Telstra denies raids in continuing MP3 piracy investigation

An Australian Federal Police investigation into an alleged major organised criminal music piracy racket involving MP3s has seen Telstra deny that any police 'raids' have taken place on its premises.

Reports that Telstra premises in Melbourne were raided in relation to the music piracy investigation by the Australian Federal Police on Thursday February 27 have been dismissed outright by the telco as untrue. Telstra spokesperson for Legal Affairs Rod Bruem told Computerworld: "Look, there were no raids. There is a very strict process under the Telecommunications Act [relating to law enforcement]. We have a law enforcement liaison unit whose job it is to deal with that [warrants and warrant operations], so there is simply no need for raids. Telstra must be satisfied that the release of records is necessary for the enforcement of criminal law... it's not done lightly… this can be scrutinised by the Privacy Commissioner. I can't comment about any warrant operations; we just don't comment on them and we don't get told what they are about.

They [authorised agencies or authorities] don't raid us, they come [to us] with a warrant, and we cooperate if we feel that the grounds are there. There are never any raids, it's all very proper".

The Australian Federal Police, meanwhile, is sticking to its story that "a search warrant was executed on Telstra premises in Melbourne on Thursday" (February 27). A spokesperson said the matter was operational and ongoing, adding that saying anything more could jeopardise the operation, but also confirmed that a warrant had been executed on another ISP in Perth.

The term 'search' warrant appears to differ from the execution of a warrant relating to Section 282 of Telecommunications Act (1997), which requires carriers and ISPs to provide information to persons authorised in the course of criminal investigations – but also provides for disclosure of information to, "a civil penalty-enforcement agency; has certified that the disclosure is reasonably necessary for the enforcement of a law imposing a pecuniary penalty". The AFP does not deal with civil matters.

AFP sources were also keen to point out that there had been no heavy-handedness, telling Computerworld: "We don't do raids [on Telstra]. It's not like we barge in and just take what we want. We use one port of call and that’s the [Telstra's] Law Enforcement Liason Unit".

According to a music industry source, the operations are part of a much wider investigation targeting allegedly organised "criminal" music piracy, with both carriers and ISPs being pulled up for failing to monitor or stamp out illegal music swapping activity.

The source also called into question whether there had been reticence on behalf of carriers and ISPs to stamp out illegal MP3 traffic because, despite it's illegality under the copyright act, it generated income: "You have to question their business model and the ethics involved when you can run a site with seven million hits [per annum] for forty bucks a month," the source said, adding that there would be plenty of "surprises" when the matter reached fruition.

The source also said that the effort could well be a "multi-jurisdictional world-first".

The Federal Attorney Generals Department and Justice Department have steadfastly refused to comment on whether their individual ministers had any prior knowledge of or approved of the warrants executed, with the Justice Department saying that copyright was not within its portfolio. The Department of Communications Information Technology and the Arts has also refused to comment.

Michael Spec, spokesman for the Australian Recording Industry Association (ARIA), which represents the interests of record companies including BMG, Sony Music Entertainment and EMI, said "It is apparent that the complaint is from music copyright holders. We don't want to jeopardise this investigation. I anticipate that the relevant minister will make a statement at the conclusion of the investigation". Tellingly, ARIA's 2002 annual report states: "The Federal Government this year commenced an inquiry into Copyright Enforcement, with ARIA making a key submission. The Committee will recommence its hearings in the new year and ARIA will continue to provide its expert resources to the Committee to assist in achieving a useful outcome".

Police sources confirmed that of late the music industry has been "very proactive".

Global implications

IDC analyst Daniel McHugh feels if criminal prosecutions against MP3 pirates succeed it will indeed be a world first and have wide-ranging implications for both consumers and enterprises alike.

"From a precedent point of view it becomes very interesting in terms of how popular are certain forms of Internet technology going to be in the future. It raises a lot of questions: is it going to slow down the adoption of these sorts of new technologies; is this the first stage of a lot of information being accessed by Federal parties? Is that going to slow down adoption? Do I want the government to know exactly what I am buying? If people [users] are charged you have to ask how it will change usage and adoption of technology.

McHugh also feels that a heavily regulated copyright enforcement system will increase costs substantially to carriers and ISP – a cost that may ultimately be passed on to enterprise and retail customers alike:

"There's a lot of additional business cost involved. I would suggest that if enterprises don't have some sort of system [to filter out MP3s] there could be potential issues.

"If the ISP [becomes liable] you have to ask how much it will cost them to protect themselves. How many people will have to be employed for technical support or in call centres to monitor and deal with it. Can you imagine how much it would cost Telstra to follow up on people who breach their code [of user conduct fort the service]? If you [disconnect] people, you are going to get angry phone calls.

"You will need additional legal staff to say whether those people can get back onto the service – and then people to pass those details along to the police if it needs to be taken further. Either way, you have to be able to prove it -- and that will mean storing a lot of information. In China they block the traffic at all the major switches, that's how they regulate the Internet…"

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