Note by Delimiter: FYX has already backed down from its plans to launch a so-called “global mode” to New Zealanders. However, we thought this issue needed further debating; hence the publication of this detailed article on the copyright situation.
This article is by Bruce Arnold, a law lecturer, and Karl Schaffarczyk, a law student, both at the University of Canberra. It was first published on The Conversation and is re-published here with permission.
analysis The launch of a new internet service provider (ISP) in New Zealand isn’t something that would normally be worth mentioning. But the launch of FYX (pronounced “fix”) by established online services provider Maxnet has already made a splash in New Zealand because FYX offers “global mode” internet access.
This is designed to avoid “geoblocking” – the restriction of content to the country or region of origin – as implemented in services such as ABC iView, BBC iPlayer, Netflix, Apple’s United States iTunes store and many others.
While “global mode” is an exciting development for consumers, the legality of such circumvention services is unclear. The likelihood of similar services appearing in Australia will depend on the success of FYX in New Zealand and the compatibility of such services with Australian law.
International copyright law is founded on what critics, such as communications researcher Herbert Schiller, damn as “information colonialism”. Markets such as Australia and New Zealand, pay higher prices than the US domestic market for videos, software, music, books and other content. Consumers in these markets are often subjected to long delays before the content is available locally. This is reinforced by technological mechanisms that inhibit the free flow of copyright material across national borders.
Most people are familiar with technological protection measures (TPM) in the form of region coding on DVDs. Those TPMs try to prevent the disc being copied and try to prevent playback in a place other than the market in which the disc was sold. Region coding allows Hollywood to segment global markets, releasing movies to one market at a time, maximising the effect of promotional campaigns, for instance. A second purpose of region coding is to prevent the movement of DVDs between countries with differently priced DVDs. The TPMs claw back Australian law’s support for consumers through parallel import measures. That is, it’s legal to buy DVDs, books and other material direct from another region for personal rather than commercial use. Geoblocking is this offline market segmentation continued into the online world.
FYX was being promoted as a solution for New Zealand consumers wishing to access geoblocked content ahead of local release dates. Promotion of the ISP in that way is interesting because it poses questions about the nature of online copyright law – something that is global rather than parochial – and follows recent decisions by Australian courts about the liability of ISPs for copyright infringement by their end-users.
In the case of Roadshow vs iiNet in April, the High Court found iiNet had not authorised its customers to breach copyright (by downloading films, TV programs and music through BitTorrent). Australian law provides broad immunity – the “safe harbour” – for internet providers whose customers have infringed copyright. This immunity does not apply where the provider has authorised the infringement. Because the main – but, importantly, not sole – feature of FYX is the circumvention of geoblocking, FYX will face questions about whether it would fail Australian legal tests of authorisation.
In NRL vs Optus – likely to be appealed to the High Court – the Federal Court decided Optus was at least partially responsible for infringing the copyright of broadcasts which it was recording for consumers. In Australia, FYX or a similar service might also be considered responsible for enabling breaches of copyright. But according to NZ intellectual property law commentator Justin Graham, FYX is in the clear under NZ law:
“It [the bypassing of geographical restrictions] is consistent with New Zealand’s policy on intellectual property, parallel importing and geographical restrictions”.
Australian law and New Zealand law both allow the bypassing of region coding on DVDs. But the application of these laws to geoblocking is yet to be tested. Is FYX in breach of New Zealand or Australian law? The test for any legal question is ultimately in what the relevant court says.
FYX appears to be offering a service that enables what many consumers would consider to be a victimless act, but there is damage to local rights holders who may have paid a high price for the rights to broadcast that content. Prior to FYX, a local rights holder could only try to enforce their rights against individuals who were downloading the copyright content. In providing a commercial service and profiting from the actions of its customers, FYX is now a convenient target for local rights holders.
FYX will, if challenged, presumably argue it is not breaking any law. Its customers may be infringing the rights of movie studios, broadcasters and other rights owners but FYX is not responsible for what those consumers do. That argument would be consistent with iiNet’s persuasive claims in the High Court. But because it is promoted specifically as a service which circumvents geoblocks FYX will have a hard time distancing itself from the activities of the consumer and claiming to be a mere provider of technology and internet access.
Due to the commercial nature of FYX, we will likely see copyright holders claim compensation from FYX; after all, the content is what will attract their subscribers. One thing is certain: whenever copyright holders are threatened by an advance in technology there is rhetoric about disaster, crime and the need for government action.
Some 30 years ago the then Motion Picture Association of America president, Jack Valenti, described the VCR as the movie industry equivalent of the Boston Strangler. Reports of the death of movies – or of broadcast television and the movie studios – seem to have been premature. We should think carefully about the inevitable alarmist claims regarding FYX and be wary about movie industry calls for new laws that protect their interests at the expense of Australian consumers.
This article was originally published at The Conversation. Read the original article.
If it’s decided that this is indeed illegal, it will be an unfortunate precedent.
The Internet was built on a number of principles that allow for uses like IP tunnelling (try searching for “IP tunnel RFC”, but it has not concept of “geolocation.”
Geolocation is instead an add-on service by many vendors, and it’s best-effort; none of them can guarantee where you are physically, because it’s impossible (although their marketing materials usually avoid mentioning this too loudly). It’s also not consistent between providers.
I understand that copyright law has jurisdiction, but as I understand it, it’s expressed in terms of physical prescence. Extending it by giving the power to determine where you are for legal purposes to a group of arbitrary companies without any oversight or review is not only cutting against the architecture of the Internet, it’s also pretty frightening.
Why is so much focus on software geo-pricing.. pricing discrimination is very common in other industries.
– Pensioner/Student price for various services (it actually increases revenues for businesses)
– Airline ticket pricing (minimum stay requirements, etc)
– Prescription drug pricing (geo-pricing, on a MUCH more important product)
The reality is that sellers price service/goods based on both cost of production and value gained by the customer.
Even for digitally distributed software, cost of production is not the same. Marketing costs in Australia is usually higher on a per-purchase basis. Regulatory compliance requirements would be higher also on a per-purchase basis (games classification, regionalization efforts, etc). For some software, the customer has expectation on a local support personnel, this costs more too.
Value gained for customer is not the same either. Value of 1 hour of entertainment in Australia is higher than the USA (thanks to our higher disposable incomes). Does it not surprise you that vendors prices entertainment software higher when alternative entertainment options in Oz are also more expensive (concerts, etc). Simple economics of competition
agreed…you can also add clothes, food, utilities, water, shelter etc to the geo-pricing/availability phenomena
While I agree geo-pricing IRL is somewhat of a different issue, as there are factors as you have stated which determine it, geo-pricing of digital content is a different matter.
Yes, the digital content is marketed and targeted in a specific country and yes, that country may have different levels of “value”- but with the internet allowing distribution for a tiny amount of expense compared to physical distribution and for marketing to reach the entire connected world from a targeted location, I’m sorry but I can’t condone or agree with the attitude of “but it’s unfair to the rights holder” in this circumstance.
Saying you NEED to sell your content for more, because Australians have more money and therefore demand will be higher is the equivalent of saying I have to sell my apples for more, because you’re eating too many of them- this doesn’t hold up in the world connected digitally, because demand CAN’T outstrip supply; technically it can if servers can’t handle a load and there is an argument for targeted geo-blocking to allow efficient streaming to target areas, but this isn’t the argument used. The argument comes down to, I have to sell it for more, because it makes me more profit. And how is that fair?
It is perfectly fair to charge a higher price what is not perfectly fair to restrict competition by not allowing retailers and suppliers to sell into other markets. They whinge and whinge for free trade yet still want to restrict trade when it suits them. The only real way to solve the issue is real competition laws at an international level. Laws that state that no-one selling goods or services be they manufacture or supplier can dictate who someone further down the supply chain can sell to.
Ah, SMEMatt, you can always simplify my gobbledegook :)
True, they’re perfectly within their rights to charge more, but you’re absolutely right it’s the fact that 3rd parties therefore can’t that is the problem.
Indeed, companies like Hulu only streaming rights for the US and Japan-not NZ (though they own both hulu.com.au and hulu.co.nz) and are only licensed to stream in those countries-FYX was providing unauthorised access.
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