UPDATE: Sky TV, Spark shares up as Kiwis lose global access   24 Jun 2015

UPDATE: Sky TV, Spark shares rise after settlement squashes 'Global Mode'

(Recasts with share prices, fund manager and Internet NZ comment)

By Paul McBeth

June 24 (BusinessDesk) - Sky Network Television and Spark New Zealand shares gained after the consortium of telecommunications companies and broadcasters cut a deal with rebel internet service providers, effectively blocking Kiwis from accessing global content in breach of the firms' local rights.

In a statement to the NZX, Sky said the legal proceedings against ISPs offering 'global mode' have been dropped after the parties reached a settlement that will end the service from Sept. 1. Sky shares climbed 1.3 percent to $6.18 while Spark advanced 0.5 percent to $2.805.

"It's more of a medium-term issue that they've held back rather than one that's necessarily a massive one right now," said James Lindsay, who helps manage $400 million for Nikko Asset Management. "You've seen Sky subscriptions being relatively flat to slightly weak, so that is obviously showing that the market is changing."

Sky teamed up with Television New Zealand, Media Works TV and Lightbox, Spark New Zealand's online streaming service, to take the action against Bypass Network Services, CallPlus Services, Orcon and Flip Services over the service, claiming it breached copyright obligations and the Fair Trading Act.

Online streaming video has become increasingly competitive as traditional broadcasters and telecommunications companies alike have seen it as an avenue to replace some of their shrinking revenue streams.

Lindsay said the ruling will also have some impact on the ISP market, with 'global mode' attractive to consumers who wanted to access content blocked along regional lines. Still, he anticipates there will be a core group of users who will continue to circumvent regional blocking.

While the broadcasters were adamantly opposed to the 'global mode' service, they've been less stringent in their opposition to virtual private networks (VPNs), another way consumers can get around regional blocks.

Industry lobby Internet New Zealand criticised the settlement, saying it didn't answer the question of whether accessing geographically blocked content created copyright concerns.

"The media companies have said that they wanted to clarify their own legal rights over content - a settlement doesn't achieve this, and leaves us all none the wiser," Internet NZ chief executive Jordan Carter said in a statement. "There remains a number of questions that will now go unanswered due to this withdrawal."

(BusinessDesk)

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