ISSUE 28 JANUARY – JUNE 2005 1 Click on a table of contents entry to go directly to the desired title. To return to the table of contents use Ctrl + Home or Ctrl + End. JAN – JUNE 2005 NEWS................................................................. 1 1. COMPETITION .............................................................. 1 AUSTRIA Regulatory intervention on the fixed network market ........ 1 CHILE Merger between Metrópolis Intercom S.A. and VTR S.A. ...... 2 2. CONTENT OF INFORMATION SERVICES .................. 2 GERMANY ID-based age verification system inadequate ................. 2 SOUTH AFRICA ICT Charter and Draft Codes of Good Practice...... 3 3. DIGITAL SIGNATURES ................................................ 3 BULGARIA Application of e-documents within judiciary .................... 3 4. DOMAIN NAMES .......................................................... 3 GERMANY Webhost is liable for causing forfeiture of domain .......... 3 5. ELECTRONIC COMMERCE ......................................... 4 GERMANY An Incorrect Price Is Not Legally Binding........................ 4 GERMANY Price indication by simple link is permitted...................... 4 6. ELECTRONIC DEMOCRACY ....................................... 4 BULGARIA Administration obliged to accept and issue e-documents4 7. GENERAL DEVELOPMENTS....................................... 5 BRAZIL Incentives for scientific and technology research ................. 5 BRAZIL Proposed Constitutional Amendment ................................... 5 8. INFORMATION SOCIETY POLICY............................... 5 BRAZIL Draft Bill 4209/2004 .............................................................. 5 BRAZIL New regulation for electronic mass communication services5 CHINA Euro-China Cooperation on Information Technology............. 6 9. INTELLECTUAL PROPERTY ....................................... 6 COLOMBIA Conveyance of copyrights must meet formalities........... 6 COLOMBIA Harrods: a well-known mark in the Andean community?7 COLOMBIA Scope of private trademark coexistence agreements .... 7 COLOMBIA Well-known trademarks must be registered ................... 7 GERMANY Court decision unsettles web designers ......................... 8 ITALY The protection of g.i.p.s and d.o.p.s ........................................ 8 10. PRIVACY ....................................................................... 8 NEW ZEALAND Telecommunications (Interception Capability) Act .. 8 11. TELECOMMUNICATIONS ............................................ 9 INDIA Govt clears 74% FDI in Telecom ............................................. 9 MEXICO Spectrum auction - divergence between regulating entities 9 12. WIRELESS .................................................................. 10 UK The Wireless Market: Recent Regulatory Developments .......... 10 COMMENTARIES ............................................ 11 BRAZIL Regulation of technological convergence ........................... 11 EDITOR / EDITORIAL BOARD ........................ 12 TABLE OF CONTENTS BY COUNTRY ........... 13 Click to subscribe NEWS 1. COMPETITION AUSTRIA REGULATORY INTERVENTION ON THE FIXED NETWORK MARKET The Austrian NRA recently analyzed the public telephone network system and its accessibility to private individuals from fixed locations. The NRA determined that Telekom Austria AG (the incumbent) holds significant market share in this area. Because the subscriber's line cannot be easily replaced, Telekom essentially enjoys a de-facto monopoly over access to the fixed network. Nevertheless, a regulatory obligation to unbundle the local loop would have little success in opening the market to competitors because substantial investments would be needed to make use of the loop. As the sole operator, Telekom Austria can offer to its customers a combination of access and telecom services (i.e., voice telephony), an advantage that could be used to leverage its control in other service markets. To prevent this from happening, the NRA required Telekom Austria to enable pre-selection and to offer the subscriber's loop for resale. The price that Telekom will charge is to be calculated on a retail-minus basis. Furthermore, the decision requires separate accounting to prevent the possibility of cross-subsidization. Telekom Austria will also be required to fulfill a cost orientation-obligation with respect to fees charged to final customers. Telekom Austria argued that by regulating the retail market, the NRA has disregarded the subsidiary principle set forth in Article 17 of the Universal Service Directive. Pursuant to this article, regulation of a retail market is admissible only if regulatory intervention at the wholesale level would be unsuccessful in addressing threats to competition in any given market. The NRA dismissed this argument. Telekom Austria is expected to challenge the decision before the Administrative Court. For more information visit : www.rtr.at or contact : [email protected]
Transcript
ISSUE 28 JANUARY – JUNE 2005
1
Click on a table of contents entry to go directly to the desired title. To return to the table of contents use Ctrl + Home or Ctrl + End.
AUSTRIA Regulatory intervention on the fixed network market ........ 1 CHILE Merger between Metrópolis Intercom S.A. and VTR S.A. ...... 2
2. CONTENT OF INFORMATION SERVICES .................. 2 GERMANY ID-based age verification system inadequate ................. 2 SOUTH AFRICA ICT Charter and Draft Codes of Good Practice...... 3
3. DIGITAL SIGNATURES ................................................ 3 BULGARIA Application of e-documents within judiciary .................... 3
4. DOMAIN NAMES .......................................................... 3 GERMANY Webhost is liable for causing forfeiture of domain .......... 3
5. ELECTRONIC COMMERCE ......................................... 4 GERMANY An Incorrect Price Is Not Legally Binding........................ 4 GERMANY Price indication by simple link is permitted...................... 4
6. ELECTRONIC DEMOCRACY ....................................... 4 BULGARIA Administration obliged to accept and issue e-documents4
7. GENERAL DEVELOPMENTS....................................... 5 BRAZIL Incentives for scientific and technology research ................. 5 BRAZIL Proposed Constitutional Amendment ................................... 5
8. INFORMATION SOCIETY POLICY............................... 5 BRAZIL Draft Bill 4209/2004 .............................................................. 5 BRAZIL New regulation for electronic mass communication services5 CHINA Euro-China Cooperation on Information Technology............. 6
9. INTELLECTUAL PROPERTY ....................................... 6 COLOMBIA Conveyance of copyrights must meet formalities........... 6 COLOMBIA Harrods: a well-known mark in the Andean community?7 COLOMBIA Scope of private trademark coexistence agreements .... 7 COLOMBIA Well-known trademarks must be registered ................... 7 GERMANY Court decision unsettles web designers ......................... 8 ITALY The protection of g.i.p.s and d.o.p.s ........................................ 8
11. TELECOMMUNICATIONS ............................................ 9 INDIA Govt clears 74% FDI in Telecom ............................................. 9 MEXICO Spectrum auction - divergence between regulating entities 9
12. WIRELESS .................................................................. 10 UK The Wireless Market: Recent Regulatory Developments .......... 10
COMMENTARIES ............................................ 11 BRAZIL Regulation of technological convergence ........................... 11
EDITOR / EDITORIAL BOARD ........................ 12 TABLE OF CONTENTS BY COUNTRY ........... 13
Click to subscribe
NEWS
1. COMPETITION
AUSTRIA REGULATORY INTERVENTION ON THE FIXED
NETWORK MARKET The Austrian NRA recently analyzed the public telephone network system and its accessibility to private individuals from fixed locations. The NRA determined that Telekom Austria AG (the incumbent) holds significant market share in this area. Because the subscriber's line cannot be easily replaced, Telekom essentially enjoys a de-facto monopoly over access to the fixed network. Nevertheless, a regulatory obligation to unbundle the local loop would have little success in opening the market to competitors because substantial investments would be needed to make use of the loop. As the sole operator, Telekom Austria can offer to its customers a combination of access and telecom services (i.e., voice telephony), an advantage that could be used to leverage its control in other service markets. To prevent this from happening, the NRA required Telekom Austria to enable pre-selection and to offer the subscriber's loop for resale. The price that Telekom will charge is to be calculated on a retail-minus basis. Furthermore, the decision requires separate accounting to prevent the possibility of cross-subsidization. Telekom Austria will also be required to fulfill a cost orientation-obligation with respect to fees charged to final customers. Telekom Austria argued that by regulating the retail market, the NRA has disregarded the subsidiary principle set forth in Article 17 of the Universal Service Directive. Pursuant to this article, regulation of a retail market is admissible only if regulatory intervention at the wholesale level would be unsuccessful in addressing threats to competition in any given market. The NRA dismissed this argument. Telekom Austria is expected to challenge the decision before the Administrative Court. For more information visit : www.rtr.at or contact : [email protected]
ISSUE 28 JANUARY – JUNE 2005
2
CHILE MERGER BETWEEN METRÓPOLIS INTERCOM S.A.
AND VTR S.A. On 9 January 2004, CristalChile Comunicaciones S.A. and Liberty Media entered into an agreement to merge VTR S.A. (VTR) and Metrópolis Intercom S.A. (MI). Together VTR and MI control approximately 90% of the pay television market in Chile. For this reason, Liberty Media and CristalChile agreed to allow the Free Competition Court (Tribunal de Defensa de la Libre Competencia) decide whether or not the merger between VTR and MI should be approved. The decision basically required the Court to determine if the merger would significantly affect free competition in any of the three markets (pay television, local telephony and Internet access) in which the companies operate. The consulting companies argued to the Court that the merger would have no impact on free competition in any of the above markets. The companies maintained that both VTR and MI are small players competing in a large, dynamic market space that is dominated by more powerful participants. They argued further that the key market in which both VTR and MI compete is not limited to pay television, but rather includes the video market, which consists of open-air television (dominant in this space), satellite television, video rentals and cinema. The companies contended that the video market is highly competitive, and thus, free competition and consumer protection would not be jeopardised by the effectuation of the merger. They further argued that the merged entity might offset the monopoly that Compañía de Telecomunicaciones de Chile S.A. currently enjoys in the local telephony market, thereby introducing competition. Finally, the companies contended that even though the merged company would assume a significant share in the wide band market (approximately 53%), the existence of other participants competing for that space dispelled any fears of a potential monopoly in that sector. A group of telecommunication companies objected to the description that the consortium provided for the operation, arguing that the mere fact that VTR and MI together controlled almost 90% of the pay television market demonstrated a serious threat to free competition. Further, these companies argued that the merger could lead to a monopoly and thus increase the likelihood of price manipulations at the companies' discretion, therein destroying free competition and consumer protection. Additionally, they argued that the merger would have the effect of making the broadband Internet-access market look more like an oligopoly. Finally, these companies expressed concern with the companies' ability to offer "tied sales" for their collective products (pay television, local telephony and broadband Internet access), leading to an artificial reduction in the prices of other services, a reality made all the more possible by cross-subsidization. The National Economic Attorney (Fiscal Nacional Económico) presented his findings. His report established, among other things, that: (i) VTR and MI are the closest competitors in the cable television market; (ii) the market is a natural monopoly in which new entrants will be required to cover important sunk costs (a fact that renders the market non-contestable), and (iii) evidence demonstrates that prices are higher in markets where only one television cable provider operates, as compared to markets where at least one competitor exists. Consequently, the prosecutor contended that a potential merger between VTR and MI might pose a threat to free competition and therefore the merger should not be authorised. Nevertheless, he conceded that, in the event the proposing companies could prove the existence of a material synergy as an offshoot of the merger, then the transaction could be approved, subject to certain restrictions. In a divided decision released on 25 October 2004, the Free Competition Court authorised the merger. The court assumed that the merger would have a positive impact on the telecommunications market in Chile by
lowering the amount of investment costs in the cable television, local telephony and broadband Internet-access sectors. These lowered costs would lead to a price reduction that in turn could open the local telephony and broadband Internet markets to a greater number of end-users. The court rested its decision on another assumption, that by virtue of its dynamic nature, developments in technology would one day eliminate any dominant position that the merged company might enjoy in the pay television market, thereby increasing competition in the telecommunications market. Even though, for the short term, the company will hold a significant share of the pay television market, the court authorised the merger on several conditions, including: (i) the controlling group of the company shall not partake, either directly nor indirectly, in the ownership of any company providing satellite television services or microwave-way television services, or in the ownership of companies deemed to be dominant in the local telephony market; (ii) in the event the company offers a telecommunication service package, it shall make clear mention of its value and any conditions attached to the offered services; (iii) the tied sale of more than one service is forbidden; (iv) the company shall neither increase its prices for pay television services nor reduce the quality of its programs for a 3-year period following the date of the effected merger; and (v) the company shall maintain a uniform price policy established for all of its territories nationwide. The merger is of great importance in Chile, especially considering this is the first time the Free Competition Court acted preemptively, determining the validity of a merger while the transaction was still pending. The decision may create a precedent as to how the Court will balance economic freedoms on one side and the protection of free competition on the other. Even so, it bears mentioning that the decision is not final; it is subject to review by the Supreme Court following a special remedy (recurso de reclamación) filed by two attorneys independent of the action. For more information please contact : [email protected]
2. CONTENT OF
INFORMATION SERVICES
GERMANY ID-BASED AGE VERIFICATION SYSTEM
INADEQUATE Recently, a number of the lower courts in Germany have had to decide whether the age verification systems in use for various websites that feature pornographic content are effective at blocking access to minors. The Superior Court of Justice in Berlin held that websites featuring pornography must prevent minors from accessing the content. (File No. 1 Ss 295/04). The court deemed a system ineffective in preventing access where users could gain access to the site by entering an ID number taken from an ID card. The decision arose from a case that involved a police officer who was able to access a pornographic website merely by entering the ID number of Uschi Glas, a well-known German actress, whose identification card just happened to be featured in a magazine some time prior. The Appellate Court of Krefeld (File No. 11 O 85/04) issued a similar ruling, holding that the age verification system in use at "ueber18.de" (over eighteen) was not compliant with legal requirements established to protect minors from viewing pornographic content. As in the case above, the age verification page was bypassed with a number from an ID card along with
ISSUE 28 JANUARY – JUNE 2005
3
the bank code and bank account number. According to the court, the system did not constitute a foolproof authentication system. Although the court conceded that no age verification system will be 100% effective in blocking access by minors to pornographic content, it noted that barriers must be sufficient to make any attempt at accessing the content a difficult endeavor. In other words, there must be a "constantly effective barrier." The court found the requirement had not been met by the age verification system used at "ueber18.de", evidenced when access was easily gained following the entry of an ID number. For more information visit : www.heise.de or contact : [email protected]
SOUTH AFRICA ICT CHARTER AND DRAFT CODES
OF GOOD PRACTICE In an effort to implement its policy of broad-based Black Economic Empowerment ("broad-based BEE"), the South African government has inserted broad-based BEE requirements into various pieces of legislation. It has also encouraged the negotiation of industry specific transformation charters. One such charter is the Information Communication & Technology Charter ("the ICT Charter"), which is currently with the National Economic Development and Labour Committee prior to its finalisation. In summary the ICT Charter:
• sets up accepted minimum targets in terms of ownership and control by previously disadvantaged individuals in existing and new ICT enterprises; and
• attempts to eliminate and discourage "fronting". In December 2004, the South African Government published "draft codes of good practice" ("the Draft Codes"), in terms of the Black Economic Empowerment Act ("the BEE Act"). These Draft Codes were published for comment and designed to provide principles and guidelines to facilitate and accelerate the implementation of the broad-based BEE. The Draft Codes comprise three core components, namely:
• direct empowerment, which is concerned with equity ownership and management;
• human resource development which comprises the elements of employment equity and skills development; and
• indirect empowerment which is concerned with procurement and enterprise development.
The ICT Charter recognises that foreign owned or controlled ICT enterprises operating in South Africa may find it difficult to dilute equity in terms of broad- based BEE due to, for example, stringent ownership equity restrictions from their parent companies and the need to preserve intellectual property. In this respect, these entities may apply to the ICT Charter BEE Council for a "Certificate of Permitted Non-Compliance" releasing it from compliance with the equity requirements prescribed by the ICT Charter. The BEE Act envisages that certain sectors' charters will be published as "codes of good practice". It is assumed that the ICT Charter will be published in some form as a "code of good practice" under the BEE Act. If this does not occur, then the Draft Codes will, upon the final publication, override the ICT Charter to the extent of a material inconsistency. Should there be anything provided for in the ICT Charter which is not provided for in the Draft Codes and which does not conflict with the Draft Codes, then it is expected that the provisions of the ICT Charter, in such instances, will continue to apply to the relevant signatories. For more information please contact : [email protected]
3. DIGITAL SIGNATURES
BULGARIA APPLICATION OF E-DOCUMENTS
WITHIN JUDICIARY Amendments to the Bulgarian Civil Procedure, Criminal Procedure, and Tax Procedure Codes, as well as to the Judiciary Act, put forward by the Council of Ministers, allow electronic documents to be used in the judiciary and for tax purposes. These amendments embody the basic principles established in Directive 1999/93/EC and in the Bulgarian Electronic Document and Electronic Signature Act adopted in 2001 (EDESA), principles that give the same legal effect to an electronic signature and an electronic document as has been long-recognized with handwritten signatures and paper documents. It should be noted that EDESA does not provide express language designed to address diverse application (?) of signed electronic documents. Nevertheless, in Article 41, paragraph 2, the Act specifically provides that within the judiciary, any electronic document endorsed with an electronic signature shall be legally regulated. The use of electronic documents within the judiciary will place the civil and criminal processes on equal grounds where a similar regulation recognizing the use of electronic documents had been introduced. More importantly, however, any equalizing offshoot should manifest in the development of a desired uniform, consistent practice for the handling of electronic documents in general. Another notable benefit is the ability to present electronic documents to Investigative Services, the Court, and the Office of the Prosecutor. The amendments also enable these departments to issue electronic versions of their rulings. As to the Tax Procedure Code, the proposed revisions will enable declarations and documents such as inquiries, claims, and appeals to be electronically submitted to the proper authorities. Further, the tax department will be able to respond electronically. In an attempt at suppressing any fraud-related activity that might arise with the introduction of an electronic filing system, a special provision has been proposed to the Criminal Code, which will criminalise the act of forging an electronic signature by means of unauthorized access to the signature creation key or the private key. For more information visit : www.orac.bg or contact : [email protected]
4. DOMAIN NAMES
GERMANY WEBHOST IS LIABLE FOR CAUSING FORFEITURE
OF DOMAIN Pursuant to a decision from the Appellate Court in Frankfurt/Main, a webhost will be liable for damages if its conduct results in the forfeiture of a domain name (File No. 2-8 S 83/03). The case involved a plaintiff who at the close of 2002 noticed that the domain name that he had registered for and that was being hosted by the defendant was no longer accessible. The defendant had neglected to pay the US registration fees required to maintain the dot com address. Shortly thereafter, a cybersquatter registered the address, offering it for sale at a price of USD 2,888.00.
ISSUE 28 JANUARY – JUNE 2005
4
The Lower Court in Bad Vilbel dismissed the claim, but on appeal, the Appellate Court determined that the defendant's conduct was unlawful, a violation of the provider contract. Herein, the provider had not met its obligation to manage and control the domain. Accordingly, the claim should not have been dismissed because the plaintiff had sufficiently pled damages. The court ordered that the plaintiff could recover a total of USD 2.888.00 from the defendant, in addition to any registration fees. The plaintiff also sought to recover for the time that the site was down; however, the plaintiff's inability to make allegations of economic damages resulting from the loss in the domain name mandated a dismissal of the claim by the court. For more information visit : www.heise.de or contact : [email protected]
5. ELECTRONIC COMMERCE
GERMANY AN INCORRECT PRICE IS NOT LEGALLY BINDING
In Internet commerce, where an item has been mistakenly set at a price above or below the amount intended, that price is not legally binding on the seller. The Higher Regional Court of Hamm held that when such an error is clear, the seller retains the right to rescind the contract (File No.: 13 U 165/03). The case involved an action brought by a customer seeking specific performance of a purchase placed with a mail-order company. The company had offered RAM memory modules on its website for a unit price of EUR 1,88, a price well below the fair market value. The plaintiff proceeded to order 99 units and once the order had been placed, an email confirmation was sent. As soon as the company became aware of its error, it rescinded the contract. The maintained that rescission was justified in this situation where the low price was the result of an error caused when a comma was placed two digits to the left of where it should have been. The Higher Regional Court accepted the defendant's argument, noting that the company could not have reasonably intended to offer the RAM product for that price. The plaintiff also brought a claim seeking damages, but the claim was dismissed for failure to demonstrate any damage resulting from the rescission of the contract. For more information visit : www.heise.de or contact : [email protected]
GERMANY PRICE INDICATION BY SIMPLE LINK IS PERMITTED
In a recent decision, the Higher Regional Court of Cologne held that e-commerce sites may place the legally required price index on a website other than the main site where its products are featured. This set-up is comparable to the "asterisk" used in traditional print advertisements, where a conspicuous reference is made in proximity to the product that is offered. Furthermore, the court held that it is unlawful to list important pricing information about the product if the information is inconspicuous or unclear. The case involved an online seller of mobile phones who placed a button next to its products, which brought the customer to a second website where the seller listed important price information. The information, however, was buried in twenty-seven lines of continuous, unformatted text, and read more like an advertisement than a factual
account. The format was found to be in violation of Section 1, paragraph 6 of the German Price Regulation, which requires a legible, discernible presentation of prices. The purpose of the regulation is to protect the consumer by insuring the consumer is aware of information that affects the price of a product. Even though the format was deemed unlawful, it is not a violation to use a second website for details concerning prices. Further, a link that brings a consumer to another page where price information is listed is also sufficient. To date, it remains unclear what type of purchasing information e-commerce sites must provide. In another case, the Higher Regional Court of Cologne determined that the seller must provide a telephone or fax number on the web page to meet the law's requirement of "direct" communication. It is not sufficient to offer a contact form, whereby a customer must provide his/her contact information so that the company can reach him/her at its discretion. Yet contrary to what this court decided, the Higher Regional Court of Hamm came out the way in a similar case. There, the court held that a contact form constitutes "direct" communication, and further, any inquiries could be addressed by the company via email rather than by telephone or fax. For more information visit : www.heise.de or contact : [email protected]
6. ELECTRONIC DEMOCRACY
BULGARIA ADMINISTRATION OBLIGED TO ACCEPT
AND ISSUE E-DOCUMENTS As of 1 January 2005, ordinance 153/5.07.2004 went into effect, requiring the Council of Ministers, the National Social Insurance Institute and the National Statistic Institute (administrative agencies) to receive electronic documents that have been endorsed with an electronic signature. In addition to accepting documents that have been sent electronically, the ordinance also mandates the issuance of any permits, licenses, or similar documents in electronic form. Proposed by the Bulgarian Council of Ministers, the ordinance is expected to encourage communication among these various State agencies. In order to facilitate agency interaction, construction of a high-speed, fiber optic system, the National ATM network of State administration, began in 1997. Though not yet complete, the network shows signs of success having been employed by some agencies for voice and video communications. With respect to EU membership, the Bulgarian government approved a Memorandum of Understanding that addresses the administration's involvement in the IDAbc Program. The Memorandum will assist the administration in structuring its e-service technology so that it can offer such services to other State agencies, as well as to businesses and individuals within the EU. For more information visit : www.orac.bg or contact : [email protected]
ISSUE 28 JANUARY – JUNE 2005
5
7. GENERAL DEVELOPMENTS
BRAZIL INCENTIVES FOR SCIENTIFIC AND TECHNOLOGY
RESEARCH On 2 December 2004, President Lula da Silva signed Act No. 10,973, a law designed to encourage scientific and technological innovation, as well as research in the production sector. The law reflects da Silva's objective of furthering the country's technological independence and promoting its overall industrial development. Similar to its US and South Korean counterparts, the law envisions distinct courses of actions in order to stimulate technological innovation, including: (i) the encouragement of privately-owned companies to engage in technology development; and (ii) the establishment of a partnership between privately-owned companies and government-owned scientific and technology-based institutions (ICTs). The Executive Branch has 120 days from the publication of the law to send a bill to the National Congress that will set the criteria required for tax break qualifications, an incentive that is hoped will help the government realise the objectives set forth in the law. For more information please contact : [email protected]
BRAZIL PROPOSED CONSTITUTIONAL AMENDMENT
A proposal to amend the Constitution (Constitutional Amendment Proposal (PEC) No. 55/2004), suggested by Senator Maguito Vilela, provides that any company offering "Social Communication" content should be subject to the same regulations that are applied to open television. Such regulations include restrictions on foreign ownership. PEC was first considered last November. The amendment would change the language in Article 222 of the Federal Constitution to read as follows: Article 222. News, radio, and sound and image broadcasters; Internet service providers; and companies involved in the production, programming or overseeing of content electronically transmitted that contains social communications directed to the Brazilian public, by any means, not considering the telecom services used in its distribution, shall be owned solely by natives of Brazil, persons who have been citizens of Brazil for at least ten years, or by entities organized under Brazilian law and headquartered in Brazil. Paragraph 1. At least 70% of the total and voting capital stock in the companies defined herein shall be directly or indirectly held by natives of Brazil, or by persons who have been citizens of Brazil for at least ten years, who shall also assume control of the management and oversee the definitions for programmed content. Paragraph 2. Responsibility for the editing, selection and direction of the programmes to be broadcast by the companies herein defined shall be handled solely by natives of Brazil, or by persons who have been citizens of Brazil for at least ten years. Paragraph 3. The companies herein defined shall follow the principles in Article 222 pursuant to applicable law, which shall give preference to Brazilian professionals in national productions. Paragraph 6. The provisions of this article do not apply to advertising agencies or to companies engaged solely in the production of commercials. Under Senator Vilela's bill, companies will be given two years to bring their policies in conformity with the provisions in the proposed amendment.
Vilela defends his bill on the ground that it is 1) necessary to amend the text of the Federal Constitution so as to reflect technological changes that have occurred with respect to electronic social communications 2) while preserving the spirit, content and scope of the Constitution as it pertains to this matter, 3) ensuring that the Constitution's purpose is achieved: namely, protection of national sovereignty and identity; development of Brazilian culture; and protection of Brazilian heritage. For more information please contact : [email protected]
8. INFORMATION SOCIETY
POLICY
BRAZIL DRAFT BILL 4209/2004
Bill PL 4209/2004, introduced by Representative Luiz Piauhylino, adopts a similar approach as that embodied in the constitutional amendment proposed by Senator Maguito Vilela. The bill proposes regulations governing Internet ownership, Pay TV and electronic media in general. The bill provides, "the production, programming and overseeing of domestic content of electronically transmitted social communications, by any means, not considering the telecom services employed in its distribution, shall be controlled by natives of Brazil, or by persons who have been citizens of Brazil for at least ten years, or by entities organized under Brazilian law, in which at least 70% of the total and voting capital stock shall be directly or indirectly held by natives of Brazil, or by persons who have been citizens of Brazil for at least ten years." The bill defines "social communication" as "content distributed from one to many, regardless of the distribution platform or the telecommunication service employed." "National content" is defined as content "(a) produced, in whole or for the most part in Portuguese and directed to the Brazilian public, (b) in which Brazilian authors, directors, journalists, actors, and so forth, constitute a majority of the participants, that (c) contains images and sounds of sporting and cultural events, amongst others activities, (i) that took place in a Brazilian territory or (ii) in which Brazilians were predominantly engaged, and (d) originally intended for a Brazilian audience regardless of its original language. The bill also requires the managing, editing, as well as the direction and selection of the programme be controlled by a Brazilian Member or by a group of the Controlling Brazilian Members. With regard to Pay TV, the regulation will apply to the programming and the supervision of any domestic or foreign content. Furthermore, the bill proscribes access to the Internet, other than through an Internet Service Provider that is in compliance with Article 2 of the Act and its relevant provisions. For more information please contact : [email protected]
BRAZIL NEW REGULATION FOR ELECTRONIC MASS
COMMUNICATION SERVICES In November 2004, ANATEL submitted a regulation for public commentary to the General Quality Standards Plan for Electronic Mass Communication Services (Public Consultation 575/2004). The most important change in the proposed regulation is its creation of the Mass Electronic Communication Subscriber Service (MECSS), a private telecommunications service that allows for a unidirectional transmission of telecommunication signals from the provider to its subscribers. The package features, amongst other things, Pay TV, MMDS and DTH services.
ISSUE 28 JANUARY – JUNE 2005
6
Any services offered must follow the guidelines for service and quality standards attached to the public consultation. Currently, the standards do not include quality control. ANATEL also submitted for public consultation a proposed Regulation for the Protection and Defense of Subscribers to Electronic Mass Communication Services. The proposal seeks to defend user rights that are not expressly protected under current regulations, such as requiring service providers to expressly state they are in conformity with the Consumer Protection Code (Law 8078 of September 11, 1990), or requiring providers to list reimbursement policies for subscribers arising from interruptions in service. For more information please contact : [email protected]
CHINA EURO-CHINA COOPERATION ON INFORMATION
TECHNOLOGY At the 2002 China-Euro Cooperation Forum on the Information Society, China and the European Union (EU) signed a joint statement, agreeing to initiate a cooperation program within the field of information technology. Following an invitation from the Chinese Minister of Science and Technology, Xu Guanhua, the European Commissioner of the Information Society and Enterprise, Mr. Erkki Liikanen, visited China for a period of one week in mid-April of 2002. During this visit, both parties exchanged their views on China-EU relations in general, and discussed information technology, industry policy, small and medium-sized enterprises (SMEs) and innovation in particular. Following their informal discussions, Minister Xu and Commissioner Liikanen held an official meeting, addressing the need to strengthen operations in several areas: SMEs, innovation and the Information Society. China and the European Commission agreed to cooperate with the Information Society. For now, the focus will be on the EU-China Working Group on Information Society Dialogue, as well as on China's participation in the Information Society Technology (IST) program of the EU's Fifth Research & Technological Development (RTD) Framework Program. China and the European Commission will also focus on developing the EC China Country Strategy Paper 2002-2006 distributed by the Information Society (adopted by the EC on 1 March 2002). A total of 15 million euros has been given to support China in these endeavors. Briefly, the cooperation program will entail:
• Science & Technology: opening China's High-Tech Research & Development Program and EU's RTD Framework Program while jointly supporting research and technological development in IST (i.e., mobile communication, open source software, connecting China to European research networks, and creating an EU-China Working Group to support the cooperation brought by the Beijing Olympic Games in 2008 );
• Regulatory & Policy Framework: clarifying regulatory and policy issues; providing technical assistance to regulators; standardization;
• Innovation & SMEs: studying/exchanging ideas for innovation development indicators; linking innovative SMEs between China and Europe.
For more information visit : www.china.org.cn or contact : [email protected]
9. INTELLECTUAL PROPERTY
COLOMBIA CONVEYANCE OF COPYRIGHTS MUST MEET
FORMALITIES In Colombia, as in other Andean communities, there is a clear distinction between authorship and ownership of copyrights. Where authorship may be granted to individuals only, copyright ownership may be granted to individuals other than the original author, as well as to legal entities, providing certain conditions have been met. By comparison, the United States grants authorship (and ownership) to an individual or a legal entity. Unlike the Andean community, the United States is more concerned with the economic benefit that attaches to a copyrightable work, and the potential threat of reproduction and subsequent exploitation. The distinction between authorship and ownership results from the continental legal tradition adopted by the Andean communities, a tradition that separates moral rights from economic rights. Moral rights are not economic; they cannot be alienated, waived or seized; and they are not subject to expiration (droit d´auteur). On the other hand, economic rights, as might be implied, recognize a right by the author to benefit economically from his/her intellectual creation. Further, economic rights may be conveyed and waived, and they expire in time. In the Andean Community, even though moral rights may not be assigned, economic rights may be conveyed where certain formalities have been met. A relevant case was recently heard in Colombia when Microsoft and Adobe Systems, Inc. sued a Colombian company for the unlicensed reproduction, execution and use of fifty-two computer programs. Microsoft contended that because the pirated programs featured trademarked material (including company labels and logos), authorship was assumed. The defendant argued Microsoft was precluded from bringing a claim because 1) Microsoft was not an individual and therefore could not be considered an author, and 2) Microsoft did not own the economic rights to the software (it had not met the necessary legal requirements). Because both Microsoft and Adobe could not assert ownership in the economic rights, the companies had no basis to defend their intellectual property rights in the software. Accordingly, the court found for the defendant. The court justified its decision on the grounds that, in Colombia, conveyance of economic copyright inter vivos requires either the registration of an agreement 1) in which the rights have been assigned, or 2) in which the work has been commissioned to an artist or author. Further, the agreements must be recorded in a public deed or in an agreement certified before a notary public. Microsoft could not demonstrate it had fulfilled these requirements, particularly considering in the United States, it is assumed employers are the authors of any work developed by their employees within the scope of their employment, as well as the owners of the copyright ensuing from such work. Accordingly, the court determined Microsoft could not assert a claim for copyright infringement. Considering the TLC that is being negotiated with the United States, the Andean communities should consider revising the regulations to allow licensees to bring actions for copyright infringement, even where licensees do not own the economic rights. For more information please contact : [email protected]
ISSUE 28 JANUARY – JUNE 2005
7
COLOMBIA HARRODS: A WELL-KNOWN MARK
IN THE ANDEAN COMMUNITY? Harrods Limited, the British retailer, recently petitioned the Colombian Council of State to void a decree issued by the Colombian Patent and Trademark Office, establishing the registration of the mark "Harrods" for Harrods Limited (Buenos Aires) within International Class 9. (International Class 9 includes scientific, nautical, and surveying instruments.) According to Harrods Limited, the registration should have been quashed for the following reasons: 1) the mark "Harrods" was already registered under Harrods Limited in International Class 28 (class 28 covers toys and sporting goods); 2) the trademark "Harrods" was well-known to the public; and 3) the commercial name "Harrods" existed prior to the application submitted by Harrods Limited (Buenos Aires). Upon hearing the matter, the Council of State compared the characteristics of the trademark "Harrods" that had been registered under Harrods Limited with the newly registered mark under Harrods Limited (Buenos Aires). In so doing, the Council concluded that the trademarks were identical. Accordingly, in the Andean Community, identical trademarks are allowed unless one of the trademarks is well-known. In this instance, where the marks are identical and one is well-known, the origin of the product may not be obvious to a consumer and would create confusion in the marketplace. The Council of State proceeded to determine whether "Harrods" was a well-known trademark. As part of its analysis, the Council looked to the historical use of "Harrods" as a distinctive mark, noting that the mark was first used in 1849 in association with a food store in London, England. In 1889, the store was registered as a limited liability company and the name was changed to "Harrods Limited". It was at this time that the store opened its business to catalogue sales, reaching an international market. At the present time, the company offers a breadth of products, ranging from cosmetics, jewelry and clothing, to food and books; each item carries the "Harrods" mark. Moreover, the "Harrods" trademark is registered in more than 40 countries around the world, including Colombia. In its analysis, the Council went on to consider the extent of its advertising budget. Herein, the Council noted that Harrods had apportioned a considerable sum to advertising, spending almost 2,3 million pounds per year. Of particular mention - Harrods's products had been featured in print publications in the United States, Europe, and the Americas (Colombia included). Ultimately, for the above reasons, the Council of State found the trademark "Harrods" was well-known. Moreover, even though the trademark was registered in a different International Class than the trademark granted to Harrods Limited (Buenos Aires), this finding was sufficient to render the newer mark non-registrable. The Council of State adopted the same reasoning used by the Andean Court of Justice when considering any confusion that was certain to arise with the name "Harrods" and the commercial name "Harrods Limited". Herein, the Council noted where a mark is similar or identical to a commercial name protected under Andean law, if a mark was in use prior to an application and confusion could arise from the similarity in the names, the application must be denied. For the foregoing reasons, the Council of State quashed the registration of "Harrods" that had been granted to Harrods Limited (Buenos Aires). For more information please contact : [email protected]
COLOMBIA SCOPE OF PRIVATE TRADEMARK COEXISTENCE
AGREEMENTS A private coexistence agreement does not guarantee the registration of identical or similar marks. Such was the position of the Colombian Council of State when it refused to register the mark "Starbucks." Starbucks, Inc. and Mars, Inc. (owner of Starburst) entered into an agreement for the purpose of registering the mark "Starbucks." As part of the deal, Starbucks agreed it would not use its trademark in association with fruit candy or confectionary products. Similarly, Starburst agreed not to use its trademark for any coffee, cocoa, espresso, coffee substitute or coffee beverage products. Nevertheless, the Colombian Council of State denied the application on the grounds that the mark was too similar to the existing trademarks and could lead to confusion amongst consumers. The Council noted that an agreement entered into between two trademark owners does not guarantee registration. Further, an agreement, on its own, does not constitute a showing that the marks are distinctive. In arriving at its decision, the Council of State applied the rationale invoked by the Andean Court of Justice (104-IP-2002). There the Court determined that the visual and phonetic likeness between the trademarks "Starbucks" and "Starburst" made it difficult to distinguish between them, and thus, their likeness would likely result in public error. Further, the trademarks both involved food products and were registered under the same international class. In its analysis, the Council of State went one step further, engaging in a phonetic explication of "Starbucks" and "Starburst," pointing out that both words began with "Star", followed by the same phoneme "bu." Even though the marks ended in different consonants, "cks" and "rst," because the ending was the weakest part, this variation was not sufficient to allay any concerns arising from the similarities. For more information please contact : [email protected]
COLOMBIA WELL-KNOWN TRADEMARKS MUST BE
REGISTERED In Colombia, a trademark will be legally recognised only if it has been registered. Accordingly, if a mark has not been registered, it is not "legally protected", and therefore, a claim of trademark usurpation may not be brought against any person or entity. It is of no consequence that a mark is well-known to the public. This principle was the basis for the reversal by the Supreme Court of Justice of a decision by the criminal court. The criminal court had found a defendant guilty of trademark usurpation for copying the composition, packaging and presentation of FAB (an ingredient found in detergent) in a piracy laboratory. According to the Supreme Court, the Colombian Criminal Code is clear: the offense of trademark usurpation does not follow unless the trademark is "legally protected". Here, plaintiff Colgate Palmolive failed to prove that an application for the registration of the mark "FAB" had been submitted. Both the criminal court and the lower court found the owner of the laboratory guilty. This finding was premised on the recognition that "legal protection" for the trademark "FAB" was implied by its "well-known" status in the local and international marketplace. Both these courts noted that, where consumer confidence was intentionally violated, absolution from liability would lead to an unwanted outcome of "scandalous impunity".
ISSUE 28 JANUARY – JUNE 2005
8
Even so, the Supreme Court emphasised that, although both Colgate Palmolive and its products are well-known, the failure to register the trademark precluded protection from piracy and prevented the company from initiating criminal proceedings. In its decision, the Supreme Court noted the formalities for trademark applications are published so as to enable compliance therein. For more information visit : [email protected] or contact : [email protected]
GERMANY COURT DECISION UNSETTLES WEB DESIGNERS
In a decision by the Higher Regional Court of Hamm (File No. 5 U 51/04), the court held that the act of copying computer graphics and style sheets was not a violation of the German Copyright Act, and further, did not constitute unfair competition. In this case, the plaintiff sought an injunction for copyright infringement, alleging the defendant had copied the graphics and style sheet featured on the plaintiff's website. Allegedly, the design for both the graphics and the style sheets entailed significant development costs, some EUR 15.000,00. The lower court dismissed the claim, and the Higher Regional Court affirmed the decision. According to the Court, the graphics were not a "work of visual art," and therefore, could not be protected under Section 2 of the German Copyright Act. The graphics lacked the necessary "Schöpfungshöhe", the degree of skill implicit in any inventor or creator of new things. Here, the designs did not demonstrate the level of craftsmanship generally required for copyright protection. Further, the computer graphics were not "photographic imagery" under Section 72 of the German Copyright Act, a provision that protects the personal achievement in the creation of photo images. Here, the provision did not apply because the graphics were computer generated. Because the images were produced by a computer program, or more specifically, because the creator relied on a computer program to generate the images, the imprint of originality required for copyright protection was not present. Nevertheless, protection for digital graphics, in general, is limited to a select number of cases. The court also determined plaintiff's website was not copyrightable. More specifically, the graphics and style sheets were not copyrightable elements pursuant to the Copyright Act. Further, the website was not a "work of art" within the meaning of the Act. Accordingly, the court dismissed the claim for injunctive relief on the grounds that the plaintiff had failed to state a claim for copyright protection. In fact, the defendant's duplication of the graphics and script-colour arrangement was legal under competition law. To bring a claim for copyright infringement, the plaintiff would have needed to plead facts that were not before the court. The impact of the decision on the copyrightability of web content is unclear. While the court did not "legalise" the copying of website content, the decision has left web designers uncertain as to whether copyright protection applies to their work in general, and where protection does apply, how much protection ensues. For more information visit : www.heise.de or contact : [email protected]
ITALY THE PROTECTION OF G.I.P.S AND D.O.P.S
On 30 December 2004, the Italian legislative decree No. 297 of 19 November 2004 entered into force and was published in the Official Gazette No. 293 on 15 December 2004. The decree sets forth penalties,
including fines, for violations of Regulation 2081/92/EC that came into force on 1992 July 14, which provides protection for "Geographic Indications" and "Designations of Origin" for agricultural products. The decree allows for the administration of fines (up to Euro 20,000.00) where there has been abuse or a deceptive indication of food products. Geographic Indication and Designation of Origin is distinguished as follows. A "Geographic Indication" is the name of a region, a specific place or, in exceptional cases, a country, used to describe an agricultural product originating in that region, specific place or country, that possesses a specific quality, reputation or other characteristic attributable to that geographic origin, and the production, and/or processing, and/or preparation of which takes place in the defined geographic area. "Designation of Origin" is the name of a region, a specific place or, in exceptional cases, a country, used to describe an agricultural product originating in that region, specific place or country, the quality or characteristics of which are essentially or exclusively the result of a particular geographic environment, and the production, processing and preparation of which takes place in the defined geographic area. In particular, Article 1 of the decree forbids any direct or indirect commercial use of Geographic Indications or Designations of Origin for: i) comparable products (i.e., products belonging to the same category, but not entitled to the Designation or Indication of such) that did not obtain a Certification of Conformity issued by the Ministry of Agriculture, or that did not meet the production procedures; ii) non-comparable products (i.e., products not belonging to the same category), the misuse of which is aimed at Designation of Origin of similar products; and iii) products compounded, elaborated or transformed, that contain labels with presentations or advertisements of a Designation of Origin or a Geographic Indication. For more information visit : www.gazzettaufficiale.it or contact : [email protected]
10. PRIVACY
NEW ZEALAND TELECOMMUNICATIONS (INTERCEPTION
CAPABILITY) ACT New Zealand's Telecommunications (Interception Capability) Act 2004 (the "Act") has now been in force for almost ten months. The Act requires all telecommunications network operators to ensure public telecommunications networks and telecommunications services have "interception capability". In essence, "interception capability" means that any person with a warrant is able to: (a) identify and intercept telecommunications under a warrant without identifying and intercepting other telecommunications; (b) obtain call associated data and telecommunications content in usable form; (c) carry out interception in a manner that protects the privacy of telecommunications not covered by the warrant; and (d) carry out the above actions efficiently, effectively and as close as practicable to the time of transmission (simultaneously if reasonably achievable). The Act also imposes on network operators and service providers a positive obligation to assist persons holding an interception warrant. Network operators and service providers must make available their officers, employees or agents who are able to provide technical assistance, and must take all other reasonable steps necessary for giving effect to the warrant.
ISSUE 28 JANUARY – JUNE 2005
9
Network operators have until 5 October 2005 to comply with the Act in relation to PSTNs, and until 5 April 2009 to comply in relation to public data networks (such as email and internet access). The New Zealand government will pay network operators' "fair and reasonable costs" if their networks were operational on or before 5 November 2002, which was the date on which the Act was first introduced as a Bill into Parliament. For more information visit : http://www.legislation.govt.nz/browse_vw.asp?content-set=pal_statutes or contact : [email protected]
11. TELECOMMUNICATIONS
INDIA GOVT CLEARS 74% FDI IN TELECOM
After much consideration, the Indian Government has finally approved a proposal to raise the amount of Foreign Direct Investment (FDI) in the telecom sector from 49% to 74%. Although a welcomed progression, the FDI increase is subject to certain conditions, some of which require 50% of the directors be resident Indians; the CEO, CFO and CTO be resident Indians; and that an Indian promoter with a 10% investment be present at all times. Apart from these conditions, several additional requirements apply to routing calls and to reporting traffic to the respective regulating authorities. Nevertheless, the decision to move ahead with the proposal is a positive step, one that will have a significant impact on the development of India's telecom sector. The sector is rapidly growing but even so, it will require a substantial investment to upgrade the sector's infrastructure and service offerings. As a result of this decision, however, the telecom sector should benefit not only from the technological upgrade, but also from the consolidation that is certain to follow. For more information please contact : [email protected]
MEXICO SPECTRUM AUCTION - DIVERGENCE BETWEEN
REGULATING ENTITIES "What a tangled web we weave" is but one of the many expressions that could be used to explain the recent ruling by the Federal Antitrust Commission (COFECO) with respect to the 1,900 megahertz (MHz) bidding process commenced by the Federal Telecommunications Commission (COFETEL) just last month, in addition to the number of amparos (proceedings to protect basic constitutional guarantees) being filed by bidders opposed to the bidding. Legally, the ruling is a reflection of the functional overlap that exists between COFETEL and COFECO. In practice, however, the ruling is indicative of the non-authoritative position taken by COFETEL, whose role it should have been to insure the bidding process was conducted in accordance with the bidding rules. COFETEL's mismanagement of the bidding process gives rise to the question: which agency should be authorised to delegate the amount of MHz to an operator in a given region? More specifically, should the power remain in COFETEL, the telecommunications regulator, or should the authority be reassigned to COFECO, the agency responsible for all antitrust policy?
A total of 1,900 MHz is being auctioned by the government for the purpose of regulating fixed and wireless services. Contrary to COFETEL's decision to provide participants with up to 65 MHz per region (COFETEL divided the country into nine regions for bidding purposes), COFECO's ruling significantly limits the amount of MHz available to 35MHz per region. Ostensibly, a reduction in the amount of MHz allocated to each region was necessary so as to attract more participants and increase competition. With more participants, the end-user can expect better prices and more options to choose from. (The OCDE has publicly supported COFECO's ruling.) It should be noted that COFETEL did not arbitrarily set the threshold at 65 MHz; the limit was based on technical considerations, including a recognition that the 1900 MHz band could also be provided in the 800 MHz band. COFECO, however, clearly ignored this reasoning, deciding instead to administer the radio-electric spectrum in accordance with its vision of market requirements in that sector. Evidently, both agencies used divergent criteria in making its decision. But this should be expected; after all, the agencies are assigned separate tasks. COFETEL is responsible for approving the frequency band allocation program (including its allocation as well as its geographical coverage), coordinating the bidding procedures, administering the radio-electric spectrum, and making sure the spectrum is used efficiently. COFECO, in turn, is charged with the oversight of all antitrust matters, including those matters where another federal, state or local agency is involved. Even though the two Commissions are delegated separate responsibilities, however, COFETEL and COFECO should have collaborated in their efforts when deciding on the frequency threshold. Working together to set an amount might have allowed for the most efficient operation of the bidding process. Instead, COFECO acted on its own initiative, using its power to promulgate a general rule that set the limit at 35MHz without considering COFETEL's findings. Standing alone, such a ruling might have been challenged by COFETEL on technical and efficiency grounds. The determination of what constitutes an efficient use of a limited resource, factoring in economic considerations and other concerns, is a matter to be resolved by the courts. Such a determination can be made in one of two ways: 1) following current amparo procedures, or 2) pursuant to a proceeding initiated by COFETEL. To avoid a similar outcome in the near future, it should be determined whose interests ought to prevail, particularly when COFETEL and COFECO adopt conflicting approaches. In other words, is there a limit to COFECO's decisionmaking power? As it stands, COFECO's ruling did not lead to an increase in market participants. In fact, the ruling's effect was felt solely by existing bidders: Unefon, Iusacell and Telefónica, companies that held over 40 MHz or were nearing 35 MHz. To date, some of the bidding participants have filed amparo proceedings in an effort to quash COFECO's resolution and to extend the limit to 65 MHz. Nevertheless, even if the court grants to each participant a preliminary suspension of the ruling, thereby permitting a bid for 65 MHz, and further, even if under that suspension a participant subsequently wins the bid, COFETEL will still be unable to formally allocate the band to the winning bidder until such time when all judicial proceedings have been exhausted. From a practical standpoint, a judicial resolution will only extend the delay in spectrum allocation, a delay that has already lasted four years. Further, because the bidding process may have to start all over, a resolution only limits the amount of money that can be offered by each participant for a portion of the spectrum. For more information visit : www.cfc.gob.mx or contact : [email protected]
ISSUE 28 JANUARY – JUNE 2005
10
12. WIRELESS
UK THE WIRELESS MARKET: RECENT REGULATORY
DEVELOPMENTS Ofcom Releases its Spectrum Implementation Plan On 13 January 2005, Ofcom published its Spectrum Implementation Plan (SIP), a follow-up document to the Spectrum Framework Review released in November 2004. The SIP discusses in some detail Ofcom's spectrum regulation review that is currently underway, making mention of the auction processes that will be used over the next few years for spectrum allocation. In the SIP, Ofcom also shares its vision on spectrum management and how it will be implemented in two main areas: 1) unallocated and underutilised spectrum that, once identified, should be released within the next two to three years (some long-term issues concerning digital switchover were also addressed), and 2) spectrum trading and the rollout of "liberalisation" for mobile services. Through the plan, Ofcom uncovered a number of bands that were unallocated and underutilised. These bands should be released within next few years. Additionally, Ofcom has used the plan to uncover the following spectrum:
• Spectrum in the L-Band (1452-1492MHz) for T-DAB use; • Spectrum formerly used as GSM/DECT guard bands (1781.7-
1785MHz paired with 1876.7-1880MHz) proposed for use under a small number of low-powered GSM licenses;
• Spectrum in the 3G band (2010-2025MHz) providing scope for possible 3G use, as well as use in wireless technology such as WiMAX and mobile broadband (IEEE 802.20);
• A significant slice of spectrum (190MHz between 2500MHZ and 2690MHz), which can be used for 3G services or a range of other fixed/mobile technology. Such use, however, will depend on Ofcom’s ability to amend several European regulations that set harmonisation restrictions on this band.
As provided in the SIP, any policy decisions pertaining to the allocation of digital switchover dividend (470-854Mhz) will be postponed until after decisions concerning international harmonization have been made, decisions anticipated to be addressed at the Regional Radio Conference in May 2006. Ofcom Releases its "Liberalisation Statement" and Enables Licensees to Change Spectrum Usage Interference arising from spectrum usage has been historically controlled by the UK through an application process that requires spectrum users to request licenses (restricted to license-to-use wireless equipment within set frequencies) for spectrum usage. By requiring a license, the UK is able to monitor the number of users and set strict limits on what usage and technology is available to them. Nevertheless, Ofcom would like to remove these restrictions. Following a consultation with spectrum users, Ofcom proposes to introduce a system whereby UK licencees can apply directly to Ofcom and request a change to their usage limits. Ofcom has labeled the process "liberalisation." "Liberalisation" is a critical step in Ofcom's plan to maximise the value for spectrum trading - the right to "trade" licenses to use spectrum (a separate development introduced last year that took effect 23 December 2004). In a formal statement released on 26 January 2005, Ofcom announced a three-phase rollout for its "liberalisation" plan. The first phase, expected to start in the early part of this year, will be limited to the Business Radio (BR) sector. From this first rollout, spectrum licensees in the relevant
technological classes (i.e., data networks, paging, analogue PAMR, and fixed wireless access) will be able to apply to Ofcom to request a change to their usage and technology limits. The second phase proposes to amend the licenses to lift the restrictions on spectrum usage. Further, it is hoped these amendments will provide a means by which a licensee will be able to place requests for minor changes in spectrum usage without first having to apply to Ofcom. The third and final phase, slated for sometime after 2005, entails application of the "liberalization" concept to 2G and 3G bands. During this phase, Ofcom plans to implement aggressive modifications to the definition of "spectrum rights" to make them more technologically neutral. Although noted improvement is expected to result from the "liberalization" plan, not all interference between users will be eliminated. Ofcom is aware of this issue, however, and intends to develop "spectrum quality benchmarks" against which any change in spectrum usage will be assessed. The company has released a copy of the guidelines it will use in developing these "spectrum quality benchmarks." Ofcom Consults on Ultra Wide Band Ofcom is considering the best approach that should be taken with respect to Ultra Wide Band (UWB) regulation, a form of low-powered wireless technology that transmits high data rates over a wide range of frequencies. UWB is most commonly used as an alternative form to wireless local access that is made possible by Bluetooth, WiFi and WLAN technologies. However, UWB raises a regulatory concern: it is impractical for the technology to be licensed using standard spectrum licenses (licenses which restrict the use of wireless equipment to limited frequencies). Additionally, to the extent UWB needs to "cut across" other licensed frequencies, it may cause interference for existing licensed users. At this stage, the consultation is merely preliminary. Ofcom is strictly focused on soliciting general commentary regarding how Ofcom should develop a policy in this area. Even so, Ofcom is anxious to regularise UWB in the UK due in part to the United State's FCC approval of UWB. This approval is expected to lead to an increase in the development of UWB products. Accordingly, Ofcom is eager to get started on the regulation process so that any subsequent increase in the importation of UWB Once the consultation is complete, Ofcom intends to add its findings to the work that is currently being undertaken by the CEPT and ITU on the European front. The European Commission has set the target date for completion at April 2005. At this stage, Ofcom would prefer to grant license-exempt status to UWB devices for frequencies ranging between 3.1 and 10.6GHz. To avoid high levels of interference between users, Ofcom is looking to implement regulations that will set tighter controls than those applied by the FCC for power levels that are given off by UWB devices. Although Ofcom acknowledges that such controls will not eliminate interference with cellular handsets, WLANs, and in particular, 3.4 GHz FWA services, the company is looking for ways to prevent, or at least mitigate undue interference (a possible solution may involve setting a frequency cap for UWB devices at 5 GHz, or further studies might be needed). Ofcom Explores Removing Restrictions on 2G and 3G Licenses As part of its rollout of spectrum trading and "liberalization" within the UK, Ofcom is proposing significant changes to regulations of 2G and 3G licenses. Despite limitations on European Union harmonisation, Ofcom has indicated that it would like to remove restrictions on existing spectrum licenses that prevent spectrum usage for mobile services other than 3G. Ofcom is also proposing to eliminate restrictions that apply to new licensees offering 3G services. Although the change could be effective right away, Ofcom prefers to delay and impose temporary 3G restrictions on new licenses until 2007, at which time or at some point thereafter such restrictions would expire.
ISSUE 28 JANUARY – JUNE 2005
11
Changes to the 2G and 3G licenses, along with the release of significant slices of spectrum frequencies for mobile service usage (discussed above), opens the 2G and 3G market in the UK to investment and competition. Ofcom has appointed economic consultants to assess the anticipated impact of its proposal on the 2G and 3G markets, a necessary evaluation given the substantial investments made by 3G operators in their licenses at the 2000 auctions. The study is expected to be complete by the end of April 2005. For more information please contact : [email protected]
View television from a PC; browse the Internet from a television screen; listen to radio from a mobile phone: all these processes illustrate technological convergence, a process that allows information to be transmitted across a multitude of platforms and networks at remarkable speed. Technological convergence has prompted unprecedented changes in socioeconomic dynamics the world over, particularly in the telecom, audiovisual and information technology industries. Moreover, it has stirred significant debate on the legal front, especially where regulation of audiovisual content is concerned. The regulation of audiovisual content is a matter of international concern. Accordingly, the emergence of this debate in Brazil by way of a draft bill - the National Audiovisual and Movies Agency (ANCINAV) has been well received. Nevertheless, in democratic societies, any proposed regulation must not entail censorship that will ultimately deprive the industry of the freedoms it currently enjoys. Rather, regulation should function merely as a means of organising the audiovisual industry, therein establishing rules that will foster and strengthen the market. In Brazil, these debates should be guided by constitutional principles: freedom of thought and freedom of intellectual, artistic and scientific expression. Because the debate involves constitutionally recognised rights, we should be vigilant in insuring that any proposed regulation targeted at restricting content does not lead to censorship or impose restrictions on any other constitutionally recognised liberties. Any regulation that targets the audiovisual industry should be directed at strengthening the industry. Thus, policymakers must consider not only the importance of the industry in fostering cultural diversity, but also its economic impact in terms of investment and employment opportunities. By way of its ability to distribute information, simultaneously reaching millions of citizens nationwide, the audiovisual industry plays a significant part in cultural development and in imparting social values. Over the last few years, traditional media, like open signal TV and radio, has had a critical role in fostering culture, developing opinions, and most importantly, strengthening democracy in Brazil. The emergence of technological convergence, however, invites discussion as to whether we should regulate content distributed through new media channels: the Internet, pay TV and mobile telephones. Under the Federal Constitution, mass media broadcasters (i.e., radio and open signal TV) are required to give preference to educational, artistic and cultural content, a mandate intended to promote culture on a national and regional level, and to encourage independent production of information favoring a regional approach to culture, the arts and journalism. Under the draft bill, telecom operators that provide content and other types of
audiovisual features to subscribers will be held to the same requirements as broadcasters. The telecom industry should not be held to the same standards as broadcasters, for several reasons. Broadcasting service providers merely receive content that is transmitted by the telecom operators; they have no input as to the type of content that will be broadcast. This fact, coupled with the notion of free, unrestricted access to broadcast services, has generated concern by the government with respect to the type of content that might be featured. Contrary to broadcast services, however, subscribers to telecom services pay to access content, and thus actively select the content that fits their viewing preferences (by browsing the Internet or by choosing a pay-per-view program). Imposing limits on the type of content that a telecom operator can provide, even under the pretext of fostering culture nationwide, is a threat to the freedom of information dissemination. Thus, there is a critical distinction between broadcasters and telecom operators with respect to access: broadcasting services are free to most, whereas telecom services are available on a subscription basis. In this respect, telecom services are available to users who are interested in receiving content that is offered by a particular provider and accordingly contract to receive their services. By virtue of its pay-for-service model, the telecom service industry is not an area that should be controlled by government regulation. Moreover, the business models of the broadcasting and telecommunication industries distinctly differ. Accordingly, even if convergence merges these two segments, the structural differences of the two industries cannot be overlooked. Bearing in mind the distinct nature of the broadcasting and the telecom service industries, as well as the disparate models on which they are based, it should become clear that a regulation drafted to apply equally to all audiovisual content is an impossibility. A better approach, where audiovisual content is being distributed by various media channels, is a proportionality test. Such a test could provide an effective means of regulation. In this way, a proportionality test would be used to determine the level at which a user could select and control the content. (The UK, for example, has adopted a proportionality test.) Another factor that should be considered in determining the degree of regulatory action necessary is whether the content is being offered without charge to the public (as with open signal TV), or whether the content is being provided pursuant to a contract between a subscriber and a service provider (as with mobile phones, the Internet, and pay-per-view programs). In general, the concerns that an open signal television channel generates by the fact that the information is being aired to millions nationwide does not warrant identical regulations for a medium that reaches several hundred mobile phone subscribers, end-users who have not only paid to view the content, but have actively selected the content in accordance with their preferences. We must address these concerns in a manner that does not entail excessive regulatory restrictions on content providers. In fact, excessive restrictions will likely curtail any interests that content producers have in developing certain programmes, which will impede information dissemination and thereby frustrate, rather than foster, cultural diversity. Discussions that will focus on what is best in terms of regulating audiovisual content is not only welcome, but necessary, particularly considering the draft bill released for public commentary fell far short of the industry's expectations as to how a law in this area should apply. In general, a regulation must be sensitive to the economic and cultural growth that this industry provides and it must encourage information dissemination to the masses. We cannot enforce a law that operates to cut down the strength of the industry by imposing excessive burdens on content that can be distributed. But before any regulation can be effective, rules must be clearly defined without any hint of censorship or similar restraints on freedom of expression.
ISSUE 28 JANUARY – JUNE 2005
12
EDITOR / EDITORIAL BOARD EDITOR IN CHIEF: Stephan LE GOUEFF, , Luxembourg
MANAGING EDITOR: Neil I. JACOBS, NI Jacobs & Associates, New York
Country Firm Contact E-mail Site
Argentina Estudio Millé Gonzalo ZORRILLA [email protected] www.reis.com.ar/estudiomille
Australia Clayton Utz Julian GYNGELL [email protected] www.claytonutz.com
Austria Dorda, Brugger & Jordis Stephan POLSTER [email protected] www.dbj.at
This newsletter may be reproduced and distributed in full, with no edits or changes, free of charge. The posting of the newsletter on a web site requires the consent of the Editor in Chief.
