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Interim Digital Britain report delivers little detail but promises future action

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30 January 2009

The Government yesterday released their draft "Digital Britain" report.  Lord Carter's report was due to have been released earlier this month but had to be delayed.  The full report and proposals will be unveiled later in the year, and is expected in June.

The interim report outlines plans to boost the digital and communications industries which , according to the BBC, contribute more than 50bn a year to the UK economy.  The report contains 22 recommendations affecting both broadcasting and digital infrastructure.  Supporting the view that digital content and its exploitation is key to individuals, media businesses and the UK economy as whole, the Culture Secretary Andy Burnham told Parliament Britain "led the world in content creation".  Prime Minister Gordon Brown said internet connections were "as essential to our future prosperity in the 21st Century as roads, bridges, trains and electricity were in the 20th".  A statistic in the report's introduction backs this up stating that "by 2012 1 in every 5 of all new commerce in this country will be online" with the UK's digital economy already accounting for around 8% of GDP.

The report is broken down into six sections:

   1. Introduction and Executive Summary

   2. Digital Networks

   3. Digital Content

   4. Universal connectivity

   5. Equipping Everyone to Benefit from Digital Britain

   6. Conclusion

A full review of the 86 page bulletin (available at www.berr.gov.uk) is beyond the scope of this bulletin but perhaps of most interest to rights owners will be "Actions" 11 - 13 as set out below.

Action 11

By the time the final Digital Britain Report is published the Government will have explored with interested parties the potential for a Rights Agency to bring industry together to agree how to provide incentives for legal use of copyright material; work together to prevent unlawful use by consumers which infringes civil copyright law; and enable technical copyright-support solutions that work for both consumers and content creators.  The Government also welcomes other suggestions on how these objectives should be achieved.

Action 12

Before the final Digital Britain Report is published we will explore with both distributors and rights-holders their willingness to fund, through a modest and proportionate contribution, such a new approach to civil enforcement of copyright (within the legal frameworks applying to electronic commerce, copyright, data protection and privacy) to facilitate and co-ordinate an industry response to this challenge.  It will be important to ensure that this approach covers the need for innovative legitimate services to meet consumer demand, and education and information activity to educate consumers in fair and appropriate uses of copyrighted material as well as enforcement and prevention work.

Action 13

Our response to the consultation on peer-to-peer file sharing sets out our intention to legislate, requiring ISPs to notify alleged infringers of rights (subject to reasonable levels of proof from rights-holders) that their conduct is unlawful.  We also intend to require ISPs to collect anonymised information on serious repeat infringers (derived from their notification activities), to be made available to rights-holders together with personal details on receipt of a court order.  We intend to consult on this approach shortly, setting out our proposals in detail.

Digital Content

So it seems there is a lot of work left still to do by the time the final report is released.  The provisions relating to Digital Content are picked up in more detail in Section 3 commencing on page 36 of the report.  This section acknowledges that "British consumers have a huge appetite for new digital services, with high levels of take-up of new networks and devices.  This in turn creates a market environment which unlocks new commercial possibilities and encourages innovation in new content, services and applications".

However, it is acknowledged that this progress has placed a strain on traditional business models; "These changes are challenging the economics of intermediaries of all kinds and more traditional types of content companies - publishers, the music industry, the newspaper industry and broadcasters - in particular".

According to the report there are four commercial challenges that need to be addressed to "preserve a healthy content market in the digital age".  These are:

   1. If digital distribution and copying costs are lower then so too are digital revenues from the product  or the advertising impact.  The report states that new business models must evolve for this environment and that "the role for regulation or intervention is not to prevent the emergence of new business models or to preserve old and unsustainable ones", it is to "contribute constructively to the transition".

   2. The "rapid growth in the number of digital outlets has hugely increased the volume of advertising inventory available".  The report states that this trend will only increase and "unless there is a paid-for product or service for the consumer to own, (e.g. paid-for content or application downloads) internet content is perceived to be 'free'".

   3. There is "the challenge of access to content and the ability to innovate across the increasing range of distribution platforms and digital devices".

   4. The "very ease with which digital content can be distributed and copied also dramatically increases the scope for unlicensed and illegal copying and distribution" with new forms of piracy being manifested at "an increasing pace".  This will come as no surprise to the rights-owners and those in the music and film industries who have suffered for years from online piracy.  Lord Carter's view seems to be that "counter piracy measures and effective rights enforcements are an important element, but only one element and insufficient on their own: new methods of legitimate access, based on new business models and incentive structures will be crucial".

That is all very well, but what many wanted to know is are the Government going to be forceful with the ISPs in order to prevent illegal file sharing?

Investment in Content: Rights and Distribution

At least the size of the problem has once again been acknowledged in black and white.  The section of the report dealing with these issues (commencing on page 39) states "traditional mechanisms to identify rights-holders and acquire legal consent to share often need radical updating to meet the near-instant demands of this new world.  There is a clear and unambiguous distinction between the legal and illegal sharing of content which we must urgently address".  However, despite acknowledging this, the report then goes on to suggest that digital rights providers  and their business models may need to change due to a social acceptability of such behaviour.  Not exactly comforting for rights-owners whose content is already the subject of copyright infringement.

Reference is made in the report to the fact that the UK achieved a world first with the Memorandum of Understanding between the ISPs and rights holders to tackle unlawful file-sharing by consumers which demonstrates that "these two groups with very different agendas can engage in an intelligent conversation".  However, the report shows something of a reluctance for the Government to enter the fray stating "It's clearly for industry to do the commercial deals - but Government should smooth the path where it can".

The scale of the problem is not watered down however, and the damage done to the creative industries is acknowledged on page 41 of the report.  Despite this the report is light on actual propositions to stop the problem.  The overriding theme is that industries must work together and those from every sector and stage in the creative process should reach a commercial solution about how best the problems can be solved, whether that be new business models, new enforcement methods or through improved education.

In relation to the specific issue of unlawful file-sharing, the report points out that it was made clear in the Creative Britain report that the Government would legislate "if necessary".  The consultation on how to tackle the issue finished in October and a Response to that consultation was yesterday published on the BERR website.  Perhaps unsurprisingly, the report states that "none of the options highlighted in the consultation attracted widespread support.  Rather there was a marked polarisation of views between the rights holder community, consumers, and the ISPs over what action should be taken".  The report continues that "our preferred option of co-regulation did not attract widespread support.  The key problem highlighted was the lack of certainty over the nature of the obligation on ISPs and the resulting legal uncertainty this would create for all parties".

However, the idea that ISPs might have to collect anonymised data on serious repeat infringers (to be made available to rights-holders together with personal details on receipt of a court order) could make it "significantly easier" for rights-holders to take targeted legal action.  Whilst the Government "intend to consult on this approach shortly", the report states that international experience of action of this sort suggests that more than two thirds of infringers change their behaviour when receiving notification.  "These obligations will form the central elements of a Code on unlawful file sharing which Industry would be required to have in place, supported by backstop powers overseen by Ofcom".  The section ends:

"We think the concept of a new Rights Agency and legislative action aimed specifically at addressing unlawful peer-to-peer file sharing could be major steps forward.  But this is new and difficult territory, and we want to get it right.  So we will review the impact of any new measures, and will not hesitate to examine other options if these do not prove to be effective".

Conclusion

It seems there is still a lot of work and consulting to be done before any significant progress can be reached definitively on the issue of file-sharing and copyright infringement.  Indeed, the Conservatives said the report promised "no new action, but eight further reports".  The proposal which seemed to be grabbing most of the headlines related to access to broadband connections.  As expected by many, Lord Carter called for everyone in the UK to have access to broadband with a speed of at least 2 megabits per second (mbps).  Connections of this speed will increase downloads and allow improved access to sites containing large files such as videos.  At present, telecommunications firms are only obliged to provide access lines which can handle 28.8kbps.  Other sections of note included provisions relating to a proposed BBC Worldwide/Channel 4 tie-up and improvements in mobile technology with increased network sharing and with plans to push out the coverage of mobile broadband to eventually replicate 2G coverage.

Davenport Lyons 2009. All rights reserved.

This document reflects the law and practice as at January 2009. It is general in nature, and does not purport in any way to be comprehensive or a substitute for specialist legal advice in individual circumstances.


About the Author

Davenport Lyons [www.davenportlyons.com] is an international business law firm based in the West End of London. The firm has an excellent reputation in areas spanning corporate to property, defamation to intellectual property, music to film finance and digital rights to sport.


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Article Published/Sorted/Amended on Scopulus 2009-03-26 01:14:35 in Legal Articles

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