“Free” TV or “Free Riding”?

“Watch TV for Free” screamed the online ad. What? No more cable bills? Never again pay for content? How is this possible? Well my friend, just buy this “fully loaded” streaming TV box and let the era of free entertainment begin!

Sounds too good to be true? It is. We all know that when something is produced through an investment of capital and labour, as a business proposition, it is usually not given away. This principle applies in the entertainment industry just the same as anywhere else. Whether the content is exclusive and high quality or more mundane filler, it all has a cost of production, and that cost has to be covered somewhere, somehow. Is there, anywhere, such a thing as “free TV”? There is certainly television content that can be accessed without a cable subscription now that digital antennas are becoming more popular, but the content made available is either ad supported or, in the case of PBS, the BBC and Canadian equivalents such as TV Ontario, TV5 or British Columbia’s Knowledge Network, taxpayer or donor supported. Streaming ad-free content from pirate sites in competition with subscriber supported premium cable or online providers doesn’t fit the acceptable definition of “free TV” anywhere, even though it may be advertised as such. That is what a number of streaming box vendors in Canada—and in some other countries—are finding out.

This is really all about getting a free ride at someone else’s expense. In this case the “someone else” is Bell Media, Rogers Communications and Videotron, large corporations (cable providers) that buy content from the companies that produce it and then resell it, at a markup, to the consumer. It is a simple business model employed in everyday transactions throughout the economy. Because the retailer buys and distributes the product, those who produce it—in this case writers, actors, musicians, animators, technical staff and all the support ecosystem that goes with production of content—earn a living, and more content is produced. The retailer (distributor) in turn provides a service and adds value by getting the product to market (employing people to ensure the product is properly packaged and delivered). The consumer is free to decide if the product offered is worth the price asked. If they like what’s on offer, they subscribe to their chosen content and are given access. If they don’t like the offer, they don’t pay and they don’t get access. It’s all very straightforward. Except, that is, to a number of smart box retailers who apparently see nothing wrong with selling a product that not only enables consumers to free ride but who promote it as “free TV”.

Bell, Rogers and Videotron have sought and obtained injunctions preventing the sale of boxes pre-loaded with software that enables access to pirated versions of the programs they distribute. To get the injunction, the companies were required to identify specific retailers, which they no doubt did through a quick online search of those merchants actively promoting their version of a “free TV” option. The targeted retailers included “MtlFreeTV”, “Android Bros Sales” and “WatchNSaveNow”. In granting the injunction, according to the CBC, the judge commented that the defendants “deliberately encourage consumers and potential clients to circumvent authorized ways of accessing content.”

While the companies wanted a blanket injunction, they were not successful (the boxes are widely available including through outlets such as Amazon) but the initial ruling allowed more retailers to be added. As a result, the companies recently went back to court to add 11 more retailers. Some were admittedly small players who were nonetheless blatantly promoting the boxes as a way to circumvent the cable companies’ business offering. The cries of outrage from the named retailers are hard to take seriously. “Why pick on me?” seemed to be the mantra, as if the fact that being small provides some kind of exemption from normal business standards.

The boxes themselves have a number of legitimate uses; it is the pre-loading (and advertising) of software that enables piracy that is the nub of the issue. Amazon and others sell the boxes but do not promote them as enablers of piracy. It should not be difficult for the targeted retailers to figure out that by facilitating and actively encouraging consumers to pirate content they were putting a big bullseye on their backs.

Is the selling of these pre-loaded boxes illegal in Canada? The answer is– “possibly”. Like many things in the copyright world, there are interesting legal wrinkles to this case. According to some legal experts, it is not illegal to stream content in Canada even if the content is not accessed through an agreement with the provider, since it is not downloaded and thus no copy is actually made. However, there is a provision in the law against enabling piracy. The enabling feature is the software (and guess where it is produced—somewhere in Eastern Europe— well beyond the reach of local law enforcement) but it seems to my non-legal mind that those who acquire the software, bundle it with a device that can be used for both legitimate and not-so-legitimate uses, and then openly advertise that the combined package they are selling allows the purchaser to circumvent the well-established and clearly legal means for distributing copyrighted content, are enabling infringement. But what if the act that is enabled (streaming) is not actually an infringement? Then again, what if the content was acquired through hacking of a technological protection measure (TPM), which is an illegal act? This is clearly one for the lawyers and the courts.

In the meantime, Canadian retailers who engage in these practices should not be surprised if they attract the attention of the cable industry, and have their practices tested in court. That is exactly what has been happening in Canada, and what has happened in the UK for the past couple of years where the legal situation seems to be clearer.

At the end of the day, one has to ask whether the actions of the “pre-loaded smart box” retailers pass the test of basic ethics—and common sense. If you are going to base your business model on ripping off, or enabling the rip off, of someone else’s work, don’t be surprised if the aggrieved party fights back, and you get unwanted legal attention. By all means business owners—especially small business owners— be creative in offering new products and services. What’s the best way to gain a competitive advantage? Create your own new value proposition—but don’t free ride on the work or property of others.

© Hugh Stephens, 2016. All Rights Reserved.

Author: hughstephensblog

I am a former Canadian foreign service officer and a retired executive with Time Warner. In both capacities I worked for many years in Asia. I have been writing this copyright blog since 2016, and recently published a book "In Defence of Copyright" to raise awareness of the importance of good copyright protection in Canada and globally. It is written from and for the layman's perspective (not a legal text or scholarly work), illustrated with some of the unusual copyright stories drawn from the blog. Available on Amazon and local book stores. View all posts by hughstephensblog