Internet Australia has criticised the government over the launch of its Data Retention Grants Program, reiterating that $128.4 million allocated to the initiative falls "well short" of the total costs incurred by ISPs.

The Grants Program, introduced last week, involves a single funding round to assist eligible telcos and ISPs with the cost of retaining a range of customer data for two years under the Data Retention Act.

There is a significant gap between government funding being provided and the expected cost to the telco sector of implementing data retention, according to the peak body representing Internet users, which also expressed concern over the late release of the program.

“Internet Australia welcomes the release of the Data Retention Grants Program. However, we are concerned that it has taken so long for this to occur. Our ISP members have had to incur considerable costs without knowing what, if any, compensation they might receive,” the organisation said.

In September, the Internet society called for “urgent clarification” around data retention funding to cover the introduction of the Data Retention Act on October 13th, with CEO Laurie Patton warning ISPs could go out of business if they were not adequately reimbursed.

In the 2015-16 federal budget the government set aside a total of $131.3 million over three years for implementing data retention; which included the cost of administering the grants program, providing technical guidance to the telco sector, and the development of data retention standards.

A government-commissioned PwC study estimated that the capital cost of implementing the data retention regime would be between $188.8 million and $319.1 million. The government's funding package is therefore "less than half the amount the government itself estimated as the cost to industry when the data retention bill was presented to parliament," said Patton.

Internet Australia believes the shortfall will be passed on to the consumer. The PwC study pegged the average cost to customers over 10 years (without government funding) would equate to between $1.83 and $6.12 per annum, with a median price of $3.98 per customer per annum.

The Grant Program will operate over three years from 2015-2018, managed by the Attorney-General’s Department. Applications for funding close at 5pm on 23 February, and telcos have been encouraged to read the Program Guidelines prior to applying.

This article was originally sourced from the CIO website here and was written by Bonnie Gardiner.