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### Viewing cable 09MADRID417, INTERNET PIRACY IN SPAIN: SUSPENSION OF

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
09MADRID417 | 2009-04-28 06:06 | 2010-12-22 12:12 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Madrid

`

    VZCZCXRO0516
    PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
    DE RUEHMD #0417/01 1180633
    ZNR UUUUU ZZH
    P 280633Z APR 09
    FM AMEMBASSY MADRID
    TO RUEHC/SECSTATE WASHDC PRIORITY 0553
    INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
    RUEHLA/AMCONSUL BARCELONA 3964
    RUCPDOC/DEPT OF COMMERCE WASHDC

` `

    UNCLAS SECTION 01 OF 03 MADRID 000417

    SENSITIVE
    SIPDIS

    STATE FOR EEB/TPP/IPE AND EUR/WE
    STATE PASS USTR JGROVES AND DWEINER
    STATE PASS COPYRIGHT OFFICE
    USDOC FOR 4332/DCALVERT
    USDOC ALSO FOR USPTO

    E.O. 12958: N/A
    TAGS: ECON ETRD KIPR ECPS SP
    SUBJECT: INTERNET PIRACY IN SPAIN: SUSPENSION OF
    PRIVATE-SECTOR NEGOTIATIONS

    REF: A. MADRID 410
    ¶B. MADRID 397
    ¶C. MADRID 224 AND PREVIOUS

    MADRID 00000417 001.2 OF 003

    SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY

    SUMMARY
    -------

    ¶1. (SBU) On April 17, negotiations between the association
    of Internet Service Providers (ISPs) ("Redtel") and the
    Coalition of Creators and Content Industries ("Coalition")
    were suspended. The parties had been meeting regularly for
    almost a year in an attempt to negotiate an agreement on
    combating internet piracy. According to Coalition sources,
    Redtel advised that it could not accept the Coalition's
    latest proposal and did not see any point in negotiating
    further. The government, which had been pressing the parties
    to reach an agreement that it hoped would serve as a basis
    for legislative and regulatory reform, asked each side to
    send its proposal in the hopes of identifying a solution that
    would bridge the differences between the two sides. However,
    the proposal submitted by Redtel was four months old and did
    not recognize more recently negotiated points of agreement.
    The government is analyzing the proposals and must decide
    whether to try to broker an agreement or to develop and
    implement its own initiative independent of service and
    content providers' positions. End Summary.

    MOVING TOWARDS A GRADUATED RESPONSE SYSTEM

    ¶2. (SBU) Per ref C, the GOS has long believed that any
    "graduated response" regime or other package of measures to
    dissuade internet users from unauthorized file-sharing and
    punish repeat offenders will be politically controversial,
    and has pinned its hopes on the private-sector negotiations.
    Senior government officials had pressed the presidents of
    Redtel and the Coalition to submit their agreement by
    December 31, and then by March 4. After the parties missed
    both deadlines, the government reportedly expressed the
    intention to form a Working Group to develop its own
    solutions. This was apparently an attempt to pressure the
    parties to conclude a voluntary agreement rather than have
    the government impose its will.

    ¶3. (SBU) As might be expected, the parties have approached
    the negotiations from vastly different perspectives. Redtel,
    whose members represent four major telecommunications
    companies - Telefonica, Vodaphone, ONO, and Orange - is
    mostly interested in the "business model" aspects of the
    agreement, in which content providers would agree to make
    some content available online, which the ISPs could market.
    This poses a problem for the U.S.-based Motion Picture
    Association of America (MPAA - perhaps the most influential
    Coalition member), which argues that it can agree to general
    statements about the desirability of online legal content but
    cannot, for U.S. anti-trust reasons, enter into business
    negotiations with Redtel on behalf of its members, which are
    individually considering online distribution deals.

    THE DEAL THAT WAS ON THE TABLE

    ¶4. (SBU) With respect to dissuasive measures, before the
    negotiations were suspended, the parties had reportedly
    agreed to a watered-down version of the graduated response
    regime currently under consideration in the French
    legislature. The parties would agree to ask the government
    to create a national commission to receive complaints about
    illicit websites and downloading activity and send warning
    letters. However, the government believes it could probably
    send only about 1000 such letters per month. Websites that
    post IPR-infringing content would receive only one warning
    before being blocked; Coalition president Aldo Olcese
    believes that some 70 sites account for 80 percent of all
    infringing content and that their takedown would go a long
    way towards solving the problem. With respect to individual
    users who download infringing content, Redtel is on board
    with sending them two warning letters but insists that any
    agreement explicitly rule out suspension of internet access
    as a sanction for repeat offenders. Representatives of the
    film and music industries accept that account suspension
    should be a rarely used last resort in extreme cases but have
    not agreed to eliminate it as an option. Redtel also

    MADRID 00000417 002.2 OF 003

    believes that fines should be the only sanction for offenders
    who ignore the first two warning letters. Its negotiators
    argue that such technical measures as posting reminder
    warnings on individual internet accounts or reducing
    bandwidth are too difficult and costly to implement or too
    interventionist. Content providers insist, however, that the
    agreement include the possibility of some technical measures,
    even if the specific details are left to be worked out later.

    ¶5. (SBU) According to Olcese, Redtel had agreed to the legal
    and regulatory aspects of the agreement. To reduce the
    burden on the government, these would be minimal: The parties
    would ask the government to amend the 2002 Law on Information
    Society Services and Electronic Commerce (LSSI) to create the
    government body to implement the graduated response regime,
    and to some provisions regulating that law. They would also
    propose amendments to the law governing civil procedure to
    remove some of the obstacles that impede rights-holders from
    pursuing civil remedies against internet pirates. There are
    conflicting accounts as to whether the parties would also
    call on the government to amend the Prosecutor General's 2002
    Circular that currently makes it almost impossible to obtain
    criminal convictions in digital piracy cases. However,
    according to Coalition sources, the proposal Redtel sent to
    the government includes none of the legislative or regulatory
    provisions, focusing almost entirely on business model issues
    and minimizing the legal and technical elements.

    GOVERNMENT PONDERS NEXT STEPS

    ¶6. (SBU) According to Salvador Soriano, Deputy Director for
    Information Society Services in the Ministry of Industry,
    Tourism, and Trade, the government is disappointed to learn
    that negotiations have failed. It is currently studying each
    side's proposal to see if there are enough areas of agreement
    to provide a basis for government action. Carlos Guervos,
    acting Deputy Director for Intellectual Property at the
    Ministry of Culture, characterized the breakdown as a small
    hurdle. He said the Culture Ministry is determined that
    there will be new regulations to address internet piracy; it
    would be easier if they were based on a private-sector
    agreement, but if that is not possible, the government will
    develop its own solution.

    ¶7. (SBU) Leading members of the Coalition hope that the
    government, eager to avoid embarrassment given how much it
    has riding on a successful negotiation, will persuade Redtel
    to return to the table with a more forthcoming attitude. The
    status quo - a legal regime that makes it almost impossible
    for content providers to enforce their rights and a
    prevailing public belief that P2P file-sharing is or should
    be legal - is unsustainable for content providers but
    advantageous for Internet Service Providers. Redtel members
    and their parent companies state that they will obey any law
    or regulation that the government enacts but have been
    reluctant to undertake any voluntary measures for fear of
    alienating their client base. Pedro Farre, government
    affairs director for the General Society of Authors and
    Publishers (SGAE), explains Redtel's withdrawal from
    negotiations as "a piece of theater." The recent campaign by
    the Internet Users' Association ("Internautas") to drive out
    the new Minister of Culture (ref B), he explained, enables
    Redtel members to argue that anyone who agrees to restrict
    internet use in any way will be the object of overwhelming
    popular wrath. (Comment: The alleged fear of the Internautas
    seems exaggerated to us, as they have not proven able to
    mobilize significant numbers for any event.)

    COMMENT

    ¶8. (SBU) Even if this impasse is overcome, there may be more
    bumps in the road ahead. In March, the parties were
    reportedly close to a deal, with only MPAA holding out,
    preferring no deal at all to what it considered an inadequate
    offer. Other stakeholders, believing that an agreement
    without the participation of MPAA would lack credibility,
    prevailed upon the Association to continue to negotiate.
    There continue to be disagreements within both the Coalition
    - especially between the film and music industry groups and
    copyright management societies like SGAE - and Redtel,
    between Telefonica and smaller ISPs. This time it is Redtel
    that prefers no deal to one that it believes will bring major
    headaches.

    MADRID 00000417 003.2 OF 003

    ¶9. (SBU) This impasse offers the government an opportunity
    to exercise leadership, but it remains unclear whether the
    government will work actively to help the parties overcome
    their differences, or propose a solution of its own, or take
    no action. One school of thought is that the government
    would like to defer this issue until after European
    Parliament elections in June. Coalition members are hopeful
    that anti-piracy legislation will pass soon in France,
    possibly influencing the calculations of Redtel and the
    government. Post will use our upcoming meeting to inform the
    GOS of its Special 301 status to emphasize the importance we
    attach to GOS action. End Comment.
    CHACON

`