In what was at times a heated morning at the CommsDay Summit in Sydney, Conroy told an overflowing room that the idea that iiNet "have no idea if any customers are illegally downloading music" on their network is a "stunning defence".
"The capacity to be able to ignore what your customers are doing on your network is being fought out in the Courts but I thought the defence of ‘we have no idea what anyone is downloading over our network' was a classic," Conroy said.
He said he had taken briefings from both sides of the case "and both seem certain of victory".
The commentary is a potentially major advancement on the issue, which Conroy revealed last week would shape part of the Federal government's policy response on peer-to-peer networking.
Shadow Communications Minister Nick Minchin took Conroy to task over his response to the active case.
"Conroy obviously has a problem with iiNet," Minchin said.
"[He] suggested their Court defence was like an episode out of Yes Minister. I'd say the NBN is more like that. We still have no preferred tender, the RFP process has been a complete circus, and Labor will be doing very well if construction starts by the end of the year, of course by which time OPEL would've been completed."
Minchin was also extremely critical of the proposed mandatory filtering regime, accusing Conroy of deliberating deflecting attention away from the success of the scheme through his commentary on iiNet.
"Labor didn't have any idea of how you'd do it [when they first promised it], but it sure sounded good, and the implementation so far is about as shambolic as the NBN," Minchin said.
"I don't really know what it is he wants to protect us from, and if I had to rely on Senator Conroy to protect me I'd know I really was in trouble.
"He can't even get a live trial underway, which is why I think he had that little aside about iiNet today."
Minchin branded the net filter scheme as having "all the appearances of a one night policy stand" designed to steal votes from social conservatives and as an act of one-upmanship on the previous NetAlert scheme.