Sky pleads ignorant as new ISP pulls Global Mode

UPDATE Tuesday May 15: Sky TV says its just as puzzled as everyone over why new ISP FYX pulled its global mode service, just days after launch.

FYX's global mode made it easier to access overseas commercial download services, such as US sites Netflix and Hulu, and movie and TV content usually blocked to New Zealanders - and much of it only available locally through Sky TV, or Sky's igloo joint venture partner TVNZ.

"Sky was watching FYX with interest," spokeswoman Kirsty Way told NBR ONLINE this morning.

"We don’t know why they removed the global mode feature but would be interested to know."

She added, "Sky has observed this new offering only. I'm not aware of any content suppliers approaching FYX."

Sky TV boss takes a stab
Laster, Sky TV CEO John Fellet added, "My guess would be it would be the overseas suppliers."

For a US studio, a geo-block busting service could "wipe out their business for the rest of the world," Mr Fellet said. 

However, it was just a guess, Mr Fellet said. He had not talked to any content suppliers, and was not aware of any specific approaches. 

Asked if TVNZ or any of its content suppliers had complained to FYX, spokeswoman Megan Richards said the state broadcaster had "no appetite" to comment on the issue, "Except to note we did not approach them."

A MediaWorks spokeswoman echoed with, "I'm not aware of any approaches to FYX from MediaWorks or any of our suppliers."

Board bottled it?
FYX CEO Andrew Schick has yet to respond to a request for comment.

NBR understands that Mr Schick and John Hanna - CEO of parent company Maxnet - were both keen to keep the global mode service.

However, "the board bottled it" according to an industry insider.

The insider says the change of heart occured after the company got a negative legal opinion from across the Tasman.

Unloading on Quickflix
While it has maintained an outwardly neutral stance on FYX, Sky TV unloaded on internet streaming service Quickflix Friday (read Sky strikes back).

Mr Fellet said Quickflix was happy to monopolise HBO content in Australia, but complained when it could not gain immediate access in NZ.

“These shows [like Game of Thrones], which are expensive to buy and even more expensive to make, simply wouldn’t exist without the pay TV model yet Quickflix thinks it should be entitled to them as of right. By all means, they can bid for it at the same time we do or get the rights to it after our exclusive timeframe is over," Mr Fellet said.

New ISP abandons 'global mode'

UPDATE Friday May 11, 6pm: New Zealand's brave experiment with a "global mode" ISP is over almost as soon as it began.

Fyx CEO Andrew Schick has just released the following statement:

FYX has made a decision to withdraw its popular ‘global mode’ service from the market for the time being.

FYX sincerely apologises to our customers and the New Zealand internet community for putting a halt to ‘global mode,’ which will happen tonight at 11.59pm.

While legal opinions have supported FYX’s global mode under New Zealand law, there are matters that require further consideration before continuing the service.

FYX customers are currently being contacted.

Future and existing customers wishing to continue with FYX will pay a new, lesser price of $30.30 per month, with $0.30 per GB for data. [Launch pricing was $34.34, plus $0.34 per GB.]

Asked if FYX had abandoned its global mode because of legal or technical reasons, a spokeswoman said "neither."

Mr Schick could not immediately be reached for comment.

May 10: New ISP FYX caused a stir Tuesday by launching a service with a “global mode” – allowing Kiwis to access street-legal download services like the BBC's iPlayer and North America's Netflix, whose mother mode of movie and TV downloads is usually blocked to New Zealanders.

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Sky TV spokeswoman Kirsty Way told NBR ONLINE said her company was "watching FYX with interest." 

Ms Way noted "It's nothing customers can't do already, but it does make it easier for them."

Sky TV was screening many shows close to their US release date, Ms Way said. First-broadcast rights to a number of shows sought by the online audience were held by TVNZ or MediaWorks.

NBR ONLINE asked FYX boss Andrew Schick about customer response so far.

Mr Schick was shy on specifics, but said “hundreds” had signed up; more than parent company Maxnet has ever landed in a similar period (Maxnet began life as a residential ISP, but these days is also known for its business hosting, and its server farm on Auckland’s North Shore).

He maintained it could have been more.

But many potential customers were frustrated by the break-fees they would have to pay their existing ISP.

In comments after NBR’s original story, many have been curious about the quality of video streamed from a US-based service.

Mr Schick (who also serves as Maxnet's internet services and marketing lead) said several Maxnet staff and affiliates had been testing FYX for around three months.

The FYX boss has judiciously avoided saying what his service’s “global mode” could be used for.

However, NBR ONLINE was put in touch with one of those on the pilot scheme, Maxnet reseller Bernie Eller.

While Mr Schick has been coy, Mr Eller made no bones about why he’d signed on to the trial.

He reeled off the names of the services he was accessing, many of them usually restricted to those with a US internet address including Netflix, Hulu Plus, Amazon Prime, and the US version of iTunes (the latter is not geo-blocked).

He had also been accessing internet streaming radio service Pandora – which recently introduced geo-blocking that cut out New Zealand listeners.

Performance for all was flawless, Mr Eller said.

He was using around 120GB to 130GB a month.

“The old Sky box is getting very little use these days,” he said.

There are a number of sub-$200 wi-fi boxes that can be used to stream video from a broadband connection or PC to a regular television.

Mr Eller was using one called Roku, purchased through eBay, which comes with apps for direct access to a number of services, including Amazon Prime, Hulu Plus, HBO Go and Netflix.

It sounds like a slick set up.

Ready to wait-list
NBR ONLINE accepts performance is flawless.

Your correspondent (on a different ISP) has also experienced flawless performance with video streamed from a US-based service (as ever, performance depends on the speed of your broadband connection).

But what happens if FYX is a hit, and tens of thousands of customers pile on? Will it clog up?

Mr Schick said Maxnet could buy extra capacity.

Data would not be shaped, he pledged.

He added, “If performance is at risk, then we’ll put people on a wait-list.”

And, indeed, parent company Maxnet currently has a wait-list in force on its unlimited data plan.

“I don’t want my name associated with an ISP that’s below par,” Mr Schick said.

“I would sooner slow down the rate of sign-ups then get a quick buck up front and harm our reputation long term.”

Street legal?
Another concern expressed in comments after NBR ONLINE’s original story: were people signing up for a service that could get shut down by legal action from content creators, distributors or rights holders?

Here, Mr Schick said comments from Chapman Tripp to NBR ONLINE were consistent with the legal advice FYX had received.

That is you might break the commercial terms and conditions of a service by skirting its US-only internet restriction – but you’re not breaking US law.

So: you shouldn’t get the Copyright Tribunal breathing down your neck.

But you could get, say, Netflix kicking you off because it discovers you don’t live in the US.

They could. But they wouldn’t be squashing a pirate; they would be losing a paying customer.

A world first?
Lastly, FYX’s global mode is a first for New Zealand.

But is it a worldwide-first, as many offshore sites are labeling it? (Certainly, FYX's launch drew a lot of attention from Australian and US sites, judging by referral traffic to NBR ONLINE)

Mr Schick was unsure. He was unaware of a similar service, but then again there are tens of thousands of ISPs around the globe.

Chapman Tripp principal Justin Graham said he was not aware of any other ISP in the world that offered a global mode.

“I’m picking there’ll be others following suit in fairly short order though," he added.