UK: E-Commerce News - Cookies, UK Anti-Terror Bill, Cyber Crime, Data Retention, Digital TV

Last Updated: 14 December 2001

The Cookie Crumbles

On the 13 November 2001 the European Parliament voted to accept an amendment to the draft directive on personal data and privacy in the electronic communications sector (“Electronic Communications Directive”) which prohibits the placing of cookies on users' computers without their explicit consent.

A cookie is an identifier sent by a web server to a web browser which enables the server to collect information about a user. Many online businesses place cookies on computers accessing their websites to enable them to store information about a particular user on the user’s own computer. Cookies are frequently used to monitor Internet traffic and record users’ preferences when visiting a particular website. Many website operators use the devices to determine where to place or purchase banner advertisements to draw potential visitors to a website and to build up demographic profiles of users.

The recent controversy surrounding the use of such devices by e-businesses arises from the fact that cookies can store personal information such as names, e-mail addresses, telephone numbers and details of previous Internet searches without the explicit approval of the relevant user. The European Parliament is of the view that cookies “may seriously intrude on the privacy of users” and argue that the use of such devices should be prohibited “unless the explicit, well-informed and freely given consents of the users concerned have been obtained”. The amendment does not therefore prohibit the use of cookies but requires e-businesses to inform users about the existence of such devices and obtain their explicit approval before placing them on their hard drives. The Electronic Communications Directive still has to be approved by the European Council, which could vote against the European Parliament’s proposal. A common position is expected to be adopted in December which will be returned to Parliament for a second reading early next year.

Critics of the proposal argue that cookies are an essential piece of Internet browsing architecture and allow websites to offer a better service to users. For example, cookies enable a website to greet a repeat visitor by name and provide recommendations based on past purchasing patterns thereby providing the user with a more personalised service. They also enhance the reliability and the speed of “surfing the net”.

The controversial amendment has alarmed Europe’s online business community who believe the restriction will seriously impede the growth of e-commerce. The Interactive Advertising Bureau UK (IAB) estimates that the amendment could cost British companies £187m in lost advertising revenue. In addition, users will be forced to re-register or re-enter preferences each time they revisit a website. Opponents of the proposal fear that the extra time, effort and frustration involved in doing so may deter users from purchasing goods or services online and fear that e-commerce could suffer as a result.

An EU Advisory Body on Data Protection produced a working paper in November last year entitled “Privacy on the Internet – an integrated EU Approach to online Data Protection”. They recommended that online businesses should always notify users about the processing and use of their data for profiling purposes and that e-businesses should inform users before any cookies are placed on their hard drives. They also recommended that personalisation of users’ profiles should require the informed prior consent of such individuals by way of an “opt-in” and that users should have a right of access to their online profiles. These recommendations have yet to be implemented in Europe and would undoubtedly face tough opposition from businesses involved in e-commerce. A copy of the working paper is available at europa.eu.int/comm/internal_market/en/media/dataprot/wpdocs/wp37en.pdf

On 13 November, MEPs also voted to leave it open to the individual member states to determine whether to adopt an “opt-in” or “opt-out” approach to unsolicited e-mail for marketing purposes. Under current UK law, prior consent (“opt-in”) is required for unsolicited marketing messages via fax or automated calling systems and individuals must be given the option to “opt-out” of marketing telephone calls. The position concerning unsolicited e-mails under the old directive is ambiguous but in the UK an “opt-out” policy is generally regarded as acceptable.


UK Anti-Terror Bill Steams Ahead

Last month UK MPs voted overwhelmingly in favour of sweeping new anti-terrorism laws. However, the Anti-Terrorism, Crime and Security Bill (“Bill”) faces strong opposition from industry bodies, civil rights groups, internet service providers (“ISPs”) and telecommunications companies.

The Bill will give police, customs and other law enforcement agencies enhanced powers to tackle terrorism. The proposals include the power to imprison suspects without trial and the power to require communication service providers (“CSPs”) to retain data on phone calls, faxes and e-mails for up to 12 months.

Critics of the latter proposal fear it could have a detrimental effect on e-commerce. The Bill strengthens the interception and disclosure aspects of the equally controversial Regulation of Investigatory Powers Act 2000. After the September 11 attacks, the UK government announced its intention to introduce a “voluntary code” requiring all CSPs to retain the communications data of all subscribers for up to 12 months. If this scheme is not successful the government has threatened to introduce a mandatory scheme. The details of the government’s plan are set out in the “Supplemental Regulatory Impact Assessment: Potential of communications data” which accompanies the Bill. According to the Assessment, the data retention requirement applies not only to surveillance in the interests of “national security” but surveillance to prevent or detect crime or to assist with the prosecution of offenders. Although ISPs would be paid a fee for each access made by a law enforcement agency they fear that the data retention requirement will lead to massive storage costs which undoubtedly will be passed on to customers.

In addition, industry bodies and most notably the government’s own Information Commission have expressed concern that the proposals could contravene existing data protection laws. Many commentators argue that the Bill contradicts the Data Protection Act 1998 and the European Telecoms Data Protection Directive (97/66/EC) which provide that businesses must not keep personal data (which includes e-mail and traffic logs) for billing purposes beyond the time necessary for that purpose. The ambiguity arising from the government’s proposal leaves CSPs in a difficult position and many fear that the new proposals could lead to prosecutions for misuse of customer data under data protection laws.

The UK government has been accused of reneging on one of the fundamental rights of privacy established by the 1997 Directive and pre-empting discussion in the EU on a related proposal to update the data protection directive (see article 1.4 below).

MPs have also expressed anger at the lack of time they have been given to scrutinise the controversial Bill. Many feel the government has rushed the Bill through Parliament in a knee-jerk reaction to the events of 11 September. Further meetings between industry bodies and the Home Office are expected this month and MPs are expected to lobby the government for further concessions.

The Bill also met with stiff opposition in the House of Lords and Peers have voted through ten amendments, one of which gives Parliament the opportunity to debate the voluntary code of practice on the retention of phone bill and e-mail data next year. Ministers are preparing to battle to overturn the Lords’ amendments and the government is said to be determined to push the Bill through before the Christmas recess.


EU to Ratify Cyber Crime Treaty

Following the events of 11 September and the recent opening of an international Convention on Cyber Crime in Budapest, the European Union is fast tracking a proposal to harmonise definitions and criminal penalties for a wide range of criminal offences committed against or with the assistance of computers.

The proposal is largely based on the core provisions of the Council of Europe’s controversial “Convention on Cyber Crime”, an international treaty designed to harmonise the laws governing computer-related crime. The main aim of the convention is to pursue “a common criminal policy aimed at the protection of society against cyber crime, inter-alia, by adopting appropriate legislation and fostering international co-operation”. The convention was adopted on 8 November 2001 and will come into force as soon as five states, at least three of which must be Council of Europe members, have ratified it. The convention was originally drawn up by the Council of Europe but many other countries, most notably the US, have assisted with the drafting of its key provisions. The convention covers offences relating to infringement of copyright, network security, computer related fraud and child pornography and deals with procedures for intercepting material on computer networks. It will give law enforcement agencies greater capabilities to track and prosecute cyber crime suspects and increases the penalties for cyber crimes. It also gives law enforcement agencies enhanced capabilities to carry out electronic surveillance and makes it easier for them to seek Internet, phone, business, medical and other records relating to suspected terrorists. Additional protocols will be added to the convention in future, including one making it a criminal offence to disseminate racist messages via the Internet.

The convention has been heavily criticised by civil liberties groups as being too heavy handed and ISPs have expressed concerns about the high costs involved in storing large volumes of data for future investigations. The EU’s proposal will coincide with the November launch of another EU commission initiative, known as the “E-Forum”, which is designed to foster public – private sector cooperation in combating cyber crime.

A draft of the EU proposal is available at http://cryptome.org/eu-antihack.htm and a copy of the Council of Europe’s Cyber Crime Treaty is available at http://conventions.coe.int/Treaty/EN/cadreprincipal.htm.


EU Expected to Reject US Request for Longer Data Retention

European Union legislators are expected to resist pressure from the US to amend a data protection law they are currently drafting to give law enforcement agencies enhanced powers of access to telephone and electronic communications data. The request is one of a long list of measures President Bush would like Europe to take to assist the US in the fight against terrorism following the events of 11 September.

The US administration has asked the EU to revise the draft Electronic Communications Directive to allow law enforcement agencies to request critical data be retained for what it calls “a reasonable period”. The draft directive currently provides that data relating to the times and durations of telephone phone calls and the transmission of electronic messages should only be retained by CSPs for as long as is necessary for billing purposes. It also provides that any retention beyond that time should be “appropriate”.

The European Parliament and the Council of Ministers appear to be divided over the issue of how much access law enforcement agencies should have to communications data. The Council of Ministers have adopted a pro-law enforcement position on the issue and have proposed a new law granting authorities greater rights of access to personal data. However, the European Parliament is likely to resist the proposal and earlier last month agreed to amend the draft law to make it more difficult for authorities to access such data. Agreement between the Council and Parliament on the text of the new law is necessary before it can become law.

Meanwhile, the European Commission has expressed the view that the current draft of the directive represents a good compromise between the needs of law enforcement agencies to investigate crimes and the need to protect civil liberties and is therefore expected to reject the US’ request in favour of preserving privacy.

In addition to the obvious privacy issues arising from the US request, CSPs are understandably reluctant to retain data any longer than necessary because of the huge storage costs involved in doing so.

The draft directive currently affords member states some flexibility in interpreting the issue of data retention. The UK, which is typically seen as being more interested in strengthening the powers of law enforcement agencies rather than protecting civil liberties, is rumoured to be in the process of proposing far reaching data retention provisions which will give law enforcement agencies sweeping rights of access to telephone and electronic communications. (See article 1.2 above). Whether such proposals go as far the US request remains to be seen.


Government to Announce Final Shutdown Date for Analogue TV

The UK government will announce the final shutdown date for analogue TV services later this month. In October of this year, the government published a draft “Digital Action Plan” which outlines the next steps to be taken to maintain the UK’s position as world leader in the digital TV revolution. The draft plan is a consultative document for key stakeholders and the government and includes ambitious plans to extend terrestrial digital TV geographical coverage.

The plan will play an important role in paving the way for digital switchover and will help the government to achieve its aim of making the UK “the most dynamic and competitive market for digital TV in the G7”. Douglas Alexander, E-Commerce Minister, said the plan “signals the next phase of the digital revolution, aiming to extend the benefits more widely, opening up new opportunities for entertainment, education and information”. The government intends to finalise the draft plan by the end of this year and hopes it will help increase the momentum in digital TV development for both the broadcasting industry and consumers.

The Government also announced the launch of a dedicated website http://www.digitaltv.culture.gov.uk which will provide clear up to date information on all aspects of digital TV and offers advice to different groups of people.

Analogue TV services will continue for some time but the government intends to switch over completely to digital transmission in the future. The government would like to do so as soon as possible and plans to completely switch over to digital TV services as early as 2006-2010. The government has set three tests which must be satisfied before the analogue signal is fully switched to digital. These are:-

  • the availability test – this test will be satisfied when virtually everyone who can receive the main free–to-air channels on analogue television (currently 99.4% of the population) is able to receive them digitally;
  • the affordability test – this test will be deemed to be met when the switching costs of converting to digital TV services is within the reach of all customers including those on low or fixed incomes, particularly the elderly (this applies to both televisions and video recorders); and
  • the accessibility test – this test will be satisfied when 95% of UK consumers have digital equipment in their homes.
The target timetables for meeting the tests outlined above is 2006-2010. However, progress will be reviewed every two years. The government hopes that setting a timetable will encourage broadcasters to invest in new digital services (including interactive services) and persuade customers to subscribe to such services. The draft action plan will need to be adapted and refined over the next few years to ensure the UK can benefit from the long term advantages of digital TV and make the switchover target date possible.

Approximately one third of UK households already watch digital TV and the majority of the population could receive existing free-to-air channels through the use of a set-top box. However, analysts predict that full switchover by 2006 is not viable and that transition will come later rather than sooner. The Independent Television Commission estimates that 40% of homes in the UK are unwilling to pay for digital TV. Many consumers are ignorant about the advantages of digital TV services and are reluctant to embrace new technologies. It therefore looks like the UK has a long way to go before the criteria for switchover outlined in the Action Plan are met.

A copy of the Action Plan is available at http://www.digitaltv.culture.gov.uk/industry.html and a list of FAQs for consumers may be found at http://www.digitaltv.culture.gov.uk/faqs.html

"© Herbert Smith 2002

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

For more information on this or other Herbert Smith publications, please email us."

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