Governing in the internet age

The arrival of the internet 30 years ago has disrupted business models and sparked concerns about online safety. What is the role of government in regulating this vast frontier? By Paul Fletcher.

The following is a speech delivered by the Hon Paul Fletcher at the National Press Club on 06 October.

Introduction

It is a pleasure to speak once again at the National Press Club —albeit in the rather unusual circumstances dictated by COVID.

When I was asked to write a short book for Monash University Publishing’s In the National Interest series, I decided I wanted to say something about “governing in the internet age.”

Twenty-five years ago, as the internet was starting to transform from an academic and research tool into a mass market consumer phenomenon, I was an adviser to then-Minister for Communications Richard Alston. At that time the standard residential internet service was 56 kilobits per second; today a typical NBN service is about one thousand times as fast.

In that role, subsequently as an executive at Optus, in the work I did as a backbench MP, and today as Minister for Communications, I have been lucky to have a ringside seat to consider these issues. So I decided to use this mini-book to take a slightly more reflective look at what the internet means for governments and the task of governing.

I argue in the book that the internet’s remarkable growth, after it arrived in the nineties, caught governments by surprise. But 30 years on, governments have a clearer idea of how to deploy the internet’s capacities to the benefit of citizens — and how to regulate for the risks and dangers it can bring.

Of course there remains much work to do, both in Australia and around the world. But I would argue that our progress on these issues compares pretty well globally, with a good example being the News Media Bargaining Code legislated earlier this year, as I will touch on a bit later.

I want to start, though, by sketching out the set of changes which has brought us the internet, and some implications of those changes.  Next I look at three case studies of the internet and public policy; and last I will suggest some principles for governing in the internet age.

What, Exactly, Has Changed

But first: what, exactly, has the internet changed?

Multiple technological breakthroughs underpinned the internet coming into widespread use. Amongst the most important were the development of packet switching in the 60s; in the 80s Tim Berners-Lee coming up with a way to connect multiple computers in the ‘world wide web’; and the Netscape browser in the 90s that meant the web could be used without needing to learn complicated computer code.

This came at the same time as the rise of personal computing. The IBM PC came on the market in 1981 – its operating system developed by a young programming genius called Bill Gates – and over the next decade personal computers became both faster, and smaller. Soon, laptop computers were small enough to carry into meetings. Then modems came along, meaning you could take your computer with you and still remain connected to your office network.

Over the same period, deregulation, privatisation and competition came to telecommunications in many countries, including Australia, where historically there had been a government owned monopoly telephone company. This meant it was not just technically possible to send data between computers spread around the world; thanks to sharp price drops and new services from the telcos, it was economically possible for companies, and even individuals, to do so.

The numbers show just how sharply the internet has grown. In 1996 there were 286,000 households in Australia connected to the internet. By 2000 it was 2.3 million. By 2016 it was 88 per cent of the population. 

One other development stands out: the arrival of the mobile phone and subsequently the smartphone. Thirty years ago mobile phones were an expensive luxury few could afford: there was roughly one mobile phone per one hundred Australians. 

Today mobile phones are ubiquitous. And the technology they embody has advanced relentlessly over that 30 years. Text messaging took off in 1999 – when cross-platform SMS came along – and before long it markedly changed social behaviour. 

3G launched early this century. Now your phone connected you directly to the exploding universe of information and opportunity on the internet.

Then 2007 brought us the iPhone: Apple took existing technologies, including 3G, and combined them in a well-designed, user-friendly package. Before too long most people were carrying a device that, amongst other things, let them take photos and videos, and send them instantaneously to all the people they knew and many more they did not. I will come back to some of the implications of this. 

In Governing in the Internet Age I argue, uncontroversially I think, that the combined effect of these changes has been a substantial net economic and social positive - allowing people to work, connect and imagine in new ways.

For example, the internet has been a boon to consumers, bringing extraordinary choice and competition to sector after sector. Price-comparison sites make it much easier to avoid being ripped off, and this has transformed transactions, from the trivial to the life-defining: remember how time-consuming it once was to compare interest-rates when seeking a home loan?

Not too long ago Australian consumers had little alternative to buying from local merchants. Today you can choose from sellers all around the world. And for products and services that can be both purchased and consumed online — music, books, movies, financial services — the benefits are inestimable. Has there ever been a comparable time in human history to be a music lover or a book lover or a movie aficionado?

For all the benefits it brings to its users young and old, the internet also brings new risks. Governments have a duty to keep their citizens safe, and this has meant there is new work for us to do in managing online harms, whether it’s addressing the problem of trolls spewing racism and hatred, or working to protect citizens from online scams.

A country’s government sets the laws for all those wanting to do business within its jurisdiction. But today, an internet-based business can sell goods and services in very large numbers all around the world. It is not straightforward for a national government to assert its sovereignty and legal power over a global internet company that may have no physical assets in that country, and no employees there.

So I want to turn now to some case studies of how the internet has created new challenges in public policy, and how governments are responding.

The Internet and Public Policy

Content regulation

Let me start with an area where government has long been an active player: the regulation of content. Whether it is the text of books or newspapers, or what is broadcast on radio and television, governments have always imposed limits. 

Defamation law stops you from undue public criticism of others. Material that is extremely violent or sexually explicit is prevented from being broadcast. If you print a work without the agreement of the rights holder you breach copyright and can be sued. There are laws restricting content that instructs people in how to make a chemical weapon or a nuclear bomb or that reveals secrets which could endanger national security.

But enforcing such laws is now much more complicated in an online world where just about anybody can make a statement, or release an image, that can potentially reach billions of people.

There is no better example than the significant social problem of so called ‘revenge porn’ – although ‘image based abuse’ is a much better term, not least because it removes the entirely unjustified implication that the victim may have done something to deserve this gross violation of her privacy.

I say ‘her’ because the evidence suggests that it is overwhelmingly women and girls who are the victims. Extraordinarily, almost one quarter of Australian women aged between 18 and 24 have had a nude or sexual image of them posted online without their consent.

Even 20 years ago this just could not have happened. But today almost all of us carry a device that can take high resolution photos and videos. That device is connected to the internet, meaning an image can be uploaded and viewed, instantly, by a virtually unlimited audience.

And finally, these technological developments have coincided with changing social behaviours, so that it is now common for those in sexual relationships to exchange intimate photographs. Of course this change in behaviour is also a consequence of the technology: in a world where your nude selfie would be seen by the local chemist when you picked up your photos from being developed, unsurprisingly people in the main did not take or share such photos. 

The implications of the internet for content regulation have been profound. Traditionally, governments were dealing with a small number of organisations that were well resourced, incentivised to behave lawfully, and operating entirely within their own borders—essentially, media organisations.

Today, by contrast, content can be posted to the internet by anybody, anywhere; it is then visible to potentially billions of people. And unlike traditional media organisations, online media platforms do not commission, curate or check the content on their platforms, at least not in any remotely satisfactory way. Image-based abuse is just one of numerous problems that have resulted.

Just in the past week Facebook has been hauled before a US congressional committee, examining the implications of its business model for user safety. Here in Australia, while we very much face the same challenges, our regulatory framework on these issues is significantly more developed than in the US. 

In 2015 our Liberal National Government legislated to establish an office, then called the Children’s eSafety Commissioner, and gave it statutory powers to deal with damaging online content targeted at an Australian child. So far nearly 3,400 Australian children have been assisted by the scheme.

In 2017 we expanded the office to support all Australians — it is now the eSafety Commissioner — and gave it new powers. In 2018 we added laws dealing with the unauthorised sharing of intimate images. Since then, about 6,700 complaints of image-based abuse have been addressed.

We consistently hear that what most victims want — whether they have faced image-based abuse, cyberbullying, or other similar harms — is for the harmful material to be removed from the internet as quickly as possible, so their humiliation can end. 

We are responding to this feedback with our new Online Safety Act, which passed the Parliament earlier this year after extensive consultation. It will strengthen the existing measures, for example by reducing to 24 hours the time period within which an online platform must act on a takedown notice from the eSafety Commissioner. It will also add a new, world-leading power for eSafety to issue a takedown notice directed at serious online abuse of an adult.

These are very important public safety measures – and particularly important for women’s safety, as, sadly, women are more likely than men to be the victims of all kinds of abuse online. I want to thank the Labor Party for joining with us to support these important measures, and express my astonishment that the Greens Party actively opposed this law that amongst other things is designed to make the internet a safer place for Australian women. 

Online Platforms and Competition: the News Media Bargaining Code

I want to turn next to the profound issues the internet raises when it comes to competition policy. Economic activity over the internet has evolved into a market structure where, in sector after sector, there are a small number of extremely large, globally dominant businesses that enjoy apparently ever-increasing returns to scale that make it impossible for competitors to grow in relative size. 

Consider the dominance of Facebook and Google. They capture an enormous share of global digital advertising and the revenue it brings. Their dominance in Australia is highlighted in the recently released report of the ACCC inquiry into ‘adtech’. 

In the Australian market Facebook and Google compete with Australian media businesses such NewsCorp, Nine Entertainment, Seven West and Australian Community Media. Yet the content which Facebook and Google use to attract to their platforms – and which they very successfully monetise with advertising revenue – comes from many places, including those very media businesses with which they compete. 

Whether Facebook and Google should pay for that content, and on what terms, is a very important competition policy question – and in turn of great importance for the sustainability and diversity of the Australian media sector. 

The Australian Government began working on these issues in 2018, when the ACCC started its inquiry into the digital platforms, at the direction of then-Treasurer Scott Morrison. But most Australians really only became aware of how high the stakes were when, on 18 February this year, we woke to discover that the Facebook pages of many Australian organisations were off the air.

The Sydney Morning Herald, Nine News, the ABC and The Australian had all been shut down. So too had the Facebook pages of fire, police, ambulance and other vital services, and of many small online enterprises with no connection to traditional media businesses – such as North Shore Mums, a thriving online business in my northern Sydney electorate of Bradfield.

Australians were shocked to learn this had been done by Facebook itself, as a tactic designed to dissuade the Morrison Government from introducing our proposed News Media Bargaining Code. 

The tactic didn’t work. Within days, and following intense negotiations between Treasurer Josh Frydenberg and Mark Zuckerberg, Facebook restored the pages. The legislation passed the Senate. And since then, Google has entered into commercial agreements with 14 news organisations, and Facebook with 11.

The Code is working as intended. And the payments received by these news organisations will contribute to sustaining public interest journalism in Australia.

Competition and the SVODs

The list of businesses disrupted by internet-based competitors is very long: from Kodak to Encyclopedia Britannica to newspaper classified ads to the impact of Uber on taxis and AirB&B on hotels and TripAdvisor on travel agents and Amazon on book stores and department stores.

What is remarkable is the successive waves of innovation and disruption. Encyclopedias were early casualties; but the devastating impact of rideshare models on taxis came later, once smart phones were widely owned.

Streaming video on demand, or SVOD, came later again – it depended on the widespread availability of fixed broadband connections that could support high resolution video. Australians have taken up SVOD – from providers like Amazon, Disney+, Foxtel, Netflix and Stan – enthusiastically, and of course the pandemic has supercharged the category.

As recently as 2014, just one per cent of Australians subscribed to a streaming service. Today, according to Deloitte’s latest media consumer survey, four out of five Australian households have at least one paid digital entertainment subscription—and most have more than two. Seventy per cent of Australians now subscribe to at least one SVOD service.

This is yet another example of a rapid internet-driven transformation that raises important policy questions. 

What does it mean for fair competition if two sets of businesses – traditional free to air and pay television on the one hand and the streaming video on demand businesses on the other – compete for eyeballs and revenue from Australian viewers, but one set has onerous regulatory obligations to produce Australian content and the other does not? 

What does it mean for our cultural policy objective of Australian audiences being able to see Australian content on their screens? 

What does it mean for the Australian screen production sector? And as the streaming sector demands ever more content to show to global audiences, how can we make sure Australian producers are getting their fair share in this market?

As a first step, last year I requested Australia’s four largest SVODs to provide regular reports to government on their investment in Australian content. Based on the first reports received, we now know that Amazon Prime, Disney, Netflix and Stan between them spent over $150 million on Australian programs in 2019-20.

But more intervention may be required. The Green Paper we released late last year proposed a formal Australian content spend requirement on the global streaming services. Right now we are examining the responses to this proposal received through our consultation process.

Principles for Government

I have argued that the growth of the internet has meant major changes for public policy, and pointed to several areas where the Morrison Government is responding. But of course the impact is extremely broad, across almost every aspect of the work of government. 

In my little book, I therefore list some principles which I think can guide governments in the internet age. In this last part of my speech I want briefly to run through them.

The first principle for government is to use the internet to serve your citizens better. The private sector has shown the way. Frankly, for a period government was lagging well behind the banks, the travel industry and many other sectors in using the internet to deliver a more convenient user experience. But through agencies like Service NSW and Services Australia, that is now changing. 

Why make people queue? Why require paper documents? Can people have their licence – or evidence of being vaccinated – on their smartphone?  What other services could be delivered over a smartphone? How can citizens efficiently establish their identity digitally?  How much time would this save in opening a bank account or getting on the electoral roll or getting a passport?

This is fruitful territory, and Ministers like Stuart Robert at the Commonwealth level and Victor Dominello in the NSW Government are passionate about using technology to serve citizens better.  Consider for example the process of applying for and receiving government benefits during COVID: over 90 per cent of these claims are being made online via MyGov, and in some cases the first payment has been made to bank accounts within hours. None of this would have been possible in a pre-internet world.

A second principle is that the internet brings greater transparency, visibility and scrutiny to government – as it does to every other institution in our society. Sometimes the tendency can be to resist such scrutiny; the better response I argue is using the internet to make all kinds of information — from on-time running data for public transport, to the population numbers of endangered species, to “dashboards” that track the progress in government spending programs — accessible to citizens. Again, the pandemic has seen many examples of this, such as the daily reporting of vaccine numbers on the Commonwealth Health Department website. 

In my view, a third principle is that the internet simply reinforces the existing imperative for a country like Australia to foster an open, globally competitive economy. Of course, as Paul Kelly has argued, this has been the “settlement” governing Australian political and economic affairs since the 1980s. But when ordinary people can routinely order goods and services online from all around the world, it makes the notion of an open economy vastly more real and tangible for most of us. 

My fourth principle is about regulating online activity. Some argue the internet cannot be regulated and governments should not try. I disagree. Our Government strongly believes that the rule of law needs to apply to human interactions in the digital town square just as it does in the physical town square. 

In my little book, I cite some of the arguments regularly heard from the digital giants in resisting regulation proposed by the Australian government. “Your country will become a technological backwater,” we are told. “Our business model does not involve any control of the material posted on our site,” we are told.

I accept that governments need to think carefully about how to design regulation in this new world. But that does not mean governments cannot or should not regulate.

Which brings me to the final principle, in many ways underpinning all of the others: governments should not give up their sovereignty. Yes, the digital behemoths will make all kinds of claims and threats when you impose the normal laws that apply to other businesses in your jurisdiction upon them. But ultimately, as our experience with the News Media Bargaining Code has shown, the global digital giants will accept the rule of law if they are doing business in Australia.

Conclusion

I conclude by noting that my remarks today are intended to summarise the arguments in my mini-book about governing in the internet age. This is necessarily an exercise in trying to identify some longer term trends, as distinct from the issues of the day.

But it is no coincidence that I have instanced several examples drawn from our current policy agenda – from online safety to competition regulation in digital media and digital advertising, to cultural and economic policy considerations triggered by streaming video on demand services.

And there are many other areas there has not been time to touch on. I could have spoken about cybersecurity and cybercrime; industry policy to boost our tech sector; online privacy; the consumer data right; rolling out the NBN and 5G networks; blockchain and currency; digital health; and more besides. Simply listing some of the issues makes the point – across the entire work of government, responding to and taking advantage of the capacities of the internet is a very big part of what we are doing.

At least some of this work responds to dangers and threats. That is inevitable given the responsibilities of government. But I believe strongly that the positives of the internet and technological change greatly exceed the negatives. I would argue that our enthusiastic take up of technology in Australia – we are a nation of early adopters – suggests that most Australians have a similar view. 

As I say in the book, my conclusion is an optimistic one. I believe we can identify and manage the risks posed by the internet; and at the same time governments should have a focus on how to take advantage of all the internet can do, to deliver better lives for citizens.

That is a big part of the work of every government – and it is certainly a focus for the Morrison Government. 

Paul Fletcher is federal Minister for Communications, Urban Infrastructure, Cities, and the Arts. This is a transcript of a speech delivered at the National Press Club on 06 October.