More than a year after it started accepting public submissions, the federal government’s IT pricing inquiry has tabled its recommendations, which range from how the government should spend its own money on IT to whether geoblocking should be made illegal. The short version? The recommendations are weak and pointless and won’t make any practical difference.
Cash register picture from Shutterstock
Yes, this is something of an “I told you so” moment. Back when the inquiry was in flow, I wrote a lengthy piece noting that the inquiry was essentially pointless because there was no way that any legislation would be introduced to actually dictate the prices that could be charged:
It is not going to recommend that competition law be changed exclusively for technology products to ensure that we get the same prices as the US. It’s legally unfeasible, politically difficult to imagine, and impossible to enforce in real terms. It’s simply not going to happen.
That has indeed proven to be the case, as we see at the top of the report:
While the Committee recognises that businesses must remain free to set their own prices in a market economy, it has nonetheless made a range of recommendations that are intended to sharpen competition in Australian IT markets. The Committee hopes that these measures will increase downward pressure on IT prices and improve the access of Australian businesses and consumers to cheaper IT products.
So what did the inquiry recommend? Its final report makes 10 key suggestions. Here they are, stripped of jargon and with some brief comments on how feasible (or otherwise) they might be. They fall into three broad groups: changing and tracking expenditure; ensuring consumers can either parallel import or use geoblocking technologies; and exploring whether the law should be changed to make geoblocking illegal.
Making It Easier To Access Overseas Services
- Lift any remaining restrictions on parallel importation to allow consumers to import genuine goods. This isn’t an unreasonable idea, but if the experience of the book market is any example, we can expect a protracted industry campaign against it. For physical goods, it’s also a horse that has bolted: grey importing anything you want isn’t difficult.
- Ensure the Copyright Act doesn’t block people using geographical circumvention measures. This sounds like an OK idea, though the existence of these concerns hasn’t stopped VPN providers from proliferating anyway. There could be unexpected trade-offs too: if it became explicitly legal to use geoblocking avoidance software, I imagine many of the existing local catch-up TV services would lose the majority of their rights. I’m not sure destroying iView is a brilliant outcome.
- Run education campaigns to explain to people how to avoid geoblocking Not a bad idea either, but likely (as with the previous points) to encounter resistance. It’s telling that even the summary suggests that the education campaign should include telling people how their consumer rights might be affected if they buy offshore. Hardly a ringing endorsement for the global marketplace.
Summary: The underlying challenge here is the one that has always existed: how on earth can the government regulate what happens on offshore sites? If an overseas site decides not to accept an Australian credit card, there’s very little locally that we can do about it.
Possible Legislative Changes
- Consider the creation of a ‘right of resale’ for digital goods. This feels fraught for multiple reasons. It’s fundamentally irrelevant for subscription services, and it conflicts to some extent with the idea of promoting people buying content overseas.
- Consider a law to make geoblocking illegal “as an option of last resort”. This if only recommended if the other recommendations have no effect. I tend to think they won’t, but we still haven’t seen any advice on how this law would be imposed on overseas corporations.
- Investigate changing the Competition and Consumer Act so that contracts which enforce geoblocking are considered void. I don’t pretend a level of expertise in contract law on the intricacies of this, but I’m not sure how (for instance) these contracts might be squared with existing contractual arrangements for local content providers, which are built entirely on this concept.
- Repeal section 51(3) of the Competition and Consumer Act 2010. This section blocks the ACCC from investigating anti-competitive conduct in some areas relating to intellectual property (IP). Everyone involved agrees it would be a good idea to dump it.
Summary: The IP provision aside, these suggestions are all highly qualified and difficult to enact. Not gonna happen.
Government Spending On IT
- Ask the Australian Bureau of Statistics (ABS) to monitor expenditure on IT products, both domestically and overseas. This is a nice idea and would give us some useful data, but in the absence of a suggestion how to fund this extra research, it seems unlikely to happen.
- Commission a study into how the university sector might be able to negotiate better software contracts. Also a worthy idea, but it’s worth pointing out discounts for this sector do already exist. And again, there’s no comment on how to fund the study.
- Push for the establishment of whole-of-government IT procurement. There’s good potential for savings here, but it’s a massively complex project
Summary: None of these are terrible ideas, but without funding for them, and with relatively few votes in discussing IT pricing for enterprises, I can’t see them going anywhere.
So Where Are We?
Rip-off pricing for Aussies is deeply annoying, and it’s no surprise people will do what they can to circumvent it. I can’t see any of these suggestions changing the fundamental shopping landscape we live in.
Post-election, it will be interesting to see if any of this is followed up. But I doubt we’ll see these ideas in the talking points from either side.