iiNet has slammed the federal government for referring to online infringements as "theft" , saying that it is a "moral rhetoric".

The internet service provider's submission (PDF) in response to the federal government's online copyright infringement discussion paper has outlined that it is "wrong at law" to define online copyright infringement as "theft".

The company points to the Victorian state law's basic definition of theft as when: "A person steals if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it", and "A person who steals is guilty of theft; and 'thief' shall be construed accordingly".

The online copyright discussion paper outlines proposals for how best to deter Australians from downloading copyright-infringing TV shows, films, and music over the internet, which would address the "long-standing issue" with Australians having "high illegal download rates".

One of key proposals that the federal government has put forward in the paper is to implement new legislation to undo the High Court's judgment in the 2012 copyright infringement case that saw iiNet win against Hollywood film studios. The paper proposes amending the Copyright Act to extend authorisation of copyright infringement and the "power to prevent" infringement would just be one factor that the courts would consider in determining whether an ISP is liable.

In its response, iiNet said it believes that if the law is changed, it will introduce greater risk and serious uncertainty not only for ISPs, but also for a range of sectors, such as online platforms, schools, universities, libraries, public Wi-Fi operators, NBN Co, and businesses offering internet and photocopying facilities.

"All of these entities would need to do more to take undefined 'reasonable steps' to prevent their users or customers from infringing copyright," iiNet argued.

"Providers of public Wi-Fi, like city councils, cafés, libraries, public transport, and the like will also run the risk of having that public access to the internet terminated, because rights holders demand that others protect their rights, rather than them exercising their current legal rights themselves."

iiNet also raised the fact that there is a need to address Australia's market failure where internet subscribers are being forced to pay higher prices than those in other countries for "desirable content" when they are available for purchase.

"Customer feedback has been consistent over a long period. Customers are demonstrating a willingness to purchase content when available, even to the extent of paying significant premiums. Others are going to some length to bypass restrictive trade practices in the form of 'geo-blocks' and delays, in order to make purchases," iiNet wrote.

"Until content providers begin to treat consumers as customers rather than as criminals, the proposals in the discussion paper are likely to meet with antagonism from the general public."

iiNet states in the document that it believes the government's suggestion to compel ISPs to take steps to prevent their customers from infringing on copyright online will be setting "dangerous precedents", with the belief that foreign companies will "continue to refuse to address their own dysfunctional business model and ignore the Australian consumer".

"The concept of authorisation, or secondary liability, is not limited to ISPs and copyright infringements. Transferring responsibility for the protection of a party's own private property rights onto a third party is a dangerous precedent, with ramifications across the economy," iiNet said.

On the topic of data retention, iiNet said it would be "inappropriate" to require ISPs to change their business processes to help law enforcements to collect and retain customer data, including matching IP addresses to customer details.

"Assisting law enforcement is one thing; harassing customers for commercial purposes is another," iiNet concluded.