Who Has Jurisidiction To Regulate Satellite Broadcasters?

Professor Lorna Woods

The electrical flow regulatory framework for electronic content is broadly divided into two: content as well as infrastructure.  This bifurcated design, inwards theory, allows platforms to live on regulated inwards a comparable way rather than live on discipline to unlike rules based on the content they carry.  Essential infrastructure (electronic communications) is discipline to a marketplace position based approach (the so-called ‘communications package’) as well as content is discipline to specific minimum standards regulated inwards the Earth of root (the audiovisual media services directive (AVMSD) as well as the e-commerce directive).

In both instances the regulatory framework is provided yesteryear European Union secondary legislation (mainly directives), but it seems that the unlike measures ascribe regulatory competence every bit betwixt Member US differently, as well as allow a regulator unlike orbit of action. Moreover, in that location is non an exact jibe alongside the underlying treaty costless crusade provisions.  This horizontal split upwards based on a service as well as technology neutral approach is neither every bit unproblematic nor every bit consummate every bit policymakers mightiness get got hoped, bearing inwards heed the gain of intermediaries operating inwards the marketplace position as well as the gain of services each operator mightiness provide. The final result is that in that location are unclear boundaries every bit to the applicable police pull and, every bit corollary of that, the relevant regulator. The difficulties are exemplified inwards the recent CJEU judgment inwards Case C-475/12 UPC v. NMHH.

UPC is essentially a retailer of electronic content: it provides packages of radio as well as audio-visual broadcast services transmitted via satellite as well as discipline to conditional access technology (ie, a requirement to pay for a subscription).  Following a companionship restructuring, consumers inwards Republic of Hungary were provided alongside the service yesteryear a UPC subsidiary based inwards Luxembourg.  Following complaints yesteryear Hungarian consumers, the Hungarian communications regulator, NMHH, asked UPC for data which UPC refused to provide on the ground that NMHH was non the competent regulator, either inwards damage of the pith of the service as well as regulatory framework, or inwards damage of geographic jurisdiction.  UPC claimed that the Grand Duchy of Luxembourg authorities, if any, should regulate as well as that the Grand Duchy of Luxembourg government had stated that they had regulatory competence. NMHH fined UPC for non-compliance.  UPC appealed as well as the thing came earlier the Hungarian courts. The questions referred brutal into 2 groups: on the orbit of the communications bundle (specifically the FrameworkDirective (FD) on telecom regulation); as well as on its human relationship alongside the underlying Treaty costless crusade provisions. The questions referred are:

(1)      May Article 2(c) of the Framework Directive live on interpreted every bit pregnant that a service yesteryear which a service provider supplies, for consideration, conditional access to a bundle of programmes which contains radio as well as telly broadcast services as well as is retransmitted yesteryear satellite is to live on classified every bit an electronic communications service?

(2)      May the Treaty on the Functioning of the European Union live on interpreted every bit pregnant that the regulation of the costless crusade of services is applicable to the service described inwards the showtime question, inwards the instance of a service supplied from Grand Duchy of Luxembourg to Hungary?

(3)      May the Treaty on the Functioning of the European Union live on interpreted every bit pregnant that, inwards the instance of the service described inwards the showtime question, the Earth of destination, to which the service is sent, is entitled to restrain the provide of that type of services yesteryear requiring that the [supplier of the] service has to live on registered inwards that Member State as well as has to live on established every bit a branch or separate legal entity, as well as allowing this type of services to live on supplied exclusively through the institution of a branch or separate legal entity?

(4)      May the Treaty on the Functioning of the European Union live on interpreted every bit pregnant that administrative proceedings relating to the services described inwards the showtime question, regardless of the Member State inwards which the project supplying that service operates or is registered, volition live on discipline to the administrative authorization of the Member State which has jurisdiction on the ground of the house inwards which the service is supplied?

(5)      May Article 2(c) of the Framework Directive live on interpreted every bit pregnant that the service described inwards the showtime query must live on classified every bit an electronic communications service, or must such a service live on classified every bit a conditional access service supplied using the conditional access organisation defined inwards Article 2(f) of the Framework Directive?

(6)      On the ground of all the foregoing, may the relevant provisions live on interpreted every bit pregnant that the service provider described inwards the showtime query must live on classified every bit a provider of electronic communications services pursuant to European Community [sic] law?

EU legislation

Although from the perspective of the consumer, UPC looks similar a broadcaster, UPC does non select editorial responsibleness for the content of the programmes, as well as so it does non autumn to live on regulated nether the AVMSD (which inwards whatever trial does non covert radio). In ruling as well as so here, the Court follows its previous judgment inwards Case C-518/11 UPC Netherland.  The Definition of ‘electronic communications service’ for the FD encompasses services usually provided for remuneration which consist wholly or mainly inwards the conveyance of signals on electronic communications networks, including transmission services inwards networks used for broadcasting, but excludes services providing, or exercising editorial command over, content transmitted using electronic communications networks.  The Court’s phraseology on this shout out for (paras 36-39 of the judgment) is opaque, talking inwards damage of ‘not excluding’ the communications package. So spell that bundle applies here, the query remains opened upwards the extent to which AVMSD or other content based provisions tin also apply to content retailers, depending on the nature of the service provided. Of course, were UPC to get got been deemed to live on responsible for content inside the AVMSD, it would likely get got been discipline to the regulation of the Grand Duchy of Luxembourg authorities, since that Directive usually confers jurisdiction upon the broadcaster’s Earth of origin.

Having excluded broadcasting, the query silent remained every bit to whether UPC brutal inside the Communications Package, a query which turned on the pregnant of ‘electronic communications service’ inwards Art. 2(c)FD.  Here, however, the shout out for at number was the fact that UPC did non utilization its ain transmission facilities but contracted alongside a 3rd political party for satellite services. The Court, reasoning to ensure the effectiveness of the regime, agreed alongside the approach suggested yesteryear the Advocate General as well as held that utilization of 3rd political party facilities was irrelevant to the classification of the service. The defining criterion of the electronic communication service is whether the provider is responsible as regards end-users for transmission of the signal to provide the relevant service.

It had also been suggested that if the service were a conditional access organisation (defined inwards Article 2(f) FD), the provisions concerning electronic communications services would non live on applicable. Both the Advocate-General as well as the Court dismissed this suggestion, as well as so 'a conditional access organisation may live on attached to an electronic communications service for the broadcasting of radio or telly programmes, without that service losing the status of an electronic communications service’.

So, the Communications Package applied, but this silent left the number of whether the Hungarian government could regulate (and if so, to what degree). The FD contains no attribution of jurisdiction inwards the way, for example, the AVMSD does.  The CJEU dealt alongside this aspect yesteryear considering the powers of the national regulatory authorities, inwards item every bit regards authorisation.  It noted that the Authorisation Directive (which forms purpose of the Communications Package as well as deals alongside the granting of licences as well as other forms of authorisation to provide relevant services) does non oblige the national authorization of the jurisdiction inwards which the services are provided to recognise authorisation decisions taken inwards the Member State from which they are supplied (judgment, para 86) – hither referring to the Grand Duchy of Luxembourg authorities’ declaration that they had regulatory competence inwards relation to UPC.  As a result, Member US inwards whose territory the recipients of services reside may impose weather on the provision of those services, every bit permitted yesteryear the Communications Package.  Under Article 11b Authorisation Directive, these include provisions to the number that national government may asking from undertakings data that is proportionate as well as objectively justified for verification of compliance alongside weather relating to consumer protection.  In sum, the provide of electronic services may live on monitored yesteryear the government of the Member State inwards which the recipients of the service reside.

Treaty rules on costless crusade of services

The Hungarian courtroom asked whether Article 56 TFEU precluded rules which require undertakings which provide electronic communications services inwards the territory of a State to register those services, or rules requiring them to found inwards that State a branch or a legal entity separate from that located inwards the Member State of transmission.  Note that where in that location has been total harmonisation via directive, exclusively those rules inwards the relevant legislation are permitted; otherwise, roughly recourse to national police pull is permitted. The Communications Package also envisages the possibility of farther national regulation, inwards improver to that specified yesteryear the bundle (recital seven as well as Article 1(3) Framework Directive), as well as farther provisions allow the regulatory government discretion to select activity to farther full general objectives, including protecting the consumer interests.   This agency that the expanse has non been totally harmonised as well as that whatever national rules inwards this expanse autumn to live on assessed yesteryear reference to the relevant Treaty freedom: here, services (see e.g. Case C‑17/00 De Coster; Case C‑250/06 United Pan-Europe Communications Kingdom of Belgium as well as Others). 

The normal rules governing the liberty to provide services allocated regulatory responsibleness to the Member State of establishment, as well as that secondary regulation must select into job concern human relationship domicile province regulation.  There is clear potential for abuse here, as well as in that location has been a flow of cases inwards the broadcasting sector inwards particular, where companies get got established inwards a Member State alongside a favourable regime as well as ‘broadcast back’ to a item State. The Court has exclusively rarely accepted that this is abuse or, alternatively, that such a companionship is genuinely established inwards the goal state.  These arguments were unsuccessful here, fifty-fifty though UPC does non provide services inside Luxembourg; this is really much inwards draw alongside the Court’s criterion approach.

As regards the notification requirement, Article 3 Authorisation Directive contains a legal framework dealing alongside the weather which the regulatory government of a Member State may impose inwards monastic tell to allow undertakings established inwards other Member US to provide electronic communications services inwards the territory of the host State. Provided that the host Member State follows the damage of Article 3, notification requirements are non precluded. Further, given that Article three seems to harmonise this aspect exhaustively, requirements going beyond Article three are non compatible alongside European Union police pull – they cannot live on judged yesteryear reference to the treaty freedoms. So, the Hungarian government may impose such notification requirements.

Note that  application of the Treaty freedoms mightiness get got led to a unlike result.  In Canal Satellite Digital (Case C-390/99), the Court held that a requirement on the operators of conditional access systems to register earlier carrying out services, inwards monastic tell for the Castilian government to cheque technical competence, inwards relation to a service provider established inwards roughly other Member State, would non live on proportionate if it duplicated checks inwards the domicile Member State.

Finally, the Court ruled that the requirement for an institution is non specified yesteryear the Communications Package, as well as so it does autumn to live on assessed yesteryear reference to the Treaty freedoms. While requiring an institution may Pb to to a greater extent than effective monitoring of authorisation conditions, such extensive monitoring is non justified.  In whatever event, an institution requirement ‘is the really negation of the liberty to provide services as well as has the final result of depriving Article 56 TFEU of all effectiveness’ (judgment, para 104) as well as cannot hence live on permitted nether the Treaty.

The judgment inwards this instance shows the importance (and complexity) of determining whether (and to what extent) a item patch of police pull is harmonised yesteryear European Union secondary legislation, as well as hence to what extent it remains regulated yesteryear the Treaty freedoms; as well as also the importance of determining which specific secondary legislative regime applies. It is interesting to Federal Reserve annotation that although the European Union took what mightiness live on termed a 'light touch' approach to telecom regulation inwards general, basing the organisation on contest police pull as well as policy principles, as well as assuming a distinction betwixt the populace involvement as well as the utilization of that system, that procedure is non complete. In particular, the communications bundle allows infinite for a gain of consumer protection issues as well as it is this, ironically, which gives to a greater extent than regulatory ability to the receiving State than the Treaty freedoms or the audiovisual services legislation does.

Barnard & Peers: chapter 14, chapter 16

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