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Introduction
Similar in
intention and spirit to the Television without Frontiers Directive of 1989,
the EC Satellite and Cable Directive of 1993 [1] was intended to break down national barriers and enhance trans-border
broadcasting and cable retransmission of television programs within the European
Union. To this end the Directive introduced two legal instruments. In the
first place, in an attempt to prevent the European satellite market from
being fragmented, it created a unitary right of satellite communication which
can only be exercised in the country of origin ('uplink') of a satellite
transmission. Second, the Directive set out a system of compulsory collective
management of cable retransmission rights, in order to facilitate and promote
collective licensing and avoid 'black-outs'.
More than ten years later, as the
European Commission readily admits in its review report of 2002,
[2] it is clear that the Directive's goals have, at best, only
partially been achieved. The envisaged future of a pan-European satellite
broadcasting market has not materialized. Instead, contractual licensing
practices reinforced by the application of signal encryption techniques have
allowed broadcasters and right holders to continue segmenting markets along
national borderlines.
Moreover, the process of convergence
that comes with the increasing digitalization of media and platforms, threatens
to undermine the Satellite and Cable Directive. In the long run the Directive
is likely to be superseded by the more 'horizontal' provisions of the Copyright
(or Information Society) Directive, that reflect a traditional territorial
approach.
In this contribution, guided by the
Commission's review report, we will critically reflect upon the impact the
Directive has had on the European market for satellite and cable television
services, and consider possible revisions. More generally, we will query
whether the Directive actually has a future in a world where wired and wireless
broadband media are rapidly converging.
Satellite broadcasting: market fragmentation persists
The first
chapter of the Directive deals with satellite broadcasting, the centrepiece
of which is a legal novelty: a pan-European droit d'injection , i.e.
'injection right'. According to Article 1(2)(b), a satellite broadcast
will amount to communication to the public only in the country where the
'injection' (uplink) of the program-carrying signal occurs. Thus, the Directive
has radically departed from the so-called 'Bogsch theory', named after former
WIPO Director-General Dr. Arpad Bogsch, which held that a satellite broadcast
is a restricted act in all countries within its 'footprint' and therefore
requires licenses from all right holders in that geographical area. Since
the transposition of the Directive, only a license in the country of origin
of the satellite broadcast is needed. Thus, at least in theory, a pan-European
audiovisual space for satellite broadcasting is facilitated.
But this theory has not proven itself
in practice. As the European Commission admits in its review report, the
process of national market fragmentation which had already begun prior to
the Directive's adoption, has continued until this day. Market fragmentation
along territorial borders persists, no longer on the basis of national copyrights,
but through a combination of encryption technology and territorial licensing.
Surprisingly, the Directive does not actually prohibit territorial licensing,
it simply does away with the underlying territorial copyrights. But interested
parties have remained free to persist in these age-old practices.
The main problem here is that the
European ideal of a pan-European television market and the reality of the
market simply do not match up. Film distributors have never allowed, except
in rare cases, the licensing of broadcasts of their films at the pan-European
level. Film distributors have always cherished the principle that national
markets within the European Union have their own dynamics, depending largely
on national cultural characteristics and audience preferences. Consequently,
movies are being released at varying times, and television broadcasts occur
in 'windows' that differ per country. Preservation of this so-called 'media
chronology' appears to be an almost sacred principle of the film industry.
The corresponding legal reality is
that film producers and distributors have continued to split rights along
national borderlines, and impose the use of encryption techniques upon broadcasting
organisations to avoid 'spill-over' across national borders.
Concomitantly, most broadcasters
in Europe do not seem to be interested in a pan-European right of satellite
broadcasting. Broadcasting in Europe is still very much steeped in national
culture, language and tradition, so why would a broadcaster pay (much) more
to acquire 'European' rights if his market and mandate is limited to a single
Member State?
In its review report the European
Commission, rather weakly, protests against the ongoing process of market
fragmentation by means of contract and encryption, but offers no solutions:
“Complete application of the principle
of the Directive, which involves moving beyond a purely national territorial
approach, should therefore be encouraged in order to allow the internal market
to be a genuine market without internal frontiers for rightholders, operators
and viewers alike.”
The Commission, however, appears
to be unaware of the fact that pan-European television will occur only if
there is a sufficient supply and demand. Here's a quotation illustrating
this market reality, which is reproduced from a report of FIAPF's Legal Committee:
[3]
“The
Commission's concern seems to stem from a vision of the broadcast sector's
development
that is at least ten years out of date. It is clear that the main inhibitory
factor to the growth of pan-European broadcasters is not so much the right
holders' lack of willingness to ignore the directive and refuse to license
for multiple territories, as the conclusion drawn by leading broadcasting
organisations that pan-European services only make economic sense in very
narrow segments of the TV market. It is baffling to think that an issue that
seems of concern to no one in the industry itself, should thus be selected
as a high priority by the Commission. ”
Indeed, who really wants to engage
in pan-European television services? The answer is: a few providers of specialized
content (e.g. news and sports), as well as a handful of public service broadcasters
wishing to reach out to Europe. But this is a very expensive ambition that
only few broadcasters can afford. Assuming that right holders would want
to play the game, pan-European broadcasting necessarily implies paying licenses
for the entire European market. One may wonder whether such an ambition complies
with the broadcaster's public service mandate, as laid down in the national
law of broadcasting, which is usually limited to the national audience that
pays the broadcast license fees.
Cable retransmission: towards source licensing
Let us now
turn to the cable chapter of the Directive. This part of the Directive provides
for a completely different mechanism of copyright management, in order to
facilitate cross-border retransmission of television programs. Again, the
chosen legal instrument is a novelty: a system of compulsory collective management
of cable retransmission rights. Under the Directive's rules, copyright holders
of television programs, such as film producers and screen writers, cannot
exercise their cable retransmission rights individually vis-à-vis
cable operators. Cable rights may be exercised only by collecting societies
that duly represent individual right owners.
This system of compulsory collective
management was introduced in 1993 to avoid the nightmare scenario of myriads
of individual right holders besieging cable operators with copyright claims,
and causing 'black-outs' (or 'black holes') in retransmitted broadcasts.
The Directive's cable regime goes
less far than was initially envisaged by the European Commission in its Green
Paper of 1984. [4] In it the Commission had argued for a system of compulsory
licensing which would have effectively stripped the right holders from their
exclusive rights, which under the current regime the collecting societies
have retained. Indeed, at least in theory, the risk of 'black-outs' remains.
The Directive does not obligate collecting societies to grant licenses to
cable operators.
Only one category of right holder
has escaped the straightjacket of compulsory collective rights management:
the broadcasting organisations. Broadcasters are allowed to individually
exercise their cable rights with respect to their own broadcasts, including
rights licensed or transferred to them (A rticle 10). This exceptional status
is wholly justified; broadcasting organisations are easily identifiable,
so no need for 'channelling' their copyright claims through a collecting
society has ever arisen.
The Commission's report speaks
in more positive terms of this part of the directive. It recognises that
the system is working quite well. Indeed, collective management of cable
rights was already occurring on a large scale in many European countries
before the Directive was adopted and implemented. But the report also implicitly
casts doubt on the need for maintaining a rigorous system of collective copyright
management. The Commission is remarkably enthusiastic about the exception
to the rule of compulsory collective management, which allows broadcasters
to deal with cable retransmission rights at the source, acting as a 'one-stop'shop'
for cable rights. Thus, providers of satellite-to-cable services have been
able to offer to cable operators a so-called 'rights-free' programming package.
Cable operators wishing to carry such programs need not pay any additional
copyright fees to collecting societies, except possibly for the musical works
included in the program.
In its report the Commission warns
against the laws of certain countries, notably Germany, that mandate payment
of equitable remuneration to collecting societies even if all rights have
been licensed or transferred to a broadcasting company.
“[…], the mandatory involvement
of a collecting society constitutes a constraint liable to militate against
the retransmission of programmes emanating from other Member States, while
it ought to be possible for the rightholder to obtain equitable remuneration
within the framework of its contractual relations with the broadcasting organisation
[…]”.
Clearly, the Commission's trust
in a system of collective rights management has been somewhat undermined,
in favour of freedom of contract. This may spell good news for broadcasters
and cable operators, but not necessarily for the authors who rely on collecting
societies to receive adequate remuneration.
Mediation
Another novelty
that was introduced by the Directive is a system of mediation between right
holders and cable operators, with the goal of reducing the risk of negotiations
between right holders and cable operators collapsing, or not even taking
place. This has become a particularly urgent and difficult problem in several
Member States in recent years. In some countries negotiations between right
holders and cable operators have been dragging on for years.
The mediation system that the Directive
prescribes does not really solve these problems. As the Commission acknowledges
in its report, the current system relies too much on voluntary cooperation
of the parties concerned, does not impose deadlines on unwilling parties,
and allows those endless legal battles that we are seeing in the court rooms
today. The Commission suggests to 'upgrade' the mediation system, inter alia
by imposing negotiation deadlines upon the parties concerned:
“It could therefore
be appropriate to lay down, as is already the case in some Member States,
the action to be taken after the serving of notice to terminate a contract,
with reasonable but maximum time limits being stipulated for each stage befor e
the mediation process, in the strict sense of the term, comes into play.
If, at the end of the set time limit, negotiations have not produced any
results, and if no remuneration has been paid to the rightholders, it could
be arranged that the portion of the cable operators' revenue corresponding
to copyright and related rights in the terminated agreement is impounded
in order to maintain the balance between the parties involved.
Thus, the possibility of direct negotiation, without the involvement of
a third party, could be recognised over the course of a year, followed in
the event of failure by a time limit of six months to draw up the mediation
agreement.
Another provision favouring the prompt implementation of the process would
be an obligation for national authorities to draw up and publish a list of
mediators.”
This proposal deserves serious
consideration. Clearly, to solve the current stalemate between right holders
and cable operators some form of binding arbitration, such as the system
provided under the German law on collective rights management ( Urheberrechtswahrnehmungsgesetz
), is in order. Another example to contemplate is the Copyright Tribunal
model of the United Kingdom. W here parties cannot agree between themselves,
the Tribunal unilaterally sets the terms and conditions of licences offered
by collective rights organisations. Compulsory collective management of satellite retransmission rights?
In its report
the Commission also queries whether the existing system of compulsory collective
management of cable retransmission rights should be extended to satellite
retransmission. This was a possibility not even contemplated when the Directive
was adopted in 1993. However, in recent years satellite services offering
'bouquets' of repackaged programs, much like cable networks, have emerged
all over Europe. Why not subject these satellite providers to a similar system
of collective management of rights? Indeed, some market players have advocated
such an extension, and thus create a level playing field between providers
of satellite and cable services.
Rather surprisingly, the Commission
does not endorse such an extension. On the contrary, it raises all sorts
of objections which confirm that the Commission no longer firmly believes
in the system of compulsive collective management of rights it devised in
1993.
“In this context,
implementation of the principle of mandatory collection would amount to an
equality of treatment in appearance only, as this approach would lead to
different situations being dealt with in one and the same way. […].
To impose the principle of collective management on retransmission activities
would amount to limiting considerably the freedom of rightholders, who would
no longer be able to object to the retransmissions in question. However,
some of the programmes contained in these retransmissions are not only the
subject of an act of communication in the broadcasting context, but may also
be presented on other media, in accordance with a chronology designed to
maximise potential remuneration in respect of the work concerned. It should
be noted that the chronology for the various acts of communication for a
particular work is organised on a national basis, depending on the initial
success achieved in the Member State where the work was produced.
However, the retransmission of programmes in packages broadcast by satellite
is part of this media chronology: to the extent that the technical means
used ensure a vast reach for the method of retransmission concerned, a limitation
on the exercise of exclusive rights would jeopardise this chronological chain
and thus, to a certain extent, the potential remuneration in respect of a
work.
The Commission does not therefore consider it appropriate, at this stage,
to extend the mandatory collective-management regime to other categories
of retransmissions.”
Admittedly, many of the
arguments mentioned by the Commission (loss of control by right holders;
undermining the 'media chronology' of film exploitation) are valid, but do
they not apply equally to cable retransmission? Also, the Commission appears
to have forgotten that the 'injection right' it introduced in 1993 was precisely
designed to prevent the partitioning of national markets for reasons of 'media
chronology', that it now considers so important. Convergence: can a 'dedicated' regime survive in the digital era?
The review
report also touches upon the problems of media convergence. Can the two distinct,
'dedicated' regimes for satellite broadcasting and cable retransmission survive
in our digital era where technical and economical differences between media
and platforms are rapidly evaporating? Convergence is occurring at all levels:
analogue television services are 'going digital'; radio and television programs
are being 'simulcast' over the internet; cable operators are reinventing
themselves as providers of broadband video services, and converting television
signals into digital files using the Internet Protocol. What will remain
of the Satellite and Cable Directive if satellite and cable services can
no longer be distinguished from Internet-based services to which 'normal'
copyright rules, as codified in the European Copyright (or 'InfoSoc') Directive
of 2001, [5] apply?
Introduce an online 'injection
right'?
The special ('vertical') rules
of the Satellite and Cable Directive are indeed quite different from the
'horizontal' provisions of the Copyright Directive of 2001, that apply to
all media, digital or analogue, across the board. Whereas the Satellite and
Cable Directive mandates a pan-European injection right, the Copyright Directive
requires Member States to provide for a general right of communication to
the public, including a right to make content available online, that is supposed
to be exercised at the national level. Whereas rights for satellite broadcasting
have to be cleared only in the country of uplink, rights for webcasting,
which is a species of communication to the public, need to be cleared for
every territory where a work is made available. In this respect, the Copyright
Directive is a step backwards to the bad old days of Bogsch.
How to reconcile the Satellite
and Cable Directive's country of origin' approach with the more traditional
territorial solutions offered by the Copyright Directive, in a world where
wired and wireless broadband media are rapidly converging? In the Green Paper
that preceded the Copyright Directive, [6] the European Commission had been playing with the idea of
applying the 'injection right' (or 'country of origin') approach to the Internet.
But the Commission's suggestion to this effect was immediately and unequivocally
rejected by all right holders consulted. Right holders feared they would
lose control of copyrighted content once it would be offered online, under
a license, somewhere within the European Union. It was also pointed out that
transmission of works over the Internet is not merely an act of communication
to the public, as is satellite broadcasting, but also concerns the right
of reproduction. Works made available online are stored on servers, and copied
repeatedly on their way from the content provider to the end user.
However, in practice the need for
an Internet equivalent of the injection right is probably less urgent than
it may have seemed ten years ago. Thanks to cooperative efforts of collecting
societies and major right holders, systems of voluntary collective licensing
on a European scale have emerged in recent years. A good example is the 'IFPI
Simulcast Agreement', which permits collecting societies representing phonographic
rights to offer 'one-stop' licenses for the simulcasting of broadcast programs
with an almost global reach. Thus, broadcasting organisations engaging in
simulcasting no longer need to seek multiple licenses from a multiplicity
of national collecting societies. Importantly, the Simulcast Agreement was granted an exemption from the EC Treaty's competition rules by the European Commission in 2002. [7]
Liability of intermediaries
The review
report does not address another convergence-related issues: copyright liability
of intermediaries. Here again we see two very different legal regimes apply
to two converging media. The Satellite and Cable Directive presumes full
(direct) copyright liability for cable operators. Although the provisions
of the Directive do not state so specifically, its system of collective management
of retransmission rights is based on the assumption that cable retransmission
constitutes a restricted act, as is illustrated by its Recital 27.
[8] Indeed, prior to the adoption of the Directive, many national
courts had produced decisions to this effect. The recent Copyright Directive
basically confirms this; cable retransmission falls squarely within the definition
of 'communication to the public', as clarified in Recital 23:
“This right should
be understood in a broad sense covering all communication to the public not
present at the place where the communication originates. This right should
cover any such transmission or retransmission of a work to the public by
wire or wireless means, including broadcasting.”
In marked contrast to the
full copyright liability imposed upon cable operators, the very same Copyright
Directive states, in Recital 27, that “the mere provision of physical facilities
for enabling or making a communication does not in itself amount to communication
within the meaning of this Directive”. Obviously, these words are meant to
apply primarily to Internet service providers (ISP's). But the Directive's
language is not limited to ISP's, so the question arises: what about cable
retransmission? Is that not a case of “the mere provision of physical
facilities for enabling or making a communication”, especially in situations
where the cable operator is subjected to a contractual or statutory must-carry
obligation? Moreover, now that cable operators are morphing into broadband
video providers, how to make a distinction? Most likely, we will be heading
for another round of cable retransmission litigation in the near future. Is there a future for the Directive?
What brings
the future for the Satellite and Cable Directive? So far, the review the
European Commission conducted in 2002 has had little follow-up. The Commission
has convened two working groups on satellite broadcasting in 2002 and 2003.
[9] Shortly after the second meeting the EC officials in charge
of this dossier have been sent home, and the dossier was dispatched to the
Copyright Unit of the Directorate-General Internal Market. No further initiatives
are expected from the Commission within the foreseeable future.
A related project that the Commission
has started to tackle is collective rights management. On April 16, 2004
the Commission has issued a Communication, which discusses problems and suggests
possible solutions with respect to this difficult, and politically sensitive
terrain. [10] Clearly, the focus of this initiative is not on satellite
broadcasting or cable retransmission. But here and there the Communication
does contain distinct references to these issues. What transpires is that
the Commission wishes to promote Community-wide licensing arrangements in
all segments of the copyright industry. In this context the Commission first
discusses (and immediately rejects) the introduction of compulsory licensing.
It goes on to consider, once again, the model of a pan-European injection
right:
“A less radical
option would be to adopt the model chosen for satellite broadcasting under
Directive 93/83/EEC to the rights of communication to the public and making
available. Under this model, according to Article 1(2)(b) of the Directive,
the relevant act of communication to the public 'occurs solely in the Member
State where, under the control and responsibility of the broadcasting organisation,
the programme-carrying signals are introduced into an uninterrupted chain
of communication leading to the satellite and down towards the earth'. However,
if this model is applied to copyright and related rights without limiting
the contractual freedom of the parties, as was done under Directive
93/83/EEC, it does not necessarily yield the desired result of multi-territorial
licensing, as it only determines the applicable law and does not by itself
result in extending the licence to the footprint in question.”
Elsewhere in the Communication
it becomes clear that the Commission no longer favours the kind of interventionist
approach that typifies the Satellite and Cable Directive. The rules that
will eventually result from this initiative, will be largely procedural,
dealing mainly with the supervision and transparency of collecting societies.
Will the Satellite and Cable Directive
eventually be revised? Probably not. More likely, it will slowly fade away,
as contractual practice, technological measures, media convergence and the
'horizontal' rules of European copyright law gradually supersede it.
Notes
[1]
Council Directive 93/83 on the co-ordination of certain rules concerning
copyright and rights related to copyright applicable to satellite broadcasting
and cable retransmission, Official Journal No. L 248 of 6 October 1993, 15.
[2]
Report
from the European Commission on the Application of Council Directive 93/83/EEC
on the Coordination of Certain Rules Concerning Copyright and Rights Related
to Copyright Applicable to Satellite Broadcasting and Cable Retransmission, COM(2002) 430 final, Brussels, 26 July 2002.
[3]
FIAPF Legal Committee, Report from the Commission on the
application of Directive 93/83 CEE on cable and satellite broadcasting, 20
September 2002, available at
http://www.fiapf.org/pdf/cabletsat.pdf.
FIAPF is a trade organisation of film producers.
[4]
European Commission, 'Television without
Frontiers', Green Paper, COM (84) def, Brussels, 14 June 1984.
[5]
Directive
2001/29/EC of the European Parliament and of the Council of 22 May 2001 on
the harmonisation of certain aspects of copyright and related rights in the
information society, Official Journal L 167/10 of 22 June 2001.
[6]
European
Commission, 'Copyright and Related Rights in the Information Society', Green
Paper, COM(95) 382 final, Brussels, 19 July 1995, p.
41 ff.
[7]
European Commission, Decision of 8 October 8 2002, OJ L 107/58,
of 30 April 2003.
[8]
Recital 27 reads as follows: “Whereas the
cable retransmission of programmes from other Member States is an act subject
to copyright […]; whereas the cable operator must, therefore, obtain the
authorization from every holder of rights in each part of the programme retransmitted;
[…].”
[9]
Reports of both meetings are available
at
http://europa.eu.int/comm/internal_market/copyright/satellite-cable/index_en.htm
[10]
Communication
from the Commission to the Council, The European Parliament and the European
Economic and Social Committee, 'The Management of Copyright and Related Rights
in the Internal Market, COM(2004)
261 final, Brussels, 16 April 2004.
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