15.128 As discussed above, retransmission of a free-to-air broadcast that ‘takes place over the internet’ is excluded from the remunerated exception by virtue of s 135ZZJA of the Copyright Act. There is currently considerable uncertainty over the meaning of this phrase and, in particular, its application to IPTV.
15.129 While the ALRC considers that the internet exclusion from the remunerated exception for retransmission should be repealed, in view of the need to renegotiate provisions of the AUSFTA and for further Government consideration of the complex issues that such a reform may raise, this is unlikely to happen in the short term. In the meantime, or if the Government determines that the internet exclusion should remain, the scope of the exclusion and its application to IPTV, in particular, should be clarified.
Interpretation of ‘over the internet’
15.130 The application of the internet exclusion to IPTV is not entirely clear. In particular, whether retransmission by an IPTV service ‘takes place over the internet’ may depend on the functional characteristics of the service. For example, it seems to be accepted that some IPTV retransmission may fall within the operation of the pt VC scheme because ‘while the retransmission occurs over infrastructure shared by an Internet connection, as a direct feed from [internet service provider] to customer at no point is connection to the Internet by either ISP or customer necessitated’.
15.131 Other IPTV retransmission may not fall within the scheme—for example, where the retransmission is ‘over the top’ of existing infrastructure and does not require business or technology affiliations with the host internet service provider or network operator.
15.132 ‘Over the top’ television (OTT TV), in this context, means a television-like service where content is delivered over an unmanaged network such as broadband internet, for example, through Telstra T-Box. As a result, some current subscription IPTV services are able to offer access to free-to-air broadcasts only because they include built-in digital TV tuners in their set top boxes.
15.133 Other questions that arise in interpreting the internet exclusion include whether it includes retransmissions that use internet protocol networks only in part. For example, if a retransmission uses the internet to ‘transmit’ to a transmitter, which then uses radio frequency spectrum to communicate content to mobile devices is this ‘over the internet’? Or must the entire retransmission both originate and terminate on the internet?
15.134 In the Issues Paper, the ALRC asked whether the application of the statutory licensing scheme for the retransmission of free-to-air broadcasts to IPTV needs to be clarified, and if so, how.
15.135 A number of stakeholders agreed that some clarification is desirable. Screenrights observed that, for example:
Foxtel is not provided over the internet to a Foxtel set top box but it is provided over the internet to the Foxtel X–box service. But to a consumer, they are more or less the same. Similarly, IPTV services such as Fetch TV and Telstra T–Box are also impossible to distinguish but one happens to be over the internet, while the other is not.
15.136 The ABC observed that the term IPTV has ‘no commonly accepted definition in the industry’ and the current legal position of some operators under the retransmission scheme ‘is not clear as it might be argued that they are not able to access pt VC legally because they are retransmitting via the internet’.
Amending the internet exclusion
15.137 If the internet exclusion is to remain, its scope should be clarified. At present, the internet exclusion may give some providers of IPTV services a competitive advantage over others, in being able to rely on the pt VC scheme to carry free-to-air broadcasts, despite services being identical to the end consumer.
15.138 While there are differing interpretations, it seems widely accepted that some forms of IPTV are not considered to take place ‘over the internet’, for the purposes of the internet exclusion. On the other hand, it seems that OTT TV is considered excluded. While the ALRC understands that OTT TV retransmission of high rating free-to-air broadcasts is unlikely to be offered because it would be likely to overload most internet delivery networks, it is possible that small audience free-to-air channels might be retransmitted in such a way.
15.139 In copyright law terms, the current interpretation may lead to arbitrary distinctions between retransmission platforms that are not based on the underlying purpose of the exclusion.
15.140 For example, the ACMA distinguishes, for communications policy purposes, between IPTV ‘delivered over managed IP-based networks’ and ‘over-the-top’ content, which is delivered ‘direct to the consumer without the internet service provider being involved in the control or distribution of the content’. The extent of an ISP’s involvement does not, however, seem relevant in copyright policy terms, even if it is relevant for the purposes of regulation under the Broadcasting Services Act.
15.141 The development of the NBN makes it important to clarify the position. The intention is that the NBN will enable content providers to retransmit using internet protocol multicasting, in reliance on the pt VC licence. The NBN Co’s Multicast feature is being marketed as ‘particularly suitable’ for IPTV service delivery. There may be difficulties, and cost implications, in enforcing restrictions on the retransmission of free-to-air broadcasts using the NBN.
15.142 The rationale for excluding retransmission ‘over the internet’ from the retransmission scheme appears to have been to avoid retransmitted content intended for Australian audiences being disseminated globally without the authorisation of the copyright holders.
15.143 The ALRC’s proposal to remove the internet exclusion, subject to geographical limits on retransmission, would mean that it would not be necessary to deal with the problem of applying the terms of the exclusion to various forms of internet retransmission, including IPTV, and all the possible technological configurations.
15.144 However, if the internet exclusion is to remain, it should be redrafted to reflect its purpose of ensuring that internet retransmission does not lead to retransmission that is geographically unlimited. That is, it should be redrafted to reflect the fact that internet protocol technology can be ‘employed in closed, secure distribution systems that offer complete protection against copying and redistribution of programming over the Internet, and that respect the principle of territorial exclusivity’.
15.145 The ALRC is interested in comment on how this might be done. For example, should the exclusion be expressed so as to allow retransmission using internet protocol to identifiable subscribers within Australia and subject to access control technological protection measures?
Proposal 15–3 If it is retained, the scope and application of the internet exclusion contained in s 135ZZJA of the Copyright Act should be clarified.
Question 15–2 How should the scope and application of the internet exclusion contained in s 135ZZJA of the Copyright Act be clarified and, in particular, its application to internet protocol television?
 For the purposes of this discussion, the term IPTV includes TV-like services where content is delivered by internet protocol, whether over the content provider’s own network or ‘over the top’ of existing infrastructure; and only includes streamed and not on demand content.
 See, eg, D Brennan, ‘Is IPTV an Internet Service under Australian Broadcasting and Copyright Law?’ (2012) 60(2) Telecommunications Journal of Australia 26.1, 26.1.
 Ibid, 26.9.
 Adapting language used by Broadcast Australia: Broadcast Australia, Submission 133.
 Australian Law Reform Commission, Copyright and the Digital Economy, IP 42 (2012), Question 37.
 APRA/AMCOS, Submission 247; Screenrights, Submission 215; Australian Broadcasting Corporation, Submission 210; Optus, Submission 183.
 Screenrights, Submission 215.
 Australian Broadcasting Corporation, Submission 210.
 Screenrights, Submission 288.
 Australian Communications and Media Authority, Online Video Content Services in Australia: Latest Developments in the Supply and Use of Professionally Produced Online Video Services, Communications report 2011–12 series: Report 1 (2012), 6.
 Screenrights, Submission 215.
 NBN Co, Multicast—Broadcasting the Future <www.nbnco.com.au/getting-connected/service-providers/multicast.html> at 2 March 2013. NBN multicasts ‘will be accessible from the same physical port on the NBN Co network termination equipment as the accompanying broadband internet connection’: Broadcast Australia, Submission 133.
 Motion Picture Association of America Inc, Submission 197.