In a significant win for the copyright industry and TV broadcasters, the AFL, NRL and Telstra have successfully appealed the Federal Court’s decision in favour of Optus’ TV Now service, which allows subscribers to watch recorded television broadcasts on mobile devices.

Earlier this year, a Federal Court judge ruled that 2006 amendments to the Copyright Act protected the making of copies of broadcast programs because the subscriber, rather than Optus, was responsible for the making of the recordings, and accordingly they were protected as being for personal use. The TV Now system recorded programs on Optus’ servers at the request of subscribers and made them available for access by the subscriber across multiple platforms, including mobile devices.

The amendments were designed to address the absurdity of home video recording and timeshifted viewing having long been in breach of antiquated copyright laws.

In today’s decision, Justices Finn, Emmett and Bennett concluded that in fact either Optus, or both Optus and the subscriber, were the makers of the recording for the purposes of the Copyright Act, and that accordingly it wasn’t protected under the amendments.

Despite the amendments making clear that “domestic use” isn’t to be determined by where the recording is made or consumed, the decision in effect draws a sharp and technologically arbitrary line between recording made personally by a consumer on equipment they directly control, and recordings made remotely by consumers using cloud resources. Indeed, the judgment specifically says that the amendments are not intended to cover “outsourcing” of recording by consumers.

The justices’ reasoning for that is based on a reading of the 2006 amendments as intended to validate existing practices, not anticipate new ones devised for the same purpose.

The effect is therefore technology-specific and anachronistic: this is a VCR decision for the internet age. It assumes consumers’ timeshifting is limited to personal devices within their own personal reach, rather than services that take advantage of cloud-based systems but which still operate at the volition of the consumer. In so doing, it hands a big win to the content industry by, at least from a legal viewpoint, locking consumers out of exploiting cloud-based systems for their own use.

For the broadcasting industry, big sports and Telstra, however, the reaction will be one of relief. The decision has cemented Telstra as the dominant media player in this country, with a range of options now open to it.  It faces no competition from Optus that might have devalued the tens of millions of dollars it has paid out for online rights to sports such as the AFL.

AFL and the NRL (and other sporting bodies) can rest easy their deals with Telstra remain unaltered and will deliver full value.

Seven, Nine, Ten and pay TV will all have more time to prepare themselves for the brave new world of the NBN. Foxtel can now roll out its new IQ box across the combined subscriber base of it and the about-to-be acquired Austar without the threat of being undermined by Optus.

And the NRL can now focus on matching and better the AFL’s $1.2 billion over five years. League attracts more viewers and has three huge viewing areas: suburban NSW, south-east Queensland and the combined regional areas of NSW and Queensland. The audience there for every NRL game is larger than the audiences in regional Australia, and in Adelaide and Perth for AFL games.

But the revenue and earnings slide now hurting the analogue media sector means the NRL contract might end up ruining a network. Nine is close to collapse, Ten is financially crippled and Seven took a blow this week from a shock earnings downgrade. Foxtel now has a massive debt burden and sluggish new subscriber growth for the AFL. A huge NRL payment will add to those pressures at Foxtel. Foxtel remains hostage to Telstra, which owns 50% and won’t allow the pay TV business to grow unless it is on its terms. So, no switch to satellite (ending the cables access, which cost Foxtel $100 million a year that was paid to Telstra).

But if Optus appeals and manages a win, then the sums for everyone will change very quickly.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey