On 9 December 2015 the European Commission has delivered a Proposal for a Regulation on ensuring cross-border portability of online content services to allow Europeans to travel with their online contents, in an unconcealed attempt to modernize the EU copyright framework.
Such a Proposal stems from the fact that the Internet has changed our lives significantly and today it represents the major distribution channel for content such as music, films or video games.
Despite the rapid and increasing use of portable devices (e.g., smartphones and tablets) has facilitated the access to online content services, Europeans moving across the EU may be cut off from services they have paid for in their home country.
Such a situation is in contrast with the ultimate aim of the Digital Single Market Strategy, designed to create an internal market for digital goods and services. Consequently, the European Commission has taken action to remove any barriers to the digital market, which represents nowadays the heart of our real economy.
2. Features of online content services
Online content services provide users with a vast catalogue of choice and the possibility to access online contents at any time.
They may rely on content that is protected by copyright and related rights, especially in the case of music or films, or on content not necessarily covered by copyright, the most notable example being sporting events. Nonetheless, when sporting events are broadcast, broadcasting organizations may invoke rights under EU copyright law.
Providers of online content services wanting to make use of copyright-protected content need to get a license from the right holders for the territories in which they want to provide services. The manner in which online rights are licensed depends on the type of content and the category of right holder.
As regards consumers, they either purchase or rent content on a one-off basis (so-called “transactional services”, e.g. Amazon or iTunes) or they establish a long-term contractual relation with service providers (“subscription services”, e.g. Netflix).
3. The question of portability
Cross-border portability of online content services may be hindered in a number of ways: when the content is accessible via digital locker; when the content is streamed only by a specific service provider; when services are exclusively provided in the Member State of residence of the consumer/service provider.
All these cases have one common ground: the territorial nature of copyright.
Under the principle of territoriality, copyright is regulated by national legislation, whose geographical scope extends exclusively to the territory of the Member State concerned. As a result, service providers who want to make content available in more than one Member State must acquire the rights to use that content in the relevant territories.
Even though right holders are not prevented from granting multi-territorial licenses through which portability would be guaranteed, such a practice would be highly expensive for the smallest service providers with distortive effects in terms of competition.
Consequently, territorial application of copyright law produces strong discrepancies in the licensing and commercial practices of the Member States.
The presence and scale of the problem at issue is different in the various sectors involved. Indeed, the most troublesome sectors are the audiovisual one and the sports one: AV producers usually grant exclusive territorial licenses to one single distributor in each Member State for the provision of premium content (e.g., films or TV series of particular relevance for the audience) and the same goes true for sporting events’ organizers.
4. The Commission Proposal at a glance
In its Communication to the Parliament and the Council entitled “Towards a modern, more European copyright framework”, the European Commission has made clear that its initiative is intended to introduce a common approach for the removal of the main obstacles to the functioning of the Digital Single Market, with a specific regard to copyrighted works.
The Proposal imposes an obligation upon the provider to enable a subscriber to use online content services, delivered on a portable basis, while he/she is temporarily present in a Member State other than the Member State of the subscriber’s residence, at the same conditions as applied therein.
Article 2 defines a “subscriber” as a consumer who, on the basis of a contract for the provision of an online content service, may access and use such service in the Member State of his/her residence, regarded as the Member State in which the subscriber habitually resides.
Online content services falling within the scope of the Proposal should be:
a) Lawfully provided online in the Member State of the subscriber’s residence ;
b) Provided on a portable basis, where “portable” means that services can be accessed and used without limitations to a specific location ;
c) An audiovisual media service within the meaning of Directive 2010/12/EU or a service whose main feature is the provision of access to works, other subject matter or transmissions of broadcasting organizations ;
d) Provided for payment of money, either directly or indirectly (e.g., a subscriber pays for a package of services which combines a telecommunications service and an online content service), or without payment of money.
In order to ensure access to the subscribed contents, Article 4 establishes a mechanism for localization of the service provider, which in the end constitutes a legal fiction. In other words, the provision as well as access to and use of the service by a subscriber temporarily present in another Member State is deemed to occur in the Member State of his/her residence. In turn, this means that for the licensing of copyrighted works and other related subject matter, the relevant acts are deemed to occur in the Member State of the subscriber’s residence.
5. Critical accounts
Giuseppe Mazziotti and Felice Simonelli, in a CEPS Commentary entitled “Regulation on ‘cross-border portability’ of online content services: Roaming for Netflix or the end of copyright territoriality?”, have pointed out some controversy issues of the Commission initiative, such as the interpretation of the decisive requirement of “temporary presence” and the mechanism of localization.
As clarified in the Preamble, proof of residence encompasses information such as banking details, the payment of a license fee for other services provided in the Member State of the subscriber’s residence, the existence of a contract for Internet or telephone connection or even the subscriber’s IP address. What remains unclear is the duration of the subscriber’s presence abroad for the mechanism to apply, as well as the criteria for calculating such period.
As regards the legal consequences, the authors have stressed that it will depend on the way the regulation will be interpreted. Indeed, a strict interpretation would render the measure a sort of “roaming for Netflix”, whose daily number of beneficiaries would be rather small. Contrariwise, a loose interpretation would lead to a significant erosion of the principle of copyright territoriality, with the strong opposition of the EU Parliament already expressed in a non-binding resolution approving the so-called “Reda Report” of July 2015.
It is also feared that the Commission will try to revisit the principle of territoriality via enforcement of competition law, rather than through the cautious and piecemeal approach followed by the Portability Regulation, as it happened in the case of Sky UK.
The European Parliament, more particularly the Legal Affairs Committee (JURI), has already started to draft a Report, after having consulted the stakeholders.
For instance, the associations representing online content service and network providers (e.g., EDIMA, IMPALA, EuroISPA) have welcomed the Proposal, stressing however their preference for a more limited country-of-residence approach. On the other hand, the European consumer association (BEUC) has made clear that the Portability Proposal will not solve the problem, unless coupled with a ban on geo-blocking practices. Finally, the associations of authors and right holders have warned of the extremely negative effect the elimination of the principle of territoriality will have on the audiovisual sector revenues.
In the light of the foregoing, during the JURI meeting of last Tuesday, the Rapporteur has clarified that the measure will be proportionate to the size of the online content services market and the number of users, and that it will be seen as an exception to the principle of territoriality of copyright and related rights, thus fully protecting the interests of authors and right holders. Furthermore, pre-existing contractual relationships between service providers and consumers will be left untouched.
The requirement of “temporary presence” has been better defined: even though the duration is to be established on a case-by-case basis, the presence abroad should be justified by reasons of private or commercial interest and it should be limited to a relatively short period of time, which presupposes a close return to the Member State of the subscriber’s residence.
As a result, in the definition of this latter concept, the sentence “and where the subscriber normally returns” has been added to the habitual residence.
 COM(2015) 627 final
 See https://ec.europa.eu/priorities/digital-single-market_en.
 COM(2015) 626 final
 Giuseppe Mazziotti is Professor of intellectual property Law at the School of Law, Trinity College of Dublin.
 Felice Simonelli is Research Fellow in the regulatory affairs research unit at CEPS.
 See https://www.ceps.eu/publications/regulation-%E2%80%98cross-border-portability%E2%80%99-online-content-services-roaming-netflix-or-end
 See http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+TA+P8-TA-2015-0273+0+DOC+PDF+V0//EN
 See http://europa.eu/rapid/press-release_IP-15-5432_en.htm