Optus' TV Now win – enabling it to use free-to-air (FtA) signals to provide TV services to its mobile customers – has created enormous upheaval in Australia. I for one am very pleased with the outcome as these issues are criticial to the development of the digital economy.
Interestingly, overseas response was along the lines of ‘what’s all the fuss about?’ Most other countries have some type of regulation in place, often known as ‘must-carry’, whereby free-to-air signals must be made available – for example, via cable TV networks. What Optus is doing is normal practice in many countries, it's just that Australia is one of the few western countries that does not have such rules and that has constituted a major battleground between Foxtel and the free-to-air broadcasters for almost 20 years.
The basic argument used by in the Optus ruling was that you can record FtA on your old video-recorder or modern PVR for personal use, and there's no discernible difference between that and what was happening with the smartphone.
The trouble with changing legislation
However, the most dangerous element of this case is the fact that if the government did in fact start changing the law for political reasons – simply to favour the sporting codes – it could seriously impede the future of the digital economy as it would then have to find a way to separate that legislation from cloud computing, since cloud computing would fall into that same category.
Also, a large part of the fuss relates to sporting rights, so how are we going to handle that if the content providers were to get it their way? What FtA can be recorded and what cannot?
And if a device other than the smartphone is developed that allows you to record ‘something’ – are we going to invent new regulation for each technology?
While its reaction was not as dramatic as some of the sport codes, Telstra was critical of the decision also. However, it should be pleased. It could still opt for certain rights that give it just that edge in the market (and we believe the market for this will still be there), while at the same time more people can use its network to download billable content. Also, cloud computing is a critical part of Telstra’s future.
We were also puzzled at how closely invlolved communications minister Stephen Conroy has become in the debate, with his threats of new legislation. This sort of recation is totally unnecessary. The law should be left to the courts to sort out – political meddling is the last thing that is needed.
Storm in a teacup
It looks to us like a storm in a teacup. We believe that if all parties were to relax and start thinking about it, they would realise that their world hasn’t collapsed.
Case studies similar to the Optus case
Singapore 2010 (RecordTV vs MediaCorp)
The court held that
US 2007/08 (20th Century Fox Cartoon Network vs Cablevision)
The court held that
Too much protection
Moving to the broader issue of copyright, I have argued in the past that content ownership is indeed a knotty issue – intellectual property is a valuable asset, and that owners should be able to have commercial protection against the misuse of it.
But the laws relating to this issue originated in 17th century Britain, and they were developed for book printing. The copyright laws in Britain made books very expensive and the book-printing business moved to Flanders and Holland. The USA did not follow the strict British laws either and they were able to boost their education system (cheap books) to deliver enormous social benefits to their society.
The lesson learned here is that too much protection could severely hamper new economic and social developments – and, in our case, hamper the digital economy. There should also be recognition of the rights of individual users, business, libraries and educational institutions.
One key factor that needs to be taken into account is that it is futile to try to protect the old world – whether it's music, books, newspaper, broadcasting or retail. Technologies will always find a way and so it is much better for the relevant industries to develop new business models that allow them to profit from the many other opportunities that the new technologies will create.
The problem is that this is a very difficult proposition for these organisations. All these sectors need to shrink before they will be able to find a new base from which to start building up business again. The music industry is getting there, but interestingly it is a totally new industry that is now leading the way. The traditional record companies have largely lost their position in this market.
This should be a warning to everyone. There is no alternative but to adapt to the new environment. As well as this, new business models will need to be based upon the customers and not around the middlemen. That is not to say that there is no role for the middleman; there are always opportunities in packaging, bundling, marketing, etc. However, again, these will be completely different middleman models from the ones that are currently in existence.
Building up layers to try and protect the old world will ultimately be a waste of time.
Paul Budde is the managing director of BuddeComm, an independent telecommunications research and consultancy company, which includes 45 national and international researchers in 15 countries.