Hard News by Russell Brown


Disrupting the Television

This week on Media7, we're looking at the curious case of Fyx, the retail ISP launched last week by Maxnet with a new pricing model and -- this is what got everyone chattering -- a "global mode" whose purpose, although the company was wary of saying as much, was to let customers defeat region-blocking on offshore video-on-demand services.

In effect, it opened up a world of film and television. Customers would be able to use (and where applicable, pay money for) Netflix, Hulu, BBC iPlayer and other services. A growing number of more sophisticated New Zealand users have already been buying such an unblocking service from third-party VPN services, attracted by the range of programming and friendly subscription pricing. But selling the service already baked into an ISP subscription seemed to represent a major step-change.

But unexpectedly, four days ago, Fyx emailed its brand-new customers:

We are very sorry to inform you that we have had to make the very difficult decision to withdraw our popular 'global mode' service from the market for the time being.

We sincerely to you for putting this halt to 'global mode,' which will happen tonight at 11.59pm.   While legal opinions have supported FYX's global mode under New Zealand law, it is important for us to cease operation of our Global Mode for now due to increased pressure.

If you do wish to continue with FYX, we would like to offer you a new, lesser price of $30.30 per month, with $0.30 per GB for data. We will also backdate this price to when you first signed up.

If you would like to leave the FYX service due to the discontinuation of Global Mode, we completely understand. We will refund you for any service you have used of ours to date, and if you have had to break any contracts to move to our service, we will refund you those costs with sufficient evidence.   FYX is committed to open access and will continue to work for the benefit of New Zealand consumers.

Yours sincerely,

Andrew Schick and the FYX team

As Tuanz CEO Paul Brislen explained in a very useful blog post on the Tuanz website, it's not clear why Fyx abandoned its previous legal position so quickly.

Chris Keall reported on the NBR website that Chapman Tripp principal Justin Graham had expressed the view that the "global mode" service did not breach New Zealand copyright law's established position:

... namely that geographical restrictions are not consumer-friendly and New Zealand consumers should be able to access copyright content in a competitive and cost-effective environment.

He argues, basically, using a VPN to defeat regional blocks on the internet is legal under our law for the same reason that parallel importing and region-free DVDs are legal here.

The authors of another useful post on the Australian media forum The Conversation were more cautious, concluding that: "The test for any legal question is ultimately in what the relevant court says."

Next question: who spooked Fyx? Not us, say Sky and TVNZ, who might have been expected to object, given that they have paid rights owners for exclusive licences to many of the programmes. We're waiting on a statement from Fyx, which may reveal more.

Even if local broadcasters didn't formally object, it can't be over-emphasised how much this kind of service could break the existing film and TV distribution system. Consumer piracy has already forced New Zealand broadcasters towards "day-and-date" screenings -- Game of Thrones, the internet's most file-shared show, screens here only a couple of weeks after it does in the US. (Pity the poor British, who are only just getting the last series of True Blood.)

But in the zeitgeisty world of internet TV fandom, two weeks is a hell of a long time to look away from spoilers. And, increasingly, to watch those shows, it's necessary to pay Sky TV a lot of money (for things you may not wish to buy) to watch them on Soho. The broadcasters' exclusive rights deals also mean that new VOD entrants like QuickFlix have bugger-all to offer.

But changing that isn't easy. Rights within programmes -- typically, for music used or archive footage -- are negotiated on a by-territory basis. Rights holders and collectors would have to change their models, probably to their considerable cost, to go global. For programme makers, clearing rights for new territories can be very expensive.

That's one reason that many BBC music documentaries aren't sold to other territories: the Beeb has its own flat-rate deal on music rights, but the "cost of sale" of obtaining those rights in other territories can be prohibitive. Our own Nick Dwyer actually lost money recently selling his Making Tracks series into Australia. Publishers, who negotiate on behalf of composers, have programme makers by the goolies. And publishing income is what really matters in the music industry now that people increasingly aren't buying music at retail.

Ironically, the music industry itself is getting through this. Apple has done the slog of negotiating local deals for the iTunes Store, while non-mainstream digital stores (Juno, Beatport, Bandcamp) now basically operate without territorial restrictions. Amazon MP3 and eMusic, on the other hand, have just picked a handful of territories where it's worth their while to set up.

Complicated, isn't it? And all you want to do is watch Game of Thrones within 24 hours of first broadcast.

We'll be discussing this further with Paul Brislen and the head of the local television industry body ThinkTV on the show.


Also on the show: our very own Jackson Perry, the keeper of Capture, will be discussing the rights and wrongs of news services grabbing and publishing photographs from the internet and social media in particular. He recently wrote about his own experience here. He'll be joined by the the editor-in-chief of APN Digital, Jeremy Rees. I think it's very commendable of the Herald to come on and discuss the issue, and I'm grateful to Tim Murphy for pursuing it on our behalf.


We'll also have some new numbers on online music sales in New Zealand -- which are growing at a much greater rate than they are across the Tasman.

So it's a copyright-tastic show. If you'd like to join us for tomorrow evening's Media7 recording, we'll need you to come to the Victoria Street entrance of TVNZ some time between 5.15 and 5.40pm. As ever, try and drop me an email to let me know you're coming.

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