Australia's copyright law and the alleged draft text from the Intellectual Property chapter of the Trans-Pacific Partnership (TPP) agreement limit the ability of internet service providers (ISPs) to cache content locally, according to iiNet.
iiNet's comments came in a submission (PDF) to the Australian Law Reform Commission's (ALRC) review of the Copyright Act.
The company estimated that 70 percent of the traffic it delivers to its customers comes from overseas, and, as such, in order to reduce the cost of transmission from the US and other countries to Australia, caching content locally is a vital necessity. iiNet estimated that caching can reduce transmission overheads to 1 percent of what they would otherwise be.
Despite its necessity, iiNet said that caching is not currently allowed under Australian law.
"Australian copyright law does not include a specific exception that permits the communication or reproduction of material for the purposes of system-level caching," iiNet said.
The telco said that this places Australian businesses at a competitive disadvantage to US businesses, where caching is either seen as non-infringing or falls under fair use.
"The uncertainty about the legality of caching is a disincentive for ISPs to efficiently manage their traffic. These uncertainties create a disincentive for Australian ISPs to innovate and provide their own caches, which would also allow for the efficient management of their internet traffic."
iiNet argued that a similar exception as in Canada's Copyright Modernization Act would allow caching, but warned that the TPP agreement that Australia is currently negotiating could also prevent caching.
"iiNet also takes this opportunity to express its concern at the expansive and uncertain language of the alleged draft US Intellectual Property chapter of the Trans-Pacific Partnership agreement concerning caching. Article 4.1 of that text grants rights holders the 'right to authorise or prohibit all reproductions of their works, performances and phonograms in any manner or form ... including temporary storage in electronic form.'"
iiNet also argued that the ruling in the Optus TV Now court case, which effectively banned recording TV shows using equipment hosted in the cloud, was "very concerning." The company said that the law is too concerned with where the recording is made.
"It is well worth asking in 10 or even five years' time, will the apparent focus in Australia's copyright law on where the hard disk is located have any meaning?"
Optus said that while TV Now was banned in Australia, Singapore law allowed the product, and the company said that countries that have "inflexible legal regimes" risk being left behind in cloud computing.
"Whilst the term 'cloud' has become somewhat overused and overhyped, the reality is online storage is here and has been for some considerable time. More and more data is being stored in the cloud, and there seems to be no logical reason why there should be any distinction between storing the data on the hard drive of a DVD recorder as opposed to remotely in the cloud," Optus said.
Optus argued that Australian copyright law should ultimately be technologically neutral, without unreasonably restricting access to copyright material for the end user, and consistent with international law.