Broadband Censorship, Copyright and Complaints | BTalk Australia

(19min 31) Simon Hackett, MD of Internet provider Internode, thinks the National Broadband Network will not, and should not, be built. On today’s BTalk Australia he explains his reasoning, in a wide ranging discussion with Phil Dobbie. You’ll also hear his views on Internet censorship, copyright infringements and the sharp increase in Telco complaints registered by the Telecommunications Industry Ombudsman.

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See also: Monopolistic Pricing Shrinks Broadband Benefits | BTalk Australia

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•  Today’s Transcript

Phil Dobbie: Hello, I’m Phil Dobbie and welcome to BTalk Australia. Today we talk to Simon Hackett, the MD at Internode. There are a couple of big stories in internet-land right now: the National Broadband Network Submissions and the government’s ambitions to introduce more censorship onto the Net. Simon Hackett is the founder and MD of Internode, one of Australia’s largest internet service providers. Simon let’s look at internet censorship first of all. Isn’t this all a bit of a storm in a teacup? I mean the government wants to try and block sites featuring child pornography, which has got to be in the public interest. Should we just let them get on with it?

Simon Hackett: Phil, it’s an interesting thing. The whole policy this time around, because this seems to happen around about every election, started out being a notion about voluntary censorship of bad things that people could opt into — that’s still there, but what it’s grown is this other “leg”, which is the notion of a mandatory unremovable censorship of your internet access. And that is a beast of a far different colour. It’s not about the content being bad, I agree. Child pornography is awful and should not be in our world. It’s about the fact that of the ways to remove that and other genuine Net nasties, the government policy will not actually achieve its stated objective — it won’t work. So you get a lot of bad consequences from “it won’t work”, including the government assuring the general population presumably that it does work, when it doesn’t.

Dobbie: Right, so people who are into that sort of thing are still going to find that there are ways to use the Net to promulgate their material — that’s what you’re saying?

Hackett: Yeah, and the problem with any such mechanism is that it annoys good people by potentially getting in the way of their internet access. In other words, what happens if that management filtering system gets it wrong and starts blocking all pages because it just broke today? The bad guys don’t use in the clear Port 80 web browsing to shift child pornography around. They never have. So it’s not even about the fact that’s easy to circumvent, it’s not even the affecting what they use.

Dobbie: So most people are using peer-to-peer type technology to try and shunt this stuff around.

Hackett: Yeah, right. File sharing happens with, well surprise, surprise: file sharing protocols, which are not actually in the scope here because it basically wouldn’t work if they tried to. But deeper than that: the trivial circumvention of any such thing is to use VPN connections or web proxies, and neither of those things would be stopped in any way by filtering of unencrypted, in-the-clear access of particular URLs. So it’s so trivial to circumvent it’s almost laughable, and again as a result the bad guys will blast right past this. Annoyingly, all you do is get a situation where the only people you impact are stupid bad guys. Today you can catch stupid bad guys because they use unencrypted transmission of stuff you might catch — you might come across in some way, but now the stupid bad guys get education and learn how to use a VPN client and now they’re also impossible to usefully intercept and they’ve become smart bad guys.

Dobbie: So the technology that I’m talking about some people have complained that it’s also going to slow down the Net, is that valid? I mean it’s really just looking up a web address isn’t it? And that happens all the time.

Hackett: Well, that’s an interesting question. It certainly would be one of the objections — one of the technical objections to this stuff is it will slow the Net down. If you throw enough money at it, you can do this without slowing the Net, but you still have a chance of the network just going off line because you’ve added more complexity, and you haven’t actually solved the problem you said you were going to solve. What’s likely is, if the government folds it in, they won’t adequately fund it. So you’ll also get performance problems in addition to the fact that it’s pointless.

Dobbie: Now these filters do exist in some countries, don’t they? Like in the UK for example they’ve got some sort of internet filtering. Do you think it’s just politics that has got in the way there of common sense?

Hackett: The difference here is between mandatory filtering and optional filtering. There’s plenty of vectors including in Australia today, the government has some vectors today where you can, on a voluntary basis, decide to impose some filtering in your internet connection. There are valid reasons to do that in some circumstances, but mandatory filtering that, in theory, the general public is subjected to whether they like it or not, is actually the preserve of countries whose governments we don’t normally consider to be compatible with a democratic ethos. The other thing to understand that’s important here is the actual demand for voluntary filtering is tiny — it’s a single-digit percentage and that’s okay. But here’s the point: the amount of technical resource and the expense to provide filtering for let’s say two percent of the population is x. If you, however, want to filter 100 percent of the population’s internet access just in case you go to a bad URL, now you need 50 times the technical resource to do it — 50 times the cost.

Dobbie: But is that because a lot of people believe that the software that they can get to filter the Net is good enough for them and perhaps it isn’t. I can give out a personal example — my brother in the UK was on the phone the other day saying that his son had come across some porn that they hadn’t been aware of, and they had software filters that clearly weren’t blocking access to some of the places they didn’t want their son to get to.

Hackett: Let’s say the software filters that you load up (which sounds like what you’re talking about) that’s the only common way to do this, and they’re in no sense perfect. They’re using black lists or white lists that are updated regularly. It’s like anti-virus and anti-spam software: there’s an update cycle and things can take a while to get into that update cycle, so these things are not perfect. I have this very simplistic view but I think a reasonable one. What we do at home — I’ve got small kids — and this is the number one way to keep this stuff under some rational control is to have the computer physically visible from the dining room table. Suddenly your kids become their own censors, really effectively  — in a good way. They generally know what’s strange or weird or otherwise negative to their lives and you can help steer them with that as long as you’re actually part of the conversation.

Dobbie: So do you think the internet service providers are doing enough in this space or do you think they should be doing more, or should the government be doing more in terms of some form of voluntary filtering or as you’re saying it’s a big expense for a small demand?

Hackett: Well, it is a big expense for a small demand but I think the place to put the sums of money the government is talking about (or indeed any value you can devote to this) is actually to the more traditional things: education and policing, because those things have a chance of improving the situation. If you give parents educational resources to help them understand how to better be a part of this process, because typically their kids know more about the internet than they do, if you help them get a big more educated about the issues and about how to deal with it, that’s a great thing. If you put more resources into traditional policing, that’s also a great thing if your aim is to actually catch the bad guys — because that’s really the only way you catch them, the only way the Australian federal police deal with child pornography is by infiltrating their rings and nailing with very traditional police work. That’s what you actually do, so that’s where you should put the resource in education and into policing. In the case of this stuff, the government has had a process where you can download free client-side filters that the government pays a licence fee for, called NetAlert — it’s out there, it exists. The government published the take up figures for that in the annual report of the Communications Department a few weeks back and it hasn’t made a big thing about that in public because the numbers aren’t fabulous. They show that there’s not a huge real-world demand. There’s been about 200,000 Australians who have downloaded the free filters in round terms; about 27,000 are still left using it today. The government identified that the target population to be about 1.7 million people that have internet access and kids, so we’re talking around about 1.6 percent actual take-up when you give it away. The government spent $7.5 million dollars in the last financial year promoting the existence of it. The demand really is small.

Dobbie: Do you fear that because of politics you might accidentally be driven down a road where you have to get more involved as a service provider, into providing it even if its opt-in type filtering — that you’ll have to invest in the technology to try and filter more content that goes to your customers?

Hackett: Yeah, that is entirely possible, and providing that we are not expected to carry the sole financial burden for doing that, I’ve got no problem with it at all. So if the government decides that that’s an instrument of social policy and would like to assist in the funding of that, and/or would be quite happy with the notion that if it costs us more money we will offer that to our customers at an appropriate extra fee (not an unreasonable extra fee, whatever that is to cover it), we’re more than happy to do that. My observation again is the actual take-up will be on the order of about 1.6 percent and that’s fine, but we’re not averse to that. We’re not averse to voluntary anything. The problem here is really the mandatory stuff because it has this plethora of negatives.

Dobbie: Another area where ISPs are coming under attack of course is in the enforcing violations of copyright infringement. IiNET felt the wrath of an internet cafe in Sydney who had been found as being responsible for copyright infringement. Should you be responsible for policing copyright infringements or is it really up to the end user as to what they’re doing on the Net? 

Hackett: Yeah, it’s a good question and clearly iiNET are in the process like it or not of being a test case to try and explore whether the copyright act as it’s currently drawn up can make an ISP culpable for being a conduit for content that’s deemed to be illegal. My personal view is that we really are just the messengers here and it’s an obvious but reasonable analogy to compare us to Australia post; that we are just moving stuff around. If there is an illegal act committed, it’s not ambiguous who’s committing it — it’s the end user, if anyone is doing it at all. So it seems to me to be in some deep sense an act of laziness to try to use us as the soft target to control that. We wind up, even if we follow all the letters of the law about safe harbours schemes (which in fact don’t stop us being potentially thrown into this), they just limit our liability. If we follow all of that stuff we are still being a judge, jury and executioner for somebody’s internet access on the basis of an allegation that we are not qualified to judge.  There’s really some rationality here that says if the law’s been broken, run a test case about the end user. We are not judges. We can’t make illegal judgment about whether that content’s actually is or isn’t legal.

Dobbie: And you become liable both ways of course?

Hackett: Yeah, we become liable both ways, exactly. The point is there’s a picture of the world where we are the targets of a carefully set up scam designed just to damage us in the marketplace by falsely alleging that our customers are doing this stuff. And if we terminate them and their customers sue us, life gets interesting.

Dobbie: It certainly does. Now the National Broad Band Network bids are in — you’ve been quoted as saying that the question is not who should roll out fibre to the node but whether it should be done at all. You said that earlier this year. Do you still hold that view?

Hackett: Yes I do. I do still hold that view. I still hold the view that fundamentally the policy is broken here. We are all working with a 2005 idea handed to John Howard by Sol Trujillo that if it’s built on time (and that’s already slipping), let’s say the moment we might get a decision to build a network by 2010 to build a network by 2015, that will be completely obsolete by 2020. That’s just madness. We should be building more high-speed wireless networks. That’s happening and fibre to the home, which isn’t happening, and the copper should stay there as a third wheel that keeps competitive tension alive. So at a high level I think it’s the wrong policy for the wrong answer. Now, given that the policy exists there are still right and wrong answers about who should win and why. Telstra have done something very strange lately which has not put a tender in. They’ve put in a 12-page public media release that explains why they’ve not putting a tender in. And it’s a sign of stress for the government I think in this whole process that they’ve actually made the initial and I think very wrong call of describing that as a bid. That to me just indicates some desperation about wanting to claim that there is competitive tension in a process that’s rapidly falling to pieces.

Dobbie: So if it does go ahead, and let’s say for example that Telstra, even though they haven’t put in a full bid, do actually get the contract and roll out fibre to the node — what potential impact does that have on a business like Internode? You’ll need access to that network presumably to survive, and you’re going to find it hard to sell your existing product without moving to that network, I guess.

Hackett: Yeah, one of the design problems about fibtr to the node in particular, which is not the case of fibre to the home is that fibre to the node involves severing the existing copper halfway and replacing the inner half with fibre; in the process it physically disconnects all of the competitive ADSL2+ providers in that geographical area. So wherever you roll out Telstra’s view of the NBN and remember this is very much Telstra’s 2005 view of the NBN, you accidentally on purpose extinguish all ADSL2+ competition. That means that we do great but we put all their prices up because we will have to mark up whatever Telstra charges us, and we will lose our ability to competitively build our own stuff that’s more cost effective.

Dobbie: Presumably you’re going to the next stage, to the next advanced technology and fibre to the home would be a massive investment if you were required to do that though, wouldn’t it?

Hackett: Yes, it would be. Ironically the best place for people to do it is Telstra, because they already own the ducts and they already own access to the lead-in to people’s houses. So the most cost-effective builder of FTTH [fibre to the home] is Telstra and the brave thing for them to do would be to abandon this and get on with their FTTH, which a lot of their bigger brothers in the US have started doing. Their complaint for a decade has been regulatory uncertainty which is actually code for we know exactly what the regulations are — we just don’t like them. And the regulations are very specific to the copper telephone line network. If they build something completely new end-to-end, if they don’t do the lazy thing of reusing the copper, then they’re not subject to any negative regulation at all. That’s why they’re so successful with their NextG network. If you build it from scratch, go to it, brother — have a good time.

Dobbie: Although they would argue, of course, that would require a massive injection of capital and they wouldn’t be too happy about sharing that investment and providing open access, I presume.

Hackett: No, no this is the point. If they build a fibre to the home network they wouldn’t have to provide open access to it. If they made their own investment in their own new connections end-to-end just like NextG, which they are steadfastly refusing to wholesale and don’t have to; that would be the point. They’d own their own road. The copper is so encumbered with access rights, that is what makes it hard for them to use it this way.

Dobbie: If they did that though and they invested all that capital, they would be shutting up shop for a lot of ISPs that wouldn’t be able to make the investment or compete in any way, presumably. 

Hackett: No, this is the thing. The copper network retains an access right that’s a year older than privatisations so we retain a right to access the copper. We — the rest of the industry. So if Telstra built a FTTH network and they bypass it with fibre, the copper would still exist and the rest of the industry would still use that, and we would sell competitive products over the copper that would themselves cause competitive pricing tension for Telstra so they wouldn’t overprice fibre to the home network and consumers would win massively out of this.

Dobbie: Yeah, it makes a lot of sense. 

Hackett: Right now, the problem is this: if you read the Telstra press release about their vision of the NBN, it’s a vision where there are no infrastructure-based copper competitors left; they’re specific about their being no sub-loop access, which in English means when they put this stuff down, they will cut off from the copper and leave it cut off. There will be no naked DSL — very explicitly, and their idea of an entry-level product will be $40 a month if you don’t bundle their phone service for a megabit with 200 megabytes of download, which is 25 times slower and 25 times less download quota than we sell today.

Dobbie: I was going to say it sounds like a big backward step.

Hackett: It’s a huge backward step. Now here’s the complication; for their own retail customers it’s not — it’s actually situation normal, but the half of the country who have come out of the coma realise they’ve got a choice of airlines will get completely shafted by that.

Dobbie: Okay. It sounds again like an example where perhaps Telstra is trying to push its own retail pricing on its wholesale customers. 

Hackett: Well, let’s say more accurately they want to push its own retail pricing on the entire Austrlian population; they don’t really care who buys it as long as it ultimately comes through their baseline price.

Dobbie: There’s been a massive increase in complaints to the telecommunications industry ombudsman within the last year — 50 percent more in a year which is just huge. What’s going on here, do you think? Are you as guilty as the rest or are you the shining example as far as TIO complaints are concerned?

Hackett: Sincerely, the TIO tell us that we are the shining example. We actually work really damn hard on customer service and in particular customers in the rare cases if they have a problem with their services, we try really hard to avoid them having to use the TIO to help solve it. The TIO have escalation levels of cases so there will be a Level 1 complaint that might be filed against us if someone’s not happy with something. It’s extremely rare for any complaint with us to ever reach Level 2.

Dobbie: So what’s happening with the rest of the industry? How come this huge increase?

Hackett: My guess, and it’s only a guess, is a combination of two things — one is price stress leading to less tendency to want to work these things out and less resourcing of call centre and of network for some people; but also I think more particularly an awful lot of people are outsourcing call centre overseas and the problem with that is not about culture and it’s not about language; it’s about disconnection from the day-to-day operation of the business. So that person in another country can only read the standard song sheet for resolution. They can’t walk out the corridor and say, “Can we just give this guy his money back?”

Dobbie: Simon it’s been a pleasure talking to you. At your forecast for 2009 do you think we’ll get this bloody fibre to the node built?

Hackett: No. Not at this rate. There’s no question in my mind who should build it by the way it’s the Optus-led Terria consortium because they’ve got the right competitive settings there; but my real suspension is — here’s the point. It’s not Telstra who wins. Telstra will sue whoever knocked Telstra into the Stone Age so my prediction is the start of the next election they’ll be no network and just a whopping great high court case happening.

Dobbie: I think you might be right on that. Simon, thanks very much for your time today.

Hackett: My pleasure.