The Impact of the Australian Convergence Review
On 30 April 2012, the Final Report of the Australian Convergence Review Committee was handed down. The Review is one of the most ambitious and far reaching convergence reviews yet undertaken by any industrialised country in the world.
The Report proposes substantive changes to Australia's media, telecommunications, Internet, and content regulatory landscape. For example:
- The Final Report proposes substantive amendments to Australia's media ownership and control rules.
- The Final Report proposes the replacement of the Australian Media and Communications Authority (ACMA) with a new 'Communications Regulator' that has powers and functions rivalling those of the Australian Competition and Consumer Commission (ACCC).
- The Report proposes the repeal of telecommunications, broadcasting and radiocommunications legislation and their replacement with a single Communications Act.
At a seminar in Sydney on 10 May 2012, Dr Martyn Taylor and Nick Abrahams provided an overview of the Final Report and its key recommendations. We also identified some of the practical implications for media, Internet and telecoms businesses, including potential M&A opportunities. We set out below a link to our slide pack from our seminar for those of you that are interested. The slide pack includes some useful diagrams to illustrate various concepts identified in the Final Report.
Our slide pack may be found here.
The following article was prepared by Dr Martyn Taylor for www.onlineopinon.com.au, Australia's e-journal of social and policy debate. The article briefly summarises the context to the Final Report and its key recommendations.
The Convergence Review: Regulation of media and Internet content
On 30 April 2012, the Final Report of the Australian Convergence Review Committee was handed down. The Report recommends substantive changes to Australia's media, telecommunications, Internet, and content regulatory landscape. The Review is one of the most far-reaching convergence reviews yet undertaken by any country in the world.
The context to the review is rapid technological innovation. The digitisation of content has enabled its replication and communication in exponential volume and variety. The Internet has enabled standardisation of content delivery. Superfast broadband Internet access is ensuring immediate delivery. Fantastically powerful computers are evolving in ever more convenient devices. Software applications in these devices are delivering content in a form that is highly refined for consumer needs, providing a rich interactive experience.
Convergence is a result of such innovation. Historically, each content type had a dedicated delivery platform into the home, including telecommunications via copper wire, pay television via hybrid fibre coaxial cable, and news via traditional print media. Innovation has now conflated these platforms. Any content may now be digitised and delivered into the home using a smart device on any platform. Business models have evolved as a result. Traditional business models are being supplanted and substantial market entry is occurring. Market boundaries are blurring. As regulation is still tailored for historic platforms and markets, the convergence of these platforms and markets is causing an accelerating regulatory disconnect.
Against this context, the task of the Convergence Review Committee was ambitious. The Committee sought to identify key policy principles to underpin a new regulatory framework. This framework would cater for continued innovation and convergence in the coming years. A clear challenge for the Committee was to identify simple concepts that could apply to a complex and dynamic environment.
The seven most significant recommendations in the Final Report of the Convergence Review Committee are summarised briefly below.
1. Content service enterprises
First, the Report has recommended a recalibration of regulation.
Broadcasting licences would be abolished. Content regulation would be directed at significant enterprises that provide professional content (in their control) to Australian consumers, to be known as 'content service enterprises' (CSE). Indicative thresholds for a CSE are suggested at 500,000 Australian consumers per month and $50 million in Australian-sourced annual revenue from that content, independent of the underlying platform and including Internet delivery.
These thresholds are controversial. On the one hand they have been criticised as arbitrarily imposing a disproportionate regulatory burden on 'old media' companies. On the other hand, they have been criticised as potentially subjecting Internet content delivery to levels of regulation that exceed those in other jurisdictions.
2. Media ownership rules
Second, the Report recommends the retention but refinement of Australia's media ownership rules.
New rules would be based on a 'minimum number of owners', so that a minimum number of CSE would provide news and commentary in each local market. The minimum number would be determined with regard to historic rules and market concentration.
The use of a market concept may again blur platform-based distinctions, hence newspapers, subscription TV and Internet would potentially be covered.
Exemptions from this rule would be provided in exceptional circumstances in the public benefit.
3. Communications regulator
Third, the Report recommends that the Australian Communications and Media Authority (ACMA) would be replaced by a new 'Communications Regulator' (CR).
The CR would have enhanced powers in relation to content regulation, potentially rivalling those of the Australian Competition and Consumer Commission (ACCC). The CR would regulate media mergers and set content rules and standards. However, it would not regulate news and commentary, except for serious breaches of industry codes.
While the Report highlights that concurrent jurisdiction between regulators is a feature of some key foreign jurisdictions, Australia's approach to date has been to concentrate competition regulatory functions within the ACCC. If the recommendations were adopted, this would represent a material change in Australian competition policy.
4. Minimum content standards
Fourth, the Report recommends refinements to Australia's minimum standards for content.
The National Classification Framework would be updated to regulate all offensive and inappropriate content, both offline and online.
The Australian Press Council would be replaced by a self-regulatory 'News Standards Body' to regulate journalistic content.
The Committee did not support the Finkelstein Media Inquiry Report recommendation that a Governmental body should hold journalists to account, instead describing Government intervention as a last resort if self-regulatory mechanisms failed. However, the Committee did recommend that such self-regulation should apply to all delivery platforms, including the Internet.
5. Australian and local content and community broadcasting
Fifth, the Report recommends substantive changes to the rules relating to Australian television content.
An important proposal is the removal of Australian content quotas in television broadcasting and their replacement with direct funding of Australian content generation.
Refinements were also recommended to the rules for Australian radio content, local content and the maintenance of the ABC and SBS as community broadcasters (including the respective extension of their charters to cover their online activities).
6. Broadcasting spectrum
Sixth, the Report proposes that entitlements to broadcasting spectrum are harmonised under the existing regime for radiofrequency spectrum. This change is overdue and should be supported by the industry.
However, the Report highlights that the Government will need to ensure that the commercial allocation of broadcasting spectrum does not adversely impact the wider public interest.
The Report also suggests that radiocommunications licence conditions could be the new means to regulate free-to-air broadcasters in the absence of broadcasting licences.
7. New Communications Act
Finally, the Report recommends that existing Australian broadcasting, telecommunications and radiocommunications legislation should be harmonised and consolidated into a single Communications Act.
The new regulatory structure would seek to ensure a consistent approach to regulation across each of the four key layers of the content delivery value chain, namely infrastructure, carriage/delivery, applications/software, and content supply.
Political context and Government reaction
The net effect of these recommendations is that Australia's regulatory framework would be updated to regulate content on a technology-neutral basis, including content supplied in an online environment. While there is a lot of substantive detail in the Final Report as to how this could occur, much practical detail remains to be resolved.
Some of the recommendations in the Report are sensible and will likely guide the future evolution of Australian law and policy. Some of the recommendations may require substantive further work and refinement, particularly where they diverge from international practice. Some of the recommendations are controversial and are likely to generate significant debate.
The extent to which the Report's recommendations will be adopted by Government will partly depend on the Government's strategic positioning for the next election. The stakeholders most affected by the Report are those with the greatest media clout. The Government will presumably wish to avoid walking a political tightrope over a chasm of media dissent.
A high wire political act with gymnastic skill is no easy feat for a minority Government, let alone one buffeted by strong electoral headwinds. We await the Government's response with interest.
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