Internet piracy code stalls on costs

news Three months after the deadline set by Communications Minister Malcolm Turnbull, the telecommunications and content industries are still deadlocked on who will pay for the cost of administering their co-developed industry code to deal with Internet piracy.

In mid-December last year, Turnbull and Attorney-General George Brandis wrote to the telecommunications industry giving it a mere 120 days to agree on a process for dealing with Internet piracy or face a Government-mandated system. The industry complied, filing an Industry Code with the Australian Communications and Media Authority on 8 April this year.

Many onlookers assumed that this would be the end of the story — the ACMA would, as it typically does, register the industry code and gradually, Australian Internet pirates would start receiving warning letters about downloading material online, as well as eventually having their details handed over to the content industry.

However, in late May, responding to questions by Greens Senator Scott Ludlam in the Senate Estimates process, the ACMA admitted there was still significant internal disagreement between the two industries over the code.

“… it’s really only when a landing on those matters is reached that we’ll be in a position to make a proper assessment of the code, how it works, its costs and benefits,” ACMA senior bureaucrat Jennifer McNeill told the Senate’s Environment and Communications Committee.

Today the Communications Alliance revealed that the two industries were still deadlocked on the matter.

“Communications Alliance, internet service providers (ISPs) and rights holders have cooperatively written a copyright notice scheme code (which does not includes sanctions such as suspension of consumers’ accounts) and have submitted it to the industry regulator, the ACMA. Negotiations are ongoing between the parties to finalise a commercial agreement, including cost-sharing, that will allow the Code and scheme to begin operating,” the telco representative group said in a statement.

“Extensive negotiations over cost-sharing have not yet resulted in an agreement, so ISPs and rights holders have jointly commissioned work by an independent expert to look at the costs that ISPs will incur to process Infringement Notices.”

In its statement, the group pushed its view that costs for the arrangement should be borne by the content industry.

“The widespread pattern of online infringement in Australia, indicated by the research, underlines the fact that rights holders – as indicated by the Government – should be ready to pay the majority of the costs of operating a copyright notice scheme, given the enormous financial upside that will flow to rights holders from changing the behaviour of online infringers,” Comms Alliance chief John Stanton said.

Determining who should pay for administering any kind of scheme has long been a factor blocking resolution of talks between the two industries on the issue of Internet piracy; it was one factor which caused ongoing talks between the pair hosted by the Attorney-General’s Department over the past few years to stall.

opinion/analysis
Like many people, I had assumed that the Communications Alliance and the content industry had more or less nailed down the Internet piracy industry code when the document was submitted to the ACMA in April for approval.

That is, after all, what normally happens in a self-regulatory system of the style that Australia’s telecommunications industry largely operates in. The industry comes to an agreement on an issue and asks the regulator to tick a few boxes and formalise the deal. If there are bigger issues which are unable to be resolved by the industry itself, then the big boys — typically the ACCC or the Government of the day — steps in.

However, what we are seeing here is that the Comms Alliance submitted an industry code to the ACMA which was still the subject of substantial disagreement — and worse, that disagreement is years and years old and heavily entrenched, stemming from the historical insistence by the content industry that ISPs must bear the cost of warning Internet users who download the content industry’s content.

The ACMA was obviously unable to ratify the code as submitted and sent it back to the drawing board.

Now, in general the Communications Alliance does a good job in its self-regulatory role. It’s a necessary and good organisation, and run well by Stanton. However, I think what we’re seeing here is what I suspected all along — that in allowing itself to be forced by the Government into taking on the role of policing Internet piracy in this country, the group overstepped its role.

Now, perhaps all this fuss is over nothing. Perhaps the content and telco industries will come to an amicable agreement over Internet piracy costs over the next few weeks, stemming from the report they have commissioned by an independent expert. The alternative, after all, is that Turnbull and Brandis finally lose patience with both sides and step in to either force an agreement or write their own compulsory industry code. And probably neither side wants that.

Of course, nothing in either alternative here is good for consumers, who are losing out entirely from this whole deal. After this deal is eventually passed, consumers will receive warning notices for pirating content online, will eventually have their details handed over to rights holders so that legal threats can be delivered, and will pay higher fees to subsidise the administration of the code.

Turnbull’s own research published this morning acknowledges that many Internet pirates would turn legal if the right content was made available in a timely, affordable and convenient manner. It feels like that message has gotten lost in this whole milleiu.