E sccr/21/2 Original: English date: August , 2010 Standing Committee on Copyright and Related Rights Twenty First Session Geneva, November to 12, 2010

E

SCCR/21/2

OriGINAL: English

DATE: August 4, 2010

Standing Committee on Copyright and Related Rights

Twenty First Session

Geneva, November 8 to 12, 2010

Study on the Socioeconomic Dimension of the Unauthorized Use of

Signals – Part III:

Study on the Social and Economic Effects of the Proposed Treaty on the Protection of Broadcasting Organizations

Document prepared by Professor Robert G. Picard, Ph.D., Principal Investigator,
Media Management and Transformation Centre, Jönköping International Business School, Sweden; Professor Guy Berger, Ph.D., School of Journalism and Media Studies,
Rhodes University, Johannesburg, South Africa; Fernand P. Alberto, LL.B., M.B.A.,
Broadcast Media Consultant, Manila, Philippines

The views and opinions expressed in this study are the responsibility of the authors. They are not intended to represent the views of any member states or the Secretariat of WIPO.

Table of Contents

Table of Contents i

Executive Summary 1

I. Introduction 2

II. Rationales for Protecting Signals 5

iii. Stakeholders Affected by the Proposed Treaty 6

Authors and Performers 7

Production Firms 8

Content Rights Holders and Licensers 9

Broadcasters/Cablecasters and Cable and Satellite System Operators 10

Audiences/Consumers/Users 11

States/Governments 12

Society 14

IV. Unauthorized Signal Use 15

Unauthorized Pre-Public Transmission Signal Uses 16

Unauthorized Use in the Terrestrial and Satellite Environment 16

Unauthorized Reception 16

Unauthorized Decryption 17

Unauthorized Retransmission 18

Unauthorized Fixation 19

Unauthorized Post-Fixation Use 19

Unauthorized Use in the Cable Environment 20

Unauthorized Connection 20

Unauthorized Decryption 21

Unauthorized Retransmission 21

Unauthorized Fixation 22

Unauthorized Post-Fixation Use 22

V. FUNDAMENTAL ECONOMICS OF BROADCASTING AND CABLECASTING 22

Broadcasting as a Public Good 23

The Challenge of Prices 24

Implications of Cost Structures of Different Types of Broadcasting 26

VI. ECONOMIC LOSSES IN UNAUTHORIZED USES OF SIGNALS 27

Broadcasting and Issues of Demand 28

VII. EFFECTS OF UNAUTHORIZED USES ON INVESTMENT 36

VIII. EFFECTS OF UNAUTHORIZED USES ON PROFITS 37

IX. ECONOMIC ISSUES OF SOCIAL WELFARE 37

X. EFFECTS OF RIGHTS AND LICENSES ON ABILITIES OF BROADCASTERS

AND CABLECASTERS TO EXPLOIT THEIR SIGNALS 42

Rights and Licenses in a Broadcast Stream 43

Right of Retransmission 44

Right of Fixation 45

Post-Fixation Rights 45

Protection in Relation to Signals Prior to Broadcast or Cablecast 46

Cases Illustrating the Impact of Unauthorized Use or Retransmission 46

How Signal Reception and Retransmission Outside an Intended Market or Audience Affects Rights and Licenses and Other Potential Uses 47

Benefits to Rights Holders if Broadcasters/Cablecasters are Able to Control Signal, Retransmission, and Post-Fixation Rights 49

XI. CONTRIBUTIONS OF UNLICENSED USE OF SIGNALS TO SOCIAL WELFARE 50

Exceptions in the Public Interest 51

Broadcasting and the Public Interest 51

Cases in which Public Interest Arguments are Seen by Some to Rise
above the Proposed Treaty’s Signal Protections 53

XII. ASSESSING OVERALL EFFECTS OF THE PROPOSED TREATY 57

XIII. How Stakeholders are Affected by the Proposed Treaty 59

Authors and Performers, Production Firms, and Rights Holders/Licensers 59

Broadcasters (Terrestrial and Satellite) and Cablecasters and Cable/Satellite Operators 60

Audiences/Consumers/Users 60

States/Governments 60

Society 61

XIV. BALANCE OF BENEFITS ANALYSIS 70

XV. HOW BENEFITS AND DISADVANTAGES MIGHT EVOLVE OVER TIME 72

XVI. ALTERNATIVE WAYS OF SEEKING BENEFITS 74

XVII. CONCLUSIONS 76

ANNEX: ORGANIZATIONS/EXPERTS CONSULTED

Figures and Tables

Figure 1: Context of Broadcast and Cablecast Signal Creation and Use 3

Figure 2: Types and Means of Unauthorized Signal Use 14

Figure 3: Harms as Seen in an Analysis Tree 32

Figure 4: Broadcast and Cablecast Policy Typically Balances
Social Welfare Objectives 36
Table 1: Summary of Economic Losses in Different Situations 28

Table 2: Central Issues and Potential Effects of the Proposed Treaty

Relevant to Social Welfare Analysis 37

Table 3: Method and Data Types for Measuring Quantifiable Results 38

Table 4: Effects of the Treaty Articles on Stakeholders 57

Executive Summary

1 This report of the study on socioeconomic dimensions of unauthorized use of signals explores the types and conditions of unauthorized uses, the economic effects of the uses, the interests of stakeholders affected by the proposed treaty on protection of broadcast signals, and how they are affected by its provisions.

2 The report explains the rationale of the proposed treaty, how unauthorized uses of signals take place in the broadcasting (terrestrial and satellite) and the cable and cable satellite environments and the differences between unauthorized reception, unauthorized decryption, unauthorized retransmission (understood in this report as meaning a simultaneous transmission), and unauthorized fixation and post-fixation uses (including reproduction and distribution).

3 This report reviews the economics of broadcasting and identifies the economic effects of unauthorized uses, revealing how they affect company costs, cost recovery, demand for authorized uses, and revenues of companies. It shows that the locations of the unauthorized uses and whether free-to-air or paid signals are involved play significant roles in whether harm occurs and the extent of harm created by unauthorized uses.

4 The report delineates the rights within and related to the signal and the implications of these for authorized and unauthorized retransmissions and post-fixation uses of signals. It also identifies social benefits that may result from unauthorized uses and identifies some uses that some stakeholders argue are worthy of exceptions or limitations to protections.

5 The report then shows the extent to which the interests of stakeholders will be affected by provisions of the proposed treaty, and considers the distribution of benefits and detriments of proposed options in the treaty among the stakeholders and the equity of their distribution.

6 Through its assessment of the treaty, the report shows:

• 
  that the primary benefits of the treaty accrue to broadcasters and cable and satellite operators;
  
• 
  that large international broadcasters and domestic broadcasters and cablecasters disseminating sporting events, concerts, and movies can be expected to be greatest beneficiaries;
  
• 
  that authors and performers, production firms, and rights holders/licensers will benefit from an additional layer of protection and enforcement that reinforces their rights under other treaties;
  
• 
  that rights of fixation and post-fixation for broadcasters will not generally disadvantage content owners (authors, performers, and other rights holders) because they do not override rights provided elsewhere;
  
• 
  that domestic broadcasters and cablecasters, distribution systems and tax receipts will benefit, but to a degree that cannot be projected;
  
• 
  that interests of audiences/consumers/users and society are protected only to the extent that contracting parties have or put in place legislation and regulatory measures that protect their interests;
  
• 
  that the greatest benefits for broadcasters and various rights holders and licensers can be expected in upper middle and high income states;
  
• 
  that some economic benefits are likely to occur in lower middle income states, but that benefits are unlikely to occur in low income states for many years due to other intervening factors;
  
• 
  that the primary disadvantages of the treaty are the additional expenditures that states/governments will be required to incur to administer and enforce its provisions;
  
• 
  that the administration/enforcement disadvantage will have the greatest impact on low and lower middle income states;
  
• 
  that audiences/consumers/users and society will be somewhat disadvantaged by reduced access to some content;
  
• 
  that the content disadvantage will have the greatest impact on low and lower middle income states.
  

7 The report concludes that the treaty:

• 
  is likely to provide some positive benefits in terms of revenue for broadcasters and cablecasters and wealth generation and tax benefits for states, but to an extent that cannot now be clearly estimated;
  
• 
  will provide some additional protection for existing investments in programming, but that it is impossible to project whether it will lead to increased investment;
  
• 
  is likely to be easier to enforce than other IP treaties because it involves actions of broadcasters, cablecasters and others that are highly visible to authorities;
  
• 
  will improve and streamline enforcement adjudication processes and procedures through its national treatment provisions.