Inside Story

Almost live is fully legal

The AFL and the NRL’s grievance against Optus is far from the epic battle that's been portrayed in the coverage, writes Scott Ewing

Scott Ewing 23 February 2012 1082 words

The furore following the Federal Court’s decision in what has become known as the Optus case reached a climax this week when the Australian Football League president, Andrew Demetriou, called on football fans to boycott Optus services and the company responded with a threat of further legal action.

At the centre of the legal and public relations battle is TV Now, a service that allows Optus customers to record free-to-air television programs and watch them on their computers and certain mobile devices. Customers don’t record directly to their devices; they retrieve the recording from the Optus server when they’re ready to watch.

The action was brought by Optus, which claimed that the AFL and the National Rugby League had made unjustified threats against it by claiming that TV Now infringed their copyright and by foreshadowing steps to restrain Optus from providing the service.

The major beef of the AFL and the NRL relates to the “almost live” nature of recordings made for Apple iPhones and iPads. While recordings can’t be accessed on a personal computer or an android or other 3G device until the show being recorded has finished, a consumer using an Apple iOS device can begin viewing the broadcast after two minutes has elapsed. The AFL and NRL, both of which have sold the internet broadcast rights for their matches to Telstra, argued that this service infringed their copyright interests.

Justice Rares found that TV Now was simply a remote PVR (personal video recorder) service. It was the consumer, not Optus, who made the decision to record a particular program and it was the consumer who decided when and where he or she would view the program. Since the Copyright Amendment Act 2006, it has been legal for consumers to tape television programs and to reproduce such programs in different formats for their personal use.

The response to this decision by various interested parties and commentators has been almost universally shrill. Understandably the AFL and NRL have been keen to vigorously protect their commercial interests. They have been aided and abetted in this mission by a bevy of consultants and commentators who have claimed that the judgement destroys the commercial value of internet rights for bodies such as the AFL and NRL. It does no such thing.

In the case of the AFL, for example, Telstra has the internet broadcast rights for all games. In Melbourne each week, three of those games will be broadcast live on free-to-air television, one game will be broadcast in delay on free-to-air and all nine matches will be televised live on pay TV. The judgement applies only to television programs that all consumers have the right to view free of charge at the time of broadcast and, since 2006, to record and watch later.

TV Now is only available to consumers living in capital cities and consumers can only use it to view the free-to-air television available in their city market. In Melbourne on a Friday or Saturday night it is almost impossible to be more than twenty metres from a television showing (or capable of showing) the football. Meanwhile, less than a third of households have a Foxtel subscription and probably less than one-in-five hotels and fewer restaurants and bars have Foxtel. As a non–Foxtel subscriber, my only interest in Telstra’s online offerings is to be able to access matches that are not shown live (or near live) on free-to-air; the discussions on football chat sites suggest that I’m not the only one.

The prime minister has already been quoted as saying that the government has told the two sporting bodies “that we will urgently consider options here. I think we are all concerned what this can mean for our great sporting codes and it was an unexpected development.” It is a little difficult to decipher what she found unexpected; surely not the fact that Australian consumers are able to watch free-to-air television programs at a time and place of their choosing? Optus clearly wasn’t surprised – it brought the case to court.

Her concern for “our great sporting codes” is also a little difficult to understand. The AFL’s broadcast rights deal is $1.25 billion for 2012–16, with $153 million from Telstra for the internet rights. Telstra uses these rights in two main ways: to deliver content over the internet through their partnership with Foxtel and to deliver via a mobile app. Because the decision only applies to games that are delivered free-to-air, which everybody with a television can access, this decision has no real implication for the first of those services.

Access to Telstra’s mobile football service will be limited to Telstra mobile customers. TV Now is limited to Optus customers. The potential loss to Telstra through the Optus decision would appear to be limited to two sources: first, the potential loss of Optus customers who would otherwise have been attracted to a Telstra mobile service because they wanted to watch football matches that were also being televised free-to-air on a mobile device; secondly, current Telstra customers who decide that now they can watch matches broadcast free-to-air on an Optus mobile device they’re prepared to change carriers. Either way, this doesn’t seem like a major problem for Telstra.

As far as the AFL and NRL are concerned, if you sell your broadcast rights to free-to-air television to be shown live (or near live), then people are going to watch those shows for free, or at least at the expense of being exposed to advertising. For these games, there is not much value left to sell. For those games broadcast exclusively on subscription television, on the other hand, there is a very large market left to sell to internet broadcasters given that less than a third of Australian households have a subscription television service. One possible implication of the Optus decision could be that it may be commercially advantageous to sell more of the two codes’ games to subscription television.

It would be very bad policy to deny remote PVR services such as TV Now to Australian consumers to protect a relatively small revenue stream for our major sporting bodies. Broadcasting rights deals are understandably the centre of the AFL and NRL’s universe, but for the rest of us they are just one small part of an increasingly complex and interdependent media landscape. •