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Global Media and Communications Watch

The International Legal Blog for the Tech, Media and Telecoms Industry

Posted in International/EU privacy Eduardo Ustaran

Getting Cookie Consent Right

One could be forgiven for thinking that knowing how to comply with a legal obligation that has been in place for nearly a decade would be clear cut. However, widespread practice tells us that this is far from the truth. In November 2009, as part of wider reforms to the European telecommunications regulatory framework, the European Union introduced various amendments to the existing Directive 2002/58/EC (‘e-Privacy Directive’), including to the provisions regulating the use of cookies.

Since then the e-Privacy Directive has required obtaining the consent of users in order to store or access information (typically cookies or similar tracking technologies) on their devices. The only exemptions to this requirement are where this is for the sole purpose of transmitting a communication or where it is strictly necessary to provide an Internet service explicitly requested by the user.

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Posted in Policy & Regulation, Spectrum Trey HanburyAri Fitzgerald

FCC Issues Public Notice on Spectrum Allocations for UAS Operations

The FCC recently issued a Public Notice that sought comment on whether to make the 960-1164 MHz and 5030-5091 MHz bands available to support unmanned aerial system operations (UAS).

The FAA Reauthorization Act of 2018 required the Federal Aviation Administration (FAA), the National Telecommunications and Information Administration (NTIA), and the FCC to submit a report to Congress on whether to allow UAS communications in these frequencies. The joint agency report must discuss: (1) whether the FCC should permit, but not require, UAS operations in these bands on an unlicensed, shared, or exclusive-use basis; (2) any technological, statutory, regulatory or operational barriers to the use of the spectrum for UAS purposes; and (3) recommendations of other spectrum bands if the agencies conclude that the 900 MHz and 5 GHz bands are not suitable to support UAS operations.

As part of the public notice soliciting public comment for the joint agency report, the FCC has also asked for public input on several related issues, including: (1) actions the FCC might take to promote the use of licensed commercial spectrum for UAS operations; (2) information on UAS applications and deployment scenarios wireless service providers and equipment manufacturers are considering; and (3) potential interference concerns and other technical issues associated with UAS operations that might inform the FCC’s decision making.

Comments are due Thursday, December 26, 2019, and reply comments are due Monday, January 27, 2020.

Posted in Policy & Regulation, Technology

Tech Tax and the OECD: it’s as easy as A, B, C

What is it about? OECD proposals to tax the digital economy which will significantly impact all large tech companies that are consumer oriented.

What will the impact be? Businesses will pay more tax. Impact on cash-flow, earnings per share and valuations. There will also be lots of complexity to ensure compliance.

What should businesses be doing now? Watching for what comes out of the OECD, including on 9 Dec on the second round of proposals.  Working with advisors to assess the potential impact.

Late last week OECD held a public meeting in Paris to hear from advisors, industry groups and multinationals on the first half of its proposals for taxing the digital economy. Delegates from Member States plus the 135 country-strong Inclusive Framework on Base Erosion and Profit Shifting will now meet behind closed doors over the coming weeks and months to agree on final details. Final agreement is expected within 12 months.

So what can companies in the technology sector expect?

First, the changes will apply to all large technology companies that are consumer-oriented. That means platforms, media, communications, and possibly even fintech. How large is still an open question, but a revenue threshold of $750m or €750m is being bandied around. If so, it won’t be just the giants, but plenty of other companies.

Second, businesses will pay more in tax. How much remains to be seen, but it will hit cash-flow, earnings per share, and valuations. And that’s before the OECD gets to its proposals for an international version of President Trump’s Tax Cuts and Jobs Act. Those are being discussed in Paris on December 9.

Third, and despite all the noises to the contrary, it’s going to be complex. And involve a lot of work. That’s because once the rules are finalised and implemented, companies will be subject to tax on three separate amounts.

  • Amount A – a share of the profits earnt by a group in excess of a deemed basic return, this being allocated to the jurisdiction where consumers are, and calculated using a pre-determined formula;
  • Amount B – a fixed level of remuneration for baseline marketing and distribution functions that take place in a country; and
  • Amount C – an additional profit accruing where in-country functions exceed the baseline activity compensated for by Amount B.

Critically, tax will be payable on Amount A even in countries where a multinational group has no physical presence, but does have sales. This is a new taxing right, and tears-up the rulebook on international tax that prevailed almost since international tax time began.

Similarly, tax will likely be paid on Amount B wherever a company has a physical presence in a country and performs at least some sales and marketing functions. The fact that consumers enter into the final sales contract with a legal entity located elsewhere will not matter. What are being called “simplifying conventions” will be used to make determination of what is payable easier. That means a fixed percentage of sales for the market, possibly varying by sector or geography, and possibly with a sliding scale depending on factors such as group profitability.

Even if A and B are kept simple (which seems a forlorn hope), multinationals will still have to work out for Amount C how far their activities in each country go beyond “baseline marketing and distribution functions”, and then put a price on that. This will be just as hard as what multinationals need to do today to work-out how much of their profits they should book in each country (i.e. what their “transfer pricing” looks like). It may even be harder, but at least will follow the arm’ length principle and current transfer pricing rules.

Based on what the Hogan Lovells team has learnt from numerous transfer pricing and tax audits around the globe, careful thought and analysis will be required to persuade tax authorities that you have got Amount C right. Fortunately, implementing effective dispute resolution mechanisms is also part of the proposals.

So, one way or another, there’ll be lots to do. Working out Amounts A and B will involve detailed calculations. We don’t know the rules yet, and there are still lots of questions to answer. Some tricky legal thinking may also be required. And that’s before you get to Amount C.

It’s not all bad news though. This is potentially a tiny step on a path towards clarity. It might be a long path, but at least there is one. And there is time for multinationals to assess, plan, and sketch-out what the impact might be. It’s also good news that a lot of countries – from China to Greenland, and the US to Nigeria, to name but a few – appear to be onboard. It’s also good news that dispute resolution is being taken seriously.

Next stop? December 9 and the second round of proposals.

Posted in International/EU privacy, Policy & Regulation, privacy and security litigation Eduardo Ustaran

Hogan Lovells calls for an alternative approach to regulating privacy in the digital economy

LONDON, 25 November 2019 – Hogan Lovells has published a study evaluating the ongoing legislative proposal for a new ePrivacy Regulation, a law aimed at updating the current ePrivacy framework in the EU.

After nearly three years of debates and negotiations, the European Union is nowhere near agreeing a position on how to achieve the right balance between the need for technological innovation, public security and the protection of privacy in the context of the digital economy. According to Hogan Lovells, this is due to the structure and legislative approach of the proposed ePrivacy Regulation, which, rather than complementing the GDPR as originally intended, is in some fundamental respects in conflict with it.

In the context of the confidentiality of electronic communications, the proposed ePrivacy Regulation follows an approach that relies on a blanket prohibition qualified by limited exceptions, which is likely to lead to unwanted effects for the development of machine-to-machine communications, the Internet of Things and artificial intelligence. With regard to the provisions dealing with information collected from and emitted by terminal equipment, the proposed ePrivacy Regulation seeks to limit the processing of a broad spectrum of information, including both personal and non-personal data, irrespective the actual impact of such processing on people’s privacy. In summary, the essence of flexibility in the application of the GDPR created by focussing on risk is fundamentally missing from the proposed ePrivacy Regulation.

In light of these shortcomings, the report released today by the firm provides a number of policy recommendations to improve the current text, including the following:

  • The ePrivacy Regulation should move away from setting out narrow legal bases for the processing of specific types of data
  • The valuable risk-based approach of the GDPR should be applied to the ePrivacy framework
  • Data processing that poses no risks to individuals, particularly where data that is or is made anonymous, should be explicitly excluded from the scope of the ePrivacy Regulation

Eduardo Ustaran, Global Co-Head of the Privacy and Cybersecurity practice at Hogan Lovells, said: “There is clearly a need for the protection of privacy in the digital economy, but to be effective, any ePrivacy legal framework must be compatible with technological development and human progress. The European Union has the opportunity to get this balance right by applying a more flexible risk-based approach which will work now and in the future.”

Download the full report here

Posted in Policy & Regulation, Spectrum Michele FarquharAri Fitzgerald

FCBA Event Highlights Innovative History and Future for Spectrum Auctions

On November 12, members of the Federal Communications Bar Association (FCBA) gathered in Washington, DC, to commemorate 25 years of spectrum auctions at the Federal Communications Commission (FCC).  Hosted at Hogan Lovells LLP, the event featured current and former FCC staff members and industry lawyers, who discussed the history and future of spectrum auctions. The FCC’s leadership and strong record of innovation in administering spectrum auctions was a recurrent theme of the program.

The Beginning of Spectrum Auctions

The first panel focused on the early days of spectrum auctions at the Commission. Mike Altschul, former General Counsel for wireless industry trade association CTIA, offered a brief history of spectrum policy and regulation, beginning with the Radio Act of 1912 and ending with the Omnibus Budget Reconciliation Act of 1993, which authorized the Commission to use competitive bidding to award spectrum licenses. Evan Kwerel, Senior Economic Advisor in the FCC’s Office of Economics and Analytics (OEA), then explained the economic benefits of auctions (a swifter license assignment process and a reduction in windfalls to parties that previously would acquire licenses via lottery or some other means with no intention of providing service) and described the many innovative auction formats the FCC has designed over the years. The simultaneous multiple round auction format, for example, is now used worldwide. Michele Farquhar, partner at Hogan Lovells and former head of the FCC’s Wireless Telecommunications Bureau, noted that the FCC’s enthusiastic embrace of spectrum auctions fueled innovation and the rapid growth of the wireless industry, even as the Commission struggled at times to balance conflicting policy priorities. She also highlighted seminal court decisions addressing the FCC’s auction authority and efforts to encourage entry by smaller and rural bidders.

Lessons Learned over the 25 Years

During the second session, the panelists focused on lessons learned during the past quarter century. Margaret Wiener, Chief of the FCC’s Auctions Division, described a process of ongoing evolution in response to changing statutory authorizations and requirements and technological progress. She also described a culture of continuous improvement and a commitment to increasing access. Jonathan Cohen, a partner at the law firm of Wilkinson Barker Knauer, who worked on the first FCC spectrum auctions, offered practical lessons from the practitioner’s perspective. Chief among these were the importance of knowing the bidding rules for the auction, the service rules for the spectrum, and the contours of the prohibited communications rule.

Current Innovations in Auction Design

The event featured closing remarks by Giulia McHenry, Acting Chief of the FCC’s Office of Economics and Analytics. She described the Commission’s strategic vision in establishing the OEA to expand and better integrate the use of economics and data into rulemakings and proceedings and to better position the FCC’s Auctions Division to support the use of auctions as an allocation or assignment system for FCC benefits throughout the FCC. She emphasized that the use of auctions is no longer limited to the FCC’s Wireless Telecommunications Bureau or for use in assigning licenses, but is now integral to the FCC’s core mission across a wide variety of programs and services.

McHenry said that the current agenda of OEA and the Auctions Division is to continue to release spectrum at a steady pace, consistent with the Commission’s 5G FAST Plan. As she described the upcoming auction proceedings at the FCC, she highlighted the innovative approaches the FCC has devised to address the unique characteristics of each spectrum band auctioned.

  • Auction 103 – The FCC will again use its incentive auction authority, this time to reorganize the 39 GHz band. The Commission will also introduce an innovative voucher system to compensate incumbents and allow them to purchase flexible use spectrum.
  • Auction 105 – The Commission will auction Priority Access Licenses (PALs) that will depend on novel dynamic spectrum sharing to allocate spectrum between Department of Defense incumbents and PAL licensees. The Commission is also exploring innovations in the auction design, including quasi-package bidding and modifications to the bidding activity rules.
  • 5 GHz Band – The FCC has revised the band rules to allow flexible use spectrum and is offering a Rural Tribal Window, a unique opportunity that will allow Tribes in rural areas to directly access unassigned spectrum over their Tribal lands.

The Challenges Ahead

McHenry used the ongoing discussions over the future of the C-Band as an illustrative example of the challenges facing the FCC’s efforts to release spectrum for 5G. There is no more “greenfield” spectrum. The Commission will increasingly have to find creative ways to encourage incumbents to relinquish their spectrum so it can be repurposed for more productive uses. She reiterated the Commission’s four priorities regarding the C-Band:

  • To make available a significant amount of spectrum;
  • To make the spectrum available quickly;
  • To generate a significant amount of revenue for the federal treasury; and
  • To ensure continuation of services currently delivered by the C-Band.

In considering solutions for the C-Band and other bands that require reallocation, McHenry urged stakeholders across the industry to be open to exploring new incentives and auction formats, as well as new mechanisms for sharing between incumbents and new uses. She also reminded attendees that the spectrum landscape will continue to change as the highest value uses continue to evolve.

Posted in Policy & Regulation, Technology Trey Hanbury

FCC Announces Members of Precision Agriculture Task Force

The Federal Communications Commission (FCC), in consultation with the Department of Agriculture, announced the members of the Task Force for Reviewing the Connectivity and Technology Needs of Precision Agriculture in the United States (Task Force). The Task Force, an advisory body to the FCC, will investigate the current state of broadband access in agricultural lands and recommend policies and regulatory solutions to the FCC to promote broadband deployment and precision agriculture, standardize data collections, and target funding towards unserved areas.  The Task Force is also slated to identify ways for the Department of Agriculture and the FCC to collaborate to achieve these shared goals.

Teddy Bekele, Land O’Lakes Senior Vice President and Chief Technology Officer, will serve as Chair of the Task Force, and Catherine Moyer, Pioneer Communications Chief Executive Officer and General Manager, will serve as Vice Chair. A full list of members is included in this Public Notice. The first meeting of the Task Force is scheduled for Monday, December 9, 2019, at 9:30 am, and is open to the public.

In addition to announcing the members of the Task Force, the FCC released another Public Notice soliciting nominations for four working groups charged with assisting the Task Force. Those working groups are: (1) Mapping and Analyzing Connectivity on Agricultural Lands, (2) Examining Current and Future Connectivity Demand for Precision Agriculture, (3) Encouraging Adoption of Precision Agriculture and Availability of High-Quality Jobs on Connected Farms, and (4) Accelerating Broadband Deployment on Unserved Agricultural Lands.  The Public Notice provides instructions on eligibility for the working groups and how to submit nominations. Nominations to the working groups are due by Tuesday, December 3, 2019.

Posted in Advertising, Technology Anthonia Ghalamkarizadeh

esports – gearing up to play in the pro leagues!

esports are so much more than an innovative, rapidly growing competitive sports discipline: from a brand owner and investor perspective, esports also provide truly global multi-channel opportunities for unique marketing and advertising initiatives with the potential to appeal to today’s over-sated young audiences. And with the rapid growth of the industry comes its increasingly sophisticated regulation, providing a degree of stability and legal certainty that is crucial for attracting investment. In short, esports come equipped with everything to make the industry a vibrant hot-spot for exciting new business initiatives. At the same time, the complexity of entwined intellectual property rights owned by stakeholders on various levels calls for careful draftsmanship when businesses decide to join the esports arena.

esports are video games played competitively and professionally at a scale that beggars belief. Teams compete for millions of dollars in prize money, playing live matches in arenas with huge audiences and accompanied by the full orchestrations of the digital age: huge video screens, epic cinematic soundtracks, witty commentators and roaring fan crowds. And simultaneously, fans all over the world are following the live streams of matches on dedicated esports channels such as Twitch, YouTube Gaming and Azubu.

Stakeholders and their global Millenial audiences

The numbers speak for themselves: esports have generated over USD 900 million in revenues in 2018,with revenues expected to grow to USD 1.4 billion by 2020. The industry combines a wide circle of different stakeholders, including game publishers, teams, players and their sponsors, league organizations, eventorganizers, advertisers, broadcasters, merchandise vendors and manufacturers of dedicated software and hardware.

And they all vie for the attention of a truly global crowd of esports enthusiasts whose demographics are every advertiser’s dream: the majority of esports viewers are Millennials under the age of 35. This audience is notoriously hard to reach through traditional forms of advertising – only a meagre 6 % of Millennials find traditional forms of advertising credible, and the majority have adblockers installed and will routinely ignore standard online advertising formats. In contrast, most esports enthusiasts have a favorable view of brand involvement in esports.

It comes as no surprise, then, that global brands from every industry, covering tech and consumer goods, automotive and financial institutions, are avidly exploring the wide range of brand involvement opportunities that esports can offer: from sponsoring an entire tournament (such as the Intel Extreme Masters), a team or individual players, to positioning brand messages within a game (think of brands shown on the shirts of virtual football players in FIFA games), in-stream advertising on Twitch and You-Tube Gaming, to merchandise (such as Hasbrotoy figures of Overwatch characters). The opportunities are manifold, and they are fresh and appealing.

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Posted in Policy & Regulation, Telecoms & Broadband Arpan Sura

Defense Department and FCC to Collaborate on 5G Testbeds

On October 23, 2019, the U.S. Department of Defense announced a plan to pilot 5G technologies on four military installations in partnership with private industry and the U.S. Federal Communications Commission.  Lisa Porter, Deputy Undersecretary of Defense for Research and Engineering, revealed the Defense Department’s plans during an appearance at Mobile World Congress (MWC) in Los Angeles with FCC Chairman Ajit Pai and Diane Rinaldo, Assistant Secretary of the National Telecommunications and Information Administration (NTIA).  Both Porter and Pai heralded the project, known as Defense Next Generation Information Communications Technology, as an opportunity to work with industry and collaborate across federal agencies to advance the Trump Administration’s policy of maintaining the United States’ global leadership in 5G.

The Defense Department will kick off the project later this month when it releases a draft request for proposals (RFP) seeking the private sector’s input on how best to test and deploy 5G technologies to achieve military objectives.  The Defense Department identified three use cases for the first round of opportunities to be included in the upcoming RFP:

  • virtual and augmented reality (VR and AR);
  • Internet-of-Things (IoT) applications; and
  • dynamic spectrum sharing.

A focus on cybersecurity will permeate experimentation in all three areas.  After reviewing responses to the draft RFP, the Defense Department intends to hold an industry day and publish a final RFP in December.

In her comments during the MWC panel and a conference call that followed, Porter emphasized the military’s commitment to 5G and remarked that the “DoD is all in.”  Porter noted the Defense Department’s belief “that the military that masters ubiquitous connectivity will maintain overmatch” and highlighted the importance of ongoing collaboration with the FCC and NTIA.

Spectrum sharing is an important issue for both the military and the private sector.  Historically, the U.S. military and other federal users have enjoyed exclusive access to wide swaths of spectrum, particularly the mid-band spectrum that is integral to 5G deployment around the world.  The commercial wireless industry has repeatedly asked the federal government to repurpose more mid-band spectrum for 5G, and several FCC commissioners have urged the Defense Department to either vacate their bands for private use or to share their spectrum with commercial operators.  For her part, Porter emphasized the importance of finding ways to better leverage spectrum for private use without detracting from the military’s ability to protect the homeland.

The draft RFP will also seek comment on VR/AR and IoT opportunities.  The military is particularly interested in using VR and AR to explore and expand its use of synthetic training environments through 5G networks, which promise to offer significantly enhanced bandwidth and lower latency to permit such military training operations on a ubiquitous, real-time basis  The Defense Department is also interested in testing IoT applications and devices to build “smart” warehouses that will help streamline supply chain operations and military logistics.

The Defense Department recently announced four military installations that will host the first rounds of testing and experimentation: (1) Joint Base Lewis-McChord, Washington; (2) Hill Air Force Base, Utah; (3) Naval Base San Diego, California; and (4) Marine Corps Logistics Base Albany, Georgia.  These bases were chosen “for their ability to provide streamlined access to site spectrum bands, mature fiber and wireless infrastructure, access to key facilities, support for new or improved infrastructure requirements, and the ability to conduct controlled experimentation with dynamic spectrum sharing.”

The timing and scope of the final RFP will depend on passage of an FY2020 defense appropriations bill.  After initially requesting permission from Congress to redirect approximately $50 million toward 5G capabilities in FY2019, the Defense Department has asked for $436 million in FY2020 to fund its 5G efforts, including this project.  The Defense Department intends to introduce new opportunities for 5G exploration every quarter, pending the availability of adequate funds.

Posted in Cybersecurity

Lessons for In-House Counsel from Cybersecurity’s Front Lines

Recent developments reinforce the urgent need for general counsel and legal departments to deepen their focus on cybersecurity. In today’s environment, any organization can be the target of a cyberattack, regardless of industry, size, or geographic footprint. Indeed, in just the past few years, a variety of cyber adversaries have attacked financial institutions, social media sites, a movie studio, hospital systems, a peer-to-peer ridesharing company, the Democratic National Committee, hotel chains, city governments, educational institutions, telecommunications and energy utilities, prominent retailers, manufacturers, and even the mobile app of a well-known coffee and donut chain.

Lessons for In-House Counsel from Cybersecurity’s Front Lines was written by members of the Hogan Lovells Privacy and Cybersecurity practice Peter M. Marta and Asmaa Awad-Farid for Bloomberg Law.

To read the full article, click here.

Posted in Cybersecurity, Data Protection & Privacy, privacy and security litigation

Privacy and Cybersecurity November 2019 Events

Please join us for our November 2019 events.

November 5
Your Body as Data
Mark Brennan will speak on the panel, “Your Body as Data: Facial Recognition, Biometrics, and the Future of Privacy,” at the Columbus School of Law at The Catholic University of America.
Location: Washington, D.C.

November 5
2019 Data Protection Leadership Forum
Eduardo Ustaran will speak during the session, “International Issues,” and will participate in a Q&A Session at the 2019 Data Protection Leadership Forum hosted by Arthur Cox.
Location: Dublin

November 20
IAPP Europe Data Protection Congress
Eduardo Ustaran will lead the discussion “EU Privacy Law, But Not as You Know It,” at the IAPP Europe Data Protection Congress 2019.
Location: Brussels

November 21
IAPP Europe Data Protection Congress
Eduardo Ustaran will speak on the panel, “Data Transfer Mechanisms: Where Do We Go From Here?” at the IAPP Europe Data Protection Congress.
Location: Brussels

November 21
IAPP Europe Data Protection Congress
Bret Cohen and Nicola Fulford will speak on the panel, “From GDPR to CCPA and Beyond: Adapting a GDPR Programme for Global Privacy Laws,” at the IAPP Europe Data Protection Congress.
Location: Brussels

November 21
Cybersecurity Preparedness
Pete Marta will discuss what financial institutions and service providers need to know about cybersecurity and cyber incident preparedness during the Hogan Lovells event, “Current issues and risks associated with cybersecurity.” This event is approved for CLE credit. To register, click here.
Location: Hogan Lovells New York office