AFACT v iiNet: Malone would prefer illegal downloaders to go elsewhere

iiNet CEO takes the stand for his third day of cross examination

iiNet chief executive officer, Michael Malone, has said he would prefer users to go elsewhere if they were going to use the Internet for illegal downloading.

Malone took the stand for his third successive day of cross examination in the civil case between the internet service provider (ISP) and the Australian Federation Against Copyright Theft (AFACT) in the Federal Court of Australia.

When asked whether the company makes money out of selling services that are attractive to downloaders, including downloaders of unauthorised copies of movies, he replied: “I’d prefer them to go somewhere else and let someone else be sued,” drawing laughter from the courtroom.

AFACT barrister, Tony Bannon SC, began the cross examination by referring to a posting by Malone on Whirlpool on Dec 13, 2008, in which Malone had made reference to iiNet’s written policy for disconnecting repeat copyright offenders. The posting stated the policy had been reviewed by law firm, Herbert Geer, but Malone conceded that the statement was inaccurate and, at the time, the ISP did not have a written policy.

Malone said he had been referring to an internally written Safe Harbour document.

Also tabled was an email between Malone and the chief executive of the Internet Industry Association, Peter Coroneos, in which Coroneos expressed concern about creating the impression that ISPs should be doing more to police copyright infringement, maintaining it was better to suggest alternate commercial models that would provide a win-win outcome for content owners and conduits.

Under cross examination, Malone agreed that iiNet had no intention of agreeing to a process where the company would forward infringement notices to offending customers with a view of disconnecting them.

AFACT lawyers tabled an email sent at the end of July 2008 from an iiNet employee which stated: “We are not obligated to do squat on their allegation.” Malone agreed with the statement’s basic tenor, although he said he thought it was “a little bit colloquial”.

AFACT's lawyers also tendered articles from the Australian Financial Review, (AFR) and The Australian regarding the traffic levels of peer-to-peer software, BitTorrent, across the Internet. In the AFR article, Malone was quoted as saying that BitTorrent traffic would account for about half of all internet traffic.

“I’m aware that BitTorrent has been used on our network since its implementation,” Malone told the court, agreeing that a substantial proportion of BitTorrent traffic has involved the downloading of TV shows and Hollywood movies.

The Australian article, which referred to ISPs placing restrictions on peer-to-peer traffic, quoted Malone saying that an ISP should ensure its network was free of congestion rather than differentiate between different types of traffic.

Malone was also questioned about the information provided to customers by iiNet’s customer service team regarding the use of BitTorrent. He confirmed that the ISP did not support third party applications, but rejected suggestions the “relatively young” customer service team are “the sort of people you would expect to be familiar with the processes for downloading via BitTorrent”.

“I don’t expect that every young person in Australia is downloading illegally using BitTorrent,” he said.

He also answered questions about customer communications which explain a gigabyte as the equivalent to two-and-a-half TV episodes or a DVD quality movie.

“It is designed to give...a scale idea,” he said.

iiNet provides customers with a Freezone, a selection of sites and servers from which customers can download without it counting towards their usage quota. Freezone partners include iTunes, Quickflix and the ABC’s iView TV service.

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