Why ISPs can’t afford to let iiNet lose the piracy lawsuit

Alex Zaharov-Reutt
Sunday, 23 November 2008 06:52

IT Industry - Strategy

If iiNet loses the piracy lawsuit, the ramifications for all Australian ISPs will be immense, forcing all to spy on their users and become online policemen. It will wipe out online privacy, slow down the Internet, impede the free flow of information, impose massive costs on ISPs, impose massive costs on users, and put broadband progress back by 10 years in Australia. Can iiNet’s competitors – or indeed ISPs worldwide – afford to let this happen?

A test case is about to get underway in Australia that has ramifications for Internet Service Providers (ISPs) worldwide – that of the major movie studios against a second-tier Australian ISP with only 5% of the local market.

The movie studios are represented in Australia by the Australian Federation Against Copyright Theft (AFACT), and they have gone after a smaller, less well resourced ISP in what Electronic Frontiers Australia (EFA) says is an attempt “to bully Internet Service Providers into becoming copyright police”.

Going after iiNet is a clever, opportunistic move. With only around 5% of the local market, as opposed to the approximately 50% market share of Australia’s largest ISP and dominant telco, Telstra, it’s clear that iiNet does not have the same level of resources as Telstra to fight AFACT’s action.

iiNet’s managing director, Michael Malone, also recently lambasted Australia’s Federal Minister for Communications, Senator Stephen Conroy, in a very unflattering manner, over the Government’s plan to force all ISPs to filter content.

It would appear that AFACT has taken this opportunity to target iiNet, knowing full well that Minister Conroy and the Federal Government are unlikely to be terribly willing to help iiNet after Malone’s outrage at the waste of time, money and speed that the content filter imposed on ISPs represents.

Of course, it could all simply be incredibly coincidental timing, but AFACT isn’t stupid – just like potential blockbuster movies are released at specific times of the year, AFACT’s court action was clearly launched at this time for maximum effect, be it “terminal velocity, deep impact or Armageddon”. Or other appropriate movie titles signalling impending doom.

The thing is, if there’s infringing behaviour on iiNet’s network, then there is, in theory, infringing behaviour on all ISP networks. But going after the largest ISP in Australia would be a much bigger legal battle.

After all, if a precedent can be set in a cheaper way with a smaller ISP, the result would be the same as if the largest ISP was gone after in the first place.

So, given that a decision against iiNet would set a local and global precedent that would force all ISPs to spy on their users, infringe their piracy, slow down their connections, shut users down on allegations not proven in courts, raise costs and thus raise costs for users – among other deleterious costs and effects – can the Australian Internet industry afford not to fully support iiNet against AFACT’s piracy lawsuit?

Please read on to page 2.