European Commission
GD Internal market and services
Department E2 – Services II SPA26/49
B-1049 Brussels
Belgium
Consultation on piracy protection for services protected by conditional access systems1
Name, Addressand email
Verband Privater Rundfunk und Telemedien e. V. (VPRT) Association of Commercial Broadcasters and Audiovisual Services Stromstrase 1
10555 Berlin
Contacts
Claus Grewenig, Deputy Director,
Julia Maier-Hauff, European Affairs,
Introduction:
- Welches Interesse haben sie am Bereich der Zugangsberechtigungsdienste?
VPRTrepresents the interests of approx. 160 companies in the private television, radio and telemedia sector. Members of the VPRT offer all types of protected services as defined by the relevant Directive, depending on the business model2.In the digital environment, protection of these services will continue to increase in importance and thereby contribute substantially to receipt of a multiplicity of offers and service providers. This should apply independently of the actual business model involved (e.g. pay television, advertising or transaction-based television or radio using aconditional access service. To this extent the Directiveis one of the major building blocks for protection of content services against piracy activities which acts alongside the protection of other European regulatory instruments (copyright law etc.). In view of the increase in cross-border piracy, it is particularly necessary to arrive at uniform conditions for infringement of the law and pursuit of this in the internal market to avoid loopholes which could negate any protection from piracy.
Conditional access services are also used by Pay-TV service providers(Pay-Per-ChannelandPay-Per-View) or Free-TV service providers financed by advertising or transactions for the purposes of protecting broadcast content, copy protection and the protection of minors, as well as to maintain licence obligations. Conditional access systems are also necessary to make it possible for the business model of Pay-TV providers e.g. subscription financing to charge in a specific way related to content. They are also a pre-condition for particular individual and personalised offers which are increasingly sought after in the digital environment.
These services can only be received using a special digital receiver in conjunction with asmartcard. In addition, the programmes of someVPRT members can be used via IPTV within the framework of the closed user circuits of the relevant IP-TV network operator.
1Conditional accessDirective 98/84/EC:
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:1998:320:0054:0057:DE:PDF
Questionnaire:
2 See article 2:Television and radio broadcasts, services of the information society.
1
VPRT members also broadcastVideo-on-Demand services on the worldwide web/Internet, partly for payment and partly financed by advertising.3These programmes are normally provided with a DigitalRightsManagement device(DRM) and can only be obtained after being enabled in advance. High qualityHighDefinition content4 must in particular be additionally protected with DRM systems, sometimesbecause this is a condition specified by thelicence holder.
Increasing digitalisation means that the risk of piracy will increase to various degrees. This undermines the commercial chain and endangers whole sectors of the industry and their business models.
To this extent, the debate about revising the CA Directive is of considerable importance to
VPRT members.
– In welchem bzw.welchen Mitgliedstaat(en) sind Sie tätig? Members of the VPRT mainly operate in Germany. Some members or their holding companies operate in one or several EU members states.
Thema 1: Entwicklung grenzübergreifender Dienste und „grauer Markt“
FRAGE1.1.
WasdenkenSie,auswelchenGründendieeuropäischenBürgerkostenpflichtigeaudio-
visuelleDienste(Informationen,Unterhaltung,kulturelleoderSportsendungen)ausan-
derenMitgliedstaatenempfangenwollen?FallsdasnurderFallist,wennsieausge-
schäftlichenoderprivatenGründenunterwegssind,solltedieRichtliniedannaufgeho-
benwerden?
Preliminary comments on the “grey market”
First of all VPRTwould like to make the point that the problem of the “grey market” in the debate should be clearly separated from the debate about renewal of the CA Directive:
The “grey market” means the fact that contracts entered into under civil law are being breached if a consumer uses a service which he receives legally, but outside the area of the contract. This constitutes an avoidance of the broadcaster’s business model, as broadcasters have to restrict their offers to a contractually defined licence area on the basis of obligations under the terms of the licence with the rights holders. Generally “grey” subscribers are registered with a fictitious billing address or with a residential address within the licence area,but receive the service at another place, for example in a holiday resort in another member state. This type of behaviour is difficult forthe service provider to check. Unlike piracy, there is generally in particular a lack of criminal motivation.
Access to the service is not gained with either hacked technical components or devices(Hardware:receiver,set-top boxes,smartcards),nor are “keys” used in illegal ways. This means that no illegal devices as defined in Art. 2e of the CA Directive are being used. There is no reduction in income for the service provider either, as the users of the service do pay their subscription.
3e.g. Premiere Internet TV: from ProSiebenSat.1or RTLnow.de fromRTL
4 High-Definition-content, i.e. high definition television
2
Cross-border
Consumer interest in cross-border services
Against a background of increasing internal European trade and lively cultural exchange, European citizens travel both on business and for pleasure, and may possibly live in another member state because of their work.VPRTis aware that these consumers like to view “their” programmes also whilst abroad or would like to receive certain foreign programmes in their member state because of interest in foreign languages. The number of people with such motives is, however, marginal overall.
Special technical features and the industry’s interests
Territorial issues due to transmission technology
The territorial restriction on the broadcasting of audiovisual services lies partly in the nature of the infrastructure used: programmes broadcast terrestrially can only be received in the respective areas and only marginally across national borders in the border area. Cable television and IPTV is transmitted to a defined circle of households in a particular broadcasting area (closed network). For satellite-supported services, the “footprint”, i.e. the broadcasting area of the satellite which can cross national boundaries, is definitive. For digital terrestrial television, frequencies are allocated nationally. For this reason the licence agreements for services broadcast by satellite generally provide for the possibility of spill-overi.e. exceptional broadcasting beyond the boundaries of the contractual area agreed. It is almost impossible to avoid cross-border analogue broadcasting, particularly in regions with many smaller member states (Benelux) or in border regions. The cover provided by individual satellites varies: the overwhelming majority of satellites supply large parts of Europe and therefore several member states and language areas, other satellite positions cover the whole of Europe. Satellites for internet transmissions reach smaller areas of Europe with several footprints.
Encryption to protect content – no obstacle to cross-border broadcasting
Digitalisation makes it possible to make offers addressable and prevent spill-over by the use of encryption and/or DRM systems. This benefits not only licence holders, as they preserve exclusivity and can exploit this commercially, but also licencees who can comply with licence conditions accordingly.
Protection of content has become more important in the digital world, as a copy of a digital content – unlike that of an analogue offer – provides the same unchanged high quality as the original. Digitalisation substantially simplifies the creation of copies and also makes broadcasting in many different ways possible. Digital contents are therefore often not only encrypted or protected with a DRM system, but also provided with a copy protection mechanism.
Protection of the signal and the content associated with this is also a significant concern in encryption. DRM measures also provide protection and addressability for other IP-based audio-visual services under development.
3
Encryption is not, however, fundamentally incompatible with cross-border usage:in joint language areas, broadcasters also transmit their content across national borders. Premiere, for example, transmits itsprogrammes viasatellite toAustria also and in addition to programmes licenced at home also offers the channel“PremiereAustria”, which is broadcast via satellite from Germany although it can only be subscribed to in Austria. Other broadcasters transmit their content via satellite with several encryption systems(Simulcrypt),so that they can be received on various platforms/in various different countries.
Encryption also makes personalised and individual services possible. Addressing services in this way is technically necessary for the design of new services and the development of an increasingly individualised society. These examples show that encryption and/or the use of DRM systems are not exclusively associated with the aim of receiving payment.
The industry’s interest in cross-border services
Citizens in the EUhave access to a very varied offer, particularly since the introduction of digital radio.The audiovisual industry is very strongly orientated to the needs of the market. It often offers its digital programmes additionally in the original language. This also benefits European citizens living abroad in other European countries.
The territorial restriction on rights of use for audiovisual content and the division into various different windows of use(Video-On-Demand,Pay-Per-View,Pay-Per-Channel,advertising-financed Free-TV)is based on economic decisions made by licensors and licensees and is subject to the contractual autonomy of the parties. Regulatory interference in these mechanisms should therefore be avoided.
Criminal dimension
Ultimately the cross-border dimension of piracy operators should be included in these considerations. Pirates often operate outside the sales area in other countries inside or outside Europe and bring hacked hardware and/or conditional access codes into circulation via the internet. To this extent, criminal prosecution itself has a distinctly cross-border application.
Need for consistency with the Audiovisual Media Services Directive
The scope of cross-border services is actually small. The fact that there are cross-border services which justify a European Directive should nothowever be attached to the “grey market”, but be orientated over and above the previous area of application to the Audiovisual Media Services Directive (AVMS-RL) which has just been issued. The area of application of the AVMS-RL covers all television services, both Free-TV andPay-TV services. It assumes, therefore that Pay-TV services also in principle represent cross-border services. In the spirit of uniformity in European legislation, Pay-TV service providers should not just be subject to the obligations of AVMS-RL but for the sake of consistency should also receive the benefit of a corresponding protection under the CA Directive. Radio broadcasts are already also included in the Directive as protected services.
Need to retain and revise the CA Directive
In VPRT’s view, the original regulatory aim of the CA Directive should be retained and remain in focus, namely to achieve a minimum standard of legal protection against piracy and its economic consequences within the EU for all participants in the commercial chain.
The protection of services for broadcasting audiovisual content must be comprehensively guaranteed: the handling of encryption services and/or mechanisms for the digital management of rights and the integrity of the business models which are based on technical or software-based protection devices, must be a central concern of the EU Commission and be continuously strengthened. Cross-border markets in particular are new markets, or markets to be developed, which means that because profit margins are still small, piracy can substantially interfere with thebusiness model. 4
The revised Lisbon strategy plans to make the European Union the most competitive information society by 2010 and to provide the population with a multitude of services and offers from the information society sector. This goal can only be achieved if added value and the digital exploitation of audiovisual services are comprehensively protected.
The CA Directive seems to us to be an important legal instrument for this purpose which should be retained and further adapted to the technical developments in the market. The area of protection provided should be extended to encrypted services which are not provided for payment in particular (see also responses to questions 5 and 6 below).
QUESTION1.2:
Kennen Sie Daten oder Schätzungen über den Umfang grenzübergreifender zugangs-
kontrollierter Dienste und des „grauen Marktes“?
Data on the German market
VPRT does not have any data available on the extent of cross-border services. In Germany Pay-TV subscriptions, for instance, have developed as shown below. The respective offerings also currently contain foreign-language packages.
Development of Pay-TV subscriptions 2001-2007 in Germany (in million units)
Key
X-axis: Million subscriptions
Colour code top to bottom: Other**, Arena satellite, Unity Cable, Cable Germany, Premiere*
Title: Source: Goldmedia analysis based on details provided by companies (“Premiere figures including Premiere Austria; ** Others are Kabel BW, Kabelkiosk, Primacom)
No data on the “grey market”
For the reasons given above, members have no data on the extent of the “grey market”. The study5 ordered by the EU Commission in which the effects of the CA Directive are examined also confirms this. At the same time the study talks of a growing “grey market” which is surprising considering the difficulty in obtaining data.
5
5 - p. 66
FRAGE 1.3: Wie wichtig sind Ihrer Meinung nach folgende Hindernisse gegenüber dem
Erwerb von Verbreitungsrechten über das Hoheitsgebiet des eigenen Landes hinaus:
– fehlende Nachfrage seitens der Fernsehveranstalter, die sich nicht über Grenzen hin-
weg entwickeln möchten?
For members of the VPRT, expansion of activities into other member states is not a question of “do not want to”.As already stated, the offer of Free-TVandPay-TV made by broadcasters follows demand. If there were corresponding demand for cross-border content which would be economically viable for the relevant territory in terms of acquiring rights and setting up infrastructure (sales of hardware and software, maintenance, call centre for this member state etc.), the broadcasters would also offer their services across the border. This is currently only the case to a very limited extent.
–fehlendeBereitschaftderRechteinhaber,VerbreitungsrechteübermehralsdasGebiet
eines Landes zu verkaufen, z. B. für ein Sprachgebiet, das mehrere Länder umfasst?
In this case also there is interest by all market partners, if demand exists and if financially viable, to negotiate the corresponding contracts and provide a cross-border offer (see Premiere’s commitment in Austria or maxdome.de’s plans to extend its offer to the Benelux states and Scandinavia7).
– fehlende Netze für die effiziente Verbreitung zugangskontrollierter Dienste in anderen
Mitgliedstaaten oder fehlender Zugang zu solchen Netzen?
VPRT has no detailed information on the situation in other member states. In Germany, however, there is a shortage of capacity particularly in terrestrial services and in cable.
– die Weigerung anderer Anbieter kostenpflichtiger Programme, in ihr Programman-
gebot Dienste aufzunehmen, die sich an ein „multikulturelles“ Publikum richten? Because of demand in Germany, cable network, IP-TV operators and marketing platforms already offer several foreign-language programmes in their package, provided the corresponding legal position permits this and the necessary capacity is available. VPRT is not aware of any refusal by other programme providers to offer particular international programmes.
– fehlende Daten über die Märkte, die sich aufgrund der Mobilität der europäischen
Bürger auftun?
No information available on this.
– Unterschiede in der Regulierung der Medien (Pluralismus, Recht auf Information,
Kulturförderung, Sportförderung usw.)? (bitte ausführen)
Viewers have a nationally or regionally marked preference for certain genres, share a similar sense of humour and a similar understanding of history which is reflected in the design of programmes for the respective market. Only a few programmes enjoy the same success in Member States speaking different languages. Added to this there is the language barrier and the varying acceptance of dubbing or sub-titles for foreign-language content.
6 p. 132
7 Digitalmagazin.info, no. 604 of 27 March 2008
6
For this reason even advertising-financed Free-TVoperatesdefinitively nationally or in a particular language zone, despite the creation of the EC Television Directive and the Agreement on cross-border Television by the European Parliament: both the viewers addressed and the advertising market financing freely receivable television are situated mostly in the country where the head office of the relevant television broadcaster is located.
In the VPRT’s view, this will not change through the growing importance of IP-TV (= closed networks) or Web-TV over the fundamentally cross-border World wide web, as viewers stick to their national habits and content-providers will orientate themselves accordingly.
– verschiedene Zeitfenster für die Verbreitung der Werke in den einzelnen Ländern? National differences in broadcasting outlets do not represent a major obstacle for broadcasting services.
– sonstige Gründe? (bitte ausführen)
none.
On balance
The legal conditions for cross-border television–Pay-orFree-TV– were created with the EC Television Directive and the Television Agreement of the European Parliament. Starting a cross-border business does, however, remain a strategic decision for each private company and is based on economic criteria.
FRAGE 1.4: Haben Sie Vorschläge, wie die Entwicklung eines grenzübergreifenden
Angebots angeregt werden könnte?
This question is based on the assumption that there is a lack of adequate programmes. As stated in question 1.3, the offer by broadcasters follows demand and anticipated return on investment. A commitment in other member states therefore requires a critical mass of viewer demand for similar content. This is apparent on a cross-border basis currently in very few markets.
Thema 2: Wirksamkeit der Umsetzung der Richtlinie in den Mitgliedstaaten
FRAGE 2.1: Kennen Sie Faktoren, die die Wirksamkeit der in der Richtlinie vorgesehe-
nen Schutzmaßnahmen beeinträchtigen? Wenn ja, welche? (Verfahrensprobleme, fehlendes Recht zur Anwendung der Bestimmungen, Beweisschwierigkeiten, fehlende