NCPA - National Center for Policy Analysis


July 12, 2010

Given the importance and ubiquity of the Internet in today's world, any reduction in performance will come at great cost to businesses both large and small.  Research published by the Australian Communications and Media Authority (ACMA) in 2008 highlights the potential costs associated with Internet service provider (ISP) level filtering, says Chris Williams-Wynn, a recent honors graduate of the University of Melbourne. 

For example: 

  • Five of the six products tested resulted in performance degradation of at least 22 percent.
  • The results of the government's 2009 ISP Filtering Live Pilot, conducted by Enex Testlab, found that filters had a "negligible impact" on performance for ISPs in the test, meaning speeds could drop by 10 percent.
  • However, this statistic refers to filtering of content on the ACMA blacklist.
  • When filtering additional material, speeds for some ISPs dropped by more than 20 percent.
  • Furthermore, these filtering tests were performed at a high-speed data center in Melbourne, suggesting actual performance degradation for typical users may be even higher. 

"Over-blocking," the filtering of content that should not be blocked, is another potential problem, says Williams-Wynn: 

  • The 2008 ACMA paper reported that up to 8 percent of material would be over-blocked.
  • The 2009 report by Enex Testlab found 100 percent accuracy with the ACMA blacklist only, but 3.4 percent of material was over-blocked when additional content was filtered.
  • With other filtering methods, this figure could reach 20 percent, meaning one-in-five Web pages may be incorrectly blocked.
  • ISPs will be expected to cover most filtering costs, which they would pass on to their customers through higher prices (or less bandwidth).
  • According to 2005 estimates, the most reliable ISP level filtering would cost at least $79 million to establish, and in excess of $30 million per year to run.  

Given the larger numbers of both ISPs and Internet users now, total costs to the economy would be higher.   Further, Enex Testlab's report notes that initial costs, including purchasing and installing the required hardware and software, will vary with the size of the ISP.  Thus, this policy puts smaller ISPs at a disadvantage, which may lead to a concentration of the market over time if these ISPs are unable to compete.   In the long-run, this may translate into further price rises and decreased bandwidth quotas, says Williams-Wynn. 

Source: Chris Williams-Wynm, "The Great Firewall of Australia:  The Economic concerns," Policy Magazine, March 22, 2010.


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