Bell Media president Mary Ann Turcke sparked an uproar last week when she told a telecom conference that Canadians who use virtual private networks (VPNs) to access the U.S. version of Netflix are stealing. Turcke is not the first Canadian broadcast executive to raise the issue – her predecessor Kevin Crull and Rogers executive David Purdy expressed similar frustration with VPN use earlier this year – but her characterization of paying customers as thieves was bound to garner attention.
My weekly technology law column (Toronto Star version, homepage version) argues that Turcke’s comments provide evidence of the mounting frustration among Canadian broadcasters over Netflix’s remarkable popularity in Canada. Netflix launched in Canada less than five years ago, yet reports indicate that it now counts 40 per cent of English-speaking Canadians as subscribers. By contrast, Bell started its Mobile TV service within weeks of the Netflix launch, but today has less than half the number of subscribers.
While Canadian broadcasters may be unhappy with subscribers that access the U.S. service, the problem is primarily a competitive issue, not a legal one. Some estimate that 25 per cent of Canadian subscribers have used a VPN to access Netflix. That means 75 per cent of subscribers – millions of Canadians – are content with the Canadian service that offers the largest Netflix library of content outside of the U.S.
Turcke’s claim that the minority of Canadian subscribers who access U.S. Netflix through VPNs are “stealing” simply does not withstand legal scrutiny. Those subscribers might be breaching the Netflix terms and conditions, but that is not breaking the law.
Similarly, arguments that the subscribers violate copyright law are very weak. There might be claim that subscribers circumvent geographic restrictions (thereby violating new rules against circumventing technological protection measures), but there are no damages involved and it is up to Netflix to enforce its rights to counter the circumvention. Since there is no chance the company will sue its customers, the focus on legal remedies is misplaced.
Bell’s insistence that VPN usage creates a problem is not very convincing. Under the current system, consumers pay for content, Netflix is paid for its service, and Netflix compensates creators in multi-million dollar licensing deals. If content owners were seriously concerned with VPN usage, they could simply refuse to license their content to Netflix until it cracked down on the practice.
Moreover, Bell and Netflix employ different business models (Bell’s CraveTV requires a broadcast subscription) and feature little overlap in content. Given the differences, Canadians accessing U.S. Netflix are not doing so to access content that is otherwise available on Bell’s service.
Bell’s emphasis on VPNs also fails to acknowledge that the technology has multiple uses. Privacy protection is among the most important uses, since VPNs allow users to conduct secure communications away from the prying eyes of widespread government surveillance. Bell’s comments may leave some Internet users thinking that VPNs are “socially unacceptable” when precisely the opposite is true.
Ultimately, the decision to target Netflix smacks of business desperation rather than legal anger. Bell’s strategic vision of being Canada’s largest vertically integrated communications company has taken repeated hits in recent months.
The Privacy Commissioner of Canada ruled against its targeted advertising program, which the company subsequently dropped. Meanwhile, the Canadian Radio-television and Telecommunications Commission implemented vertical integration safeguards to prevent market abuse, ruled that Bell’s Mobile TV service violated the law, and ordered broadcast distributors to offer channels on a pick-and-pay basis. That is likely to spell the demise of some of Bell’s highly profitable, but little watched channels that benefit from favourable bundling.
The reality is that Netflix is increasingly licensing content on a global basis, particularly with its investment in original shows such as House of Cards and Daredevil. As its global library grows, consumer interest in VPNs will further subside, leaving Canadian broadcasters with one less excuse to explain why subscribers are jumping to competitors.
Suck it, Bell.
As a Canadian Netflix subscriber I long avoided signing up for a VPN or similar service to access US and other Netflix, if only because I already have way too many unwatched things in my queue (not to mention my DVD collection).
I was recently overseas for several months in a long stay hotel, and our employer actually recommended we get a VPN for security reasons on the hotel WiFi. It also worked out well as the country I was in did not have Netflix, so I was able to access my Canadian Netflix, which I pay for, as a Canadian. So there’s definitely other use cases where people are using VPN for Netflix that have nothing to do with trying to get extra content from other jurisdictions.
I subscribed to Netflix after realizing that there was so little content on cable I wanted to pay to watch that paying a ridiculous amount of money every month to a cable company made no sense. So, I “pulled the plug.”
Although I don’t access Netflix via a VPN, Bell, Rogers and the other cable service and content providers ought to look internally at their offerings and pricing structure before going after people who spend only $8 per month for high quality programming. Increasingly, technology is disrupting the business models of one industry after another – from taxi cabs to broadcasters and law firms to retailers. Ms. Turcke and her shareholders would be better served if she devoted as much energy to rethinking how Bell attracts and retains customers than trying to create a phantom evil that doesn’t exist.
Excellent points that I completely identify with. I use a VPN to connect to work. I used it once on my laptop to access US Netflix (just to see the difference), but really didn’t see a compelling reason to do that again. There’s enough to see on Canadian Netflix.
The problem with CraveTV is you need to be a Bell subscriber to have access to it and you need to be a Rogers subscriber to access Shomi. I’m looking to cut the cord so to speak, and love the online, streaming offerings, as well at the Netflix only programming.
Bell is taking this approach because they know they can’t compete. They can’t compete in offerings, price, or service. Because they can’t compete, they want to restrict what Canadians have access to; to force us to rely on the pathetic offerings we have in Canada. They’re probably also a bit scared. HBO has started an online streaming service, and Showtime has just announced they will as well. That will reduce the number of people willing to pay for Bell’s (or Roger’s) premium or VIP television service.
I have some old advice for Bell – if you can’t take the heat, get out of the kitchen.
So according to Ms Turcke, I am also a thief: to view Canadian news and shows I like, I use a VPN from my home in Florida.
Bell and Rogers should be grateful for the fact that by streaming Netflix, I have several times gone over my monthly bandwidth limit, resulting in truly egregious overage fees, which are all gravy for their bottom line. 🙂
Go to distributel for internet. They use Bell network, are cheaper and offer no bandwidth caps.
There are way better providers out there that have faster connections and offer unlimited bandwidth.
Also, Save your money and stop paying for services like netflix, cable or any other shit service. Get yourself a media streaming device or build one yourself and install Kodi (xbmc) Every movie and tv show that you can find anywhere on netflix, cable Torrent sites you can also find on Kodi. Install the project free tv or genesis app on kodi and you are good to go. Stream anything you want for free.
Those media streaming devices like Kodi still need some work always finding servers that don’t work or picture isn’t that great and sound.
Not really, they work perfectly fine for me. I’ve been using kodi since day one. I still run xbmc on the first xbox’s that came out as a media center as well. If you know how to run them properly you won’t have any issues. I also host my own server that has a 1gb upload and download speed. I can drop any media file onto my server and stream it right to my device without any lag issues. My home connection speed is 500mbs with unlimited bandwidth. Having a fast internet connection definitely helps for streaming. I went from paying around 120$ per month for cable + internet to now only paying 54$ a month for internet. Saving lots of money over time plus I get a HELL of a lot more content to watch than what netflix or cable would provide with out any restrictions.
Anonymous said “If you know how to run them properly” it’s not a problem. But how many people do? The majority of computer and Netflix users are not very tech savvy.
So I guess this prosecutor in Pembroke thinks you are wrong Michael:
http://www.thebeaverton.com/national/item/1898-canadian-caught-stealing-american-netflix-to-be-punished-with-3-year-bell-contract
I guess it could be a hoax or some kind of misapplication of the law but I don’t know how to research that further. Hopefully you can get to the bottom if it.
Regardless, it seems inappropriate for an arbitrary private company such as Bell to be the benefactor of the application of the law here. I.e. why Bell? Why not some cable provider, etc.?
Dude, the Beaverton is parody news…
“Parizeau wins sovereignty from his corporeal form “
I did say in my posting, that I thought it could be a hoax. But…
~sigh~ Do we really need another Onion? I mean the Onion is great but with too much proliferation this is just going to get ridiculous.
So like every time I go to read a news article on a “news site” that I am unfamiliar with, I have to read a dozen other articles on the same site to know if it’s real news or parody?
Every Onion-wannabe site should just stop and realize it’s been done (and is still being done) and that there is only room for one. The rest are just copycats at best and muddying the waters of real news reporting.
Huh?? Because you’re too lazy or clueless to recognize parody, we should all have less of it??
Maybe you’re intending parody by telling us you did not recognize parody by the time you finished reading the headline of that article?
-sigh-
The Onion didn’t invent parody and satire nor should it have a monopoly on it. Yes, you might actually have to employ your brain when looking at an unfamiliar website. One would hope you tried to do this with legitimate news sites as well.
tl;dr: “I am too lazy to do proper research. I should be able to trust everything I read on the internet and hear on TV. “
Yes, that is exactly the point. Think about what you just said: “I am upset that I have to do a bit of extra work to ensure the information I am receiving is correct.” Seriously?
When you read news articles, whether they are a legitimate site or an “onion-wannabe”, you should always do a bit more research to see if they aren’t blowing smoke up your ass.
That post is totally clueless.
There’s no way any of it could be true.
I love the slug line:
“North America’s Trusted Source of News”
Whoever runs The Beaverton needs a good slap in the back of the head.
Yeah, I had to think it couldn’t be anything more than parody.
Trouble with that kind of parody is, lots of people who don’t frequent the site will read that crap and accept the stories as some kind of real news.
Well too bad for the credulous, then.
Why is it necessary to restrict satire for the benefit of slack-jawed twits who can’t tell it from reality?
Would you think it cruel of me to use sarcasm as well?
I’m about as credulous as they come. But, given the ridiculous nature of some of the news–especially conservative American political news–sometimes it is hair-splittingly difficult to separate parody from reality.
And I think you know that.
Yes, this is exactly what the problem is. Too frequently, particularly where it comes to government and law enforcement these days, the world of the incredible and unbelievable is actually taking place inside the real world.
Government and law enforcement are out of control and out of touch with reality and reasonableness any more that it’s difficult to determine what is parody and what is real with them.
I also am a pretty incredulous person. I’m the person that the people around me come to to debunk hoaxes because I have a pretty good nose for what seems reasonably real and what does not.
And as I said previously, I did suspect hoax here, but I was led to that story by an otherwise serious organization (openmedia.ca) so was taking a lead from them assuming (wrongly as it seems) that they were sorting out the real from the hoax. It seems they have since taken down their coverage of that story.
That’s actually the exact point of the parody – to teach people that news sources can’t be trusted and they should look int it further for themselves.
For anyone who can’t recognize satire and parody when they read it, when you watch shows like The Daily Show, or This Hour Has 22 Minutes, do you think you’re watching serious news?
I always enjoy hearing from Mr. Geist. I have and use a VPN and yes occasionally use it access Netflix. I started using a VPN just about the time Bell started their Customer Online Improvement program and essentially started tracking every bloody website I visited or used. I will continue to use a VPN to help retain some semblance of online privacy.
Once again Mr. Geist thank you for a well written and informative article.
If Bell, Rogers , etc etc were not gouging customers. None of this would even be coming up. IF Bell, Rogers,etcetc were actually giving customers choice AND value, none of this would be necessary. IF Canada was willing to make investments into making our wireless, our internet one of the best in the world, none of this would be debated. As long as Bell, rogers,etc,etc are prying into MY privacy (Thx harper for bill C-51), none of this would be contested. IF Canada as a whole actually cared what the average Canadian wanted to see, watch. listen to. None of this would become a hot potato. I am seriously considering using a VPN simply because of all the spying on my usage by various companies and even our own government thanks to Bill C-51. Madame president of Bell has no clue about what Canadians are doing or even the reason WHY.
I want to take issue with one paragraph:
“Similarly, arguments that the subscribers violate copyright law are very weak. There might be claim that subscribers circumvent geographic restrictions (thereby violating new rules against circumventing technological protection measures), but there are no damages involved and it is up to Netflix to enforce its rights to counter the circumvention. Since there is no chance the company will sue its customers, the focus on legal remedies is misplaced.”
Specifically, two premises here are worth scrutiny:
1) The realities and cost-effectiveness of using a tribunal/court to vindicate an otherwise-valid legal claim is relevant to the validity of the claim…you may say that without a remedy there is no right but there of course is a remedy, regardless of how much commercial sense it makes to pursue it. Your argument here expands the dictum into “without an economically-pursued remedy there is no right”–a view that wouldn’t leave many rights left.
2) “no damages”–surely there is some measurable loss, otherwise why would Netflix care? Even if this is true, though, we still need to ask whether it is acceptable as a citizen to knowingly break the law based on a private prediction that no cognizable harm will result. Not sure what standards are used to determine answer, but it seems likely to be ‘no’. Also relevant here would be whether these geographic restrictions are contractual or statutory…if contractual, one could use Holmes’s “nothing but a prediction to pay damages on breach” argument but that gets us nowhere if these geographic restrictions are laws of general application…
The one party not mentioned in the article is the creator of the content and that’s where the potential loss is. The content (American TV shows is what we’re really talking about here) is sold to Bell and Rogers and Shaw and then resold to Canadians like a lot of other products made outside of Canada and sold through local distributors or subsidiaries. So, there is the potential that the Canadian distributors will lose enough viewers to stop buying the content.
Of course, why should we care if American producers lose the Canadian market? But the deal that Bell, Rogers and Shaw have had is that in return for the protected territory of Canada to resell the American shows they will invest money in producing Canadian content.
That’s a deal we may want to change, but it’s what’s at the heart of this issue. And, really, at the heart of that is the idea that this content is “culture” and therefore different than other manufactured products.
We are talking about Canadians who pay for the service right? And it up to Netflix to enforce the content issues with subscribers using fake IP addresses to gain access to a service they pay for. Ya so if NETFLIX is getting paid where’s the problem. That’s like saying here ya go rent my beach house, ima charge the same price as if you had access to the mini bar, but don’t touch it cause im hording the extra booze. but American johnny is allowed to drink from the mini bar. Say what you want about the analogy but the biggest issue is NETFLIX is getting paid at the end of the day. Eat a dick copyright and Canadian content enthusiasts. Our previous generation created the computer with punch cards “fortran” and it was supposed to change the world. Now the same computer is being put on trial because it changed the world too much? I don’t see you enthusiasts going after the cell phone makers for not building speech recognition into the phones. The tech has only been around since the release of windows 7. But noooo all Canadians have to pay for data so their phone can talk to google and it translates speech to text and we pay the highest cell phone bills in the world.
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If Netflix was concerned that this constituted stealing they could easily mitigate this “problem” by asking subscribers to identify their country of origin when they sign up for the service (which they already do). Content restricted to viewers of that country (in this case Canada) would be served to them and Netflix would not allow them to view any other content (US-only content).
Netflix specifically does not do this. Instead, they detect your current location based on IP access node. This allows Canadians to view Canadian content while at home in Canada and view US content while physically visiting the USA (viewing at a coffee shop, hotel, etc). As a result, this also allows one to use an American VPN service to do likewise while remaining physically present in Canada.
Clearly Netflix does not have an issue with this as they could easily restrict clients that have signed up as Canadian to be treated to Canadian content only. Doing so would mean Canadian travelers to the US would continue to view Canadian content while they were there however, and that probably muddles the contracts Netflix has with their content providers, because most of those rely on outdated concept that a viewer should be physically present in the same country the signal is broadcase from.
The same thing was tried with DVD “region codes” and that proved futile as well. People outside “region 1” (Canada + USA) would invariably either “recode” a DVD to remove the restriction so it would work in any player, or more commonly they would obtain a player that was simply programmed to ignore all restrictions.
Netflix is giving its clients what they want while pretending the company is adhering to the contracts it has in place with its content providers. The providers are either paid a straight rate regardless of the number of viewers, or on a pay per view basis. Netflix is still tracking how many times an item is watched. If they are smart (and they are a smart company) they would not specifically be counting Canadians logged into VPN any differently from a count to the US viewership in order to save a few bucks. Relationships to clients and providers make up 100% of their entire business model so I can’t imagine them messing with that.
None of this is the business of any 3rd party. Bell should not be involved in worrying about how Netflix deals with its customers or content providers.
People still give money to Bell??
They should just be the cable management and have other Service Providers use their lines. That way they would actually maintain / develop their capacity and customers would have a competitive variety. Problem solved?
If Canadian Netflix content didn’t suck so hard, nobody would use VPN’s. I can see the CRTC crying but Bell? Really? Don’t you get paid for bandwidth anyway? This women sounds Loonie, toonie.
I cut the cord last fall. A digital antenna and Netflix is saving me over $100/month and we do not miss it. Continuing in this direction, I was tired of paying extra for such awesome technology like touch-tone dialing and decided on VOIP saving me a further $80/month for equal if not more service. I also have a pay-as-you-go phone that suites my needs.
Bell and Rogers are fundamentally technology companies. And like many other companies that had a captive market, they failed to innovate, and/or pass on any savings to the customer. Instead I saw bills skyrocketing for meh service. Bell’s media empire would then push content to their media distributors telling us how cutting the cord would not work. After many years of getting fat and lazy the technology they failed to use to improve prices and service is going to cause a massive disruption.
Yet instead of realizing this, the best they can do to address their failure is to call the customers they have been gouging for decades as thieves. They are so far entrenched in their ivory tower that they will become beggars at their own demise.
hahaha hilarious. Bell and Rogers BOTH steal satellite and dish network signals from the U.S. border. They have been called out by the American providers for doing this and not paying for it. They then turn around and charge Canadians for their stolen programming. Takes a crook to know one and the biggest I know of are Fraud’gers and Bell’hell
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I would just like to add that I use a VPN connection almost daily in my academic work. My university allows students and staff to connect to their library databases and journal subscriptions through a VPN server. This allows me the convenience of being able to continue my research from any place with an internet connection, instead of only a library.
A company I had an internship with uses VPN connections to let employees work from home when nessesary, while protecting the network connection.
VPNs are a normal part of modern academics and business.
Congratulations Bell Canada, once again you have an inferior product and service with less content that you would like to charge much more for, and you are tech company whining about tech and other companies which have nothing to do with you to negatively shape the future of our society for your own personal gain. You’re the asshole rich kid. Nothing more.
It’s also worth noting that a Netflix account is a global account. Once I’ve physically crossed a border, Netflix automatically changes my content into the appropriate jurisdiction, and apportions my subscription fee accordingly. When using a VPN, the US licencing fees are still being paid by Netflix, and so no one is out of pocket. If the content owners are receiving remuneration, then there can be no charge of theft.
I’m unconvinced after reading this piece. If a studio grants a license to Netflix USA that permits them to distribute a work in the USA only, and grants another license to another company to distribute a work within Canada only, then someone pays Netflix USA to distribute the work to them in Canada, I don’t see how that is legitimate and I don’t see how it does not deprive the Canadian licensee of revenue. It appears to me that there is no legitimate license to distribute the work and it appears that there are damages. What am I missing?
I hate that the owners of the works have granted and appear to continue to be granting exclusive rights on a country by country basis, but they are free to do that if they want to. As consumers, we need to figure out how to respond so that it is no longer in their best interest to license their works under that model.
I would add, that if it is beyond consumers and markets to influence the licensing models being employed, legislation and treaties are another option. In the era of big free trade agreements, who is to say that it shouldn’t be explicitly legal to stream content bought in one country, to me as a consumer in another country that is signatory to the trade agreement? Our trade agreements allow me to transfer my physical goods, so why not my intellectual ones too. If we’re supposed to be in an open economic marketplace with the USA and Mexico then that marketplace should be as open for intellectual property as it is for physical property.
Netflix adoption is likely caused more by customer dissatisfaction with service/price then it does with anything else. I’d be happy to support a Canadian company that gave me what I wanted at a fair price. Instead my money goes to an American company that is, to some extent, shaking up the status quo in Canada.
Get rid of the crazy media contracts and open up the content to real competition so that the best technology (or company) can win…
Pathetic.
It’s not stealing if the people at Netflix are still taking their $9 a month from my CC. Why are they even shedding light on this issue? You can’t tell me which sites and programs I can, and cannot have on my PC.
Google chrome makes it so easy to access US Netflix with “Hola”. One button, bam.
Lots of content on UK Netflix that is not on either Canada or US, I think there is a lot on the Mexican and in the Netherlands
The real problem with all intellectual property is the claim of moral wrong when someone has access to use information or media in some way that the creator has unforeseen. Stories and technology always belonged to all of the tribe, not just to one person. Specialization was rooted in special skill, such as story telling or smithy not in hording knowledge for profit. When the secret’s out, it’s out. Intellectual property law evolves as a social contract that needs periodic reworking and renewal. It doesn’t derive from any basic moral principle and is probably actually in conflict with basic morality i.e. the moral imperative to share. Also the reworking and renewal of IP law should not be so one-sided. We ought to be able to depend on our governments to take our side instead of merely parrot the desires of corporate interests.
All that to say that using terms like “stealing” is an unreasonable attempt to shame the public into submission by introducing a moral slant that really isn’t there. We might just as well call their practices self justified greed.
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“That means 75 per cent of subscribers – millions of Canadians – are content with the Canadian service”
That’s not what it means. That’s what it *could* mean, but it could mean other things instead/too. Plenty of people are kinda clueless about VPNs and anything “tech-y” in general, so they settle for the easier option. For example.
If it was exactly the same process to get US Netflix as Canadian, what would the numbers be like then?
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You know what the simple solution is; something netflix can profit off of immensely,
Offer US netflix to Canadians for an additional price, that’s it. All problems solved. That will in turn force Canadian companies to drastically expand their networks in order for them to compete.
The thing is with people, they will always find a way to skirt around to get the best deal. Even the Bell CEO himself would pay less if he could to access more.