Griffin on Tech: Epic app store win, low-cost fibre, and eRUC logistics

Epic Games won an epic victory in Australia this week against Apple and Google regarding how the tech giants operate their app stores and handle in-app payments.

The Federal Court found Apple and Google misused their market power to limit competition in the app store market, breaching section 46 of Australia’s Competition and Consumer Act. 

While the court found that the app store operators were not guilty of “unconscionable conduct”, a really bad thing in competition law, they were found to have created uncompetitive environments, charging excessively high commissions for app sales and in-app purchases, typically 15–30%, and preventing users and developers from accessing alternative app stores.

It opens the floodgates for class action lawsuits and at least two are already underway in Australia that could result in compensation for Epic games customers, particularly Fortnite gamers who likely paid higher fees for in-app purchase due to the cut Apple and Google take. Most importantly, Epic games will return to the Apple app store in Australia after a five year absence following the ruling.

New Zealand isn’t included in the judgement, but it signals that Australian courts are willing to challenge dominant platform business models and could pressure both companies to reform their global practices around app commissions and payment systems. That seems all but inevitable now as Apple faces criminal charges in the US for failing to follow a court order there relating to its app store. The digital walled gardens that are the Apple App and Google Play stores have created lucrative multi-billion dollar revenue streams for Apple and Google. 

They offer a secure way to download and update apps, so they are high-trust systems. But they are also a cosy duopoly in the app space, which results in us paying more for premium apps. Hopefully this judgement and others like it around the world will result in lower prices and more flexibility for making in-app purchases.

A digital lifeline for low-income households

Hats off to small internet providers Vetta Online and Prodigi, and ultrafast broadband network operator Chorus for offering low-cost fibre plans that could make a big impact on our lingering digital divide.

IT Professionals NZ’s Victoria MacLennan has put a huge amount of effort in over the years on behalf of the Digital Equity Coalition Aotearoa to push for more affordable broadband for low income households. The coalition released research last year showing that the manageable cost of internet in low-income communities was $7 per week. Using survey data and the Household Economic Survey (HES), DECA and Figure.NZ found that that 380,000 households in the lowest income bracket struggle to afford basic internet packages under the 2% affordability threshold, an international benchmark which holds that broadband should cost less than 2% of a household’s annual income.

Most fibre-based connections start at $60 a month. While there are cheaper plans, they are typically delivered via cell towers as a mobile data project, which is fine, but isn’t quite the same as using a fibre optic cable to connect to the internet. Taxpayers made a large contribution to building the UFB over a decade ago, and subsequent expansion now sees it reach 87%. It’s simply nonsensical not to use this network to allow the disadvantaged to access the internet at decent speeds in their homes.

Those two small South Island-based ISPs did a deal that saw Chorus lower the wholesale broadband connection rate it charges them. It means they are now offering, contract-free, a 100Mbps/20Mbps connection for $26, with a 500Mbps/100Mbps connection costing $30. Vetta’s scheme is called Local Linkup, while Prodigi’s is Whānau Link. That’s more realistic pricing, in line with DECA’s findings. The plans come with a Wifi-6 modem included, which also has parental controls and content filtering built in.

There are some pretty clear eligibility criteria, and the ISPs have avoided creating an administrative nightmare for themselves by basing eligibility mainly on the address finder broadband providers direct you to when looking to sign up to a plan. That address finder determines, crucially, whether you can access the Chorus UFB network, but also whether you live in Kianga Ora social housing or an eligible Tāmaki Regeneration address (a social housing scheme in Auckland). Other sign-up questions ask you whether you have a child in a school with an equity index of 490 or higher, and whether you have a community card. 

There will be edge cases which the ISPs are working with community groups to deal with, but those criteria will quickly determine eligibility for the bulk of potential subscribers. Vetta Online co-founder Shaun Fisher told me that it’s a proof of concept project that will run through to September 30 at which time the ISPs and Chorus will evaluate whether to continue with it. But he said there’d been a “surge” in sign-ups for the nationally available broadband plans already, so it won’t be a case of lack of demand that stops it. Fisher credits Chorus CEO Mark Aue, who assumed the top job last April, with giving the project momentum.

Shaun said a key aspect of the scheme is working with community groups to support users of the plans, because there won’t be full technical support on offer from the ISPs, which you wouldn’t expect at that price anyway. 

Spark, with its Skinny Jump mobile data service available from $5 a month for 35GB of data, deserves credit for attempting to fill the broadband affordability gap in recent years. Some mobile virtual network operators now offer sharp bulk data deals which make access more affordable. But they are dependent on cell towers to connect people, where operators can avoid paying the wholesale fee to Chorus.

This is a step in the right direction after the plug was pulled on thousands of households that had received subsidised broadband connections through a Ministry of Education scheme set-up during the pandemic. Still, the fact remains that $26 a month will be the difference for some households between putting food on the table and the kids going hungry, so we’ve a lot more work to do yet to close the digital divide. 

The nuts and bolts of eRUC charging

Within a couple of years, it won’t just be EV, heavy vehicle and diesel vehicle owners that will be required to pay road user charges, we’ll all have to make the payments. It’s a move the government says is necessary as less money is collected in government levies on petrol sales as more people switch to electric, and efficient diesel engines.

Fair enough, but it will create an administrative headache that the government will be leaning heavily on technology to take care of. Eroad is a fleet monitoring company that has smart technology that can do the job, but how much will it cost? Eroad’s CEO co-chief executive Mark Hein told the Herald this week that it won’t require a costly bolt-on box to be installed in every petrol car. For newer cars that have eSIMs involved, the car can talk to a smartphone to get the mileage reading - and flag when a car has travelled through a toll gate. 

For older vehicles, a $40 RFID smart tag can be added to the windshield. But that would require some sort of infrastructure to track a vehicle's location, unless GPS can be employed to do so, maybe via a smartphone. This is an ambitious plan that needs to be carefully worked through, particularly as it has implications for privacy. It’s great that we have strong local players with experience in this space in Eroad and Teletrac Navman.

But no country has a national eRUC system for all vehicles. Our other major transport project, the national ticketing scheme, is behind schedule and over budget. Here’s hoping we get this right as we all know who will wear the cost if it goes off course.

Photo credit: Vlad Gorshkov/Unsplash