The loophole allows for game developers to bypass the Classification Board when selling smartphone game apps online. Apple's iTunes store, Google's Android marketplace, BlackBerry maker Research in Motion's App World and Nokia's Ovi store, among others, all allow for game developers to list their games on them for purchase. However, developers have not been sending their apps to the Classification Board for classification, which can cost thousands in fees. Mr O'Connor in April this year had yet to decide what he would do, other than to say that he was "examining the issues". This week though, The Australian reported that the matter had been taken to the May Standing Committee of Attorneys-General meeting, at which it was decided to consider it "out of session", meaning that attending ministers would consider it between that meeting and their next on classification issues, scheduled for November. The matter now sits idle, but game developers for smartphones such as Apple's iPhone believe that, if the government considers it necessary to classify and censor game apps, it will be costly.

Many developers are even saying they will not release their game apps in Australia if they have to get them classified, pointing out that a smartphone game might not generate enough money to be sustainable if classification costs were factored into its release, let alone if they had to get classified a game they offered free. One such developer is the founder of Bjango, Marc Edwards. Mr Edwards, 34, from Melbourne, said that, if the government made a decision to close the loophole, his company, which develops game apps for Apple products including the iPhone, would cease to release them to Australia. He said that only 4 per cent of his company's apps were sold to Australians. This meant that it would most likely be unsustainable to release them to the Australian market due to classification costs potentially outweighing revenue made from them. "I understand that there's certainly a desire to treat [mobile game apps] in the same light [as PC-based games], but I think they're built and consumed in quite a different way and I think iPhone games may be a little closer to flash games on websites, certainly in some cases where they're small titles rather than [blockbuster] titles with large budgets and large timelines," Mr Edwards said.

He also pointed out that the Classification Board might have a hard time trying to police the Apple iTunes app store, considering it alone approves close to 2000 apps a month. "The sheer volume is going to make it very, very difficult," he said. "The Classification Board is certainly going to have to put on a large amount of staff to be able to handle the iPhone app store, the Android [marketplace], as well as other platforms like Nokia's Ovi and other emerging platforms." There was also the issue of what the difference was between a game app and a utility app, Mr Edwards said. "It's very difficult to define what's an app and what's a game," he said. "What about if a utility has some kind of game as an Easter egg? Does that mean that all of a sudden it becomes a game? And what about desktop applications? They've never been classified." He said the classification of mobile apps on iTunes alone could rake in $345 million a year for the Classification Board, assuming $2000 a classification.

Big Bucket Software founder Matt Comi, 27, from Perth, said he too would most likely untick the box that allowed for mobile apps to be sold in Australia on the iTunes store. "It is in a developer's best interest to make sure you can release in Australia but, having to go through a timely classification system, I don't know how long it would take, but it would mean that you would have to delay the release worldwide or stagger the release and you really want to make sure you get that out all at one time," Comi said. "You can't know in advance whether you've got a hit on your hands or whether or not you're going to recoup your costs. So I think with a smaller industry, particularly with my team - myself and a designer - we couldn't say whether we were going to make $10. So I think the most likely effect that it would have on people like us would be that we would just launch it in the US, and if it seems to be a success we would just go through this trouble of getting classified in Australia." This would be "harmful" to the local industry, Comi said, adding: "But I think it would be more harmful to consumers, just because there would be less people releasing [to Australia]." Non-profit association Let's Make Games founder Nick Lowe, 31, also from Perth, said he was "sceptical" that the government was only now acting on the classification of apps.

"It's curious that the government is acting on this now given that Apple and other publishers may have been in breach of classification legislation for quite some time," he said. "I'm sceptical that the government simply sees potential to generate revenue at the expense of what they see as a minority demographic." He said the government failed to appreciate that mobile phone games were enjoyed by a wide audience, and that revenue generation was "not guaranteed as many publishers will simply choose not to release their games in Australia". Mr Lowe said those that did choose to have their smartphone games classified would seek to pass additional classification costs on to consumers, "potentially resulting in higher prices for mobile phone games in Australia". This would also have an impact on smartphone game apps sold free on app stores, potentially seeing an end to them, Mr Lowe said.

"Applying the same fees for classification of mobile phone games will impose a disproportionate burden on smaller developers, who often develop games in their spare time and on a shoe-string budget," Mr Lowe said. "It's likely that most developers will simply choose not to release their games in Australia. This could be incredibly demoralising, particularly for indie developers." Apple, Google and Research in Motion did not comment specifically on the matter when asked to. Apple previously said it would abide by Australian law and adjust where necessary. Nokia said that the legalities around mobile apps in Australia are "still unclear". "If legal developments in this area dictate that additional steps need to be taken, we would comply accordingly." The Australian Mobile Telecommunications Association (AMTA), the industry body representing Australia's mobile telecommunications industry, said it had not been approached by government, but said that it would "work with governments if they adopt a classification system for mobile applications".

A spokesperson for the Home Affairs Minister said O'Connor would continue working with his state and territory counterparts and anticipated that this matter would be "further discussed at the next meeting of censorship ministers in November". "Any change to classification guidelines requires the consent of the responsible minister in each state and territory," the spokesperson said. The minister had asked the Commonwealth Attorney-General's Department to "develop options to address this problem that can be progressed quickly and do not require legislative changes by the states and territories”, the spokesperson added. In an emailed statement, the Classification Board director said the definition of "computer game" did "not exclude games distributed or playable online or on mobile phones". "The Classification Board will classify a computer game – including on mobile phones – upon receipt of a valid application," he said.