The IT Pricing Inquiry: One Year On, And Nothing Has Changed For Aussie Geeks

The IT Pricing Inquiry: One Year On, And Nothing Has Changed For Aussie Geeks

Editorial: One year ago today, the guns fell silent on the IT Pricing Inquiry. The Parliamentary Committee tasked with finding why we pays more for gadgets, software, music and movies fired the final shot in the form of a report to the government on how to solve the availability crisis Australia had found itself in. One year on, and nothing has happened. The Australia Tax is as bad as it ever was, and content piracy is now at epidemic levels. We’re at a tipping point, and the government isn’t doing a thing to help.

The Inquiry

It started small at first.

On indulgence the Federal MP for Chifley, Ed Husic, stood up in the Chamber one day to denounce big companies like Apple and Google for charging Aussies seemingly high prices compared to those paid by US counterparts.

He called it “The Australia Tax“: a tax on Aussies paid due to the tyranny of distance.

In some cases the gouging was severe, with companies like Adobe bearing the brunt of the blame.

At that point, Adobe was still selling boxed copies in stores of software like Creative Suite 6 and its respective parts.

A quick price comparison at the time between Adobe’s US and Australian online stores showed a deplorable price disparity of $1735. Almost $2000 difference on a piece of software distributed through an online store. It was cheaper to fly from here in Sydney to Los Angeles, buy it there, and come home. By doing that you would have saved $601, and I’d get Virgin Australia frequent flyer points, too.

Soon, a formal inquiry was convened to call up the offending companies and quiz them on why they thought it appropriate to rip off Aussie consumers.

Eventually as a result of the inquiry, Adobe dropped the prices of its cloud suite and began shunting customers away from boxed copies and into the rights-managed cloud.

It looked like the government inquiry was working. The dream was alive and well.

The Dream

Eventually, a 150-page document detailing how the government could solve the problem for the Australian people was drawn up and tabled in Parliament.

The 150-page report contained a total of 10 recommendations to the Government, ranging from education campaigns through to law reform:

Price discrimination and consumer impacts

Recommendation 1 The Committee recommends that the ABS develop a comprehensive program to monitor and report expenditure on IT products, hardware and software, both domestically and overseas, as well as the size and volume of the online retail market.

Recommendation 2 Considering the importance of IT products to education, and in the interests of greater transparency in this area, the Committee recommends that the Australian Government, in consultation with Universities Australia and CAUDIT, conduct a comprehensive study of the future IT needs of and costs faced by Australian Universities, in order to provide clearer financial parameters for negotiations.

Recommendation 3 The Committee recommends that the Australian Government consider a whole-of-government accessible IT procurement policy, to be developed by relevant agencies including AGIMO, and in consultation with relevant stakeholder groups including ACCAN.

Copyright, circumvention, competition, and remedies

Recommendation 4 The Committee recommends that the parallel importation restrictions still found in the Copyright Act 1968 (Cth) be lifted, and that the parallel importation defence in the Trade Marks Act 1995 (Cth) be reviewed and broadened to ensure it is effective in allowing the importation of genuine goods.

Recommendation 5 The Committee recommends that the Australian Government amend the Copyright Act’s section 10(1) anti-circumvention provisions to clarify and secure consumers’ rights to circumvent technological protection measures that control geographic market segmentation.

Recommendation 6 The Committee further recommends that the Australian Government investigate options to educate Australian consumers and businesses as to: • the extent to which they may circumvent geoblocking mechanisms in order to access cheaper legitimate goods; • the tools and techniques which they may use to do so; and • the way in which their rights under the Australian Consumer Law may be affected should they choose to do so.

Recommendation 7 The Committee recommends that the Australian Government, in conjunction with relevant agencies, consider the creation of a ‘right of resale’ in relation to digitally distributed content, and clarification of ‘fair use’ rights for consumers, businesses, and educational institutions, including restrictions on vendors’ ability to ‘lock’ digital content into a particular ecosystem.

Recommendation 8 The Committee recommends the repeal of section 51(3) of the Competition and Consumer Act 2010.

Recommendation 9 The Committee recommends that the Australian Government consider enacting a ban on geoblocking as an option of last resort, should persistent market failure exist in spite of the changes to the Competition and Consumer Act and the Copyright Act recommended in this report.

Recommendation 10 That the Australian Government investigate the feasibility of amending the Competition and Consumer Act so that contracts or terms of service which seek to enforce geoblocking are considered void.

The dream was that all Aussies would know how to dodge paywalls, geoblocks and unfair deals made by overseas retailers in a bid to get cheaper products here faster, and drop the rate of piracy for in lieu of services like Netflix, Hulu and HBO Go.

But ultimately, it wasn’t meant to be.

The IT Pricing Inquiry, while noble in its mission, fell victim to the timeframe of politics. The report was submitted to the last Labor government for consideration towards the end of its term. The election saw the Parliament suspended from making new laws before the eventual rise of the Coalition government led by Prime Minister Tony Abbott.

The new Coalition government was too busy scrapping laws like the Carbon Tax, the Mining Tax and so-called “green tape” to care about what nerds were paying for their gadgets. The dream was dead.

The Stick

The IT Pricing Inquiry took big business to task and hauled them before an inquiry to be roasted for gouging a nation of 23 million people.

Apple, Microsoft and Adobe were all lambasted by the Inquiry and its headkicker in chief, Ed Husic, for charging the Australia tax. It gave no thought to the government’s relationship with big business and tore some of the world’s biggest and most profitable companies a proverbial new one.

But just as the Labor-led panel on IT Pricing took the content industry to task, the Coalition government appeared to backflip and cosy up to the content industry.

Private screenings of yet-to-be-released films were arranged for Ministers who would ultimately decide the fate of Australia’s anti-piracy policy, and Village Roadshow — arguably the mouthpiece of the content industry when it came to anti-piracy policy — was caught pouring large amounts of money into the campaign of the Coalition.

This hand-in-glove relationship between the industry and the government reared its ugly head in a leaked discussion paper on piracy that favours the stick over the carrot.

In its leaked discussion paper, the government freely admits in the first sentence of its introduction that there’s a real content problem in Australia:

“There are a number of factors that contribute to online copyright infringement in Australia. These factors include the availability and affordability of lawful content, the case with which consumers can access unlawful material and consumer awareness of legitimate services,” the government wrote.

Translation? Aussies wait too long, pay too much, pirate too often and don’t know about decent legal streaming services.

In response to the issue, sites like The Pirate Bay will likely soon be blocked for Aussie consumers, while the landmark iiNet v Village Roadshow decision that found ISPs weren’t liable for the piracy of their users, looks set to be overturned.

Nowhere in the discussion paper does it say that Australians will be allowed to circumvent geoblocks, nor does it say that companies offering content at higher prices in Australia will be compelled to justify their prices or drop them.

The problem isn’t being solved: it’s being exacerbated by bad policy.

The Glimmer

Not all is lost, however.

It had been thought that the Inquiry was conducted in vain until today, when the head of the Government’s “root-and-branch” review into competition signalled that IT Pricing would be in its scope.

The issues paper for the new competition inquiry asks how the government could regulate the market to ensure that tech and gadgets carry fairer prices.

Economist Ian Harper is running the review, and we’ll be watching it carefully as it plays out.

Ed Husic, former Champion of Australia’s gadget-buying geeks, told the AFR today in an interview that we’re no closer to a solution today than we were 12 months ago:

It’s been 12 months since the IT price inquiry report was released – but all we have from the Abbott government is inaction. As a result, Australian consumers and businesses are paying a high price for the Abbott government dragging its feet on IT price discrimination

You said it, Ed.

We had a chance to do something. A chance to fix it. A chance to create a tiny island utopia for where content of all sorts was cheap, readily available and was delivered onto our PCs via fast internet. Where did that Australia go?