Archive for March 2016

ITV in the EU and the On-Demand Loophole – 10 Mar 2016   Leave a comment

ITV Hub

ITV Player in the EU and the On-Demand Loophole

 

The previous post, BBC iPlayer in the EU – January 2016, focused on the BBC iPlayer, funding and the BBC’s intention to make iPlayer available in the European Union.

There have been some developments in the last two months. It is now clear that when, later this year, the government introduces the new legislation on the TV licence and the on-demand loophole, ITV Player (ITVhub) will not be included. Only BBC on-demand TV will require a licence. Whatever plan the ITV might have for its on-demand service, it does not intend that the BBC should benefit through the licence fee.

There is now a slightly clearer picture emerging of how, for example, the BBC and the ITV could operate within the EU’s plans for TV without borders across the EU. In the case of the BBC, a UK TV licence will be needed to verify entitlement to the live and catch-up TV. The BBC regards the licence as central to its plans and made it clear that linking iPlayer catch-up to the licence would enable delivery of BBC TV in Europe. The ITV has a different view of the on-demand loophole and does not intend to link ITV catch-up to the TV licence. Therefore, if the ITV does plan to make its catch-up service available across the EU, it will have to verify UK residency but will not use the TV licence as proof of residency. The ITV would, therefore, need an alternative verification.

The On-demand Loophole

Currently, you do not require a TV licence to watch UK public service catch-up TV. You can watch BBC, ITV, Channel 4 and Channel 5 catch-up without a licence. Only live TV requires a licence. This will soon change.

The BBC and the UK government wish to close this TV licence loophole but not everyone, notably the ITV, shares that view. The TV licence is used to fund the BBC and so the extra licence income from closing the loophole would benefit the BBC. The ITV does not benefit directly from the licence and opposes a change in the law on ITV catch-up. ITV’s reasoning seems to be that only the BBC would benefit from any extra income, estimated at about £150 million per year. One of ITV’s arguments against making ITV catch-up dependent on a TV licence is that it is unreasonable to expect users of ITV’s catch-up services to fund the BBC through the licence fee.

Last year the government stated in a letter to the BBC Director General:

“The Government will bring forward legislation in the next year to modernise the licence fee to cover public service broadcast catch-up TV”

This suggested that all the PSB catch-up viewing would require a licence. An article in the Guardian reminded us (2nd March this year), saying:

“In other words, all public service catch-up television, not just that provided by the BBC, would be covered by the end of the iPlayer loophole.”

From: The Guardian – closing the BBC iPlayer loophole – March 2016

In the same article the Guardian reported on the culture secretary John Whittingdale’s announcement in his speech at the Oxford Media Convention that same day in March:

“The government is to rush through legislation to close the ‘iPlayer loophole’, which allows people to watch BBC shows on catchup services without having a TV licence.”

The article contrasted this with last year’s government statement. Only BBC catch-up would now require a licence.

Clearly there had been a significant shift in the scope of the UK government’s plan to modernise the TV licence. The change in the law will not cover all public service catch-up TV. It will cover only BBC catch-up and so will not include ITV, Channel 4 and Channel 5.

This shift was presumably due, in part, to reports that the ITV was planning a legal case against the inclusion of ITV Player catch-up in the loophole closure. Or was it simply that the government priority, along with the BBC, was to close the iPlayer loophole as soon as possible and so to go ahead with just that?

Following the March announcement you will be able to continue to watch public service catch-up TV, except BBC iPlayer catch-up, without a TV licence. This will be good news for viewers in the UK who do not intend to purchase a TV licence and who can live without live TV and BBC catch-up. You will still be able to watch catch-up on ITV, Channel 4 and Channel 5 ‘for free’. Note that you will still need a licence for live TV including live subscription channels.

It is possible that the modification to the licensing law, that will close the iPlayer loophole, will be introduced as early as this May.

Viewing ITV within the EU

It is not clear whether the ITV will comply with the EU Commission’s Digital Single Market proposals for ‘TV without borders’ across the EU. Under the EU proposed legislation, a qualifying UK resident will be entitled to view UK internet TV anywhere in the EU. The BBC has already agreed that it will comply. One wonders when will the ITV reveal its position.

In principle, given that watching ITV’s live internet TV is dependent on a paid-for TV licence, you might expect that the ITV would follow the EU rules and simply provide access, in the EU, to their live TV streams to anyone with a UK licence. The provider, in this example the ITV, has to verify that the resident does actually qualify, because the owners of the digital rights need to be satisfied that only those who qualify can access the service. The criteria that determine access to UK TV in the EU are that a UK resident is legally entitled to watch in the UK and can be identified as a UK resident. In the case of live TV, the possession of a UK TV licence verifies the legal entitlement. The TV licence also verifies the UK residency. Therefore, possession of a TV licence satisfies both criteria  to watch ITV’s live internet TV anywhere in the EU. As you can imagine, the process, in practice, is not simple and will not be straightforward, particularly given the large numbers, potentially millions of customers. Who is going to pay for the administration and how does the ITV benefit?

The situation with catch-up TV will be even more more complicated if the catch-up does not require a licence. It does not matter, within the EU Digital Single Market framework, that ITV catch-up does not require a UK TV licence. What matters is proof of residency. The ITV has to verify that the customer is a UK resident. A TV licence, in the context of ITV catch-up, can be used as proof that the viewer is a UK resident and therefore, as with any UK resident, is legally entitled to watch ITV catch-up. If the person can be identified as a resident, either through a TV licence or any other means, then the provider, namely the ITV, can make their catch-up TV streams available to that individual, whatever the location within the EU.

There is advice in the EU proposals about what can be used as proof of residency:

“while self-declaration would not be enough, what should be required as proof of residence is information such as banking details, the payment of a licence fee for other services provided in the member state of residence or the existence of a contract for Internet or telephone connection”

A TV licence would seem to be the most straightforward way to confirm residency – but a resident, who watches only catch-up in the UK, may not have a licence.

The actual mechanism, within the ITV Player app, for verification using a TV licence leads to another problem. A solution similar to the BBC proposal would work – a login code based on the TV licence that you would apply for before travelling to the EU. If the BBC can operate a verification based on a login then, in principle, so can the ITV. But, how would the ITV access the licence details of a potential customer to verify the login?

The EU’s proposed system may fit well with the business model of a TV subscription service in which a user registers with the provider and pays a fee. Unless there is some other market advantage for a public service broadcaster then the extra administrative load may be unmanageable. The PSB provider, in this example the ITV, can decide whether or not it wishes or is able to undertake the verification of residency. The EU  allows the potential provider to opt out. For example, the ITV can claim that it does not know the country of residence of a customer and so cannot perform the verification required by the EU rules. It seems it could opt out even if the resident possesses a UK TV licence that provides clear proof of residency. This opt-out is understandable. In the context of a UK TV license as a proof of residency and a legal entitlement to the online TV service, the UK government itself should facilitate the mechanism needed for a smooth implementation of online verification.

For the time being it appears to be up to the ITV to sort out the verification method. If the ITV and Channels 4 and 5 are able to opt in then, as with the BBC, they have until some time next year to develop new internet TV players.

The EU rules do not actually require that the provider of the service, such as the ITV, receives a payment for the service. There appears to be confusion about the distinction between live and catch-up TV in discussion of the EU rules. This could arise from the view in the UK that the UK licence fee is not a payment for a service, so that both live and catch-up do not involve a payment. Currently, it is correct that there is no payment for catch-up. What about live TV? Maybe the confusion results from the EU’s reference to “People who legally buy content” – which could lead some to think that UK public service TV does not qualify. It may well be that the payment for a UK TV licence is not a payment for a service but the EU DSM rules regard the possession of a licence as evidence of a payment, in the context of the relevant EU Article 2(e) that allows the licence holder to access the service.

Article 2(e)  requires the provider, such as the BBC or ITV or Netflix, to provide the content (in this case the internet TV streams) to the customer either:
(i) against payment of money, or
(ii) without payment of money provided that the member state of residence is verified by the provider.

UK live TV comes under category (i). Category (ii) concerns TV broadcasts that are completely free, meaning there is no payment and that a licence is not required to watch in the country of residence. The entitlement is derived simply on the basis of residence in that country.That is why only verification of the state (the country) of residence is needed. In category (i) it is the TV licence that provides an effective ‘proof of payment’ and therefore the legal entitlement and, of course, verifies the country of residence. Clearly ITV catch-up falls in category (ii) because ITV catch-up does not and probably will not depend on a licence fee, although some form of payment cannot be ruled out.

It may be easier for the provider, the ITV, to verify that the UK is the country of residence if the resident possesses a TV licence. If the ITV were to opt in then the mechanism would  be easier to manage if just the live TV component of the ITV Player app were made available to UK residents in the EU. The customers would then have a licence. Of course, it would be a lot easier if the ITV were able to register its customers, charge for the catch-up service and verify those customers as UK residents during registration.

If the national TV provider is a conventional subscription service,  much of the administration is already in place. There would normally be a payment direct to the provider and so the customer’s account details with that service provider would be used to verify country of residence. A subscription service provider would not be allowed to opt out because the administrative tools are already in place. The problem in the UK and, no doubt, in other EU nations is that the public service broadcaster (PSB) does not necessarily hold details such as the possession of a TV licence and the country of residence within the EU. In the UK, the TV licence database is operated by a third party, TV Licensing, and is the responsibility of the BBC and so presumably is not accessible by, for example, the ITV. The result is that it is probably very difficult, assuming that the individual does possess a licence, for the ITV to verify possession of a licence and therefore residency. Does this mean that the EU is proposing a regulation that is unworkable for a large number of EU citizens? It appears so.

The UK government is responsible for the UK law on UK TV licensing and the PSBs. It seems self-evident that it should ultimately be the UK government’s responsibility, assuming it approves the DSM legislation, to create an appropriate working framework in the UK. In particular, the UK government could, along with the BBC, make the TV licensing details of UK residents securely accessible by the internet TV application software (such as the ITV Player) that will be used to deliver UK internet TV, across the EU, to qualifying UK residents.

Personal data held by the BBC and its TV Licensing agents, for the purpose of administering the television licensing system, cannot be used for any other purpose unless it is expressly required or permitted by law. Presumably, if the licence were to be used for verification, there would need to be a change in the law so that the PSBs other than the BBC could verify possession of a licence and residency. You can imagine a scenario in which the UK resident submits personal details and the TV licence number via the ITV Player app and that the app then verifies the details against the database. The system could be automated. Presumably something similar is needed in the system that the BBC is now working on.

It does seem unlikely, given the complications, that the TV licence will be used for verification, apart from the BBC.

If ITV Player and the other PSB internet TV channels are not made available in the EU then the existing alternative is unauthorised access via a proxy UK IP address. Of course, the EU rules on TV without borders may not be implemented until the end of 2017. A lot can happen before then.