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Summary

On May 18, 2017, the European Parliament approved new portability regulations that limit the use of geo-blocking by online services such as Netflix, Amazon Prime, and Spotify. The regulations are restricted to fee-based online services and ensure that subscribers will be able to access digital content in other EU countries that they temporarily visit from 1H18. The law still needs final approval from the EU Council before member states have to begin incorporating it into national legislation.

Fee-based online content subscribers will finally be able to access services regardless of location

A major part of the EU's Digital Single Market strategy is the commitment to end unjustified geo-blocking, which providers use to deny customers in one country access to content based in another. New portability rules approved by the European Parliament in May 2017 forbid this practice for copyrighted audiovisual content.

While the rules do not blanket ban geo-blocking, they do insist that online AV content services allow cross-border content portability to customers who have paid subscriptions and are temporarily in another member state. This guarantees that customers can continue to access the services they have paid for in their home country, regardless of their location, and without the need for content providers to purchase pan-European rights, which generally only the largest providers can afford. It should also ensure that investment in regional content, especially for minority languages, is not reduced. As geo-blocking is becoming common practice – 68% of digital content providers have informed the EC that they geo-block consumers located in other EU member states – these rules are expected to have extensive implications for many providers, including OTTs, pay-TV providers, and broadcasters.

During the consultation process, the industry noted that it saw little need to intervene, because multi-territorial licenses already exist and demand is currently limited. Despite this, the EU has chosen to press ahead with rules that place considerable burden on providers. One area that will concern them is the measure aimed at overcoming the challenges of considerable variations in copyright legislation between EU member states. The EC has attempted to address the matter by including provisions that allow audiovisual providers to take steps to establish the residency of their subscribers, to avoid breaching any content rights and national laws.

Under the rules, providers will be allowed to take reasonable measures to verify that a subscriber has not moved permanently, to ensure that consumers don't purchase content services in member states offering the lowest price. Verification would be through identity cards, payment details, tax information, and IP address checks, but providers still need to adhere to data protection principles, including the proportionate processing of personal data and implementation of safeguards, especially for IP address checks.

The approach seems remarkably similar to the residency verification process involved in the EC's "Roam like at Home" (RLAH) policy, which aims to allow customers to use their mobile phones abroad without incurring additional charges, but it is also rather complicated. It will likely burden online service providers with a costly verification process. This might concern customers if it results in a rise in the cost of subscriptions, especially in countries where existing prices are low, as content providers try to maintain current revenue levels.

Appendix

Further reading

The Regulatory Environment for Platforms, TE0007-001003 (March 2016)

"EU reform of copyright rules requires striking a careful balance," TE0007-001110 (January 2017)

Author

Sarah McBride, Analyst, Regulation

sarah.mcbride@ovum.com

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