Aussie regulator not in the ‘real world’ over Vodafone and TPG

Lawyers representing Vodafone Australia and TPG have suggested the Australian competition watchdog is not living in reality as it continues quest to force in a fourth MNO.

Last year, Vodafone and TPG announced intentions to merge operations in pursuit of creating a business which can offer comprehensive services in both the mobile and fixed segments. The pair were searching for ‘synergies’, seemingly a play to compete in the world of convergence, but the Australian Competition and Consumer Commission disagreed, blocking the merger four months ago.

The ACCC rationale was relatively simple; if the pair are forced to continue to operate independently, they could potentially fund their own fixed and mobile networks, broadening competition across the country. Vodafone and TPG suggest this is not the case.

“What TPG wants is for this merger to go through but when you step back and look at the options and approach it had before August 2018… it is entirely commercially realistic that TPG will return to rolling out a mobile network,” said Michael Hodge, representing the ACCC in court.

However, the opposition hit back.

“There isn’t a real chance that TPG will pursue the rollout of a mobile network. There is not a real chance that TPG will become Australia’s fourth network,” said Inaki Berroeta, Vodafone Australia CEO.

The dispute here is simple. The ACCC wants four, independent MNOs across the country. TPG made some noise about deploying its own network prior to the merger announcement, though these ambitions were seemingly quashed by the ban on Huawei technology in the country.

“TPG did try to build it, but it was thwarted by community objections, by technical difficulties but ultimately by the federal government’s security guidance,” Ruth Higgins, the legal representative of TPG, said.

Vodafone and TPG do not believe they can compete with Optus and Telstra without a merger, though the ACCC is under the impression a fourth MNO will emerge organically.

TPG did announce in May 2018 it was planning to launch its own mobile network, learning from the success of Reliance Jio in India. The idea to attract subscribers was to offer six months of data and voice services for free, though this idea was killed off due to two developments.

The first development was the merger between Vodafone and TPG. Why would it build its own mobile network when it could dovetail with Vodafone, bringing its own fixed network to the party to complete the convergence dream.

The second development was the banning of Huawei technology in Australia.

“It is extremely disappointing that the clear strategy the company had to become a mobile network operator at the forefront of 5G has been undone by factors outside of TPG’s control,” TPG Executive Chairman David Teoh said at the time.

Following the decision, TPG decided against building its own mobile network as Huawei was the main supplier to the firm. This is an instance which backs up the Huawei claims it will improve competition in the 5G vendor ecosystem, bringing down the price of equipment investment and speed of deployment.

The decision to end TPG investment in a mobile network might have been enough to convince the ACCC the merger could be approved, but it seems the competition watchdog is clinging onto the hope it would do so on its own. TPG statements should be taken with a pinch of salt, it wouldn’t be the first-time executives changed their minds, but it does run the risk of negatively impacting competition.

One thing which is not healthy for any market is a tiered ranking system. If Vodafone cannot compete with Optus and Telstra without the converged business model the TPG assets offer, it might well fall further behind. If it dwindles to the point of irrelevance, the Australian telco market will be in a worse position than it is today, or with the combined Vodafone/TPG company offering increased competition. The risk the ACCC runs is effectively creating a duopoly.

Realistically, there is no right or wrong answer here. We do not have a crystal ball, and we cannot read the minds of TPG executives. It might well pursue the deployment of a mobile network if the prospect of a merger is killed off all together, but then again, it might just double-down on fixed line investments. It does currently have an MVNO, but that is a poor substitution for a fourth MNO to increase competition.

Huawei hasn’t given up on Australia as it plugs 6G smarts

Even though Australia blindly followed the US down the Huawei-accusation rabbit hole, the Chinese vendor hasn’t given up on the country, using the 6G carrot to tempt the Aussies back into the fray.

Speaking at the Emerging Innovation Summit in Melbourne, a Huawei executive suggested Australian decision-makers have been short-sighted in addressing cyber-security concerns.

“The current approach being taken towards cyber-security on 5G mobile networks solves absolutely nothing – and that will be exposed further in 6G,” said Huawei Australia Chief Technology and Cyber Security Officer David Soldani.

This is of course assuming Huawei is an innocent party, though as little (if any) concrete evidence to prove guilt has been presented to date, the fair position would be to maintain this assumption of innocence.

“Blocking companies from certain countries does nothing to make Australia any safer from cyber-security issues – in fact it just makes things worse because they are not addressing the real issues on cyber-security.”

This is a point which has been raised frequently but those who advocate the inclusion of Huawei in communications infrastructure moving forward. Banning a certain company or technology from networks does not tackle the issue. For some, the most sensible route forward would be that of risk mitigation, an approach Vodafone in the UK has been very vocal about.

“Huawei is already way ahead of our rivals on 6G research and we can see that the way in which we will be gathering and consuming data on those 6G networks means the cyber security risks will increase,” Soldani added.

Although it might encourage moans from some corners of the industry, 6G is becoming a very real and increasingly important facet of the connectivity mix. 5G is of course not a reality yet, but for the R&D engineers, the job is complete. Work has moved out of the research labs and into production; for these employees it is onto the next task; 6G.

This is another common message which has come out of the Huawei ranks over the last few months; it is critical to work with us, not ignore us. And many of those on the technology side would agree also.

The reason the prospect of a Huawei ban is such a divisive and persistent topic is relatively simple; Huawei produces excellent products. Not only are these products cheaper, while the field support offered to telco customers is largely unrivalled, the products are genuinely at the top of their field. There are large crowds who would suggest Huawei is market leader on in the radio and transmission segments.

“The communique from the Five Eyes was absolutely clear that countries need to ensure entire supply chains are trusted and reliable to protect our networks from unauthorized access or interference,” Soldani said.

“This means there is absolutely no point in simply banning companies from certain countries – it actually makes Australia less secure because it means we have to then increase our reliance on just one or two other vendors – neither of whom are having their equipment tested.”

This is another point which, once again, has been thrown around quite often by Huawei, but is also valid; no-one is 100% free of cybersecurity risk. By reducing the number of attack points for cyber-criminals, arguably it becomes more difficult to defend and the chances of a breach increase.

These are all perfectly valid points, but Huawei is trying to prove a negative here. Nothing which can be said or presented to the world would completely exonerate the firm of suspicion, especially with the US Government constantly hinting there is evidence of wrong-doing. The fact that no-one outside the White House or the Foreign Department has seen this evidence does appear to be irrelevant to some, though that is not to say it does not exist.

This issue is quite frankly becoming tiresome. Of course, governments around the world have a duty to ensure companies are acting responsibly through the sourcing and deployment of secure and resilient products, but the issue is become tedious to discuss week on week. Unfortunately, as the UK Government continues to kick the can down the road, the debate is likely to continue.

Although the UK is finding it difficult to maintain friendships with its peers inside and outside of the European Union, it is still an incredibly influential voice. The Supply Chain Review has attracted interest from numerous parties around the world, and the decision will be carefully scrutinised. It might be rubbing nations up the wrong way with Brexit, but its opinion still matters.

Some nations of course benefit from the on-going stand-still and some don’t. The UK doesn’t benefit as telcos are still no wiser whether supply chains will be in tatters and numerous other countries that rely on Huawei, Germany, Spain or Italy for example, are in the same boat. Australia is in a tricky position as banning Huawei limits the options which are out there. This present complications from a resilience and competition perspective.

The US appears to be one of the few nations which is not going to be impacted. Deployment might be a bit more expensive due to decreased competition, but the telcos have never had the opportunity to include Huawei in plans so there is no disruption from this on-going saga. The US might well be a lost cause, but it does appear Huawei believes it can charm Australia back on-side.

Huawei might not have given up on Australia, but as long as the White House is singing from this hymn sheet, it is likely to be nothing more than a Sisyphean task.

‘Five Eyes’ align security objectives but where does this leave Huawei?

After a meeting in London, the members of the ‘Five Eyes’ intelligence alliance has released a communique to reinforce the relationship and outline quite generic objectives.

As with all of these communiques, the language sounds very impressive, but in reality, nothing material is being said. In this document, the UK, US, New Zealand, Australia and Canada have committed to countering online child sexual exploitation and abuse, tackling cybersecurity threats and building trust in emerging technologies.

Although nothing revolutionary has been said, the reinforcement of this alliance leaves questions over Huawei’s role in the aforementioned countries.

“There is agreement between the Five Countries of the need to ensure supply chains are trusted and reliable to protect our networks from unauthorised access or interference,” the communique reads. “We recognise the need for a rigorous risk-based evaluation of a range of factors which may include, but not be limited to, control by foreign governments.”

Government officials will never be so obvious as to point the finger at another nation, at least not most of the time, but it isn’t difficult to imagine who this statement is directed towards.

So where does this leave Huawei? Banned in Australia and the US, denied work in New Zealand and on thin ice in Canada. The only market from the ‘Five Eyes’ where is does not look doomed is the UK. But can the other members of the intelligence club trust the UK while Huawei is maintaining a presence in the country’s communications infrastructure?

The US has already spoken of withholding intelligence data should the partner nation allow Huawei to contribute to 5G networks, and this alliance is already very anti-Huawei. In re-affirming its position to the alliance, the UK is certainly sending mixed messages only a week after a statement which suggested Huawei might be safe.

Of course, this might mean very little in the long-run, but it is another factor which should be considered when trying to figure out what Huawei’s fate will actually be.

For its own part, Huawei is doing as much as possible to disprove collusion and security allegations. Aside from the cybersecurity centres opened to allow customers and governments to validate security credentials, it has recently signed up to the Paris Call.

“The quest for better security serves as the foundation of our existence,” said John Suffolk, Global Cyber Security & Privacy Officer at Huawei. “We fully support any endeavour, idea or suggestion that can enhance the resilience and security of products and services for Governments, customers and their customers.”

The Paris Call is an initiative launched by the French Government in November 2018. It is a call-to-action to tackle cybersecurity challenges, strengthen collective defences against cybercrime, and promote cooperation among stakeholders across national borders. To date, 67 national governments, 139 international and civil society organizations, and 358 private-sector companies have signed up to the collaborative initiative.

Although we are surprised it has taken Huawei so long to sign up to the initiative, it is another incremental step in the pursuit to demonstrate its security credentials and build trust in the brand.

Even with this commitment from Huawei, you have to question how the UK can continue to be a member of the ‘Five Eyes’ alliance and work with the Chinese infrastructure vendor. The concept of the alliance is to align activities and this communique talks about managing risk individually but also about supporting the efforts of other partners.

It does appear the UK is attempting to have its cake and eat it too. We suspect there will be pressure on the newly-appointed Prime Minister Boris Johnson to fall into line before too long, and it will be interesting to see how the newly formed Cabinet manage expectations externally with international partners and internally with British telcos who rely on Huawei.

Vodafone Australia admits to misleading carrier billing service

After an Australian Competition and Consumer Commission (ACCC) investigation, Vodafone Australia has admitted misleading consumers through its third-party Direct Carrier Billing (DCB) service.

The investigation looked into transactions made between 1 January 2013 to 1 March 2018, though it is most likely Vodafone broke the rules upon the introduction of an Australian Securities and Investments Commission Act in 2015.

“Through this service, thousands of Vodafone customers ended up being charged for content that they did not want or need, and were completely unaware that they had purchased,” said ACCC Chair Rod Sims. “Other companies should note, money made by misleading consumers will need to be repaid.”

The service was first introduced in January 2013 allowing customers to purchase digital content from third party developers such as games, ringtones and apps, with charges being applied to pre-paid and post-paid accounts.

The issue which Vodafone seems to be facing is the service was automatically applied to customer accounts, with purchases being made with one or two clicks. As the customer was not suitably informed, the service has been deemed to be misleading.

Vodafone has already begun the process of contacting impacted customers and will be offering refunds where appropriate. The telco has phased out the majority of the service already, owing to an increasing number of complaints during 2014 and 2015.

While a final judgment has not been released just yet, a confirmation and fine will likely follow in the next couple of weeks, other Australian telcos have been found guilty of the same offence. Both Telstra and Optus have been fined AUS$10 million for their own misleading carrier billing services.

Although it is hardly rare for a telco to be found on the wrong side of right, especially in Australia where the ACCC seems to be incredibly proactive, such instances will create a negative perception at the worst time for the telcos.

In an era when the telcos are searching for additional revenues, carrier billing initiatives are an excellent option. Assuming of course the telcos don’t mess it up.

The digital economy is becoming increasingly embedded in today’s society though there are still many consumers who will begrudgingly hand over credit card details to companies with whom they are not familiar. This mistrust with digital transactions could potentially harm SMEs while providing more profit for the larger players who have established reputations on the web.

In this void of trust and credibility, the telcos have an opportunity to step in and play the intermediately as a trusted organization; how many people have an issue with handing credit card information over to a telco?

There are plenty of examples of this theory in practice; Amazon or eBay are the most obvious and most successful. These are online market places which allow the flow of goods and cash between two parties who may not have had a prior relationship. The consumer might have an issue paying Joe Bloggs Ltd. as there is little credibility, though many trust the likes of Amazon and eBay, allowing the third party to manage the transaction and take a small slice of the pie.

Carrier billing can be an excellent opportunity to add value to a growing digital ecosystem, using the consumer trust in the telcos to drive opportunities for those businesses which want to grow online. However, should there be a perception that the telcos do not act responsibly with a customers’ bill, this opportunity will dry out very quickly.

Aside from costing Vodafone a couple of million dollars, this also dents the credibility of the telco (and overall industry by association). This example suggests it is just as risky purchasing goods through the telco as it is an unknown supplier online.

Telstra confirms 6000 jobs to be cut by the end of this year

Australian telco Telstra has announced steady progress for its T22 restructuring plan, allowing it to retire AUS$500 million of legacy IT equipment and bring forward 6,000 job cuts to 2019.

The restructuring plan, T22, was introduced during June 2018 in an effort to simply the structure of the business and improve profitability. The plan is to remove 8,000 roles in total from the business, through replacing legacy systems, digitising certain processes and simplifying the management structure of the business.

According to Telstra executives, who’s jobs are seemingly secure, the firm had become a burdensome beast and needed streamlining. This plan was set in motion not only to reduce the complexity of the organization, but also deliver AUS$2.5 billion in cost efficiencies by 2022.

In today’s announcement, 6,000 of the planned redundancies have been brought forward from 2020 to 2019, increasing the restructuring costs for this financial year by AUS$200 million and introducing a AUS$500 million write down of the value of its legacy IT assets. Investors might not have expected such a hit in 2019, but the news should not have come as a surprise.

“We understand the significant impact on our people and the uncertainty created by these changes,” said CEO Andrew Penn. “We are doing everything we can to support our people through the change and this includes the up to $50 million we have committed to a Transition program that provides a range of services to help people move into a new role. We expect to have announced or completed approximately 75 percent of our direct workforce role reductions by the end of FY19.”

According to Penn, plans are on track and the majority of the work is behind the team. Employees are yet to discover their fate, however the consultation is expected to finish in mid-June

Headcount FY 2018 total revenue Revenue per employee
Telstra 32,293 $20.05 billion $620,877
BT 94,800 $30.01 billion $316,561
Telefonica 120,138 $54.33 billion $452,229
Verizon 144,000 $130.863 billion $908,770

All figures in US Dollars

While Telstra executives might not like the balance of the spreadsheets as it stands, you can clearly see from the table above it is not in the worst position worldwide. Restructuring plans are certainly having more of an impact at some telcos, take BT for example, though some might be aggrieved when being forced into redundancy.

That said, NPAT (net profit after tax) for 2018 was AUS$1.2 billion, 4.1% of total revenues. When compared to Verizon, where profits represented 8.1% of total revenues, or Telefonica where it was 7.4% for 2018, you can begin to see why the management team is under pressure to find efficiencies across the business.

Redundancies, while never pleasant to talk about, are commonplace in the telco industry and will continue to be so. As businesses evolve, more processes become automated and more technology becomes redundant. This will have an impact on any workforce, but when you consider the complexities of managing a network or securing the digital lives of customers, the demand of digitisation becomes more apparent for the telcos.

Unfortunately for Telstra, it also happens to operate in an environment which makes delivering connectivity incredibly challenging and expensive (i.e. the scale of Australia and the geographical isolation of some communities). Add in the fact it will now longer be able to work with Huawei or ZTE, the vendor pool becomes smaller, adding more financial risk to the procurement channels. All of these factors add up to more financial outlay when it comes to the business of delivering connectivity, and pressure to improve operational efficiencies.

Merger of Vodafone Australia and TPG blocked

The Australian competition authority has decided that the telco merger of Vodafone and TPG amounts to excessive consolidation and has blocked it.

This decision comes after months of agonising by the Australian Competition and Consumer Commission (ACCC), which started looking into the deal last December, several months after it was first proposed. Vodafone is one of three major MNOs over there, while TPG is one of three major fixed-line players.

“Broadband services are of critical importance to Australian consumers and businesses, across both fixed and mobile channels,” ACCC Chair Rod Sims said. “Given the longer term industry trends, TPG has a commercial imperative to roll out its own mobile network giving it the flexibility to deliver both fixed and mobile services at competitive prices. It has previously stated this and invested accordingly.

“Vodafone has likewise felt the need to enter the market for fixed broadband services. These moves by TPG and Vodafone are likely to improve competition and future market contestability. TPG is the best prospect Australia has for a new mobile network operator to enter the market, and this is likely the last chance we have for stronger competition in the supply of mobile services.

“Wherever possible, market structures should be settled by the competitive process, not by a merger which results in a market structure that would be subject to little challenge in the future. This is particularly the case in concentrated sectors, such as mobile services in Australia.

“TPG has a proven track record of disrupting the telecommunications sector and establishing itself as a successful competitor to the benefit of consumers. TPG is likely to be a vigorous and innovative supplier of mobile services in Australia, offering cheaper mobile plans with large data allowances, and competing strongly against incumbents Telstra, Optus and Vodafone.

“TPG has the capability and commercial incentive to resolve the technical and commercial challenges it is facing, as it already has in other markets. TPG already has mobile spectrum, an extensive fibre transmission network which is essential for a mobile network, a large customer base and well-established telecommunications brands.

“TPG is also facing reducing margins in fixed home broadband due to the NBN rollout. Further, there is the growing take-up of mobile broadband services in place of fixed home broadband services which is expected to increase especially after the rollout of 5G technology. After thorough examination, we have concluded that, if this proposed merger does not proceed, there is a real chance TPG will roll out a mobile network.”

It’s great that Sims offered such a detailed rationale, but he could have just said “We want to force Vodafone and TPG to diversify through organic investment rather than M&A.” He doesn’t seem to buy TPG’s line that the Huawei ban makes it impossible for it to build its own mobile network, but it seems to be a big leap of faith to conclude that blocking this merger will automatically result in a change of heart.

Google starts droning on about home delivery

Another one of Google’s bright ideas is starting to bear fruit as subsidiary Wing starts testing an air delivery service in North Canberra, Australia.

Almost every company on the planet searches for the diversification holy grail, but few have the patience, investor confidence and bank accounts to see through the quest. Google is one of the rare exceptions. A company which seems to revel in investing in the preposterous, giving every idea as much capital as necessary to ensure it can be a success, should the conditions be right. Wing is another example of this.

“Today, we are excited to be launching our first air delivery service in North Canberra,” the Wing team wrote in a Medium blog. “Our service allows customers to order a range of items such as fresh food, hot coffee or over-the-counter chemist items on our mobile app and have them delivered directly to their homes by drone in minutes.”

The initial service will only be available to a limited set of eligible homes in the suburbs of Crace, Palmerston and Franklin for the moment, but the ambition is clear; drones can disrupt the logistics and delivery segments.

The first partners of the service will be Kickstart Expresso, Capital Chemist, Pure Gelato, Jasper + Myrtle, Bakers Delight, Guzman Y Gomez, and Drummond Golf, allowing customers to choose from a range of goods, though Wing has stated it is open to new ideas.

Starting in 2014, Wing has been working to realise the drone delivery dream in Australia. Live trials started 18 months ago, delivering food, small household items and over the counter chemist products to more than 3,000 times to Australian homes in Fernleigh Park, Royalla and Bonython. Progress might have been slow, but that never seems to bother the Googlers.

The pursuit of disruption is becoming somewhat of a speciality for Google, either through acquisition or nurturing ideas in the Moonshot labs. Loon is another idea few companies would have thought realistic, but in signing a partnership with Telkom Kenya, Google is proving the delivery of connectivity through balloons is a perfectly reasonable business plan.

This is not to say every Google idea turns out to be a raving success. Google Fiber started off well but soon got canned as the search giant realised fixed line connectivity was much harder than it first seemed.

This is of course not the only attempt at monetizing drone technology through home delivery. AT&T has been creeping forward with its own drone programme in the US, while Amazon has been conducting trials in the UK, and Vodafone delivered an iPhone to a customer in New Zealand. All of these trials would have been deemed successful, though you have to wonder whether they are commercially viable.

For Amazon, the idea of drone delivery makes sense. Having drones to deliver goods from fulfilment centres to remote locations answers a difficult logistics issue, while AT&T and Vodafone might be able to craft a connectivity offering, but Google has something which many of these companies do not; existing relationships with numerous businesses, irrelevant as to whether they are large or small.

Almost every business in the developed markets will have a relationship with Google, such is the power, influence and simplicity of the platform. This extends from listings in the search engine, the Maps products or through to the YouTube platform. This offers an incredible opportunity to leverage relationships and make an idea which might not be considered commercially viable profitable.

Once again this demonstrates the power of the internet and new technology. Through a simple app, customers will be able to do more without leaving the flat, while businesses will be able to expand the perimeter of their operations.

Of course, you have to consider whether local and national governments are ready to foster this kind of entrepreneurship, but that has never stopped the internet giants before. Google is showing its pedigree for innovation again, taking an idea which seems ridiculous and potentially making it work.

Austria and Australia join the march against Silicon Valley

The days of the wild-west internet seem to be coming to a close with Austria and Australia becoming the latest nations to update the rules governing the business activities of the internet giants.

At the foot of the Alps, the Austrians are proposing a new 5% sales tax on digital revenues which are realised in the country, another European state to tackle the ‘creative’ accounting practices of Silicon Valley. Down under, the Australian Government plans on introducing tougher rules which will place greater accountability on social media platforms for extreme and offensive content.

For years the world watched in amazement as the likes of Google, Facebook and Amazon climbed higher up the ladder of influence. We gazed in wonderment as Silicon Valley seemed to pluck profits out of thin-air and their CEOs hit celebrity status. But then the scandals started to roll-in and we all realised these companies had abused the privilege of self-regulation.

The Cambridge Analytica scandal was the watershed moment, a saga which dominated headlines around the world for months and hauled politicians away from free lunches and back into the debating chambers. All of a sudden everyone realised the likes of Zuckerberg, Bezos and Page were not our friends, but incredibly intelligent businessmen who were exploiting the grey areas sitting idly between the mass of criss-crossing red-tape.

What followed this scandal was a more forensic look at the business models of the internet giants. Those looking close enough found trickily worded terms and conditions, confusing processes, ransom opt-ins and abused freedoms. Users were being tracked without their knowledge, personal information was being traded as a commodity and tax havens were being exploited. Opinion on Silicon Valley turned sour.

On the other side of the coin, it wasn’t just the craft and cunning of Silicon Valley lawyers to blame, but inadequate rules for today’s digital era. Politicians and regulators woke up to the fact rules and legislation needed to be updated to create a fair and reasonable policy landscape to hold the internet giants accountable. Experts were brought in to account for the vast gulf in competence and the march towards Silicon Valley began.

A perfect storm has been brewing around the internet giants and as the weeks pass more countries are taking a more stringent approach to the business of the internet. Australia has been trundling along with incremental progress, and now Austria has entered the fray.

“Through the digital tax package, we are closing tax loopholes and thereby ensuring that large digital corporations, agency platforms and retail platforms are called to account,” said Austrian Finance Minister Hartwig Löger. “Through fair taxation of the digital economy, we are establishing equity in taxation.”

Moving forward, a digital tax of 5% will be introduced for large digital corporations, those with global sales of € 750 million, of which €25 million originates in Austria. The new rules will also take away VAT exemptions for deliveries from foreign countries. Previously, orders valued below €22 were exempt from the tax.

“Through this measure, we are taking digital agency platforms to task,” said State Secretary of Finance Hubert Fuchs. “No one is entitled to evade the obligation to pay tax.”

Austria is of course not alone in this tax assault. As the member states of the European Union cannot agree on a bloc-wide tax mechanism, plans were blocked by nations who benefit from the status quo such as Ireland, individual states have gone on alone. France and the UK have already set plans in motion, but we expect such proposals to start snowballing before too long.

Australia is targeting a different area of contention however. Following events in Christchurch, New Zealand, and the simultaneous live-streaming of the incident, the Australian Government has introduced new rules which will hold social media and other social media platforms accountable for the dissemination of offensive material.

The Sharing of Abhorrent Violent Material bill creates new offences for content service providers and hosting services who fail to act expeditiously to remove videos containing “abhorrent violent conduct”. Such conduct is defined as terrorist acts, murders, attempted murders, torture, rape or kidnap.

The technology community and legal experts have slammed the new rules, and while there are some valid points, the social media and hosting platforms might have to be forced forward. It is an incredibly difficult task to identify these videos, such is the complexity of identification in such as vast swarm of uploaded content nowadays, but without the threat of penalty there is a risk progress will not move at a desired pace.

Following the incident, Facebook pointed out that it did take down the video quickly, though it was not able to use AI to identify the content. This is where it becomes incredibly difficult for the technology industry; these applications need abhorrent content to be trained to identify abhorrent content. It’s a bit of a catch-22 situation, but harsh penalties for non-compliance will force the industry to find a solution.

“We have heard feedback that we must do more – and we agree,” said Facebook COO Sheryl Sandberg in a letter to the New Zealand Herald. “In the wake of the terror attack, we are taking three steps: strengthening the rules for using Facebook Live, taking further steps to address hate on our platforms, and supporting the New Zealand community.”

Sandberg has promised new restrictions on how live videos can be uploaded and streamed to the platform, though details were incredibly thin. Facebook will not want to introduce too many restrictions, making the process too convoluted and tiresome will impact user experience, though it clearly has to do something. The opportunity to broadcast horrific acts has become too accessible.

This is the problem which Facebook and everyone else in the digital economy is facing. The promise is to open up the gates and allow people to express themselves, but unfortunately there are people who will take advantage of this situation. It is an incredibly difficult equation to balance.

Technology will eventually help the internet companies get to a suitable position, with the potential of AI grafting through the millions of uploads, however the training period is going to be a difficult process. The risk of going too sensitive is restricting free speech, though with content uploaded from shows such as Game of Thrones, there is plenty of room for error.

The internet giants will want to resist change, despite giving the impression of encouraging more regulation and government intervention, but it won’t be able to hold back the tides forever. With privacy concerns, fake news, tax evasion, political influence, anti-trust accusations and the unknown power of data analytics, the internet giants are simply fighting on too many fronts.

These are companies who have incredible financial power and immense armies of lobbyists, but Silicon Valley is the bad guy right now. Politicians have spotted an opportunity to make PR points by unloading on the punching bag, and you can guarantee there will be many lining up to take a swing.

Australia poised to significantly increase regulation of OTTs

Australia is the latest country to cast an eye towards Silicon Valley, revamping rules to create a regulatory framework with greater oversight and authority over the booming digital ecosystem.

While the digital economy has operated in a relatively tether-free fashion to date, various scandals throughout the last 18 months have shown these companies are not mature or honest enough to manage themselves. Facebook has drawn the lion’s share of the headlines, but the social media giant is not alone in abusing the system; this is a pandemic with Silicon Valley as ground zero.

“While online services like Facebook, Apple, Amazon, Netflix and Google bring undeniable social and economic benefits to Australians, they have now become global giants with significant market power in Australia,” said Nerida O’Loughlin, Chair of the Australian Communications and Media Authority (ACMA).

“As aggregators, curators and distributors of content – in particular news and journalistic content—digital platforms have significant influence. But they are not fully considered within current media and communications regulation.”

The ACMA statement follows the Digital Platforms Inquiry Preliminary Report from the Australian Competition and Consumer Commission (ACCC) which calls for regulatory reform to tackle newly emerging segments of the digital economy, as well as greater powers to gain insight into how businesses such as Google and Facebook actually work.

This has been the great conundrum of the last few years; these companies have incredible power and influence over society and business, though due to opaque transparency reports and sheer complexity, few understand the cogs of the digital machine. This is not a healthy position; these companies should not be allowed to operate in a cloud of confusion, such is the power they wield. It would be irresponsible of any government to allow such a dangerous status quo to continue.

What this report suggests is the creation of a new set of rules, which would govern the digital economy as what it is. These companies are no-longer simply platforms, and they are not digital publishers. For years, regulators have tried to squeeze them into existing regulatory frameworks and it has not worked. The creation of new rules, fit for purpose to tackle the digital economy and specific to the companies which dominate it, are critical.

As you can probably imagine, the internet giants are not particularly happy with this assault on their freedoms. Facebook has accused the ACCC of protecting traditional media titles at the expense of digital and the consumer, while Google has suggested the ACCC is ill-informed when it comes to basic understanding of the current state-of-affairs.

The aggressive and patronising objections to the ACCC and ACMA should come as little surprise as the internet giants face greater controls on their businesses throughout the world. Australia and Europe seem to be the tip of the spear, but others will soon follow suit once they see how regulations can be effectively reformed. Unfortunately for the internet giants, there is not a single focal point.

In Europe, certain states are putting stricter rules in place for the removal of offensive materials, Germany is leading the charge here. GDPR is a European-wide response to privacy concerns. The tax-avoidance schemes are being tackled by France and the UK. The Netherlands is tabling new rules which would made foreign acquisitions more difficult. The digital business model is being assaulted from numerous angles, and quite rightly so.

Over the last decade, the internet giants have become experts at wriggling through the red-tape maze and exposing the regulatory grey areas. This is only possible because rules have not been designed specifically for the internet economy, an anomaly in today’s world. Every other industry has rules which are designed specifically for those circumstances, and the world is starting to wake up to the need for the same here.

Arguments against might take the form of slowing progress, but the internet giants have not shown themselves responsible enough to self-regulate. Cambridge Analytica, overly-complex T&Cs, data breaches, insecure databases, irresponsible data processing and handling activities, hosting of offensive material and unauthorised location tracking scandals are just a few areas which need to be addressed.

Regulators and legislators need to wake up and start governing the digital economy. Thankfully, Australia and Europe are taking the fight to Silicon Valley.

Nokia launches a 5G FWA router and Optus buys some of them

Nokia’s big MWC 2019 reveal went big on 5G fixed wireless access with the launch of its FastMile 5G Gateway.

FWA is a popular early use-case for 5G. It’s presumably a lot simpler to set up a 5G connection to a static domestic router than to a mobile handset, but you still get to say you’ve done some 5G. Aside from showcasing 5G in the wild, FWA is all about providing decent broadband to places that otherwise lack it.

Nokia claims the FastMile 5G Gateway serves up 10-25 times more bandwidth then LTE. It uses sub-6 GHz 5G spectrum, so will still have half-decent range. It’s being described as ‘plug-and-play’, which is geek-talk for ‘easy to set up’ and seems like a fairly inoffensive bit of industrial design. We don’t know what its costs though.

FWA is also being positioned as an early bit of ROI for operators upgrading their networks to 5G, although Nokia is only anticipating around 50% growth in its use – from 18 million to 27 million households globally – by 2022. When you’re dropping a ton of cash on a network upgrade it’s never to early to have something to show for it.

One operator that seems at least partially convinced is Optus in Australia, where you can imagine there are a fair few remote households in need of a bandwidth boost. It has been the first to trial the FastMile in a live network and seems to think it’s gone well, so much so that it will have 50 live 5G sites using it by the end of March.

“These are historic milestones for Optus as we focus on delivering our customers the very best 5G experience,” said Allen Lew, CEO at Optus. “Nokia has partnered with Optus to accelerate our preparations for 5G and as a result we are first in the world to deliver live 5G NR FWA services using the Nokia’s FastMile 5G Gateway.”

“We are excited to partner with Optus on their 5G vision with solutions that will create a better, more connected future for Australia,” said Sandra Motley, President of Nokia’s Fixed Networks Business Group. “With our 5G FastMile solution Optus will be able to unlock the full potential of its mobile network and deliver new ultra-broadband services to customers.”

The rest of Nokia’s announcements were predictably 5G-ish too. There are some trials and general 5G conviviality with Bharti Airtel, Korea Telecom and Vodafone. On top of that Nokia is helping Sony Pictures bleed its Spiderman asset yet again by combining with Intel to serve up some kind of 5G VR experience at their respective MWC booths.