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Copyright proposals could cost ISPs

The Copyright Review Commission's proposed three-strikes remedy could be financially ruinous for Internet service providers.

A report into copyright infringement issues in SA has made a far-reaching proposal that could see Internet service providers (ISPs) forced to cut off their own customers if they are found to continually abuse copyright law.

Trade and industry minister Rob Davies appointed the six-member Copyright Review Commission in November 2010, to review concerns raised by the music industry around the collection and distribution of royalties to artists. Its report was recently released by Davies as a precursor to a meeting president Jacob Zuma will hold with the creative industry in November.

The report suggests implementing a rule similar to the “three-strikes” law that has been implemented in France, the UK and New Zealand. It calls for legislative amendments to require ISPs to “adopt a graduated response for repeat infringers culminating in the suspension of access services of an individual”.

According to the report, both the Electronic Communications and Transactions (ECT) Act and the guidelines that allow the Internet Service Provider Association (ISPA) to be a recognised body should be amended.

Too drastic

Currently, under the ECT Act, there is no general obligation on ISPs to monitor the data which it transmits or stores; or to actively seek facts or circumstances indicating an unlawful activity. ISPA is opposed to the adoption of a three-strike rule to curb piracy, the report notes.

ISPA regulatory advisor Dominic Cull says the report recommends that ISPs disconnect their own clients on the basis of allegations by a third party that have not been verified by a court or other tribunal. “This is a drastic remedy which requires compelling evidence and a great deal more consideration of the impact.”

Cull says ISPA believes the recommendation does not take into account the bigger policy implications of tampering with the neutrality of ISPs by making them an enforcement agency for third-party rights.

There is also no recognition of the technical implementation difficulties or the potential increases in consumer prices, says Cull. He says the report notes that other jurisdictions have had difficulties with the three-strike rule, but glosses over the challenges.

“ISPA supports efforts to promote local content and improve the position of local artists, but does not believe this can be done through serving the interests of extremely powerful international lobbying groups.”

Cannot be done

Internet Solutions (IS) legal manager Marc Furman points out that first-tier ISPs are unable to suspend access to individuals who are so-called repeat offenders. He explains that IS, for example, provides connectivity to downstream users and is unable to identify and block an individual from accessing a particular service.

“It would be completely ineffective to require a company such as IS to block a username when the offending individual may have other usernames which remain unblocked.” Furman says this is just one of the technical problems around the recommendation.

Furman says ISPs cannot police the Internet effectively. While ISPs are able to take certain technical steps at times when required to ensure compliance with the law and regulations, it is far too broad to suggest ISPs are able to police the Internet, he adds.

“A heavy-handed obligation on ISPs to monitor and report on its customers could potentially do much harm to the ISP industry, not least by destroying relationships of trust which have developed over time between ISPs and their customers.”

Furman adds that, apart from being impractical and often technically impossible for ISPs to police the Web, in most cases such far-reaching requirements would be commercially ruinous to an ISP. He says it would involve tremendous costs in infrastructure and overheads.

It should be noted that the recommendations of the report are not very detailed, and will still require much fleshing out before they can be better understood and dealt with, says Furman. He says IS is ready to comply with laws and regulations, but the report does not take the complexities of such a proposal into account.

No protection

South African copyright and performers' protection legislation is outdated and does not provide for all forms of digital exploitation, says the report. “SA's antiquated legislation has led to uncertainty and hampered the efforts of collecting societies to license digital content providers.”

Citing the Recording Industry of SA's Digital Music Statistics report, the commission points out that about 3.6 million songs are illegally downloaded in SA every month, costing the sector R432 million a year.

The document also quotes PricewaterhouseCoopers' Entertainment and Media Outlook Report from 2010, which estimates that, if the current trend continues, by 2014 the potential revenue loss due to copyright infringement will be more than R500 million a year.

Collecting societies, which handle royalties, are unable to collect royalties where third parties make sound recordings available to the public in an interactive manner, notes the commission.

In the electronic environment, it is a relatively simple matter to infringe intellectual property rights, the commission says. “Technology is changing the way that copyright goods can be illegally copied and distributed.”

However, monitoring copyright violations is far from simple, especially when content exists in an electronic form and can be distributed instantaneously, cheaply and easily in the form of digital copies, the quality of which is indistinguishable from that of the original, says the report.

The liability of service providers for the infringement of intellectual property rights remains controversial in intellectual property law, it notes. The commission says SA should amend the Copyright Act to include provisions suitable for the digital environment.


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