FlagThe European Parliament has voted to reject proposed legislation designed to prohibit ‘geoblocking’.  The vote represents a major set-back in the European Commission’s “Digital Single Market” strategy (covered by Sports Shorts previously).

The vote comes only weeks after the European Commission announced an agreement with the European Parliament and member states to allow online subscriptions (including for sports events) to be subject to cross border portability from 2018.  The prohibitions on unjustified geoblocking were contained in what has become known as the Sat-Cab Regulation, first proposed in December 2015, the majority of which has been rejected by the Parliament.

The Commission’s rationale for the DSM strategy, including its proposals to restrict geoblocking, is that the practise artificially carves up the European market in a way that is contrary to the central principles of the EU (i.e. the notion of free movement of goods and services across a single market).  However, as Sports Shorts has noted previously, sports rights holders have traditionally relied on the ability to distribute content in numerous distinct markets as a way of maximising value in their digital and broadcast assets. The Premier League, for example, generates huge amounts of revenue from sale of rights on a market-by-market basis, although it has also pointed out that it is already offering aspects of portability (in response to the demands of the market rather than any legislative initiative).

Last week, members of the European Parliament Committee on Legal Affairs and MEPs specifically discussed the example of Bundesliga coverage, arguing that viewers in Poland pay only around one seventh of the price paid in Germany to watch games. Arguably the difference in price reflects a fluctuation in demand for a product in two different markets and removing the ability to treat them as such would either require matches to be offered within Germany at the lower price or vice versa, with the result that revenues might be damaged.

The vote is positive news for rights holders in the film and TV industries but is likely to leave consumers disappointed.  A 2015 EU survey, for example, suggested that one in three Europeans aged between 15 and 39 years old thought that portability and accessing the service they subscribe to when travelling in Europe was important (frankly, it seems surprising that the figure was not higher).

In response to the Parliament’s vote, Nicola Frank, the European Broadcasting Union’s Head of European Affairs, said:

The SatCab regulation was originally devised to enhance the circulation of content in Europe and enable both consumers and Europe’s audiovisual sector to reap the benefits of the DSM. Today’s vote (on December 12) goes against these intentions, maintaining a fragmented European audiovisual market and turning down enhanced access to European culture for citizens.”

“We salute the European Commission for taking a brave step to submit this proposal and respond to the expectations of citizens and consumers. The procedure is not over and we hope that upcoming milestones in the adoption of this regulation will lead to a better outcome.”