Vodafone Australia and TPG told to wait three months for merger decision

The final arguments have been presented to the Australian courts and now Vodafone Australia and TPG will have to wait until early 2020 for the decision on whether the $15 billion merger will be allowed.

This is a saga which has the potential to cause some long-term friction between the regulator and industry. Wherever you are around the world, best-case scenario would be collaboration between all elements of the ecosystem, but it does appear this is far from the case.

In a court case which has been on-going for just over three weeks, Justice John Middleton will now take into consideration all the arguments which have been presented. Unfortunately for those who are seeking a swift conclusion to the litigious chapter will be disappointed. Justice Middleton has said to expect a decision in January 2020, or potentially February.

Australian Competition and Consumer Commission (ACCC) took the decision to block the merger between Vodafone Australia and TPG on the grounds it would negatively impact competition in the future. The telcos are arguing this decision should be over-turned, suggesting it is the only way to ensure competition in a world which is quickly being defined by convergent operations.

This is a decision which will certainly disappoint someone. As patiently as Justice Middleton could look, there is no middle-ground between the feuding parties. The regulator is effectively accusing TPG of lying and the Vodafone/TPG representatives are suggesting the watchdog is not living in the realms of reality.

Looking at the perspective of the ACCC, the regulator believes the merger would prevent a fourth mobile player from emerging in the country. This is of course presuming TPG still has the appetite to deploy a network, and considering the telco has said it does not, the regulator is making a bold assertion.

Another interesting statement made by Michael Hodge QC, the lawyer representing the watchdog, is that its persistence to block the merger is based on “regulatory paternalism”. This is effectively a more acceptable way of saying ‘we know what better for you than you do’.

On the other side of the aisle, Vodafone and TPG are questioning whether the ACCC is looking at the same conundrum.

TPG did have an interest in diversifying revenues to enter into the mobile space, it was potentially going to do a ‘Jio Job’ to cause chaos, but the Huawei ban effectively put an end to this. Huawei was being touted as TPG’s main supplier of network infrastructure equipment, though the Australian ban for the vendor made financially unviable to pursue the network deployment, according to the telcos.

“Indeed, on the Commission’s evidence, TPG dodged a bullet that the network that they were rolling out would have been one of the great white elephants of Australian telecommunications history,” said Peter Brereton QC, representing Vodafone Australia at the trial.

If you believe the telcos, TPG is no-longer interested in building its own mobile network. It is not a financially attractive. Should the ACCC’s blockage of the merger stand, Australia will continue with three mobile network owners, though Vodafone will be in a weakened position to compete with the likes of Telstra and Optus.

This is the question which Justice Middleton needs to ponder. What is the best course of action for enhanced competition in the future? Three strengthened, converged telcos, or a fingers-crossed situation that TPG will be able to source CAPEX to fuel its own network deployment.

There are of course good and bad arguments on both sides of the aisle. The ACCC is potentially right to push for a disruptive fourth mobile provider, though is it reading the environment correctly? The telcos are of course correct to pursue a more comprehensive converged player, three top-tier telcos is certainly favourable than a duopoly, but there might be some nuanced language over the TPG appetite for network deployment moving forward.

The risk which could emerge is potential animosity. The UK’s connectivity landscape suffered due to friction between BT and regulator Ofcom, and there is potential for the same outcome here. Vodafone Australia and TPG only have one thing on their mind right now; a tie-up to challenge Optus and Telstra. The ACCC has taken somewhat of a patronising and stubborn stance, and seemingly does not want to consider the opportunity for increased competition with three converged operations.

Neither party is willing to budge, and it seems the loser will have to swallow a lot of pride to ensure a smooth relationship in the future.

US lawmakers want to look at private emails from tech execs

Scrutiny of the US tech giants has been taken up another level after members of the US House Judiciary Committee have demanded they expose their internal workings.

The move has been widely reported in the US, including by the Washington Post. It seems there is already a congressional antitrust investigation underway into Amazon, Apple, Facebook and Google, which is presumably related to the actions taken against Google and Facebook earlier this week. They want to know whether the companies have abused their dominant positions to corrupt markets for digital products and services in their favour.

One of the fun things about getting legislators and lawyers involved in scrutinizing the activities of companies is that they have the power to demand access to a bunch of information that would normally be kept locked in a dark cellar, to which only the CEO has a key. The stuff this committee would like financial data about includes their products and services, and private discussions about potential merger targets, we’re told.

Having said that the letters sent apparently don’t have any legal weight behind them right now, so the companies could theoretically refuse. This is a dangerous game to play, however, as they would have to refuse in a way that didn’t imply they had something to hide. Perhaps they could just chuck over some light-hearted Friday afternoon email banter while whistling nonchalantly.

What seems unavoidable is that the state machinery in the US and elsewhere has the tech giants in its sights and seems to have decided the lot of them have far too much power by half. Since they are undeniably dominant their execs and legal departments would be well advised to buckle in for the long haul. They could also do worse than speak to grizzled campaigners from companies like Microsoft and Intel to get some top tips.

Sharon White calls it a day at Ofcom

After four years of running the UK telecoms regulator Sharon White has decided she fancies a go at retail.

Ofcom has announced White will leave her current post as CEO of the regulator towards the end of this year in order to become Chairman of The John Lewis Partnership – a UK retail chain. They don’t have a replacement lined up but have half a year to dig someone up.

“Sharon has been an outstanding Chief Executive for Ofcom and will be missed by the whole organisation,” said Ofcom Chairman Lord Burns. “Under Sharon’s leadership, Ofcom has helped to deliver ultrafast broadband, widespread 4G mobile and now 5G, and became the first independent regulator of the BBC. She leaves Ofcom as a regulator with a relentless focus on the consumer interest; making sure people and businesses can get the best out of their communications services.”

“It’s been a huge privilege to lead Ofcom at a time when reliable, affordable communications have become essential,” said White. “I will leave behind an organisation that is dedicated in its mission to make communications work for everyone.”

On the whole White seems to have done a decent job in her time at Ofcom. She had to deal with things like the Openreach controversy, the 5G spectrum auctions and Three’s constant moaning and has done so with dignity and without any major mistakes. While she has left a solid platform for her successor, that person will have to deal with an industry in the middle of enormous change and in the centre of some of the biggest contemporary geopolitical issues.

German regulator promises light-touch on fibre

In an effort to force German telcos onto a fibre diet, regulator Bundesnetzagentur has promised a light-touch regulatory environment for the last-mile.

In the draft regulations, the German regulator is suggesting it would play a relative hands-off role when it comes to driving fibre deployment in the last mile, assuming market leader Deutsche Telekom plays nice with alternative connectivity providers, providing non-discriminatory access to wholesale services.

“Fiber is the technology for the gigabit world, and the successful regulation of Deutsche Telekom’s existing copper network is not transferable to fiber optic networks, and our analysis lays the foundations for a differentiated regulation of copper and fiber,” said Jochen Homann, President of Bundesnetzagentur, the German Federal Network Agency.

“If the non-discriminatory access of competitors to the fiber is guaranteed, we can confine ourselves to a ‘light’ regulation and the draft was future-proof, also with regard to the EU’s legal framework and the right of veto.”

In short, as long as Deutsche Telekom does not try to milk the profits unfairly, the regulator will allow it to conduct business as it sees fit. There is a slight risk in taking this approach, such is the dominant position of DT, but it seems to have weight this danger against the benefits of an accelerated fibre rollout. Perhaps this is done to progress made thus far.

According to the latest statistics from the Fibre to the Home Council Europe, Germany is currently one of the laggards when it comes to fibre deployment. The Council estimates only 2.3% of subscribers across the country have signed up to a fibre connectivity package, considerably below the 13.2% European wide average, and miles off bloc leader Latvia at 50.3%.

While it might be a leading political and economic voice across the continent, from a connectivity perspective Germany is currently one of the ‘also -ran’ category. With digital offering so much to future societies and economies, it will be hopeful to lose this tag sooner rather than later.

In the market definition presented by the regulator for consultation, distinctions between competitive conditions have been claimed between copper and high-performance fibre optic networks. With this in mind, the Bundesnetzagentur has said it would not be sensible to regulate the fibre market in the same way as it provides pricing conditions with copper.

Keeping regulation in the fibre to an absolute minimum should theoretically provide more incentive for private investment. There are of course risks, corporations on numerous occasions have shown them untrustworthy in a self-regulatory environment, but other nations will eagerly anticipate the mid- to long-term outcome of this move. Balancing the regulatory equation is an incredibly difficult task.

Germany has a swing at Facebook advertising platform

German regulator Bundeskartellamt has made a fresh attempt to curb the powers of the internet giants, this time targeting the data processing capabilities of Facebook.

The case built by Bundeskartellamt is based on what it has deemed market abuses by the dominant social media player in Germany. With Google+ shutting down, the regulator believes Facebook has a dominant position in the market, though it has not effectively informed users about the process of combing third-party data sets with information taken from the core Facebook platform to improve the detail of user profiles for advertising purposes.

This has been deemed inappropriate and Facebook has been ordered to shut down the process. This is not the first time this practise has been criticised by the regulator, but this is the first concrete ruling to for Facebook to desist.

“With regard to Facebook’s future data processing policy, we are carrying out what can be seen as an internal divestiture of Facebook’s data,” said Andreas Mundt, President of the Bundeskartellamt. “In future, Facebook will no longer be allowed to force its users to agree to the practically unrestricted collection and assigning of non-Facebook data to their Facebook user accounts.

“In future, consumers can prevent Facebook from unrestrictedly collecting and using their data. The previous practice of combining all data in a Facebook user account, practically without any restriction, will now be subject to the voluntary consent given by the users. If users do not consent, Facebook may not exclude them from its services and must refrain from collecting and merging data from different sources.”

Facebook has already stated it will appeal the decision with the Düsseldorf Higher Regional Court, though this should come as little surprise considering the attack on the foundations of the social media giants business model. The reason companies like Facebook and Google have been so successful in the early days of the data-sharing economy is because of the accuracy of advertising. This ruling could have a notable impact.

Not only does Facebook collect information about you from its core platform, but by supplementing this picture with more detail from third-party sources, a hyper-targeted advertising platform can be created. It’s seemingly one of the reasons advertisers have stuck by Facebook despite numerous scandals over the last couple of years; there are very few other platforms or businesses which can offer advertising services on par.

Although it is now common knowledge platforms such as Facebook sell ‘you’ to advertisers to fuel the spreadsheets, Bundeskartellamt believes the firm should obtain consent from the user should it want to use additional information to create a more detailed user profile. This data could be taken from sister platforms such as Instagram or WhatsApp, or third-party websites and applications which have ‘like’ or ‘share’ buttons embedded.

“By combining data from its own website, company-owned services and the analysis of third-party websites, Facebook obtains very detailed profiles of its users and knows what they are doing online,” said Mundt.

The practise becomes a bit more nefarious however. Even if there is no Facebook symbols or embedded buttons on the page or application a user is viewing, data might still be flowing back to the social media giant. This is not what anyone would consider transparent and should be addressed in all markets, not just Germany.

Overall, the Bundeskartellamt believes Facebook is abusing its dominant market position to the detriment of the other side of the equation, the user. While this will be escalated to higher courts, should the regulator win favour from the judges Facebook would have to obtain consent from every single one of its 32 million German users. It certainly will be able to obtain consent from many, but it would be a dent to the increasing under-fire advertising machine.

This is of course not the first time Germany has taken a run up at the internet giants. Germany has consistently been one of the leading nations attempting to tackle the power and influence of the internet players, creating a more tightknit regulatory framework which you would naturally expect in business. However, the social giants and their slippery lawyers are doing their best to resist.

Back in 2016, Facebook was told to stop collecting WhatsApp data from users and delete all the information it has already collected, due to the fact proper consent had not been obtained. It has also been investigating whether the Google+ data breach during the latter months of 2018 violates GDPR. Germany has also been one of the leading voices in the prolonged battle to ensure the internet giants pay fair and reasonable taxes across the European bloc.

What we are seeing in this case is another example of a regulator cracking down on the freedoms granted to Silicon Valley. For years, the internet players have been sliding between rules designed to parallel industries, exposing the grey and unregulated areas, as rule makers consistently struggle to keep pace with technological progress. There are numerous governments attempting to create more accountability, though it has been an uphill struggle so far.

The next couple of months will certainly be an interesting period in Germany. With judges considering the Facebook appeal, a win for the Bundeskartellamt could at as a springboard to wrap up the OTTs in more red-tape. We hope there is enough wiggle room left to innovate, but the last two years of scandals have shown the dire need to more strictly regulate Silicon Valley.

Ofcom reckons we’re clueless about broadband pricing

UK telecoms regulator Ofcom thinks consumers are ill-informed about the best broadband deals and wants ISPs to help rectify that.

As with many other utilities, UK punters often don’t shop around when it comes to broadband deals and often don’t even get the best service their current ISP offers at the price they’re paying.  Ofcom thinks that’s bang out of order and wants ISPs to be a lot more proactive about communicating this stud to their customers.

It’s kind of depressing that a regulator needs to get involved in this sort of thing at all. How difficult would it be for an ISP to notify their customers of the best deals on offer once their contract comes to an end? Not only is it underhand to conceal such things, but it’s presumably in the ISP’s interest to keep their customers happy so they don’t moan, churn or harm their precious net promoter score.

Yet here we are. Ofcom is proposing new rules that will oblige all UK communications service providers to flag up the best deals to their customers when discounted deals come to an end and also annually regardless of what kind of deal they’re on. “We’re concerned that many loyal broadband customers aren’t getting the best deal they could,” said Ofcom Chief Exec Sharon White. “So we’re reviewing broadband pricing practices and ensuring customers get clear, accurate information from their provider about the best deals they offer.”

The hook in Ofcom’s accompanying press release is a factoid that only half of the country is on ‘superfast’ broadband, while nearly everyone has access to it. What’s that all about? Ofcom puts the blame squarely at the feet of ISPs, as we’ve already explored, and it certainly seems like poor form for them not to even give their customers the best service at a given price point. Surely that should happen automatically.

Having said that it shouldn’t be beyond us to shop around every now and then. “While it’s true that half the battle in finding the most suitable and cost-effective broadband deal for your household is the availability of information, there must also be the will to find a better deal on the part of the customer,” said Dan Howdle of Cable.co.uk. “Thanks to the ‘stickiness’ of bundled TV packages, physical equipment such as dishes, set-top boxes and cable installations, along with no small amount of apathy when it comes to shopping around, too many stick with what they have and as such pay more than they should.”

Just in case CSPs were thinking of brushing this stuff off, Ofcom has thrown in an extra angle around ‘vulnerable’ people to ensure that wouldn’t be a good look. Additionally it’s launching a consumer campaign called Boost Your Broadband, fronted by consumer champion celeb Gloria Hunniford and designed to make it easier for punters to shop around.

ICO broadens data privacy investigation to 30 organizations

The ICO has announced it is investigating 30 organizations, including Facebook, to understand how personal data and analytics can impact political campaigning and influence elections.

Following the Facebook/Cambridge Analytica scandal, the ICO was sharp out of the blocks to kick-start an investigation in how personal data has been used in an unethical or potentially illegal manner. While we are usually quite critical about the sluggishness of the public sector, the ICO defied logic by securing a warrant before Facebook had the chance to conduct its own audit of the Cambridge Analytica data. The warrant was granted on Friday 23 March, before being investigators left the Cambridge Analytica offices at about 3am the next morning.

Having dug around the Cambridge Analytica filing cabinets, the ICO is taking the investigation up a step and broadening the number of companies underneath the microscope.

“As part of my investigation into the use of personal data and analytics by political campaigns, parties, social media companies and other commercial actors, the ICO is investigating 30 organisations, including Facebook,” said Information Commissioner Elizabeth Denham

“The ICO is looking at how data was collected from a third party app on Facebook and shared with Cambridge Analytica. We are also conducting a broader investigation into how social media platforms were used in political campaigning.”

As a result of the scandal, Facebook has brought in a host of changes to how and the amount of information developers can extract from user profiles. While this work has been noted by the ICO, Denham highlighted that only time would tell as to whether this would be deemed sufficient.

Elsewhere in the world other headaches are starting to appear for the social media giant. Alongside the ICO investigation and a grilling in the US, Australia has opened up its own probe into the saga. Australian Information Commissioner and acting Privacy Commissioner Angelene Falk has opened up an investigation after Facebook confirmed the information of over 300,000 Australian users may have been acquired and used without authorisation.

Back to the UK, details on who the other 29 organizations are unknown for the moment, though this should hardly be a surprising move from the ICO. Scandals are opportunities for politically charged public servants to make a mark in the history books, and Denham has seemingly spotted a potentially catastrophic one here. Widening the net and potentially uncovering more nefarious behaviour is a chance for the Commissioner to make a name for herself. Expect this to be a political circus for months.

Mr Burns takes over as Ofcom Chairman

UK telecoms regulator Ofcom has announced the appointment of Lord Burns as its next Chairman.

Burns will Dame Patricia Hodgson at the start of next year. Hodgson’s predecessor was Dame Colette Bow and the founding Chairman was Lord Currie of Marylebone. You get the picture. Burns has plenty of Chairmaning experience, having occupied that role at Channel 4 for a while, as well as Marks & Spencer, Santander UK, Welsh Water, the National Lottery Commission and The Royal Academy of Music.

“I am very pleased to have the opportunity to take on this role at an important time for Ofcom,” said Burns. “The UK communications sector provides essential services to everyone in the UK and is critical to the future success of the economy.”

“Lord Burns brings with him a wealth of experience and I am looking forward to working together as we deliver on Ofcom’s priorities,” said Sharon White, Ofcom CEO. “I am incredibly grateful to Dame Patricia Hodgson, who has provided expert stewardship to Ofcom as Chairman and Deputy Chairman over the past six years. Colleagues across Ofcom thank her for the contribution she’s made.”

It’s not immediately obvious what the Ofcom Chairman, who is appointed by the government, actually does, but it looks like nice work if you can get it. Burns will get £120 kpa for, hilariously given Ofcom’s current opposition to the term, ‘up to’ three days work per week. Excellent.

Taiwan fines Qualcomm $773 million for antitrust violations

US mobile chip giant Qualcomm has been the recipient of yet another fine for claimed anticompetitive business practices.

This time it’s Taiwan, where its Fair Trade Commission has concluded that Qualcomm abused its dominant position in the mobile chip market for at least seven years by refusing to provide products to companies that didn’t agree with its conditions. The ruling itself is currently only published in Taiwanese, so the specifics are sketchy, but it looks like Qualcomm’s dominance is being used against it.

This is part of a growing number of legal actions against Qualcomm for similar reasons. At the end of last year Korea fined Qualcomm $850 million for very similar reasons. Europe is still in the process of investigating the company, the implications of which could be far greater, and Apple is putting its considerable resources into attacking the entire premise behind Qualcomm’s licensing business model.

As with many tech-related antitrust actions, it’s clear that once a company achieves a certain level of market dominance a different set of rules apply to its behaviour. Terms and conditions that would be considered acceptable in a more competitive environment are considered illegal when used by a company that is considered to be dictating the market.

Qualcomm hadn’t returned a request for comment at time of writing but it’s reasonable to assume it will appeal. The even bigger issue at stake for Qualcomm is not just the growing cost of these fines but its very way of doing business. The licensing model means that Qualcomm doesn’t just get revenue from selling its chips (mainly modems), but also a fee for every product sold that contains them. There is a growing movement opposing that model which must have Qualcomm very concerned.