Optus’s dirty little secret revealed

By Michael Sainsbury and Vanda Carson

December 1, 2004

OPTUS’s dirty little secret – a highly lucrative business based on Internet phone pornography lines – has been exposed in a Supreme Court judgment against the country’s second-biggest telcos.

Optus acted as the middleman in the trade of porn from Vanuatu to the US and Europe, as well as hosting computers in its Australian data centres from which Gibraltar-based porn merchant Gilsan served graphic sex photographs and videos directly to its mostly US and European customers.

The key to generating profits, believed in the tens of million of dollars, was a deal with Telcom Vanuatu, which kept only US10c of its $US4($5.15)-a-minute global call rate, the balance split between US telco AT&T, Gilsan and Optus, in return for for a rich vein of new telephony traffic.

Optus yesterday declined to comment on whether it was still involved in the business, which came to light after NSW Supreme Court judge Robert McDougall found against the telco in an action started three years ago by Gilsan.

Justice McDougall found last Friday that Optus had under-reported the number of minutes Gilsan’s clients were on the phone to Vanuatu getting their porn.

While pecuniary judgment has been reserved, the two parties’ original claims in the battle were understood to be in the range of $US30 million to $US40 million.

Gilsan, however, will be forced to pay Optus a much smaller amount, believed to be about $800,000, after the telco countersued for rent from the porn merchant for housing its computers.

It is understood Optus also houses computers loaded with pornography for other customers. It is unclear how much Optus and its parent company, Singapore Telecommunications, makes from such services.

An Optus spokeswoman said: “The issues in dispute go back several years and the divisions mentioned have been restructured since SingTel acquired Optus three years ago.”

It is understood an email from an Optus, executive presented during the trial, put total revenues from Gilsan at more than $US100 million, shared between all players.

In his judgment, Justice McDougall cast doubts on the reliability of evidence from Optus executives John Bragg and Velvet Patachingis, who are no longer with the company, and slammed the company’s business culture.

“I have come to the conclusion that Mr Bragg is a witness who had no regard for the truth except when it suited him to recognise it.

From the outset his cross-examination was marked by implausibility, evasion and inconsistency,” the judge said. He also said that Optus had a “culture of imposition” and arrogance, under which it unilaterally changed contracts with its customers.

In a final twist to the saga, Vanuatu banned Gilsan from using the country’s numbers to peddle its wares.

Telstra moved last year to block access to such services following complaints from customers, a spokesman said.

Pornography is on the rise in Australia’s $10.5 billion-a-year mobile phone sector. The industry’s newest entrant, Hutchison, launched Playboy video clip services on its third-generation video phone network, “3″. Company insiders said they were very popular.

The Australian

This report appears on NEWS.com.au.

Related Articles:

• Greece: can you believe this/them?
• Syria February 2012: Two Perspectives
• EGYPT: THE GROSS INSECURITY OF THE DHIMMI
• Female Circumcision in the Maldives, the Islamic Movement and Islamophobia
• Australia Day message

This work, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 2.5 Australia License.