The Internet Society and the Communications Alliance say that the $131 million falls short of the amount required to cover the costs of compliance that will be incurred by  telecommunications and internet providers.

Society CEO Laurie Patton describes the amount of money as “nowhere near enough” and warns  the increased costs will be passed on to consumers.

Patton backs up his criticism, pointing out that the Prime Minister, himself, estimated a couple of months ago that the compliance bill would be about $400 million - a figure that many experts were skeptical was too low.

In a "worse case scenario” Patton even suggests that some of the smaller ISPs – burdened by the costs of compliance - could be forced out of business.

He also stresses that the figure of $131 million is less than half the amount the Government itself estimated as the cost to industry when the Data Retention Bill was presented to Parliament.

“The Government's original cost estimate was not based on widespread industry consultation and the Internet Society is concerned that the costs have been significantly underestimated, especially in respect of small to medium sized ISPs that don't have the resources to undertake the work in-house and therefore will be required to pay for external assistance,” Patton says.

Today, Patton called on the Government to commit to a top up if there is a significant shortfall once the final costs have been determined, once again warning that, otherwise, the ISP/telco industry will have to underwrite the difference and pass on to the extra costs to consumers through increased Internet fees.

Patton said the society’s objective was to see that the money is distributed in a “fair and equitable manner”.

The Communications Alliance has joined with the Internet Society in pushing its concerns over the compliance costs, with alliance CEO John Stanton saying the telecommunications sector and the government must work to minimise the costs of complying – “ensuring that the funding shortfall (the costs that service providers must fund themselves) is as small as possible, so as to reduce the price impact on consumers”.

“Industry is working with the Attorney-General’s Department on the detailed implementation arrangements and we must continue to look for ways to streamline the required processes and compliance requirements to make the regime as efficient as possible,” Stanton said.

“Sensible use of the exemption provisions within the Act and a pragmatic approach to encryption requirements are just two of many avenues that can be explored to avoid unnecessary cost burdens on consumers.”

Stanton also complains that the industry has not yet been advised how government proposes to allocate the $131 million among the several hundred service providers that will be captured by the data retention requirements, but “stood ready to assist in devising a fair and reasonable formula for achieving this”.

According to Patton, the feedback the society and Comms Alliance are giving the government is demonstrating that the Government has greatly underestimated the work involved. “Therefore, we believe that it is too early to be capping the amount of money allocated to the industry's cost recovery.”