New copyright law could push up everyone's internet cost

Internet service providers can charge a $25 fee to copyright holders for every complaint notice issued under the Copyright (Infringing File Sharing) Amendment Act 2011, which comes into effect on September 1, Justice Minister Simon Power revealed yesterday.

An MED paper, also released yesterday, said a $20 fee would allow ISPs to recoup a "reasonable proportion" of their costs for issuing copyright warnings (cabinet bumped up the fee to $25).

$56 true cost vs $25 fee
The ministry also recommended a review of fees in six months (which cabinet agreed to) due to "the difficulties in assessing the impacts of the fee on the effectiveness of the regime, and the likelihood that implementation costs will be passed on to consumers."

Yesterday, ISPs were coy on whether they would pass on costs.

Picking up the baton on their behalf, Labour communications spokeswoman Clare Curran said ISPs had estimated the cost of sending an infringement notice as high as $56.

"And that doesn't include indirect costs or the cost to establish a new or upgraded system to process infringement notices,"

Under the new law, a copyright holder such as a movie studio or record company must identify an alleged offender. If the rights holder pays the $25 fee, the alleged pirate's ISP must then send them three warning notices. If these are ignored, the rights holder can then pay $200 to take the case to the Copyright Tribunal, which can fine an offender up to $15,000. (The act's so-called "ultimate sanction" - disconnecting the individual, company or family internet account used by an offender - can only be implemented by an Order in Council, created by a cabinet minister and signed by the Governor General).

Relatively high fee will limit complaints ...
However, the MED paper also makes it clear that the main effect of setting the fee at $20 ($25 in the final event) would be to dampen rights' holders enthusiasm for making complaints (rights holders had called for a fee of $2 or lower; a lobby group representing 80% of ISPs wanted a $40 fee).

The relatively high complaint fee would "prevent an unmanageable number of noices", buying time for ISPs to set up systems around the new law. 

"We consider setting the fee at this level will ... prevent an unmanageble number of notices," the MED paper said.

And a modest number of notices will, presumably, lessen the likelihood of costs being passed on to ISPs' customers.

... and limit the effectiveness of the act
Similarly, in calculating the cost of the new law (Copyright Tribunal funding has been increased by $838,000) the ministry uses cost recovery examples of 250 to 500 cases a year - far below the numbers mentioned in earlier discussion documents. 

"We note that setting the fee at this level will result in significantly lower notice volumes than rights owners would wish to be able to pursue through the system," the MED said.

"This may limit the effectiveness of the regime."

Expect rights holders to lobby hard for a fee reduction when the six-month review period comes up.