EU geo-blocking: Ansip's crusade liable to disappear through 'unjustifiable' loophole

Robot in Distress - penny drops at Commish

The European flag

Analysis Europe’s digital single market proposals encapsulate many of the EU’s problems in one handy document. The intentions are noble, but the utopian “solutions” are clumsy and inept, leaving Eurocrats attempting to brute-force something that people don’t want onto a diverse and disparate collection of countries.

Sound familiar? It should, because that’s exactly what happened with the single European currency, and why even EU-friendly pundits now want the Euro project radically rethought, or abandoned.

The most controversial section of robo-Commissioner Ansip’s proposed reforms, intended to improve the Digital Single Market, has a really simple explanation. Ansip chose a “solution” before understanding what “the problem” is. Ansip found he couldn’t access material - Estonian football he’d paid for in Estonia - when he was in Brussels.

A few phone calls would have set him right.

Fundamentally, Europe is not the USA. The USA is a monoglot market with a dominant single language, English. Producers of cultural goods and services in the USA have less incentive to engage in price discrimination, whereby punters in one area pay more than others. Price discrimination between US states may also, unless justified, be illegal under federal law which is fairly simple to enforce.

But Europe couldn’t be more different. There are many more languages than member states – one of the most widely spoken (Russian) belongs to a country that isn’t even in the EU. And spending power varies much more, with a 10x difference in earnings between Romania and Luxembourg. And the reality is that there's nothing in Europe like the US Federal Trade Commission and the vaunted "Common Market" does not exist in this sense.

All this means that price discrimination is well-nigh universal in Europe. It affects everyone, some more than others. “Geo-blocking” usually arises from price discrimination - it’s a way of attempting to enforce different pricing. Generic products like Europop or blockbusters can be released everywhere at once. But for smaller producers of niche language products, with wafer thin margins, it’s the difference between life and death. They use price discrimination because people in some geographical regions will pay more for their product than people in other regions will (often because they are richer, and can afford to).

They’re not alone. Ansip has singled out the BBC for “geoblocking” iPlayer streams outside the UK, figuring that there must be a way for non-licence-fee-payer Europeans to pay for BBC access, and the way to pay for it is via BBC Worldwide, the Corporation’s commercial arm. (We’ll come back to that.)

Vice President Ansip (and no doubt the army of academics and digital activists influential in Brussels) seem to think that producers wake up every morning and wonder how they can enforce geoblocking (being the evil people that they are) … with price discrimination as some peripheral, ambient consequence. But it’s the other way around. Ansip didn’t put in the calls to explain how the markets work here, and he relied on his intuition instead (and the army of academics and think-tanks). He blundered on, believing he’d found a populist winner. Ansip’s understanding of the European culture market is entirely upside down.




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