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State control: Telco industry 'punch drunk' over increasing regulation

Data retention, website-blocking, new security laws -- as telcos and ISPs face increasing regulation at the hand of a national security-focused Government, one industry leader warns against the "state control of telecommunications".

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As the Federal Government prepares to introduce new laws to regulate the country's telcos and ISPs, a leading industry body has warned against "over-reach," saying Australia risks sleepwalking towards a future of state-controlled telecommunications.

In under a year, the Government has introduced mandatory data retention laws, as well as a number of bills that grant police and security agencies greater digital surveillance and monitoring powers in a bid to combat a supposed growing national security threat.

Alongside a 'three-strikes' anti-piracy scheme and new website-blocking laws requiring ISPs to play a bigger role in policing copyright infringement, the Government has now proposed a suite of Telecommunications Sector Security Reforms (TSSR) that require telcos and ISPs to secure their networks against breaches and national security threats.

But Communications Alliance, the industry body that represents more than 100 Australian telcos, ISPs and technology companies, has raised the alarm over this increasing level of government intervention. John Stanton, CEO of Comms Alliance, says the extensive new laws and regulations push the industry closer towards state control.

Beyond the privacy implications of data retention or the civil liberties concerns raised by opponents of site-blocking, consumers could also see fewer competitive players in the market, higher prices passed on by telcos and a future where law enforcement agencies have greater access to personal communications, Stanton said.

"The industry's feeling a little punch drunk under the weight of the various initiatives that have come forward, both in national security and the copyright arena," said Stanton.

"There's no doubt that in the current climate, if you put the 'national security' tag on something it tends to whizz its way through Parliament. We've tried with each of these things to get sensible amendments to make them more manageable -- typically we agree with the underlying premise, but we have difficulty with the execution."

Stanton warned that each regulatory change brings an attached cost, not only making business "more difficult" for telcos and ISPs, but also bringing the risk of "reduced competition and higher prices" for customers.

The debate about tightening regulation has been reignited after the release of the draft text of the TSSR bill [PDF], which will require service providers to secure their networks in a bid to manage "national security risks associated with unauthorised access and interference."

While the Attorney-General's Department says the reforms will help protect a society that is sending increasing amounts of digital information via telco networks, Stanton says the laws put a great deal of power in the wrong hands.

"This latest legislation, if it's not sensibly amended, lays open the risk of a much higher degree of state control of telecommunications than we've ever seen in this country," he said. "It puts the power in the hands of the new regulator...to require industries to not do anything that the Government would consider could contribute to a national security risk.

Comms Alliance has now joined forces with a coalition of industry groups to take the concerns of some 60,000 Australian businesses to the Government, rejecting the TSSR laws for "regulatory over-reach."

In a submission to the Federal Government on the draft laws [PDF], the industry groups say the legislation is "out of step" with international approaches, that "it hands unjustifiably significant additional and intrusive powers to Government," and that it risks undermining competition.

But it's not just the TSSR bill that has the potential to harm competition -- Stanton says all the impositions being put on telcos and ISPs in the form of data retention, site-blocking and 'national security' legislation has the potential to knock small providers out completely.

"It's without question a cumulative, life-threatening burden for smaller players," he said. "I've already seen messages coming across my email from small providers saying, 'You know what? We might as well just shut up shop now.'"

For their part, service providers both large and small are voicing their concerns about the Government's latest bid to regulate telecommunications in Australia.

In a statement to CNET, Telstra's chief risk officer Kate Hughes warned that the proposed TSSR powers "are quite broad and potentially impose substantial costs on Australian telcos and our customers."

"We have a clear commercial incentive to maintain the security of our networks and protect our customers' data," she said. "Any government intervention should be light touch."

That concern is also being felt by smaller brands and network resellers such as Amaysim.

"There certainly seems to be an increase in regulatory requirements coming the way of the telco industry," said Amaysim head of corporate affairs and communications, Gerard Mansour. "A balance will need to be achieved that makes sure the privacy of citizens stays in the picture, with the right checks and balances to ensure that red tape doesn't mount up."

In responding to specific questions from CNET, both Optus and Virgin Mobile replied with identical boilerplate comments asserting that they were complying with their obligations under current laws and were focused on balancing "security with effective cost and privacy safeguards." The companies declined to comment on whether they were concerned about regulations passed in the name of national security.

With the bill set to be introduced to Parliament later in the year, John Stanton has called on the Government to ensure "adequate scrutiny" of any new laws that expand law enforcement powers to intervene in the day-to-day operations of Australia's telecommunications companies.

"We have a concern that even if the current generation of agencies were to behave eminently reasonably, there's no knowing what the next generation of agencies or operatives will do," he said. "It's an incredibly wide power."

The Attorney-General's Department and Vodafone did not respond to CNET's request for comment.