-in’ provision for free-to-air service providers is necessary to “acknowledge the different business models adopted by these service providers, who are currently not as well placed to offer portability”. In response to the Committee’s question on whether any monitoring or potential review of the ‘opt-in’ for free-to access service providers is being considered, the Minister notes the introduction of a new review provision:

“A new Article 7a has been introduced, which provides an evaluation mechanism to ensure that the Regulation is working as intended. This evaluation, which will occur 3 years after implementation, will assess all aspects of the Regulation, including the opt-in. If free-to-air services were slow or unwilling to adapt their services to comply with the Regulation, Article 7a could be used to provide a legislative proposal to address the situation. In this way we have sought to ensure that the Regulation can be modified in the future should its full intended benefit not be felt by UK citizens.”

3.19In response to the Committee’s question on whether the Commission will update its impact assessment to reflect the amendments made to the original proposal, the Minister states that as “Member States were generally content with the impact assessment, it is unlikely that the Commission will update it”. In response to the Committee’s question on whether the Government will further consider the cost-benefit analysis of the revisions on UK consumers, service providers and rights holders, the Minister states that the “Government will monitor the costs and benefits of this measure to UK citizens as part of any implementing legislative process”.

3.20In response to the Committee’s question on how the Minister thinks the obligation to provide consumers with information as to the quality and availability of portable services is likely to be implemented in practice, the Minister states that the “intention here is that the requirement is light touch, and that information on a service provider’s website should be sufficient to inform consumers about the quality of the service. This has been reflected in Recital 17 of the Regulation”.

Previous Committee Reports

First Report HC 71-i (2016–17), chapter 1 (19 May 2016), Twenty-ninth Report HC 342-xxviii (2015–16), chapter 1 (20 April 2016); Twenty-fifth Report HC 342-xxiv (2015–16), chapter 2 (9 March 2016); Eighteenth Report 342-xvii (2015–16), chapter 3 (13 January 2016).


7 Online content services are defined broadly to include services that provide on-demand and linear access to audiovisual content, music, books and videogames.

8 A General Approach acts as a statement of the Council’s informal agreed position on a proposal and can also be a mandate for trilogue negotiations.




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18 July 2016