Feb 2, 2012

AFL, NRL appeal likely, but Optus TV ruling the right call

Justice Rares in the Federal Court yesterday cut a large chunk out of the value of sports broadcasting rights in new media by ruling that Optus is allowed to offer its TV Now Service, writes Kimberlee Weatherall.

Won’t someone think of the footballers? The end of sports and sport broadcasting is nigh. Or rather, Justice Rares in the Federal Court yesterday cut a large chunk out of the value of sports broadcasting rights in new media by ruling that Optus is allowed to offer its TV Now Service. TV Now lets Optus customers use all kinds of devices (tablets, smartphones, computers) to record broadcast television in "the cloud" (i.e. Optus servers) and play it back any time within 30 days. The privileged Apple-owning classes can even watch the recording nearly live -- only two minutes after the broadcast starts. Much gnashing of teeth has ensued, with the News Limited-owned Australian claiming the decision "puts at risk the ability of every sport to sell their new media broadcast rights", the AFL and the (also News Ltd part-owned) NRL expressing their disappointment (and intention to appeal) and Telstra claiming the decision will "destroy enormous value". It's easy to understand why the sports bodies are upset: if you can get your AFL on your Optus phone (or any other telecom provider that decides to offer a similar service), new media rights aren’t nearly as valuable. But disaster for Telstra? Yes, in the very short term it’s not ideal: it agreed to pay over $150 million for exclusive new media rights in AFL matches. But in the longer term, it could avoid paying for exclusive rights -- and do something such as TV Now itself. I guess competing on services and technology isn’t quite as attractive to Telstra as using its insider status, sheer size and ability to pay for exclusivity. Sometimes it feels like, unlike their early-adopting customers, the broadcasters and their various commercial partners never met a new technology they didn’t hate (let’s not forget that online access to television shows has been a long time coming in Australia too). The TV Now case is just one of a long string of similar fights. We've had the Ice TV case about ownership of electronic program guides, in order to control the functions of digital video recorders in the home. We've also had The Panel case (about re-use of clips from television in a comedy show) and Telstra verses the Premier Media Group (about re-use of sporting clips in sports highlights packages). The quest, in all these cases, is for total control over broadcasts, so that maximum dollar can be extracted via licensing and advertising. This quest crashes up against two cold, hard facts: that access to sports broadcasts is practically a right in Australia, and that people -- including politicians -- are pretty accustomed to recording television to watch later. The right to sport is enshrined in anti-siphoning laws; people’s right to record is recognised in an exception in the Copyright Act in 2006. I'm sure we can expect more litigation (an appeal has already been flagged) and lobbying. But we'd better hope the courts and the government can resist the pressure, because the risk of unintended consequences is high. You see, there are two key legal issues involved. The first is fundamental: when a customer clicks the "record" button on their iPad, is the copy made on the Optus server made by the customer, or by Optus (and similarly, when they later click "play", is it the customer, or Optus, that is responsible for the streaming of the show to their device)? It was a relief to see Justice Rares decide -- like US and Singaporean courts before him -- that it's the customers, and not Optus, who make the copies and play the recordings back later. Any other holding on this fundamental question in copyright would have put at risk the large and growing industries in cloud computing as well as a host of other activities and services in the digital environment. The second legal issue is whether, if the customers are doing the recording and playing, their actions fall within the detailed drafting of the home recording exception in s111 of the act. Certainly government could confine the home recording exception; so could a court through a narrower reading than that of Justice Rares. This would, of course, mean overcoming the natural hesitation of politicians and judges to curtail Australians' rights to sport and television, ruling against the cloud in home recording, and slamming down a service that Optus offers that people clearly want. And you have to ask whether saving one of many revenue streams for live sports is worth the cost to consumers, and to the ability of companies such as Optus to offer innovative (and clearly appreciated) new services to its customers. No government should jump lightly into protecting this one revenue stream given all the various revenue streams open to the AFL and NRL, and all the other government rules that impact on revenues -- like anti-siphoning rules, or the various rules that protect the exclusivity of big events such as the Olympics or the Rugby World Cup. This copyright rule is only a very small part of a very big picture when it comes to money in sport. One more irony in all this is worth noting. In 2006, Australia flirted with introducing a general fair use exception into copyright law. Copyright owners opposed such a move, and instead more specific and purportedly narrow exceptions were introduced instead, like the home recording exception. But a fair use defence would have required the court to consider the impact of any exception on the copyright owner’s market. And so I wonder whether, if we had fair use, Optus would have got away with playback on a two-minute delay, which undermines any market for exclusive rights to live broadcast of sports online? Food for thought as the Australian Law Reform Commission takes on a new inquiry into copyright exceptions in 2012.

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6 thoughts on “AFL, NRL appeal likely, but Optus TV ruling the right call

  1. Aka

    Can someone clear up a point for me? Is Optus allowed to rescreen all AFL games both fox and free to air or only free to air? if only free to air then it will not be all games and timing will be a problem. in nsw and qld the Friday game does not go out live on free to air nor does Sunday game. So people in nsw and qld will have to wait. I can’t see how other games can be shown if they are only on fox for to get that telecast you have to pay and when you pay you agree not to use it for anything other than your own use. Optus would to me be in breach if they offer replay rights. lawyers? ps I think the assumptions in this report are nonsense. the anti syphoning rules benefit only free to air stations they are frequently abused. one only needs to recall channel nine’s farcical hidden rugby world cup coverage. No matter how you look at it Optus is using a clever loophole to steal the creative property of another party. As a journalist I have always fought hard to retain control of my work. Dressing this up as some sort of triumph for consumers is nonsense. Optus is the only winner here

  2. Peter Bayley

    The essence here is the value of the “exclusivity”. The AFL gets a big wack of cash for giving Telstra exclusivity and at the sane time slaps its public in the face as they get less choice and possibly more costs in order to follow the game live. This selling of their “customers” freedom of choice is a dangerous game.

    Consider 3D TV. The quintessential 3D movie was Avatar. But James Cameron sold exclusive rights to the 3D Blu-ray version to Panasonic to bundle with purchases of its blu-ray player. So disgusted was I by this slap in the face that I will NEVER buy Panasonic ever again – which I am sure will wound Panasonic gravely but there you are.

    Sony did the same thing when it used its combined might as both a Hollywood studio owner and hardware manufacturer to impose that stupid “Region Encoding” on DVDs which was just another slap in the consumer’s face (luckily hacked away into irrelevance but still an annoyance). Copyright owners have the same, narrow, short-term benefit customer-slapping view and plenty of US lobbying bucks to enforce it – but keep slapping your customers and they’ll eventually walk away.

  3. Aka

    What Optus is doing is theft. Content is not done ethereal thing that magics into place for the use of all. it is the result of a creative effort on the part of all involved. They are entitled to be rewarded. a large swag of the money from AFL goes to players. not enough in my view but it stilll goes to them. the money also pays real people, producers, camera people, commentators. We are not talking about faceless corporations but people who the previous commenter would it seem be happy if they worked for nothing. Optus seems to be able to onsell it for pure profit and with no obligation to pay . Sounds like theft to me.

  4. Mark from Melbourne

    I dont get it.

    How can Optus copy a live telecast and then stream that as part of it’s commercial offering to its users? If you followed that principle then all it takes is for someone to copy any song, any book etc and then anyone is free to offer it to their users without paying a licence fee.

    It is in no way the same as an individual copying it and watching at a timing of their choosing – that is probably still an infringement of copyright itself but has always been tacitly allowed.

  5. Gavin Moodie

    According to Rares, J, Optus’ TV Now Service allows Optus customers to record a tv broadcast on Optus’ data centre and then play the record on their own device.

    ‘Users with Apple iPads or iPhones can watch a program selected for recording “almost live” within about two minutes of the commencement of the actual free to air broadcast. Users with other compatible devices (PCs, Android and 3G devices) can . . . watch a recorded program [only] after the broadcast had finished.’

    Rares, J held that the recording was not made by Optus but by the Optus customer, even tho it was done using mostly Optus’ equipment and service.

    Section of the Copyright Act 1968 (Cth) provides that ‘. . . a person [who] makes a cinematograph film or sound recording of a broadcast solely for private and domestic use by watching or listening to the material broadcast at a time more convenient than the time when the broadcast is made . . . does not infringe copyright in the broadcast . . .’

    Rares, J has provided a useful summary of his judgement which with his judgement may be found by searching for:

    Singtel Optus Pty Ltd v National Rugby League Investments Pty Ltd (No 2) [2012] FCA 34

    afr’s version is a neatly formatted pdf which isn’t behind its paywall. Rares, J’s summary and judgement is also on Australasian Legal Information Institute (AustLII)’s site where one would expect it, but in AustLII’s normal rudimentary format.

  6. Brian Williams

    There’a lot of disinformation about this case both within the article itself, the various sports bodies rantings and ravings, and the comments above. Here are the facts in a nutshell:

    1) Rares J has ruled that the 2006 exemption to the Copyright Act for private copying of TV broadcasts also applies to users of the Optus TV Now service. In other words, he has ruled that it is the customer who is initiating the recording and playback using equipment provided by Optus, in exactly the same way as a customer uses a PVR manufactured by a third party such as Sony or Tivo to record and playback in their own home.

    2) Users of TV Now can only record FTA broadcasts, and absolutely nothing that is on Pay TV exclusively. This means that they will not be able to record most NRL games.

    3) The only customers of TV Now who are able to access the 2 minute delay are those who use Iphones and Ipads. This is because the OS on these devices streams video in Apples Quicktime format. Users of all other mobile devices (i.e. most of the Optus customer base) have to wait until the program has been fully recorded before they can start viewing the program.

    4) All that Optus TV Now customers are doing is substituting the need to lug around a TV to view content to which they are legally entitled to view for free any time they damn well like, if they were to lug around said TV, or happen to be in front of a TV at the time.

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