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European Union: Regulation on Cross-border Portability of Online Content Services in Effect

(Apr. 10, 2018) On April 1, 2018, the Regulation on Cross-border Portability of Online Content Services (Portability Regulation) became applicable across the European Union (EU). The Portability Regulation aims to accomplish seamless access for consumers throughout the EU to online content services, such as Netflix or Spotify, which they subscribe to in their home Member State. (Regulation (EU) No 2017/1128 of the European Parliament and of the Council of 14 June 2017 on Cross-border Portability of Online Content Services in the Internal Market 2018 O.J. (L 168) 1, EUR-Lex website.) Regulations, as opposed to directives, do not need to be transposed into national law by the EU Member States and are directly applicable. (Consolidated Version of the Treaty on the Functioning of the European Union (TFEU) art. 288, 2016 O.J. (C 202) 47, EUR-Lex website.)

The goal of the Portability Regulation is to ensure that consumers who live in the EU can use online content services, such as video-on-demand platforms, online TV services, music streaming services, or game online marketplaces, when they stay temporarily in another Member State for travel, vacation, study, or business purposes. (Portability Regulation recital 1; Cross-border Portability of Online Content Services, EUROPEAN COMMISSION (last updated Mar. 1, 2018).) The portability of online content is also available for consumers who daily commute to another Member State. (MEMO/18/2601, Fact Sheet, European Commission, Digital Single Market – Portability of Online Content Services (Mar. 27, 2018).)

Background

Previously, consumers traveling or staying temporarily in a Member State other than their Member State of residence in many cases could not continue to access the online content services they had lawfully obtained the right to access in their home Member State. (Portability Regulation recital 3.) Providers of online content services hold licenses only for certain territories within the EU and therefore had to take actions such as prohibiting access to their services from IP addresses situated outside the territory concerned. (Id. recital 10.)

The Portability Regulation, however, does not change the territorial licensing model. (Id. recital 12.) In order to ensure that providers of online content services are able to comply with their new duty to provide cross-border portability of their services, the Portability Regulation contains a specific legal mechanism (id. recital 23), namely that providing an online content service and the subscriber’s accessing it are deemed to occur solely in the subscriber’s Member State of residence if he or she is staying only temporarily in another Member State (id. art. 4). The providers can therefore offer cross-border portability of online content without having to obtain licenses for those additional territories. (MEMO/18/2601, supra; Portability Regulation recital 23.)

New Rules

According to the Portability Regulation, the provider is obligated not only to provide access to the same content but to make it available on the same range and number of devices and with the same range of functionalities. (Portability Regulation art. 3, ¶ 1.) However, the provider is not required to meet the same quality requirements as if it were providing that service in the subscriber’s Member State of residence. (Id. art. 3, ¶ 3.) On the other hand, the provider must not take any action to reduce the quality of delivery of the online content service. (Id. art. 3, ¶ 3, subpara. 1.)

The Portability Regulation does not determine a maximum duration for staying abroad. It defines the term “temporarily present in a Member State” as “being present in a Member State other than the Member State of residence for a limited period of time.” (Id. art. 2, ¶ 4.)

The obligation of providers to offer cross-border portability is mandatory law and, consequently, the parties cannot exclude it, derogate from it, or vary its effect. (Id. recital 21.) Providers are also not allowed to impose any extra charges on subscribers for the use of the online content service in another Member State. (Id. art. 3, ¶ 2.) Whether providers additionally offer their subscribers access to local content is at their discretion. (MEMO/18/2601, supra.)

As the Portability Regulation covers only situations in which subscribers stay in another Member State for a limited period of time, the provider is obliged to verify the subscriber’s Member State of residence. The provider is therefore entitled to request that the subscriber provide, for example, an identity card and payment details at the conclusion and renewal of a contract for the provision of an online content service. (Portability Regulation art. 5, ¶¶ 1 & 3.) If the provider has reasonable doubts about the subscriber’s Member State of residence in the course of the duration of the contract, the provider is allowed to repeat the verification of the subscriber’s Member State of residence—for example, by checking the IP address. (Portability Regulation art. 5, ¶ 2.)

The services provided by public broadcasters like the BBC also fall within the scope of the Portability Regulation if the consumer can already access the services on different devices, the provider has verified the subscriber’s Member State of residence, and either the services are offered against payment or the provider has chosen to comply with the new portability rules. (MEMO/18/2601, supra.)

Prepared by Catharina Schmidt, Law Library intern, under the supervision of Jenny Gesley, Foreign Law Specialist.

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