Keeping the IT price debate alive

Finding a remedy to price gouging has turned from a political point-scoring exercise into a potential hand grenade. But Canberra must persist with the issue, as its consequences go well beyond just cheaper prices for consumers.

It took a year-long inquiry, 133 passionate submissions and a confusing hearing with three reluctant tech giants for the government to conclude that Australians are being ripped off for no good reason when it comes to the pricing of tech products.

And despite all this effort, it took fewer than three days – and in some cases less than three hours – for the whole process to be considered an anti-climax and a waste of time.

Needless to say, Ed Husic, the MP who started this process just over two-and-a-half years ago by merely following up on some complaints from his constituents on the price of video games, was none too pleased with claims that his work had amounted to nothing.

Speaking shortly after the release of the inquiry’s findings, Husic said those who were already condemning the report were the same kind of people who would “boo Santa”.

He has a point. It's been just under a week since the release of the IT price inquiry’s report and its 10 recommendations to remedy price gouging in Australia, and so far it's failed to gain the political traction it deserves.

Only Husic and the inquiry’s chairman, MP Nick Champion, have been out and about commenting on its findings. Labor’s sentiment towards the inquiry’s findings is best summed up by this tweet from Husic:

Meanwhile, the Coalition’s prominent representative during the inquiry, Paul Fletcher, declined an opportunity to comment on the report. The closest thing to any kind of response was a quick comment from shadow communications minister Malcolm Turnbull on copyright law during a business breakfast this week.

And despite the the Greens proposing reforms to the copyright act to tackle geoblocking, they too have stayed silent on the report.

A complex collision course

This lack of momentum hints at a new dynamic within the inquiry. Now that the report has been released the issue has evolved from an easy point-scoring exercise for politicians to a political hand grenade – a topic that nobody wants to touch.

The reticence is understandable because at least seven of the inquiry’s recommendations put Canberra on a collision course with other overseas laws. It’s complex enough that two legal academics who entered submissions to the inquiry – Australian National University’s Dr Matthew Rimmer and Queensland University of Technology’s Dr Nic Suzor – don't quite see eye to eye on what can be done and what can't.

To start with, both academics told Technology Spectator that recommendations one through to three, which revolve around monitoring pricing and sales in Australia and procuring IT for government and the education sector, would be easy to implement.

Overall, Rimmer was more optimistic than Suzor.

He says that if the government follows through on the recommendation to expand the Australian Competition and Consumer Commission's ability to engage with matters involving intellectual property, then it may be able to use its powers to open up competition and drag down prices.

Rimmer says the ACCC has been asking for this kind of power for a while, and if it's granted, the government may not need to legislate the other recommendations.

Suzor disagrees. He says that the ACCC will be bound by its charter to uphold consumer welfare which, oddly enough, also means upholding price discrimination.

It may be an unpopular argument from an Australian perspective, but Suzor contends that price discrimination on our shores allows for goods to be more universally distributed across the planet.

Simply put: we pay more because we can, so that other poorer countries who can’t can pay less.

The trouble with geoblocking 

With regards to geoblocking, Suzor says that if the government were to push forward with a campaign to promote the use of virtual private network and proxy services to access offerings like Netflix, it would be breaking US law.

As covered in our investigation into geoblocking, Netflix is liable to the studios producing its content for allowing Australians to illegally use its service. So far, the studios are yet to act on this, but something like a government ad campaign on how to use a VPN could inflame the issue and actually force Netflix to implement stricter geoblocking measures.

Finally, there’s also the risk that any law implemented by the IT price inquiry could simply be ignored by foreign entities.

For instance, even if the government were to support the hacking of gaming consoles so that a user could easily play imported, geo-locked games, it can't do anything to stop the gaming companies from disabling that console over the internet.

The Australian government simply doesn’t have the jurisdiction to influence the practices of US-based companies.  

The further you delve into this issue, the deeper the legal morass becomes. And you begin to realise that the status quo really is tailored towards particular commercial interests rather than free markets and consumer rights.

The complexity of the issue also hints at the nightmare the MPs chairing the inquiry must have faced in trying to make head or tail of it with very little help from industry.

Keeping the faith 

Despite this, the man who started it all, Husic, maintains that the report will usher in change. If Labor survives the next election, he may have more say in the matter. Given his status as a member of Cabinet, Husic is likely to take a leading role in drafting and pushing the government’s response to the inquiry.

He can take heart from the way the inquiry has already helped drive down the procurement price of Microsoft's IT services for government. And at the very least, the exercise has helped publicise a complex web of persistent issues that are going to be crucial to the digital economy that we’re so longing to develop.

The IT price inquiry will only be a waste of time if Canberra fails to carry the debate further, in a meaningful and a bi-partisan manner. The quest for cheaper prices may have been the catalyst but ensuring that the future of the internet is not dictated by corporate interests should be the real reason why the process needs to stay on course.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles