Government Must Act on Data Retention Funding

Sydney, 12 April 2016 –  One year after the passage of the Federal Government’s mandatory data retention legislation, Australia’s telecommunications providers are still waiting to learn how much of their multi-million dollar compliance costs will remain unfunded – and whether their business will be threatened as a result.

The Telecommunications (Interception and Access) Amendment (Data Retention) Bill passed the Senate on 13 April 2015 – one year ago tomorrow - and came into effect on 13 October last year.

The requirement to collect and store a huge volume of customer data was estimated by the Government’s consultants to entail an upfront capital cost to industry of up to $319.1 million. Industry expects the actual capital costs to be significantly higher than that.

The Government itself estimates that the ongoing data retention compliance costs to industry will total $738 million over the first 10 years of operation of the scheme.

The 2015-16 Federal Budget contained funding of $131.3 million over three years to make a contribution to the increased capital costs of telecommunications providers. Of that figure, almost $3 million will be siphoned off by the Attorney General’s Department for administrative costs.

“Only weeks away from the 2016-17 Budget, however, telecommunications providers are no closer to knowing how much they will receive from the Government.”

“They therefore don’t know how much their business – and ultimately their customers - will have to contribute to the costs of the data retention regime,” said Communications Alliance CEO, John Stanton.

The round of applications from service providers seeking a share of the Government funding closed on 23 February this year.

The next step is for the Government Data Retention Implementation Working Group to meet and review the weightings that are to be used to help calculate how much subsidy funding each eligible service provider will receive.

That meeting has not yet been scheduled.

“No-one doubts that the Attorney-General’s Department has been working hard to implement the regime and sort out the funding question – but the ongoing delays are having perverse consequences, “Mr Stanton said.

“Many service providers – particularly smaller operators - have told us that they are doing very little or nothing to build their compliance capabilities at the moment.

“Who can blame them – if they start investing in new systems now, without knowing how much of that investment will remain unfunded once the subsidies arrive, they are putting themselves at risk of bankruptcy.”

“Other operators have been investing in compliance measures, but are doing so in an ongoing climate of uncertainty.”

“There has been a lot of well-based criticism of the data retention scheme itself.”

“But leaving that aside, the Government must at the very least act quickly to provide some certainty to the telecommunications sector, which is battling plenty of economic and commercial challenges aside from data retention.”

“So far the only thing that is certain is that all the Attorney-General’s Department costs will be fully covered.”

“That is cold comfort for service providers struggling to deal with the massive burden of the data retention legislation.”