A tale of two media reports: one poses challenges for digital media; the other gives ABC and SBS a clean bill of health



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The competitive neutrality report has given the ABC, and SBS, a clean bill of health.
Shutterstock

Denis Muller, University of Melbourne

Two reports out this week – one into the operations of Facebook and Google, the other into the competitive neutrality of the ABC and SBS – present the federal government with significant policy and political challenges.

The first is by far the more important of the two.

It is the interim report by the Australian Competition and Consumer Commission of its Digital Platforms Inquiry, and in a set of 11 preliminary recommendations it proposes far-reaching changes to media regulation.

Of particular interest are its preliminary recommendations for sustaining journalism and news content.

These are based on the premise that there is a symbiotic relationship between news organisations and the big digital platforms. Put simply, the news organisations depend heavily on these platforms to get their news out to their audiences.

The problem, the ACCC says, is that the way news stories are ranked and displayed on the platforms is opaque. All we know – or think we know – is that these decisions are made by algorithms.




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The ACCC says this lack of transparency causes concerns that the algorithms and other policies of the platform giants may be operating in a way that affects the production of news and journalistic content.

To respond to this concern, the preliminary recommendation is for a new regulatory authority to be established. It would have the power to peer into these algorithms and monitor, investigate and report on how content – including news content – is ranked and displayed.

The purpose would be to identify the effects of the algorithms and other policies on the production of news and journalistic content.

It would also allow the authority to assess the impact on the incentives for news and journalistic content creation, particularly where news organisations have invested a lot of time and money in producing original content.

In this way, the ACCC is clearly trying to protect and promote the production of public-interest journalism, which is expensive but vital to democratic life. It is how the powerful are held to account, how wrongdoing is uncovered, and how the public finds out what is going on inside forums such as the courts and local councils.

So far, the big news media organisations have concentrated on these aspects of the ACCC interim report and have expressed support for them.

However, there are two other aspects of the report on which their response has been muted.

The first of these is the preliminary recommendation that proposes a media regulatory framework that would cover all media content, including news content, on all systems of distribution – print, broadcast and online.

The ACCC recommends that the government commission a separate independent review to design such a framework. The framework would establish underlying principles of accountability, set boundaries around what should be regulated and how, set rules for classifying different types of content, and devise appropriate enforcement mechanisms.

Much of this work has already been attempted by earlier federal government inquiries – the Finkelstein inquiry and the Convergence Review – both of which produced reports for the Gillard Labor government in 2012.

Their proposals for an overarching regulatory regime for all types of media generated a hysterical backlash from the commercial media companies, who accused the authors of acting like Stalin, Mao, or the Kim clan in North Korea.

So if the government adopts this recommendation from the ACCC, the people doing the design work can expect some heavy flak from big commercial media.

The other aspect of the ACCC report that is likely to provoke a backlash from the media is a preliminary recommendation concerning personal privacy.

Here the ACCC proposes that the government adopt a 2014 recommendation of the Australian Law Reform Commission that people be given the right to sue for serious invasions of privacy.

The media have been on notice over privacy invasion for many years. As far back as 2001, the High Court developed a test of privacy in a case involving the ABC and an abattoir company called Lenah Game Meats.

Now, given the impact on privacy of Facebook and Google, the ACCC has come to the view that the time has arrived to revisit this issue.

The ACCC’s interim report is one of the most consequential documents affecting media policy in Australia for many decades.

The same cannot be said of the other media-related report published this week: that of the inquiry into the competitive neutrality of the public-sector broadcasters, the ABC and SBS.

This inquiry was established in May this year to make good on a promise made by Malcolm Turnbull to Pauline Hanson in 2017.




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He needed One Nation’s support for the government’s changes to media ownership laws, without which they would not have passed the Senate.

Hanson was not promised any particular focus for the inquiry, so the government dressed it up in the dull raiment of competitive neutrality.

While it had the potential to do real mischief – in particular to the ABC – the report actually gives both public broadcasters a clean bill of health.

There are a couple of minor caveats concerning transparency about how they approach the issue of fair competition, but overall the inquiry finds that the ABC and SBS are operating properly within their charters. Therefore, by definition, they are acting in the public interest.

This has caused pursed lips at News Corp which, along with the rest of the commercial media, took this opportunity to have a free kick at the national broadcasters. But in the present political climate, the issue is likely to vanish without trace.

While the government still has an efficiency review of the ABC to release, it also confronts a political timetable and a set of the opinion polls calculated to discourage it from opening up another row over the ABC.The Conversation

Denis Muller, Senior Research Fellow in the Centre for Advancing Journalism, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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ACCC wants to curb digital platform power – but enforcement is tricky


Katharine Kemp, UNSW

We need new laws to monitor and curb the power wielded by Google, Facebook and other powerful digital platforms, according to the Australian Competition and Consumer Commission (ACCC).

The Preliminary Report on the Digital Platforms Inquiry found major changes to privacy and consumer protection laws are needed, along with alterations to merger law, and a regulator to investigate the operation of the companies’ algorithms.

Getting the enforcement right will be key to the success of these proposed changes.




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Digital platforms. Why the ACCC’s proposals for Google and Facebook matter big time


Scrutinising accumulation of market power

The report says Google and Facebook each possess substantial power in markets such as online search and social media services in Australia.

It’s not against the law to possess substantial market power alone. But these companies would breach our November 2017 misuse of market power law if they engaged in any conduct with the effect, likely effect or purpose of substantially lessening competition – essentially, blocking rivalry in a market.

Moving forwards, the ACCC has indicated it will scrutinise the accumulation of market power by these platforms more proactively. Noting that “strategic acquisitions by both Google and Facebook have contributed to the market power they currently hold”, the ACCC says it intends to ask large digital platforms to provide advance notice of any planned acquisitions.

While such pre-notification of certain mergers is required in jurisdictions such as the US, it is not currently a requirement in other sectors under the Australian law.

At the moment the ACCC is just asking the platforms to do this voluntarily – but has indicated it may seek to make this a formal requirement if the platforms don’t cooperate with the request. It’s not currently clear how this would be enforced.

The ACCC has also recommended the standard for assessing mergers should be amended to expressly clarify the relevance of data acquired in the transaction as well as the removal of potential competitors.

The law doesn’t explicitly refer to potential competitors in addition to existing competitors at present, and some argue platforms are buying up nascent competitors before the competitive threat becomes apparent.




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A regulator to monitor algorithms

According to the ACCC, there is a “lack of transparency” in Google’s and Facebook’s arrangements concerning online advertising and content, which are largely governed by algorithms developed and owned by the companies. These algorithms – essentially a complex set of instructions in the software – determine what ads, search results and news we see, and in what order.

The problem is nobody outside these companies knows how they work or whether they’re producing results that are fair to online advertisers, content producers and consumers.

The report recommends a regulatory authority be given power to monitor, investigate and publish reports on the operation of these algorithms, among other things, to determine whether they are producing unfair or discriminatory results. This would only apply to companies that generate more than A$100 million per annum from digital advertising in Australia.




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These algorithms have come under scrutiny elsewhere. The European Commission has previously fined Google €2.42 billion for giving unfair preference to its own shopping comparison services in its search results, relative to rival comparison services, thereby contravening the EU law against abuse of dominance. This decision has been criticised though, for failing to provide Google with a clear way of complying with the law.

The important questions following the ACCC’s recommendation are:

  • what will the regulator do with the results of its investigations?
  • if it determines that the algorithm is producing discriminatory results, will it tell the platform what kind of results it should achieve instead, or will it require direct changes to the algorithm?

The ACCC has not recommended the regulator have the power to make such orders. It seems the most the regulator would do is introduce some “sunshine” to the impacts of these algorithms which are currently hidden from view, and potentially refer the matter to the ACCC for investigation if this was perceived to amount to a misuse of market power.

If a digital platform discriminates against competitive businesses that rely on its platform – say, app developers or comparison services – so that rivalry is stymied, this could be an important test case under our misuse of market power law. This law was amended in 2017 to address longstanding weaknesses but has not yet been tested in the courts.




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Privacy and fairness for consumers

The report recommends substantial changes to the Privacy Act and Australian Consumer Law to reduce the power imbalance between the platforms and consumers.

We know from research that most Australians don’t read online privacy policies; many say they don’t understand the privacy terms offered to them, or they feel they have no choice but to accept them. Two thirds say they want more say in how their personal information is used.

The solutions proposed by the ACCC include:

  • strengthening the consent required under our privacy law, requiring it to be express (it may currently be implied), opt-in, adequately informed, voluntary and specific
  • allowing consumers to require their personal data to be erased in certain circumstances
  • increasing penalties for breaches of the Privacy Act
  • introducing a statutory cause of action for serious invasion of privacy in Australia.



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This last recommendation was previously made by the Australian Law Reform Commission in 2014 and 2008, and would finally allow individuals in Australia to sue for harm suffered as a result of such an invasion.

If consent is to be voluntary and specific, companies should not be allowed to “bundle” consents for a number of uses and collections (both necessary and unnecessary) and require consumers to consent to all or none. These are important steps in addressing the unfairness of current data privacy practices.

Together these changes would bring Australia a little closer to the stronger data protection offered in the EU under the General Data Protection Regulation.

But the effectiveness of these changes would depend to a large extent on whether the government would also agree to improve funding and support for the federal privacy regulator, which has been criticised as passive and underfunded.

Another recommended change to consumer protection law would make it illegal to include unfair terms in consumer contracts and impose fines for such a contravention. Currently, for a first-time unfair contract terms “offender”, a court could only “draw a line” through the unfair term such that the company could not force the consumer to comply with it.

Making such terms illegal would increase incentives for companies drafting standard form contracts to make sure they do not include detrimental terms which create a significant imbalance between them and their customers, which are not reasonably necessary to protect their legitimate interests.




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The ACCC might also take action on these standard terms under our misleading and deceptive conduct laws. The Italian competition watchdog last week fined Facebook €10 million for conduct including misleading users about the extent of its data collection and practices.

The ACCC appears to be considering the possibility of even broader laws against “unfair” practices, which regulators like the US Federal Trade Commission have used against bad data practices.

Final report in June 2019

As well as 11 recommendations, the report mentions nine areas for “further analysis and assessment” which in itself reflects the complexity of the issues facing the ACCC.

The ACCC is seeking responses and feedback from stakeholders on the preliminary report, before creating a final report in June 2019.

Watch this space – or google it.




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The Conversation


Katharine Kemp, Lecturer, Faculty of Law, UNSW, and Co-Leader, ‘Data as a Source of Market Power’ Research Stream of The Allens Hub for Technology, Law and Innovation, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Digital platforms. Why the ACCC’s proposals for Google and Facebook matter big time


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The Competition and Consumer Commission is worried about the ability of the platforms we use to determine the news we read.
Shutterstock

Sacha Molitorisz, University of Technology Sydney and Derek Wilding, University of Technology Sydney

The Australian Competition and Consumer Commission has released the preliminary report of its Digital Platforms Inquiry, and Google and Facebook won’t be happy.

Rather than adopting a gently-gently approach, the ACCC has produced draft recommendations that are extensive and dramatic.

If implemented, they would significantly affect the way the digital platforms make their money, and help direct the content we consume.

What’s more, the inquiry is touted as a world first. Its findings will be closely monitored, and perhaps even adopted, by regulators internationally.

Who should care?

The digital platforms themselves should (and do) care.

Any new regulations designed to foster competition or protect individual privacy (both are among the ACCC’s recommendations) have the potential to harm their revenues.

They’ve a lot to lose. In 2017, nearly A$8 billion was spent on online advertising in Australia, and more than half went to Google and Facebook (p3).

News organisations whose output is disseminated by those platforms should (and do) care too.

As the ACCC notes, more than half of the traffic on Australian news websites comes via Google and Facebook (p8).




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Increasingly, news producers depend on social media and search engines to connect with consumers. Google is used for 95% of searches (98% on mobile devices).

The rise of Google, Facebook and other digital platforms has been accompanied by unprecedented pressures on traditional news organisations.

Most obviously, classified advertising revenue has been unbundled from newspapers.

In 2001, classified advertising revenue stood at A$2 billion. By 2016, it had fallen to A$200 million. The future of newspapers’ ability to produce news is under a cloud, and digital platforms help control the weather.

Of course, advertisers care too.

But the stakeholders with the most to gain or lose are us, Australian citizens.




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Our lives are mediated by Google, Facebook, Apple, Amazon, Twitter and others as never before. Google answers our search queries; Facebook hosts friends’ baby snaps; YouTube (owned by Google) distributes professional and user-generated videos; Instagram (owned by Facebook) hosts our holiday snaps.

As the ACCC notes, they have given us tremendous benefits, for minimal (apparent) cost.

And they’ve done it at lightning speed. Google arrived in 1998, Facebook in 2004 and Twitter in 2006. They are mediating what comes before our eyes in ways we don’t understand and (because they keep their algorithms secret) in ways we can’t understand.

What does the ACCC recommend?

The ACCC’s preliminary recommendations are far-reaching and bold.

First, it suggests an independent review to address the inadequacy of current media regulatory frameworks.

This would be a separate, independent inquiry to “design a regulatory framework that is able to effectively and consistently regulate the conduct of all entities which perform comparable functions in the production and delivery of content in Australia, including news and journalistic content, whether they are publishers, broadcasters, other media businesses, or digital platforms”.

This is a commendable and urgent proposal. Last year, cross-media ownership laws were repealed as anachronistic in a digital age. To protect media diversity and plurality, the government needs to revisit the issue of regulatory frameworks.




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Second, it proposes privacy safeguards. Privacy in Australia is dangerously under-protected. Digital platforms such as Google and Facebook generate revenue by knowing their users and targeting advertising with an accuracy unseen in human history.

As the ACCC puts it, “the current regulatory framework, including privacy laws, does not effectively deter certain data practices that exploit the information asymmetries and the bargaining power imbalances that exist between digital platforms and consumers.”

It makes a number of specific preliminary recommendations, including creating a right to erasure and the requirement of “express, opt-in consent”.

It also supports the creation of a civil right to sue for serious invasions of privacy, as recommended by the Australian Law Reform Commission.

Australians lack the protections that Americans enjoy under the US Bill of Rights; we certainly lack the protection afforded under Europe’s sweeping new privacy law.




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It wants the penalties for breaches of our existing Privacy Act increased. It recommends the creation of a third-party certification scheme, which would enable the Office of the Australian Information Commissioner to give complying bodies a “privacy seal or mark”.

And it wants a new or existing organisation to monitor attempts by vertically-integrated platforms such as Google to favour their own businesses. This would happen where Google gives prominence in search results to products sold through Google platforms, or prominence to stories from organisations with which it has a commercial relationship.

The organisation would oversee platforms that generate more than A$100 million annually, and which disseminate news, or hyperlinks to news, or snippets of news.

It would investigate complaints and even initiate its own investigations in order to understand how digital platforms are disseminating news and journalistic content and advertising.

As it notes,

The algorithms operated by each of Google and Facebook, as well as other policies, determine which content is surfaced and displayed to consumers in news feed and search results. However, the operation of these algorithms and other policies determining the surfacing of content remain opaque. (p10)

It makes other recommendations, touching on areas including merger law, pre-installed browsers and search engines, takedown procedures for copyright-infringing content, implementing a code of practice for digital platforms and changing the parts of Australian consumer law that deal with unfair contract terms.

Apart from its preliminary recommendations, there are further areas on which it invites comment and suggestions.




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These include giving media organisations tax offsets for producing public interest news, and making subscribing to news publications tax deductible for consumers.

Platforms could be brought into a co-regulatory system for flagging content that is subject to quality control, creating their own quality mark. And a new ombudsman could deal with consumer complaints about scams, misleading advertising and the ranking of news content.

All of these recommendations and areas of interest will generate considerable debate.

What’s next?

The ACCC will accept submissions in response to its preliminary report until February 15.

At the Centre for Media Transition, we played a background role in one aspect of this inquiry.

Earlier this year, we were commissioned by the ACCC to prepare a report on the impact of digital platforms on news and journalistic content. It too was published on Monday.

Our findings overlap with the ACCC on some points, and diverge on others.




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Many thorny questions remain, but one point is clear: the current regime that oversees digital platforms is woefully inadequate. Right now, as the ACCC notes, digital platforms are largely unregulated.

New ways of thinking are needed. A mix of old laws (or no laws) and new media spells trouble.The Conversation

Sacha Molitorisz, Postdoctoral Research Fellow, Centre for Media Transition, Faculty of Law, University of Technology Sydney and Derek Wilding, Co-Director, Centre for Media Transition, University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Consumers let down badly by electricity market: ACCC report


Michelle Grattan, University of Canberra

The Australian Competition and Consumer Commission has called for sweeping reform of the national electricity market to lower power prices and restore consumer confidence.

In its damning report, to be released on Wednesday, the ACCC says consumers face a confusing and unfair market. Discounts are misleading and need to be made fairer; customers should be able to compare these against a benchmark rate set by the Australian Energy Regulator.

The ACCC backs the Turnbull government’s push for its National Energy Guarantee (NEG), calling on other governments to commit to it. The federal government is presently trying to bed down the NEG with states and territories, against a distracting background of criticism from former prime minister Tony Abbott.

Prime Minister Malcolm Turnbull will deliver a consumer-focused speech on energy and power prices to the Queensland Media Club on Wednesday.

The ACCC’s recommendations would require action by federal and state governments.

The ACCC says the electricity market is facing its most challenging time, with the present situation being unacceptable and unsustainable. But it holds out the prospect of “significant gains” for consumers and businesses if the changes it recommends are made.

Urging a reset, it says reform can “bring down prices and restore consumer confidence and Australia’s competitive advantage”. Unnecessary costs need to be got out of the system to save consumers hundreds of dollars annually.

The ACCC urges changes to get greater competition among wholesalers and retailers, and says network charges must fall.

Tougher powers should be given to the Australian Energy Regulator to deal with “market manipulation”.

The customer transfer process needs to be speeded up, enabling people to move to new offers quickly. Special conditions like pay-on-time discounts should not operate in a harsh punitive manner.

The ACCC says small businesses should get access to the same improved rules as households.

Third-party sites showing comparisons in prices should state their commissions, it says.

The ACCC says there is a case for government support to underpin long-term contracts for large commercial and industrial users that brings on new dispatchable generation from operators that do not currently have a large market share.

It says big generators and retailers (“gentailers”) have market strength and often charge a large premium when selling wholesale electricity to their own retail operations.

The ConversationIt recommends a cap on any further merger or acquisition by a company with more than 20% generation market share – although such a company would be permitted to build new generation capacity.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

News outlets air grievances and Facebook plays the underdog in ACCC inquiry



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The ACCC inquiry looks at the impact of digital platforms on the supply of news and journalistic content.
Shutterstock

Andrew Quodling, Queensland University of Technology

The recent Cambridge Analytica scandal and congressional testimony of Facebook CEO Mark Zuckerberg has brought global attention to the power and influence of Facebook as a platform. It has also invigorated discussions about how such platforms should be regulated.

Meanwhile, the Australian Competition and Consumer Commission (ACCC) has been conducting an inquiry into the influence of digital platforms on media and advertising markets in Australia.




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Submissions to the inquiry by a range of media outlets, advertisers, as well as Google and Facebook, were published last week. Although Facebook has expressed interest in participating in regulatory debates, its submission is a disappointing early indication of how we might expect the company to downplay its magnitude and its roles in future regulatory debates.

The purpose of the inquiry

Late in 2017, the Federal Treasurer, Scott Morrison, directed the ACCC to conduct the inquiry into digital platforms, including search engines, social networks and other aggregators. As part of the ongoing inquiry, the ACCC will consider:

the impact of digital platforms on the supply of news and journalistic content and the implications of this for media content creators, advertisers and consumers.

It came about as a result of negotiations between the government and the former independent Senator Nick Xenophon. Xenophon insisted on the inquiry in exchange for his support for the government’s changes to Media Ownership laws.

To some extent, the inquiry retreads familiar ground. Old anxieties about declining revenues for journalistic organisations and the advent of internet technologies and internet-focused stakeholders continue a conversation that has been going for well over a decade.

News outlets air grievances

In total, the ACCC published 57 submissions. This includes contributions from most major Australian media organisations, industry bodies, unions and advertisers.

Many respondents took the opportunity to criticise the narrow scope of the inquiry. The inquiry’s scope is somewhat frustrating considering the complexities digital platforms present. They impact not just media and journalism markets, but also aspects of political, social and everyday life.

While the ABC’s submission was generally favourable in its discussion of online platforms, other Australian media organisations used the inquiry as an opportunity to air grievances about the impact of digital platforms.




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News Corp accused the platforms of abusing the local market and engaging in anti-competitive practices. Commercial Radio Australia pointed to a lack of regulation compelling transparent and structured audience metrics. Nine complained of declining revenues and a lack of platform-specific regulations, while Foxtel raised the issue of copyright infringement.

Seven West Media and Ten argued that there is a barrier to entry imposed on traditional publishers by the significant existing collection of personal data that platforms like Facebook and Google can leverage.

The platforms respond

In their submissions, Facebook and Google both attempted to build a narrative that emphasised how the tools and systems they provide can empower journalists and other content creators. Meanwhile, they minimised or outright ignored the opportunity to discuss the broader concerns of the broadcasters, publishers and individuals who are stakeholders in the industries Facebook and Google are operating in.

Google’s short response to the inquiry is not particularly interesting, in part due to its brevity and its focus on championing Google’s notionally positive influence for publishers. Facebook had significantly more to say in its 56 page submission, which also gives context to Mark Zuckerberg’s recent comments welcoming the potential for regulation.

Facebook plays the underdog

Facebook’s submission reveals how the company portrays itself to regulators, with an interesting element of self-deprecation. Take for example, the statement that:

Facebook is popular, but it is just one small part of how Australians connect with friends, family and the world around us.

Given a user-base that dwarfs the population of, well, even the most populous countries, Facebook’s most compelling option for presenting itself as an underdog in this space is to compare itself by share of “attention”, rather than share of market.

Facebook presents “multi-homing” – the practice of having and using a variety apps on your phone – as a key concern. It paints a picture of precarity in a marketplace that they dominate.




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Facebook’s arguments about competition also ring hollow because the platform’s design and scale allows it to benefit from significant network effects.

Put simply, a network effect is when existing and new users benefit from the growth of a network. A familiar example of these effects can be seen in the services of mobile phone network providers. Telstra and Optus provide cheaper, or no-cost calls or messaging between customers of their own service.

But the similarities end there. While you could still call a friend with a competing mobile phone provider, there is no such interoperability with platforms like Facebook. This design helps Facebook protect its market power by keeping total control over the Facebook platfom’s network.

If you decide to leave Facebook, you sever the connections between yourself and other users of the platform. Given Facebook’s focus on augmenting social functions this can, quite literally, be an ostracising endeavour. In spite of both the recent Cambridge Analytica revelations, and several #deletefacebook campaigns, we’re yet to see a significant exodus of users from the platform.

A disappointing response

Facebook has a colossal user base. Over two billion people use the platform each month, and almost three quarters of those people use Facebook on a daily basis. It owns Instagram and WhatsApp – each of which are profoundly successful platforms in their own right.

The ConversationFacebook is a titan of this industry, and the sooner it stops pretending to be a bit player, the richer our discourse about platforms and their role in society can become.

Andrew Quodling, PhD candidate researching governance of social media platforms, Queensland University of Technology

This article was originally published on The Conversation. Read the original article.

Power bills can fall – but the main attention must be on affordability: ACCC


Michelle Grattan, University of Canberra

The chairman of the Australian Competition and Consumer Commission (ACCC), Rod Sims, holds out the prospect of an absolute fall in electricity bills over coming years – but says this will require focusing centrally on affordability, not just reliability and sustainability.

In its Retail Electricity Pricing Inquiry preliminary report into the electricity market, released on Monday, the ACCC says residential electricity prices have increased by 63% on top of inflation in the last decade, with network costs being the major contributor.

Household bills rose by nearly 44%, from an average of A$,1177 in 2007-08 to $1,691 in 2016-17.

Household bills have risen less than electricity prices because usage has fallen, mainly due to self-supply by solar panels.

The report comes as cabinet is set to consider on Monday the government’s energy policy, which it hopes to take to the Coalition partyroom on Tuesday. Energy Minister Josh Frydenberg last week signalled the government had moved away from the Finkel inquiry’s recommendation for a clean energy target.

Facing the prospect of a shortage of power in the period ahead, the government is particularly focused on the need to increase dispatchable power.

The clean energy target, even in modified form, is also unpopular in Coalition ranks.

The ACCC report indicates that supporting renewable energy has been a relatively minor driver of the spiking of prices.

Sims – who flagged the ACCC findings when he addressed the National Press Club recently – says affordability should be the “dominant” objective in policy but in recent years it has come after several other objectives – including reliability, dividends and sustainability.

He said different approaches were needed to pursue each of the objectives of affordability, reliability and sustainability. As reliability and sustainability were pursued, it was important to do it in “the least-cost way and to let people know the costs”.

“What’s clear from our report is that price increases over the past ten years are putting Australian businesses and consumers under unacceptable pressure,” he said.

The ACCC found that on average across the national electricity market (which does not include Western Australia or the Northern Territory), a 2015-16 residential bill was $1,524, excluding GST. This was made up of network costs (48%), wholesale costs (22%), environmental costs (7%), retail and other costs (16%) and retail margins (8%).

Sims said the primacy of network costs in rising bills was not widely recognised.

Since July 2016, retail price rises were likely to be driven by higher wholesale prices.

“We estimate that higher wholesale costs during 2016-17 contributed to a $167 increase in bills. The wholesale (generation) market is highly concentrated and this is likely to be contributing to higher wholesale electricity prices.”

The ACCC estimates that in 2016-17 South Australia had the highest residential electricity prices, followed by Queensland, then Victoria and New South Wales. SA prices were roughly double those in Europe.

Sims said measures the government had already taken – notably telling companies to make customers aware of better deals, and its plan to scrap the process allowing companies to appeal against decisions of the Australian Energy Regulator – would help lower prices.

The ACCC is now looking in detail at further measures, ahead of making a final report. In the meantime, its preliminary report puts forward some suggestions. These include the states reviewing concessions policy to ensure consumers know their entitlements and concessions are well targeted to the needy, and a tougher stand against market breaches.

It says increased generation capacity (particularly from non-vertically integrated generators), preventing further consolidation of existing generation assets, and lowering gas prices could help reduce the pressure on bills.

The ACCC will also look at how to mitigate the effect of past investment decisions – but it notes that many are “locked in” and will continue to burden users for many years.

It will as well consider what more can be done to make it easier for consumers to switch suppliers.

The report says that “an increasing number of consumers are reporting difficulties meeting their electricity costs, and some consumers have been forced to minimise their spending on other essential services, including food and health services, to afford electricity bills.

“Businesses across all sectors have faced even higher increases over the past 12 months, following renegotiation of long term contracts. Many of these businesses cannot pass the increased costs on and are considering reducing staff or relocating overseas. Some businesses have even been forced to close.”

The ConversationThe ACCC’s final report will be released in June next year.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

The ACCC threatens to take Telstra and other ISPs to court over misleading NBN speeds



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Not up-to-speed.
NBN Co

David Glance, University of Western Australia

Rod Sims, chairman of the Australian Competition and Consumers Commission (ACCC), has signalled that the regulator is going to take a tougher stance against internet service providers like Telstra, Optus and Vocus about misleading consumers about NBN broadband speeds.

In particular, Sims has said that Telstra’s continued use of terms like “Very Fast” and “Super Fast” to describe theoretical, but often unobtainable, broadband speeds needs to stop.

The ACCC has indicated that it is likely to bring court cases before the end of the year if these practices don’t end.

In a speech at the Unwired Revolution Conference, the ACCC talked of the findings of a Australian communications sector review.

In particular, Sims drew attention to the fact that the Australian public were opting for slower speeds on the NBN mainly because ISPs were unwilling to sell faster speeds due to the high costs of the connections (CVC) provided by NBN Co.

The pricing of wholesale connections provided by NBN Co are set in order for them to recoup money that has been invested, in large part by the Australian federal government, and so unless NBN Co is directed to do this differently by the government, the situation is unlikely to change.

Part of the problem is the lack of transparency. Many properties that are being supplied with a Fibre to the Node (FTTN) connection may never be able to get the fastest connection plan of 100 Mbps because they are too far from the node. As the chart below shows, speeds of 100 Mbps can only be achieved if the house is within 500 meters of the node.

FTTN speed slows with distance from the node.
NBN MTM

A map of properties in Australia highlights that two houses on opposite sides of a road can have very different maximum speeds because of the nodes they are connected to. Telstra has previously admitted that some customers were sold plans for speeds they would never be able to attain at their premises.

NBN street map showing distance from node and calculated speed.
NBN MTM

In addition to this, there are the number of connections to that node and in particular, the capacity of the ISP to handle peak demand by having spare CVC capacity. There are also other factors that would affect a property’s connection, including the state of the copper wiring between the node and the house.

What the ACCC wants ISPs to do is to tell customers not only what the theoretical maximum speed may be for their property using a given technology, but also what the speeds may drop to during peak demand.

NBN Co has this data and could make it public, but it won’t because it claims that it is the responsibility of the ISPs to tell their own customers. Shadow communications minister Michelle Rowland has filed a freedom of information request for the NBN data of theoretical speeds for each property.

The ACCC is recruiting volunteers to install special hardware and software to monitor speeds and the quality of internet connections in their homes.

The results of a pilot trial reported in 2015 showed that the problems with peak demand and variability of internet speeds existed on pre-NBN internet services like Telstra’s HFC cable service. As the figure below highlights, even fibre to the premises (FTTP) connections from one provider varied dramatically, dropping significantly every evening.

Average download speed of FTTP connections.
ACCC

While the data that the ACCC is collecting will be useful and will ultimately assist in highlighting ISPs that are not providing promised services, it would be far better if NBN Co provided this data publicly in the first place.

If the politics and economics of the NBN mean that consumers are going to mostly stick to slower speed plans, many of the proposed economic and social outcomes that were originally envisioned will not be realised.

The ConversationWhile it may represent a slightly better situation for some people who currently have a poor connection via ADSL, it is hard to justify the AUD$20.3 billion that has been invested by the Australian government in the network so far.

David Glance, Director of UWA Centre for Software Practice, University of Western Australia

This article was originally published on The Conversation. Read the original article.

EBAY RESTRICTIVE COMPETITION PRACTICES


Australia’s competition and consumer watchdog, the ACCC, is bringing action to bear against online auction giant eBay. By forcing the site’s sellers to use eBay owned PayPal for sales, eBay is restricting competition and enlarging their own profits through PayPal charges on top of the charges already placed on auctions.

There is a revolt against eBay in Australia with many users flocking to other online auction sites. There are however other users who continue to use eBay, even though they are not happy with the new eBay directives for swelling items on eBay.

I would expect the ACCC to ensure that eBay’s directives to use only PayPal are not carried through here in Australia. I would have to agree with the stand taken by the ACCC, even though I still use eBay myself. I have considered moving to another online auction site but it is difficult to leave the already established eBay site for lesser known alternatives and I think this is what eBay is planning on.

Currently eBay has further delayed it’s plans to fully implement their planned changes regarding the use of PayPal until after the ACCC has reached a decision.