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Thursday, 30 May 2013

Sources: no Digital Economy Act copyright warning letters until 2016 at the earliest

It's been a while since I wrote anything on the Digital Economy Act.

As a quick recap, although the primary legislation to notify and punish those whose internet connection is repeatedly used to infringe copyright was rushed through the dog end of the Labour government - with Conservative support from the then shadow Culture Secretary Jeremy Hunt - progress has since stalled.

Two Statutory Instruments were expected to flesh-out how the copyright infringement warning letters will be dispatched, paid for and appealed: a so-called Initial Obligations Code and a shorter Cost Sharing Order defining how the cost of scheme will be split between copyright owners and internet service providers.

Two attempts have so-far been made to enact the shorter Cost Sharing Order, but even this relatively simple piece of legislation only got as far as the notification phase, where other EC member states are notified of draft changes to policy potentially affecting cross-border trade [refs: here, and here].

Both times the Order was quietly dropped, and nothing much has been heard since.

In response to a Tweeted question this morning I thought I'd see if my old Westminster contacts still wanted to talk to me.

Two separate sources told me not to expect the remaining secondary legislation this side of the general election.

Assuming a 2015 general election, and factoring-in time to establish the necessary body or bodies to oversee the operation of the notification and appeals systems, it will be 2016 at the very earliest - and possibly 2017 - before the first warning letters go out.

UPDATE 19-June

5 days after I posted this, DCMS released minutes [link] outlining their expectations:
"DCMS expects the first letters to be sent in the latter half of 2015"
My own sources were clear that the remaining legislation - two statutory instruments (that might possibly, now, be rolled into a single instrument) - were unlikely to go before Parliament until after the 2015 General Election.  By my own estimates it will then take around 9 months to establish the systems necessary to get the first letter out, including the crucial appeals process, hence my claim of 2016.

It seems the Department for Media, Culture and Sport (DCMS) thinks it can be done slightly faster, hence their note of optimism in their timetable of back-end of 2015.

So what's the delay?

One source described the copyright provisions in the Digital Economy Act 2010 as "un-implementable".

The legislation rushed through parliament in 2010 - at the behest of copyright lobbyists asserting prompt action was essential to the survival of the creative industries - was bad.

Since then the UK music and film industries have grown despite the gloom in the rest of the economy and 2012 saw an 11% revenue growth for legitimate downloaded media content in the UK despite progress on the Digital Economy Act stalling.

1. Treasury

I'm told there is an ongoing spat between the Department for Media, Culture and Sport (DCMS) and the Treasury over whether Treasury Approval is required for the remaining legislation required to implement Britain's 3-strikes internet copyright provisions.

It's a complex area, but as I understand it, DCMS and Ofcom (who are drafting the legislation for DCMS) argue that the money copyright owners will pay for generating a copyright infringement notification are simply fees for accessing the service, and therefore the Treasury need not be involved.

However, according to one source, the Treasury has raised concerns that the charges are in fact a levy - amounting to taxation - and therefore require Treasury approval, echoing concerns raised by the European Commission in 2011.

Additionally, any body set-up to oversee the notification process or the appeals process may require additional Treasury Approval in order for a working budget to be approved for the body.  Taxpayer money could be at risk if the scheme doesn't pay for itself through fees (or levies) as envisaged.

Options are being considered that remove the need for any separate body (known in government jargon as Arm's Length Bodies), but these proposals could bring their own problems.

For example, if the appeals body is not seen as fully independent, it might not meet the criteria for a tribunal of first instance, meaning anyone unfairly accused of copyright infringement would then have an automatic right of appeal to the High Court, putting an even bigger strain on the public purse.

2. Disagreement between ISPs and copyright holders

I understand one option being considered that will at least allow warning letters to be sent out earlier than 2016 is for copyright owners to pay the entire cost of notifying alleged infringers

That is, the ISPs' costs will be passed on to copyright owners in full, rather than the 75%/25% split previously proposed.

This means the fees charged are far less likely to be classed as a levy (ie taxation), since only the body requesting the service has to pay the fee, and no approval from the Treasury is required.

The problem with this approach is that there is no incentive for ISPs to take steps to minimise their costs in providing this service, therefore the cost of sending a copyright warning letter may be prohibitive.

The New Zealand equivalent of the DEA is under-used according to reports because the cost of notification is too high.

If the system is not used in the UK the taxpayer will be left with a considerable bill for setting up the scheme, which is estimated at £6m and could rise as delays mount.

Any attempt to cap or set a fixed fee may require legislation outside the scope of the Digital Economy Act, and this will need introducing in a new Government bill.

3. Politics

For various reasons I'm told the Cabinet Office is trying to keep a lid on policies with adverse publicity and negligible contribution towards meeting the Government's key aims.

I was first told this last year, when I was warned that the legislation may be squeezed out in a suitable window at the back-end of 2012, but I've since learned the initiative has been extended to the general election.

Government advisers are aware that the creative industries are not currently on the point of extinction due to online copyright infringement, and are also aware of the concerns raised by ISPs and civil rights groups.

The main concerns revolve around the difficulty of identifying who was actually using an internet connection at the time, rather than simply the person who pays the bill.  There are concerns that shifting the burden of proof onto the account holder may affect other government policy such as community WiFi and other broadband schemes, as well as affecting libraries, schools and cafes.

Additionally the Communications Bill, originally planned for 2014, is rumoured to have been postponed until after the general election.  This Bill would be a natural place to overhaul the primary legislation if amendments are require to the Digital Economy Act in order for it to be implemented.  But this would likely push warning letters out to 2017 or beyond.

I'm told the desire not to grasp the Digital Economy Act nettle before the general election has nothing to do with disagreements between coalition partners - whatever that means!


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