Kiwis encouraged to fight software prices

OLIVIA WANNAN
Last updated 11:52 24/06/2013
Software prices

PRICEBUSTERS: Price comparisons show New Zealanders are paying more for the same product.

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Up to double what people pay in the United States - that's what a downloader from Down Under might expect to pay for apps or software.

Even taking into account taxes and more stringent consumer warranty laws in countries like Australia and New Zealand, such markups have been labelled highway robbery.

The difference led Australian federal MP Ed Husic to launch an inquiry last year, with the final report due shortly. As New Zealand buyers are frequently stung by more than their Australian counterparts, we should really be paying attention, technology journalist Bill Bennett says.

"To some extent, we're just sitting back and taking it."

The parliamentary inquiry was even able to haul the heads of IT giants Apple, Adobe and Microsoft before them in March. "They really, really didn't want to go; in the end they had to be summoned. That alone tells you there's something going on."

The big three struggled to explain the need for their large markups, and were "evasive" in their answers, MPs said.

The real offenders were found to be Adobe and Microsoft, with Apple's products looking "not too bad" - yet that could all be spin, Bennett says.

"The explanation Apple gave to the Australian Government . . . was contradicted by what Apple said to the US Senate about why its prices are different in different countries."

Apple told the inquiry that negotiated contracts with movie studios, record labels and TV networks were to blame for price differences.

Adobe had since dropped its monthly subscriber prices in Australia.

It might be unfair and immoral, but is it legal? There are no laws against price gouging in New Zealand, and the Commerce Commission can only step in and regulate prices when there is little or no competition - for example, ensuring Wellington Airport, with no competitor, keeps its charges fair.

One potential solution, floated by Husic, is to ban "geo-blocking", a technique where a customer's web IP address is used to determine which region they came from.

Geo-blocking is why New Zealanders can not access overseas streaming sites like Netflix, Hulu and BBC iPlayer, protecting the rights of local broadcasters. Techniques to get around geo-blocking exist, but are legal grey areas in many countries.

Some have compared a geo-blocking ban to the online equivalent of New Zealand and Australia's legalisation of parallel importing, passed in the 1990s against discriminatory pricing policies by big multinationals lacking any real competition.

Although the internet has made the practice visible, small, isolated markets like New Zealand have long experienced price discrimination, Victoria University economist Toby Daglish says.

"A company . . . is thinking about what price they charge to get as good a deal as possible."

The New Zealand Institute for the Study of Competition and Regulation director says a smaller market with less competition leaves little incentive for such companies such as the IT giants to drop their prices.

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If they did, they would sell only a few more titles but would be reducing their profit in every sale.

When it comes to software, consumers are already used to such discrimination. The Microsoft suite might cost a private user $239, while their copy at work might cost $425 - the commercial version almost double the price, with only one extra program, Outlook.

But if a lack of competition is what led New Zealand to have such high pricing, it is competition that will sort things out, fellow economist Martin Berka says.

"Remember that you don't have to buy this stuff. You can easily find a substitute PDF viewer, operating system, or a word editor. Often, they are free."

Although outraged consumers might want an easy answer like a geo-blocking ban, or hope Microsoft, Adobe and Apple start to play nice, Dr Berka sees this as a pipe dream.

"Customers cannot hope to get a good deal. You need to fight for it, with your wallet."

Consumer Affairs Minister Craig Foss and Communications and IT Minister Amy Adams are following the inquiry and say they will work with the Australian officials on related issues coming out of the final report.

Not that anyone is calling for them to step up and hold a similar investigation - it would lack the punch of the Australian forum, and probably come to the same conclusions, Bennett says.

He hopes the recent publicity about the price discrimination might be enough to shame the major players into change, here as well as across the ditch.

"Just getting them to stand up and justify themselves - at the very least it would make them think about why they're doing this and would show consumers what's going on as well."

- The Dominion Post

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