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Thursday, 16 June 2011

Ofcom to spend an estimated £5.9m as real cost of Digital Economy Act starts to emerge, and there's a lock-in!

As your MP to sign an Early Day
Motion calling for a re-think
UPDATE 10-June-2011:  DCMS have responded with an estimated total spent of £115,626.49.  From my understanding of the legislation, unlike Ofcom's costs, these costs can't be claimed back as "set up costs" from rights holders once the notification process gets up and running.

Although the DCMS were quick to point out that "93% of our judicial review court costs should be paid by the claimants".  See the full answer from DCMS on the excellent MySociety.org website WhatDoTheyKnow.com.

>> Original post >>

Another scoop for SROC today as Ofcom answered the first of a series of Freedom of Information Act requests I made to government departments to uncover the cost of implementing the digital copyright enforcement measures in the Digital Economy Act.

Noting that Ofcom is only one department involved (the Department for Culture, Media and Sport, DCMS, has undertaken a substantial amount of work but is yet to answer), the total amount spent since the Act was passed is £1.9m; which includes £1.8m on the 3-strikes notification and appeals procedures and £100,000 on a review of the potential efficacy of the site-blocking provisions of the DEA (section 17 and 18).

Ofcom expect to spend a further £4.0m in the current financial year, responding to my request to divulge any estimates made in their forward plans, taking the grand total to £5.9m - excluding anything spent at the DCMS.  It also doesn't include any pre-legislative work on the draft bill as it passed slowly through the Lords (and very quickly through the Commons).

Ofcom were quick to point out that they expect to recoup the vast majority of these costs (all except the £100,000 spent on the review of site blocking) through the administrative charges levied on rights holders when they use the scheme to warn alleged copyright violators:
"The draft statutory instrument which is to be made by the Secretary of
State under section 124M of the Communications Act 2003 in relation to the
apportionment of costs for the online copyright infringement provisions
provided that the costs of the scheme, including Ofcom's costs and those
of an appeals body, will be borne by copyright holders and internet
service providers on an ongoing basis. Copyright owners and internet
service providers
would also be liable to pay Ofcom costs incurred prior
to the commencement of the scheme."
(my bold)
But there is of course a catch:
"The judgment of the Court in the judicial review of the online copyright infringement provisions (The Queen (on the application of British Telecommunications plc and Talk Talk Group plc) and the Secretary of State for Business, Innovation and Skills) found that internet service providers should not be responsible for the payment of a proportion of Ofcom costs or those of the appeals body."
The lock-in is that Ofcom has already spent £1.8m which it expects to reclaim once the measures in the act come in to force.  If the measures never come into force, the £1.8m will never be reclaimed.

If the measures do come into force; somehow a combination of taxpayers, rights holders and ISPs will be left with at least an estimated £5.9m bill for measures that might not even work.

And since costs borne by rights holders and ISPs will eventually be passed on to us - the customers - then we're all paying for these measures, that could be avoided completely if the rights holders make content available and set realistic prices on digital media if the findings of the study Media Piracy in Emerging Economies by the Social Science Research Council are applicable also in developed economies.

The costly measures might not work due to a gaping loophole: that the person who pays the bill for the internet connection might not be the person who committed the infringement and is nevertheless not automatically legally liable for activities of other.

I was told by a DCMS official at the Nominet Policy Forum last month that the Digital Economy Act does not create any new vicarious liability on the account holder.  Essentially, any court would have to prove the account holder authorised or consented to the infringing activity using their connection.

I'll post again when I have the DCMS costs in.


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