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STANDING COMMITTEE ON ENVIRONMENT, COMMUNICATIONS, INFORMATION TECHNOLOGY AND THE ARTS
01/06/2007
Communications Legislation Amendment (Content Services) Bill 2007

CHAIR —Welcome. Would the Australian Mobile Telecommunications Association like to make an opening statement?

Mr Althaus —Thank you and good morning. I will give you a brief outline of some of our key thoughts on the matter of this legislation, and my colleagues will add to that. It is certainly important to note that AMTA is the peak organisation for the mobile telecommunications sector and we welcome the opportunity to participate in this inquiry. We have a keen interest in this bill. We broadly support the principles that it is seeking to convey. There is nothing more important than the protection of particularly minors. The mobile telecommunications sector is working hard on that as convergence brings forward further challenges for us all in terms of how our product and services relate to the subscriber base. Of course, the subscriber base in mobile telecommunications in this country is reaching what we describe in the industry as almost saturation point. We are at a point now where there are over 19.7 million subscriptions in this market, so it is an incredibly pervasive technology and, of course, we have more and more opportunity through the third generation of mobile telephony to access and participate in a wide range of content.

The industry has not been idle on this matter; in fact, in response to the mobile premium services determination we have over the last 2½ years been working on a mobile premium services industry scheme. We were always aware that the determination was an interim measure, pending the development of this legislation, but the scheme the industry has put together addresses many of the concepts and issues that the legislation seeks to address. In fact, the presence of the scheme itself is a good example of how this industry works with government—and works successfully, can I say—insofar as legislation of this kind sets general parameters or general principles and, because of the speed and dynamic nature of change within the industry, we are often asked in a co-regulatory way to adopt schemes and codes underneath the legislation to monitor and manage industry performance. That is a very important part; it gives the industry an incredible amount of flexibility and also bestows upon us an important level of responsibility. To date, I think we have proved to government that we are skilled at meeting the responsibilities of legislation under these codes and schemes. I am highlighting that because this particular legislation and the existence already of our mobile premium services industry scheme, which has been registered by the Communications and Media Authority, is a classic example of a good workable partnership between industry and government.

This is an incredibly important area and we certainly support the objectives of this particular legislation. While being supportive broadly, we have identified some areas where further clarity and certainty are required for industry. My colleagues will go to those points. But if I can finish on the clarity and certainty issue, that is certainly what is paramount, and to that end there are a few drafting issues we have identified which I will ask Jane to comment on.

CHAIR —Thank you.

Mrs van Beelen —As Mr Althaus said, industry supports the bill and supports the objectives of the bill. Industry is also supportive of the changes to the objectives of the BSA to reflect that these services need to be regulated but in a way that is not going to impose undue financial or administrative burden upon the industry and in a way that will enable the services that are enabled by the technology to flourish. To that end, we want to draw to your attention to a few drafting concerns in respect of which we would seek some clarification or in respect of which it would be helpful if the bill provided greater certainty to industry.

The first of those is in relation to the definition of a content service. The principal concern is the use of the word ‘delivers’ in paragraph (a) of the definition of ‘content service’. The reason for the concern is that the word ‘delivers’ connotes, I suppose, the concept of transporting something. In the new media world there is a situation unlike that in the broadcasting world. In the broadcasting world if you get a broadcasting licence you get not only a licence to provide the content but also, attached to that, an apparatus licence, which is effectively your licence to use radio communications spectrum to deliver your content, and the two are welded together as a broadcasting licence. In the new media world, the content service provider and the provider of the infrastructure or services which facilitate the delivery or the making available of that content are, in most circumstances, separate entities. That means that the use of the word ‘delivers’ just creates some uncertainty about the extent to which carriage service providers who may provide additional facilities to carriage but are nonetheless not involved in the making available, as in the selection and the putting online, of the content may inadvertently capture them as content service providers and even commercial content service providers.

AMTA recommends that this could be addressed by changing the word ‘delivers’ to ‘makes available’. That removes that transport component of the definition and makes it clear that it is someone who makes it available—that is, puts it in a place like a server or a play-out centre whereby it can be delivered or is made accessible by use of a carriage service provider. We think that would more clearly distinguish the role of the content service provider from that of the carriage service provider, who may provide other things. We note the exemption in clause 5 that you are not held to be a content service provider merely by virtue of providing a carriage service, but we point out that there are circumstances in which mobile carriers do provide more than a carriage service but are nonetheless not involved in the selection and making available of the content. For that reason we are concerned about that uncertainty.

I will move on to the next point that I think will be helpful. The second key thing I draw to your attention is the practical difficulties in complying with a special take-down notice. The special take-down notice is where ACMA can issue a notice requiring, for example, the content host not to host similar types of content. The obligation that seeks to impose is very broad, and the impact of it may be that it requires a content host to continuously monitor the content that it is hosting. Our understanding of the regime set up with the take-down notices is that it is not meant to require content hosts to undertake continuous monitoring; rather, they are meant to respond to take-down notices when the notices are received. That reflects the fact that continuous monitoring would be unworkable and incredibly onerous and that it is not appropriate to put content hosts in a situation where they are the judges and censors of the content. So AMTA has requested some clarity there—for example, that the special take-down notice identify the specific person whose content is not to be hosted rather than be so indefinite as to impose onerous obligations on the content host.

The final key drafting issue that I draw to the committee’s attention relates to the difficulty we see in achieving a type A or a type B remedial situation—again, the best example is probably in relation to hosted content. Firstly we note that there is not a definition of ‘host’ in the bill and so it would be a concern if the obligation not to host the content actually required the content host to remove all copies of the content that it may have on its systems. It may be that it has some copies stored but not hosted—as in not stored in such a way that they are accessible to the public—and it may be that the service provider needs to retain those for various business reasons, including the reason potentially that they have concerns about the way the legislation is applied to them. That problem could probably be rectified by having a definition of ‘host’. The second issue is that the broad drafting of the second limb, where it would effectively require the content host to ensure that that content is not available anywhere on the internet, is clearly unworkable; it is not something that a single content host can achieve. It would be better if the provision or requirement were an obligation on them not to themselves host that particular content.

They are the key drafting concerns I wanted to raise. There are others recorded in our submission which I am happy to talk to if necessary, but I thought articulating those would be helpful to the committee. I will now hand over to Ms Bean, who is going to talk about the restricted access system issues.

Ms Bean —I am going to speak on both the restricted access system and deal a little bit with the Mobile Premium Services Industry Scheme and its relationship to the determination. ‘Restricted access system’ is not defined in the bill, and mobile operators are quite familiar with operating restricted access systems now. It is clear that there are two requirements: the identification of the customer and the ability to verify their age. Currently, when we offer credit services to our customers, when we do a credit check, mostly those customers have to be over 18 to get those services; in fact, we even have a credit reference. Our research shows that over 99 per cent of customers are over 18 once they have those mobile services. So we have a high degree of certainty that a customer receiving an account with a telecommunications provider is over 18. In the case of customers who do not have accounts, who have prepaid services, the ability to check their age by requiring them to do a credit card transaction would ensure that they over 18 and, currently, the internet industry does that. They use credit cards to verify that the provision of adult content is to people over 18.

Our main concern is that, because ‘restricted access system’ is not defined, ACMA, who has the ability under the bill to approve such systems, is not confined to looking at current industry practice or what is practical. So on the issue of clarity and certainty we are quite concerned that existing systems that make us feel quite confident may not meet the approval of ACMA. So clarity in that area is really desirable from an industry point of view.

I would like to touch now on the determination that currently exists, the Telecommunications Service Provider (Mobile Premium Services) Determination that was issued by ACMA. Because of that determination, the industry has developed the Mobile Premium Services Industry Scheme, and that scheme currently regulates content as well as providing consumer protection measures, such as being able to stop premium services subscriptions once you have subscribed to them if you no longer want them and other billing issues.

It is desirable to have only one content regulator or one set of content regulations for premium services and other material that is provided by our industry or by our content providers. Our suggestion is that the bill is the appropriate mechanism for dealing with that content because it will deal with a range of material and because uniformity of classification and approach to content is appropriate, rather than having a variety of schemes. So, clearly, the determination needs to be clarified—and, as Mr Althaus said, it was considered to be an interim measure to start with. While the consumer protection measures do need to be preserved and also the complaints system that operates, allowing consumers to make complaints about premium services operators who do not comply with the scheme, the regulation of content needs to be clarified so that we are not faced with increased burdens in terms of the operation of our businesses.

CHAIR —Thank you very much. Now, Microsoft.

Ms Inman-Grant —Thank you, Chair. In my capacity as Microsoft Corporation’s Regional Director of Internet Safety and Security, I work with government policymakers, law enforcement, NGOs and consumers in 13 countries across the Asia-Pacific region. It also bears mentioning that I am making this testimony on behalf of Microsoft Corporation as an offshore provider based in the United States, rather than Microsoft Australia, which does not host content—and also not on behalf of ninemsn, which is the joint venture between Microsoft’s MSN and PBL, which does host content in Australia. Ninemsn would potentially be regulated very differently from Microsoft Corporation under this particular bill, and ninemsn did make their comments and concerns known through the Internet Industry Association’s submission, so their concerns were certainly taken into account.

As a first matter, let me say that Microsoft understands and shares the concerns of the department and the parliament in relation to the exposure of Australians, particularly young Australians, to illegal and offensive content. While the economic and social benefits of the internet are undeniable, it is also true that the internet provides a means for inappropriate access to offensive material and, in some cases, can facilitate criminal activity. We also believe that the content services bill is one of the most sweeping reforms of its kind. Given Australia’s role as a policy bellwether in the region—particularly in the internet safety space—we believe that the precedential impact for future laws and regulations developed in the Asia-Pacific is very important and tied to the outcomes of the development of this bill. The only possible example of other similar legislation is the audiovisual media services directive that is currently pending in the European Commission. It is expected to be considered in June this year.

For its part, Microsoft invests heavily in technological solutions; consumer education and partnerships with government, NGOs and law enforcement to ensure that such content is not provided using our services; and in providing consumers with the tools to control their and their children’s internet experiences. Examples of this in Australia include our participation in the national e-security education week; our planned launch of the ‘think you know’ internet education safety program, in cooperation with the Australian Federal Police, ACMA and NetAlert; and a broad range of recent law enforcement training we have conducted in Australia, including one that we did in conjunction with the Queensland Police, Interpol and ICMEC, the International Centre for Missing and Exploited Children, on helping over 100 Australian law enforcement officials learn more about how to track down online paedophiles and predators.

Microsoft’s perspective in relation to this bill is as a provider of content services that are hosted offshore, principally in the US. These services are numerous, and I am often confounded and confused by them. They include: Windows Live Hotmail, our email service; Windows Live Messenger, our internet messaging service; Windows Live Spaces, which is our social networking or blogging site which is very similar to the MySpace social networking site except for some very different safety concerns and architectural differences; MSN Video, which would be akin to Google’s YouTube, which provides user-generated content through video; and Xbox Live, which is our online, interactive, simultaneous gaming platform. All of these services are used by hundreds of Australians every day.

Microsoft believes that the existing schedule 5 of the BSA, which focuses on regulating offshore content providers to the extent that they host content in Australia, is a very pragmatic and reasonable approach. Our interest in the content services bill and the current bill is to ensure that we can continue to provide our content services to consumers on a global basis on substantially the same terms and that Australia’s approach harmonises with that of other jurisdictions. The government, both DCITA and Minister Coonan’s office, have been very open and receptive to our comments and understanding of our concerns. We were not initially invited to participate in the limited consultation. We requested specific permission, and they did grant us that. So we are very appreciative of that willingness.

One of the concerns we outlined, both in the exposure draft and in the current bill, was the potential application of the bill to offshore links. Service providers could encompass Microsoft where a user of one of its services, rather than Microsoft itself, creates a link to prohibited content hosted in Australia. An example is used in our submission in section 3.2 where a user of Windows Live Spaces could create a link that is hosted in Australia. That would be beyond our knowledge or editorial control. Ostensibly the individual or group who has hosted the content would be under the purview of the bill.

Secondly, we believe there is significant ambiguity in the Australian connection definition—although it is an improvement on the Australian link definition that was included in the exposure draft—because it does not specify how to identify where live content originates. This potentially impacts on a number of Microsoft services. This may be a different concern to those expressed by our AMTA colleagues in that live content potentially could be generated interactively amongst a number of people from different jurisdictions around the world—for example, you could use an Xbox Live multiplayer game where you could have players from Australia, the US and Japan. Ostensibly a move made by an Australian player to go up a hill or shoot a dart could be considered live generated content originating from Australia even though it may be a negligible part of the overall live content being streamed.

Our third concern is with the definition of the term ‘content services’. Because of the structure, it is a broad definition with 22 significant exceptions. We believe there is significant scope for unintended consequences to flow from this approach as technology and new services evolve over time. Certainly if you think two or three years back, things like social networking were not really mainstream activities—and there is potential for new and unexpected services to emerge. Just this week, Microsoft introduced a product called Microsoft Surface, which is actually an interactive computer tabletop which is touch based. It is very much like what you use at an ATM. They expect that, in the next three years, this sort of tabletop computer will be embedded as a delivery platform into refrigerators and microwaves and will be among a multibillion-dollar industry. The possibilities are endless. We certainly appreciate the complexities that go into drafting something and trying to anticipate the types of services and uses of content going forward.

In section 5.2 of our submission we recommend as a first option narrowing the basic definition of content services to encompass the types of content services to be regulated, and perhaps these could be reviewed over time. As a second option we suggested in section 5.4 applying a dominant feature test. A number of these current services, an example would be instant messaging, can be used as a voicemail chat, email or text chat, and also as a file-sharing mechanism. If you apply the dominant test to the service, that would allow for an easier interpretation and application of the content service definition to one or more of our services. In any case, I kindly ask that you do refer to the written submission for more detailed information. I am certainly happy to answer any questions that the committee might have. Thank you.

Senator WORTLEY —Thank you for your submissions and for appearing here today. My first questions will be directed to the AMTA and then I will move to Microsoft. If at any time I ask a question that is relevant to your area then feel free to jump in and give an answer. Do you think this bill will adversely affect the growth of the mobile telecommunications industry in Australia?

Mr Althaus —Our work on the bill has been fairly extensive and we do not believe it would adversely affect growth. Having said that, it is a very dynamic sector. I guess I would go back to the notion of this kind of legislation being broad in its scope. My colleague from Microsoft has just given a couple of very good examples of the speed of change within the telco sector, and that is increasing with convergence. So our ability to be flexible and take growth opportunities, and not be limited by legislation, is very closely linked to the broadness of the legislation. Our assessment of this particular bill is that it is not going to limit our opportunities for growth.

Senator WORTLEY —AMTA says that there are some technical issues in the drafting of this bill. Is that right? You say further that the definition of content service vis-a-vis carriage service requires clarification. Does clause 5 not provide sufficient clarification in AMTA’s opinion?

Mrs van Beelen —As I said in my opening remarks, the concern with clause 5 is that on one reading it provides an exemption if all that you do is provide carriage, but there are a number of examples where a mobile carriage service provider may, for example, also provide a billing service for the content. That is not to say that they have anything to do with the choosing or the making available of the content but they do have the mechanism to bill for the content via the bill for the mobile service. There is some uncertainty about whether they would still fall within the exemption in clause 5 by virtue of the fact that they do more than provide a carriage service. If you like, I can articulate an example by reference to Australia Post. They are not responsible for the content of the letters that they carry, that is clear, but they do provide billing services for the gas and electricity companies et cetera. That does not make them responsible for the gas service. In the same way we need to be very clear, because mobile carriage service providers may provide carriage and billing services and perhaps other services which are nonetheless not related to the provision of the actual content, that they are not caught as content service providers by the bill.

Senator WORTLEY —In your submission you also address restricted access systems. Can you explain why you have concerns about the provisions relating to the restricted access systems? I acknowledge that you did that to some degree in your opening statement but could you provide some more detail with regard to that?

Mrs van Beelen —The main concern is that a restricted access system, which as defined in the bill, is required in respect of restricted content but the definition merely refers to that which ACMA says is a restricted access system. There is one criterion, I think, which is that it has to be a system that ensures that children cannot access restricted content. But it is not clear what ACMA would determine is a restricted access system. It is not clear to what extent ACMA would take into account what industry is already doing, or whether ACMA might seek to impose any more onerous requirements on industry in order to determine that what industry is using as a restricted access system actually is one for the purposes of the bill.

Senator WORTLEY —At this stage do you feel that there needs to be more clarification with regard to a restricted access system?

Mrs van Beelen —It would be helpful if there were some greater clarity as to what ACMA’s decision-making criteria would be in determining what constitutes a restricted access system for the purposes of the bill.

Senator WORTLEY —Is there one type of restricted access system that would adequately achieve the bill’s objectives?

Ms Bean —I do not think there is one type and that would limit operators, but generally operators have systems that identify a customer and also obtain their age either by requiring date of birth for identification or by production of a credit card. I think it would create expense on industry if only one system was set out in the bill because of the variety of systems we are already using.

Senator WORTLEY —Can you think of a restricted access system that can adequately or accurately verify the ages of those young people aged between 15 and 17?

Ms Bean —The production of a credit card because they have to be over 18 to have one.

Senator WORTLEY —What about those between the ages of 15 and 17?

Ms Bean —No, there is not a system that will do that unless we ask them to make a declaration or if their parents authorise them to have use of material based on their age.

Senator WORTLEY —Do you think that the proposed provision will serve to protect these children?

Ms Bean —Yes, I do because those children are not going to have access to material that is not appropriate for them because the restricted access system will require the account holder to approve their use if they are a user of a service.

Senator WORTLEY —I refer to clause 47 of the bill, which refers to the fact that ACMA can, following a successful investigation into the hosting of prohibited content by a hosting service with an Australian connection, direct a hosting service provider to take steps to ensure a type A or type B remedial situation. This clause runs over 3½ pages and contains subsections, so it would appear that the government has gone to some length to set out action to be taken in relation to hosting services in breach of the bill. Notwithstanding their efforts, can you explain what a type A or type B remedial situation is in lay person’s terms?

Mrs van Beelen —I can try. A type A situation exists where the specific provider to whom the take-down notice is addressed does not host the content that is the subject of the notice or:

(b) the content is not provided by a content service provided to the public.

It is subclause (b) that we have an issue with. Basically, as we read it, if you receive a take-down notice, you are required to cease hosting the content or otherwise ensure that the content is not made available.

CHAIR —Which clause is that?

Senator WORTLEY —I am reading from clause 47(6). I have noticed that throughout some of the responses there have been comments saying, ‘As we take it,’ and so on. Is it fair to say that this clause is unclear and that it could or should be further clarified?

Mrs van Beelen —That is one of the things that we have asked for clarity on. It is not clear to us how a content host could otherwise ensure that the content is not made available. That is not going to be within their control.

Senator WORTLEY —How would you clarify it?

Mrs van Beelen —We did make a suggestion on that. I will refer back to my comments. As I said, the first issue we raised was that of definition of ‘host’ and what that means. The second one was about making it clear that, having defined ‘host’, the host is required to cease hosting the content. It seems to me that that is what is within the realm of the control of the content host.

Senator WORTLEY —I am going to go back one step to the questions regarding the restricted access for people between the ages of 15 and 17. You were saying that credit cards would be a way of ensuring that. Credit cards are provided to people over the age of 18, so how do those people between the ages of 15 and 17 verify their age?

Ms Bean —Those people would not be able to have access to the content unless the account holder of the mobile service authorised their use.

Senator WORTLEY —Unless the account holder of the mobile service provided them with their credit card details?

Ms Bean —No. Unless the person who was operating the mobile account or was in control of that account authorised them to be a user on that person’s account. An example would be that a parent has a mobile account and they allow their child to have a mobile service, so there are two mobile services operating on the one account. But we will require the account holder to authorise those people who are users on the account to have access, or not, based on their—

Senator WORTLEY —And if they were authorised, can that access be restricted to that age group—up to 17 but not 18? Are there provisions for that?

Ms Bean —Not currently.

Senator WORTLEY —So if the mobile phone account holder provided access on their account, say, to a 15-year-old, that would automatically give them access to material that is not suitable for—

Ms Bean —That is behind the restricted access system.

Senator WORTLEY —Perhaps we will just move on from there. Before we do, is there any way to address that that you can think of?

Ms Bean —I think the restricted access system is not subtle enough to allow content that is directed only to 15- to 17-year-olds. That content—MA15+ content—will be behind the restricted access system, because of the concern of the community and operators that people between 15 and 17 do not have unrestricted access to it. It clearly needs to be within the control of a person over 18—a parent, guardian or other person who is over 18, not allowing people under 18 to give access to the material. I think restricted access systems currently are not subtle enough to allow material to be directed just to 15- to 17-year-olds. As you have highlighted, the difficulty in determining the age of those people would make such systems very complicated and expensive.

Ms Inman-Grant —You have put your finger on something that would be considered a global conundrum, because there currently really are not technologies that are capable of proving that a child is a child. You can prove that an adult is an adult through credit card verifications. There are some pilots in the US and other places that we will be looking at. In the US you can drive at age 16, so you could potentially look at driver’s licences as a way of at least verifying from 16 and over. There are of course a lot of privacy concerns related to that. The other option that we are looking at is doing a pilot with schools. Schools are really the only bodies at this time that probably have the names, ages and identities of children—but again there are numerous other safety and privacy issues associated with that. So I think it is a conundrum that we are going to have to really look at and grapple with very closely.

Senator WORTLEY —When you say you are looking at doing a pilot, do you have any idea as to how long it will be before you get the results?

Ms Inman-Grant —It depends on how limited the pilot is. It could be a matter of six months to a year, but it is something that our leadership at the very top of the company is looking at. We have got an application called CardSpace, which is an authentication mechanism. Clearly identity management is an important issue in Australia and elsewhere, so we are looking at ways that we could use this platform, which is open and can use a number of different types of age and identity verification systems going forward. But I would say that the technology and the systems are not mature yet anywhere in the world.

Senator WORTLEY —I would like to move on to interim or final take-down notices. Can you explain AMTA’s understanding of how this provision, which is section 52 of the bill, would work.

Mrs van Beelen —I have section 52 as the special take-down notices.

Senator WORTLEY —Maybe it is section 51, but perhaps we can touch on both of those. What is your interpretation of how that would actually work?

Mrs van Beelen —Section 51 is about the revocation of final take-down notices, on my copy.

Senator WORTLEY —While that is being checked, could you talk about the special take-down notices and then we will move on to the interim or final take-down.

Mrs van Beelen —That is the one that we have raised some concern about. A special take-down notice, as we understand it, would be issued if ACMA had concerns that content of a similar nature and that which raises similar concerns to that which had been the subject of a take-down notice might be posted—potentially as a substitute in an attempt to avoid the specific provisions of the take-down notice. That is what we understand to be the trigger for the issue of the notice. The content host, for example, would be required to achieve a type A or a type B remedial situation in relation to that content. It raises some issues as to how ACMA is going to know that that content is going to be put up and, likewise, how the content host is supposed to know that that content is going to be put up and therefore prevent it from occurring. It is conceivable that similar content could be put up by somebody completely different. It could be put up by the same content service provider. It just seems to me that that clause raises some concerns for industry about exactly what might be required of a content host upon receipt of that notice in order to comply with it, given that ‘similar content’ is quite a broad concept and a content host is not in a position to know the nature and substance of the content that it is hosting. That is why we have a take-down regime which is directed to specifically identified content. While we understand and appreciate that we would not want the regime to be able to be easily avoided, there is some concern that the provisions here are going to impose onerous obligations on hosts.

Senator WORTLEY —How do you see it working in the instance of an aggregated content site? From what you have read into the bill, who would have to comply with the notice—the host site or the producer of the content?

Mrs van Beelen —What we understand is that it would be directed at the host, and therein lies the concern.

Senator WORTLEY —Do you think that there is any way that a content host could know in advance that a content provider was proposing to host content that is the same as or is substantially similar to the content identified in an interim or final take-down notice.

Mrs van Beelen —It is not clear to us how that would be the case.

Senator WORTLEY —How would you propose the government clarify this provision?

Mrs van Beelen —We have suggested that if a take-down notice has been issued in respect of content supplied by a particular content service provider, then, perhaps rather than just saying ‘similar content’, the notice could specify similar content as being ‘content similar to that referred to in the take-down notice you have already received and supplied by the same content service provider’. That would at least narrow the operation and therefore the activity that the content host would need to undertake. It is actually quite a difficult one—particularly in relation to user generated content, I might add. I know a number of submitters to the committee have suggested the exemption of user generated content, but it is potentially quite difficult to comply with something like this when you have got user forums.

Senator WORTLEY —I would like to move on to telecommunications service provider determination. You say in your submission in your opening statement that the effects of the MPSD are unclear. Were you consulted about the effect of the bill on the MPSD prior to the release of the bill?

Ms Bean —We were consulted about the bill but not specifically on that question, and so we have raised that ourselves.

Senator WORTLEY —You said that you were consulted about the bill. Were you aware that this was going to be included?

Ms Bean —Sorry?

Senator WORTLEY —Were you aware there were going to be issues around MPSD?

Ms Bean —Once we started looking at the bill ourselves we drew attention to the potential conflict where both the determination and the bill were regulating the same material and our suggestion is that the bill takes that over. In fact, the way the mobile premium services industry scheme operates, complaints go to the complaint body that has been appointed as the telecommunications industry Ombudsman. The Ombudsman’s office is well practised in dealing with the consumer protection part of these complaints—complaints about billing, complaints about content providers not stopping subscriptions when asked to and so on—but they are not an appropriate body to be making decisions about content and appropriate classification.

So, as part of the set-up of the scheme, we have had some discussions between the Telecommunications Industry Ombudsman’s office and ACMA about how complaints would be handed off to ACMA to deal with content. This bill in fact clarifies, or could clarify, that issue very clearly so that content is dealt with by the bill and the determination then is amended so that content is no longer covered.

Senator WORTLEY —It does clarify or it could clarify?

Ms Bean —No, the bill does not clarify it yet, but our proposal is that the bill should do that. If content is going to be dealt with under the bill then our proposal is that the bill should make clear that it is the one that deals with content and not the determination.

Senator WORTLEY —So there would need to be amendments to clarify that?

Ms Bean —Correct.

Senator WORTLEY —When I asked you if you were consulted about the effect of the bill on the MPSD prior to the release of the bill, you said you were consulted. When you received the bill, you then became aware that there were issues. Is that correct?

Ms Bean —We were not asked that question specifically; that is all I was saying. We were given ample opportunity to be consulted and to give back our comments about the determination and the way the bill and the determination operated and the conflict that existed. So, yes, we were consulted.

Senator WORTLEY —Are you aware if anyone else in the mobile industry was consulted in respect of the MPSD?

Mr Althaus —The bulk of the consultation took place through the AMTA group, which represents all facets of the industry.

Senator WORTLEY —Was that prior to the release of the bill?

Mr Althaus —Yes. During the development of the bill we were in discussions with the department and the minister’s office on elements of the bill.

Senator WORTLEY —So you were consulted; you now have the bill before you—but those issues were not raised previously?

Mr Althaus —We had a range of discussions on the bill as the development process took place, but, as with every piece of legislation, when the final product hits the desk there are ongoing issues that we want to discuss, and the relationship with the determination is one of those.

Senator WORTLEY —So what effect do you think the bill will have on the MPSD?

Mr Althaus —Our core concern is that, in the regulation of this aspect of the industry, we do not end up with too many layers of regulation that are confusing to industry and reduce the level of certainty under which we operate. So I think, as my colleagues have outlined, our interest is in clean and clear, certain regulation. To that extent, we need clarity on the relationship between this bill and the determination, and it is our view that ultimately it should be the bill that carries the load.

Senator WORTLEY —How could these effects be best managed?

Mr Althaus —Like we said, the nature of this legislation in a very dynamic sector is always going to be quite problematic. I think the government has taken the right approach in putting together a broadly based bill that gives industry—and government, for that matter—flexibility in terms of regulation and co-regulation with industry to deal with the dynamics of the sector. So we are keen for this approach to continue, we think this bill does a good job, we are on board with the objects of the bill and we look forward to working with the government to get a successful outcome.

Senator WORTLEY —But your views are that this area needs to be addressed—it needs to be clarified?

Mr Althaus —Clarity and certainty are very important. We have a new piece of legislation that is essentially taking over from a previous determination. We have done a lot of work under that determination and can see it makes sense that ultimately this bill is the primary guiding force in this context.

Senator WORTLEY —You also have some concerns about the ‘Australian connection’ test in relation to links services. Can you explain those further?

Mrs van Beelen —I do not think that the Australian connection is particularly articulated in relation to links services, and that is the basis for our concern. So I guess we would just seek some clarity on what, if any, test does apply for an Australian connection in relation to links services.

Senator WORTLEY —Do you have any views on this?

Mrs van Beelen —Only that whatever is imposed needs to be able to be complied with. We do not have any specific suggestions as to how that would be done—potentially, if the link is hosted in Australia. I note our colleague from Microsoft Corporation has highlighted some challenges that she is probably better qualified to speak to than I am.

CHAIR —Do you want to make a comment on that—expand the whole issue, Ms Inman-Grant?

Ms Inman-Grant —Yes. I think I will use the example of Windows Live Spaces, which is our social networking site. The challenge would be: the service is hosted in the United States but a user without our knowledge may have a link to a prohibited site that is hosted in Australia. Ostensibly, through this legislation, the government would have the power to regulate that particular individual group or that hosted site in Australia. Our concern is that in our read of the links connection services that prohibition would also apply to Microsoft, the offshore content provider, where we would really have no knowledge that this hosted link in Australia that was put up by the user was prohibited.

We take these safety concerns very seriously. We use filtering technology in all of our spaces that detect flesh tones. If the tool flags to us that there is any inappropriate content, particularly pornography or child pornography, it violates our terms of service and we will take down that offending link. We will preserve it for law enforcement. We will report it to law enforcement and to the National Center for Missing and Exploited Children. Clearly, this sort of offending content is a concern to us as a service provider, and that is not the type of service that we want to be hosting. We are just concerned with what could be interpreted as an overly broad interpretation of link service provider. If the US, the Australian government or otherwise lets us know there is offending content and we have the ability to take it down, we will. But, then again, we do not want to be ensnared in something that we do not have knowledge or editorial control of. Does that make sense?

CHAIR —A little bit; not totally. You said you had a filtering system, which presumably applies to your American services. Are you implying that the kind of material which this bill is designed to prohibit could not be transmitted into Australia from the United States on your service?

Ms Inman-Grant —The content—say, videos or Live Spaces—is actually hosted on servers in the United States that an Australian user may have put up on their MySpace webpage. It will actually be sitting on a server in the United States that the Australian consumers or users from around the world can access, so that filtering technology applies to all of the sites that are set up. We are concerned with some of the links. There may be a website link to a service that is indeed hosted in Australia that we would not have knowledge of and we would not proactively go through each space’s website and analyse whether the links that individuals have on their personal webpages comply or not. Does that make sense?

CHAIR —Yes, it does. So the link material would not go through your system; it would be direct from the user to the link?

Ms Inman-Grant —Yes. Again, ostensibly, if the user is in Australia or is using a prohibited site that is hosted in Australia, my reading of the bill is that ACMA or others would have jurisdiction to go directly after that link or site rather than going after Microsoft, which is hosting the content offshore.

Senator BIRMINGHAM —How does your ability as an offshore provider of, say, live space with a link built in—the example being used there—differ from that of an Australian onshore provider to regulate what that link might lead into? Say it were MSN, your affiliate, that had a link there. Is there a point of difference there?

Ms Inman-Grant —I do not think there would necessarily be a point of difference to the link. Every system is going to be different. There are some social networking sites that do not have a filtering service, or may not be proactively patrolling the sites to make sure they are clean. They may have different terms of services. But I think it would be very difficult, whether it is housed in the US or housed in Australia, to have the capacity to check every single link that is posted on a user’s individual webpage.

Senator BIRMINGHAM —So whilst there may be difficulties for ACMA, or whomever, to actually regulate who is carrying links, if they are offshore, why is there any difference between what is carried onshore and what is carried offshore? Why should we exclude those links?

Ms Inman-Grant —Again, the individual link has nothing to do with our service but may be posted on an individual’s webpage. There would really be no way for us to go through every link and be able to assess what is prohibited and what is not prohibited content, if it is hosted elsewhere. I guess the point we are really trying to make goes to how far this legislation extends its extraterritorial reach. We believe that the current schedule 5 takes a pragmatic and reasonable approach that we can and do live by and abide by. Our interpretation is that the way it is currently drafted could potentially extend its extraterritorial reach in a way that could prove to be cumbersome and difficult from a compliance perspective.

CHAIR —This segment is scheduled to go until quarter past. I do not know whether Senator Macdonald has any questions of a legal nature.

Senator IAN MACDONALD —I have a couple of questions, not necessarily of a legal nature. I heard you mention to Senator Wortley that you were consulted about this, but have you made these comments known to the department and the drafters?

Mr Althaus —When the bill was introduced to the parliament we were able for the first time to see the finished product. Discussions on the issues that we have been raising have been ongoing during the process of the development of the bill. But, as I said earlier, to the extent that the final product was not available, as soon as it was we raised those issues again. To a large degree these are finetuning, drafting issues. We are also making it very clear to the department and the minister’s office that we do not want the bill to become overly prescriptive. Some of these operational issues will be dealt with by the operation of our scheme, in partnership with ACMA, but it is the clarity and some of the confusion, given the scope of this bill, that we have been seeking to address.

Senator IAN MACDONALD —That is how I understand your submission. None of you object to the principles and the goals of the bill—in fact, you both support them.

Mr Althaus —Absolutely. We are in this space already and these issues have been under determination for some years, to the extent that we finished our own mobile premium services industry scheme before this bill commenced. That scheme has been registered by ACMA and is in operation today.

Senator IAN MACDONALD —Have you had feedback on any of these substantive issues from the drafters as opposed to the policy makers?

Mr Althaus —We have discussed them, yes. In the very short time that we have had the bill we have had some initial discussions, but without conclusion. I guess we are using this process to air those more formally.

Senator IAN MACDONALD —Not having been a lawyer—I do not think lawyers know too much, mind you. Have you had decent lawyers have a look at this? Perhaps some of you are decent lawyers!

Mr Althaus —My colleagues to my right are part of that process; so, yes, we have looked at it in detail. One of the challenges here is part of that translation of operational pragmatism into a legal framework.

Senator IAN MACDONALD —I cannot speak for the committee, but I think that so often the government has good ideas and good policy proposals but sometimes we fail to get the people on the ground to implement the policy proposal because the legislation is not thought through well enough. It is difficult for me to argue at great length on your suggestions, but it does seem to me—and I cannot speak for the committee—that a lot of your suggestions warrant further consideration by the drafters rather than the policymakers.

Mr Althaus —I agree with that, Senator. There is a lot here that is finetuning. We think the bill has come a long way. We as an organisation and as a sector have worked very cooperatively with both the department and the minister’s office in preparations so far.

Senator IAN MACDONALD —I should make it clear that I am not criticising the drafters, the minister’s advisers or the department in any way. Applying them on the ground is very often different to sitting in Canberra thinking about how they should operate. There are some other groups in your area that would be interested in these outcomes if the law were changed in this way. Are there others who might look at these and say that that has changed the approach?

Mr Althaus —To give you an example, we are the peak group for the mobile telecommunications sector—

Senator IAN MACDONALD —Is that for Optus, Telstra, Vodafone—

Mr Althaus —Indeed; all the carriers and all the manufacturers are members of AMTA. In this increasingly convergent environment we, by definition, form alliances and relationships and interact with other sectors which are in the overall picture—for example, the internet group—and we partnered with the Australian Direct Marketing Association in the development of our premium services scheme. To the extent that we engage that way, we have a reasonable handle on what people are thinking in this context. We have been able to bring a lot of our views on the bill as it stands into our submissions. We do not speak for them by any means, but we have canvassed the space.

Senator IAN MACDONALD —Would people like—these are examples only and I mention them because they are on the agenda—the Council for Civil Liberties and the Festival of Light often use you as a first line of approach for things they wanted to deal with?

Mr Althaus —No, not necessarily. I am referring to us generally going out to other industry colleagues to drill into the operational implications of legislation of this nature.

Senator IAN MACDONALD —I am sure we can ask both the Council for Civil Liberties and the Festival of Light these questions ourselves, but would any of you think that anything you are proposing would offend the broad approaches of either of those or other organisations—as I said, I am just using them as examples because they are on the agenda?

Mr Althaus —We are in agreement with the principles and objects of this legislation. We are keen to have the pragmatic approach taken by the government to a very dynamic sector that is changeable and the protection mechanisms to protect younger Australians. We think this is a pragmatic approach, but we do not stop; we keep going as technology changes and other things become available. We look at them as they arrive.

Senator IAN MACDONALD —The finer drafting principles are a bit too much for me these days, but would any of the people who have strong views on these things one way or another say to us, ‘They are just weasel words, trying to make it easier for them to avoid their obligations’?

Mr Althaus —I do not believe so.

Senator IAN MACDONALD —But you have not had any input from anyone else who might—

Mr Althaus —No.

Ms Inman-Grant —I do not have much insight into how the department or the minister’s office went about deciding which stakeholders would be part of the limited consultation. As I said to your committee colleagues earlier, we requested specific permission to participate and they very generously granted that to us. But there are some players in the Australian content industry that did not partake and I am not sure if that was by choice or by accidental omission. I am thinking of people like the game developers, the Interactive Entertainment Association of Australia and some of our offshore colleagues such as Google, YouTube, News Corp and MySpace, the major social networking sites. I would have thought that this legislation would have been very critical to their interests and needs. I was surprised that they did not partake, but I am not sure what the circumstances were.

Senator IAN MACDONALD —Perhaps it means they are happy with it as it is.

Ms Inman-Grant —It could be.

Senator IAN MACDONALD —Very often because of timetables governments are not able to have the full consultation period, but this committee tries to help out in those areas whilst in no way wanting to interfere with the government’s general approach.

Senator BIRMINGHAM —I have a general question. In terms of the content that is captured and restricted by this proposal, do any of you have any opinions as to whether it is the right balance or whether it captures too much or too little?

Mr Althaus —That is a good question. Our view is that, again going back to the legislative regulatory model that we use, it is important that this bill is fairly broad. I do not think it goes too far, but certainly our ability to be nimble and react to changes over time is going to be embedded in how we manage our mobile premium services industry scheme. Key to that, and to a lot of this, is the relationship between industry and the Australian Communications and Media Authority. To the extent that that will evolve as this bill comes into law, we will be working in that regard, but we think the balance is broadly right at this point.

Senator BIRMINGHAM —So you believe that the bill provides the flexibility for the industry to manage control of content through your industry structures into the future without being overly prescriptive?

Mr Althaus —In partnership with the media and ACMA. Our own scheme extends that partnership to the TIO, the Telecommunications Industry Ombudsman, for other elements of monitoring this space.

Senator BIRMINGHAM —I want to return very briefly to the issue of restricted access that Senator Wortley was speaking of. Obviously your concerns are that ACMA may come up with a system that is more onerous or more difficult than, for instance, in the 18+ sector, the current simple credit card check.

Mr Althaus —That is right.

Senator BIRMINGHAM —On the issue of the MA 15+ category and 15-year-olds to 17-year-olds, which is obviously carried over from media such as television, at present there is no filter or restriction on the access of 15-year-olds to 17-year-olds, or even those under 15, to such programs aside from parents’ control of the television set and the remote control, basically. That is a fair assessment, isn’t it?

Ms Bean —I could just clarify that. Under the mobile premium services industry scheme that material is also within the restricted access system. So it is slightly more restrictive than broadcast media.

Senator BIRMINGHAM —In your medium, it is more. How do you restrict that at present?

Ms Bean —If I can just turn to my notes about how the systems are operating. All mobile accounts are automatically defaulted to ‘blocked’. So when you start your mobile service you do not have access to that material. Then you may request access to that material. If you have a post-paid account—so a mobile running on an account—you have already had to meet the credit check, so we have already ascertained that you are over 18 because you have a credit reference. If you are in a prepaid service you have to have a small credit card transaction with a credit card in the your name—the account holder’s name—to then opt into the restricted access system which gives you access to content that is MA 15+ and above.

Senator BIRMINGHAM —The point I am attempting to make there is that, under your current system, as well as presumably under systems that may be imposed after this bill, access to such classified content is harder through the medium of your technology than it is in the home on a television set.

Ms Bean —That is correct.

Senator BIRMINGHAM —And this bill will obviously continue to make that harder, potentially, if it is not amended, depending on what guidelines ACMA put in place.

Ms Bean —Yes.

Senator BIRMINGHAM —You talk about clause 122 in schedule 7 related to state and territories laws. Is there a particular basis for concern there that the states may enact concurrent laws that could have effects across Australia? Is there a reason that you are aware of why that clause has been written as it is in the bill?

Mrs van Beelen —No. Again, it is a legal concern that there is that theoretical possibility that states and territories could enact other laws and that, because of the nature of the internet and the nature of these services in that they are generally nationally available, the effect of the conduct of one state or territory government would have national effect. Some states and territories now already regulate this space to some extent—for example, some of them prohibit certainly criminal activity over the telecommunications network, I understand. It is just more a legal issue that there is that possibility.

Senator BIRMINGHAM —Thank you.

Senator IAN MACDONALD —Just on that point, what happens in the event of conflicting laws under this bill and under state and territory law? This provision says that it is not to exclude concurrent state and territory laws. What happens in the case that they are conflicting?

Mrs van Beelen —The Commonwealth has the constitutional power to legislate in relation to carriage services—to telecommunications—so I expect—

Senator IAN MACDONALD —This is a provision relating to not excluding. Isn’t the Commonwealth saying, ‘If there is a conflicting law, then it will take precedence’? You do not read it that way?

Mrs van Beelen —I think the word ‘concurrent’ suggest that there is other legislation in the field. I do not think there is other legislation that is specifically in this field at the moment, but that is not to say that there perhaps could not be. It would be a constitutional question how the states would legislate in that way. Our legal advisers foresee that there is at least that possibility and thought it was unusual that it was not specifically excluded.

Senator IAN MACDONALD —In the previous recommendation you have a different protection that is provided for in the Broadcasting Services Act. Is there any reason why that might be?

Mrs van Beelen —We could not think of one. We could not think of why there would be a difference from what is in schedule 5, so we were just seeking consistency there.

Senator IAN MACDONALD —Thank you very much.

Senator WORTLEY —In your submission you raise concern with the limitation of liability provisions in section 111. You suggest that they should be broadened. Why, in your opinion, should they be broadened?

Mrs van Beelen —That is the consistency issue I was just discussing with Senator Macdonald.

Senator WORTLEY —Yes, but to move on from that, are there any specific reasons why you consider they should be broadened, and in what way?

Mrs van Beelen —It is simply that schedule 5 gives that broader limitation, including by reference to common law, laws of equity and state and territory laws. I trust that the drafters of schedule 5 thought that that was necessary. So I guess it is more a question of why it would be narrower in schedule 7. We are not aware of why that would be.

Senator WORTLEY —Thank you. Microsoft’s submission raises issues regarding the definition of ‘content services’. I have to agree that 22 exceptions are rather a lot. Can you explain the deficiency that Microsoft sees in the definition of ‘content services’?

Ms Inman-Grant —I appreciate that it is very difficult to anticipate the types of services that may emerge in the future, which is why I assume the drafters took the approach of drafting the definition of ‘content services’ by exclusion rather than inclusion. We just think it would be much easier from a compliance perspective if, rather than looking at every service or component of each service and mapping that against each of the 22 exceptions, there were a much narrower definition of ‘content services’ that has more clarity and granularity in terms of what content services are trying to be provided. That would be our first recommendation: rather than by exclusion, more clarity and narrow the scope in terms of content service. If you decide not to take that approach, we would simply ask that you consider that there be a dominant feature test applied to each content service. Xbox Live, for instance, is primarily an online interactive gaming platform, but a chat function also exists. Most people will not use the chat function on Xbox to call their friends, although it is a secondary or tertiary feature. So, for instance, for Xbox, the dominant purpose is multiplayer interactive gaming. I think it would be much easier for us to apply the content services definition and test rather than apply 22 different exceptions to different layers of that particular service—if that makes sense.

Senator WORTLEY —In Microsoft’s opinion, what would a narrower definition be and how would this assist? You have explained it in relation to Xbox—

Ms Inman-Grant —The ‘content service’ would be a specific, narrow definition that says, ‘This is what the government considers a content service to be,’ rather than, ‘This is generally what a content service is, except for 22 exceptions.’ Does that make sense?

Senator WORTLEY —Yes.

CHAIR —It sounds cumbersome, but in fact it is a way of doing it that is effective, isn’t it? You state what isn’t objectionable, so whatever is left is.

Ms Inman-Grant —Right. I would also note that in the exposure draft user generated content was included as an exception. So if you are going to take that approach we recommend that user generated content be dropped in as an exception as part of this bill. That would be consistent with the approach that the European Commission takes with the Audiovisual Media Services Directive. Again, I think, from a compliance perspective—from an organisation that delivers these programs globally—to the extent that there is harmonisation and consistency in these types of laws across the globe, it would make it much easier for us to deliver the services and comply. I would ask that you consider excluding user generated content as an exception.

CHAIR —It is interesting that you referred to the EU law. We might seek to find what its details are today or in the next few days to inform the committee.

Ms Inman-Grant —I am happy to provide a link to members of the committee.

CHAIR —If you would.

Ms Inman-Grant —Indeed.

CHAIR —That concludes this segment. I thank you all for appearing. It has been very helpful evidence.

[10.21 am]