No deal, no Netflix? There's much worse than that for the digital economy in latest Brexit notices

Profile picture for user slauchlan By Stuart Lauchlan October 14, 2018
Summary:
No Netflix after Brexit? No, not exactly, but the lurid headlines stole attention away from much worse news for players in the digital economy.

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Just when you thought that Brexit warnings couldn’t get much more dire along comes one that the mainstream media latched onto - no deal, no Netflix!

Of course it’s not that ludicrously simplistic, but it was the consequence that came ready-made for a good headline out of the final set of papers issued by the UK Government of what might ensue if there is a no deal Brexit.

So what’s the reality? At the moment, European Union (EU)-wide portability regulations, which kicked in in April, means that streaming services, such as Netflix and Spotify, are not allowed to discriminate against subscribers accessing the same content in other EU countries as they can in their home nation.

But according to the UK Government’s technical notice:

The portability regulation will cease to apply to UK nationals when they travel to the EU. This means online content service providers will not be required or able to offer cross-border access to UK consumers under the EU Regulation. UK consumers may see restrictions to their online content services when they temporarily visit the EU.

Now, that’s not actually the same as no Netflix. Currently if a UK Netflix subscriber goes to, for example, the US, he or she can still access Netflix, but will find that while there’s a big overlap in available content, there will be some programming that’s different. In other words, it’s unlikely you’d lose access to The Crown or Stranger Things, but you might miss out on more UK-centric content due to licensing restrictions.

Bigger problems

So not no Netflix, just the likelihood that you’ll find yourself tapping into the localised library. Still, it made for a good set of headlines - and resulted in a lot of other rather more important disruptions than missing out on Netflix re-runs while you’re on vacation.

For example, the wider question of geo-blocking. The UK Geo-blocking Regulation is due to come into force on 3 December. This ensures that customers can purchase from online service providers throughout the EU without being penalised for doing so from a different country to that in which the provider is located.

That regulation will still come into force before Christmas, but will cease to have any effect in March 2019 in the event of no deal. If that happens, then the level playing field can be dug up. Businesses in the UK, the EU and third countries will be permitted to offer different terms of use of service. As the technical paper notes:

For instance a UK trader would be able to offer different terms to a UK customer compared to a French customer.

Now clearly that could in theory be preferential for UK customers. But equally it could see EU nations still playing to the same terms, while UK customers find themselves on the receiving end of unequal Ts & Cs.

Then there’s the serious B2B issue of cross-border data flows, a topic that commentators and industry associations have urged the UK Government to get to grips with, but which is still fudged in the latest technical papers

The UK negotiators are still pitching an adequacy arrangement as the preferred route forward and appear to have stated that the UK will unilaterally accept data flows from EU states regardless. The suggestion is that EU Standard Contractual Clauses (SCC) will be adequate for post-Brexit use and there will be no need for the UK to come with its own version.

But UK tech trade association techUK has warned that such a state of affairs would not help businesses who need to transfer data on to third countries, such as the US. techUK Deputy CEO Antony Walker, said:

While there is useful detail in this final batch of notices, huge gaps remain for tech companies. For instance, there is no mention in any of the notices of how UK-US data flows would be enabled if the UK were to suddenly fall out of the EU-US Privacy Shield arrangement in a No Deal scenario.

The final batch of notices does provide more detail on some core issues facing tech businesses. In particular, the continued operation of geo-blocking; the formation and operation of subsidiaries in the EU; and what level of protection consumers can expect. Despite the gaps, it is important that all businesses, large and small, properly digest each of these notices.

Walker concluded:

These notices again make it very clear that no deal would be a very bad outcome for UK tech companies. The UK and the EU must do everything in their power to reach a deal and avoid the mutual damage a no deal situation would create.

My take

The latest batch of technical notices came out on a Friday - and a Friday with a Royal Wedding dominating the news agenda - almost as though there was a vague hope they might fly under the radar. The events of the weekend in Brussels sees the UK and EU enter a crucial week for negotiations with no deal seeming a more and more likely option.

techUK has raised a number of concerns from the latest technical notes with the Department for Digital, Culture, Media and Sport in the hope of getting some prompt answers and action. If this week’s summit in Europe goes the way that pessimistic commentators are expecting, such urgency is going to be essential right across government.