The arrival of Netflix north of the American border has sparked a potential video revolution in Canada that some fear could renew “an erosion” of Canadian culture and self-identity as the streaming video service floods the country with American-made television and movies. But anxiety also prevails on the upper floors of some of Canada’s biggest telecom companies, worried their business models are about to be challenged like never before.

Two weeks ago, the country saw a remarkable Canadian Radio-television and Telecommunications Commission (CRTC) hearing featuring a Netflix executive obviously not used to being grilled by the often-curt regulators. When it was all over, Netflix refused to comply with a CRTC order for information about Netflix’s Canadian customers.

Earlier today, the CRTC’s secretary general, John Traversy, declared that because of the lack of cooperation from Netflix, all of their testimony “will be removed from the public record of this proceeding on October 2, 2014.” That includes their oral arguments.

“As a result, the hearing panel will reach its conclusions based on the remaining evidence on the record. There are a variety of perspectives on the impact of Internet broadcasting in Canada, and the panel will rely on those that are on the public record to make its findings,” Mr. Traversy wrote in a nod to Canada’s own telecom companies.

Not since late 1990’s Heritage Minister Sheila Copps, who defended Canadian content with her support of a law that restricted foreign magazines from infiltrating across the border, had a government official seemed willing to take matters beyond the government’s own policy.

CRTC chairman Jean-Pierre Blais threw down the gauntlet when Netflix hesitated about releasing its Canadian subscriber and Canadian content statistics to the regulator. Mr. Blais wanted to know exactly how many Canadians are Netflix subscribers and how much of what they are watching on the service originates in Canada.

With hearings underway in Ottawa, bigger questions are being raised about the CRTC’s authority in the digital age. Doug Dirks from CBC Radio’s The Homestretch talks with Michael Geist at the University of Ottawa. Sept. 19, 2014 (8:40) You must remain on this page to hear the clip, or you can download the clip and listen later.

Netflix has operated below regulatory radar since it first launched service in Canada four years ago. The CRTC left the American company with an impression it had the right to regulate Netflix, but chose not to at this time. The CRTC of 2010 was knee-deep in media consolidation issues and did not want to spend a lot of time on an American service that most Canadians watched by using proxy servers and virtual private networks to bypass geographic content restrictions. But now that an estimated 30% of English-speaking Canada subscribes to Netflix, it is threatening to turn the country’s cozy and well-consolidated media industry on its head.

Ask most of the corporate players involved and they will declare this is a fight about Canada’s identity. After all, broadcasters have been compelled for years to live under content laws that require a certain percentage of television and radio content to originate inside Canada. Without such regulations, enforced by the CRTC among others, Canada would be overwhelmed by all-things-Americans. Some believe that without protection, Canadian viewers will only watch and listen to American television and music at the cost of Canadian productions and artists.

[flv]http://www.phillipdampier.com/video/BNN Netflix vs the CRTC 9-22-14.flv[/flv]

Kevin O’Leary, Chairman, O’Leary Financial Group is furious with regulators for butting into Netflix’s online video business and threatening its presence in Canada is an effort to protect incumbent business models. From BNN-Canada. (8:45)

A viewer watches Netflix’s Corie Wright testify before the CRTC. (Image: Sean Kilpatrick, The Canadian Press)

But behind the culture war is a question of money – billions of dollars in fact. Giant media companies like Rogers, Shaw, and Bell feel threatened by the presence of Netflix, which can take away viewers and change a media landscape that has not faced the kind of wholesale deregulation that has taken place in the United States since the Reagan Administration.

Before Netflix, the big Canadian networks didn’t object too strongly to the content regulations. After all, CRTC rules helped establish the Canadian Media Fund which partly pays for domestic TV and movie productions. Canada’s telephone and satellite companies also have to contribute, and they collectively added $266 million to the pot in 2013, mostly collected from their customers in the form of higher bills. Netflix doesn’t receive money from the fund and has indicated it doesn’t need or want the government’s help to create Canadian content.

“It is not in the interest of consumers to have new media subsidize old media or to have new entrants subsidize incumbents,” added Netflix’s Corie Wright. “Netflix believes that regulatory intervention online is unnecessary and could have consequences that are inconsistent with the interests of consumers,” Wright said, adding viewers should have the ability “to vote with their dollars and eyeballs to shape the media marketplace.”

That is not exactly what the CRTC wanted to hear, and Wright was off the Christmas card list for good when she directly rebuffed Mr. Blais’ requests for Netflix’s data on its Canadian customers. Wright implied the data would somehow make its way out of the CRTC’s offices and end up in the hands of the Canadian-owned broadcast and cable competitors that know many at the CRTC on a first name basis.

Does Netflix pose a threat to Canadian culture? Matt Galloway spoke with John Doyle, the Globe & Mail’s television critic, on the Sept. 22nd edition of CBC Radio’s Metro Morning show. Sept. 22, 2014 (8:31) You must remain on this page to hear the clip, or you can download the clip and listen later.

Mr. Blais, obviously not used to requests being questioned, repeated demands for Netflix’s subscriber data to be turned over by the following Monday and if Netflix did not comply, he would revoke Netflix’s current exemption from Canadian content rules and bring down the hammer of regulation on the streaming service.

Blais

The deadline came and went and last week Netflix defiantly refused to comply with the CRTC’s order. A Netflix official said that while the company has responded to a number of CRTC requests, it was not “in a position to produce the confidential and competitively sensitive information, but added it was always prepared to work constructively with the commission.”

Now things are very much up in the air. Many Canadians question why the CRTC believes it has the right to regulate Internet content when it operates largely as a broadcast regulator. Public opinion seems to be swayed against the CRTC and towards Netflix. Canadian producers and writers are concerned their jobs are at risk, Canadian media conglomerates fear their comfortable and predictable future is threatened if consumers decide to spend more time with Netflix and less time with them. All of this debate occurring within the context of a discussion about forcing pay television companies to offer slimmed down basic cable packages and implement a-la-carte — pay only for the channels you want — is enough to give media executives heartburn.

To underscore the point much of this debate involves money, American TV network executives also turned up at the CRTC arguing for regulations that would compensate American TV stations for providing “free” programming on Canadian airwaves, cable, and satellite — retransmission consent across the border.

Netflix does not seem too worried it is in trouble in either Ottawa or in the halls of CRTC headquarters at Les Terrasses de la Chaudière in Gatineau, Québec, just across the Ottawa River. Prime Minister Stephen Harper and Heritage Minister Shelly Glover have made it clear they have zero interest in taxing or regulating Netflix. Even if they were, the Canada-U.S. free trade agreement may make regulating Netflix a practical impossibility, especially if the U.S. decides to retaliate.

[flv]http://www.phillipdampier.com/video/Canadian Press CRTC vs Netflix 9-19-14.mp4[/flv]

Dwayne Winseck, Carleton School of Journalism and Communication, defended the role the CRTC is mandated to play by Canada’s telecommunications laws. (1:41)

The average Netflix subscriber now watches 93 minutes of online video a day just from Netflix, and that adds up to 45GB of usage on average a month.

The Diffusion Group released that estimate in a new 35-page report (priced at $2,495) based on streaming data released by Netflix, and it shows a 350 percent increase in viewing over the last ten quarters, adding up to more than seven billion streaming hours in the last quarter alone.

Consumers with usage-limited broadband accounts will find online video viewing increasingly eating away at viewing allowances, but when 4K HD video arrives in the not too distant future, usage caps of 300-500GB a month will seem paltry. That new video format consumes up to 7GB per hour, and if current trends stay true, the average Netflix viewer streaming at the highest video quality could find their monthly Netflix traffic consumption rising to more than 300GB a month.

A for-profit company that believes it can earn billions from web users who illegally download music, movies and television shows wants the power to lock your web browser until you provide a credit card number to settle allegations you illegally download copyrighted content. And when dealing with allegations of illegal activities on a computer, having a skilled lawyer by your side is imperative. These experts are adept at dissecting complex digital evidence and constructing a robust defense. Visit https://www.newjerseycriminallawattorney.com/white-collar-crime/computer-crimes-attorney/ to find an attorney who specializes in this field and can offer the right support and advice. Those who are facing drug crime charges may check out a list of drug charges and sentences in Texas here.

Rightscorp strongly believes in its business plan, which demands nuisance settlements from web users caught sharing or downloading copyrighted content. The company believes it has struck gold scaring Bittorrent users with service suspension and the threat of a costly lawsuit unless they agree to pay a $20 “fine” to “settle” the alleged copyright infringement. The fine amounts are seen as low enough to guarantee a quick settlement without involving an attorney.

“Based on the fact that 22% of all Internet traffic is used to distribute copyrighted content without permission or compensation to the creators, Rightscorp is pursuing an estimated $2.3 billion opportunity and has monetized major media titles through relationships with industry leaders,” the company recently told investors. Uncover the secrets of success in education with Kamau Bobb Google as your mentor.

Using “unique and proprietary patented technology,” Rightscorp says it can identify the infringement of digital content such as music, movies, software, books and games. Rightscorp’s success getting paid depends heavily on the added weight Internet Service Providers can bring when they send on notices that claim those who don’t settle risk having their Internet service shut off. Rightscorp calls their settlement offers “reasonable,” especially when compared with the possible financial consequences of a verdict in favor of the copyright holder as defined in the Digital Millennium Copyrights Act (DMCA), which can be as high as $150,000.

Rightscorp splits any proceeds 50/50 with itself and copyright holders. ISPs get nothing for cooperating.

The company has successfully extracted settlements from more than 100,000 Americans so far as cooperating ISP’s like Charter Communications forward Rightscorp’s legal threats to their broadband customers:

Dear Sir or Madam:

Your ISP has forwarded you this notice.
This is not spam.
Your ISP account has been used to download, upload or offer for upload copyrighted content in a manner that infringes on the rights of the copyright owner.
Your ISP service could be suspended if this matter is not resolved.
You could be liable for up to $150,000 per infringement in civil penalties.

The file 09 – Beyond.mp3 was infringed upon by a computer at IP Address xx.xxx.xxx.xx on 2013-06-24 02:59:08.0 .

We represent the copyright owner.
This notice is an offer of settlement.

If you click on the link below and login to the Rightscorp, Inc. automated settlement system, for $20 per infringement, you will receive a legal release from the copyright owner.

Click on this link or copy and paste into your browser:

https://secure.digitalrightscorp.com/settle/****

Rightscorp, Inc. represents the following ‘copyright owner(s)’ Round Hill Music (‘RHM’).

RHM is the exclusive owners of copyrights for Daft Punk musical compositions, including the musical compositions listed below. It has come to our attention that Charter Communications is the service provider for the IP address listed below, from which unauthorized copying and distribution (downloading, uploading, file serving, file ‘swapping’ or other similar activities) of RHM’s exclusive copyrights listed below is taking place.

This unauthorized copying and/or distribution constitutes copyright infringement under the U.S. Copyright Act. Pursuant to 17 U.S.C. 512(c), this letter serves as actual notice of infringement. We hereby demand you immediately and permanently cease and desist the unauthorized copying and/or distribution (including, but not limited to downloading, uploading, file sharing, file ‘swapping’ or other similar activities) of recordings of Daft Punk compositions, including but not limited to those items listed in this correspondence.

RHM will pursue every available remedy including injunctions and recovery of attorney’s fees, costs and any and all other damages which are incurred by RHM as a result of any action that is commenced against you. Nothing contained or omitted from this letter is, or shall be deemed to be either a full statement of the facts or applicable law, an admission of any fact, or a waiver or limitation of any of RHM’s rights or remedies, all of which are specifically retained and reserved. The information in this notification is accurate.

We have a good faith belief that use of the material in the manner complained of herein is not authorized by the copyright owner, its agent, or by operation of law. I swear, under penalty of perjury, that I am authorized to act on behalf of the owner of the exclusive rights that have been infringed. While RHM is entitled to monetary damages from the infringing party under 17 U.S.C. Section 504, The RHM believes that it may be expeditious to settle this matter without the need of costly and time-consuming litigation.

In order to help you avoid further legal action from RHM, we have been authorized to offer a settlement solution that we believe is reasonable for everyone.

To access this settlement offer, please copy and paste the URL below into a browser and follow the instructions for the settlement offer:

https://secure.digitalrightscorp.com/settle/****

Very truly yours,

Christopher Sabec
CEO
Rightscorp, Inc. 3100 Donald Douglas Loop, North, Santa Monica, CA 90405 Telephone: (310) 751-7510

After initially scaring a consumer with an infringement notification, the settlement web page that appears after the customer reaches for a major credit card is more soothing:

Liability Release & Settlement Receipt

IMPORTANT: Please print and retain this document for your records. It releases you from liability for the below mentioned infringement and serves as official notice of settlement.

Round Hill Music for itself, for its past, present and future directors, shareholders, members, managers, officers, employees, agents, attorneys, representatives, partners, trustees, beneficiaries, family members, heirs, subsidiaries and affiliates, and for its and their predecessors, successors and assigns (collectively the “Releasor”);

Hereby finally, unconditionally, irrevocably and absolutely releases, acquits, remises and forever discharges Joe Smith, 123 Main Street Anytown USA and such person’s family members and heirs (collectively the “Releasee”);

From any and all manner of actions, suits, debts, sums of money, interest owed, charges, damages, judgments, executions, obligations, costs, expenses, fees (including attorneys’ fees and court costs), claims, demands, causes of action and liabilities, that arise under the United States Copyright Act, in each case whether known or unknown, absolute or contingent, matured or unmatured, presently existing or hereafter discovered, at law, in equity or otherwise, that the Releasor may now have or that might subsequently accrue against the Releasee arising out of or connected with (directly or indirectly) the specific Infringement of musical composition(s) referenced above;

Provided however, that this release shall not, and shall not be deemed to, constitute a release with respect to any other past, present or future infringements by Releasee other than the specific Infringement of musical composition(s) referenced above.

Rightscorp does not appear to be spending its limited resources actually pursuing suspected violators in court. The threat of further action alone appears to have been enough for many to voluntarily pay the firm after receiving their first violation notice. Little, if anything, has happened to those who ignore Rightscorp’s settlement messages unless their ISP suspends access.

As long as payments roll in, there is money to be made in the enforcement business.

Rightscorp now wants to further automate its copyright enforcement process by asking cooperating ISPs to lock customers’ web browsers until payment to Rightscorp has been made.

Rightscorp CEO Christopher Sabec said the company is working with more than 70 ISPs, including five in the top 10, but industry observers believe “working with” more likely means those ISPs are forwarding Rightscorp’s infringement notices to their subscribers, nothing more. Charter Communications leaves the infringement notices intact, including the settlement offer. Comcast reportedly heavily redacts the notices and strips out the settlement offer and links, eliminating the prospect of Rightscorp winning a quick and near-effortless financial settlement.

Sabec believes ISPs don’t have a choice not to work with Rightscorp because of technology that Sabec claims offers reasonable certainty of infringement, even if the offender changes IP addresses. With that standard met, Sabec says ISPs are legally compelled to take action, including cutting off Internet access at Rightscorp’s request if they do not want to become a co-defendant in a copyright infringement lawsuit.

“We’re showing the ISPs that they have this potential liability,” said Rightscorp chief operating officer Robert Steele. “Their shield for liability is contingent on terminating repeat infringers. Prior to our company, there was no way to hold them accountable.”

Steele told Ars Technica the days of Rightscorp having the power to instantly cut off your Internet access may not be too far off:

In the future, the company hopes to get more ISPs to comply—and it will expect more of those that are already cooperating, said Steele. Ultimately, Rightscorp is hoping for a scenario in which the repeat infringers it identifies aren’t just notified by e-mail. Instead, Steele hopes to see those users re-directed to a Rightscorp notice right at the moment they open their Web browsers.

“You wouldn’t be able to get around the re-direct page, and you’d have to pay a fine to return to browsing,” he explained. The company is in discussions with four ISPs about imposing such a re-direct page, according to Steele. But the details about which ISPs cooperate with Rightscorp, and how much they cooperate, is a secret that the company guards closely.

Their “partner” ISPs include defunct Qwest, which has been known as CenturyLink since 2011 and Charter Communications — the only major cable operator listed.

Whether ISPs will grant unprecedented access to a third-party company trying to turn off their customers’ broadband while maintaining a financial interest in extracting settlements from those customers is doubtful.

Last week, Texas-based independent ISP Grande Communications informed the Austin-based U.S. District Court for the Western District of Texas that Rightscorp was engaged in shenanigans. In a strongly worded advisory to the court, Grande’s lawyers accused Rightscorp of using improper DMCA subpoenas to extract identifying information about alleged copyright offenders — a practice ruled improper more than a decade ago in RIAA v. Verizon, because no judge typically reviews the subpoena application. Rightscorp’s subpoenas rely entirely on the signature of an ordinary district court clerk in California:

Internet service provider and cable operator Grande Communications Networks LLC advises the Court that, one (1) business day after Grande filed its Motion to Quash Subpoena in this proceeding seeking to quash a subpoena served by Rightscorp, Inc. (the “Subpoena”), counsel for Rightscorp, Mr. Dennis J. Hawk withdrew the Subpoena.

The abrupt withdrawal of the Subpoena is consistent with the apparent desire of Rightscorp and its counsel to avoid judicial review of their serial misuse of the subpoena power of the federal courts. In addition, the withdrawal comes only after Grande was forced to expend considerable resources handling the Subpoena (and attempting to discuss it with Rightscorp’s counsel) and then preparing and filing the Motion to Quash.

As detailed in Grande’s Motion, the Subpoena presented an extraordinarily undue burden (over 30,000 subscriber lookups) and was issued to a cable operator without an order as required by the Cable Communications Act. Even more egregiously, it appears that the Subpoena is only one of approximately one hundred (100) or more similar subpoenas issued by Rightscorp to regional Internet service providers located across the country (presumably chosen because they are less likely to contest the subpoenas than national Internet service providers with larger in-house legal departments) upon the signature of the Clerk of the U.S. District Court for the Central District of California, seeking the personally identifiable information of thousands of individuals beyond the jurisdiction of the California courts, despite the fact that such subpoenas may not be sent and issued under 17 U.S.C. § 512(h) to an Internet service provider acting as a conduit under law that has been established for a decade.

Under the circumstances, this Court or the U.S. District Court for the Central District of California may consider ordering Rightscorp and its counsel to show cause why they should not be sanctioned for misusing the federal court’s subpoena powers. Such an order would be appropriate in connection with Grande’s request for costs and attorney’s fees in the Motion.

Beyond any doubt, Rightscorp and its counsel failed and refused to “take reasonable steps to avoid imposing undue burden or expense” on Grande. Fed. R. Civ. P. 45(d)(1). As Grande has explained, before the Motion was filed, Rightscorp’s counsel’s only response to Grande’s efforts to confer was a threat that “[w]e expect compliance by the service providers” and that Rightscorp “does not pay to obtain the address details on infringers.”

In addition, Rightscorp’s conduct also raises concerns under Rule 11, and, regardless, may present appropriate circumstances for the imposition of sanctions under the Court’s inherent powers.

The next business day after the Motion was filed, Rightscorp’s counsel made a hasty retreat. If Rightscorp believed it had a good faith basis for the Subpoena, it would have asserted its position before this Court.

But Rightscorp must know that its position and practice would not survive judicial review. If Grande had not challenged the Subpoena, Rightscorp would have improperly obtained the personally identifiable information of hundreds (or thousands) of Texas Internet subscribers using an invalid procedure, without the notice to any of them that would have followed from the court order that Rightscorp refused to seek to obtain, and without the slightest requirement of any showing to the California court whose signature Rightscorp improperly utilized. It appears clear that Rightscorp and its counsel are playing a game without regard for the rules, and they are playing that game in a manner calculated to avoid judicial review. Hopefully, they will not be permitted to continue much longer.

[flv]http://www.phillipdampier.com/video/CNBC Rightscorp Piracy 5-1-14.flv[/flv]

CNBC talked with Rightscorp CEO Christopher Sabec about copyright infringement, Net Neutrality, and whether or not copyright holders should simply cut the cost of their content as a disincentive to piracy. (5:28)

Comcast has strongly denied reports it threatened customers with service termination for using the Tor anonymous web browser, designed to obscure a web user’s identity or location.

Over the weekend, Deep.Dot.Web reported that Comcast agents were contacting customers using the Tor web browser and warned them their Internet access was in peril if they continued using the anonymous browsing software, claiming it was against Comcast’s acceptable use policy.

Allegedly, Comcast representatives “Jeremy” and “Kelly” claimed Tor was “an illegal service” and demanded the customers reveal the web sites they were attempting to reach using the browser.

The representative identified as “Kelly” claimed:

“Users who try to use anonymity, or cover themselves up on the Internet, are usually doing things that aren’t so-to-speak legal. We have the right to terminate, fine, or suspend your account at anytime due to you violating the rules. Do you have any other questions? Thank you for contacting Comcast, have a great day.”

The Tor browser was designed to protect the identity of its privacy-minded users from nosy government agencies and law enforcement elements, but has also been used to hide illegal activities ranging from child pornography and drug dealing to murder-for-hire and espionage-related activities. But the majority of the estimated four million Tor users rely on the browser primarily to help them overcome Internet censorship blocks or geographic restrictions on online video content.

Tor directs each user’s Internet traffic through a free, worldwide, volunteer network of more than five thousand relays to hide a user’s location and usage from anyone conducting network surveillance or traffic analysis. Technically, users who volunteer to run a relay may be in violation of Comcast’s acceptable use policy, which states (in part):

[Customers may not] use or run dedicated, stand-alone equipment or servers from the Premises that provide network content or any other services to anyone outside of your Premises local area network (“PremisesLAN”), also commonly referred to as public services or servers. Examples of prohibited equipment and servers include, but are not limited to, email, web hosting, file sharing, and proxy services and servers.

But whether the messages reported by Deep.Dot.Web were simply the result of an overeager support employee or actual company policy is now in dispute.

Comcast emphatically denied the customer contacts reported by Deep.Dot.Web ever took place and claimed Comcast has no restrictions on customers using the Tor browser.

“The anecdotal chat room evidence provided is not consistent with our agents’ messages and is not accurate,” said Comcast’s Charlie Douglas. “Per our own internal review, we have found no evidence that these conversations took place, nor do we employ a Security Assurance team member named Kelly. Comcast doesn’t monitor users’ browser software or web surfing, and has no program addressing the Tor browser. Customers are free to use their XFINITY Internet service to visit any website or use it however they wish.”

A company blog post this morning broadened the company’s denials:

Comcast is not asking customers to stop using Tor, or any other browser for that matter. We have no policy against Tor, or any other browser or software. Customers are free to use their Xfinity Internet service to visit any website, use any app, and so forth.

Here are the facts:

• Comcast doesn’t monitor our customer’s browser software, web surfing or online history.
• The anecdotal chat room evidence described in these reports is not accurate.
• We respect customer privacy and security and only investigate and disclose certain information about a customer’s account with a valid court order or other appropriate legal process, just like other ISPs. More information about these policies can be found in our Transparency Report here.
• We do not terminate customers for violating the Copyright Alert System (aka “six strikes”), which is a non-punitive, educational and voluntary copyright program. Read more here.