Delimiter » iinet

iiNet ramps up Internode digestion

Renai LeMay — Mon, 21 May 2012 00:48:10 +0000

news iiNet has taken several key milestone actions over the past week as it continues its ongoing efforts to integrate the operations of fellow national broadband provider Internode into its own, following its acquisition of the company in late December last year.

When iiNet announced it would buy Internode in late December last year, the two companies were careful to highlight their plans for the South Australian ISP led by well-known industry figure Simon Hackett to remain independent from its new parent. “This is another iiNet acquisition and Internode will just disappear, right?” stated a question posted as part of Internode’s frequently asked questions document for the transaction. “No, it isn’t,” came the answer from Hackett. “Internode will be remaining as a separate operating company within the group, with its own identity and its own staff. I am staying at the helm of Internode as is the rest of the management structure of the Internode & Agile company group.”

At the time, Hackett emphasised that his new status as a major shareholder of iiNet itself would mean that Internode would not “just disappear into iiNet without trace”, and that there was little reason for the company to harmonise its broadband plans and offerings with those of iiNet, as other companies subsumed into iiNet — such as Netspace, Westnet and AAPT — had in the past.
However, over the months since the acquisition, iiNet and Internode have increasingly tied their operations together.

Late last week, iiNet confirmed that one of Internode’s most high-profile executives, current chief technology officer John Lindsay, would take up a position as CTO of iiNet, replacing Greg Bader, who left the CTO position recently to become iiNet’s head of its growing business division. Lindsay was seen as one of Hackett’s main lieutenants and had succeeded Hackett himself in the Internode CTO position earlier this year. He previously acted as Internode’s carrier relations manager for a decade to March 2010, when he achieved a higher profile as the company’s general manager of regulatory and corporate affairs.

With the departure of high-profile executives Matthew Moyle-Croft and network engineer Mark Newton from Internode’s ranks in September, the only remaining executive at Internode who has a high public profile as a commentator in the telecommunications industry is Hackett himself.

iiNet chief executive Michael Malone noted in a brief comment on the appointment by email that it was the third time that Lindsay had been iiNet’s chief technology officer, having served in the position twice throughout the mid to late 1990′s. “I’m now delighted he’s moving to take over tech for the group, a role that’s been vacant since Greg took over Business in July,” Malone said. “Being iiNet’s CTO is the most exciting technology job in Australia,” added Lindsay.

The news came after iiNet last week also announced the merger of the 3FL and games.on.net Internet gaming platforms which had separately been operated by iiNet and Internode respectively. The new merged platform will combine “the best features” of both and will retain the games.on.net brand name, according to an iiNet media release issued last week. “By combining iiNet and Internode resources and staff, we can offer the latest news, reviews and interviews plus more than eight terabytes of files, trailers, mods and patches and a 10,000 player capacity,” iiNet chief product officer Stephen Harley said last week. “The best bit is that all servers, files and content will remain in place so it’ll be an easy transition for our customers.”

Internode content manager, Heidi Angove, said the combined forces of iiNet and Internode would change the Australian gaming landscape for the better. “Premium titles, a plethora of servers with a choice of rulesets, fast gameplay and excellent editorial. Together we’re committed to be the best possible ISP for gamers in Australia,” Angove said. The merge is expected to be complete by July 2012.

iiNet and Internode have also integrated a number of other areas of their businesses since the acquisition was finalised earlier this year.

In March iiNet introduced Internode’s data blocks feature to its own broadband plan structure, and then several weeks later iiNet also dumped the on-peak/off-peak split of its broadband plans, offering customers the same base system as Internode has long promoted for its own plans. Both moves came after Internode announced its intention in February to migrate customers using wholesale offerings from rival companies like Optus and Telstra to iiNet’s ADSL infrastructure where possible. With similar moves occurring on iiNet’s end, the move effectively integrates the ADSL infrastructure owned by the two broadband companies.

However, iiNet and Internode do retain separate operations in a number of areas. The pair’s wider plan structures remain separate, and each has a slightly different product offering set.

opinion/analysis
When reading of and considering the latest actions taken by iiNet in its integration of Internode, I felt continually reminded of the overall philosophy which iiNet has with regard to competition in Australia’s telecommunications sector.

As best highlighted through this recent omnibus feature I produced on the subject, iiNet’s view in general appears to be that real competition in Australian telecommunications will only be provided once industry giant Telstra is substantially attacked by rivals, with the sector’s available market share split up more evenly between its players. Right now, Telstra still has a huge market share in Australian fixed telecommunications, with the remaining portion being largely owned by iiNet, TPG and Optus.

Secondly, iiNet has always appeared to feel that competition in Australia’s telecommunications sector is best served by better customer outcomes. In this sense, iiNet has never viewed its acquisitions of rivals such as Westnet, Netspace, OzEmail, Internode, AAPT’s consumer arm and so on as harming competition in the sector, because, it has argued, those customers will get a better overall deal as part of the broader iiNet group than they would have with the companies remaining separate.

I agree that Telstra’s market share is an issue in the sector, but I do not agree with iiNet’s view that better outcomes for customers through acquisitions is the same thing as increasing overall competition in the sector.

My view of competition is that this ideal is best served by having a multitude of strong, innovative companies in the marketplace, offering a variety of different solutions to customers. What we’re seeing right now with iiNet’s integration of Internode is a weakening of competition. Previously, amongst my peer group, most people really only chose between iiNet and Internode when it came to their broadband connection, eschewing companies such as Optus, TPG and Telstra because of their lack of innovation and often lesser customer service levels compared with iiNet and Internode.

iiNet may not have harmonised Internode’s broadband plans with its own. But increasingly, it is harmonising lots of other areas of its former rivals’ offering with its own. First came the integration of ADSL infrastructure, then iiNet adopted some of the best aspects of Internode’s broadband plans, and now the two will share a gaming platform, a value-added service which, I would argue, Internode has always done better. The shift of John Lindsay to the iiNet group will also radically diminish Internode’s public profile in the regulatory space. Overall … I think in a year or so there will be very little competitive difference between iiNet and Internode for customers.

Now, I don’t want this article to be all doom and gloom. After all, customers of both iiNet and Internode are still getting a great broadband service, and the quality of that service is likely even increasing, following the Internode acquisition.

But I do want to highlight the fact here that iiNet is not leaving Internode as a separate company, as both said it would during the acquisition. Slowly but surely, Internode is being subsumed into iiNet as all of iiNet’s previous acquisitions were. And with that action, dies a strong competitor in Australia’s telecommunications market, and one of the only companies which was keeping iiNet (itself, one of the only decent mid-range players in the market) honest in the first place.

Geo-block busting ISP not realistic, says Hackett

Renai LeMay — Fri, 11 May 2012 05:14:46 +0000

news Internode managing director Simon Hackett has downplayed the potential for Internode or other Australian ISPs to follow a New Zealand ISP and offer a “Global Mode” that offers greater access to the internet by circumventing geographical restrictions placed on the certain internet services such as Hulu and Netflix.

A long-time issue for Australian Internet users has been that a number of major Internet content companies — such as Amazon, Apple, Hulu, Netflix and others — will only stream content online to customers located in certain jurisdictions, usually the United States. Visitors with an Australian IP address are told they are not able to access the content in their jurisdiction. However, this week an ISP-based solution to the issue surfaced in New Zealand. The country’s National Business Review newspaper has an extensive article on the subject, stating:

“FYX (“Fix”), launched on May 4 as a sub-brand of established ISP Maxnet, holds the tantalising promise that its users will be able to directly access US based-commercial download services such as Hulu and Netflix, and the likes of the BBC’s iPlayer – all of which offer a motherlode of street-legal movies and TV shows for download, but are “geo-blocked” to stop people outside their parent countries accessing them.”

Could such a service be provided by an innovative Australian ISP? That’s the exact question which a Whirlpool user asked iiNet subsidiary Internode this week. The company’s response came quickly from the group’s outspoken managing director Simon Hackett.

“Frankly it’s something I’ve often pondered doing,” Hackett wrote. “To the extent that from time to time we’ve done some internal design exercises to work out what it might look like … we have routers, servers, and rack space in other countries already, so operating one of several possible forms of VPN server and/or NAT based session rewrite and/or application level gateway service (e.g. a Socks proxy etc) in the USA and/or Europe… it all works in theory.”

However, Hackett added, there turned out to be technical barriers to an ISP like Internode offering such a service in practice.

“… it winds up being quite easy for a Netflix or Hulu to identify such proxied sources and block them, based on technical tests as simple as end to end latency (e.g. > 150 milliseconds round trip time for a connection generally implies ‘out of this country’),” the Internode MD wrote. “It can also be done based on administrative tests (“who is the owner of the IP range concerned, and is that a non-USA ISP?”).”

Consequently, he said, customers who had signed up for such a service from Internode might end up being disappointed. “So, now let’s imagine that Internode fielded such a service, and 6 months later, having got a great name for it, and having had people sign up because of it, the service then suddenly stopped working for major content services like Netflix, as they caught up with us doing this … and they would catch up with us precisely because it got popular and hence because it got us noticed.”

“Then, we’d wind up being crucified by, well, by you guys, as examples of customers who have signed up ‘just because of this’. Customers who would then say that we touted ourselves as being the ISP of choice because of this. Those customers would then start demanding exit from their contracts with no penalty because it no longer did what they expected (not withstanding that the underlying service itself would continue to work just fine – it’d just be Netflix etc who had blocked us) and would spend the next two years telling everyone who posts in “Choosing an ISP” not to trust Internode because they did this ‘bait and switch’ thing.”

“Not a place we’d want to knowingly put ourselves (or our customers), really, is it?”

“I don’t know how the NZ ISP concerned is doing it, and whether they’ve found some magic pudding we haven’t thought of,” Hackett added. “But if, in six months, you see them unexpectedly withdrawing the service in the face of customer complaints that Netflix suddenly blocked them… well, put it this way – I wouldn’t personally be all that surprised.” The more realistic way to approach the problem, Hackett said, could be for Australian customers to sign up themselves for commercial VPN services from the US.

opinion/analysis
I highly encourage readers to check out Simon Hackett’s excellent post in this area. It goes through the technical and commercial arguments for this kind of ISP service in Australia at length, and provides a solid grounding for further discussion. As always, we are grateful to Hackett for this kind of transparency and insight into the situation; it’s a level of transparency we don’t see from any other ISP in Australia.

My own point of view on this is that Hackett is likely right. It would be unseemly and pointless for Internode or any other Australian ISP to get into this kind of ‘arms race’ with commercial content providers in the US. Much better to solve the problem permanently (and on a more legitimate basis) through a traditional avenue: Customer demand. If a company like Netflix receives hundreds of letters demanding they launch in Australia, I’m sure that would change the conversation they have internally around such matters.

Image credit: Netflix

Senate blocks release of secret piracy docs

Renai LeMay — Fri, 11 May 2012 01:49:06 +0000

news The Federal Government and Opposition have teamed up to block a motion put by the Greens in the Senate which would have forced the Attorney-General’s Department to produce a series of documents regarding its closed-door meetings on Internet piracy in February this year.

On 8 February this year, major Australian ISPs sat down with the representatives of the film, television and music industries and the Federal Attorney-General’s Department, with the aim of discussing a potential industry resolution to the issue of online copyright infringement. The meeting was the fourth such meeting to be held, after a series of other meetings were held late last year under similar circumstances.

However, the Attorney-General’s Department has used a series of complex legal arguments to deny the release of documents associated with the meetings under Freedom of Information laws — redacting, for example, an entire 14 pages of notes taken by a departmental staffer at the event and other four pages of notes taken by a senior staffer from Communications Minister Stephen Conroy’s department.

Subsequently to the censorship of the FoI request, Greens Senator and Communications Spokesperon Scott Ludlam filed a motion in the Senate in March requesting that the Attorney-General’s Department produce a list of invitees and attendees at the February meeting, notes and minutes arising from the meeting, any documentation issued to attendees and any internal departmental correspondence regarding the meeting — as well as documents relating to future meetings.

However, the motion came to fruition on Wednesday this week, it was blocked overwhelmingly in the Senate, with both the Government and Opposition declining to support it. In the Senate, Ludlam noted for the record that the Greens supported the proposal, while “the rest of the chamber opposed it”. The Coalition did not take the chance to hold the Government accountable on the matter. In the past, Shadow Attorney-General George Brandis and Shadow Communications Minister Malcolm Turnbull have not responded to requests to comment on the issue.

The news is now the third time which attempts to retrieve information regarding the secret piracy talks have failed.

In April, the Federal Attorney-General’s Department conducted an internal review of the decision by its Freedom of Information officers not to release the sensitive documents. At the time, a senior office of the department found that its decision to substantially block the Freedom of Information request was valid.

“I have decided that disclosure of these documents would be contrary to the public interest,” the department’s director of its FOI and Privacy Section, Malcolm Bennett said at the time in one argument made. “My reasons for so concluding are essentially the same as [AGD senior legal officer Jane Purcell]‘s— that is, that the discussions that are taking place are at a delicate and sensitive stage.”

The talks have gained an extra level of potency following a High Court decision in mid-April which found that major ISP iiNet was not responsible for the Internet piracy actions of its users. At the time, the Australian Federation Against Copyright Theft, which represents film and TV studios, said the loss illustrated that the Government needed to step in and take action on the issue of Internet piracy.

In response, Federal Attorney-General Nicola Roxon said the Government would closely examine the case, but added that the closed-door meetings between the content and ISP industries on the matter would continue. Despite this statement, it is believed that no further formal meetings have been held or scheduled by the Attorney-General’s Department on the issue since February.

The Australian newspaper has reported that ISPs have taken a stronger stance against copyright holders in dealing with the Attorney-General’s Department since the High Court decision. However, it also reported that a second set of informal meetings between a smaller group of industry stakeholders had also been held by the Attorney-General’s Department on the issue.

opinion/analysis
I really don’t understand the Opposition. This is a political group which will rail against the Government at every opportunity — on asylum seekers, on the National Broadband Network, on the carbon tax — the negative vitriol is incredible. And yet, when given a concrete chance to hold the Government of the day accountable on an issue of high public interest such as Internet piracy, the Opposition doesn’t take it.

All it would have taken for the Opposition to hold the Government accountable on this issue would have been for it to vote for the Greens’ motion to produce these secret documents. Instead, the Opposition chose to support the Government in keeping information in the public interest from being made public. Incredible.

As for Shadow Attorney-General George Brandis … do your job, George; realise that there has been public interest in this important issue for six months now, that it’s been covered in several national media outlets, and that the Labor Government is both holding secret meetings with industry and trying to stop that information from coming to the public eye. Keeping the Government accountable on this issue serves both the Coalition’s political interests as well as the public interest. Can’t you see your way clear to getting out of bed for this kind of free win?

Reality check: ISPs do not understand content

Renai LeMay — Wed, 09 May 2012 02:29:45 +0000

opinion Australian ISPs, regulators and the Government need to take a step back and stop fooling themselves that future telecommunications competition will rest on ISPs’ ability to provide bundled video content services to users. The reality is that ISPs aren’t good at this task and customers don’t want them to do it.

Over the past few weeks, an old dream has begun to resurface strongly in the ongoing conversation around the future of Australia’s telecommunications industry. In this dream, ISPs and telcos are able to diversity beyond their roots providing telecommunications services such as broadband and telephony to customers. Under this so-called ‘triple-play’ vision, ISPs would add services further up the networking stack, providing video services such as films and television episodes on top of their network infrastructure.

The desire to realise this dream has become very evident in a number of comments made by industry figures over the past year or so.

In a briefing in Sydney yesterday, ACCC telecommunications commissioner Ed Willett said the nature of telecommunications competition could change as the powerful National Broadband Network rolled out, with ISPs competing with content providers for access to video streaming rights. This new world could see ISPs forced to compete with an emerging class of rivals such as Apple and Google for “the primary customer relationship”, Willett said, according to this article published by iTNews. The Australian also has more on this. One can’t help but feel the regulator already has its eye strongly on this new market opportunity, given the provisions it forced on Foxtel in its $1.9 billion buyout of Austar, which ensured some of the pair’s key content holdings would be unlocked for competitive use by ISPs.

Across town, the nation’s biggest telco Telstra was reportedly discussing its “media strategy” with the aid of ex-Television NZ chief Rick Ellis, with the idea raised that the company could make a bid to buy pay TV ConsMedia, which, along with Telstra, part-owns Foxtel and also has interests in Fox Sports Australia.

Meanwhile, at an investment conference held by Macquarie Bank, top-tier ISP iiNet was spruiking its growth strategy. In a broadband market which is experiencing negligible amounts of growth, a core plank of iiNet’s strategy — as with every other ISP — is getting its customers to buy more from it. This means, according to the company’s presentation, getting more people to sign up for its “TV Bundle” — the FetchTV set-top box through which iiNet can get its customers to pay for TV and movies delivered over their broadband connection.

And the nation’s number two telco Optus is also certainly taking the content opportunity seriously.

Like iiNet, the company is pitching the FetchTV offering to its customer. Its chief executive has publicly called for the Australian Competition and Consumer Commission to regulate content as it does telecommunications access, citing this area as the next major regulatory battleground. And of course the telco has over the past year taken the fight directly to the TV networks with its TV Now cloud-based personal video recorder, which the Federal Court unfortunately shut down last month.

Yes, yes, for Australian telcos at the moment, you can’t escape the feeling that the future is very much about content. Lovely, juicy, value-adding content, streamed on their networks, delivering extra profit margins and locking customers into triple-play or even quad-play (with mobile) bundles. It sure sounds like a lovely vision. But there’s just one problem: If you dig a bit beneath the surface a bit, it’s hard not to escape the conclusion that it’s a false hope.

For starters, it’s important to realise that the ISPs’ forays into content provision over their networks over the past decade have broadly failed.

In total, iiNet has approximately 860,000 broadband customers. But in the almost two years since it launched FetchTV, it has succeeded in converting only 20,000 (two percent) of those customers into FetchTV customers as well. With that abysmal run rate, it’s hard not to make a case right now that iiNet should simply abandon its FetchTV efforts altogether. The project certainly isn’t making iiNet any money. Optus, which launched its own FetchTV offering in Octover 2011, is no doubt doing no better than iiNet on that front right now.

Telstra, which has many millions more broadband customers than iiNet, has fared a little better; in late March this year, the company revealed that it had sold more than 300,000 units of its T-Box Internet video set-top box. Given that the company has some 2.5 million broadband connections using its network, that’s a much better sign-up rate than iiNet’s FetchTV service enjoys — about 12 percent. But it’s not enough to call the platform a success just yet.

But wait, there’s more.

The recent wave of Internet video services launched by the telcos are only their most recent foray into the area of content provided over their telecommunications networks. Before there was content on fixed broadband, there was content on mobile.

A July 2007 article published by the ABC chronicles how Telstra had then launched a service which would allow customers to watch television programs on their mobile phones — for a charge. At the time, then-Telstra executive Justin Milne, who was then in charge of Telstra’s BigPond ISP unit, hyped the device up as a revolution.

“We are inventing a new medium here and what I earnestly hope is that by giving them some slots and making them available to Australian producers to help us invent this whole short form of TV, that the folks will vote with their feet and they’ll buy those shows, and those will become the most popular shows and so we’ll produce more of them,” he reportedly said.

At the time, mobile television was all the rage. Telstra was doing it, Optus was doing it, Vodafone was doing it, and the then-separate Hutchison Telecommunications, developer of the ’3′ network in Australia, was doing it. You could buy individual ‘packs’ through the various companies which would give you access to various slices of content. The only problem was, these types of services never took off. For a time, Australians were interested, but after a while the interest dropped off and the various telco’s efforts to pump content through their mobile networks slowly failed and were largely abandoned.

It wasn’t the first time that this had been tried in Australia, either.

Those of you with slightly longer memories might recall that in late 204, Telstra launched what was then described as an ‘i-mode’ service (imported from Japan, where it was quite popular) through its mobile devices. At the time, the idea was that content providers like eBay, Citibank, CNN, Fox Sports, Whereis, Flight Centre and The Weather Channel would provide portals through Telstra’s mobile devices that would allow customers to buy content directly on their mobile.

But, just like the mobile content wave which would follow it a few years, later, i-mode bombed in Australia and is now remembered as one of Telstra’s greatest mobile-related failures locally.
Now, I don’t want to imply that every attempt by an Australian telco to diversify into content services has failed.

Probably the most high-profile success in Australia in this area — and, by now, you’re wondering why I haven’t noted this elephant in the room — is Telstra’s 50 percent investment in pay TV company Foxtel, and the provision of extremely profitable Foxtel services over Telstra’s HFC cable network. Formed in 1995 through a joint venture between Telstra and News Corporation, Foxtel has historically made a stack of money for both, and you can only get access to it if you have Telstra’s HFC cable running to your door.

Now, it’s true that Foxtel has been a success. But what’s important to realise is that Telstra has had very little to do with that.

Telstra’s role in Foxtel is essentially limited to two areas. Firstly, Telstra is a 50 percent investor in Foxtel, so it has put in a stack of money into the company. And secondly, Telstra maintains the HFC cable network over which the Foxtel services are provided. This is simplifying things a bit, given the complex relationship between Foxtel and Telstra, but when you break it down, you quickly realise that all of the content-related work that goes into Foxtel is done in a separate company to Telstra — one focused on content. The success of Foxtel is based on the fact that Telstra kept its nose out of the content and focused on what it does best — providing telecommunications carriage services to get that content to users.

And every other area where Telstra has attempted to leverage the Foxtel relationship itself, it appears to have broadly failed in.

Telstra’s attempts to provide access to Foxtel content through its mobile phones; Telstra’s attempts to provide access to Foxtel content through its T-Box platform — in short, Telstra’s attempts to leverage its Foxtel relationship through any other avenue than simply providing the telecommunications network for Foxtel to sell pay TV — have broadly failed. In fact, Foxtel is probably experiencing more success offering its services through Microsoft’s stand-alone XBOX 360 platform right now than it is through Telstra’s competing platforms.

Now that we’ve established that ISPs don’t do content very well, the key question which needs to be asked is why. On this front, I think it’s appropriate to go to a quote from Walter Isaacson’s Steve Jobs biography. This is vintage Jobs, speaking about the recording industry and why it couldn’t get its own online music store off the ground:

“When I went to Pixar, I became aware of a great divide. Tech companies don’t understand creativity. They don’t appreciate intuitive thinking, like the ability for an A&R guy at a music label to listen to a hundred artists and have a feeling for which five might be successful. They think that creative people just sit around on couches all day and are undisciplined, because they’ve not seen how driven and disciplined the creative folks at places like Pixar are.

On the other hand, music companies are completely clueless about technology. They think they can just go out and hire a few tech folks, but that would be like Apple trying to hire people to produce music. We’d get second-rate A&R people, just like the music companies ended up with second-rate tech people. I’m one of the few people who understands how producing technology requires initiation and creativity, and how producing something artistic takes real discipline.”

What’s happening right now in Australia’s telecommunications sector is that the ISPs and telcos are, as Jobs said about the record-labels, hiring second-rate people to enter industries which they don’t understand. The fundamental business of telcos is to provide telecommunications carriage services; not to provide content services. And consequently, telco people just don’t understand the content industry. Telco people think of everything through the lens of their network infrastructure; cables, routers, datacentres. But they don’t think about the content itself — the content, for a telco person, is just something carried on their network.

But providing content isn’t about getting a network right and bundling content onto it. It’s about making that content available wherever a customer wants it, in whatever format they want it; no matter what underlying network may deliver that content. The birth of the Internet has ensured that content has become disaggregated from the network layer that delivers it; and very few customers want to go back to the bad old days where the two are tied irrevocably together, as they are with Foxtel.

Now, I don’t want to argue that the content industry is getting this right either. It has been exhaustively documented right now that Australians are getting a rough deal when it comes to obtaining TV and film content on-line, on-demand and in a timely and affordable manner. But the answer to that problem is not going to come from Australia’s ISP industry.

As the US and UK have also exhaustively demonstrated with companies like Netflix, Apple and Amazon, the solution to that problem will come from a new category of companies which sit in the middle between content owners and consumers, with their service to be provided on top of telecommunications networks, but with no need for an explicit relationship with the providers of those networks. Quickflix founder Stephen Langsford, whose company sits squarely in the middle of this new industry category, nailed this concept in a speech last week; he’s perhaps one of the first executives in Australia to do so publicly.

The Quickflix executive said the best option for Australian consumers was a streaming platform which would offer an unlimited “all you can view” movie and TV streaming service for a single monthly price across any device or platform. This, he said, was an important point because currently in Australia, most companies locked customers in to a particular device, which he said limited the number of consumers who would take up such services. This is the model which has driven Netflix to a level in the US where it accounts for 20-30 percent of all Internet traffic in the country. And it is the model which will see paid Internet video succeed in Australia.

Ironically, Langsford’s speech was given at the same conference where iiNet and Telstra were hyping up their own Internet video options. I wonder if many in the audience appreciated the subtle difference — which will mean the difference between success and failure — between the different philosophies presented.

I suspect not.

Update: This article has been updated with correct T-Box figures. We had estimated about 100,000 sales over the past several years; the correct figure is 300,000.

Pure massacre: Optus sacks 750

Renai LeMay — Wed, 02 May 2012 02:07:03 +0000

news The nation’s number two telco Optus this morning revealed plans to sack some 750 staff, in a company-wide restructure which it claimed was aimed at giving customers “a stronger voice”.

In a statement, the company said it would create a “customer division” responsible for managing all aspects of the company’s relationship with its customers throughout the lifetime of their service. This restructure would be supported by the creation of “new marketing and sales division” to support its Optus brand, alongside the centralisation of a number of other key functions, including “commercial, human resources and strategy”.

The telco said the restructure would also see it rationalise “a number of operational, back office and administrative functions” to help drive greater efficiencies. “By moving to a more streamlined and centralised structure, Optus will remove a number of areas of duplication,” the company said. “As a result, Optus is proposing to make approximately 750 roles redundant over the coming months, with an associated one-off charge of approximately $37 million. The majority of these roles will come from senior and middle management as well as operations, back office and support functions.”

The company said that in order to maintain its “customer focus”, minimal customer-facing staff would be directly affected by the announcement.

The company’s chief executive of its consumer division in Australia, Kevin Russell, who has only been in his role effectively overseeing Optus in Australia for several months, said the “competitive environment” required Optus to have “a sustainable cost structure” that would allow it to remain competitive and continue to deliver value to its customers.

“However, a key driver of the restructure has been to elevate the voice of our ten million customers to ensure they are heard loud and clear in every aspect of our business,” he said, “in our service delivery and support, in the products and services we bring to market, and in the consistent experience we provide across all our sales channels.”

“By creating a more efficient organisation with a renewed focus on the customer, we will be able to compete more effectively,” Russell added. “When combined with our reinvigorated Optus brand and stronger mobile network, these changes will put us in an even stronger position to provide our customers with an exceptional and rewarding experience, while at the same time driving sustainable growth for our business.”

The news comes as Optus continues to experience only modest levels of growth in both its customers and key financial measures. In February the company reported a net profit of A$177 million for the third quarter, representing growth of 4 percent. The company’s operating revenue was up 2 percent to A$2.42 billion, while EBITDA increased 2 percent to A$562 million. The company added a mere 182,000 mobile customers in the quarter, and experienced negligible fixed-line growth.

In comparison, Telstra bolted on some 958,000 new mobile and fixed customers to its roster over the second half of 2011.

opinion/analysis
Rather than analysing the current situation, I’ll re-post my thoughts here that I wrote after Telstra revealed its latest set of financial results in January:

“Optus chief executive Paul O’Sullivan has a huge amount to answer for here.

Right now, Optus is experiencing growth of something like one (possibly two or three, with the Christmas period?) percent growth in its mobile division. Telstra is experiencing ten. Telstra just bolted on almost a million new Australian mobile customers in six months. In that period, Optus will struggle to bolt on a third that amount — and it might even look a lot more like a quarter.

Optus might call itself Australia’s leading telco challenger brand, but right now that’s nothing more than a bad joke. Telstra is the challenger brand in Australia’s mobile market — it’s challenging the status quo in terms of what we previously thought could be done in the mobile sector, and it’s blitzing Optus and driving Vodafone into the ground in the process.

This should be particularly disturbing for Optus.

As I’ve previously written, Optus has virtually ignored Australia’s fixed broadband market recently, resulting in its lunch being completely eaten over the past five years by the likes of TPG and iiNet, which now have stronger brands than it does in fixed telecommunications. It has done this in order to focus on the more profitable and unregulated mobile sector.

However, now Optus is having its lunch eaten in the mobile market as well. Telstra is making an absolute mockery of Optus in that segment. “Challenger telco”? I think not. Right now, in mobiles, Optus is virtually stuck in neutral.”

The fact that Optus this morning claimed it was restructuring “to give customers a stronger voice” is nothing more than a bald-faced misdirection. The company is experiencing negligible growth and is clearly going through a cost-cutting exercise designed to shore up its margins. It’s hard to argue that sacking 750 staff will give customers “a stronger voice”, when it seems clear that those customers will have less people to speak to.

I have a message for Optus. You don’t drive long-term growth by creating new marketing and sales divisions, while simultaneously cutting operations, back office and support staff. You drive growth by innovating and creating new products and services that your existing salespeople can sell. You know, the kind of thing which Optus used to do, and which iiNet and Telstra are doing right now.

Image credit: Promotional shot for AMC’s The Walking Dead TV series

Turnbull on iiTrial: We need ‘global copyright’

Renai LeMay — Thu, 26 Apr 2012 01:09:08 +0000

news In the wake of iiNet’s victory in its Internet piracy High Court case, Shadow Communications Minister Malcolm Turnbull has called for the content industry to start releasing all of its content globally through on- and offline platforms simultaneously upon launch, in an effort to meet the demands of consumers and make piracy irrelevant.

The High Court last week knocked back a final appeal in the case by a coalition of film and TV studios, represented by the Australian Federation Against Copyright Theft. The studios first took iiNet to court in 2009, claiming iiNet had “authorised” its users to download pirated movies and TV over the Internet. However, the court said today, iiNet had no ability to prevent its customers from infringing copyright, and copyright law was not suited to enforcing the laws of content owners through such platforms.

Subsequently, AFACT said the loss illustrated that Australia’s Government needed to step in and take action on the issue of Internet piracy. The Government has said it will examine the decision, but has a preference for talks on the issue to continue under the auspices of the Federal Attorney-General’s Department.

The Coalition, which is currently expected to win government in the next Federal Election, has not yet released a policy on the issue of Internet piracy, although Delimiter has requested comment on the issue several times from figures such as Shadow Attorney-General George Brandis.

Speaking on the ABC’s Political Forum show with host Richard Glover (transcription available here), Turnbull said the content industry currently faced “a very big challenge” with respect to its future. ” I think firstly, we have to move to a system of global copyright where basically people — there are no territorial limitations on copyright,” he said. “Because I think the internet is basically made that all unworkable.”

iiNet chief executive Michael Malone wrote on iiNet’s blog this week that he was a big of a “tragic” for the HBO TV show Game of Thrones (inspired by the classic fantasy book series A Song of Ice and Fire by George R. R. Martin) and it was “killing” him to know that he would have to wait several weeks before he could legally watch new episodes in Australia — even though Internet pirates had already made the content available on BitTorrent.

“Basically you’ve got to recognise that the minute Game of Thrones or any other show is put to air, it will be available globally,” said Turnbull “.So the owners of that copyright have got to be in a position where it can be released simultaneously theatrically, or in the case of something like that on Pay TV everywhere. But also, it should be for sale through the iTunes store or various other platforms at the same time.”

“Because if it’s not for sale — because what’s happening is, Game of Thrones, episode three I think goes on air this week in Australia. I think it went to air a couple of weeks ago in the States. It’s been tweeted and written up and Facebooked endlessly – and if they can download, they will. Now we’re just kidding ourselves — all they are doing is throwing money away by not making it available instantly.”

Turnbull said he wasn’t suggesting that it was possible to stop people downloading material illegally, but the film and TV studios could “mitigate” that sort of behaviour by making the cost of a legitimate download a lot lower.

The Liberal MP also emphasised that it was important to maintain intellectual property rights, as they helped drive Australia’s creative industries. However, he said the High Court came to the right decision in the iiNet trial, and he “really” welcomed iiNet’s victory. “It is very, very, very difficult if not impossible for someone that is just selling connectivity, just providing bandwidth to then be monitoring what people are doing,” said Turnbull, citing his past background as chairman of 1990′s leading ISP OzEmail, which itself has now been subsumed into iiNet.

opinion/analysis
It’s all very nice that Turnbull welcomes the outcome of the iiNet trial, and of course his view that content needs to be released simultaneously globally through multiple platforms both online and offline is a very mainstream one — perhaps the mainstream one. Turnbull’s speaking common sense here, and it’s great to hear that from the Coalition, which often seems to be in short supply of this valuable commodity.

However, Turnbull’s statements this week don’t really give us any insight into what the Coalition’s actual policy is on this important issue.

Let me make myself clear. The Labor Federal Government is currently holding highly controversial closed door meetings between the ISP and content industries, with the view of forming an industry code on Internet piracy. The Government has consistently blocked requests for more information on what is being talked about at the meetings, has heavily censored Freedom of Information requests into their content, and has denied requests by consumer groups to attend. The issue has become so serious that the Greens have filed a Senate motion for documents pertaining to the most recent meeting in February to be produced.

Therefore, what we need from Turnbull and his colleagues in the Coalition is not a personal opinion and some whimsy about how good Game of Thrones is (although everyone seems to agree that it’s excellent, an issue on which we concur), but some real answers about what the Coalition would do about this issue if it wins the next election. A policy, in short, a policy. Isn’t that what political parties are supposed to produce? In 2012, the practice seems to have gone out of style, having been replaced by individual politicians making off-the-cuff comments in daily media appearances. In this context, it is perhaps not so important that we know that winter is coming, so to speak, but what our rulers intend to do about it.

Image credit: HBO (promotional shot from Game of Thrones TV show)

Exetel launches $55 terabyte ADSL plan

Renai LeMay — Thu, 26 Apr 2012 00:10:40 +0000

news National broadband provider Exetel has launched a terabyte ADSL broadband plan including a PSTN landline service for a total of $55 per month, in what is initially a limited “Anzac Special” offer lasting to the end of April.

In a post on his blog, the company’s chief executive Steve Waddington said the company’s current ‘Fair Use’ plans, which technically feature a quota limited only by the average of what customers download, had proved “pretty popular” since the company launched them at the same $55 price point in late March, although sales had not been as high as he thought. Waddington himself uses the plan for his home connection.

However, the executive noted, he could understand why “some people might be reluctant to buy a Fair Use plan”, because of the somewhat nebulous definition of ‘Fair Use’. In the fine print associated with the plans, Exetel notes that it regularly monitors average usage statistics of its users. “… if you are deemed by Exetel to be exceeding the average, Exetel will request that you reduce your usage,” Exetel’s terms state. “Persistent breaches of our Fair Residential Fair Use Policy may result in Exetel terminating your service.” Exetel has not extended the unlimited plans to its National Broadband Network pricing.

That average number, Waddington wrote, was “quite low, less than 100GB overall, and that is just not an appealing number, where legitimate use nowadays can see in three or four times that downloaded in a month”.

Consequently, he added, Exetel had launched an “Anzac Special” ADSL broadband plan with a bundled PSTN telephone line (the plan is broken up into a $35 charge for the broadband plan and a $20 line rental charge) with a dedicated terabyte of download quota for a total of $55 per month, the same cost as its fair use plans, “for people who want certainty in quota rather than certainty in excess usage charges”.

“The plan should be on the web site later today, and we will see how it runs to the end of April and decide if we want to extend it into May,” Waddington wrote on Tuesday.

The plan is dramatically cheaper than similar terabyte plans offered by rival providers. iiNet, for example, which launched the first terabyte plan in Australia several years ago, offers a terabyte plan with a bundled telephone line for a total of $129.90 per month, Internode offers a 1.2TB plan with a phone line for $119.95, and Primus offers a 1.1TB plan for $109.95.
Rival broadband provider TPG does, however, offer a $69.95 plan with a telephone line and unlimited downloads, and Dodo offers an “unlimited” downloads plan with no telephone bundling required for $39.90.

Exetel has had a long-term on-again, off-again relationship with unlimited and high quota plans dating back most of a decade. In the earliest years of this decade, for example, before the onset of ADSL2+ speeds up to 24Mbps, Exetel offered a number of unlimited plans at various speeds. However, at one point it cut them, before reinstating them in December 2004. This was a pattern which the company would repeat over the years, with the most recent flirtation with the unlimited idea occurring in November last year, when then-Exetel CEO John Linton mooted the idea of bringing the plans back.

Following Linton’s untimely passing earlier this year, his business partner Steve Waddington has taken over the business. In March on his company blog, Waddington noted that Exetel had had “a sudden brain storm” with respect to Unlimited plans — which spurred the launch of the company’s initial ‘fair use’ plans.

opinion/analysis
I don’t expect these terabyte plans from Exetel to last long, so if you’re willing to put up with Exetel’s fickle nature, which often sees the company launch new broadband plans, only to retract them in a few months, then jump on board — you’re going to get better value for a terabyte plan from the ISP than you will from any of its other rivals at the moment, although of course you can also go for an unlimited plan for a similar or even cheaper charge from Dodo. I’m never quite clear on just how ‘unlimited’ such plans truly are, however; in Australia’s broadband industry, ‘unlimited’ often isn’t quite what people say it is ;) I like the fact that Exetel is guaranteeing a terabyte quota as a set amount. It sort of implies you are going to get the same quality on that plan as on any other broadband plan, while with unlimited a lot of people suspect that shaping and other limiting factors are going on behind the scenes.

Image credit: Mike Gieson, royalty free

Piracy meetings still censored: “No public interest”

Renai LeMay — Tue, 24 Apr 2012 05:52:32 +0000

news An internal Government review has backed a decision by the Federal Attorney-General’s Department to censor almost all information about the secret Internet piracy meetings the department has held with the content and ISP industries over the past six months.

Over the past six months, the Federal Attorney-General’s Department has been hosting a series of closed door meetings between the content industries, represented by groups such as the Australian Federation Against Copyright Theft, and Internet service providers such as iiNet and Telstra. The meetings have also been attended by industry groups such as the Communications Alliance, although consumer groups have been explicitly barred from attending.

Earlier this year, Delimiter filed a Freedom of Information request seeking details of the latest meeting, held in February, seeking details such as a list of attendees, notes taken by any government staff, a copy of documentation issued to attendees, email correspondence related to the calling and conduct of the meeting, and internal departmental correspondence regarding it.

However, the Government subsequently used a variety of complex legal justifications to avoid releasing virtually any detail of the meeting under FoI laws. Subsequently, Delimiter appealed the decision and requested an internal review of the Attorney-General’s Department’s justifications. In addition, the Greens have filed a Senator order requesting the documents be produced, although that motion will not be voted upon until May.

This afternoon, the Attorney-General’s Department has made public the results of its internal review. The department’s director of its FOI and Privacy Section, Malcolm Bennett, wrote in a letter to Delimiter that he backed the initial decision to censor the piracy meeting material from being made public. “I have, in short, decided to affirm [AGD senior legal officer Jane Purcell]‘s decision to exempt all the notes in full pursuant to section 47C of the Freedom of Information Act,” wrote Bennett.

One of the main legal instruments used to deny the initial release of information was section 47C of the FoI Act, which exempts material from being disclosed if it would disclose material which was involved in the deliberative or consultative processes of the government. In the previous FOI decision, Purcell had used the section 47C clause to deny the release of 14 pages of notes taken by a departmental staffer at the piracy meeting and another four pages of notes taken by a senior staffer from Communications Minister Stephen Conroy’s department.

“As advised earlier by Ms Purcell, the notes in question record discussions which took place at the meeting about proposed industry solutions to the issue of online copyright infringement,” wrote Bennett. “As also advised by Ms Purcell, such discussions are still ongoing. I have affirmed Ms Purcell’s decision that the meeting notes comprise material recording the substance of consultation and deliberation that has taken place in the course of, and for the purposes of, the deliberative processes involved in the functions of this department.”

Bennett noted, as Purcell also did, that another section of the FoI Act required such material to be disclosed unless doing so would be contrary to the public interest.

“I have decided that disclosure of these documents would be contrary to the public interest,” he said. “My reasons for so concluding are essentially the same as Ms Purcell’s — that is, that the discussions that are taking place are at a delicate and sensitive stage.”

“Disclosure of the details of them at this stage would, in my view, prejudice, hamper and impede those negotiations to an unacceptable degree. I agree with Ms Purcell that such a disclosure would be contrary to the interests of good government — and, by definition, contrary to the public interest.”

In Delimiter’s communication with the Attorney-General’s Department requesting a review of the initial FoI request, we had argued that it seemed unreasonable that the entirety of the 18 pages of notes be redacted.

“I would anticipate that there would be sections of these notes which would be trivial, and the redaction of the entire documents is a rather heavy-handed approach,” we wrote in our email to the department. “A more targeted approach, redacting sensitive portions of those notes only, would seem a more appropriate response to the spirit of a Freedom of Information request, and I note that AGD has taken this redaction approach in other sections of the documents.”

Delimiter also objected to the notion that it was not in the public interest to release the documents in full.

“As demonstrated by the degree of interest in this issue amongst the readership of sites like Delimiter (with many thousands of readers interested in this information), it seems clear that the public is highly interested in gaining more information about this situation,” we wrote. “This is further evidenced by the fact that consumer groups and other ISPs have also requested to join the meetings – but been denied. In addition, I am informed that the issue will also be raised in the Senate this week, further demonstrating that there is a public interest in the documents being released.”

iiNet chief executive Michael Malone has reportedly said that his preference would be to stop participating in the talks held by the Attorney-General’s Department.

Delimiter is currently investigating appealing the decision of the Attorney-General’s Department by having it externally reviewed by the Office of the Australian Information Commissioner.

opinion/analysis
Not in the public interest? Judging by the many thousands of people who read Delimiter’s articles on the iiNet versus AFACT High Court case last week (tens of thousands of people on Delimiter alone), and the fact that the matter has been raised in the Senate, I would say there is a huge amount of “public interest” in what is happening in these secret meetings being held by the Attorney-General’s Department.

I am aware that “in the public interest” does not simply mean “people want to know”. However, especially now that the iiNet High Court case has been finalised, it is of paramount importance that the Australian public knows what is being discussed in these meetings, so that it can its own say on this weighty national issue. These talks should be held in the open, with representatives of consumer groups able to attend. And media outlets such as Delimiter will not stop probing the Attorney-General’s Department on this issue until they are.

Image credit: Attorney-General’s Dept, with slight editing.

Reality check: AFACT is not planning mass lawsuits

Renai LeMay — Tue, 24 Apr 2012 01:14:37 +0000

analysis Worried that AFACT will start suing individual users, now that it has lost its High Court case against iiNet? You needn’t be. The organisation itself has denied any such plans, and even the legal case to identify Australian Internet pirates is on shaky ground at the moment.

Over the past few days since the High Court handed down its judgement in the high-profile court case between a coalition of film and TV studios represented by the Australian Federation Against Copyright Theft and iiNet, a great deal of speculation has arisen that the organisation, bruised and bloody from its battle with the ISP, will go after individual users next, targeting those actually doing the alleged copyright infringing, rather than the ISPs on whose networks it takes place.

And, to some extent, it’s a legitimate fear. Well, on paper, at least — if not in reality.

The threat of this kind of ‘mass piracy lawsuit’ behaviour has been held to Australia’s throat before. In October last year, for instance, a new and somewhat shadowy firm dubbed ‘Movie Rights Group’ sprung up and proposed to engage in just such mass legal action. Movie Rights Group’s initial targets consisted of some 9,000 Australians who had allegedly pirated the little-known film Kill the Irishman over the past 12 months.

Such programs of legal action — which commentators have commonly analysed as profit-making exercises rather than actions aimed at pure copyright enforcement — are relatively common in the US. The Recording Industry Association of America, for example, launching an early settlement program in 2007 which targeted thousands of users with offers to settle cases of copyright infringement. According to Arstechnica, the average amount being settled was about $3,000 at the time. And there have been a number of other similar programs, with similarly high-profile results.

The most visible face of the fear that this kind of behaviour could hit Australia is an article published by the Financial Review newspaper over the weekend. With the flagrant headline “Users warned they could be next”, it struck fear into the hearts of Australian broadband users that Big Brother was watching their Internet connections, cataloguing their downloads and preparing the legal writs. It cited eminent sources such as IP lawyer and Electronic Frontiers Australia secretary Kimberley Heitman, Theresa Corbin from the Australian Communications Consumer Action Network and iiNet chief executive Michael Malone and regulatory chief Steve Dalby, all discussing the issue of AFACT suing end users.

Just reading the article, I’m sure, gave many readers a chill down their spine. After all, we all know people who religiously download the latest episode of Game of Thrones every week. Could they become the subject of multi-million-dollar lawsuits?

In a word: No.

Buried in the Financial Review’s article was an extremely salient point against this scenario, made by none other than … AFACT executive director Neil Gane, who you might expect to be an expert on the copyright lobby’s plans in the area. Gane, as a number of other media outlets have also noted, categorically denied any plans to sue individual Australians over Internet piracy, in an open press conference last Friday.

“I can say at the current stage, at the current time, we have no plans to sue end users in Australia,” he said. “We have always maintained that we prefer a more proportionate and effective approach, which is for ISPs to notify their customers.”

Well. It doesn’t get much clearer than that. The Financial Review’s headline should have been: No plans to sue end users, says AFACT. But of course, that wouldn’t stoke the fear (and page impressions) amongst readers, would it? Truth rarely does.

But wait, you may say. AFACT could be lying — it’s not exactly the most transparent of organisations, and if Movie Rights Group could start suing thousands of Australians, what’s to stop AFACT and the many film and TV studios that it represents from doing the same?

Well, to start with, it’s important to note that it looks like, following a rash of negative publicity, Movie Rights Group appears to have shut down, with its web site deleted from the Internet and its chief spokesperson having moved on to other roles. However, there are also deep questions about whether it is actually possible for content owner organisations like film and TV studios to directly sue individual Australians for allegedly pirating their content online.

The legal mechanism which Movie Rights Group’s litigation was to rely on is a very similar one which is used in the US. In short, a rights holder such as a film or TV studio approaches an ISP like iiNet with a subpoena from a court. That ISP is then more or less compelled to provide the individual’s details to the rights holder so that they can be sued directly, leaving the ISP out of the legal equation. Typically, in the US, the rights holder will approach the ISP with a list of thousands of users’ details which it wants — and then the mass piracy lawsuits begin, after the necessary identification details are handed over.

Now, some Australians — such as the late chief executive of Exetel, John Linton — have had a strong belief that this mechanism can be used in Australia. This belief was fuelled by the judgement of the full Federal Court in the iiNet/AFACT case, which some legal experts had believed opened the door for this kind of discovery process, and mass lawsuit process, in Australia. And this is also what Movie Rights Group had believed, after what it had said last year had been extensive investigation of the area.

However, this kind of legal approach hasn’t yet been tested in Australia, and even Linton was planning to tell Movie Rights Group to go take a long jump off a short pier if it tried it. In practice, we don’t quite know what would happen, should an organisation like AFACT seek to subpoena thousands of user details from an ISP like iiNet. In addition, last week’s High Court judgement brought further evidence that such action was unlikely. The High Court, in its judgement, stated:

“The appellants [AFACT and so on] have brought no legal action against any individual user of the internet services provided by iiNet for any primary infringements of copyright … and it did not appear to be in contention that it would be somewhat impractical to do so.”

In addition, the judgement referred to another prior judgement, in which the judge had “referred to the possibility of copyright owners taking action against individual infringers as a “teaspoon solution to an ocean problem”.”

What I’m saying here is that there is both a lack of desire on the part of organisations like AFACT, and the content owners they represent, to conduct mass piracy lawsuits in Australia as well as a lack of legal clarity about to what extent they’re possible at all, especially if ISPs like iiNet continue to push back against rights holders legally. And let’s not forget that iiNet is not alone in its approach to the issue — it has been broadly supported in its court defence by Telstra, for example.

Most legal commentators on the iiNet case have been quite clear (see Nic Suzor’s excellent analysis here, for example) that the next steps in the issue in Australia will very likely involve lobbying by groups like AFACT for a legislative solution to its woes. In fact, that lobbying has already begun. In addition, many feel that we will shortly see more compromise behaviour from rights holders in making their content more widely available in Australia.

In this context, articles speculating that ‘users could be next’ in the legal gun barrels are not useful contributions to the discussion about online copyright infringement in Australia. They are nothing short of fearmongering. Internet piracy and the legal availability of content are important issues which need to be discussed honestly and transparently in Australia so the nation can move forward on becoming a leader in the digital economy sphere. Consequently, any debate about these issues should be based on truth — not groundless conjecture.

iiNet’s Hollywood ending: what does its court victory mean for copyright law?

External Contributor — Mon, 23 Apr 2012 02:29:02 +0000

This article is by Nicolas Suzor, a Lecturer in the Faculty of Law at the Queensland University of Technology. It was first published on The Conversation and is re-published here with permission.

analysis In what is being billed as iiNet versus Hollywood, the Australian internet service provider has come out an apparent winner after the High Court dismissed a copyright infringement case brought by industry movie studios. The case was a final appeal by the industry in its attempts to crack down on internet users infringing copyright by using BitTorrent to download movies. Nicolas Suzor, lecturer, Faculty of Law at Queensland University of Technology, explains the decision and what it means.

What’s the background to today’s decision?

This decision is the culmination of the last few years of litigation by the Australian Federation against Copyright Theft (AFACT), in conjunction with 34 movie studios. They sought to argue that iiNet, which is Australia’s second largest internet service provider, was liable for copyright infringement when its users used their home internet connections to download and upload movies using the BitTorrent protocol.

The High Court has found in line with the lower level court decisions that iiNet was not responsible for the actions of its users. The evidence before the court was that iiNet hadn’t done anything beyond providing the internet connection. The High Court found in order to be liable something more is required – iiNet cannot be liable for merely being inactive in response to allegations of infringement of copyright made by AFACT. Importantly, the High Court ruled that it would not be reasonable to expect iiNet to disconnect the accounts of its users solely on the allegations of infringement provided by AFACT.

What are the implications of this decision? Other internet service providers will no doubt be watching with great interest.

It’s a very important decision worldwide. We’ve only seen a few of these decisions so far. There was one in the Irish High courts where the Irish ISP Eircom was found liable for infringement on its network.

This decision in Australia is the most considered decision that we have seen in common law countries. It represents the next iteration of an attempt by copyright owners to enlist the aid of internet service providers to police infringement on the internet.

Over the past 15 years, copyright owners have had trouble using litigation to deter copyright infringement. They started off targeting companies like Napster and Kazaa, who were clearly encouraging the infringement of copyright by developing peer-to-peer file sharing networks that were designed to allow people to share copyrighted materials.

Then those technologies started to become decentralised and the copyright owners found they could not sue the developers of technologies like BitTorrent because they are such widely used general-purpose protocols, and they couldn’t sue end users because it tends to be terribly expensive, terribly unpopular, unfair and, realistically, quite ineffective.

So most recently, they have been trying to impose a duty on domestic ISPs to police infringement on the network. This approach is attractive because ISPs are quite big targets and, by imposing regulation at that point, they can potentially have quite a strong flow-on effect on the ability to control what users are actually doing.

This is quite an important decision worldwide because a lot of different countries are trying to look for different ways to target infringement and trying to sort out the principles on which ISPs should and should not be required to police what is on their network.

France had a quite controversial three strikes regime, which was struck down by the Constitutional Court and, in the end, was recast as a more limited and legitimate judicial regime. Both the UK and NZ have also introduced controversial “graduated response” regimes, where users will be progressively warned and potentially have their internet accounts terminated when they are found to have infringed copyright. The US has not gone so far, but the major ISPs have agreed with copyright owners to introduce some form of private notification scheme.

What about here in Australia?

Here in Australia this was seen as a test case to see if ISPs already have a duty to police Australian internet users under the law. It was quite ambitious in that the duty to terminate is not explicit under Australian law. The questions was whether or not ISPs that did nothing more than provide a connection could be liable. If they were, that would impose on them an obligation to do something about copyright infringement – although AFACT was never quite clear on what exactly it expected ISPs to do.

So what will the next move be from copyright owners?

I think two things may happen. This decision provides a good deal of certainty to Australian ISPs under current law, so copyright owners will likely increase pressure on policy makers to develop a new legislative regime. Copyright owners are still looking for a way that they can enlist the help of intermediaries such as ISPs to police copyright infringements, although such regimes are often highly controversial. It is unclear at this stage whether the federal government will entertain copyright industry demands for a three-strikes or similar system in Australia, particularly in the face of strong public opposition worldwide. At any rate, little is expected to change before the Australian Law Reform Commission completes its review of the copyright system near the end of 2013.

We are also starting see the emergence of an acknowledgement by copyright owners that it is important to develop business models which provide consumers with cheap, high quality and fast access to entertainment and other copyright material. The one thing that has worked in last 15 years is increasing access: models like iTunes, Amazon’s Kindle, and Netflix have been able to successfully provide a legitimate and convenient alternative to infringing filesharing.

This article was originally published at The Conversation. Read the original article.