As the Government looks to finalise its Convergence Review next month, the enormity and complexity of the task of regulating media and content services in a converged environment was thrown into sharp relief by the Federal Court's recent decision in the Optus "TV Now" case.
The Optus "TV Now" service essentially allows users to record and watch free-to-air television broadcasts on a "near-live" basis. In a decision that has outraged sports rights-holders and surprised television broadcasters, the Federal Court held that the "TV Now" service does not infringe copyright in the original terrestrial television broadcast of certain football and cricket matches and for which Telstra owned the exclusive internet rights. Optus was able to rely on the time-shifting exception to copyright infringement in section 111 of the Copyright Act 1968 (Cth), which permits an individual to make a recording of a broadcast for their private and domestic use at a more convenient time.
The TV Now service acts as a virtual personal video recorder, or PVR, and was found to be analogous to the physical version of the PVR sitting alongside most television sets in Australia, the use of which is legal under the time-shifting exception in the Copyright Act (subject to certain conditions).
In addition to providing the Court's interpretation of the time-shifting exception in the age of ubiquitous cloud service offerings by telcos, the decision has serious implications for rights-holders; the commercial value of live-streaming internet rights (including live mobile rights), in terms of the ability to sell those rights separately from the television broadcast rights is greatly decreased. (See Corrs in Brief: Optus vs NRL – a silver lining for cloud based services? for further detail)
Television and radio broadcasters will not want to pay a premium for live broadcast rights if the event or content is available on another platform on a near-live basis; it is the exclusivity of the broadcast that attracts advertising spend and sponsorships, the life-blood of free-to-air broadcasters. This will have a serious impact on the fees flowing back to rights-holders such as sporting associations if the current commercial models and the bundling of rights is not updated.
Some may argue that in a converged environment and where we will shortly have a fast-speed National Broadband Network, free-to-air television rights and live-streaming internet rights (whether the content is received on a PC or mobile device) will become one and the same (to the user). But the commercial models used by rights holders, particularly sports rights holders, are not at this point yet. To get to this point, sports rights holders would need to undergo a similar seismic shift to that of the music and film industries in the wake of P2P file-sharing and the age of iTunes, which lead to a dramatic change in how music and films are commercialised and distributed.
An appeal to the Full Federal Court is under way and the Attorney-General, the Hon Nicola Roxon MP, has launched an inquiry by the Australian Law Reform Commission into copyright laws. The ALRC is expected to release terms of reference by the end of March.
The Optus TV Now decision is a clear example of why the law (not only broadcasting regulation, but copyright and related laws) needs to be reviewed and thoughtfully updated to reflect the technology and user realities of the converged environment. Not an easy task.
We will be closely following the ALRC's Copyright Inquiry and eagerly await the Convergence Review Committee's final report to Government, which is also due in March 2012. Any review of the time-shifting exception and other provisions of the Copyright Act will need to be considered hand-in-hand with the recommendations of Convergence Review Committee in order to deliver an effective and fair solution for rights-holders, broadcasters and the public alike.
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