Australia: Convergence Review Committee's final report released

Last Updated: 8 May 2012
Article by Cameron Abbott, James Arnott, Kate Marshall, Darryl Slabe and Mark Feetham

The Convergence Review Committee, established early last year, has been tasked with examining the operation of media and communications regulation in Australia and assessing its effectiveness in achieving appropriate policy objectives. It has concentrated on promoting innovation and simplifying the current regime. Regulation based on 1990s services cannot take into account the evolution of emerging technologies and increasing broadband speeds. In a previous eAlert!, we commented on the Committee's interim report, which was handed down in December 2011.

Senator Stephen Conroy (Minister for Broadband, Communications and the Digital Economy) released the Committee's final report on 30 April 2012.

The report can be found at

Implications of the final report

The final report proposes wholesale changes to the media and broadcasting regulatory environment. It encapsulates the theme of the interim report, advocating a continued shift away from the current regulatory regime to a principle-based system.

The recommendations in the report could have a significant impact on traditional media organisations, and include changes to media ownership regulations and the establishment of new bodies to regulate the industry.

Further, the Committee proposes a framework that would regulate enterprises based on their size and scope, rather than how they deliver content, which could have implications for content providers that have escaped attention under the current regime. The proposed content standard and local content regulations may affect internet service providers (ISPs) and telecommunications carriers that generate and distribute a large amount of content online.

At this stage, the proposals contained in the final report are in their infancy and the Federal Government has not yet provided its response. However, the recommendations, if implemented, have the potential to impact on a large variety of businesses that are involved in the generation or distribution of content (and not just traditional media organisations).

Recommendations in the final report

The Committee recommends that significant media enterprises (including global enterprises), which meet certain criteria will be defined as "content service enterprises" and will be subject to regulation in three main areas where continued government regulation is in the public interest:

  • media ownership (to ensure that no media operator has a dominant influence in a local market)
  • media content standards across all platforms (to take into account the way contemporary Australians access content)
  • production and distribution of Australian local content (to ensure that Australian voices have a place in Australian media).

The Committee's concept of content service enterprises is broader than the traditional concept of a "broadcasting service", and will potentially capture organisations that only operate in an online environment. This could include telecommunications carriers and ISPs that generate and distribute content online. However, the Committee noted that only a relatively small number of organisations will qualify as content service enterprises. The detail around the test to establish what constitutes a "content service enterprise" (which will ultimately determine the type of businesses that would be caught by the proposed regulations) is yet to be developed.

The committee further recommends the establishment of two bodies to administer the new regulatory regime:

  • a statutory communications regulator to replace the Australian Communications and Media Authority (ACMA)
  • an industry-led body to oversee journalistic standards which will ultimately absorb the Australian Press Council's powers and the ACMA's responsibilities in relation to news and commentary.

The recommendations in the final report are summarised below.

Media ownership

The Committee asserts that rules preventing the undue concentration of ownership of familiar news outlets remain an important factor in maintaining diversity of news and commentary. It advocates for the dissolution of current media ownership and control rules (including the "75% audience reach" rule) and replacing them with a "minimum number of owners" rule.

A further recommendation is a "public interest test" to ensure media diversity is considered where content service enterprises with significant national influence are involved in mergers or acquisitions. This concept has been criticised as vague by media companies, who also argue that the Australian Competition and Consumer Commission (ACCC) has all the necessary powers to ensure anti-monopoly and competition issues are protected. Whether these proposals will achieve the report's aim of reducing regulation remains to be seen.

Media content standards across all platforms

The Committee acknowledges that there should be a flexible and technology-neutral approach to content regulation. The Committee broadly accepts recommendations contained in a recent Australian Law Reform Commission (ALRC) report that the common classification scheme should apply to media content across all platforms, including online.

Production and distribution of Australian content

The Committee proposes a number of significant changes to the regulation of the production and distribution of Australian content, including:

  • the replacement of broadcast quota requirements for local content with expenditure requirements
  • a "uniform content scheme", which will require qualifying content service enterprises with significant revenues from television-like content to invest a percentage of their revenue in Australian drama, documentary and children's programs, or alternatively in a new "converged content production fund"
  • an increase in Australian sub-quota content obligations for drama, documentary and children's content for both commercial free-to-air broadcasters and subscription television broadcasters
  • raising the producer offset from 20% to 40% for television and drama
  • the introduction of an interactive entertainment offset.

Managing the broadcasting spectrum

The Committee recommends a market-based approach to pricing the broadcasting spectrum and abolishing the current licence-fee system (where free-to-air broadcasters are charged a licence fee calculated as a percentage of revenues).

The Committee recommends that existing holders of commercial broadcasting licences should be issued with spectrum licences enabling the current broadcasters to continue supplying their existing services.

Communications regulator

According to the final report, the communications regulator would operate at arm's length from government direction. It would incorporate a Classification Board (as recommended by the ALRC's National Classification Scheme review).

The communications regulator would complement the ACCC, and be responsible for:

  • defining thresholds for content service enterprises
  • administering the "minimum number of owners" rule
  • administering the public interest test
  • ensuring that Australian and local content obligations are applied.

Industry-led regulator

The establishment of a publicly funded statutory authority to look at news and commentary was proposed by the Finkelstein review of press regulationą, which was made public last month, and remains an option for the government. However, the Committee recommends that content service enterprises be required to become members of, and provide funding for, an industry-led body, with powers to:

  • promote new standards
  • adjudicate complaints
  • provide timely remedies

across all platforms.

Next steps

The Committee has recommended a staged approach to implementation. The Federal Government's response to the final report will likely be released later this year. Content generators and distributors across all platforms should stay tuned. We will keep you updated as new developments come to light.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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