Providers who defied TV company demands to switch off their VPN services have caved in following legal threats. CallPlus and Bypass Network Services faced action from media giants including Sky and TVNZ for allowing their customers to access geo-restricted content. Their 'Global Mode' services will be terminated by September 1.

Unlocking geo-restricted digital content is an activity carried out by millions every day, but the practice is frowned upon by entertainment industry companies.

The large amounts of time, effort and financial planning that go into complex licensing agreements can be undone in an instant by a user of a VPN or ‘smart’ DNS service, opening up services like Netflix and breaking down barriers to U.S-based products such as Hulu.

In April, media companies SKY, TVNZ, Lightbox and MediaWorks told several Kiwi ISPs that if they didn’t stop providing geo-unblocking services to their subscribers, legal action wouldn’t be far ahead.

Within days and following claims of breaches of the Copyright Act, Unlimited Internet pulled its VPN service. However, CallPlus and Bypass Network Services stood firm and stated that they weren’t going to be bullied.

Now, just two months later, both providers have caved in to the demands of the media companies. The news was revealed in the briefest of announcements posted to the NZX by Sky TV this morning.

“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,” the statement reads.

The news will come as a blow to users of the ‘Global Mode’ service who will now have to find alternatives if they wish to continue accessing geo-locked content. While that will be extremely easy, Global Mode was a free product so it’s likely that additional costs could be on the horizon.

InternetNZ, the non-profit group that oversees the Internet in New Zealand, says it is “deeply disappointed” by the news.

“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,” said InternetNZ Chief Executive Jordan Carter.

“Withdrawing the service and settling before court seems a worse outcome for all concerned. The media companies have said that they wanted to clarify their own legal rights over content – a settlement doesn’t achieve this, and leaves us all none the wiser.”

Noting that both Internet users and innovation have “taken a back seat to entrenched old media interests”, the InternetNZ chief called for a revised look at local copyright legislation.

“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.”

Those looking for the all-important details on why the companies backed down will be disappointed. The details of the settlement between the providers and entertainment companies are confidential. Submissions will be made to the court but they will not be for public consumption.