Opening the door to more Internet content

This story was first published in The Straits Times on Aug 28, 2013

This technology with a mundane name was once used for an equally mundane purpose - mainly by big businesses to let employees securely access corporate networks from their homes.

But it has come alive in recent years as virtual private networking (VPN), as it is called, is now the key to unlocking a world of Hollywood movies and TV dramas over the Internet that would otherwise be blocked, due to geographical restrictions.

Take Mr Ben Wightman, 36, for instance. The United States citizen and Singapore permanent resident relies on his VPN service to catch free broadcasts of American TV shows through the websites of US television networks such as NBC and ABC.

As the shows are usually available on some online video websites soon after they are shown on TV in the US, consumers here who have subscribed to a VPN service will be able to catch the programmes weeks before they are aired in Singapore, if they even make it here.

The popular US high school drama Glee, for example, is available for free on Internet video website Hulu about a week after it airs on US airwaves. To catch the show just a day later, consumers can subscribe to the premium Hulu Plus service.

To sweeten the deal, content services have also produced exclusive programmes, from Netflix's Emmy awards nominee House Of Cards to Hulu production The Morning After.

That strategy is working. House Of Cards, which stars Hollywood actor Kevin Spacey, has helped Netflix secure between 1.5 million and twomillionusers for its UK service, according to Enders Analysis, a market research firm.

Content providers are also jostling to secure coveted TV hits to grow their audiences. Earlier this year, Amazon wrestled the British period drama Downton Abbey from Hulu and Netflix, earning the exclusive rights to screen the show on its Instant Video service for the third season and beyond.

Content any time, anywhere

Besides TV shows, Mr Wightman also uses the VPN service to listen to online music with his USSpotify account, which he said offers a greater variety of songs compared with the local Spotify service.

"The artificial restrictions put in place by content providers merely serve to preserve their existing business and content distribution models," he told Digital Life.

"Consumers now want the flexibility to access content any time and anywhere they are," he said.

According to PricewaterhouseCoopers, a consulting firm, Singapore movie and TV fans are expected to spend US$9 million (S$11.5 million) this year on such so-called "over the top" content from players such as Netflix and Hulu.

By 2017, this will increase to more than US$35million, surpassing the US$29 million that consumers are expected to spend on video-on-demand services from local pay-TV operators StarHub and SingTel.

Sidestepping geographical restrictions

VPN services work by sending a stream of encrypted data through a secure tunnel over the Internet, letting consumers bypass geographical restrictions imposed by US-based Internet content providers.

To avoid upsetting cable TV companies licensed to deliver the same content in another country, US-based online video websites such as Hulu and Netflix typically limit usage of their services to USusers.

With a VPN service, which masks a user's Internet address to trick a website to think that the user is from US even though he is living in Bedok in Singapore, consumers can easily bypass those measures.

But there is one more hurdle.

Most US content providers, apart from Netflix, require users to provide a US credit or debit card to sign up for their services.

To get around this, some users have purchased US gift cards through friends and relatives in the US to view video-on-demand content from Amazon and Apple's iTunes.

Legal minefield

As compelling as VPN may be, consumers should be aware of the legal issues associated with the technology.

Under Singapore's copyright laws, said MrBryan Tan, partner at legal firm Pinsent Masons, it is possible that using VPN services could amount to circumventing a "technological measure" that limits access to copyrighted content.

While Mr Tan agreed that breaching the content providers' terms and conditions of use - which are private contracts - is not illegal, a US district judge recently ruled that changing Internet addresses to access a blocked site might violate the US Computer Fraud and Abuse Act.

In the case, 3Taps, a website that aggregates publicly available information, was accused of aggregating Craigslist ads without permission.

Craigslist then blocked 3Taps' Internet addresses, but 3Taps continued to republish Craigslist's ads using different addresses.

The danger here, Mr Tan said, is whether this ruling can be translated into a reading of the Copyright Act or the Computer Misuse and Cybersecurity Act and bring about such offences.

Foreign content players, such as Netflix and Hulu, which do not target their offerings at Singapore consumers are exempted from local regulations in areas such as content classification.

However, a media convergence report by the Government last year noted that if a foreign content provider targets the Singapore market by setting up a Singapore website, or receive subscription fees or advertising revenue from the Singapore market, then the Media Development Authority would have justification to require that it complies with local standards.

That means content providers may have to edit their programmes to meet local censorship rules, a process that would increase the time it takes for consumers to catch the latest shows.

VPN-like services offered

While the law is still grey, two Internet service providers here have started offering VPN-like services as add-ons to their fibre-broadband packages.

Their services make use of a technology known as DNS routing, which lets users access sites from multiple geographical locations instead of onecountry at a time.

In May last year, ViewQwest launched its Freedom VPN service that lets consumers watch a list of content available only in the US and Britain for $10 a month.

The service is used by seven out of 10ViewQwest subscribers, who also have the option of buying a ViewQwest TV, an Android set-top box loaded with apps from Netflix, Hulu, PPTV and others.

MyRepublic, too, has a similar service dubbed Teleport. "We see Teleport as part of a massive industry transformation," said MyRepublic spokesman Fiona Lai.

Citing research by JP Morgan, Ms Lai said telcos are getting a smaller slice of the content market, as more consumers stream content from the Internet.

Ms Lai revealed that MyRepublic has been approached by several start-ups with plans to launch Netflix-type services in Singapore.

"With the launch of these services, we expect to see less and less need for consumers to get their content from afar," she said.

Game console makers, too, are jumping on the bandwagon. With consumers already hooking up consoles to their TVs, the next business opportunity would be to offer video content through those devices.

Sony and Viacom have reportedly reached a deal to stream cable channels to the PlayStation 4 game console. Tech giants Intel and Google are also working on similar services.

While the offshore market players are not a real threat to the telcos for now, Forrester senior analyst Clement Teo said they could be a threat in the next 12 months - especially as they have foreign programmes that are unavailable here.

The telcos are not standing still.

One of the drivers for VPN services, said StarHub's head of home solutions Lin Shu Fen, is the demand for content that has been released in other regions first.

To address that need, StarHub is working to let Singapore viewers catch their favourite content at the same time as other regions, without using VPN services.

"A good example is our partnership with TVB, which lets fans in Singapore catch TVB's latest dramas and series at the same time as Hong Kong viewers," Ms Lin said.

Forrester's Mr Teo does not expect bigger telcos such as StarHub to offer VPN services here as yet. But the market, he said, will determine how soon they will take action. That is, if there is huge demand and users are switching to others who provide such services.

Ms Lin said while StarHub is aware of a growing number of customers using VPN services to access geo-blocked content, it "has not seen a significant shift in the market" for the telco to start offering VPN services.

SingTel said it has not seen much demand for VPN connectivity from consumers so far, though the telco is not ruling out the possibility of offering VPN services with its broadband services.

Meanwhile, Mr Wightman is looking forward to buying his first smart TV, which should come with the apps from his favourite US providers.

"With my VPN service, which is shared with my wife and across all our devices, I can get the content that I want without following a TV schedule, and on any screen," he said.

This story was first published in The Straits Times on Aug 28, 2013

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