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New Zealand telcos want to delay the introduction of new copyright laws to police internet privacy by up to two months while they iron out "controversial issues".

Section 92A of the Copyright Act requires internet service providers to act against their customers on copyright owners' allegations of illegal music and movie downloads from the internet.

The Telecommunications Carriers Forum - representing big phone companies such as Telecom and Vodafone - indicated it would not be able to negotiate a code of practice with the movie and record companies before the February 28 deadline set in the act.

Delays will add to growing tensions between the two industries over telcos' new role in guarding the entertainment industry's property rights.

The internet users group internet NZ made similar calls for a delay last week.

Chief executive Keith Davidson was angry about what he said was the entertainment industry's tough approach negotiating the new terms.

He said that the copyright owners viewed the new obligations as assured and were not interested in having a debate.

A working group of the TCF and the copyright owners - dominated by the Hollywood studios and international record companies - is due to release a draft code of practice on January 27 for public comment.

But TCF sources have indicated the working group will not meet the February 28 deadline for the new process to be established.

A telecommunications industry insider said that the big telcos accepted - some begrudgingly - that there would be new obligations under the Copyright Act. Vodafone is itself selling music downloads.

But a member of the TCF said telcos want the entertainment industry to tone down some of their more "draconian" demands under the new system.

A key issue is deciding how much the ISP's act on the complaints of the copyright owners - such as a record company or movie studio - and how much after initial advice to the customer it can leave the two parties to resolve issues.

Section 92A does not involve ISPs trawling their customers looking for breaches, but there are still potential issues.

Internet NZ's Davidson said that may of the problems were due to poor drafting of the Copyright Act.

Section 92A forces ISPs to terminate internet accounts on the basis of allegations of copyright infringement, a process that makes the ISPs liable for court action from customers.

Davidson says it is unreasonable to require ISPs to be unpaid policemen for the entertainment industry.

But in a joint statement last week the copyright users rejected the complaint.

"Section 92a brings an opportunity for ISPs and rights holders to work together to address the large-scale online piracy problem that is affecting creative industries in New Zealand and worldwide.

"This is an urgent issue and it cannot be solved without help from ISPs."

95 per cent of music downloads illegal, group says

International digital music industry body the IFPI says the industry's biggest challenge is finding new ways of making money online when 95 per cent of music downloads are illegal.

IFPI estimates more than 40 billion files were illegally file-shared in 2008, giving a piracy rate of around 95 per cent.

IFPI chief executive John Kennedy said in the IFPI report that co-operation from internet service providers held the key to solving the piracy problem.

Kennedy said UK music consumers would stop illegally downloading if told to do so by their ISP.

Most French consumers agree internet account disconnection is a better approach than fines and criminal sanctions.

But there was a lot of good news.

Single track downloads, up 24 per cent in 2008 to 1.4 billion units globally, continue to drive the online market, but digital albums are also growing healthily - up 36 per cent.

The report showed digital music expanded for a sixth year in 2008, growing by an estimated 25 per cent to US$3.7 billion ($6.7 billion) in trade value. Digital platforms now account for around 20 per cent of recorded music sales, up from 15 per cent in 2007.

Recorded music is at the forefront of the online and mobile revolution, generating more revenue in percentage terms through digital platforms than the newspaper and film industries combined.

The top-selling digital single of 2008 was Lil' Wayne's Lollipop, which had sales of 9.1 million units.