Data retention compliance cost AU$50m less than anticipated: ACMA

The total cost of complying with Australia's data retention laws was AU$176.2 million by June 2017, which was partially offset by the AU$128 million grants and AU$26.6 million in costs recovered from agencies.
Written by Corinne Reichert, Contributor
(Image: Screenshot by Corinne Reichert/ZDNet)

The Australian Communications and Media Authority (ACMA) has revealed that administrative compliance costs for telcos implementing obligations under the government's data retention scheme reached AU$176.2 million by mid-2017.

This total -- reported in the ACMA's Communications Report 2016-17 [PDF] tabled in Parliament on Friday -- was additionally partially offset by AU$26.6 million in costs recovered from criminal law enforcement agencies (CLEAs) for responding to their requests for data, the ACMA said.

As a result, the total cost of compliance was around AU$149.6 million, most of which would be covered by AU$128 million in data retention industry grants handed out by the government at the start of the year.

This is despite the ACMA's prediction in last year's Communications Report using information from the Attorney-General's Department (AGD) that predicted compliance costs would reach AU$198.5 million by mid-2017 -- AU$3.8 million in 2014-15, AU$69 million in 2015-16, and AU$125.7 million in 2016-17.

According to data reported to the ACMA by around 400 carriers and service providers, however, data-retention compliance actually cost AU$11.97 million in 2014-15, partially offset by AU$7.3 million in costs recovered from CLEAs; and AU$44.4 million in 2015-16, partially offset by AU$9.4 million in costs recovered from CLEAs.

Despite the compliance cost jumping to AU$119.8 million in 2016-17, the costs recovered from CLEAs remained relatively stable on the prior year, at AU$9.8 million.

Under the industry grants [PDF], Telstra received AU$39.9 million; Vodafone Australia AU$28.8 million; Optus AU$14,8 million; Vocus and M2 AU$3.4 million; MNF Group AU$3 million; TPG AU$2.2 million; Exetel AU$1.8 million; and the National Broadband Network (NBN) company AU$1.1 million.

Most telcos received up to 80 percent of their implementation costs under the grants, according to the ACMA, which added that the "effectiveness of the data retention obligations will be considered by a Parliamentary Joint Committee on Intelligence and Security in 2019".

According to the ACMA, most telcos also had an up-to-date implementation plan.

"In 2016-17, the AGD referred three service providers to the ACMA for failing to submit an amended data retention implementation plan to the AGD. Following contact from the ACMA, the three service providers provided the amended plans as required," the ACMA's report said.

The Telecommunications (Interception and Access) Amendment (Data Retention) Act 2015, which came into effect in October 2015, mandates that customers' call records, location information, IP addresses, billing information, and other data be stored for two years by telcos, accessible without a warrant by law-enforcement agencies.

While the purpose of the Act was to use retained data in an effort to combat national security threats such as terrorism, an AGD report in August revealed that it is mainly being used to investigate drug-related offences.

During October 13, 2015, to June 30, 2016, the AGD report said illicit drug offences involved 57,166 authorisations to view telco data. This was followed by miscellaneous, homicide, robbery, fraud, theft, and abduction.

Terrorism offences ranked below property damage and cybercrime, with 4,454 data retention authorisations made during that period.

An Ombudsman investigation into the "accidental" use of journalist metadata by the Australian Federal Police (AFP) last week found that the AFP was unaware of the legal requirements, meanwhile.

The ACMA also used its Communications Report to provide an update on connectivity across the nation, saying that 89 percent of Australian adults accessed the internet during the year.

Pointing to the NBN rollout, AU$2 billion worth of mobile network investments from Australia's telcos during the coming year, the mobile blackspot program, VoWiFi and LTE-B trials, submarine cable investments, Internet of Things (IoT) networks and trials, and 5G trials, the ACMA said Australia is improving its communications infrastructure in line with increasing demands.

According to the ACMA, there were 33.64 million mobile services and 8.46 million fixed-line telephone services as of June 2017, with 40.08 million internet service subscribers in total.

Using information from Australia's three mobile telcos, the ACMA said market share remained relatively stable for the year, slightly decreasing for Telstra, increasing for Optus, and staying stagnant for Vodafone.

(Image: Screenshot by Corinne Reichert/ZDNet)

While the ACMA had reported mobile phones reaching saturation levels three years ago, it has said the number of handsets in the country continues to increase.

It is also forecasting that 9 million handsets will be shipped to Australia during 2018 thanks to the entry of Amazon and the re-entry of Nokia.

Around 6 percent of people were using only their smartphone to access the internet during the year, the ACMA added.

In terms of fixed-line broadband, the ACMA said Telstra had 5.17 million subscribers as of June, followed by Optus with 1.15 million; iiNet with 983,000; TPG with 885,000; and Vocus with 528,000.

With the NBN still rolling out, 4.23 million Australians were on ADSL connections as of June 2017, although this represented a year-on-year decrease of 15.9 percent. There were 2.14 million on fibre connections, 1.01 million on cable, and 140,000 on fixed-wireless. The ACMA did not report satellite customer numbers, but said 6.11 million used mobile wireless services including dongles, data cards, and USB modem devices.

The ACMA also pointed towards over-the-top (OTT) messaging apps as increasing in popularity, and said IoT is becoming "mainstream" as regions begin implementing technology for smart cities programs.

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