David vs Goliath: Why the Global Mode stoush is good for consumers

NZ consumers simply don’t want to have limited content options, and to pay more for goods and services in NZ – whether it be for digital content, books, DVDs or software – than our overseas cousins. That's the position of Global Mode and its allies. But MediaWorks, Sky and TVNZ definitely have other ideas.

CallPlus Group and ByPass Network Services Limited (BNSL) yesterday responded to the cease and desist letters sent out by Global Mode opponents Sky, MediaWorks, TVNZ and Spark. And rather than bowing down to the corporate juggernauts, the pair of organisations instead responded with a level of competitive enthusiasm that rarely makes it through the corporate PR force field.      

Here's what CallPlus Group chief executive Mark Callander had to say:       

We have responded to SKY, Spark, Mediaworks and TVNZ’s cease and desist letters today.

We reject their vague assertions and are seeking clarification of their claims.

We stand by our strongly-held belief that access to the internet via Global Mode is completely legal, and believe threats of legal action from this gang of big media companies are just an attempt to restrict consumer choice in favour of their profits.

NZ consumers simply don’t want to have limited content options, and to pay more for goods and services in NZ – whether it be for digital content, books, DVDs or software – than our overseas cousins.

We’re glad to see that ByPass, who supply the Global Mode service to us, have not caved in to these unfair demands so that together we can keep Global Mode going for the benefit of Kiwi consumers.

And here's the publicly available response from BNSL chief executive Patrick Jordan-Smith:

We have your letter of 2 April.

To be honest we were shocked to get it. We are a tiny company trying to innovate in New Zealand. To receive without warning a grossly threatening legal letter like that from four of the largest companies in New Zealand is not something we are used to. It smacks of bullying to be honest, especially since your letter doesn’t actually say why you think we are breaching copyright.

Your letter gets pretty close to the speculative invoicing type letters that lawyers for copyright owners sometimes send in the US “pay up or shutdown or else were are going to sue you”! Not fair.

We have been providing the Global Mode® facility for 2 years. In all that time, none of your Big Media Gang have ever written to us. We assumed they were OK with Global Mode and we continued to spend money innovating the facility and providing innovative NZ ISPs with a service that their customers were telling them they wanted – a service that lets people pay for content rather than pirate it.

We did that on our understanding that geo-unblocking to allow people to digitally import content purchased overseas is perfectly legal. If you say it is not, then we are going to need a lot more detail from you to understand why. Simply sending us a threatening letter, as frightening as that may be, does not get us there and is not a fair reason for us to shut down our whole business.

Emotive

While both these statements have been addressed to the so-called "Big Media Gang," they are crafted in plain, emotive English to appeal to the consumers who might read them. And this has not been done by accident. Both responses could've been written in inaccessible legal English and delivered directly to parties involved, but that has not been the style of the Global Mode players thus far.

When MediaWorks, Sky and TVNZ first ordered Slingshot to remove its Global Mode ads from television, Slingshot general manager Taryn Hamilton immediately turned to the media, accusing the old media guard of banning the ads and stopping consumers from accessing content readily available in international markets.

“It’s a sad day when our TV stations start to ban ads because they feel threatened by one of their advertisers and the products they are offering," said Hamilton at time. "In this case Sky is using its position to obstruct Slingshot because they feel intimidated by Global Mode."

'Us' vs  them

The 'us vs them' dynamic has been maintained ever since the issue first flared, and the proponents of Global Mode have consistently placed themselves in the consumers' corner against the major corporates, who are depicted as being resistant to change.

Disruptive technology

And change is really what this bickering is all about. In a number of industries, regulation is struggling to keep up with technology. Just look at the incumbents—and often the authorities—battling against the rise of Airbnb and Uber at the moment. And the internet has also called into question what some believe are anachronistic geographic broadcast rights. 

The rapid emergence of video on-demand services has clearly rattled the big players in the market, here and overseas. If consumers did not have demand for these services, then the major players could have continued trucking along with a system that has been in place for decades. TVNZ and MediaWorks have both launched their own on-demand services in recent years, Spark has invested in Lightbox and Sky has unveiled Neon. 

These moves when viewed alongside the emergence of Netflix have created one of the most interesting commercial battles since the explosion of mobile devices on the market. Consumers are no longer forced to attain their content from a single source, they can now pick and choose from a range of options. And within the wider telco industry, in a few years, it's moved from fairly stagnant, with two big juggernauts not doing too much, to extremely vibrant, with a range of activity, excitement and tension, from Spark's rebrand, to Vodafone's acquisition of Telstra Clear to 2degrees' ascent and move into fixed line, Call Plus' purchase of Orcon (and M2's purchase of Call Plus), and, of course, the Global Mode stoush. 

Run faster and win

You run faster when you're being chased. And in a recent interview with StopPress,2degrees marketing manager Malcolm Phillipps explained how beneficial the impact of increased competition can be for consumers.  

Phillipps said that in 2009, before 2degrees entered the market, New Zealand had some of the highest mobile costs among OECD nations. And, after the entry of the new company, prices dropped significantly and Kiwi affordability increased markedly.

This competition drives innovation. Each of the traditional media players—and the telcos themselves—have been forced into making moves into the SVOD market in order to align their services more closely with modern consumer habits—and drive demand for data—and these habits are being influenced by technological advances in the online space. 

And this principle isn't only limited to SVOD. Even relatively new tech companies such as Skype are being forced to innovate in order to stay relevant as new competitors vie to usurp its position as the preeminent online calling device. For this reason, the company recently launched a translation service that enables languages to be inter-changed in real time. And although the company might have eventually got around to incorporating this innovation in its own time while holding the lion's share of the market, it's difficult to argue against the fact this was probably expedited by the growing strength of competitors such as Whatsapp, Viber and Gchat. 

    

This being said, it is necessary to have rules ensuring competition is fair for all those involved. The rights holders and broadcasters obviously see backdoor access as akin to stealing (in a column in the Herald, Christian Barry argued that even piracy is not the same as stealing a physical object as there are multiple copies). Some others, such as Consumer NZ, believe consumers who are happy to pay for international services are missing out and corporate profits are being protected. It's a fascinating battle and, according to the NBR (paywall), we might find out pretty soon whether dynamic proxies are illegal as a case is set to be brought to the High Court.

This article first appeared on www.stoppress.co.nz