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I don't buy the premise that these are threats to Netflix, which is easily available to everyone quite easily.... but might be a threat to HBO that isn't interested in selling their service to people.
This article is premised on the myth that the choice is between copyright infringement and paying, when in fact many of the services mentioned aren't available for people to pay for without an anti-competitive tie to a legacy (and in many cases, entirely unwanted) cable or other BDU service. Don't get me started with the illegitimacy (and likely eventually determined illegality) of services like Shomi, CraveTV and FibeTV.
Go ahead, prove me wrong -- convince the copyright holders (for CanCon often owned by the old-economy BDUs) to make their content available via services like Netflix rather than tied to legacy BDU services, and see if the infringement rate for movie and television drops to a level not worth measuring.
As expected, the CRTC ruled yesterday that it will require cable and satellite companies to offer a mandatory basic service capped at $25 per month (which may include U.S. channels) and a pick-and-pay alternative for individual channels no later than December 2016. As also expected, the doomsayers are out in full force, trying to explain why a low priced service and more consumer choice will lead to higher cable bills. The Globe and Mail’s Kate Taylor predicts “my bet is that most Canadians will find themselves piecing together a smaller cable package that will cost just about the same as the old behemoth.” The National Post’s Terrance Corcoran says that no one will buy the basic bundle and that “what is clear is that, when viewers start picking [bundles and channels], the amount they end up paying could go up.”
Yet that analysis runs counter to what business analysts expect to happen. Maher Yaghi of Desjardins Capital Markets says the changes could “lead to a reduction of $5 to $10 in monthly [revenue per user] as customers get the option to choose the channels they want to watch and move discretionary money toward OTT (over-the-top) services such as Netflix.” Canaccord Genuity analyst Dvai Ghose suggests even bigger declines of $9 to $21 for some customers. In fact, Ghose notes that “current entry-level TV monthly prices for the large BDUs are as follows: Bell Fibe TV $45.95, Rogers Cable $40.48, Shaw $39.90 and Videotron $38.00 and Telus $34.00 ($29.00 if bundled).” A $25 service is obviously going to result in reduced spending for those consumers.”
Critics keep claiming that the changes will result in billions in lost revenue. For example, Friends of Canadian Broadcasting says that more than $2 billion per year could be lost under a pick-and-pay system. The CRTC rejected those claims, but if they are even close to correct, how do you take $2 billion out of the system? By having consumer spend less on broadcast services. It simply makes no sense to suggest that broadcasters will earn less, broadcaster distributors will earn less, but somehow consumers will spend more.
Beyond the obvious economics, critics like Taylor and Corcoran emphasize that consumers will have to piece together bundles or more expensive pick-and-pay channels in order to get what they want. For example, Taylor says consumers will be looking for U.S. channels in their package. They can be included in the basic $25 service, but if they are not, they will be forced onto a higher tier. The fallacy with this analysis is that it thinks of consumer choices as limited to the cable system. This might have been true years ago, when consumers had few other choices (OTA the exception) than purchasing cable services.
No longer. Cable and satellite must now compete with streaming services such as Netflix, sports packages, and (soon in the U.S.) HBO and something that looks a lot like basic cable from Apple. The price points of streaming services are far lower than a cable bill of basic plus lots of bundles or individual channels (there is also an Internet bill, but consumers are buying Internet access with or without streaming services).
Cable and satellite services can try to piece together a crappy basic service without U.S. channels or set high fees for individual channels. But in a competitive market, there will be a strong disincentive against doing so. My bet would be that the major cable providers will include U.S. channels on basic because that is what the market wants and if they don’t, many will simply walk away altogether. Indeed, it was Rogers that specifically asked for the U.S. networks to be included on the basic package. The same is true for high prices for standalone services. Some might be pricey, but typically when there are no other alternatives to the same programming. When consumers have other options – streaming sports packages rather than TSN or Sportsnet rather than TSN – the market will keep prices in check.
Some Canadians will obviously continue to buy expensive bundles or retain their existing service. Old habits are slow to change. But they do change (as the newspaper or music industry can attest). With the new changes, those who currently purchase basic service will certainly save money. Moreover, the next generation of potential subscribers – my kids and my students – will only subscribe if cable or satellite offers better value than the online alternatives.
The post Beware of the Scare Tactics, Part Two: CRTC Unveils Cheap Basic Service and Pick-and-Pay appeared first on Michael Geist.
The CRTC released its TalkTV decision this afternoon and – as expected – it includes a mandatory basic service capped at $25 per month (which may include U.S. channels) and mandates a pick-and-pay alternative no later than December 2016. Why did the CRTC conclude that it needed to regulate a pick-and-pay option? Because the public wanted it and it was convinced that cable and satellite providers would not do it on their own. This passage from the decision tells you everything you need to know and gets it exactly right:
while some parties argued that it would be sufficient to prohibit programmers from preventing BDUs from offering programming services on a pick-and-pay or build-your-own-package basis, this approach does not take into account the fact that vertically integrated BDUs have every incentive to ensure that their related programming services are insulated from the financial pressures that come with greater choice and packaging flexibility. As such, BDUs, and vertically integrated BDUs in particular, may not be sufficiently incented to make the necessary changes to their current offerings or might make these changes at a much slower pace than that desired by Canadian subscribers. Moreover, the Commission considers that BDUs have not generally demonstrated that they would willingly move to more flexible packaging options on their own.
The post Why Did the CRTC Mandate Pick-and-Pay? Because BDU’s Wouldn’t Do It On Their Own appeared first on Michael Geist.
Today we’re publishing a refreshed How Google Fights Piracy report, which explains how we combat piracy across our services. This new version updates many of the numbers from the 2013 version and lists a few other developments in the past year:
Every day our partnership with the entertainment industry deepens. Just this month we launched a collaboration with Paramount Pictures to promote their upcoming film “Interstellar” with an interactive website. And Content ID (our system for rightsholders to easily identify and manage their content on YouTube) recently hit the milestone of enabling more than $1 billion in revenue to the content industry.
In addition to strengthening these relationships, we continue to invest in combating piracy across all our services.
Posted by Katherine Oyama, Sr. Copyright Policy Counsel
The CRTC will release its latest decision in the TalkTV consultation later today as it announces much-anticipated plans to require cable and satellite companies to offer consumers the option of picking the television channels they want without requiring them to purchase expensive bundles. The decision, which builds on earlier rulings that focus on a more competitive marketplace, will fulfill the government’s promise to bring in consumer choice for television packages, which was a prominent part of its 2013 Speech from the Throne.
The specifics are yet to come, but the CRTC will likely require distributors to offer a basic service of Canadian and mandatory channels at a relatively low price (a 2014 working document suggested a cap of between $20 – $30/month), offer consumers a pick-and-pay option, and adjust the Canadian content requirement for bundles.
Consumers will emerge as the clear winners, benefiting from increased choice and the potential to lower their monthly bills. Yet the CRTC decision will undoubtedly be greeted by doomsayers who will argue that pick-and-pay will increase prices and decrease choice (because some channels will fold).
It seems likely that some channels with small audiences will shut down, but that merely means that consumers have been sustaining them through inflexible bundles for years. The notion that consumers are better off paying for channels which they don’t watch merely because distributors enjoyed market power to force them to do so is a strange notion of consumer welfare. If there is a public interest in maintaining a channel, there are better forms of support than forcing millions of Canadians to pay for something they don’t want.
As for consumer costs, there may well be sticker shock at the prices of some services sold on an individual basis. However, this Financial Post article notes that analysts expect monthly revenue per user to decline by $5 to $10 per month. In other words, the amount consumers spend on cable and satellite subscriptions will decline. Consumers may choose to spend that money on other programming – Netflix or other online video services – but their choices will now better reflect their interests, not those of the broadcast distributor. In fact, while some specialty services will be very pricey on a standalone basis, the increasing availability of streaming alternatives for sports, movies, and other programming suggests that there will be competitive pressures to keep prices in check, particularly given the threat of consumers leaving the system altogether in favour of unregulated alternatives.
The post Beware of the Scare Tactics: CRTC To Announce Pick-And-Pay TV Today appeared first on Michael Geist.
Computer science research on re-identification has repeatedly demonstrated that sensitive information can be inferred even from de-identified data in a wide variety of domains. This has posed a vexing problem for practitioners and policy makers. If the absence of “personally identifying information” cannot be relied on for privacy protection, what are the alternatives? Joanna Huey, […]
The Federal Court has issued its ruling on the costs in the Voltage – TekSavvy case, a case involving the demand for the names and address of thousands of TekSavvy subscribers by Voltage on copyright infringement grounds. Last year, the court opened the door to TekSavvy disclosing the names and addresses, but also established new safeguards against copyright trolling in Canada. The decision required Voltage to pay TekSavvy’s costs and builds in court oversight over any demand letters sent by Voltage.
The issue of costs required another hearing with very different views of the costs associated with the case. TekSavvy claimed costs of $346,480.68 (mainly legal fees and technical costs associated with complying with the order), while Voltage argued the actual costs should be $884. The court disagreed with both sides, settling on costs of $21,557.50 or roughly $11 per subscriber name and address. The decision unpacks all the cost claims, but the key finding was that costs related to the initial motion over whether there should be disclosure of subscriber information was separate from the costs of abiding by the order the court ultimately issued. The motion judge did not address costs at the time and the court now says it is too late to address them.
That approach seemingly does not reflect how the parties viewed the case given that this was an unprecedented action. With TekSavvy now bearing all of those motion costs (in addition to costs associated with informing customers), the decision sends a warning signal to ISPs that getting involved in these cases can lead to significant costs that won’t be recouped. That is a bad message for privacy. So is the likely outcome for future cases (should they arise) with subscribers left with fewer notices and information from their ISP given the costs involved and the court’s decision to not compensate for those costs.
The big question now is whether Voltage will proceed with the case. Given their expense to date, they will likely pay the costs and obtain the names. However, they must be committed to going to court over the claims, since the court made it clear that merely sending threats would be viewed as copyright trolling for future claims. Yet with the cap on liability for non-commercial infringement, the further costs of litigating against individuals, the actual value of the works, and the need to obtain court approval on demand letters, it is hard to see how this is a business model that works. Indeed, that is what the court initial noted, stating that “damages against individual subscribers even on a generous consideration of the Copyright Act damage provisions may be miniscule compared to the cost, time and effort in pursuing a claim against the subscriber.”
Further, the market has shifted in Canada with rights holders using the new notice-and-notice system to accomplish much the same thing. Their personal information is not disclosed but the demands for payment still make it through to the subscriber. That has left Canadians facing a barrage of notices and demands for settlements. It points to why the government needs to address the costs and loopholes in the notice-and-notice system, which is now being used to circumvent the courts by pressuring subscribers to pay settlement demands with ISPs bearing all the costs of forwarding notifications.
The post Defending Privacy Doesn’t Pay: Federal Court Issues Ruling in Voltage – TekSavvy Costs appeared first on Michael Geist.
The Supreme Court of Canada heard arguments yesterday in the copyright case of CBC v. SODRAC. While the case was ultimately about whether CBC should be required to pay royalties for incidental copies necessary to use new broadcast technologies, at stake was something far bigger: the future of technological neutrality under Canadian copyright law.
CBC argued that technological neutrality means that it should not pay for incidental copies since it already pays for the use of music in broadcasts. The incidental copies – copies which are made to create the final broadcast version of a program (including copies from the master to a content management system or other internal copies to facilitate the broadcast) – do not generate revenue and are simply made to facilitate use of the music that is paid for through a licence. SODRAC, a Quebec-based copyright collective, countered that CBC had always paid for these copies and that the CBC argument was the reverse of technological neutrality, since it wanted to avoid payment in the digital world for copies that were being paid for with earlier, analog technologies.
The case emerged as an important one when the question of the meaning of technological neutrality took centre stage. That elicited interveners such as Music Canada, which argued for a narrow interpretation of the principle, claiming that it was just an “interpretative metaphor” (similar arguments about users’ rights being no more than a metaphor were rejected by the Supreme Court in 2012). The danger in the case from a technological neutrality perspective is that the Supreme Court could roll back its finding that technological neutrality is a foundational principle within the law. Moreover, if the court were to rule that all copies – no matter how incidental – are copies for the purposes of the Copyright Act, there would be the very real possibility of payment demands for the myriad of copies that occur through modern technologies.
For those concerned with this outcome, the hearing did not start well, as the Supreme Court was clearly skeptical of the CBC’s arguments, leaving some judges confused and others openly critical (I attended the hearing). The first intervener, Howard Knopf, raised important arguments on behalf of the Centre for Intellectual Property Policy and Professor Ariel Katz on whether Copyright Board tariffs can be mandatory on users. Those arguments felt like a prelude to a future battle with Access Copyright and the court may lay the groundwork for that potential case with this decision.
Technological neutrality was left to my colleague, Jeremy deBeer, appearing on behalf of CIPPIC, which also intervened in the case. CIPPIC’s argument provided the court with another option: establish a test grounded in existing law on when a copy should be treated as a copy for copyright law purposes. CIPPIC’s fear:
In a digital environment, treating literally every copy as a reproduction is simply not realistic. Take basic web browsing for example, which involves countless ephemeral reproductions not only by intermediaries but also by end users. Reading an e-book is impossible without ephemeral copying. Interpreting the reproduction right literally would, in practical terms, give copyright owners unprecedented control over other people’s ability to even access digital content – in technological terms, accessing digital content cannot be done without prolific ephemeral copying.
CIPPIC’s brief notes that the Supreme Court has already ruled that not all communications fall within the Copyright Act’s communication right and that the same should be true for reproductions. Simply put, not all copies have value and deserve compensation. The challenge is to develop a test that identifies where the value lies. During the argument, deBeer invited the court to establish a clear test for when a copy qualifies as a reproduction by citing three criteria: there must be a reproduction (as Theberge held), the copy must be durable (drawing from ESA), and it must be material (taken from Section 3 of the Copyright Act).
The proposed test clearly attracted the court’s attention because it opened the door to establishing a technologically neutral approach to reproduction. In fact, SODRAC indicated during argument that it agreed with deBeer’s proposal (contending that the copies in this case qualified as reproductions under the test).
As for a narrow interpretation of technological neutrality, the court did not seem interested in backtracking on its earlier decisions. In fact, when Music Canada’s counsel Barry Sookman raised the issue, Justice Marshall Rothstein, who wrote the dissent in the ESA technological neutrality decision, noted that “I thought we lost that argument in ESA.”
While it is risky to read too much into oral arguments, given the fact that the government referenced technological neutrality in the 2012 copyright law amendments (which the court also mentioned), the case may ultimately serve to reinforce the importance of the technological neutrality principle and confirm that in the digital world, not every copy is a copy for the purposes of the Copyright Act.
The post When is a Copy not a Copy?: Technological Neutrality at Stake at the Supreme Court of Canada appeared first on Michael Geist.
In September 2007, I wrote a column titled “Canadian Broadcasting Policy for a World of Abundance”, which focused on a report commissioned for the CRTC that recognized that conventional broadcast regulations were crumbling in the face of new technologies and the Internet. As it turns out, the Dunbar-Leblanc report was ahead of its time as the CRTC was not ready for the regulatory overhaul it recommended.
Standing beside two giant screens proclaiming “Age of Abundance”, CRTC Chair Jean-Pierre Blais unveiled the latest round of decisions from the TalkTV hearing and left little doubt that the Commission is now ready to lead with changes that have been a long time in coming. For Canada’s broadcast regulator, it was time to admit that decades-old policies must adapt to a changing environment in which the viewer is in control (or the emperor, in Blais’ words). Those policies were largely built on creating a regulatory wall for the Canadian system with Cancon requirements, genre protection, foreign ownership rules, and simultaneous substitution. Like many walls, the rules shielded the Canadian market from competition, guaranteeing a place for Canadian content and limiting the impact of more popular U.S. programming.
Yet the wall has been steadily crumbling since rules no longer shield Canadian broadcasters or creators from competition. The industry has reacted in different ways to the crumbling wall. Some, such as the Writers’ Guild (or the Ontario government), want to patch the wall by regulating new services such as Netflix. The group issued a release yesterday arguing that the migration to unlicensed platforms raises concerns about medium-to-long term sustainability as they want the CRTC to require Netflix to contribute funds toward Canadian content (ie. a Netflix tax). Others, such as Bell Media, want to build a bigger wall. Last week, Bell Media CEO Kevin Crull called for blocking U.S. channels and adopting measures to make it more difficult for Canadians to access US Netflix.
Yesterday, the CRTC made it clear that it believes the way forward does not involve extending or expanding the regulatory wall. Instead, it recognizes that broadband Internet allows Canadians to effortless circumvent the wall, watching what they want, where they want, and when they want. The new regulatory structure therefore focuses primarily on three ways to tear down the wall by creating a more competitive broadcast environment.
First, the consumer choice that is an integral part of the Internet is being extended to conventional broadcast. The pick-and-pay world of television channels won’t be announced until next week, but yesterday’s decision helped lay the groundwork for pick-and-pay by removing some of the licensing limitations that make it difficult for broadcasters to convince consumers to pay for their service. Under the new rules, genre protection is eliminated, meaning there can be more competition in specialty areas and specialty services will be better able to respond to the market with their programming choices. Moreover, discretionary services with audiences under 200,000 subscribers will be exempt from licensing. All of this is designed to force broadcasters to compete (the elimination of simultaneous substitution, which was likely part of the CRTC’s original plan, would have done so as well). This should create a real market with broadcasters enjoying greater freedom in what they program and consumers finally permitted to make their own subscription choices on a pick-and-pay basis.
Second, the CRTC is changing some of the rules with respect to Canadian content. These include pilot project changes in what counts as Canadian content (an effort to expand the scope of potential Canadian productions), the removal of Cancon requirements during the daytime programming (creating incentives to make bigger investments in prime time programming), and initiatives to promote Canadian content. While some are skeptical about the likelihood of success, the premise is that good enough is no longer good enough. As the wall comes down, Canadian content must stand on its own and these changes are designed to increase the chances of that happening.
Third, the CRTC has been working to address Internet-related competition concerns. The Commission’s decision on Bell’s Mobile TV service brings net neutrality into the discussion as it was concerned that zero-rating would “may end up inhibiting the introduction and growth of other mobile TV services accessed over the Internet, which reduces innovation and consumer choice.” Moreover, yesterday’s decision created a new class of video on demand service known as a hybrid service that borrows from both the regulated video on demand services and the Internet-based video services. The full rules are still to be determined, but the goal would appear to be encourage services such as CraveTV and Shomi to compete in the Internet video space (or face conventional regulation and obligations). Further, it goes without saying that the CRTC did not adopt a Netflix tax, leaving the Internet-only space largely unregulated.
While success is by no means certain, Blais made it clear that the Commission is ready to fight for its new vision of Canadian broadcast regulation. I was in the audience for the speech and the one comment that generated an audible gasp was the following:
If you hear criticisms of our decisions ask yourself this question: Are the arguments advanced by these critics those of the public interest or are they rather those that find their true roots in private entitlement, dressed up to look like they are founded on the broader public interest? This town is full of lobbyists whose job it is to spin their client’s private interests into something else, to wrap themselves up, as it were, in the flag, and to puff about Parliament Hill with an air of shock and dismay. I respect their right to do so, but I respect more the rights, expectations and wishes of Canadians we serve.
In a room full of the clients and their lobbyists, Blais offered his unofficial response to the recent Bell lawsuits against CRTC decisions and the likely backlash against his latest plan: bring it on.
The post When the Walls Come Crumbling Down: The CRTC’s Latest TalkTV Decision appeared first on Michael Geist.
By Richard Stobbe In some cases, a franchise relationship ends after many years of business. At the point of termination, the parties must wrestle with a number of issues, including customers, inventory, and (as we reviewed in Part 1) the impact of any post-termination restrictive covenants. In other cases, however, the franchise ...
By Richard Stobbe A year ago, BlackBerry sued Typo Products LLC for patent infringement, based on the design of a snap-on keyboard. Typo's physical keyboard was designed to attach to an iPhone, in order to mimic a BlackBerry-style QWERTY keyboard. The design was, in BlackBerry's view, imitation that went beyond flattery and ...
By Richard Stobbe For software vendors, open source software (OSS) should be treated like a compliance issue - in the same way that corporate, securities or environmental compliance is a concern for many companies. The failure to manage compliance can be costly - just like it would be if a company ignored ...
By Richard Stobbe A recent Ontario court decision (Arctic Cat Inc. et al. v. Peter Watson, 2014 ONSC 6874 (CanLII)) dealt with a foreign letter of request, or "letter rogatory" in a cross-border patent infringement case involving the invention of snowmobile prototypes. This type of request is used where a foreign ...
By Richard Stobbe A recent report shows interesting trends in US patent litigation: 5,002 patent infringement cases were filed in the US in 2014, up from 2,641 filed in 2010; Of those cases filed, the majority (61%) were commenced by NPEs (non-practicing entities), which is a neutral term to describe what are commonly referred to ...
By Richard Stobbe Who can resist an announcement laced with nerdy acronyms? Last week, the Canadian Intellectual Property Office (CIPO) announced the launch of a Patent Prosecution Highway (PPH) pilot agreement with the European Patent Office (EPO). The initial pilot will run from January 6, 2015, to January 5, 2018. Canadians can gain ...
By Richard Stobbe In a recent interview with The Washington Post, Jay Walker, founder of Priceline.com, has proposed a kind of neutral private-sector utility for the licensing of patents. He argues that "We have spent trillions of dollars inventing things and 95 to 98 percent of all patents have yet to make ...
By Richard Stobbe You may have read the recitals or introductory clauses in a license or an assignment agreement. In most cases, these clauses are just skimmed, if they are reviewed at all. In a recent decision of the US Federal Circuit Court of Appeals, the court reviewed the impact of ...
By Richard Stobbe A couple, the Ecklunds, approached Oakcraft Homes, a custom home-builder. Based on their discussions, Oakcraft prepared a house plan and gave a copy of the plan to the Ecklunds. The couple later took that plan to a rival home builder, Toscana Developments. Toscana used Oakcraft’s house plan without ...
By Richard Stobbe What is eligible to be patented in the US? This week the U.S. Patent and Trademark Office (USPTO) released Interim Eligibility Guidance on patent subject matter eligibility. In this document, the USPTO summarizes the instructions for examiners on the following categories which are exceptions to patent eligibility: abstract idea, natural phenomena, ...
In a recent article by Scahill and Begley, we learned that the CIA is interested in targeting Apple products. I largely agree with the quote from Steve Bellovin, that “spies gonna spy”, so of course they’re interested in targeting the platform that rides in the pockets of many of their intelligence collection targets. What could […]
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