Australians could have their right to obtain cheap digital content from overseas enshrined in law if a key recommendation of the Productivity Commission draft report into intellectual property arrangements is adopted.
If successful, the move could spell big trouble for local content suppliers such as Foxtel and the Australian iTunes and Amazon stores.
The 600-page draft report, which was tabled on April 29, argues that Australian consumers have long been ripped off by differential pricing policies, and insists that the government should move to guarantee people are protected in their efforts to find ways around them.
The primary means by which differential pricing is enforced is geoblocking, whereby consumers in Australia are prevented from accessing licensed distributors of content in countries such as the US and Britain, where that content is often available earlier and cheaper than it is in Australia.
"The use of geoblocking technology is pervasive, and frequently results in Australian consumers being offered a lower level of digital service (such as a more limited music or TV streaming catalogue) at a higher price than in overseas markets," the report's authors wrote.
"Studies show Australian consumers systematically pay higher prices for professional software, music, games and e-books than consumers in comparable overseas markets. While some digital savvy consumers are able to avoid these costs (such as through the use of proxy servers and virtual private networks), many are relegated to paying inflated prices for lower standard services."
A report to the House of Representatives in 2013 found that Australians pay on average 52 per cent more for music, 84 per cent more for computer games and 16 per cent more for e-books than consumers elsewhere.
The Productivity Commission draft report urges the Australian government "to amend the Copyright Act … to make clear that it is not an infringement for consumers to circumvent geoblocking technology".
Further, it should also "seek to avoid any international agreements that would prevent or ban consumers from circumventing geoblocking technology".
In essence, what that means is that the Australian government would be guaranteeing the rights of its citizens to use virtual private networks (VPNs) to hide their location from offshore digital services, thus allowing Australians to access, say, the US iTunes store, US Netflix service or HBO Now.
In theory, that would mean Australian fans of Game of Thrones could stream episodes of the show via the HBO Now streaming service rather than purchasing a subscription to Foxtel or waiting to buy the show on iTunes.
It is not currently illegal to use a VPN, though confusion on the matter leads many people to think it is. However, doing so potentially puts Australian consumers in breach of user agreements for services that require a user to be resident in the country of purchase.
Laurie Patton, chief of internet advocacy group Internet Australia, welcomed the Productivity Commission's proposal.
"We have consistently argued that geoblocking is fundamentally wrong and that it has resulted in unfair price-gouging of Australian consumers for decades," he said.
Prior to the age of digital distribution, DVDs were country coded to allow for differential availability and pricing, Mr Patton noted. "But even if there was some argument then about distribution costs, that does not apply to delivery via the internet. It costs no more to deliver a live stream or download to Melbourne than it does to Los Angeles."
Mr Patton argued that an end to geoblocking made sense for rights holders, as it would help the fight on piracy.
"The main reason most people unlawfully download is that they can't get what they want through legitimate channels," he said.
"There is ample evidence that people are willing to pay if they can get the content they're after. The best way to reduce unlawful downloading is to make content available and easily accessible at reasonable prices comparable with similar markets overseas."
The final report of the Productivity Commission is due to be tabled in August.
