Monday, January 05, 2009

Dial X for Optus

Dial X for Optus was the delightful heading on a story in today's SMH. This story is based on a whole series of judgements, the most recent of which was between Optus and Telecom Vanuatu on 27 November 2008.

These judgements lift the lid on the whole gruesome world of two services - international audiotex and international internet dial-up services (or IID). But more on that in a moment.

The litigation brought by Telecom Vanuatu was triggered by the earlier litigation* by Gilsan that had revealed that C&W Optus** had used some Vanuatu numbers without Vanuatu's permission. Telecom Vanuatu claimed C&W Optus was liable to pay Telecom Vanuatu for the use of the numbers. A very interesting part of the judgement is that the court found "Under the present law, the tort of conversion is not available in relation to intangible property". They go on to note that it is available in certain US cases and that "powerful dissenting opinions [in a House of Lords case] may one day find favour if the law is to keep pace with the advances in technology in modern society".

This opens up a whole wealth of areas for consideration in domestic telecommunications. For example, the current operation of One3, 1300 and 1800 numbers sees these routed through the service provider who directly connects the customer to the network. However, the judgement would seem to suggest that telcos could volunteer to provide the traffic to the rights holder of the number and by-pass the carrier notionally providing the service. This is particularly interesting because it was once conducted by a mobile operator with a bank customer.

It also re-emphasises for those (usually right-wing) critics of "activist" judges that most of commercial law is based on common law which is entirely judge made law.

However the far more interesting part of this tale is the description of how these international services operate. International audiotext was actually an Australian invention, having first been deployed by OTC in about 1991 to balance traffic with other countries (Australia having relatively cheap local rates was a net sender of calls to Europe, by balancing out the traffic OTC saved money which was shared with the people who ran the service). OTC always ran this as a relatively conservative service though debate raged about the balance between ethics and revenue. The business went into decline following the merger with Telecom Australia and the bigger revenue streams available from dmestic audiotext.

The Gilsan litigation reveals the way these services subsequently developed. This was through the use of "flag of convenience" terminating destinations, "short stopping" and the addition of internet dial-up.

The first of these was the business countries like Vanuatu got into of actively seeking terminating traffic. This wasn't about balancing out anymore but actively seeking the high terminating rate traffic.

The next development of short stopping was the decision to not route the traffic all the way to Vanuatu, but instead stop the traffic at Optus in Sydney. For this to work the orginating carriers had to be carriers that routed through Optus, hence the carrier selection codes were included in the ads.

The final development was the move away from simply audiotext to include internet dial-up. The Gilsan litigation (para 11) refers to this as;

In brief, a consumer who was browsing the internet (usually, what are known as “adult sites”) might see an advertisement for a particular service. Those advertisements were placed by service agents with whom service providers contracted to Gilsan had contractual or other arrangements. Consumers who wished to avail themselves of the services on offer would download the “dialler” that the service agent provided. Activation of that dialler would cause the computer to disconnect from the internet and, through its modem, to call the relevant international telephone number. The dialler also incorporated a Carrier Identification Code (“CIC”), so that the call was switched from the consumer’s local carrier to the originating carrier identified by the CIC code.

The practical reality of these services was that the user usually wound up down-loading the dialler without knowing they were doing so.

This litigation has focussed on the services C&W Optus offered to international carriers transitting Australia. At the same time there were big issues in Australia with sex services. The Government had legislated to restrict the provision of adult content on 1900 services without a PIN. Once this occurred the services being promted in Australia migrated to international numbers, usually Caribean destinations. The adds usually included the Optus over-ride code. At the same time there was a great deal of concern about what was caled "internet dumping"***, the downloading and reconnecting through diallers to international numbers without the customers knowledge, let alone permission.

Given that Optus was engaged in short-stopping for the Gilsan traffic, it would be instructive to know whether they were ever investigated to see if they were short stopping in the case of the international audiotext services that were adverised with their carrier over-ride code in Australia. It would also be instructive to know whether any of the internet dumping that occurred in Australia was fully investigated to identify the relationships between the relevant parties and whether any Australian carriers were engaged in the activity.

What remains disturbing is that these activities which Australia was fulminating about at the time were being engaged in in Australia without the regulator or policy makers apparently paying any attention.

*For reference, the Vanuatu litigation arose because of information that was revealed in earlier litigation between Optus and its service provider, Gilsan (four judgements Nov 2004, Feb 2005, Jun 2005 and Oct 2005. There also seems to have been one application by Optus. There are two judgements brought by the other service provider referred to in the article (Jun 2005 and Apr 2007) that seem to be constrained to the question ability of lawyers to act. There was an earlier decision in the Vanuatu case which was a failed application to have part of the claim struck out.

**It is important to note that at the time of these activities Optus was under the designation "C&W Optus" because following the re-incorporation of Optus Vision and other shareholder movements Cable and Wireless had moved from being an investor in Optus to having control of Optus. C&W was a very big player in international telecommunications at the time, and also operated many Carribean telcos.

*** See the DCITA consumer advice and the TIO media release.

No comments: