148._org_OzHub

Full name: David Forman

If you are making this submission on behalf of an organisation, please provide the name: 
OzHub

Address:  12/71 Leichhardt St Kingston ACT 2604

Question 1: 

Submission to Australian Law Reform Commission Copyright Review
November 2012
Copyright and Emerging Industry Trends
Introduction
OzHub is Australia’s leading industry alliance representing the interests of the Australian cloud computing industry. Its members represent data centre builders and owners, equipment vendors, and service providers. It aims to position
OzHub submits that the copyright laws in Australia as they have been recently applied is not supportive of the rapid transformation that the economy is undergoing as information and communications technology create new opportunities.
Cloud and Changes in Economic Organisation
The most far reaching of the changes taking place in the application of information and communications technologies at present is the rapid and accelerating development of so-called cloud computing services. Put simply, this is the move of processing and data storage from individual homes and offices to central locations. There are various models under which firms and individuals can deploy cloud services, from simply rented data storage space to outsourcing all storage, processes and even applications. This allows end users to acquire processing as a service, rather than having to acquire the equipment as a capital investment and then being responsible for the delivery of services from that equipment.
These changes are facilitated and driven by increased broadband access, speed and reliability, and the pressure for more energy efficient and low emission technology. It is also driven by consumer demand for applications and services that utilised cloud-based architecture at their core, including popular social media applications.
While this technological shift sounds straight forward, the broader micro and macro economic implications cannot be understated, or indeed fully anticipated.
For example, moving to a service-based cloud model allows companies to immediately benefit from software application upgrades, rather than having to invest in buying new applications as has been the case in the past, with obvious implications for productivity improvements. Also, the power consumption and efficiency of carbon emissions by a modern data centre is vastly better than that of a typical “in house” server and storage arrangement.
For consumers, the potential for the transformation of service delivery is no less profound. Already, social media based on cloud computing architecture is reshaping people’s daily lives through the enthusiastic take up of services such as Facebook.
These changes in customer behaviour and expectations and the enormous growth in demand for them have meant that investment in the ICT sector has swung dramatically toward cloud infrastructure and services, combined with mobility. For example, vendors producing the equipment at the heart of communications networks are focused on equipment that supports centralised service delivery. Telecommunications companies are expanding rapidly into data centre investments integrated into their netwoks.
Content owners therefore face a delivery architecture that is in fact changing the nature of target markets and consumer expectations. In some circumstances, content owners will need to re-examine whether the value they could historically capture from tradition distribution methods are sustainable. In other cases, they will need to consider if there are new and better business models that they should be pursuing
OzHub submits that copyright law should encourage all participants to respond to and participate in economic transformation and in so doing encourage greater national productivity, lower emissions intensity and greater innovation at the customer and firm levels.
Does copyright law encourage this economic transition? 
Copyright laws should not protect copyright owners from being required to respond to changes in technology and subsequent economic reorganisation. It should allow and facilitate them participating in changes by encouraging them to reconsider how they gain value from their content.
Members of OzHub are deeply concerned that the decision by the Federal Court in the National Rugby League v SingTel Optus case. In this instance, copyright laws have been interpreted in a way that fails to require businesses to respond to changes in society. Rather, it serves to shelter them from change and to protect the business decisions of existing rights holders.
From the perspective of OzHub members, consumers are interested in functionality, whether it is delivered locally or remotely. If superior functionality is delivered by cloud services, there should be no barriers to activity migrating to this new technology.
From a customer’s perspective, TV Now is a device to record free to air television to be replayed on a mobile device, rather than recording the same program on a digital recorder in the home. It is likely that many consumers are oblivious to whether the recording is held on their phone or on a server in a datacentre.
As OzHub understands the Federal Court decision, it means the law looks to the technology that the consumer employs to make the recording and distinguishes between the technology the consumer owns in their home and the technology that they utilise, or rent, in a remote location.
This distinction is alarming in principle to Ozhub members because it looks to technology rather than consumers’ behaviour, intent and activities. This raises questions about whether cloud services offering substitutes to established technologies will be treated differently in other circumstances.
How does Australia compare with other jurisdictions?
Two important features of the rapid change in the technologies used to deliver computing services and data storage are that the choice of location and jurisdiction for investors is very flexible and that there is consequently a global investment “land grab” underway. There is an appreciation that some countries in regions may be able to establish themselves as regional hubs if global investors believe they can serve several national markets from a single location that has a supportive legal and policy environment and good national and international infrastructure.
The constant improvement in communications networks, both between countries and within national markets, means big global investors in the data centres that form the true heart of “cloud” services have a great deal of flexibility to choose regional locations for multimillion dollar data centre investments. There are technical limitations on some application that are sensitive to latency, but few applications cannot run successfully from regional hubs. Investors therefore can choose between countries in regions based on factors such as cost, policy and regulatory stability and support and integration into regional markets.
OzHub is aware from private discussions that some global equipment vendors were led to consider whether they will need to disable some functionality in their newest network products in the light of the TV Now decision. We are unaware of how these internal discussions concluded, but the very fact that they were occurring indicates that Australia’s reputation as a forward looking country in matters cloud computing has suffered some damage.
What changes should be made?
OzHub submits that copyright law should recognise that cloud storage is now an established substitute for local storage, but that the consumer behaviour in making copies of services such as free to air television reflects the same purpose. Copyright laws should be amended to clarify that the person making a copy of content for personal or domestic use or for internal business purposes using a cloud services provider is the consumer, and not the cloud service provider. It should be clear that recording services via means of the cloud are treated no differently than recording via older media such as tape, DVD or DVR.
This would resolve the confusion arising from the Federal Court’s decision with regard to the TV Now service and would put Australia on a consistent basis with that of nations who are our rivals for cloud services investment.
Contact
For further information or queries please contact
d.forman@cprcomm.com.au
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