A number of New Zealand companies are bundling their broadband offerings with technology that automatically allows their subscribers to access geographically-restricted content from providers in other countries. BBC iPlayer, for instance, offers users on-demand access to more than 2000 hours of the best British TV shows. But it is available only in certain countries and the BBC uses geo-location technology to restrict access geographically to users in authorized countries. A variety of mechanisms allow users to “geo-unblock,” that is, to bypass these technical geo-location restrictions. For instance, using this technology a user in New Zealand can appear to be in the United Kingdom and so receive programming authorized by BBC for distribution in Britain, but not in New Zealand, or available in New Zealand only through an authorized distributor. Similar geographically-restricted content providers include Netflix, Hulu and Amazon Prime.
For a long time, individuals have been able to obtain this kind of circumvention technology on their own and use it in connection with their separately-obtained broadband connection to access content from services that are not authorized to distribute it in their home country. These consumers typically pay any required subscription fees to the off-shore content distributors, but they are unambiguously violating the terms and conditions of their subscription agreement when they access the restricted content. These content distributors clearly warn their users in their terms of use that they may view content only in geographical locations where these companies have licensed it and that the companies will use technologies to verify their users’ geographical location.
What is new is the bundling of broadband offering with technology designed to evade territorial content restrictions. In some cases, the circumvention capability is turned on by default so users will automatically appear to be in an authorized country when they try to access off-shore content providers. Instead of needing to obtain separate software for this, subscribers now have “geo-unblocking” by default.
Also new is the effort to market the bundled broadband-circumvention service precisely as a way for consumers to bypass geoblocks to gain access to restricted off-shore content. For example, the general manager of one of the broadband companies that bundles geo-blocking bypass technology said last year that his offering “…is to watch Netflix, this is to watch BBC iPlayer, this is to watch Hulu, this is to watch Amazon Prime.”
These new issues have less to do with the end users and more with the commercial interests of various businesses. Local distributors of TV shows and movies have paid for exclusive distribution rights in New Zealand. When the broadband companies providing bundled unblocking services urge members of the public to subscribe to their service so as to obtain access to the same content from off-shore sites, aren’t they violating these exclusive distributor arrangements? New Zealand law generally allows the importation of goods legitimately sold abroad, but it bans the parallel importation of films for commercial use. Don’t the actions of the broadband-unblocking bundlers amount to importation for commercial use? A group of companies concerned about the actions of broadband-unblocking bundlers have raised these legal questions and others. A clarification from New Zealand courts would help all parties understand their legal responsibilities.
Regardless of the details of this case, some disturbing commentary has accompanied the discussion of its global implications. Sometimes the business practice of geographical market segmentation is looked upon as an evil in itself. At other times, it is said to be inconsistent with the open, free, borderless, and global nature of the Internet.
The business model of territorial exclusivity and distribution sequences has governed the film and TV industry throughout its history. This business model is highly typical of many industries and it is in no way contrary to the nature of the Internet. Indeed, it is especially suited to the demands made on international companies by local governments concerning Internet content in their jurisdiction.
From its beginnings, the film industry has used distribution “windows” and territorial exclusivity as a way to structure financing for movie production. Beginning in the 1920s, films were exhibited initially in “first-run” theaters and moved on to less expensive “second-run” outlets only when they had finished their initial exhibition period. The first-run theaters received geographical exclusivity during the course of their first run – no one else was licensed to distribute these movies during that time in that area.
Distribution of movies and TV shows through broadcasting, cable, and home video followed this historical model of territorial exclusivity and distribution windows. Local broadcast affiliates were given exclusive rights to broadcast network programming in their local areas. Network television programs aired first on network television and then were available for broadcast or cable syndication. Movies were exhibited through a sequence of windows, appearing first in theaters and then moving through secondary distribution in broadcast, cable, home video, hotel, airlines and Internet outlets.
This complicated system needs to evolve to take into account the efficiencies and advantages of Internet distribution. Many in the industry are looking for ways to allow subscribers to access programming anytime, anyplace, anywhere on any device of their choosing. But this needs to be done through a system of licensing, not through bypass technologies that evade licensing. The connectivity provided by the Internet should be global but that does not mean Internet actors have a right to override contractual licenses that restrict distribution to local areas or to selected distributors.
The reliance on geographical market segmentation is also highly typical of many industries other than TV and movies. The software industry often licenses its software on a geographical basis, a tendency that will become more pronounced as software is increasingly provided as a service. Book publishers often make their material available in different jurisdictions at different prices, or do not distribute the same books in all markets. The pharmaceutical industry also constrains distribution geographically and prices differently in different countries. The distribution of recorded music is also subject to local availabilities and pricing differentials.
Geographical market segmentation is especially important to allow companies to comply with different regulations in different jurisdictions. Advertising rules differ, for example. Saudi Arabia does not accept advertising for alcoholic beverages; some EU countries do not allow comparative advertising. Content rules differ from country to country. Companies operating in different jurisdictions have to be aware of local laws regarding hate speech and group defamation and often need to take steps to block content that runs afoul of these local laws.
Geolocation technology enables these business models and efforts to comply with local laws. SIIA has commented on these issues before in a white paper and in a blog, as has Information Technology and Innovation Foundation in a report, all arguing that geolocation technology is useful for a variety of worthwhile business and public purposes. Any concerns should relate not to the technology itself but to the underlying purposes and uses to which it is put.
Indeed, the same point applies to technology that circumvents geo-blocks. It can be used to access illegal content or legal content that is illegal to access. But it also has good uses. Many authoritarian governments use a variety of technical and other means to restrict access to politically controversial content. Often they do this to maintain political stability or to restrict public discussion of issues. It is crucial to defend and foster the use of bypass technologies to tunnel to freedom and to gain access to information and points of view that will promote public discussion of important issues. Indeed, the use of circumvention technologies for this purpose is an element in the U.S. State Department’s Internet freedom agenda.
Concern with the use of bundled broadband and bypass technology to access off-shore content in a way that violates the contractual rights of distributors should not be confused with hostility to the bypass technology itself or to its use to advance free expression.
Mark MacCarthy, Senior Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow Mark on Twitter at @Mark_MacCarthy.