Clearly ISPs (and the RIANZ or RIAA who represent the copyright owners) are not going to care about people watching a youtube clip of their kid dancing to a piece of music that is copyrighted, and I would think judges would be inclined to agree. Whilst technically that might be infringing copyright, it is inconsequential and a waste of everyone’s time trying to get them all disconnected. If they did, then pretty much everyone with an internet connection would have to be disconnected – clearly an unrealistic prospect and clearly not what the law is intended to do.
Also, I‘ve had a brief look through the relevant parts of the legislation and cannot see anything that suggests the ISPs will be disconnecting people based on an unsubstantiated accusation alone with no evidence to back it up. It says that ISPs must have procedures to deal with repeat infringers, but nothing about there being no evidence required for ISPs to act, or ISPS not being allowed to conduct an investigation before acting. No ISP is going be prosecuted because it chooses to confirm accusations before making disconnections.
If an ISP disconnects a customer who is under contract and they are innocent, then they run foul of the CGA (consumer goods act) surely? If I was in an ISP’s legal team I would be making damn sure proper investigations were done to ensure only true infringers are disconnected. Pretty bad publicity otherwise.
As for the Telecom spoof ad, I’m not sure about NZ, but copyrighted works are allowed to be used/changed for satire purposes in the USA, so, if NZ is the same, then it would be fine.