Australia's Shrinking ICT Policy Engagement

It is really quite hard to come to grips with exactly what has been happening in the ICT lobbying space over recent years. Australia had three groups with a policy focus in the ICT space.

The user side was represented by the Australian Telecommunications Users Group (ATUG) which this year celebrated its 3oth anniversary by closing its doors. The charitable interpretation was that the organisation had achieved its objective, as competition in telecommunications was secure and indeed the structural separation of Telstra (a long held ATUG goal) was occurring.

At the time I questioned the decision noting that ATUG had been trying to create a role as the Digital Economy Stakeholders Forum. I noted that the AIIA has rebranded itself as The Voice of the Digital Economy, and this organisation was even touted as a possible merger partner for ATUG.

Now we hear that the Australian Information Industries Association (AIIA) is halving its head count and declining a role to promote our ICT industry. There are no advices of these on the AIIA website, though both the AIIA CEO and Chair are quoted in the stories.

The CEO maintains there has been no decline in membership, but the section of the website that identifies members seems to be not accessible today. However it was noted that the AIIA board consists of ten reps of multinationals and only six from domestic firms.

Finally the Internet Industry Association has been undergoing turmoil and has appointed as interim CEO the same person who performed the close down role at ATUG.

In the case of both ATUG and the IIA it is known that a factor was the decision of Telstra to rationalise the associations it participated in. It is unclear whether Telstra has also withdrawn from the AIIA.

Outside of Telstra support comes from multinational ICT firms that must increasingly wonder about the value of involvement in Australian policy work, especially as the Australian government seems to have downgraded its own direct involvement in this work.

There is a case for "middle power diplomacy" for Australia in global ICT policy. But the Government has to recognise there is no "industry" to speak of that is uniquely Australian to take up these issues.

It is also becoming apparent that the decision of the ALP to remove the IT component of policy from the Department of Communications etc has led to a significant reduction in policy interest.


Novae Meridianae Demetae Dexter delenda est

Market structures

The Federal Court decision in the case of the etcash acquisition of Franklins raises some interesting questions.

The first is to note that the judgement is based on the question of the ACCC's definition of a market and the court's decision that both Woolworths and Coles are actually involved in the wholesale market. It also hinged on the delightful thing called the "counterfactual" which is what is the likely outcome if the merger is not approved.

Counterfactuals are little more than modern day prophecies with economists and merchant bankers playing the role of soothsayers.

But the decision that the acquisition will not substantially lessen competition in the wholesale market does not mean that the merger improves competition.

Indeed as Heinz asserted today the home brand "revolution" is what is killing competition, and there is not a thing the ACCC can do about it.

From a technical point of view Coles and Woolies are using their market power in retail to exercise power in the upstream manufacturing market. Neither has enough market power to fall foul of the misuse of market power test.

The Competition and Consumer Act is fundamentally broken as a tool of economic policy. The concepts of "market" and "market power" and of "competition" embodied in it are sufficiently weak that any competent lawyer can steer their way around them.

The solution perhaps lies in a different set of laws that look more like the access regime laws under which the ACCC can declare certain things to be markets and to have specific characteristics. This could include simple things as specifying indices of concentration (such as the HHI)above which it would be determined a market is not effectively competitive.

In passing I will note however that vertical arrangements are not always bad. The move by AAP into telecommunications as AAPT was good, but the move by Telstra into media via Foxtel is less so. (Note that I worked for AAPT long after that, and I was up to my eyeballs in trying to make the Foxtel deal happen).

But talking of AAP provides an excuse to note the closure of its NZ counterpart the New Zealand Press association since their biggest market, Australian media, now owns the local media!

I will be speaking about competition policy for the digital economy at this year's Communications Policy and Research Forum. I will also be discussing the change in corporate Australia's relationship with competition policy in a column on ATUG..


Novae Meridianae Demetae Dexter delenda est

The prescient Brian Perkins and NBN tale

I had the pleasure of attending the ATUG Gala Awards Evening and Conference last week.

I happened to be talking to last year's Charles Todd Medal winner (The Hon Senator Stephen Conroy, Minister for DBCDE), when this year's winner (Macquarie Telecom's David Tudehope) came over to introduce a former winner, AAPT's Brian Perkins.

David rightly introduced Brian as a role model for all the entrants who came after him. But I was able to trump that by saying Brian was also prescient. In AAPT's move from one end of George St to another various documents were being disposed of, but the secretary to the CEO, Rosemary Robinson, knew I liked history and sent some my way.

Included in it was a memo from Brian to AAPT CEO Larry Williams dated 4 August 1993, in which he says he was asked at ATUG what his views were on the Government's plans to initiate a fibre-to-the-home project.

He notes that ATUG submitted to the the ROSA review that Telecom be separated into three companies, but that the Government had opted for accounting rather than structural separation. He writes;

ATUG should propose a stand-alone company whose responsibility is to provide and operate an efficient and cost-effective fibre distribution network which will meet the needs of Australian service suppliers and users into the 21st century.

(Note: The note also makes reference to the troubles AAPT had in getting its 1414 access code configured. Technically the 1991 Act did not require the provision of PSTN Ingress and Egress (as it was then known - hence the PIE model), in fact, the view in Telecom was that to provide it was illegal. This did not stop then Minister Grahame Richardson ringing then GM CCD Sales John Brennan (who had responsibility for AAP as an account) and saying that Telecom had to "fix it or it was your job". Brennan passed it up the chain.)

Novae Meridianae Demetae Dexter delenda est