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LATEST: Survey reveals how many hit by Global Mode decision; measures backlash against Sky TV, Spark

The "Global Mode" case has been settled in favour of the big media companies.

A notice posted this morning to the NZX by Sky TV reads, in full: "The legal proceedings against “Global Mode” service providers have been settled. As a result, from 1 September 2015, the “Global Mode” service will not be available to any person for use in New Zealand." [See expanded statement by Sky TV to media end of article.]

In return for CallPlus dropping its service, the media companies have dropped their case.

Sky TV, TVNZ, MediaWorks and Lightbox owner Spark brought a High Court Action against the CallPlus (owner of Orcon and Slingshot) over their Global Mode service, available to all customers of its ISP services, which made it easier to access BBC iPlayer, Netflix US and other offshore content services usually geo-blocked to New Zealanders. The action also covered Bypass Network Services Ltd (BNSL), the tiny Auckland company that developed the Global Mode technology used by Orcon and Slingshot (plus a half-dozen smaller ISPs who threw in the towel as soon as the legal action was brought).

The big media companies claimed the service breached the Copyright Act and the Fair Trading Act.

Late yesterday on Geekzone, several Slingshot and Orcon customers were complaining they could no longer access Global Mode, and reference to Global Mode had been removed from their websites.

Neither CallPlus nor BNSL responded to NBR's queries yesterday. Previously, the companies had pledged to fight the action, arguing that the big media companies were anti-innovation and attempting to preserve old-world distribution monopolies rather than uphold copyright. They said subscribing to offshore content services was no different from parallel importing a physical product.

The case was still pending as the settlement was announced this morning. The big media companies won a bid for an urgent hearing but only in the relative terms of the case being heard in weeks or months rather than years.

Why settle?

With all parties bound by non-disclosure, NBR can only speculate on why CallPlus and BNSL folded. It could be that, like the smaller ISPs before them, they thought they were right but did not have the stomach or financial wherewithal for an extended fight.

A complicating factor has been CallPlus' sale to Australian company M2.

M2 initially indicated it supported Global Mode, but I do wonder if its loss in the Dallas Buyers' Club piracy case across the ditch sapped its will for a fight here (M2 has decided not to appeal that decision).

NBR understands negative feedback from a legal insurer could also be a factor.

BNSL has previously indicated it would struggle to pay for a prolonged fight without CallPlus in its corner (the Global Mode company also told NBR it planned a complaint about Sky TV to the Commerce Commission; however, this morning ComCom spokesman Christian Bonnevie said, "No, there’s nothing in our system. If they had called or written it would have been logged.")

Won't stem the tide

My take: this is a victory for the old media companies but really only a moral one. Global Mode was unique worldwide in that it covered every CallPlus and Slingshot customer, without them having to do anything but there are still lots of easy ways for people to access geo-blocked sites. To be fair, the traditional players are now offering some carrots along with the sticks; such as Sky TV offering same-day screenings of hit shows; making A-list content like Game of Thrones and now True Detective available through Neon, and offering online-only, no-contract options for some sports via Fanpass.co.nz. That's the real way to compete for next-generation viewers: with convenience and content - especially unique content, which usually means local content.

"It's more of a medium-term issue [for Sky] that they've held back rather than one that's necessarily a massive one right now," said James Lindsay, who helps manage $400 million for Nikko Asset Management. "You've seen Sky subscriptions being relatively flat to slightly weak, so that is obviously showing that the market is changing."

And perversely, had they lost, at least the big media companies would have had a legal decision confirming what everybody already knows: that in the age of streaming video services, there's no such thing as an exclusive local license any more – and that the price Sky TV and others pay for local rights should reflect that.

Another factor: now that Sky TV, MediaWorks and TVNZ have dispatched Global Mode, will they turn their attention to how easy Spark and other ISPs make it to access Netflix US and other offshore services through local caching? Are they fine with Spark saying it has no interest whether its customers are using VPNs (often used for accessing geo-blocked content)?

Unanswered questions

InternetNZ CEO Jordan Carter says he's "deeply disappointed" the case had been settled.

"Global Mode was a great example of Internet-based innovation that challenged traditional content distribution models. It was by no means clear that the service was illegal, and we were keen to see the matter go before the courts to provide users and the industry with clarity," he said.

"There remains a number of questions that will now go unanswered due to this withdrawal. Internet users and innovation have taken a back seat to entrenched old media interests.

"This outcome makes it ever more important that we review New Zealand copyright law, to ensure that the interests of consumers and creators are appropriately balanced."

The government agrees a copyright law review is necessary, but says it's on hold until TPP talks wrap up.

UPDATE: Sky TV's expanded statement

CallPlus (including Slingshot, Orcon and Flip) and ByPass Network Services today announced the Global Mode service will be withdrawn in New Zealand on 1 September 2015.



The removal of Global Mode forms part of a settlement which sees SKY, TVNZ, Lightbox and MediaWorks drop the legal action against CallPlus and ByPass.



Further details of the settlement are confidential and will be the subject of a formal court order.



As a term of settlement, the parties have agreed that they will not provide additional information about this matter.

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