New Zealand's Parliament Commerce Committee has reported back on the Copyright Infringing File Sharing Bill and it will now move to parliament for its second reading. The controversial 3 strikes provision is still included, but will now only be implemented if a letter writing scheme to educate citizens fails, and people continue to share illicit files during the next two years.

Following a review, New Zealand’s Commerce Select Committee has recommended changes to the Copyright (infringing File Sharing) Amendment Bill, the proposed legislation aimed squarely at reducing instances of online infringement.

The Bill, which unanimously passed its first reading in Parliament in April and repeals section 92A of the Copyright Act, will put in place a 3 strikes-style regime, whereby Internet service providers will initially be required to send warning letters to alleged infringers at the behest of rights holders.

The Copyright Tribunal, which will be empowered to rule on cases of alleged infringement, will be given control over a streamlined, lost-cost system for dealing with cases and will be empowered to hand down fines up to $15,000 ($11,500 USD).

In a statement, Commerce Minister Simon Power welcomed the changes to the Bill.

“The Commerce Select Committee’s recommended changes to the bill will help it be more workable and effective,” said Mr Power.

The power for District Courts to disconnect Internet users for a period of up to 6 months remains in the Bill, but the Committee is recommending that the measure is not activated unless citizens fail to respond to the warning letters sent out by rightsholders and ISPs.

“This will enable the Government to work with stakeholders to monitor and review the situation and determine when a further deterrent may be needed,” notes Powers’ office.

That review is expected to come late 2012, which gives file-sharers around 2 years to mend their ways. Failure to do so would hand the decision to implement disconnections directly to Minister Power, who will be able to do so without further discussion.

“I am pleased that the Committee has recommended that account suspension not be introduced now,” says InternetNZ Chief Executive Vikram Kumar.

“We would have preferred no remedy of account suspension being included in the legislation. The decision to leave it in but not commence its application is a second best option, but is far better than the current law, and better than the initial draft,” he added.

However, Kumar was still critical of elements of the Bill, noting that it “still leaves account holders entirely responsible for another person’s use of their account even where they have no control over them.”

While critics remain skeptical that the warnings letters will have the desired effect, some feel that infringements could be reduced significantly.

“If done right, the Copyright (Infringing File Sharing) Amendment Bill will go a long way towards reducing the level of online copyright infringement, as research has shown that seven in ten people will stop upon receiving the first notice from their ISP,” said NZFACT executive director Tony Eaton.

In common with the UK, warning letters will not be sent out to users of cellular networks in the first instance and in New Zealand not until August 2013.

“This position is likely to change in the near future as technology advances and mobile broadband prices go down,” said Mr Power.

An additional recommendation by the government is to enable the District Court to refuse to implement an Internet disconnection “where it would be manifestly unjust to the account holder” to do so.