Lords Committee knocks Digital Economy Act Costs Order

Digital Economy Act time. Remember that?! We spent yesterday morning at Ofcom, who kindly offered us and a couple of other organisations the chance to ask questions about their revised Initial Obligations Code. It was a useful exercise. It’s clear that they have done plenty of work on the code since the previous draft in 2010. It seems to us like there’s plenty still to look at – for example there’s still plenty of uncertainty around the liabilities to be faced by WiFi providers, in our opinion. They’re running a consultation which closes on 26th July. We’ll write up and publish our response soon, and we will also be asking you to respond, especially if you are a wifi provider such as a cafe, hotel or library and are concerned about how the Code may affect you.

Shortly after yesterday’s meeting, the Secondary Legislation Scrutiny Committee published its report on the Draft Online Infringement (Initial Obligations) (Sharing Of Costs) Order 2012. They conclude that “The House may wish to press the Minister in debate for greater reassurance about whether this scheme will function effectively; and we draw the Order to the attention of the House on the grounds that it may imperfectly achieve its policy objective.”

They criticise the £20 appeals fee, the confusion around the position of wifi providers such as libraries, and the laying of the order whilst a consultation was ongoing. The Committee ends by questioning whether the objective of reducing copyright infringement by 75% is achievable.

(The Committee scrutinises secondary legislation and makes recommendations to the House on its findings. The Sharing of Costs Order 2012  requires ‘Ofcom to set fees payable by Copyright Owners to ISPs and to Ofcom if they intend to take advantage of a notification scheme in relation to online infringements of their copyright.’)

If you are following the Digital Economy Act, it really is worth reading the full report. Some of the more choice comments:

• “We…note that DCMS offer no robust definition of what they interpret as “vexatious” or “frivolous” appeals” 
• “we note that paragraph 10.4 of the EM says first that under the Initial Obligations Code libraries offering public access networks will not be considered to be ISPs but in the following sentence the EM says that they can claim that they are ISPs. We find this confusing; and we remain unclear whether or not such institutions will be charged the £20 appeal fee.” (The EM referred to is the Explanatory Memorandum.) 
• “DCMS should have given the House a much clearer explanation of how this Order fits into the wider policy context.”
• “We were also concerned about the unusual situation where DCMS have laid before Parliament an Order that is the subject of an ongoing consultation. DCMS assured us that the consultation relates only to the implementation of the Order and not to the instrument itself. However, if DCMS is not yet clear about how the scheme will be implemented, it raises questions about how can they set the level of an appeal fee that satisfies the terms of the Treasury Rules for full cost recovery”
• “the Committee does not have sufficient information to judge whether £20 is the appropriate amount given that significant parts of the structure of the scheme and the appeal mechanism are still undecided.”
• “This Order makes a division of costs based on a large number of currently unknown factors, and those who are required to operate it have made it clear that their cooperation is entirely dependent on financial considerations. This raises questions about whether DCMS’s policy objective of reducing online infringement of copyright by 75% is achievable.”

Now, this may all sound extremely niche and complicated. And it kind of is. But its also really important. The IOC and the Costs Order are supposed to clarify key substantive issues in the Digital Economy Act. It is telling that 2 years after it passed, some of these are still a cause for concern – including, as the Committee points out, why a £20 appeals fee was decided to be most effective and reasonable option. There are some lessons here – if you rush an Act, based on an inadequate analysis of objectives and how to achieve them, without sufficient scrutiny, then you’ll probably have to spend quite a lot of time afterwards trying to clear up the mess.