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Wednesday, 3 August 2011

Behind the scenes in the government's digital economy soup factory

You will have to pay an appeals fee of £20 if you want to challenge a copyright infringement warning letter you receive under the Digital Economy Act.  The fee will be refunded if the appeal is successful.

This was the surprise announcement made this morning, as the government made its welcome response to the Hargreaves review into copyright reform.  I welcome the government response to Hargreaves, but that's not the story I want to tell.

Web blocking (under Section 17) of the Digital Economy Act has been ruled out by Ofcom (pdf) (see update below) as unworkable, but Ed Vaizey tried to sweeten this for rights holders by saying that it had "not said no to site blocking forever" (not sure I agree with the minister's take) and went on to mention the Newzbin ruling which allows court-ordered blocking of websites infringing copyright when an ISP already has an existing blocking mechanism installed.

It's a subtle point, but vitally important to note that the Ofcom report into web blocking was completed months ago.  I have it on excellent authority, confirmed from insiders in both Ofcom and the Department for Media, Culture and Sport (DCMS), that DCMS have been sat on this report for at least 2 months.  The first court hearing to block Newzbin was heard on 28th June this year and Ofcom could not have known how the courts would rule on using S97A of the Copyrights, Designs and Patents Act to block infringing websites.

Aside: note how large sections of the Ofcom report into website blocking have been redacted.  Is this good for transparency?  The aim is to hide technical discussion of how web blocking can be circumvented.  I'm not aware this is - as yet - a crime, so I'll do my best to fill in the gaps over the next few weeks.

UPDATE: a commentator points out the Ofcom blocking document was badly redacted, and the blacked-out text is visible with some PDF viewers.  DCMS have taken their copy down, but it's still available direct from Ofcom for the moment.

UPDATE2: All government copies of the document have been pulled, however I've put a copy of the consultation on my publisher's server here (pdf) and @tjmcintyre provides easy access to the redacted text on his blog.

Behind today's announcement lies a thermonuclear lobbying effort on behalf of rights holders and a government power play that goes right up to the cabinet, leading to a series of fudges and yet further delays in the remaining legislation required to implement the anti-file-sharing measures in the Digital Economy Act.

Sources tell of a battle between Vince Cable and Ed Vaizey over who would make today's announcements on Hargreaves and the Digital Economy Act; plus, there are serious questions over why government is making policy announcements over the summer recess, when parliament is not convened to comment.

I'm told both announcements were slated for last month, but were delayed when cabinet and parliament were overrun by the phone hacking scandal.

Progress, at any cost!

But the government wants to be seen to be making progress on the Digital Economy Act after pressure from Labour front benches still defending Mandelson's swansong, hence an announcement during summer recess.  There's also a lot of pressure for progress on copyright reform from the Lib Dems within government, who are desperate to make progress on their fairness agenda.

And, if the rumours can be believed, pressure on Vince Cable having any lasting impact on government policy before he's booted out in an autumn cabinet reshuffle.  Watch this space, but I can't see the Lib Dem grass roots taking such a move with good grace.

The Digital Economy Act and Hargreaves announcements were then pencilled-in for Monday 1st August, but Ed Vaizey for some reason wasn't available, so Vince was due to make the Hargreaves announcement, minus any DEAct points.

I'm told Vince Cable was actively refusing to make the bad news sandwich to bury the £20 cost of appeals, forcing Ed Vaizey to the floor.  The government and DCMS have long been keen to use Hargreaves as a sweetener for the file-sharing clamp down.

Did the lobbying effort mostly fail, this time?

Multiple sources have told me the £20 fee was one of very few "concessions" to rights holders, who feel stung not only by Hargreaves and refusal to implement web blocking, but also by an under-reported ruling in the recent judicial review into the Digital Economy Act, making it illegal for the government to impose on Internet Service Providers (ISPs) any portion of the government's £5.9m set-up cost for the DEAct measures.

Nothing in the judicial review prevented ISPs bearing a far higher proportion - or indeed all - of their own costs in tracing and notifying subscribers (the so-called notification costs under the Act) - as noted by the judge  [paragraph 193] - and rights holders, wary they will be forced to pay all of the set-up costs, have been furiously lobbying for ISPs to pay a higher proportion of their own notification costs.

But the draft Cost Sharing Order published this morning shows the lobbying in this instance has failed.  Rights holders will now pay: all of the set-up costs, 75% of the notification costs and 75% of the appeals costs, the one concession being the £20 appeals fee paid by ISP subscribers.

Appeal on appeals and further consultation

The £20 appeals fee marks a policy about-turn, as any fee had been pretty-much ruled out as unworkable after the Citizen's Advice Bureau responded (pdf) to a government consultation last year, arguing:
The consultation paper suggests that the fee could be means-tested in order to ensure that it does not discriminate against potentially vulnerable people. Citizens Advice Bureaux have experience of means-tested systems, including helping people claim income-related benefits and apply for remission of court fees on grounds of hardship. Our experience is that the current remission of fees system in the county court causes vulnerable people enormous problems for the following reasons: 
 * Difficulty providing proof of income which will satisfy court staff
 * Unfairness in the design of the remission system.
Pressure is now growing on the government to consult on this shift in policy, with an insider claiming the charge was sold as "essential" after a lobbyist representing the BPI presented evidence that the system would otherwise be subjected to "vexatious appeals".

A source inside government told me:
"This concession [to rights holders] is not compatible with recommendations in the Hargreaves report that government must base [intellectual property] policy on evidence, and there is simply no evidence at this stage that the appeals system would be subject to vexatious appeals"
Consumer and digital rights groups have also told me they will campaign for the appeals fee to be means-tested, as otherwise it will deny justice to poorer families.  The CAB response last year noted:
Even a £10 fee could be difficult for someone on jobseekers allowance of £65.45 per week to pay upfront, as it would represent 15 per cent of their weekly income.
Appeals are especially important to the whole process, as notifications will be sent out solely on evidence gathered by rights holders themselves.  An appeal is the first chance a subscriber has to challenge the allegation of infringement and the evidence behind the allegation.  There are still huge questions over the standard of evidence.

No mention was made today on the detailed description of how the warning letter system will work, known as the Initial Obligations Code. I'm told this has been re-written to make allowances for schools, libraries, universities and other public intermediaries concerned over the impact of the digital economy act.  

The big question on the Initial Obligations Code is whether it will make similar allowances for cafes, restaurants and hotels offering free WiFi - as this could leak to a significant "chill" in the availability of open internet access, as noted in the Judicial Review [paragraph 240].

Hollywood against Hargreaves

Rights holders are annoyed that Hargreaves goes too far in legalising e.g. software which will copy a DVD onto a memory card for easy viewing on a tablet computer or smart phone.  

Studios want you to pay twice, or pay a premium for "innovative" (read: last decade's) technology.  And they want technology which facilitates such format-shifting banned.  Implementing Hargreaves as the government indicated today would finally make legal any such device which helps personal viewing and listening in a format of your choice.

For some reason groups representing rights holders seem to have drawn a line at films, conceding it's okay for consumers to copy a CD onto their MP3 player but not a DVD onto a memory card to view on a tablet computer or similar.  I've heard this comes down to copy-protection measures within DVDs, the circumvention of which would be necessary to copy a DVD onto a memory card.

Nothing announced today is a foregone conclusion.  Expect more hardcore lobbying from an industry refusing to turn its back on the analogue age; so, if you welcome today's government response to Hargreaves, it's worthwhile letting your MPs know your feelings on Hargreaves now, noting how you're looking forward to watching your existing DVDs on your smartphones etc.



  1. The "redaction" on the Ofcom document hasn't been performed properly - they just set the text to black on black, so you can highlight it and read what's there. (It's very tame, I'm surprised they bothered with the redaction)

  2. An excellent summary. Your link to the Ofcom paper is 404ing. Anyone got a link to the original?

  3. Another point on the £20. Is it so low that people will still clog up the system with veracious appeals?

    Surely that's worth it if you want to see what "evidence" they have against you? Or if you just feel like annoying them.

  4. This comment has been removed by the author.

  5. Regarding your point about "cafes, restaurants and hotels offering free WiFi": Sion Simon (at the time, Parliamentary Under-Secretary of State for Creative Industries) assured me that it's "still possible to have open networks whose settings protect the host from unlawful activity on the network" (Twitter status 5951557332) while acknowledging that some torrent activities are legal (Twitter status 5951733756).

    My repeated requests that he justify this remarkable claim remained unanswered until (when no longer an MP) he referred me (Twitter status 14958695761) to the House of Commons debate on the Digital Economy Bill on 6 April 2010, in which said:

    "We should, however, be very careful that the Bill does not have the unintended consequence of bringing about the end of public wi-fi. I was assured by the experts in the various Departments involved in this legislation that there were clearly existing technical measures that made it perfectly possible to run public wi-fi with these measures.

    "I do not claim to know what the technical measures are, but when I am told that they exist, I take it in good faith that they do exist…"

    My FoI request to see that advice was refused.

    Any sign of such measures becoming known, yet?

  6. Hi Andy, I'm aware of Sion "creativity is the enemy" Simon's contribution and the line pushed in Westminster during Mandelson's #deact reign and all I can say is that a lot of people have been trying to raise the issues you mention to MPs.

    I'd say universities and libraries made the biggest impact over the last year, with a very tight campaign which - I'm told - has lead to significant concessions.

    We won't know for sure until the Initial Obligations Code is released by DCMS. Watch this space.

    Meanwhile here's a report of how public intermediaries like libraries put their case, and also read the Judicial Review ruling you'll see the judge seemed sympathetic to the issues around a "chill" of free and open WiFi.

    Also enjoy the Sion Simon creativity is the enemy remix on YouTube!



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