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Global Media and Communications Watch

The International Media and Telecoms Law Blog

Posted in Telecoms & Broadband

NextNav closes $70 million Series D funding

NextNav LLC (“NextNav”) closed its US$70 million Series D funding led by venture capital firms New Enterprise Associates and Oak Investment Partners, along with Columbia Capital, Telcom Ventures, and GoldmanSachs Investment Partners. The deal is 2014’s largest venture capital funding to date for a D.C.-area tech company.  Hogan Lovells advised NextNav in the deal.

NextNav, launched by former XM Satellite Radio CEO Gary Parsons, is a leading provider of location services for indoor and urban environments. The financing will be used to extend the commercialization of NextNav’s revolutionary Metropolitan Beacon System (“MBS”) positioning network. MBS provides accurate horizontal and vertical location services inside buildings and in urban areas where satellite-based GPS signals aren’t available or reliable. NextNav is deploying its MBS network much like a cellular network, resulting in wide-area coverage that delivers its location services to every building within its network footprint.

Hogan Lovells corporate partner Richard Becker from the Northern Virginia office led the team, with assistance from Corporate partner Randy Segal, Antitrust partner Michele Harrington, Corporate associate Gabrielle Witt (all Northern Virginia), and Washington, D.C. Tax partner Shawna Tunnell.

 

Posted in Internet, Policy & Regulation, Telecoms & Broadband

Hogan Lovells launches Shanghai Free Trade Zone microsite

Hogan Lovells today announced the launch of its Shanghai Free Trade Zone (“FTZ“) microsite to provide information and resources with respect to the latest developments in the FTZ.  The microsite contains an analysis of the FTZ rules relating to value-added telecommunications services (“VATS“).

The microsite showcases Hogan Lovells’ unique market positioning as the only major international firm on a panel of approved professional service providers for advising on investments in the FTZ. The site will publish key updates on FTZ rules and regulations as they are issued, as well as in-depth write-ups by Hogan Lovells’ lawyers analysing their implications.

The FTZ, officially known as the China (Shanghai) Pilot Free-Trade Zone, was officially launched in September 2013. It is widely seen as a testing ground for economic and financial reforms with support from the Chinese central government. Foreign investors, especially those in heavily regulated or restricted sectors such as medical or telecommunications services, have been quick to demonstrate their interest in the industry-specific liberalisation policies within the FTZ. Other investors have been drawn in by the streamlined approval procedures, particularly for those sectors not included on the Negative List, moving away from the historical and onerous approval system towards a simplified and expedited record-filing system. If successful, the model may be replicated or rolled out elsewhere in China. Companies seeking to be at the forefront of developments in the liberalisation of the Renminbi have also shown interest in the FTZ; China has indicated that the FTZ is where the capital account will be liberalised on a trial basis in due course.

With its abundant on-the-ground experience and resources in China and expertise in all the key sectors, as well as its position on the FTZ panel, Hogan Lovells is uniquely positioned to help both inbound and outbound investors establish and develop their businesses in the FTZ.

Andrew McGinty, Head of Hogan Lovells’ Corporate and M&A practice in Asia, commented:

“Our team has made tremendous efforts on the establishment of this microsite. I believe it will become an extremely helpful reference tool for our international clients to understand the most up-to-date developments as well as considering the values and returns by entering into the Shanghai FTZ.”

Posted in Broadcasting, Policy & Regulation, Spectrum, Telecoms & Broadband

Mexican Telecommunications and Broadcasting Law to enter into effect 13 August 2014

On 10 June 2013, after a fast-track approval, the decree to reform the Mexican Constitution (the “Reform”), mainly in telecommunications matters, was enacted by President Enrique Peña Nieto. The Reform recognized as human rights the access to: (i) information and communications technology, and (ii) broadcasting and telecommunications services, including broadband and the Internet.  Following the Reform, the Federal Telecommunications and Broadcasting Law (the “Law”) was published on 14 July and will enter into effect on 13 August 2014.

The Reform creates the Federal Institute of Telecommunications (“IFT”), a new regulatory agency that enjoys constitutional autonomy in charge of regulating all broadcasting and telecommunications matters, including all economic competition matters related to both sectors. The IFT replaced the former Federal Telecommunications Commission created in 1996, as a subordinated governmental body.

Among other tasks, the IFT is in charge of the regulation, promotion and supervision of: (i) the radio spectrum; (ii) networks; (iii) provision of broadcasting and telecommunications services, and (iv) access to active and passive infrastructure and other essential facilities.

With respect to telecommunications and broadcasting concessions, IFT will be the sole authority in charge of determining: (i) granting; (ii) revocation; (iii) assignments, and (iv) the compensation of its granting, as well as the authorization of the corresponding services, prior opinion of the tax authority. The Reform also provided the creation of specialized judges and courts in broadcasting, telecommunications and economic competition matters, that is expected to bring more certainty in this highly litigated field.

The Reform provides for the implementation of numerous actions within certain timeframes, such as:

  1. direct foreign investment was permitted as of June 12, 2013 up to: (a) 100% in telecommunications and satellite communications, and (b) 49% in the  broadcasting sector subject to reciprocity from the country of the ultimate investor;
  2.  the publication of a new convergent law to jointly regulate the telecommunications and broadcasting sectors on or before December 9, 2013;
  3. once the IFT is created, Must Offer and Must Carry obligations will be valid, except in certain cases;
  4. on or before March 8, 2014, the Institute should have: (a) published the bidding rules for the tender of two new television channels with national coverage, and (b) declared the existence of “preponderant economic agents” (see below) and imposed on them measures in order to avoid adverse effects on competition;
  5. the State will ensure the installation (between 2014 and 2018) of a shared public telecommunications network of wholesale wireless services by mainly using the 700 MHz band, and
  6. the transition to digital terrestrial television (“DTT”) must end on or before December 31, 2015.

 Implementation of the Reform

In August last year, the specialized judges and courts were created and in September the Institute was duly created and published its new organic statute.

In 2014 the Institute began to implement the Reform as follows: (i) it published (prior to a public consultation) the general guidelines to regulate the Must Offer and Must Carry obligations (February); (ii) it declared as preponderant agents and imposed different measures on: (a) Telcel and Telmex in the telecommunications sector, and (b) Televisa in the broadcasting sector, and (iii) it published (prior to a public consultation) the call for a public bidding in order to create two new national television networks in Mexico (March).

Although according to the Reform the convergent law should have been published on or before December 9, 2013, it was not until March 24, 2014 when the President submitted the bill before the Senate.

The new Federal Telecommunications and Broadcasting Law (the “Law”) was published on July 14 and will enter into force as of 13 August  2014. The Law will repeal the Federal Telecommunications Law and the Federal Radio and Television Law.

The new Law

The Law sets forth a new regulatory regime for the telecommunications and broadcasting sectors based on the principles and guidelines of the Reform. Some of the main provisions of the Law are the following:

  1. Telecommunications and broadcasting services are considered as public services of general interest and any discrimination in its provision is forbidden.
  2. The IFT is granted with new powers, functions and institutional design, including specific rules of transparency and contact with the regulated industry.
  3. There is a new concessions regime (not involving spectrum or orbital resources) called “unique concession” that allows the provision of all telecommunications services and is granted through a special procedure, prior request, considering a specific term of 60 calendar days and if the IFT fails to resolve the request, it shall be understood that the concession should be granted. A unique concession can only be granted to Mexican individuals or entities, but there is no limitation with respect to foreign investment for telecommunications services.
  4. The spectrum and orbital concessions are granted through a public bid, but the economic factor (consideration) will not be the sole element to determine the winner of the bid.
  5. Concessionaires may lease only frequency bands that were granted in concession for commercial or private use, private communication purposes, and prior approval of the IFT.
  6. An authorization granted by the IFT is required to: (i) establish a reseller of telecommunications services without being a concessionaire; (ii) install earth stations to transmit satellite signals; (iii) install telecommunications equipment and transmission media that cross the borders of the country, and (iv) exploit emission allowances and receive signals and frequency bands associated  with foreign satellite systems providing services on the country. The requests for authorization are resolved within 30 business days of their submission. After this period without being resolved, it shall be deemed granted.
  7. The Law provides a new kind of public/private network structure, called “public telecommunication networks with public participation.” The concessions for commercial use to public bodies under a public-private partnership scheme have the character of “shared network of wholesaler telecommunications services.” Such networks cannot provide services to final users.
  8. The Law contemplates and regulates the following matters: network neutrality; numbering; access and interconnection services; the use of State goods for the deployment of telecommunications infrastructure; satellite communications; Must Offer and Must Carry obligations; broadcasting services, and pay television/audio services.
  9. The IFT will be in charge of the Public Registry of Telecommunications, composed by the Public Registry of Concessions and the National Information System of Infrastructure.
  10. The Law includes different obligations  for regulated agents in security and justice matters, such as the obligation to give a geographic location in real time of mobile devices as provided in the corresponding laws, among other obligations.
  11. The final users of telecommunications and broadcasting services will have  rights provided in the Law. All telecommunications concessionaires shall observe the federal consumer protection law. There are new and specific rights regarding disabled users.
  12.  The Law provides the right of freedom of information, expression and of receiving content through the public broadcasting service and pay television/audio, which shall not be not subject to censorship or limitation.
  13. The Law provides two main figures which trigger asymmetrical regulation: (i) in the case of preponderant agents, and (ii) in the existence of dominant agents.
  14. Preponderant agents are those who hold a national participation in the telecom or broadcasting sectors that exceeds 50% of users, subscribers, audience, traffic on its networks or used capacity thereof  and are declared by the IFT following a specific procedure and implementing measures provided in the Law.
  15. The IFT is authorized to determine the existence of agents with substantial market power in any of the telecom and broadcasting markets under the Federal Competition Economic Law in which case the IFT is allowed to impose specific obligations in certain matters.
  16. The telecommunications products, equipment, devices or gadgets that can be connected to a telecommunications network or use radio spectrum frequencies, should be approved according with the applicable norms.
  17. The Law provides a new set of rules to limit the cross ownership of telecom and broadcasting concessionaires and other restrictions in the acquisition of spectrum for broadcasting services,  so that in certain market or coverage areas there is no restricted  or limited access to plural information.
  18. The IFT is in charge of the verification and supervision of the fulfillment of the Law, and the obligations established in the concessions and authorizations.
  19. The IFT is in charge of the application of sanctions provided in the Law following the procedure set forth in the Federal Law of Administrative Procedure, except in the following matters: (a) protection of consumers (Federal Consumer Protection Agency), and (b) content and publicity (Ministry of Interior).
  20. The Law introduces a new scheme of sanctions based on percentages of income of the offender.
  21. The general norms, acts or omissions from the IFT can be appealed only with a constitutional trial (amparo indirecto) and there is no injunction. Such trials will be held before the specialized judges and courts.

With thanks to the authors: Federico Hernandez Arroyo, Bernardo Herrerias Franco and Juan Francisco Torres Landa of the Mexican law firm Barrerra Siqueiros Torres Landa which combined with Hogan Lovells on 1 August 2014.

Posted in Policy & Regulation, Telecoms & Broadband

USA: Federal Communications Commission Rewrites E-Rate Rules for Technology Support for Schools

The main telecommunications regulatory body in the United States has adopted new rules governing the administration of the country’s multi-billion dollar education technology fund.  Schools and libraries in the U.S. will want to review the final rules closely to see how changes to this program will affect their future technology procurement plans and budgets, while telecommunications service providers doing business in the U.S. should be aware that the changes could open the door to a future increase in regulatory fees.  The new rules also create a significant new revenue stream for providers of managed Wi-Fi services (and, indirectly, vendors of Wi-Fi equipment), and vendors of caching servers.

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Posted in Copyright, Internet, Policy & Regulation

EU: Copyright Levies and the Cloud

On February 27, 2014, the European Parliament (“EP”) adopted a resolution on private copying levies, finding that a copyright levy regime is relevant in the online environment but that licensing models for streaming services (where no copy can be stored on a device) should have preference. The EP calls on the European Commission to assess the impact of the use of cloud computing technology for private recording and storage of works to determine whether a levy regime should also apply to cloud computing services.  This article looks at the EP’s approach to harmonising private copying levies in the digital age and looks at some of the recent key developments in the U.K., France, Germany and the Netherlands.

Click here to read the full article in our Spring issue of the Global Media and Communications Quarterly

Posted in Data Protection & Privacy, Policy & Regulation

UK Government seeks to preserve data retention powers

On 10 July, the UK government announced cross-party backing for emergency legislation designed to ensure that the police and security services can continue to access communications data held by communications service providers for the purpose of investigating criminal activity and protecting national security.  This is in response to the recent CJEU judgment of 8 April 2014 in joined cases (C-293/12 Digital Rights Ireland & C-594/12 Seitlinger) which declared the Data Retention Directive (2006/24/EC) invalid (as discussed here in a previous post).

The draft Data Retention and Investigatory Powers Bill (the “Bill“) provides powers to introduce secondary legislation to replace the Regulations which implemented the Data Retention Directive in the UK (the “2009 Regulations“), and seeks to clarify the scope of obligations that can be imposed on telecommunications service providers based outside the UK under the Regulation of Investigatory Powers Act 2000 (“RIPA”).

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Posted in Data Protection & Privacy, e-commerce, Internet, Policy & Regulation

Hogan Lovells Paris IoT seminar features “La Poste” connected home strategy

On 5 June, 2014, Hogan Lovells’ Paris office hosted a seminar on the Internet of Things, focusing on product liability, privacy, IP interoperability issues.  The seminar featured presentations relating to the French post office’s plans to act as a central hub to facilitate “connected home” technologies.

Everyday products are now able to receive and store information regarding the product itself or the user. The interconnection between connected products allows the gathering, processing and permanent transfer of this information, thereby further blurring the boundaries between the real and virtual worlds. However, the “Internet of things” will likely bring many new and interesting challenges as well as concerns for lawyers and businesses: privacy issues, data protection, potential product liability…

This seminar was introduced by Christine Gateau, a Partner in the Paris Litigation practice of Hogan Lovells, who underlined the actual and prospective importance of smart products.

Stéphanie Dubreuil, Associate General Counsel of the French group La Poste, and Raphaël Basset, Director of strategic marketing and partnerships, DOCAPOST, then presented their views on connected services and products.  La Poste is becoming a facilitator for numerous connected home technologies.

Stanislas Roux-Vaillard, a Partner in Hogan Lovells’ IPMT practice, analysed the potential frictions between standards and intellectual property rights in a world of interoperability.

Lionel de Souza, a Senior Associate in Hogan Lovells’ IPMT practice focused on privacy and personal data issues. Indeed, smart products are potentially intrusive given the amount of data collected.

Finally, Christine Gateau and Christelle Coslin, a Senior Associate in the Paris Litigation practice of Hogan Lovells, offered an overview of the liability incurred in relation to the use or dysfunction of smart products.

Posted in Copyright, Entertainment & Content, Policy & Regulation

European Union – European Commission adopts an Action Plan on the enforcement of Intellectual Property Rights

On 1 July the European Commission adopted an action plan to address infringements of intellectual property rights in the EU (COM(2014) 392/2). The action plan intends to shift the attention of enforcement policies and actions from individuals infringing IP rights towards commercial scale infringers as they are viewed as the most harmful according to the Commission.

The EU Commissioner for Internal Market and Services, Michel Barnier commented on the new plan stating: “Rather than penalising the individual for infringing intellectual property rights, often unknowingly, the actions set out here pave the way towards a ‘follow the money’ approach, with the aim of depriving commercial-scale infringers of their revenue flows”.

An action plan is deemed necessary by the Commission due to the high importance of IP-rights for the European market. According to the communication IPR-intensive sectors account for around 39% of EU GDP. The number of new European patent, Community trade marks and Community designs registrations more than doubled between 2003 and 2012. At the same time IP infringements also rose to an all-time high; from less than 27,000 cases of goods suspected of infringing intellectual property rights registered by EU border control in 2005, to 90,000 cases in 2012.

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Posted in Broadcasting, Copyright, Entertainment & Content

USA: Supreme Court finds Aereo live streaming service infringes copyright

The US Supreme Court has delivered its much anticipated ruling in American Broadcasting Cos., Inc., et al. v Aereo, Inc, a case about whether Aereo’s live streaming service infringes US broadcasters’ public performance right. The Supreme Court found that it does, overturning the ruling of the Court of Appeals for the Second Circuit.

In 2012 the owners of various copyrights in television content sued Aereo in relation to its live streaming service, which allows subscribers to watch free, over-the-air television stations on its website at virtually the same time as the content is being broadcast. The system is comprised of thousands of tiny antennas housed in a warehouse, each one dedicated to an individual subscriber for the duration of the show they have selected to watch. Once that subscriber has selected a programme, the system creates a personal copy of the broadcast from the signals received by that subscriber’s dedicated antenna and streams it to the subscriber. After the District Court and the Court of Appeals for the Second Circuit both found that Aereo’s service did not infringe the broadcasters’ public performance right, the broadcasters sought review by the Supreme Court.

Copyright owners, including the owners of broadcast television programmes, have the exclusive right to “perform the copyrighted work publicly” in the US. The US Copyright Act of 1976 defines that right as including the right to “transmit or otherwise communicate a performance…of the…work…to the public, by means of any device or process…” This language was part of a series of amendments to the Copyright Act intended to cover the retransmission of broadcasts by traditional cable systems.

Aereo argued that it was merely a supplier of equipment that allows the subscriber (rather than Aereo) to perform the copyrighted works. It sought to distinguish itself from traditional cable companies by arguing that it is the subscriber who performs a work by initiating a request for the work to be received and transmitted. The Supreme Court was not persuaded by this argument.  The “overwhelming” similarities between Aereo and traditional cable systems led the Court to conclude that Aereo was not simply an equipment supplier, but that it “performs” the works.

On the question of whether the works are performed publicly, Aereo argued that its one-to-one system, which streams each transmission to each subscriber from an antenna ascribed to that subscriber personally, does not transmit a performance “to the public”. The Court found, however, that where Aereo is transmitting the same programme to multiple subscribers, it is transmitting a performance to all of them and this transmission amounted to a performance “to the public”.

The US Supreme Court’s approach to live streaming services is consistent with the approach taken in Europe. In ITV Broadcasting Ltd v. TV Catch Up Ltd, which also related to a live streaming service that was retransmitting free-to-air broadcasts in the UK over the internet, the Court of Justice of the European Union held that any retransmission which uses a different technical means must be authorised by the copyright owner and, therefore, the retransmission of broadcast content over the internet required the consent of the broadcasters. It did not matter that there was a “one-to-one connection” with each subscriber. The Court felt that a one-to-one connection did not prevent a large number of people having access to the work at the same time.

The United States Supreme Court in Aereo was careful, however, to state that its decision is limited to live streaming services (i.e., cable companies and their “equivalents”) and that the Court was not opining on whether other technologies, such as cloud computing services and remote storage digital video recorders, might infringe the public performance right.