#CyberFLASH: Melanie Joly’s Tough Choice on Canadian Content: New Thinking or New Taxes

27521603693_5eda2af096_k-780x350Canadian Heritage Minister Mélanie Joly launched her surprise national consultation on Canadian content in a digital world last April with considerable excitement for the possibilities of revolutionizing policies born in an analog era. Joly spoke enthusiastically about the potential for Canadian creators to use digital networks to reach global audiences and for all stakeholders to rethink the cultural policy toolkit.

My Globe and Mail op-ed notes that submissions to the consultation closed last week and despite the hope for new, innovative thinking, many of Canada’s largest cultural groups placed their bets on extending a myriad of funding mechanisms to the Internet. Rather than overhauling older programs, the groups want those policies expanded by mandating new fees, costs or taxes on Internet services, Internet service providers, Internet advertisers, and even the sale of digital storage devices such as USB keys and hard drives.

Netflix is the top target, as the streaming giant is on the receiving end of demands to extend sales taxes and implement a Cancon contribution tax on foreign online video providers. For its part, Netflix highlighted its investment in Cancon in its submission, noting that Canada is now one of the top three locations worldwide for its commissioned original productions and pointing to dozens of Canadian programs that it has licensed or helped finance.

Yet groups such as ACTRA, the Writers Guild of Canada, the Canadian Media Producers Association, and the Directors Guild of Canada remain unconvinced, arguing that the government should require Netflix to contribute a percentage of its revenues toward the creation of Canadian content.

If implemented, such a Netflix tax could have far reaching effects. For example, ACTRA recommends that any online video service that distributes broadcast content with more than 2,000 subscribers be required to contribute 5 per cent of its gross revenue toward independent Cancon creation funds. The proposal could mean that many services block Canadian subscribers to avoid the mandated payments, resulting in decreased online video competition in Canada. In fact, the Directors Guild of Canada wants even more, running into the hundreds of millions of dollars annually.

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#CyberFLASH: Netflix border-hopping crackdown hurts VPN users seeking privacy, advocacy group says

529957915_216017972-e1401991064713A Canadian internet advocacy group is fighting back against Netflix’s recent crackdown on cross-border watchers.

Vancouver-based Open Media argues the clampdown unfairly targets people who value their privacy online.

In mid-January, Netflix began cracking down on customers hopping virtual borders to watch shows and films restricted to other countries, especially in the U.S., which offers a rich content library.

After Netflix crackdown on border-hopping, Canadians ready to return to piracy
Netflix crackdown on border hoppers could kill some unblocking companies, says expert
Netflix’s plan of attack was to block access to anyone using a VPN or virtual private network, software that can be used to disguise one’s physical location.

Open Media claims the move unjustly punishes people who use VPNs not to border hop but to protect their identity online for privacy reasons.

The organization has posted an online petition protesting the VPN crackdown and has already collected close to 45,000 signatures.

And today it’s sending a letter to Netflix CEO Reed Hastings, chastising the company for targeting VPN users. It’s also demanding a meeting to discuss better ways to tackle the thorny issue of regionally licensed content.

“You just haven’t been treating us well,” states the letter.

‘We’re not insignificant’

“We love Netflix but we don’t think that they need to be undercutting our privacy in order for us to access it,” says Open Media’s Laura Tribe, who penned the letter to Netflix on behalf of her organization.

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#CyberFLASH: Netflix enrages Canada by actually following through with VPN crackdown plans

netflix-errorTensions are rising between Netflix and the people of Canada once again this week as more border-hopping subscribers find out first-hand that the streaming service wasn’t bluffing about that whole “VPN crackdown” thing.

This particular storm started brewing back in January, when Netflix announced that it would be taking steps to prevent members from using virtual private networks, proxies or unblocking services “to fool our systems into thinking they’re in a different country than they’re actually in.”

As most non-American Netflix users well know, the streaming service offers each of its roughly 190 markets different volumes and types of programming based on region-exclusive content licensing agreements.

At press time, Canadian Netflix users could access approximately 4,000 movies and shows, while nearly 7,000 titles were available to subscribers in the U.S.

For many people, however, getting around geo-restrictions is as much about the quality of these titles as it is about quantity.

Since Netflix announced that it would be cracking down on customers who use VPNs, intermittent reports of payment problems with unblocking companies have been rolling in — alongside reports of Canadians finding ways around these problems to continue watching U.S.-restricted Netflix content.

This weekend, however, the tone among border-hopping Netflix viewers changed.

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#CyberFLASH: Netflix CEO Reed Hastings says blocking region-switching proxy services is ‘the maturation of Internet TV’

hi-netflixrtxyw4i-8colDuring a recent roundtable discussion MobileSyrup attended at Netflix’s head office in Los Gatos, California, Netflix CEO Reed Hastings finally commented on the company’s controversial move to begin blocking the use of proxy VPN/DNS services.

“We have the obligation to respect the content rights that we buy; it’s just a simple fairness thing. Someone else has paid for the rights in Germany, so we should respect that, just as we would expect the same in return,” said Hastings.

Since Netflix’s 2011 release in Canada, Canadians, as well as people from other regions of the world, have been using proxy DNS/VPN services to access additional Netflix libraries, most notably the wealth of content available in the U.S. It’s worth noting, however, that this is a direct violation of Netflix’s terms of service.

“The basic thing is if we license a movie here [the U.S.], and then another network licenses it in Germany, then we don’t don’t have the rights to display it in Germany. That’s why we have to enforce those VPN rules, just like Amazon Prime Instant Video and others do as well,” said Hastings. “Think of it as the maturation of Internet TV”

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#CyberFLASH: Netflix border crackdown cuts off some customers, but unblocking services fight back

hi-netflixrtxyw4i-8colYes, the Netflix crackdown on cross-border watching is real.

Customers worldwide have grown accustomed to sneaking over virtual walls to stream shows and movies restricted to other countries.

Now, Netflix is stopping some virtual travellers at the border, finally enforcing its age-old policy that says viewers aren’t allowed to access Netflix in other regions.

Meanwhile, unblocking companies that help virtual travellers defy the rules are fighting back. And some are already declaring victory in the battle to keep Netflix’s borders wide open.

Netflix access denied

Numerous customers with the unblocking company Unblock-Us started reporting technical problems soon after Netflix announced its crackdown on Jan. 14.

For a fee, unblocking services do the technical legwork to help customers hide their location so they can hop borders.

For example, the service would help a Netflix Canada customer watch Sons of Anarchy on Netflix U.S. The Canadian version doesn’t carry the show.

“Help,” wrote one border hopping customer on the Unblock-Us tech support site on Jan. 27, explaining that he lives in Toronto and can no longer stream content on Netflix UK.

Another customer posted, “I live in Norway and am currently using your service to watch American Netflix, but now it doesn’t work anymore.”

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#CyberFLASH: Why Netflix may come under fire from Ottawa: Geist

529957915_216017972-e1401991064713The Trudeau government has thus far said very little about its plans for future digital and copyright policy reform. There were few references in its election platform and the ministerial mandate letters that identify immediate policy priorities did not speak to the issue.

According to ministerial briefing documents recently released by the government, Canadian Heritage officials have told new minister Mélanie Joly that emerging issues may include targeting the use of virtual private networks and website blocking. The comments can be found in a departmental briefing for Joly on copyright policy, which includes a discussion titled “what’s next” for copyright.

The document identifies three issues, each likely to be exceptionally controversial. The first involves the use of virtual private networks (VPN) for copyright infringing purposes. VPNs are widely used in corporate environments to ensure secure communications and by a growing number of individual Internet users seeking technological tools to better safeguard their online privacy.

The same technologies can be used to hide infringing activity, however. Those activities raise genuine issues, though the prospect of targeting the technology itself would quickly generate robust opposition from those who rely on VPNs for a myriad of legitimate purposes.

Officials point to “hybrid legal/illegal offer of online content” as another emerging issue. The reference to hybrid offering may be a reference to those accessing U.S. Netflix, which is a legal service, but raises concerns when a non-U.S. subscriber accesses content that is not licensed in their country.

The popularity of accessing U.S. Netflix attracted considerable attention earlier this year when a Bell Media executive said that Canadians who access the U.S. version of Netflix are stealing.

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#CyberFLASH: Sorry Bell, accessing U.S. Netflix is not theft: Geist

house-of-cards.jpg.size.xxlarge.letterboxBell Media president Mary Ann Turcke sparked an uproar this week when she told a telecom conference that Canadians who use a virtual private network (VPN) to access the U.S. version of Netflix are stealing.

Turcke is not the first Canadian broadcast executive to raise the issue – her predecessor Kevin Crull and Rogers executive David Purdy expressed similar frustration with VPN use earlier this year – but her characterization of paying customers as thieves was bound to garner attention.

Turcke’s comments provide evidence of the mounting frustration among Canadian broadcasters over Netflix’s remarkable popularity in Canada. Netflix launched in Canada less than five years ago, yet reports indicate that it now counts 40 per cent of English-speaking Canadians as subscribers. By contrast, Bell started its Mobile TV service within weeks of the Netflix launch, but today has less than half the number of subscribers.

While Canadian broadcasters may be unhappy with subscribers that access the U.S. service, the problem is primarily a competitive issue, not a legal one. Some estimate that 25 per cent of Canadian subscribers have used a VPN to access Netflix. That means 75 per cent of subscribers – millions of Canadians – are content with the Canadian service that offers the largest Netflix library of content outside of the U.S.

Turcke’s claim that the minority of Canadian subscribers who access U.S. Netflix through VPNs are “stealing” simply does not withstand legal scrutiny. Those subscribers might be breaching the Netflix terms and conditions, but that is not breaking the law.

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#CyberFLASH: How Canadian Law Views Online Streaming Video

15888328569_285bb303b4_k-780x350The misuse of Canada’s new copyright notice-and-notice system has attracted considerable media and political attention over the past week. With revelations that some rights holders are requiring Internet providers to send notifications that misstate the law in an effort to extract payments based on unproven infringement allegations, the government has acknowledged that the notices are misleading and promised to contact providers and rights holders to stop the practice.

While the launch of the copyright system has proven to be an embarrassment for Industry Minister James Moore, my weekly technology law column (Toronto Star version, homepage version) notes that many Canadians are still left wondering whether the law applies to Internet video streaming, which has emerged as the most popular way to access online video.

In recent years, the use of BitTorrent and similar technologies to engage in unauthorized copying has not disappeared, but network usage indicates its importance is rapidly diminishing. Waterloo-based Sandvine recently reported the BitTorrent now comprises only five per cent of Internet traffic during peak periods in North America (file sharing as a whole takes up seven per cent). That represents a massive decline since 2008, when file sharing constituted nearly one-third of all peak period network traffic.

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