IT pricing: DBCDE tells inquiry geoblocking legislation problematic

The practice, where companies block consumers in certain countries from buying goods online or give them alternative pricing, has been one of the key issues looked at during the inquiry

The Department of Broadband, Communications and the Digital Economy (DBCDE) has warned of the challenges associated with legislating against geoblocking.

The DBCDE also suggested supply mechanisms in the market would respond to price disparity issues.

A spokesperson from the DBCDE told a hearing for the IT pricing inquiry that “Our expectation is that as the use of the online economy expands – and it’s expanding quite quickly … it’s likely that sources of supply will diversify and it’s our expectation that at least to some extent the market will respond to those issues.”

The Standing Committee on Infrastructure and Communications, which is looking into whether Australians pay more for software and hardware, asked whether the DBCDE had looked into legislating against geoblocking.

The practice, where companies block consumers in certain countries from buying goods in other countries based on their IP address, has been one of the key issues looked at during the inquiry.

The DBCDE said it was waiting to see what outcomes the committee came up with and had not yet formulated any responses to the practice of geoblocking.

But the Department suggested there were several factors to consider if legislation was brought in to prevent geoblocking.

“[O]ne of the things you need to think through is if you respond to this technology, does that simply mean that [companies] find an alternative and is that easy to find?” a department spokesperson said.

The spokesperson raised the example of anti-spam legislation. While it had helped to curb spamming, he said it was not as effective as hoped and questioned how much impact introducing legislation would have.

The DBCDE told the hearing that it would also need to be established that geoblocking was a “bad thing” in all situations, stating that it is not just used by IT companies but also international retailers.

Legislating companies who operate offshore with no physical presence in Australia was also problematic, the spokesperson said.

“There are a whole lot of, I suspect, practical considerations that would need to be worked through to understand whether it frankly was something that could be given effect to with any success,” he said.

“One of the observations we make in respect to a lot of things in the digital economy and the online space is the power or the ability to effectively regulate and Australia assumes the border is something that is easy to get a handle on, and that’s difficult with stuff that is occurring online.”

The Department of Foreign Affair and Trades (DFAT) has also previously highlighted issues with legislating offshore companies against geoblocking.

It told a hearing in November last year that options need to be identified in how Australia could “exercise jurisdiction” over websites that were hosted in another country.

“[I]t would seem an important requirement if you want to develop practical measures to address anti-competitive geoblocking,” Hamish McCormick, first assistant secretary, Office of Trade Negotiations, Department of Foreign Affairs and Trade, told the inquiry.

Consumer advocacy group Choice has recommended consumers should work around geoblocks by spoofing their IP address and using a US forwarding address to beat high IT prices in Australia.

Choice has previously told the inquiry that Australian consumers are paying around 50 per cent more than US consumers for music downloads, computer software, hardware and games.

The IT pricing inquiry will hear from Adobe, Microsoft and Adobe on 21 March, with all three companies summonsed to appear before the committee after failing to appear at a hearing in July last year.

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