A leading Australian Internet service provider has pulled out of negotiations to create a warning notice scheme aimed at reducing online piracy. iiNet, the ISP that was sued by Hollywood after refusing to help chase down alleged infringers, said that it can't make any progress with righthsolders if they don't make their content freely available at a reasonable price. The ISP adds that holding extra data on customers' habits is inappropriate and not their responsibility.

In many countries around the world the entertainment industries are attempting to engage Internet service providers in their battle against online piracy.

The music and movie industries have persuaded some to begin sending warning notifications to subscribers which advise them that their infringing activities have been monitored. In addition to a few less high-profile projects, large scale schemes are underway in France, New Zealand and a similar operation is about to launch in the United States.

In other countries negotiations have been less fruitful. Australia became a notable failure after discussions on infringement developed into parallel legal action against an ISP. The Hollywood-affiliated video industry there thought it could convince a court to hold the ISP iiNet responsible for the activities of alleged infringers. It couldn’t.

Despite the legal action, negotiations between rightsholders and ISPs, pushed along by the Attorney General’s Department, have continued in the hope that an agreement can still be reached. But for iiNet, it’s the end of the road.

Chief Regulatory Officer at iiNet Steve Dalby said his company has pulled out of the talks and lays the blame firmly at the feet of the entertainment companies.

“The conversation has failed to move on. The rights holders are still insisting ISP’s should perform work on their behalf instead of addressing what we have always said is the root cause of the infringements – the limited accessibility to desirable content and the discriminatory and high cost of content in Australia. Infringements are a symptom – access is the problem,” he said.

Dalby is clear – the industry’s problems are being driven by the mechanics of their own business model. If piracy is to be reduced then work has to be done to bring timely and reasonably-priced content to online consumers. iiNet, he says, is still happy to work with the industry to make that happen.

“iiNet has repeatedly and publicly called on the studios and content owners to enter into commercial discussions for the digital distribution of their desirable content.

“The law as it stands has given clarity; this whole idea that people will wait 12-18 months; consumers are just not buying it. You’ve got to address what is now a broken model from last century,” he said, quoting from iiNet’s court battle with the studios.

But while the lack of timely and reasonably-priced content is a serious flaw, that is only part of the problem.

Any notice scheme requires ISPs to store data which ties their customers to alleged infringements which of course has privacy implications. Over in the United States there have been concerns that the information gathered as part of “six strikes” could be used for more than just warnings. Sure enough, last week it was revealed that the data voluntarily retained by ISPs could end up being used to file lawsuits against customers.

According to Dalby, this will not happen at iiNet.

“iiNet won’t support any scheme that forces ISPs to retain data in order to allow for the tracking of customer behaviour and the status of any alleged infringements against them. Collecting and retaining additional customer data at this level is inappropriate, expensive and most importantly, not our responsibility,” Dalby says.

And this – the issue of responsibility – rounds off iiNet’s comprehensive rejection and exit from the talks.

“It’s not iiNet’s job to play online police. The High Court spoke loud and clear in their verdict when they ruled categorically that ISPs have no obligation to protect the rights of third parties, and we’re not prepared to harass our customers when the industry has no clear obligation to do so,” Dalby states.

It will be a serious concern, particularly to the Hollywood studios, that not only has it proven impossible to force iiNet to comply through the courts, but that negotiation on the issue of piracy has failed too. It is now up to rightsholders to make the next move.

“Hollywood, you know where we are. It’s time to change the tune,” Dalby concludes.