Digital Economy Act 2017: The pick 'n' mix assortment of provisions receives Royal Assent

The post below was first published on our Fintech blog

The Digital Economy Act (the "Act") finally received Royal Assent on 27 April 2017 and the final text has recently been published. First introduced in the House of Commons in July 2016, it has been the subject of much scrutiny and debate by both Houses of Parliament. With the General Election looming, the legislation was passed in a final sweep as part of the so-called "wash up" period before the dissolution of Parliament.

It covers a wide assortment of areas falling under the "digital economy" umbrella but at its heart it seeks to "modernise the UK for enterprise" – focusing on improving access to digital communication services (including through improved connectivity and infrastructure), supporting new digital industries and enhancing protections for citizens using those services.

Some of the key areas covered by the Act include:

• Fast broadband and support for consumers
  • a new Broadband Universal Services Obligation providing end users with a legal right to request a minimum broadband connection (initially set at 10Mbps)
  • automatic compensation payments to end users for failing to meet a specified standard or obligation
  • easier switching of communications providers through consumers being able to make more informed decisions about those providers
  • duties on mobile providers to enable customers to apply billing limits to their accounts, including requirements to notify customers if a limit is reached (or likely to be reached) in a particular billing period
• Enabling digital infrastructure
  • a new Electronic Communications Code to replace the one currently in force and which aims to lower the cost and simplify the rollout of mobile and superfast broadband infrastructure
  • new measures to manage radio spectrum to increase the capacity of mobile broadband by supporting technologies like "white space" wireless broadband
• Protecting citizens in the digital economy
  • new measures protecting children from online pornography by requiring age verification for access to sites and applications, introducing civil penalties for online pornographers who do not verify the age of customers and granting the British Board of Film Classification (BBFC) powers to require ISPs to block access to non-compliant material
  • a new direct marketing code to be introduced by the Information Commissioner's Office ("ICO") that will have statutory status, strengthen enforcement action and further protect individuals' rights against so-called nuisance calls and spam emails
• Protecting intellectual property
  • increasing penalties for online copyright infringement to equalise the penalties with the laws on physical copyright infringement
  • removing the defence to copyright infringement where a wireless broadcast is retransmitted by cable through repealing sections 73 and 73A of the Copyright, Designs and Patents Act 1988
  • extending the public lending right to cover ebooks
• Ofcom and on-demand services 
  • extending certain powers of Ofcom including in respect of regulating the BBC
  • accessibility for people with disabilities in respect of on-demand programme services
• Other
  • a range of measures relating to government digital services including those intended to improve the delivery of public services and sharing of personal data between certain public authorities
  • use of digital software in the secondary ticketing market - criminalising use of digital software (i.e. "bots") to obtain an excessive number of tickets on the primary ticketing market

The Digital Economy Bill has been in the spotlight since it was first published, with the extent of the government's data sharing rights proving particularly controversial – the rights were initially described by the House of Lords as "inappropriate" and giving rise to "almost untrammelled powers".

Some reservations may well remain regarding the degree of data sharing permitted and the sufficiency of the protections anticipated – not least given the final text of the Act incorporates some, but not all of the ICO's recommendations. The ICO will, however, welcome the introduction of a new direct marketing code – which aims to give the guidance the "greater weight" and "certainty on key issues" recommended in its House of Lords Report on the Digital Economy Bill in March 2017.

The new Broadband Universal Services Obligation of at least 10 Mbps is thought to be higher than almost all of the other EU member states. It pales in significance however when compared with the 30 Mbps originally voted through by the House of Lords. The unrealistic prospect of delivering the higher speed by the original 2020 target (particularly due to the likely £2 billion cost to implement it, the lack of ISP support and slow roll-out in rural areas) meant that this tougher requirement was dropped at the last minute. Commentators have also cited a lack of evidence that a substantial majority of UK premises have taken up superfast broadband. The Act does, however, direct Ofcom to review the minimum download speed once superfast broadband uptake (enabling a speed of at least 30 Mbps) reaches at least 75% of premises in the UK.

Some of the provisions in the Act are arguably long overdue and reflect the overwhelming need for regulation to keep up with the fast pace of new technologies in the current digital era – for example, those relating to the Electronic Communications Code (which governs the rights of communications operators to access public and private land for the installation of communications apparatus). First established in 1984, it has long been criticised and the new Code set out in the Act is the product of both a 2013 Law Commission recommendation that the Code should be completely rewritten and the government's subsequent proposal for a revised Code published in May 2016. The new Code will no doubt be welcomed by infrastructure providers and communications operators alike.

Other provisions seek to align English law with the European legislative framework. The abolition of the specific defence to copyright infringement (retransmission of wireless broadcast by cable) follows recent EU case law (ITV v TVCatchup) anticipating the same result and brings English copyright law and practice in line with the EU Infosoc Directive (see our e-bulletin here). This change will be important to the broadcasting industry given that many businesses rely on the defence. It will be welcomed by originating broadcasters in combating illegal streaming of broadcast content and it is likely to pave the way for broadcasters to seek payment of retransmission fees from cable operators.

Much of the Act is not yet in force. With staggered commencement dates and many of the provisions being commenced (and the detail provided) by secondary legislation - it is currently unclear whether (and how) these diverse provisions will fit together, including with other measures being progressed in parallel. For example the potential overlap of the new direct marketing code with the current European reform of the e-privacy framework. And that is without the added layer of complexity that Brexit may bring.

The Digital Economy Act also supports a number of the key concepts set out in the UK Digital Strategy 2017, the government's long-awaited strategy for a post-Brexit digital Britain published in March 2017.

Faced with potential political and economic change, it remains to be seen whether the Digital Economy Act 2017 will in fact achieve its aim of building "a more connected and stronger economy", as envisaged by Matt Hancock, Minister of State for Digital and Culture. However one thing is for sure, let us hope it is more successful than its older sibling, the Digital Economy Act 2010 – also hurried through the "wash up" process in a similar manner, but many of its provisions were either repealed or never implemented.