D-Day for global mode: BNSL responds to Buddle Findlay with a flame-thrower

LATEST: D-Day for global mode: CallPlus rejects cease-and-desist letter

It's D-Day for global mode — and there have been a couple of major developments already.

CallPlus, several small ISPs and global mode service provider Bypass Network Services Ltd (BNSL) have until 5pm today to respond to a letter from Buddle Findlay on behalf of its clients Sky TV, Spark (owner of Lightbox), MediaWorks and TVNZ (read the letter here).

Sky TV et al say global mode — which makes it easy to access offshore content services like Netflix US and BBC iPlayer usually blocked to New Zealanders — is a breach of the Copyright Act (1994). They want BNSL to cease providing global mode to CallPlus and others by 5pm, and to publicly acknowledge it is unlawful. Similarly, ISPs have been given until the close of business today to stop using global mode.

BNSL has now published its response to Buddle Findlay, and it's a no-holds-barred flame-thrower response. It reads (with NBR's emphasis):

We have your letter of 2 April.

To be honest we were shocked to get it. We are a tiny company trying to innovate in New Zealand. To receive without warning a grossly threatening legal letter like that from four of the largest companies in New Zealand is not something we are used to. It smacks of bullying to be honest, especially since your letter doesn’t actually say why you think we are breaching copyright.

Your letter gets pretty close to the speculative invoicing type letters that lawyers for copyright owners sometimes send in the US “pay up or shutdown or else were are going to sue you”! Not fair.

We have been providing the Global Mode® facility for 2 years. In all that time, none of your Big Media Gang have ever written to us. We assumed they were OK with Global Mode and we continued to spend money innovating the facility and providing innovative NZ ISPs with a service that their customers were telling them they wanted – a service that lets people pay for content rather than pirate it.

We did that on our understanding that geo-unblocking to allow people to digitally import content purchased overseas is perfectly legal. If you say it is not, then we are going to need a lot more detail from you to understand why. Simply sending us a threatening letter, as frightening as that may be, does not get us there and is not a fair reason for us to shut down our whole business.

Patrick Jordan-Smith, CEO

Counter-attack with ComCom complaint
Earlier, BNSL told NBR it planned a complaint to the Commerce Commission over what it sees as Sky TV et al's anti-competitive behaviour, and attempt to stifle innovation.

CEO Patrick Jordan Smith says it is still committed to that path. He says a formal letter to the regulator is being prepared and he expects BSNL's lawyers to deliver it to the Commission shortly.

Meanwhile, another of the small ISPs named in the Buddle Findaly letter has folded.

Mynx International director John Humphrey (ex Pacific Fibre and Telecom) says his company received legal advice global mode does not break the Copyright Act (1994). 

But it simply does not have the resources for a protracted fight with Sky TV, Spark, MediaWorks and Sky TV.

Mynx is standing firm on one point: it will not publicly state global mode is unlawful (read Mynx's full letter here).

Taranaki-based Primo Wireless said this morning it will turn also turn off global mode.

And rural broadband specialist Lightwire says it will have no choice but to follow suit if nothing changes by 5pm.

Those yet to say how they will respond to the Buddle Findlay letter are Singapore-owned UFB specialist MyRepublic (which uses a global mode technology developed in house, unlike the others named who use BNSL), Evolution Wireless, Gisborne Net, Netspeed, Unlimited Internet, EOL and CallPlus.

All eyes are on CallPlus Group, the only one of the global mode ISPs of any scale.

On Monday, CallPlus (which includes Slingshot, Orcon and Flip) was sold to listed Australian company M2 for $250 million.

The $A2.04 billion marketp cap M2 says CallPlus will be run as a self-contained division. So far, neither the new owner or CallPlus CEO Mark Callander (who is staying on) have said how they will respond to Buddle Findlay — or whether it will mount a joint defence with the tiny BNSL.

Consumer, InternetNZ back global mode
Consumer has backed companies offering global mode, with its chief executive Sue Chetwin saying Sky TV et al are waging an "attack on consumer choice" as they try to defend territory-based distribution agreements.

“Consumers will always look for the best deal, and if that isn’t offered by a New Zealand company then they shouldn’t be stopped from looking overseas for a better deal.”

Lowndes Jordan partner Rick Shera, who has carried out work for CallPlus, earlier told NBR that accessing Netflix from New Zealand was akin to parallel importing, and that Global Mode is in accordance with the Fair Trading Act, Copyright Act and other laws. However, a neutral lawyer consulted by NBR is leaning in a different direction (more on that shortly). One thing that lawyers on all sides agree on is that there needs to be a test case for the ten-year-old legislation.

Global mode? Maybe. Shut-down threat? Not on
InternetNZ CEO Jordon Carter agrees. His organisation has not taken a stance on the legality of global mode, but it has taken a strong line that BNSL, CallPlus etc should not be told to "shut up shop" by 5pm today.

The legal questions need to be answered in court, Mr Carter says. Sky et al should follow that path rather than making thereats.

"Teaming up together and using their considerable influence and resources to try and intimidate smaller players is not an inspiring way to try and win business. Threatening to sue if you don’t comply with unreasonable demands is also not an inspiring way to win business," the IntenetNZ boss says.

"InternetNZ does not believe that the ISPs should switch off Global Mode, because the allegation that the service, or the use and marketing of it, is breaking the law is just that: an allegation.

"The legal questions around Global Mode are yet to be answered by a court. Until they are, any demands for shutting down or public statements prostrating oneself should be treated with the contempt they deserve."

ckeall@nbr.co.nz

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• The BNSL crew will answer readers' questons in an Ask Me Anything session from around 11am tomorrow.
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