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Expand the measurement of Competition to include impacts on innovation

  • To: cctc-draft-advice-letter@xxxxxxxxx
  • Subject: Expand the measurement of Competition to include impacts on innovation
  • From: Paul Twomey <paul.twomey@xxxxxxxxxxxxxxx>
  • Date: Sat, 25 Feb 2012 09:28:00 +1100

I congratulate the Consumer Trust Working Group on their important work.

I wish to make one observation, related particularly to the benefits and measurement of competition.

While I think the definition of competition offered by the Working Group is adequate, the measures that are then offered fail to reflect fully the benefits of competition.

The measures outlined on page 11 of the Draft Report focus on market share and price impacts.

But the economic literature on the benefits of competition also stresses its role in driving innovation and the emergence of improved or new products and services.

The US Federal Communications Commission outlines this economic analysis pithily:

"Free and open competition benefits individual consumers and the global community by ensuring lower prices, new and better products and services, and greater consumer choice than occurs under monopoly conditions. In an open market, producers compete to win customers by lowering prices, developing new services that best meet the needs of customers. A competitive market promotes innovation by rewarding producers that invent, develop, and introduce new and innovative products and production processes. By doing so, the wealth of the society as a whole is increased." /( Connecting the Globe: V. Competition in Telecommunications/ www.fcc.gov/connectglobe/sec5.html )

I strongly recommend that the Working Group develop some measures which focus on innovation and on new products or services.

In my mind, one example of the innovation benefits of the previous rounds of introducing new gTLDs is the new use of the DNS by .tel (although I recognize it was not initially welcomed by all members of the technical community).

While the TLD is controversial for other reasons, the representation and warranty provisions of registration under .xxx ( relating to invalidation if for use or promotion of certain "illegal purposes" ) may also be another example.

Limiting registration to ensure authoritative expression of identity, as is the case in .cat, is another.

These are benefits which may benefit various and smaller segments of the user base. This is a valid outcome of competition. Indeed, one of the positive outcomes of open, competitive markets is the focus of producers on the needs of more specific segments of the broader consumer base. Monopoly markets tend to talk of users; competitive markets tend to talk of market segments. The measurement of competition should also seek to capture that development.

I look forward to the Working Group considering this comment, and developing further measures of competition.

Your sincerely,


Dr Paul Twomey
Managing Director
Argo P@cific

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