Securing copyright tariff key in JumpTV’s bid to become an Internet re-transmitter

Anumbered company fronted by Montreal lawyer Howard Greenspoon and his partner Farrel Miller is preparing to launch another iCraveTV-like service called JumpTV.com sometime in 2001, according to documents obtained by Canadian NEW MEDIA. His numbered company, 2000051 Ontario Inc, has filed for an interim tariff with the Copyright Board that deals specifically with Internet retransmission. If the board accepts JumpTV’s position that this form of broadcasting should have its own tariff, at whatever rate, the move could signal de facto approval by the federal government of this controversial business model. JumpTV’s lawyer is Dr. Sunny Handa, a high-profile copyright lawyer with Fasken Martineau DuMoulin. In an August 30 letter to the board, Handa says his client wants to comply with copyright law, and ensure rightsholders get paid before the company begins retransmitting over-the-air signals on the Internet. It appears, however, that a retransmission tariff proposed for 2001-2003 doesn’t fit the bill. "(The tariff) does not specifically contemplate retransmission of distant signals using the Internet, even though such retransmission falls squarely within the terms of section 31 of the Copyright Act." As it stands now, the proposed tariff would be inappropriate for a service which relies on paid advertising in the form of banners side-by-side with a TV-viewing window – as Greenspoon’s company is proposing: "The basis for the calculation of the retransmission royalty applicable to cable and satellite retransmitters is the number of premises which receive distant signals on the last day of each month. This calculation model assumes that the retransmitter will have fixed subscriber relationships with each premise receiving a distant signal, and is not easily reconciled with a non-subscription advertising model in which individual users connect to a generally available service," argues Handa in the letter. Instead of the current model, Handa writes that there are two other options. The first is to use a percentage-of-revenue model like SOCAN’s Tariff 2.A for conventional television. The numbered company recommends a 2.5 per cent take – a proxy of the percentage of revenue paid by cable and DTH operators under the retransmission tariff. Alternatively, the board could peg the tariff at a level consistent with the company’s maximum number of simultaneous users – somewhere between 4,000 and 6,000. If the board accepts that argument, 2000051 Ontario recommends a royalty rate equal to one-half of the rates set out in the proposed 2001-2003 tariff. Uncertainty in a new market, argues the company, should justify a 50 per cent cut. Tariff important first step Convincing the board to accept either option would be a victory for the nascent retransmission industry. To date, there has been no settling of any of the broad issues which could scuttle plans for re-broadcast. A nod by the Copyright Board would lend credibility to companies such as JumpTV and iCraveTV.com as they struggle against efforts by both U.S. and Canadian broadcasters to shut them down (CNM, March 22/00). While copyright law threatened to sink iCrave at the height of its troubles last winter, it was ultimately the company’s inability to control "leakage" of its signal to the U.S. which forced them to temporarily shut down (the company has said it will rise again this fall with improved firewalls; (CNM, July 12/00). Copyright issues such as displaying both a TV signal and a banner or other advertising are still unresolved. Whether Internet streams qualify as simultaneous transmissions is another potential roadblock (CNM, December 23/99). These issues will likely prove marginal, however, if the board sets an Internet-specific tariff. It would give companies such as JumpTV and iCrave the same rights as cable operators and satellite TV companies when it comes to retransmitting local broadcast signals. Such a tariff would also obviate the need for individual agreements with rights-groups. Regulatory environment unclear Sources say it’s uncertain whether the board will even consider JumpTV’s application. Without a federally set tariff, JumpTV would regress to where iCrave stood at the outset of its launch, without guidance from the board on Internet copyright issues. While 2000051 Ontario had until August 30 to object to the proposed tariffs for retransmission, the Copyright Act has no provisions for a forced hearing, and its objection could sit on the books for years. Like iCrave, JumpTV has reportedly adopted firewall technology called Border Control which it hopes will avoid difficulties with Canadian signals leaking into the U.S. market. Having Sunny Handa on board should help JumpTV navigate the copyright waters, given the senior legalist’s extensive experience in the area. He is an adjunct law professor at McGill University specializing in copyright law, communications law and computers and the law. He has also authored numerous books and articles on the topic. At the time of writing, company principal Farrel Miller was in Rome, and unavailable for comment. He is the former president of BAM Solutions, a Toronto- and Montreal-based Internet advertising firm.

Securing copyright tariff key in JumpTV’s bid to become an Internet re-transmitter

Broadcast | September 20, 2000

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