Monday 29 July 2013

Differential IT taxation, geoblocking and the 'Australia Tax': proposals for reform

Earlier today, Parliament of Australia's Standing Committee on Infrastructure and Communications tabled its report on the inquiry into IT pricing entitled "At what cost? IT pricing and the Australia tax".  The Foreword, reproduced below, gives a good idea of what it covers:
The importance of IT products to every sector of Australian society can hardly be overstated. IT products are woven into the fabric of our economy and society, and have driven rapid change in the way Australians communicate, the way we work, and the way we live. 
Australian consumers and businesses, however, must often pay much more for their IT products than their counterparts in comparable economies. In many cases Australians pay 50 to 100 per cent more for the same product. 
Consumer and business concern over IT price differences prompted the Minister for Broadband, Communications and the Digital Economy, Senator the Hon. Stephen Conroy, to refer the question of IT pricing in Australia to the House of Representatives Standing Committee on Infrastructure and Communications for an inquiry and report. 
Evidence presented to this inquiry left little doubt about the extent and depth of concern about IT pricing in Australia. Consumers are clearly perplexed, frustrated and angered by the experience of paying higher prices for IT products than consumers in comparable countries.
High IT prices make it harder for Australian businesses to compete internationally and can be a significant barrier to access and participation for disadvantaged Australians (in particular Australians with a disability). 
Based on the evidence received over a 12 month inquiry, the Committee has concluded that in many cases, the price differences for IT products cannot be explained by the cost of doing business in Australia. Particularly when it comes to digitally delivered content, the Committee concluded that many IT products are more expensive in Australia because of regional pricing strategies implemented by major vendors and copyright holders. Consumers often refer to these pricing strategies as the ‘Australia tax’. [European, and particularly UK, readers will recall a similar phenomenon with regard to the price differential for downloads from iTunes. Not for nothing was the UK called 'Treasure Island'.  This blogger also recalls a good deal of resentment against regional technological bars that prevented the playing of legitimately purchased product in the 'wrong' continent]
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. 
Given the ever-increasing importance of IT products to Australian society and the economy – in driving innovation, reducing isolation in regional and rural Australia, or improving the lives of Australians with a disability – it is essential that Australians get a fair deal.
The Standing Committee comes up with 10 recommendations, of which the following are of particular note:
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 [this recalls the EU litigation in UsedSoft], 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.
This blog will watch with interest to see how things progress.

This item was picked up via a Tweet from the excellent Matthew Rimmer (@DrRimmer).

1 comment:

Suleman said...

In a globalised world governments and populations are able to make comparisons with what is happening elsewhere. This should make it harder to use national boundaries to artificially inflate prices. Companies need to start learning these lessons now, because tomorrow the internet will allow any service and any product to be bought from anywhere in the world.