Published On:Tuesday, March 16, 2010

By NEIL HARTNELL

Tribune Business Editor

A BAHAMIAN telecoms start-up yesterday warned that content and programming rights holders will be reluctant to do business with legitimate companies in this nation due to the widespread sale of pirated DVDs and CDs, depriving these firms and the sector regulator of much-needed revenue.

IP Solutions International, the $16 million plus Bahamian start-up aiming to launch a 'multiple play' of TV and video-on-demand services via a wireless infrastructure, warned that widespread copyright infringements in this nation had created an "non-level playing field" favouring the purveyors of this illicit trade.

Edison Sumner, IP Solutions International's president and chief executive, in a March 12, 2010, letter sent to the Utilities Regulation & Competition Authority (URCA), urged the sector regulator to "prioritise" the fight against counterfeited and pirated DVDs/CDs.

Responding to the regulator's content regulation consultation, Mr Sumner expressed hope that this effort would start to combat the multi-faceted "entry into the Bahamas' content market of counterfeit and pirated material.

"It comprises content which has been illegally copied or wrongly taken from a source that has not given permission for its product to be used in the Bahamas. Widespread practice can create a situation where infringements, which are literally visible to all, become tacitly accepted by the consumer market. As a result, they receive little or no sanction from the regulators."

Clearly written with the impact the sale of counterfeit movies will have on demand for IP Solutions International's product and services, and therefore its revenues and profits, in mind, Mr Sumner nevertheless makes numerous valid points in relation to the Bahamas' attitude towards intellectual property rights protection.

While it is unclear whether copyright will fall under URCA's purview, Mr Sumner said eradicating such piracy was "one of the prime aims" for both the World Trade Organisation (WTO) and World Intellectual Property Organisation (WIPO).

"It is hoped that the tacit collusion between the illegal marketer and the consumer and, in some jurisdictions, also the authorities, can now be monitored effectively here in the Bahamas," Mr Sumner wrote.

"Films, which are still in their first run in cinemas and which have not been released by the copyright owners for any other kind of showing, are openly available in stores and on the streets in the Bahamas.

"This black market means that revenues to content creators are diminished and, ultimately, less content will be funded. Many films use special effects and treatments, such as 3D. These are not capable of coming through an illegal copying mechanism, thereby reducing the viewer's experience to a considerable degree and devaluing the process."

And Mr Sumner added: "Illicit downloading of copyright material from open circuit satellite sources is another form of piracy, which deprives the content creator and the legitimate satellite provider of revenue. It also will impact the sale of legitimate video services in the Bahamas, and will result in a reduced revenue payable to URCA through the licence fee mechanism.

"The actions of this illegal trade have created a non-level playing field, as legitimate companies who have negotiated and secured the rights to carry and distribute content are at a disadvantage in having to compete with those who neither pay for their content nor pay the requisite fees to URCA for the conduct of their businesses."

Mr Sumner warned that the proceeds from counterfeit DVD and content sales "frequently end up in the hands of organised crime, and so should be a priority for our new regulatory approach.

"If lack of attention to such illegal activity generates a feeling of distrust in the major content providers, they will be wary of contracting with our newly-licensed providers for supply of their product, with a consequent loss to the market."