Report from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - Second Report on the implementation of Directive 98/84/EC of the European Parliament and of the Council of 20 November 1998 on the legal protection of services based on, or consisting of, conditional access {SEC(2008) 2506}
Date: 2008-09-30
Institutions: European Commission
Subjects: access to information, activity report, application of EU law, audiovisual piracy, computer piracy, pay television, report, right to justice

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.9.2008 
COM(2008) 593 final 

REPORT FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN 
PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND 
THE COMMITTEE OF THE REGIONS 

Second report on the implementation of Directive 98/84/EC of the European Parliament 
and of the Council of 20 November 1998 on the legal protection of services based on, or 
consisting of, conditional access 

{SEC(2008) 2506} 

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TABLE OF CONTENTS 

1. 

2. 

Introduction .................................................................................................................. 3 

Implementation of the Directive .................................................................................. 3 

2.1. 

Transposition into national legislation ........................................................................ 3 

2.1.1.  Content ......................................................................................................................... 3 

2.1.2.  Transposition by the Member States............................................................................ 4 

2.2. 

2.3. 

Scope of the Directive: The "grey" market .................................................................. 4 

Differences in implementation at national level .......................................................... 5 

2.3.1.  Level of sanctions at national level.............................................................................. 5 

2.3.2.  Sanction on private possession..................................................................................... 6 

2.3.3.  Effectiveness of the action of national authorities ....................................................... 6 

2.4. 

The international dimension ........................................................................................ 6 

3. 

3.1. 

3.2. 

3.3. 

Adjustment of the Directive in the light of convergence ............................................. 7 

New modes of distribution............................................................................................ 7 

New forms of piracy ..................................................................................................... 7 

Contribution to the protection of copyrights................................................................ 8 

3.3.1.  Extension of protection to rightholders........................................................................ 9 

3.3.2.  Digital rights management systems ............................................................................. 9 

3.4. 

Protection of remuneration, the only criterion for protection ................................... 10 

4. 

4.1. 

4.2. 

Conclusions and future actions .................................................................................. 11 

Assessment of Directive 98/84/EC ............................................................................. 11 

Future action to improve its application and address convergence .......................... 12 

4.2.1.  Establishment of a group of experts........................................................................... 12 

4.2.2.  Working group on the grey market ............................................................................ 12 

4.2.3.  Gathering information................................................................................................ 12 

4.2.4.  Ratification of the European Convention on the Legal Protection of Services based 

on, or consisting of, Conditional Access.................................................................... 13 

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1. 

INTRODUCTION 

In  1998  the  European  Parliament  and  the  Council  adopted  Directive  98/84/EC1  on 
the  legal  protection  of  services  based  on,  or  consisting  of,  conditional  access  to 
enable  development  within  the  single  pay-TV  services  market.  In  2003,  the 
Commission presented the first report on the implementation of the Directive.2 

Ten  years  after  the  Directive  was  adopted,  the  Commission  is  presenting  a  second 
report on its implementation. The revolution the market has undergone is described 
in  the  Study  on  the  impact  of  the  Conditional  Access  Directive  compiled  by  KEA 
and Cerna on behalf of the Commission in 2007.3  

The  question  now  is  whether  the  Directive  as  it  currently  stands  is  still  useful  and 
appropriate. The present context is characterised by market potential for new content 
distribution  platforms:  Web  TV,  IP-TV,  mobile  TV,  video-on-demand.  Do  these 
markets need to be protected in the same way as pay-TV? Is the protection afforded 
by  the  Directive  useful  to  them,  or  even  necessary?  Such  questions  only  arise,  of 
course,  if  the  response  to  the  opening  question  is  that  the  Directive  is  indeed 
effective. 

One  is  forced  to  acknowledge  that  the  piracy  which  the  Directive  seeks  to  combat 
adapts  extremely  well  to  technological  progress  and  even  thrives  on  the  new 
possibilities available. 

In  order  to  obtain  the  information  needed  to  analyse  the  implementation  of  the 
Directive  to  date,  in  addition  to  the  aforementioned  study,  the  Commission 
conducted a public consultation between 11 February and 4 April 2008, receiving 54 
contributions.4 Appended to this report is a Commission working document outlining 
the positions reflected in these contributions. The Commission services also met the 
sector's stakeholders directly at a number of meetings. 

2. 

IMPLEMENTATION OF THE DIRECTIVE 

2.1. 

Transposition into national legislation  

2.1.1.  Content 

To enable the development of services based on conditional access through the single 
market,  the  Directive  defines  the  services  protected  and  draws  up  a  list  of  illicit 
commercial  activities  punishable  by  the  Member  States,  who  are  responsible  for 
establishing penalties for offenders as well as legal redress for injured parties. 

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4 

OJ L 320, 28.11.1998, p.54-57, see: 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31998L0084:en:NOT.  
COM(2003) 198 final, 24.4.2003, see: 
http://ec.europa.eu/internal_market/media/docs/elecpay/com-2003-198_en.pdf.  
http://ec.europa.eu/internal_market/media/elecpay/index_en.htm.  
http://ec.europa.eu/internal_market/media/elecpay/index_en.htm.  

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2.1.2.  Transposition by the Member States 

All  the  Member  States  have  now  transposed  the  Directive  into  their  national 
legislation.5  The  new  Member  States  were  required  to  transpose  the  Directive  –  as 
part of the acquis – before they joined the European Union. 

2.2. 

Scope of the Directive: The "grey" market 

Despite the Directive and the associated Community-wide harmonisation, European 
citizens exercising the right to free movement within the European Union have been 
refused legal access to the TV channels of their State of origin. A "grey" market has 
developed,  whereby  lawful  subscriptions  are  obtained  by  means  of  letter-box 
addresses.  This  cannot  be  said  to  be  an  entirely  "black  market"  given  that  the 
subscriptions  are  paid  for.  On  the  other  hand,  it  is  not  entirely  above  board  since 
certain  broadcasting  rights  obtained  by  TV  channels  are  valid  only  within  the 
territory of the country in question and not that of other Member States. 

Some  pay-TV  services,  however,  are  available  on  a  cross-border  basis,  thus 
mitigating an excessively negative view of the impact of the Directive on the single 
market.  These  examples  follow  the  usual  model  governing  the  use  of  broadcasting 
rights  and  exclusive  rights:  television  channels  purchase  such  rights  for  all  the 
national  territories  concerned,  as  characterised  by  a  common  language,  and  only 
rarely target a linguistic diaspora present in several or in all Member States. 

Outside  this  conventional  structure,  the  possibility  of  legalising  the  grey  market  is 
disturbing  to  most  market  stakeholders  since  it  necessarily  challenges  the 
organisation  of  the  sale  of  rights  (copyrights  or  sports  events  broadcasting  rights) 
according to national territory. Rightholders naturally wish to maximise revenue by 
selling the rights for each individual territory, and audiovisual services providers fear 
that  their  offer  would  be  less  attractive  should  it  cease  to  be  exclusive,  e.g.  if 
competitors with a comparable offer were to penetrate their territory.  

It  is  important  to  note,  in  this  respect,  that  the  only  cross-border  market  which  the 
Commission  would  like  to  see  being  developed  is  that  for  services  catering  to  the 
mobility  and  legitimate  expectations  of  European  citizens  and,  as  such,  legally 
available in their mother tongue and the language of their native country.  

Developing such an offer would require a flexible approach to the sale of rights, in 
terms of the number of consumers identified in the State in question, for example, a 
development  possible  only  with  the  active  collaboration  of  all  the  sector's 
stakeholders, which at present seems difficult to achieve given the observed lack of 
motivation. It would also require an examination of the different national regulatory 
systems governing the windows for the distribution of cinematographic works, since 
differences could help to block the multi-territorial distribution of works. 

A solution could be found in the advent of new types of services such as web TV or 
mobile  TV,  which  are  associated  with  distribution  and  conditional  access  systems 
that are relatively less costly than those linked to the use of decoders. Again, these 
new  services  should  not  be  restricted  on  the  basis  of  territory  at  the  request  of 

5 

http://ec.europa.eu/internal_market/media/elecpay/natimpl/index-map_en.htm.  

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rightholders:  the  fact  that  the  programmes  of  certain  television  channels  cannot  be 
viewed  on  computers  located  in  other  Member  States  has  already  been  raised  in  a 
number of complaints received by the Commission. 

It  is  worth  pointing  out  that  currently  more  than  8.7 million  European  citizens6  are 
resident  in  a  Member  State  other  than  their  native  country  and  that  this  number  is 
constantly  rising.  The  free  movement  of  persons  and  services  are  among  the 
fundamental  principles  of  European  integration  and  guaranteeing  every  European 
citizen  access  to  an  audiovisual  offer  in  their  native  language  and  culture  would 
facilitate movement of this kind7.  

To  continue  the  examination  of  the  subject,  it  is  important  to  obtain  the  maximum 
amount of information on a range of subjects, such as the potential of the new types 
of  services  in  terms  of  targeted  cross-border  audiovisual  offer  and  the  potential 
market generated by the mobility of European citizens. 

2.3. 

Differences in implementation at national level 

The  Directive  requires  Member  States  to  apply  sanctions  that  are  "effective, 
dissuasive and proportionate" and to ensure that service providers have appropriate 
legal recourse. 

Although  the  KEA  and  Cerna  study  examined  in  detail  the  legislation  of  only 
11 Member  States  and  the  consultation  responses  did  not  cover  all  27 Member 
States,  these  two  information  sources  give  some  idea  of  the  trends  in  terms  of 
national  transposition.  While  some  contributors  express  satisfaction  with  the 
implementation at national level, many more underscore the limits of their national 
legislation. 

2.3.1.  Level of sanctions at national level 

As long as they complied with the three aforementioned criteria, the Member States 
were  quite  free  to  select  the  type  and  level  of  sanctions  applied.  The  ranges  of 
sanctions are very broad and for the pecuniary fines vary between minima of EUR 25 
to  EUR 7 500  and  maxima  of  EUR 1 158  to  EUR 50 000  and  for  prison  sentences, 
where applicable, between eight days and five years. 

Such  marked  differences  explain  the  range  of  views  of  operators  in  the  various 
Member States on the effectiveness of sanctions. Differences in the standard of living 
within  the  European  Union  must  certainly  be  taken  into  account  and  Europe-wide 
harmonisation  of  sanctions  does  not  appear  to  be  desirable.  However,  it  may  be 
necessary to re-examine the deterrent effect of sanctions in each Member State. 

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Eurostat – table pages 18-19: 
http://www.interculturaldialogue2008.eu/fileadmin/downloads/documents/630-factsfigures/KS-EP-07-
001-EN.PDF. 
See also the Communication on satellite dishes: 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52001DC0351:EN:NOT.  

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2.3.2. 

Sanction on private possession 

Only commercial activities involving illicit devices are subject to Community-wide 
harmonisation,  and  the  Member  States  remain  free  to  decide  whether  or  not  to 
sanction  the  private  ownership  of  such  devices.  This  highly  sensitive  aspect  of  the 
fight  against  piracy  continues  to  be  intensely  debated,  as  it  has  been  since  before 
adoption of the Directive. 

The  sanction  for  private  possession  is  favoured  by  the  operators  who  see  it  as 
instructive for consumers who may be tempted by illicit services. It may, moreover, 
help  with  sanctions  for  new  types  of  piracy  which  are  based  on  a  combination  of 
different  actions,  some  of  which  may  be  private,  such  as  the  online  disclosure  of 
encryption codes, codes subsequently used by the consumer directly to programme a 
chip  card  purchased  without  programming  and  whose  sale  (the  commercial 
transaction) is therefore a priori lawful.  

Sanctioning  private  possession  seems  to  have  come  back  into  favour  with  the 
Member States. Italy re-established it in 2003 and Sweden is currently studying the 
possibility of introducing it for the purchase and use of illicit devices. 

Further  consideration  of  this  subject  would  therefore  be  of  interest,  with  the 
possibility of the Member States exchanging their experience on the subject. 

2.3.3.  Effectiveness of the action of national authorities 

The study and the contributions submitted mention the general problem of a lack of 
technical knowledge on the part of the authorities responsible for implementing the 
legislation. 

They  also  mention  particular  difficulties  due  to  the  high  technical  level  of  the  new 
pirating methods which require an excellent command of the new technologies.  

In this respect, setting up an expert group bringing together the competent authorities 
in  the  Member  States  would  be  a  particularly  appropriate  method  likely  to 
disseminate technical information on piracy as well as best practices. 

2.4. 

The international dimension 

Various  rounds  of  enlargement  of  the  European  Union  have  changed  the 
geographical  landscape  in  terms  of  piracy,  which  formerly  flourished  in  certain 
Eastern  European  countries.  These  countries  are  now  EU  Member  States  and 
transposition of the Directive governs the fight against piracy. 

In  addition,  accession  candidates  (the  former  Yugoslav  Republic  of  Macedonia), 
those  involved  in  accession  negotiations  (Croatia  and  Turkey)  and  potential 
candidates (Albania, Bosnia and Herzegovina, Montenegro, Serbia and Kosovo) are 
all bringing their legislation into line with the Community acquis. Lastly negotiations 
leading to a free trade agreement are under way with Ukraine, which has to bring its 
legislation into line in the relevant areas.  

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Apart  from  enlargement  of  the  European  Union,  Decision  of  the  EEA  Joint 
Committee  No 17/2001  of  28 February  2001  incorporated  Directive  98/84/EC  into 
the EEA agreement, so that it is applied in Iceland, Liechtenstein and Norway. 

Beyond  this,  the  Commission  has  little  scope  for  action.  However,  the  European 
Convention  on  the  Legal  Protection  of  Services  based  on,  or  consisting  of, 
Conditional  Access8  adopted  by  the  Council  of  Europe  on  24 January  2001 
establishes protection similar to that of the Directive and is due to be ratified by the 
47 countries  that  are members of  the Council of Europe as well  as Belarus  and  the 
Vatican.  

At present, it has been signed by 11 countries9 and ratified by eight. Ratification of 
the Convention is open to the European Community. EC ratification may help give 
new  impetus  to  ratification  by  other  countries  and  thus  extend  the  protection  of 
relevant service providers outside the EU. 

3. 

ADJUSTMENT OF THE DIRECTIVE IN THE LIGHT OF CONVERGENCE 

3.1. 

New modes of distribution 

The new technological landscape can be summed up in a single word: convergence. 
This  is  the  label  given  to  the  capacity  to  access  content  via  a  range  of  platforms. 
Since  the  Directive  was  first  planned,  the  European  legislator  sought  to  frame 
technologically  neutral  terms  that  would  prevent  the  act  becoming  obsolete  in  the 
light of innovations already anticipated at that stage. This original intention explains 
why the definition of "protected services" includes television and radio broadcasting 
services  and  information  society  services.  Nor  does  the  definition  adopted  take 
account of the mode in which the relevant services are distributed. 

In  this  way,  any  television  or  radio  broadcasting  service,  whatever  the  mode  of 
distribution  (ADSL,  web,  mobile)  is  covered  by  the  definition  of  "protected 
services",  as  is  any  service  accessible  at  a  distance  at  the  request  of  the  consumer, 
which thus meets the definition of an information society service10, such as video-on-
demand.  The  only  limit  to  this  protection  stems  from  the  condition  of  use  of  a 
conditional access system to ensure payment for the service. 

3.2. 

New forms of piracy 

The increasing use of smart cards for decrypting signals presaged a diversification in 
pirating activities. Decoders and blank smart cards are sold openly as they can also 
have  perfectly  legal  applications.  Independently,  card  programming  codes  are 
disclosed online, in particular by pirates who derive economic advantage from this, 

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10 

http://conventions.coe.int/Treaty/Commun/QueVoulezVous.asp?NT=178&CM=8&DF=8/12/2

008&CL=ENG. 
Bulgaria,  Cyprus,  Croatia,  France,  Luxembourg,  Moldavia,  Norway,  Netherlands,  Romania,  Russia, 
Switzerland, with Luxembourg, Norway and Russia yet to ratify. 
Definition  of  information  society  service  given  in  Article 1  of  Directive  98/34/EC,  as  amended  by 
Directive  98/48/EC:  “any  service  normally  provided  for  remuneration,  at  a  distance,  by  electronic 
means and at the individual request of a recipient of services”. 

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leaving  to  the  purchaser  of  the  decoder  and  the  blank  smart  card  the  task  of 
programming the card so as to be able to gain unlawful access to services. 

This  division  of  activities  has  led  to  a  new  way  of  gaining  illegal  access  to  the 
services  concerned  and  is  an  action  that  is  difficult  to  prosecute  in  law.  This  is 
mainly due to the fact that the commercial activities concern products which can be 
used in a lawful manner and that it is difficult to link the disclosure of codes online 
with such sales. Lastly, the blank smart card is programmed directly by the consumer 
and not by the vendor. 

In this context, the terms of the Directive do not appear to be directly applicable as it 
is  difficult  to  find  proof  of  illicit  commercial  activity.  It  is  true  that  operators  can 
maintain that the smart cards used in this traffic are not appropriate for any legal use, 
since  the  complexity  of  their  components  and  hence  their  price  make  them 
uncompetitive for the most common purposes (e.g. security badges).  

In  that  case,  however,  courts  have  to  make  a  technical  assessment  which  often 
exceeds the knowledge of the competent officials. 

Operators pinpoint the need to be able to penalise the online disclosure of codes by a 
third  party  without  remuneration.  The  terms  of  the  Directive  do  not  appear  to  be 
applicable  on  account  of  the  non-commercial  nature  of  such  activity:  it  is  virtually 
impossible to establish proof of a link between the sale of a blank smart card and the 
disclosure of codes via the internet. Even the sanction against the private possession 
of  an  illicit  device,  while  making  it  possible  to  sentence  the  consumer  using  such 
procedures, would not provide a direct solution to the existence of the codes on the 
internet. 

On  this  point,  only  unfair  competition  actions  seem  able  to  resolve  the  problem 
which can nonetheless come up against a stumbling block due to the extra-territorial 
nature of the infringement. It would therefore be worthwhile examining the question 
in order to explore the legal options for countering such practices. 

Other  forms  of  piracy  have  emerged  too.  One  example  is  card  sharing,  whereby  a 
legally obtained card is used to enable redistribution of a service to other consumers, 
e.g.  via  a  wireless  network  or  WiMAX  access  technology.  Generally  this  is 
commercial  redistribution  and,  as  such,  covered  by  the  provisions  of  the  Directive. 
The problem with this form of piracy is the difficulty of detecting infringements, an 
area in which police personnel need to be trained. 

It  is  hence  worth  encouraging  the  improved  exchange  of  information  between 
national administrations. 

3.3. 

Contribution to the protection of copyrights 

Directive  98/84/EC  does  not  enable  the  holders  of  rights  pertaining  to  content  to 
make use of its provisions. The matter of extending such protection was debated at 
length when  the Directive was adopted, only to be rejected given the prospect of a 
specific  text  being  adopted  on  copyright  protection  in  the  information  society. 

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Directive  2001/29/EC  of  22 May  200111  on  the  harmonisation  of  certain  aspects  of 
copyright  and  related  rights  in  the  information  society  supplemented  the  protection 
afforded by Directive 98/84/EC three years after the adoption of the latter. 

Directive 98/84/EC nevertheless makes a significant, albeit indirect, contribution to 
protecting copyrights by protecting the content covered by the copyright and hence 
the revenue of the holders of such rights against piracy. 

3.3.1.  Extension of protection to rightholders 

Rightholders,  entitled  persons  and  persons  holding  rights  to  sports  events  showed 
interest in being covered by the Directive. 

However, some appear to have misunderstood the nature of the protection provided 
by  the  Directive.  The  sanctions  established  under  the  Directive  can  concern  only 
actions  relating  to  the  use  of  illicit  devices.  They  cannot,  therefore,  apply  to  other 
actions, such as the use of lawful devices without respect for territorial restrictions, 
for example, as in the case of the grey market described above. 

It  is  important  to  draw  this  distinction  because  contributions  from  rightholders 
(holders  of  copyrights  or  analogous  broadcasting  rights  to  sports  event  coverage) 
focus on compliance with the territorial aspect of the rights and the risks of loss of 
the value of such rights if territorial limitations are not adhered to.  

In this context, it would be of no practical use to extend the scope of the Directive to 
cover other stakeholders. The Directive effectively defines piracy as based on the use 
of  illicit  devices,  i.e.  the  use  of  equipment  not  approved  by  the  content  distributor. 
For example, the decoders used in the context of the grey market are approved by the 
broadcaster, who receives regular remuneration for same. 

One of the proposed solutions to resolve the problem of the rightholders is to move 
towards greater integration and incorporation of the potential revenue from the grey 
market.  This  avenue  does,  however,  need  to  be  explored  more  carefully  and  more 
information on the potential of the cross-border markets should be gathered. 

The  fact  remains  that  sports  events  rightholders  seem  perfectly  entitled  to  demand 
better  protection  in  the  absence  of  provisions  directly  covering  them,  taking  into 
account the legitimate expectations of consumers to have legal access to services on 
a  cross-border  basis  and  the  need  to  ensure  broad  access  to  events  of  major 
importance to society. The Commission proposes to initiate work to assess the need 
for additional measures to close this loophole. The proposed study on the financing 
of sport announced by the Commission in its White Paper on sport12 should make it 
possible to bring together the rudiments for such an evaluation. 

3.3.2.  Digital rights management systems 

The  start  of  the  distribution  of  content  online  has  been  accompanied  by  the  use  of 
new content protection systems: digital rights management systems (or DRM). 

11 
12 

OJ L 167, 22.6.2001, p. 10. 
http://ec.europa.eu/sport/whitepaper/wp_on_sport_en.pdf.  

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These  technical  protection  measures  are  aimed  in  particular  at  ensuring  respect  for 
copyright  in  the  context  of  online  distribution  of  content.  The  overall  objective 
covers a wide range of configuration and use measures, establishing different types 
of  restriction:  quantitative  restrictions  on  the  number  of  readings,  geographical 
access restrictions, restrictions in terms of the hardware or software needed to read it, 
transfers between devices, digital extraction (the list is far from exhaustive). 

Some measures may therefore tally with the definition of conditional access systems, 
"any technical measure and/or arrangement whereby access to the protected service 
in  an  intelligible  form  is  made  conditional  upon  prior  individual  authorisation" 
(Article 2(b)  of  the  Directive).  As  such,  the  measures  used  to  ensure  the 
remuneration of the work,  chiefly those enabling tariff differences according to the 
use  made  of  it  by  the  consumer  (single  or  multiple  viewing,  variation  in  quality  of 
recording) certainly benefit from the protection afforded by Directive 98/84/EC.  

It  is  true  that  Article 6 of  the  aforementioned  Directive  2001/29/EC  (copyright  and 
related rights in the information society) expressly provides for the legal protection 
of technical measures. However, such protection is due under the copyright law, and 
the  Member  States'  transposing  legislation  may  restrict  legal  actions  solely  to  the 
rightholders  and  not  to  the  content  distributors.  In  this  sense,  Directive  98/84/EC 
continues to be useful for digital distributors, who thereby enjoy a means of taking 
action  against  piracy  against  the  protection  measures  they  use  to  distribute  content 
online. 

3.4. 

Protection of remuneration, the only criterion for protection 

The Directive restricts protection of conditional access services against piracy strictly 
to those used for the purposes of remuneration: payment for the service (subscription 
or  individual  purchase  price)  necessarily  being  the  condition  for  access  to  the 
content. 

However,  conditional  access  systems  may  be  used  for  purposes  other  than  the 
protection of the remuneration of the service provider, in particular to comply with 
contractual  or  legislative  obligations  (such  as  limitation  of  the  potential  audience  – 
be  it  territorially,  in  accordance  with  the  rights  ceded,  or  according  to  an  age 
restriction to protect minors from content intended only for adults), commercial and 
advertising  strategies,  security  matters  or  to  draw  indirect  remuneration13.  Various 
operators therefore expressed interest in extending the protection. 

It  should  however  be  clarified  that  the  concept  of  remuneration  goes  beyond  mere 
direct  payment.  Information  society  services  can  use  technical  means  to  limit  the 
distribution  of  content  which  is  accessible  free  of  cost  but  financed  indirectly  by 
advertising or sponsorship. Such services also fall within the scope of the Directive. 

In  conclusion,  there  is  an  undeniable  demand  for  protection  to  be  extended. 
Questions remain, however, as to the usefulness of extending protection, entailing as 
it  would  a  reworking  of  the  Directive.  The  scope  of  the  Directive  at  present  is 

13 

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See the study of April 2000 carried out by the Institute for Information Law (IVR) of the University of 
Commission:
Amsterdam 

behalf 

the 

on 

of 

http://ec.europa.eu/internal_market/media/elecpay/background_en.htm.  

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confined to acts of piracy for commercial purposes. Can commercial piracy be said 
to exist with regard to conditional access used for these other purposes? Furthermore, 
use  of  conditional  access  systems  motivated  by  the  legal  provisions  should  be 
protected  through  legislation  which  is  properly  enforced.  This  applies  to  the 
provisions  on  the  protection  of  minors,  on  cybercrime  and  on  data  protection  and 
privacy. These questions must be examined in further detail and one first step could 
be a debate within a group of experts to be set up. 

4. 

CONCLUSIONS AND FUTURE ACTIONS 

4.1. 

Assessment of Directive 98/84/EC 

This  report  has  addressed  various  aspects  of  the  implementation  of  the  Directive 
which pose problems or raise questions. This examination has been a vital first step 
before  assessing  the  impact  of  the  Directive  in  its  various  fields  of  application  as 
input  for  the  Commission's  conclusions  on  its  effectiveness  from  adoption  to  the 
present day. 

The first point to note is that the Directive has been transposed by the Member States 
in general and this has made it possible to curb piracy in the European Union and, 
thanks to the entry into the EU of certain countries previously affected by piracy, to 
change its geographical pattern, pushing the centres of piracy outside the Directive's 
sphere of influence. 

The  second  point  is  that  the  efficiency  of  its  implementation  occasionally  seems 
questionable,  thus  reducing  the  legal  security  of  audiovisual  service  providers.  In 
particular, implementation at national level suffers, depending on the circumstances, 
either from sanctions which are too light or from a lack of command of the technical 
nature of the field on the part of the national authorities. On this latter point, it should 
be  pointed  out  that  the  ongoing  technological  evolution  continually  increases  the 
complexity  of  this  subject  area,  with  the  emergence  of  new  types  of  piracy,  new 
distribution platforms or new conditional access systems such as certain digital rights 
management systems. 

Thirdly,  with  regard  to  free  movement,  despite  the  deployment  of  a  Community 
framework  intended  to  promote  the  development  of  the  single  market  in  these 
services,  there  has  been  only  limited  development  of  completely  legal  cross-border 
services.  The  grey  market  is  the  cross-border  mechanism  which  seems  the  most 
developed,  but  this  is  only  tolerated  by  the  operators,  while  the  availability  of 
audiovisual  services  of  the  State  of  origin  is  an  important  factor  in  the  welfare  of 
European  citizens  exercising  their  right  to  free  movement  within  the  European 
Union. 

Lastly, the Commission notes that certain restrictions upon the implementation of the 
protection  afforded  by  the  Directive  require  more  in-depth  analysis.  This  may 
concern,  firstly,  the  possibility  of  imposing  sanctions  for  the  private  possession  of 
illicit systems, a proposal from the operators but one which is not easy to implement, 
and  secondly,  the  situation  of  the  operators  who  do  not  benefit  from  adequate 
protection, such as holders of rights in respect of sports events. 

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4.2. 

Future action to improve its application and address convergence 

4.2.1.  Establishment of a group of experts 

The Commission proposes to set up an expert group on conditional access made up 
of experts from the Member States. The group will operate following the model of 
the e-commerce expert group and with a similar mandate.  

Specifically,  the  conditional  access  group  will  have  to  take  action  to  bolster  and 
facilitate administrative cooperation between Member States as well as between the 
Member  States  and  the  Commission,  discuss  problems  related  to  the  application  of 
the  "Conditional  Access"  Directive  98/84/EC  and  discuss  topical  problems 
associated with the use of conditional access systems. 

The subjects to be tackled as priorities are those outlined in this report, chiefly: new 
forms  of  piracy,  assessment  of  the  deterrent  nature  of  the  sanctions  in  place,  scope 
for  a  sanction  on  private  possession  within  the  protection  of  conditional  access 
systems,  links  with  legislative  provisions  on  copyright  protection,  the  inclusion  of 
DRM (digital rights management) as a conditional access system, and the protection 
of  the  use  of  conditional  access  systems  for  purposes  other  than  protecting 
remuneration.  

The  group  should  also  take  account  of  the  potential  advantages  of  the  use  of 
innovative  conditional  access  systems  and  DRM  systems,  making  a  particular 
assessment  of  their  potential  to  limit  the  need  for  sanctions  of  a  more  deterrent 
nature.  In  this  context,  the  group  will  also  take  into  account  all  aspects  which  can 
contribute to personal data and privacy protection. 

By  adopting  this  report,  the  Commission  is  taking  the  decision  to  establish  such  a 
group by the end of the year 2008. 

4.2.2.  Working group on the grey market 

The Commission will also propose that the expert group mandate a specific working 
party to tackle the subject of the grey market.  

In the first instance, this working party should strive to compile as much information 
as  possible  on  the  intra-Community  movements  of  European  citizens  and  on  their 
audiovisual  service  consumption  habits.  It  could  go  on  to  explore  various  avenues 
that  might  offer  solutions  enabling  interested  citizens  to  access  services  provided 
from their Member State of origin. 

4.2.3.  Gathering information 

The  report  highlights  a  certain  lack  of  information,  in  particular  concerning  the 
exercise  by  European  citizens  of  the  right  to  free  movement  and  the  supply  and 
demand  situation  for  audiovisual  services  abroad.  Such  information  should  help  to 
establish the potential of the cross-border markets and contribute to deliberations on 
copyright and rights to sports events.  

The  Commission  proposes  to  launch  a  survey  on  the  subject  at  the  beginning  of 
2009. 

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In another field, information on the sale of rights to sports events will be gathered as 
part  of  the  study  on  sports  financing  announced  by  the  Commission  in  its  White 
Paper  on  sport14.  This  information  should  constitute  the  first  phase  in  gathering 
information  on  the  situation  of  holders  of  rights  to  sports  events  when  faced  with 
piracy involving the retransmission of events. 

4.2.4.  Ratification of the European  Convention on the Legal  Protection of Services based 

on, or consisting of, Conditional Access 

This  European  Convention  has  considerable  potential  to  extend  the  protection  of 
conditional  access  services  internationally,  beyond  the  territory  of  the  European 
Union. The European Community's ratification of the Convention would enable new 
impetus to be given to international action among the 47 members of the Council of 
Europe. 

The  Commission  will  therefore  shortly  propose  to  the  Council  that  it  ratify  the 
Convention on behalf of the European Community. 

14 

http://ec.europa.eu/sport/whitepaper/wp_on_sport_en.pdf.  

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