HomeInsightsNeed to Know 24.2.14

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Technology

European Commission publishes survey on international roaming.  

Ofcom publishes consultation on technical coexistence issues for 2.3 and 3.4 GHz spectrum release.

PhonepayPlus issues fine of £45,000 against provider over misleading apps. 

Broadcasting

Ofcom upholds privacy complaint against ITV because complainant was not informed of plan to broadcast Scott & Bailey episode which focused on a murder bearing close similarities to the real life murder of complainant’s father. 

Ofcom renews broadcasting licences for Channel 3 (ITV, STV and UTV) and Channel 5. 

Music

Council of European Union adopts Collective Rights Management Directive.

UK Government welcomes European Collective Rights Management Directive. 

Publishing

European Newspaper Publishers’ Association says it fully supports call from German and French Culture Ministers for immediate action to lower VAT on digital press. 

Film & TV

Cinema admissions in European Union down by 4.1%. 

Sport

Court of Appeal refers examination of BSkyB’s arrangements for wholesaling its sports content to market rivals back to Competition Appeal Tribunal. 

Ofcom publishes consultation on broadcast of FIFA World Cup 2014 by BBC and ITV. 

Technology

European Commission publishes survey on international roaming.

The survey of 28,000 EU citizens shows that 94% of Europeans who travel outside their home country limit their use of services like Facebook, because of mobile roaming charges.  As a result, the Commission calculates that telecoms companies are missing out on a market of around 300 million phone users because of current pricing strategies, with negative effects for other businesses such as app makers.

At the same time as booming use of mobile at home, especially use of mobile data, other effects of roaming premiums include:

  • 47% would never use mobile internet in another EU country;
  • only 1 out of 10 would use e-mails in the same way as at home;
  • more than a quarter of us simply switch off our mobiles when we travel in the EU; and
  • millions divert to SMS rather than pay for calls.

Frequent travellers, the most lucrative section of the potential market, are more likely to switch-off their mobile phone data roaming capabilities than occasional travellers.  The Commission believes this is because frequent travellers are better informed about the real costs of data roaming in Europe than less frequent travellers.

Commissioner, Neelie Kroes said: “I am honestly shocked by these figures.  It shows we have to finish the job and eliminate roaming charges.  Consumers are limiting their phone use in extreme ways and this makes no sense for the companies either.  It’s not just a fight between holiday-makers and telecoms companies.  Millions of businesses face extra costs because of roaming, and companies like app makers lose revenue too.  Roaming makes no sense in a single market – it’s economic madness”.

The Commission’s “Connected Continent” legislative proposal asks the European Parliament and Council to achieve a Single Market when making a phone call or browsing the Internet.  The aim is to achieve a combination of regulatory obligations and market incentives that will induce mobile operators to extend their domestic plans/bundles so that by 2016 at the latest, customers throughout the EU are able to use their phones and smartphones at domestic rates while travelling throughout the EU).  Under rules adopted in 2012, customers will also have the right from July 2014 to leave their domestic operator when travelling and take cheaper roaming services from a local operator in the visited country or a from rival roaming provider in the home country, without changing their SIM card.  The aim is to phase out and eventually eliminate the difference in charges paid for domestic, roaming and intra-EU calls. 

Ofcom publishes consultation on technical coexistence issues for 2.3 and 3.4 GHz spectrum release.

The consultation sets out Ofcom’s proposals for addressing technical issues related to the forthcoming award of 190 MHz of spectrum in the 2.3 and 3.4 GHz bands.  It focuses in particular on the future coexistence between potential new users of the spectrum and existing users of adjacent frequencies. 

PhonepayPlus issues fine of £45,000 against provider over misleading apps.

PhonepayPlus, the UK phone-paid services regulator, today fined Nobinet Ltd £45,000 and ordered refunds over misleading apps on Facebook and Tumblr that led to a “Pac-Man” style game with hidden PRS charges. 

The complaints received by PhonepayPlus about Nobinet included one parent who reported that their 13-year-old son was affected and another parent whose 17-year-old daughter’s phone had been charged.

There were a number of misleading elements to the service including apps spread virally through Facebook and Tumblr and consumers reporting being unaware that they were paying to play a “Pac-Man” game.

Users of Facebook and Tumblr were misled by adverts promising to reveal who had viewed their profiles.  When clicked on, these adverts then re-posted themselves onto the user’s own wall and took users to a “Pac-Man” style game.  Consumers were told that if they obtained the highest score in the game they would be entered into a draw to win high value prizes, including iPads and Playstation 3 consoles.

To enter the game the users were asked to enter their phone numbers but several reported that they hadn’t realised they had signed up for a subscription.

Patrick Guthrie, PhonepayPlus’ Director of Strategy & Communications, said: “Consumers were tricked into signing up for this service by misleading digital marketing.  Most affiliate marketing services follow the rules, but this case should be a warning to consumers to take care following adverts that then require them to enter their phone number online.  If an advert promises something that looks too good to be true then treat it with caution”. 

Broadcasting

Ofcom upholds in part privacy complaint against ITV because complainant was not informed of plan to broadcast Scott & Bailey episode which focused on a murder bearing close similarities to the real life murder of complainant’s father.

Ms A complained that the character murdered in this episode mirrored that of her father in that names and circumstances of her close relatives were shared and the attack and the way the killers were traced were similar.  ITV explained that a police consultant, who provided insights into the details of real crimes including the murder of Mr A, assisted with the production process for the broadcast.

Ofcom considered that, although not all the personal circumstances of close relatives of the victim would necessarily be in the public domain, the fact that much of the detail surrounding the real life murder of Mr A was and had been in the public domain for some time gave the complainant a lower expectation of privacy in respect of it.  Ofcom also recognised that broadcasters should have the right to have freedom of expression to create fictional dramas drawing upon real life events.  As such, Ofcom did not consider that Ms A’s consent was required to broadcast the material complained of.

Because of the many close similarities between Ms A’s father’s real life murder and the murder depicted in the programme, Ofcom considered that the programme had on this particular occasion become, though unintentionally, in certain respects more akin to a dramatic reconstruction than a purely fictional drama and had the potential to cause some distress to Ms A and her immediate family members.  Ofcom considered that ITV, so far as was reasonably practicable, in accordance with rule 8.19 of the Broadcasting Code, should have informed Ms A (as an immediate relative of the murder victim) of the plans for the programme and its intended broadcast.  In this respect Ofcom upheld the complaint.  .

Ofcom renews broadcasting licences for Channel 3 (ITV, STV and UTV) and Channel 5.

Ofcom has renewed the licences for ten years from 1 January 2015, following acceptance of terms by the licensees.

This follows the decision by the Secretary of State for Culture, Media and Sport, Maria Miller, in November 2012, which enabled the renewal of these public service broadcasting licences.

Earlier this month, Ofcom confirmed that it would renew the licences and set out the terms for renewal, which all the licensees have now accepted.

Ed Richards, Ofcom’s Chief Executive, said: “The renewal of the Channel 3 and 5 licences is an important step in securing a sustainable future for commercial public service broadcasting in the UK over the next decade”.

Ofcom consulted on the programming obligations for the Channel 3 and Channel 5 licences, proposals to change the areas covered by two licences held by ITV, and the methodology for determining the financial terms for the licences in February 2013. 

Music

Council of European Union adopts Collective Rights Management Directive.

Following the European Parliament’s vote to approve the Collective Rights Management Directive on 4 February 2014, the Council has now also approved and adopted the Directive.

The Directive pursues two complementary objectives:

  • to increase transparency and efficiency in the functioning of copyright collective management organisations; and
  • to facilitate the granting of cross-border licensing of authors’ rights in online music.

The new Directive aims to create conditions for the more effective online licensing of music by collective management organisations in an increasingly cross-border context.

Currently, in the online music sector, online service providers wishing to obtain licences for cross-border music services across EU borders have to obtain licences from separate collective management organisations in each EU Member State.  This fragmentation also prevents consumers from enjoying the widest possible access to the considerable diversity of musical repertoires.

The new Directive will, the Council says, enable service providers to obtain licences from collective management organisations operating across EU borders.  As a consequence, consumers will be able to enjoy a much wider choice of music, either to download or to stream.  It will also encourage the development of new models of music access.

The Council says that the development of legal online music services across the EU will also contribute to the fight against online infringements of copyright.

Member States will have two years to incorporate the new provisions into domestic law. 

UK Government welcomes European Collective Rights Management Directive.

The UK Government says that the Collective Rights Management Directive, now agreed by the European Council, will “simplify the licensing process, saving businesses time and money and making it easier for them to operate right across Europe.  The agreement is set to benefit a thriving UK industry which accounts for 1.6 million jobs and more than 5% of the UK economy”.

The UK Government says that it welcomes the changes, which will mean the process for licensing music across the EU will be more efficient.  “This should help improve access to legitimate EU-wide online music services and will also introduce minimum standards of conduct for all EU collecting societies …”, the Government says.

Currently an online music provider, wanting to set up a cross-border music service, has to obtain licences from multiple collecting societies in different member states.  The changes will make it possible to go to fewer, and for some repertoire a single, collecting society, making licensing more efficient.

Minister for Intellectual Property, Lord Younger said:  “The UK has a world class music sector which supports thousands of jobs across the country.  The very fact that we are 1 of only 2 net exporters of music in Europe underlines its importance.  This deal should be seen as a positive step taken by the European Commission and I welcome this agreement.  By simplifying cross-border licenses we are making sure that we continue to do all we can to support this thriving industry”.

Publishing

European Newspaper Publishers’ Association says it fully supports call from German and French Culture Ministers for immediate action to lower VAT on digital press.

In France, a law aimed at aligning the VAT rate that currently applies for the printed press to the digital press, has been approved by the Assemblée Nationale.  In Germany, Culture Minister, Monika Grütters, has called on the EU to put the reduction of VAT rates for digital press on the EU agenda as soon as possible.

ENPA calls on Member States and EU institutions to take immediate action allowing the reduction of VAT rates on the digital press.  ENPA says that the actions from France and Germany are a “clear and decisive political signal for an urgent change”, to align the VAT rates (including zero, super reduced or reduced VAT rates).  ENPA says that this would “encourage a pluralistic, independent and vibrant press sector in Europe”.

The need for change has been strongly supported by ENPA, following the decision of the French government to apply a 2.1% VAT rate to digital press in France.  ENPA wants governments to adapt the VAT legislation in order to provide “a sustainable future for digital business models in the press sector”.  

This is a major step that the European Commission should take before the end of the current mandate in order to fulfil the objectives of the EU Digital Agenda”, ENPA says. 

Film & TV

Cinema admissions in European Union down by 4.1%

On the occasion of the 64th Berlin International Film Festival the European Audiovisual Observatory has released its first estimates for European cinema attendance in 2013.  The Observatory estimates that total admissions in the European Union dropped by 4.1% to 908 million tickets sold, around 39 million less than in 2012 (947 million).  This would mark the second lowest admissions level in the EU since the turn of the century. 

Sport

Court of Appeal refers examination of BSkyB’s arrangements for wholesaling its sports content to market rivals back to Competition Appeal Tribunal.

BSkyB had obtained the right to broadcast live certain high profile sports events, such as the Premier League.  It broadcast them to consumers on what Ofcom defined as “core premium sports channels” through its own Pay TV digital satellite network.  BSkyB’s rivals, such as BT and Virgin Media, provided Pay TV to consumers through Digital Terrestrial Television or DTT, Digital Cable TV and by Internet Protocol Television, which streams programmes to TVs.  BSkyB was always prepared to retail (for a fee) its core premium sports channels on its competitors’ platforms.

From 2007 Ofcom undertook three rounds of consultation on the issue of whether BSkyB, which Ofcom concluded had “market power” in the supply of core premium sports channels, was restricting the wholesale supply of these channels to other Pay TV providers (i.e. BT and Virgin Media, who retailed the channels to consumers) in a manner that was prejudicial to “fair and effective competition” in the Pay TV market.

In March 2010, Ofcom produced a “Pay TV Statement” concluding that BSkyB had a “practice” that consisted of a “strong reluctance” to negotiate wholesale deals for its core premium sports channels with retailers, except where there had been a prospect of regulatory intervention if it had not done so.  The reason for this, Ofcom concluded, was that BSkyB was acting over and above purely short-term commercial interests in order to maintain two “strategic
objectives
”: a) to protect BSkyB’s retail business on its own satellite platform; and b) to reduce the risk of stronger competition from rival retailers to be able to bid for content rights, such as the right to broadcast premium events such as the Premier League matches.  Ofcom concluded that BSkyB’s practice, which Ofcom characterised as a deliberate denial of wholesale access to its core premium sports channels by retailers, was prejudicial to “fair and effective competition” in the Pay TV market.

As a consequence of its findings, Ofcom declared in the Pay TV Statement that, pursuant to s 316 of the Communications Act 2003, it would exercise its statutory right to impose a term in BSkyB’s broadcasting licences in respect of its core premium sports channels, such that it had to offer wholesale its core premium sports channels to retailers at a fixed “wholesale must-offer” price set by Ofcom.  These prices were also determined in the Statement.  This was the first time that Ofcom had exercised its jurisdiction under s 316 of the 2003 Act.

Ofcom also concluded that, to the limited extent that BSkyB would enter any discussion as to the wholesale pricing for its core premium sports channels, it would be only on the basis of the price that BSkyB currently set to Virgin Media for the latter’s right to use the sports channels and other premium channels such as movie channels.  This price was known as the “rate-card” price.  Ofcom found that the price on offer from BSkyB did not enable any other retailer of the core premium sports channels via DTT to compete with BSkyB’s rates to consumers.

BSkyB challenged whether Ofcom had jurisdiction under s 316 to impose licence conditions.  BSkyB also challenged Ofcom’s conclusion that it had a practice of deliberately restricting the supply of its sports channels to retailers on account of the two “strategic objectives” identified by Ofcom in the Statement.  This was the first appeal to CAT on Ofcom’s exercise of its s 316 powers. 

CAT allowed BSkyB’s appeal on the merits of Ofcom’s principal conclusion, finding that Ofcom was wrong to conclude that BSkyB was refusing to negotiate wholesale agreements with retailers in order to safeguard its two strategic objectives, but it rejected BSkyB’s case that Ofcom had no jurisdiction under s 316 to impose the wholesale must-offer condition in BSkyB’s broadcasting licence. 

BT was given permission to appeal the “rate-card” price issue, i.e. whether retailers could compete with BSkyB on the basis of BSkyB’s offer to wholesale its sports channels at the rate-card price and, if so, on what terms.  CAT had dealt with this conclusion only briefly.  In short, CAT had said that, in the light of its conclusion on the first and (in its view) principal issue, i.e. that Ofcom was wrong to conclude that BSkyB was refusing to negotiate wholesale agreements with retailers in order to safeguard its two strategic objectives, it was unnecessary for CAT to deal with the second issue on any competition issues concerning rate-card prices.  BT, supported by Ofcom, argued that CAT had erred as a matter of law in failing to deal with this issue.  BSkyB cross-appealed the jurisdiction decision.  BSkyB was supported by the Football Association Premier League.

The Court of Appeal found that BSkyB’s challenge to Ofcom’s jurisdiction should be dismissed, but that BT and Ofcom’s appeal on the judgment of CAT should be allowed.  The court found that CAT had failed to see the importance of the rate-card price issue and the competition issues that arose from it.  Accordingly, the Court of Appeal referred the matter back to CAT for reconsideration.  (British Telecommunications Plc v Office of Communications [2014] EWCA Civ 133 (17 February 2014) – to read the judgment in full, click here).

Ofcom publishes consultation on broadcast of FIFA World Cup 2014 by BBC and ITV.

Ofcom has published a consultation following requests from the BBC and ITV for consent to broadcast exclusive live coverage of the FIFA World Cup 2014.

The World Cup takes place in Brazil from 12 June to 13 July 2014, and comprises a total of 64 matches.  ITV and the BBC would share coverage of the World Cup.

The matches broadcast by the BBC will be shown on BBC One, with the exception of three matches in the group stages of the tournament that clash with other matches.  These will be shown on BBC Three or the interactive streams of BBC One.

The matches broadcast by ITV will be shown on ITV1, with the exception of five clashing matches.  These will be shown on one of ITV’s free-to-air digital channels.

In accordance with s 101 of the Broadcasting Act 1996, Ofcom’s consent is needed for exclusive live coverage of Group A Listed Events.  The Code on Listed Events sets out the matters that Ofcom will take into account in deciding whether or not to grant consent.

Ofcom invites broadcasters and other interested parties to comment on the request by ITV and BBC by Tuesday 18 March 2014. 

 

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