At issue is a plan by Canada's JumpTV to offer live network TV over the Internet--a strategy that recalls an earlier venture by Toronto-based iCraveTV, which collapsed in a chaos of lawsuits last year.
JumpTV, which has yet to turn on the most controversial part of its service, says it will avoid the lawsuits by limiting its viewership to Canadians, with technology that purports to pinpoint Web surfers by country, region and even ZIP code.
If implemented, it would be the first time a high-profile Web entertainment service has set up a technological walled garden attempting to eliminate the international reach of the Web.
That has sweeping implications for the entertainment and broadcast industries, which have resisted putting some content online for fear of disrupting their local TV distribution systems.
JumpTV hopes to take advantage of Canadian broadcast laws that allow retransmission of local TV signals without permission--as long as appropriate royalty fees are paid. But broadcasters contend those rules do not apply to the Net. They are preparing for a legal showdown aimed at halting the service before it begins.
Among other things, broadcasters warn of a Napster-like catastrophe for the TV industry if JumpTV is allowed to proceed, kicking off a regulatory battle that could help shape the future of online TV in Canada and elsewhere in the world.
Allowing JumpTV and others to operate "could cause incalculable damage to local TV stations and put their basic economics in grave jeopardy," the National Association of Broadcasters (NAB) wrote in a recent missive to Canadian regulators. "It is not an exaggeration to say that Internet transmissions of TV stations could cripple, if not destroy, the U.S. and Canadian successful system of free, local, over-the-air television."
Much of the dispute turns on subtleties of Canadian copyright law. But it could also have far-reaching consequences for online TV in general by offering a test of nascent technology for tracing the geographical location of Net users.
Such technology has been in the spotlight before, most notably during Yahoo's run-in with the French government over the auction of Nazi memorabilia on its site. The Web giant was ordered filter access to its auction service by region--something the company said it could not do. The conflict was resolved when Yahoo banned all sales of Nazi goods on its site, leaving the effectiveness of regional filters untested.
If Canadian regulators allow JumpTV to proceed with its broadcast plans, they could provide an opportunity to prove the effectiveness of regional filters and lay the groundwork for a dramatic reworking of the Internet landscape. Although regional access filters could create new business plans for companies such as JumpTV and advertisers, they also open the possibility for new local restrictions, blocking such content as pornography or even politically unpopular speech from certain countries or locales.
A cautious start
Unlike predecessor iCraveTV, JumpTV is working slowly. Although it already offers streams of television from around the world, it does not yet show major-network programming from the United States or Canada. But it plans to add this soon, citing support by Canadian law.
Under Canada's copyright law, networks such as satellite or cable TV can retransmit local TV stations without asking, as long as they pay appropriate fees for recompensing the original copyright owners. JumpTV CEO Farrel Miller says there's no reason why this shouldn't apply equally to Internet companies, which in some cases are even using the same cable TV wires to transmit their signals.
"All we're saying here is that retransmission laws in Canada have to be applied on a technology-neutral basis," Miller said. He's asking Canada's copyright office to set up a payment structure so he can ensure his company is operating legally. Miller filed his full case with copyright authorities late last week.
iCraveTV made the same argument in early 2000. But it launched its service with network TV programming that had been lifted from U.S. stations and was promptly sued. The company settled the case before it had a chance to take the issue to regulators.
JumpTV, however, says it has a way to stop Americans and other foreigners at the borders.
Giving the Web border patrols
Along with some technology developed internally, JumpTV is using filters developed by Silicon Valley's Quova, which uses Web surfers' network addresses to pinpoint their geographical location by country, region, and possibly even ZIP code.
The technology is designed for advertisers that want to offer Web deals relevant to their local customers. But it could also serve as a kind of online border guard, stopping anyone who displays a Web address belonging to another country.
This type of technology does have its limitations, particularly when trying to dig down to the local level. It looks at the Internet Protocol address of a given Web surfer, generally assigned to that individual's Internet service provider. That provider gives some indication of where the customer might be.
Geo-trackers can often be fooled by anonymity services or other Web privacy tools. The technology is further complicated by cases such as America Online, which uses proxy servers that make it appear as though all subscribers venturing onto the Net are coming from the company's headquarters in Virginia.
Nevertheless, services such as Quova's are fairly accurate when simply pinpointing what country a Web surfer is in, analysts say.
"They should be able to do that," said Van Baker, a Gartner analyst. "There might be a few fringe people who are dialing in from across the border or something. But that should be fairly minimal."
The TV stations, studios and broadcasters that sued iCraveTV remain skeptical, however. They want the service blocked to ensure the Internet won't provide competition to their over-the-air broadcasts.
"We question whether the (regional blocking) actually works," said Dennis Wheaton, a spokesman for the NAB. "With the Internet, it's difficult to control boundaries. The whole concept of U.S. broadcasting is based on serving local audiences."
JumpTV's Miller said he is waiting to decide whether to launch the network TV streams on the company's site until the copyright panel rules. That ruling is a long way off, he says, but Miller is confident he has the law on his side, even if history has so far ruled against him.
"If they have problems with the (copyright) laws in Canada, then that's the issue they have to address," Miller said.