Commission Green Paper on the legal protection of encrypted services
The European Commission, on the initiative of Mr. Mario Monti, Commissioner responsible for the Single Market, and in agreement with Commissioners Oreja and Bangemann, has adopted a Green Paper on the legal protection of encrypted services. The Green Paper covers all services which are encrypted in order to ensure payment of a fee. In other words, all services, transmitted or re-transmitted by any technical means, whose signal is scrambled or otherwise modified so as to restrict its reception to specific users. This category includes traditional encrypted broadcasts (pay television), new broadcasting services (digital television, pay-per-view, near video on demand) and certain information society services (video on demand, games supplied on request and interactive teleshopping). This is a fast developing market, thanks in particular to the advent of digital technology, which will allow communication capacity to increase. Moreover, because of their specialized nature, these services are bound to need a cross-border market. Their growth is, however, being jeopardized by piracy, with a booming unofficial decoder manufacturing industry springing up alongside authorized manufacturers. This produces and markets, without the consent of operators, unlawful devices (decoders, smart cards) that enable individuals to gain access to the service without paying the subscription or fee. To put an end to this practice, some Member States have adopted specific rules prohibiting the manufacture and distribution of illicit decoders; some are in the process of doing so, and others do not yet have any specific legislation. After analyzing the different approaches taken in national rules, the Green Paper concludes that the fact that the Member States do not all have an equivalent level of legal protection prevents the Single Market from operating properly. This creates a number of obstacles to the free movement of encrypted services and decoders and numerous distortions of competition between operators in the various Member States. The present fragmented approach to legislation is seen by the trade as a major barrier to the development of a European market in the new encrypted services. Given this situation, the Green Paper considers the case for the Commission proposing an initiative to harmonize national laws in this area. Such an initiative would prohibit the manufacture, sale, importation from third countries, possession for either commercial or personal use, installation and commercial promotion of decoders designed to permit access to encrypted services without the encryptor's authorization. The unauthorized decoding of encrypted services would also be banned. Member States would have to adopt effective, proportionate and deterrent penalties for any breaches of these rules and would have to enable any interested party to make a claim for damages. The Green Paper will form the basis for consultations with interested parties, to take place between now and 31 May 1996. These will enable the Commission to decide whether or not action is required at Community level and, if so, what form this should take.