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The streaming wars

Ramon Lobato and James Meese

12 February 2016

How did Australia’s love affair with Netflix begin? In this extract from a new book, Ramon Lobato and James Meese trace the geoblocking debate and its political fallout


Hotspot: programs like House of Cards (above) and Game of Thrones became massively popular in Australia thanks to unauthorised streaming and torrenting.

Hotspot: programs like House of Cards (above) and Game of Thrones became massively popular in Australia thanks to unauthorised streaming and torrenting.

Over the past decade Australia has become an unlikely hotspot of digital disobedience. Frustrated by the high cost and slow delivery of first-release TV and movies from the United States – and by their own perceived status as second-class media citizens – Australians have taken to offshore streaming with a singular enthusiasm, signing up for virtual private networks, or VPNs, and proxy services and using them to gain access to Netflix, Hulu and HBO Now in the United States, and the BBC’s iPlayer.

These practices climaxed during the years 2012 to 2014, and subsided somewhat after the launch of Stan, Presto, and Netflix’s Australian service. But the phenomenon of digital “geo-evasion” endures, fuelled by controversy over the larger range of programming available from international streaming services. The circumvention tactics that many Australian internet users learned during this period allow them to cross digital borders and view this offshore content with relative ease.

These tactics will likely be familiar to many readers. Tech websites are abuzz with tips and tricks on how to evade geoblocks; DNS routing services like Getflix and UnblockUS have attracted many Australian subscribers; and VPN brands like HideMyAss and Private Internet Access have almost become household names. A complex informal apparatus for accessing digital content has become normalised among the early adopters and TV junkies who drive consumer technology adoption in Australia. In these circles, VPN- and proxy-enabled streaming has become a mainstream pastime – the polite alternative to online piracy.

Early adopters are brazen about their circumvention. Most argue that they have a right to access content if it is not available legally and in a timely fashion, or if they feel they have to pay too much for it. But these consumer issues have become folded into a wider set of policy debates concerning Australia’s economic future and national self-image. Geoblocking and circumvention have attracted the attention of parliamentarians, competition regulators, consumer groups and rights-holders, and have overlapped with discussions around copyright protection, global governance and tax evasion. In other words, they are trigger points for a wider conversation about Australia’s place in the world.

Australian audiences have often waited months or even years to view imported movies and TV series. In the past, they had few other alternatives and were generally content to wait. But nowadays local audiences are hooked into global TV fandom in real time through Twitter, internet forums and fan websites. Broadcasters have tried to reduce delays where possible, with shows increasingly fast-tracked from the United States and Britain. But these are the exceptions that prove the rule. In the current licensing and advertising environment Australian broadcasters find it hard to get content to air quickly enough to satisfy audiences, who turn to Bit Torrent and VPNs as a way around the time lag.

Making matters worse is the problem of pricing. Digital content purchased through iTunes and other online services is invariably more expensive in Australia than overseas (although pricing for subscription services like Netflix is broadly comparable). According to the consumer group Choice, Australian viewers of The Walking Dead “will be paying up to 376 per cent more than people watching the same show in the United Kingdom.” This discrepancy, known colloquially as the “Australia tax,” has been a major topic of public discussion. Dissatisfaction about digital pricing has become a rallying cry for Australian early adopters who increasingly see themselves as disadvantaged media citizens “fed on a diet of geoblocking, slow content delivery and price gouging.” This adds fuel to the fire of consumer resentment, and provides a rhetorical justification for piracy and geo-hacking.

To understand the evolution of this debate we need to consider how the wider political and public policy context has changed in recent years. By 2012, geoblocking had become a mainstream issue. Sensing the mood of the public, Australian regulators were questioning the price-discrimination policies of American tech companies and asking why our media and software products were more expensive than they needed to be. Opportunistic politicians started to see geoblocking as a popular issue, one that enabled a nationalist narrative (US-based multinationals ripping off Australians) to be fused with a free-market narrative (geoblocking as anti-competitive). In other words, it was a vote-winner. As Labor MP Ed Husic put it, “For too long, businesses and consumers have asked: why does it sometimes cost up to 80 per cent more to simply download software in Australia compared to overseas… No one doubts that IT firms should be able to recover legitimate costs but the Australian consumer shouldn’t shoulder an unfair share of the pricing load.”

The level of disquiet was such that the government announced a parliamentary inquiry into the “Australia tax” in 2012. Its final report included some remarkable recommendations, including abolishing all parallel-import restrictions, amending the 1968 Copyright Act to allow lawful circumvention of geoblocking, and educating consumers about how to use VPNs effectively. The report even floated the possibility, as an option of last resort, of a government ban on geoblocking. Although none of these recommendations has been adopted, the report was widely seen as tantamount to an official endorsement of circumvention. As a Choice representative said around the time of the hearings, “Look, if businesses want to set up virtual walls to make Australians pay higher prices, then we think Australians have every right to use legitimate means to climb those walls, to knock them down, to get around them.”

With government officials and consumer advocates singing from the same songbook, circumvention of geoblocking has become a quasi-sanctioned practice. This state of affairs arguably reflects the inequities of digital media geography, with Australian consumers often facing significant pricing differentials for the same products and companies regularly providing little or no justification for the practice. But over time these pricing issues have unfortunately become intertwined with other discourses about foreign services and offshore “competition,” leading to a situation where many Australians now see themselves as victims of cultural globalisation. A politics of resentment has taken hold, tinged with nationalist overtones. Its central figure: the ripped-off Aussie consumer.

One result of these developments has been widespread consumer adoption of circumvention technologies. Taking a cue from their elected representatives, Australians began signing up for offshore streaming services in ever-greater numbers, using fake IDs and location-masking tools. In part this was due to more people using streaming services generally: internet speeds were rising, catch-up TV was catching on, and everyone was used to watching TV in their browsers. From here it was just a small step to hacking into BBC iPlayer, Netflix and Hulu.

One of the first indicators of a shift came when a national electronics retailer, Harvey Norman, caused a stir by selling a product package designed explicitly for geo-circumvention. The product in question was a set-top box – the McTivia – which came bundled with a VPN subscription. “Stream direct from the USA!” promised the marketing material. “[T]ailor your home entertainment system to meet your lifestyle and gain access to a global library of previously geographically restricted media direct to your TV.” A minor scandal followed after the Australian picked up the story, and Harvey Norman insisted that it did not mean to promote geo-hacking.

Detailed how-to guides also began to appear on Australian tech websites. Forums overflowed with tips about which VPN had the best download speeds or customer service. National newspapers buzzed with reports of 200,000 unauthorised Netflix subscribers in Australia. Tech journalists openly instructed their readers on the finer points of VPN and proxy use, proclaiming the benefits of browser plugins like MediaHint and Hola. On tech websites, such as Gizmodo, Whirlpool and ITNews, the discussion about circumvention was even more ubiquitous and unapologetic.

This was the tip of the iceberg. By now, thousands of Australian households had taken up personal VPNs and proxies. In research conducted during 2013 with Swinburne University’s World Internet Project, a biannual telephone survey of 1000 Australian users, it emerged that 18 per cent of respondents used VPNs or proxies – a much higher figure than expected. While some of this usage was business-related, it still represents a remarkably high level of familiarity with what were formerly obscure networking tools. A follow-up study by Essential Research in 2015 produced similar findings, suggesting that 16 per cent of Australians have used VPNs or the anonymity network Tor.

Malcolm Turnbull – a former internet entrepreneur known for his early-adopter habits – summed up the general mood when, as communications minister, he addressed the crowd at a Govhack event. “You’ve all got VPNs anyway,” he remarked. “All of you appear to be somewhere in Iowa when you go online… I know that… anyway, I won’t go on.”

Running through this debate about geoblocking are several unresolved legal and policy issues. One of these is the uncertain legal status of VPNs as circumvention tools.

There is no clear consensus on whether using VPNs to access offshore content infringes Australian copyright law. When he was communications minister, Turnbull stated that circumventing geoblocking was not illegal under the Australian Copyright Act – but rights-holder groups such as the Australian Copyright Council disagree. Some media producers have even called for the government to legislate against unauthorised VPN use. Legal scholar Nic Suzor has concluded that VPN-enabled geo-circumvention is primarily a contractual issue between users and platforms, but that it “might technically be an infringement of copyright under Australian law, and there is a small possibility that it might be a crime under Australian law as well.” In other words, this is a grey area of the law.

This legal uncertainty is clouding the Australian public’s understanding of VPNs, which can of course be used for many purposes unrelated to geo-evasion. In the wake of hacking scandals and daily reports of cybercrime, VPN use is being promoted by consumer and technology advocates as a way to stay safe online – an act of responsible cyber-citizenship. VPN use is also being recommended as an antidote to Australia’s controversial metadata retention law, the Telecommunications (Interception and Access) Amendment (Data Retention) Act 2015, which requires ISPs and telcos to retain logs of customer activity for two years. Unsurprisingly, there has been widespread public concern about data retention, and VPN services are an appealing counter-measure. Savvy VPN companies such as PureVPN and IBVPN now promote themselves to Australian users on this basis.

Recent developments in copyright law also bear directly on VPNs. June 2015 federal legislation gives judges the power to block access to pirate websites such as The Pirate Bay. While the law is expected mostly to target file-sharing and streaming sites, the initial wording of the law was vague and many consumer groups feared that websites for VPN services could be blocked too. In the end the government was forced to add an explanatory memorandum specifying that the blocking should not apply to VPNs “that are promoted and used for legitimate purposes, or merely used to access legitimate copyright material distributed in a foreign geographic market.” But given that the marketing practices adopted by many VPNs are not always legitimate, there is still some ambiguity here.

All this is happening while the federal government is trying to introduce a new internet industry code of practice – a three-strikes graduated response scheme in which repeat offenders receive infringement notices. Like the metadata law, the three-strikes code is likely to further increase demand for VPNs as an identity-masking tool for peer-to-peer users. In this complex game of whack-a-mole, public awareness of VPNs, proxies and other circumvention tools is always on the rise.

Amid all this activity, Netflix’s Australian service was launched in March 2015. For the first time Australians could access an authorised, local version of the service, which should in theory reduce the appeal of geo-hacking. Due to licensing agreements and limited investment in local content acquisition, though, the local Netflix has a much smaller library. Only 1116 streaming titles were available at launch, compared to 7000 in the United States. This is a sore point for Australian consumers, and has attracted a lot of media attention.

Last month the game changed again when Netflix made two major announcements: that it was expanding its service to every country except China, North Korea, Syria and Crimea; and that it would be cracking down on proxy and VPN access, in order to “respect and enforce content licensing by geographic location.” But the extent of the crackdown seems limited so far. Some proxy services have reported access issues, but most experienced Australian users are still able to access the US Netflix catalogue.

All things considered, what does the arrival of Netflix Australia mean for geoblocking and circumvention? On the one hand, there is broad agreement that Netflix Australia has been a success: subscriber numbers have been strong and Australians for the first time seem happy to pay for TV. In theory, this should reduce both piracy and circumvention. On the other hand, widespread awareness of the catalogue disparity has stirred resentment and is fuelling a different kind of circumvention – a kind of transnational “shopfront hopping” by paid-up Netflix subscribers, a much less threatening act of middle-class consumer rebellion. So, just as one driver for VPN use disappears, another appears in its place. Consequently, it seems reasonable to assume that geo-circumvention activity will be a feature of Australian digital media consumption for some time to come, even if the landscape of services, policies and workarounds continues to shift.

The geoblocking issue has also become entwined with a sometimes heated debate about taxation. In May 2015 the former Australian treasurer, Joe Hockey, announced a “Netflix tax” – a tax designed to bring foreign over-the-top services into line with local services that must charge a 10 per cent goods and services tax. This policy was designed to boost the national coffers while mollifying nervous Australian media moguls who have been clamouring for government protection against foreign streaming services. (Presto, owned by Foxtel and Seven West Media, and Stan, owned by Fairfax Media and the Nine Network, already argue that Netflix’s GST-free status constitutes an unfair commercial advantage.) But the Netflix tax had another political advantage for the government. It played neatly into the narrative that both sides of Australian politics have been pushing – that tax-dodging multinationals are ripping off Australian consumers and citizens.

Looking ahead, one issue to watch is the relationship between internet privacy and consumer advocacy. Historically, Australia does not have a strong tradition of constitutional privacy protections, unlike Europe and the United States, and public discussion of surveillance and privacy is somewhat muted by comparison. Yet the rise of VPNs seems to constitute something of a turning point, fusing together privacy, anonymity and media consumption as a public controversy for the first time. Many Australians already have a strong familiarity with the use of VPNs to torrent safely and avoid geoblocking, so it is likely that there will be some spillover into other privacy-related uses.

These practices appear to be spreading beyond early adopters and geeks to include a certain subset of more mainstream users – exactly the same community who are the biggest fans of streaming and download media. Here again, a link between consumption and citizenship is evident, as Australian consumers’ impatient desire for the latest thing feeds directly into an understanding of issues like digital privacy, internet policy and cyberpolitics. The end result is something quite unexpected: the mainstreaming of DIY privacy protection and anonymisation as everyday practices among a substantial minority of the population. •

This is a revised extract from Geoblocking and Global Video Culture, an open-access book edited by Ramon Lobato and James Meese and published by Institute of Network Cultures.

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