The country's third-largest internet provider, Slingshot, is likely to be on a collision course with Hollywood after launching the Global Mode service, the Telecommunications Users Association says.

The service disguises customers' internet protocol addresses and can make it appear as if customers live in the United States or Britain. That means Slingshot customers can access online services that are not available in New Zealand, such as online television service Netflix and the US shopfronts of online stores such as iTunes.

Slingshot launched Global Mode as a free option for its broadband customers, promoting it as a service that they would use if they were hosting overseas visitors.

But general manager Scott Page acknowledged the company was not policing how customers used Global Mode, saying that "would be seen as a breach of privacy". That means there would be nothing in practice to prevent Slingshot's Kiwi customers using the feature to circumvent geo-blocking restrictions.

Telecommunications Users Association chief executive Paul Brislen said it was probably only a matter of time before Hollywood interests responded.

Online entertainment providers and retailers often had legal or commercial motivations for blocking the availability of online services outside the US, he said.

Shortland Chambers lawyer Kevin Glover, an expert in intellectual property law, said the legal status of anti-geo-blocking services such as Global Mode had never been tested in New Zealand.

But Brislen expected Slingshot would see some "push back" from international rights holders, particularly ones that had separately sold New Zealand rights to their content.

"If they are going to protect their copyright, then they are bound to do something. If they don't, that's a precedent that they would not want around the world."

Page said Slingshot had not received any objections to Global Mode as of yesterday, but Brislen forecast it would probably take time before pressure was brought to bear.

The New Zealand branch of the US Motion Picture Association, the Federation Against Copyright Theft, which represents major Hollywood studios, did not respond to calls for comment.

Glover said consumers who had fibbed about their country of residence when subscribing to a service such as Netflix could be guilty of infringing copyright.

Slingshot would not be guilty of a copyright offence, however, even if it were deemed to have encouraged that as, unlike in the US, encouraging copyright infringement was not illegal in New Zealand, he said. An issue would arise only if Slingshot was considered to have actively encouraged customers to breach contracts, he said.

Page said Slingshot's terms and conditions stated customers should use Global Mode only for "legitimate purposes". He added that Slingshot did not believe geo-blocking was right as it "flew in the face of the global internet".

COMBATING DOWNLOAD PRICE GOUGING

Auckland data centre operator Maxnet launched a consumer-oriented internet provider, Fyx, in May last year which let its subscribers mask their country of residence using a similar service also called Global Mode.

Unlike Slingshot, Fyx promoted the service as one that could legitimately be used by New Zealand residents.

Maxnet axed Fyx's "global mode" after just a few days during negotiations over the $9.5 million sale of its business to Australian-listed telecommunications firm Vocus.

Australian parliamentarians are understood to be considering recommending a law change that would clear up legal confusion in Australia by making it explicitly allowable for internet providers to offer services such as Slingshot's Global Mode.

The idea has been canvassed during a year-long "price gouging" inquiry by the House of Representatives standing committee on infrastructure and communications as a way of lowering pricing.

The committee has been examining why Australians typically pay over 50 per cent more than Americans for many downloadable goods, such as games, movies, music and software.

Paul Brislen, chief executive of the Telecommunications Users Association, said the "ultimate answer" was for the US companies to do away with geo-blocking restrictions.

Contact Tom Pullar-Strecker

Technology reporter

Email: tom.pullar-strecker@dompost.co.nz

Twitter: @PullarStrecker