Legal flaw in Sky TV's action against ISPs

Sky TV has written* to the major ISPs asking that they block certain websites because they carry materials that Sky says it has the rights to, locally.

It's drafted a note to take to court asking it for the power to do this.

The four ISPs named (Spark, Vodafone, Vocus and 2degrees) cover the vast bulk of New Zealand's user base so any move to block access to these sites for those customers would in effect be a blanket ban on accessing those sites for the whole country.

Sky says this isn't censorship but there's really no other way to describe it.

The law, as it stands, does not allow for this. The section of the Copyright Act that Sky invokes (Section 92B, which deals with an ISP's liability) says ISPs can't be held liable for a customer's infringing but that "nothing in this section limits the right of the copyright owner to injunctive relief in relation to [the customer's] infringement or any infringement by the Internet service provider". There's nothing that says ISPs have to take this extraordinary step to secure Sky's rights.

And this really is where the problem really lies. Sky has bought the rights to this content for a geographically restricted area (New Zealand) but these days we live in a global economy where that same content is made available to other territories on varied and sometimes incompatible grounds. Sky's argument isn't really with the local telcos, it should be with the rights owners who have licensed the content but aren't enforcing those licences. I'm sure that taking Disney, Fox and Sony to court isn't something Sky relishes so it's turned instead to the local network providers to see if it can't make them responsible for the whole mess.

Piracy dropping
Piracy is a big problem and Sky clearly feels it is hard done by and needs to respond. But piracy is nowhere near the problem it was five years ago and is rapidly dwindling in the New Zealand ecosystem. Vocus says piracy rates have dropped by around 70%. Why? Because paid services are available en masse and customers are happy to pay $15 a month for a service that offers them hundreds of hours of content. I'm signed up with Amazon Prime and now that I've watched "Sneaky Pete" I should probably cancel but I'm paying about $3 a month for the service so…

This is, I suspect, Sky's biggest issue. Customers are leaving because paying $140 a month for HD, all the channels and a hard drive just doesn't stack up next to Netflix, Lightbox, Quickflix, Amazon and all the others. Competition has come to town, reset the price point and Sky has not responded well at all. Its online offerings have been slow and late to market, its service is costly and a channel-based system is no longer the standard that the customer wants.

Let's pretend Sky wins
Let's assume the court grants this injunction and Sky gets to force the ISPs into blocking Pirate Bay and all the other sites they can find. What will happen then? Put aside for the moment the idea that the pirates will simply give up and not just launch another website and enter the amusing world of parallel importing and the Virtual Private Network.

The clever customer will simply add an extra hop to their internet connection and sign up for a VPN service and access content in another jurisdiction. Netflix NZ has a lot of content but Netflix USA has a ton of it, and there's BBC's iPlayer and all the rest as well. The ISPs won't be able to stop it because plenty of people and services use VPN capability and unless they want to get into DPI (deep packet inspection) and really breach everyone's privacy on many levels, this is a dog that won't hunt. And of course, it opens the door to other aggrieved businesses who will want to know why they can't demand similar actions from their internet provider. The slippery slope is very slippery at that point.

Sky needs to reassess its business model. It needs to offer a video on demand service similar to Netflix and it needs an interface that works as it's supposed to. It has to come to some agreement with the sport franchises about the future because without sport, Sky has no model at all and it's a long way down. It has to do that now and it has to stop blaming everyone else for the situation it is in. The market has moved on and Sky needs to move with it or be run over.

Paul Brislen is a former chief executive of the Telecommunications Users Association and a current contributor to the Institute of IT Professionals' TechBlog.

QUICK TAKE ON SKY'S WEBSITE BLOCKING BID

• Spark: will fight Sky in court
• Vocus: will fight Sky in court
• Vodafone: won't comment on if it will fight Sky in court, says will comply with any order
• 2degrees: hasn't made a final decision, but has issues with Sky's draft injunction on several fronts

* Sky sent Spark, Vocus, Vodafone and degrees this draft injunction. It says it will file the real thing in the High Court in a few days.