A new law which could see internet giants like Microsoft, Apple, Facebook and Google forced to open up their systems to New Zealand's spy agencies is unworkable Kim Dotcom's new company Mega has told MPs.

Parliament's law and order committee yesterday began hearing submissions on the Telecommunications (Interception Capability and Security) Bill (TICS). The legislation works hand in glove with new laws for the Government Communications and Security Bureau (GCSB) which will allow it to legally spy on New Zealanders.

The TICs bill will allow the GCSB to force any type of communications company which carries New Zealanders' voice calls and messages to make them available for interception.

Currently that obligation rests solely with traditional telecommunications companies or "network operators" like Telecom, Vodafone and Chorus.


Mr Dotcom's Mega, which uses encryption to allow users to share files securely says that is a step too far.

Mega chief executive Vikram Kumar said Mega and other companies that provide services "over the top" of the networks provided by the likes of Telecom were already covered by the Search and Surveillance Act.

"If you get a court production order everyone including us will comply with it."

While Telecom and other network operators could provide interception capability on their physical networks, it was impractical for Mega and other internet service companies to do so.

"Until a short time ago, Mega had no servers in New Zealand so where do you intercept it? Do you expect GCSB and the others to fly off to where we have our servers, it just doesn't make sense.... it is conceptually just wrong."

But network operators Telecom, Vodafone and Chorus yesterday told the committee that service companies like Mega and even Microsoft, Google and Facebook which provide popular voice over internet and messaging services should have interception obligations placed on them immediately.

They argued it was unfair and anti-competitive that they had to meet the considerable cost of providing interception capability when they were losing market share to internet service companies.

All three were strongly opposed the bill's provisions which would force them to consult with the GCSB on network security issues.

Telecom was coping well with security threats on its networks, its general manager of regulatory affairs John Wesley-Smith told the committee.

"We have a rich and deep relationship with government already in relation to security risks and we don't believe that having it codified in an Act that we have to talk to Government about this stuff should change how we interact with them."