On 30 April 2012, The Australian Government publicly released the Final Report of the Convergence Review (the Review). After considering in excess of 340 detailed submissions, participating in public forums across Australia and meeting with media industry representatives, the Convergence Review Committee has proposed fundamental changes to how the Australian media is regulated as it moves further into the digital age – the so called age of convergence.

The Review recognises that the current media regulatory regime is outdated and no longer able to meet the demands of advancing technology as well as serving the demands of the media consuming Australian public.

The Convergence Review Committee proposes 31 recommendations for reform. Whilst it claims to have approached the task from the standpoint that regulation should have a "light touch" and its default position should be "deregulatory", the implications of the proposed reforms for the media industry and consumers alike are vast.

The Review has attracted the ire of several major Australian media providers who have expressed their disappointment at several of the recommendations for reform set out below. Common among the criticisms are that the Review:

  1. Substitutes one form of regulation with another, further layer which will result in greater compliance costs with no perceived benefit;
  2. Uses vague concepts such as the test for "public interest";
  3. Has avoided grappling with mega online content providers such as Google and Facebook;
  4. Threatens to erode Australia's independent media by recommending a partially government funded content regulator with broad enforcement powers.

Correspondingly, the Review has received a positive response amongst other interested parties, such as the Screen Producers Association, particularly on issues such as increased Australian content requirements.

The government's response to the Review is unknown. Senator Conroy is presently considering the recommendations which are summarised below.

A new framework

The Review considers that a new policy framework is required to best approach and adapt to the converged media landscape and the continual change that will occur to the way Australians access and use the media. The Review argues that the framework must necessarily be technology neutral, not only to acknowledge the changing way media offerings are consumed but also to allow the framework the flexibility to adapt to new and yet to emerge services regardless of their platform or technology.

At the centre of the new framework is the concept of a Content Service Enterprise (CSE). The Review proposes that major media organisations would be classed as CSEs. These enterprises would be identified based on the scale and scope of their operations rather than how they deliver their content, whether it be TV, radio, newspaper or online. The Review estimates that using the threshold level of revenue of $50M a year from Australian sourced content and audience users of 500,000 per month there would be approximately 15 CSEs. These would include the three free to air TV networks, Fairfax Media, Foxtel, News Limited, Macquarie Radio and DMG Radio. However, Google, Telstra, Bigpond and Apple would not be considered a CSE.

In this respect, ironically it seems that the Review's stated aim of platform neutrality would apply to traditional media providers which publish across multiple platforms but would not apply to traditional online content providers.

The regulation proposed by the Review targets the operation of the CSE, most importantly in the following areas:

  1. Proposed changes in ownership;
  2. Content standards; and
  3. Contribution to the availability of Australian content.

The Review proposes to replace the current media regulating authority, the Australian Communications and Media Authority with the following two bodies:

  1. A statutory based "communications regulator": this body would assume all the current functions of the ACMA (apart from content) and would administer the new national classification scheme as proposed by the recent ALRC review.
  2. An industry-led "news standards" body to oversee journalistic standards for news and commentary across all media platforms to promote "fairness, accuracy and transparency". Whilst membership will not be mandatory for non-CSEs, it is proposed that all media organisations (big and small) be encouraged, including by the threat of loss of media privileges afforded under the Competition and Consumer Act and the Privacy Act.

Within the new proposed framework, the Review recommended the following further reforms:

Media ownership

Central to the reform of media ownership, the Review proposes that the current framework whereby ownership and diversity rules are based on broadcast licences (which were based on the traditional distinction between electronic and print media) be abandoned and replaced with a platform neutral "public interest" test. Consistent with this view, it is proposed that the public interest test be developed to ensure that diversity considerations are assessed where changes in control of CSEs 'of national significance' are proposed. The test, outlined in the Review, should be focussed on diversity of content at a national level.

The Review recommends that despite the changes within the media and communications market in the last decade, the minimum ownership level in local markets should be retained to ensure that no single operator or small group of operators has a dominant influence in a local market for news and commentary. Whilst renaming this rule the 'minimum number of owners rule', the rule would be platform neutral and extend to all CSEs, thus having the potential to capture some larger media operators for the first time.

The Review also proposes that there is merit for different quantitative limits to be set for metropolitan and regional markets as part of the new 'minimum number of owners rule'.

Media ownership would be determined by the new communications regulator (in conjunction with the ACCC), which would have the power to define local markets and exempt CSEs from the 'minimum number of owners rule' in any particular market on the basis of a public benefit exemption.

Content-related competition issues

The Review believes that in order to encourage innovation and competition in the media industry, the new communications regulator should be empowered to initiate investigations concerning competition issues relating to content. The Review states that the ACCC's current powers are too narrowly focussed to deal effectively with content-related issues, in particular, exclusive content rights, bundling, network neutrality and metering.

The Review avoids making any recommendations in response to submissions concerning the issue of retransmission of free to air broadcasts, except to refer the issue to the upcoming ALRC review into the operation of copyright in the digital environment.

Content standards

Central to the Review's recommendations is the belief that communications and media services should reflect Australian community standards and views. The Review believes this can be best achieved with a new approach to content standards providing consistency across all media platforms.

The Review recommends that the new communications regulator should be responsible for all compliance matters related to media content, except for news and commentary. The new communications regulator will also be responsible for the national classification scheme as proposed by the Australian Law Reform Commission review. The new regulator would have a range of 'mid tier' enforcement options enabling them to take enforcement action that is proportionate to the severity of a breach of content standards.

News and commentary standards

The Review proposes that regulation of news and commentary standards should be provided by a single cross-platform body. The Review believes that the most effective way to promote standards and prove timely remedies is through an industry-led news standards body. In this respect the Review disagrees with the Finkelstein/Independent Media Inquiry's recommendation for a statutory body to govern news and commentary standards. The proposed news standards body would:

  1. Require membership by all CSEs but not require membership of the ABC or SBS;
  2. Allow all professional news and commentary providers to opt in to the relevant news standards obligations;
  3. Be funded primarily by the media industry;
  4. Enforce a developed media code of standards and practices and have meaningful sanctions including having the power to order members prominently to publish findings;
  5. Have the power to refer to the communications regulator instances where there have been persistent or serious breaches of the media code.

The Review suggests that membership of the news standards body could be a condition of retaining legal exceptions available to media organisations under the Competition and Consumer Act 2010 and the Privacy Act 1988.

The Review considers that it is appropriate that children's content requirements are maintained, but broadcasters should have the flexibility to meet those requirements on a digital multichannel, and that children's time zones are reviewed at the completion of the digital television switchover.

Australian content: screen

The Review proposes that the current quotas and minimum expenditure obligations applying to free to air and subscription television sectors be replaced with the uniform content scheme. Under the proposal, CSEs that provide drama, documentary and children's programs which meet the scale and service criteria, would be required either to:

  1. Invest a potential of their Australian market revenue from professional television like content in new Australian drama, documentary and children's content; or
  2. Contribute to a central converged content production fund.

Australian content: radio

The Review proposes that CSEs providing analog commercial radio services continue to be required to comply with Australian music quotas and these quotas be extended to CSEs that have a digital only radio service.

Local content: television and radio

The Review recommends that commercial free to air television and radio broadcasters using spectrum should continue to be required to devote a specified amount of programming to material of local significance. If broadcasting licences are removed (as recommended by the Review) then minimum levels of local content should be made a condition of their spectrum licence.

Public and community broadcasting

The Review recommends that the charters of the ABC be updated to expressly reflect the range of existing services, including online activities and that both the ABC and SBS should be subject to an Australian content quota (ABC: 55 per cent Australian quota on its primary channel; SBS: 22.5 per cent).

Spectrum allocation and management

The Review recommends that the existing commercial broadcasting licences fee arrangements (payment of a percentage of annual gross earnings as a licence fee) be replaced by a market based pricing mechanism (to be developed by the communication regulator).

Implementing the new approach

The Committee proposes the following three staged model for implementation of its recommendations, without indicating any timing as to the stages:

  • Stage 1: Stand-alone changes that can be achieved in the short term should be made to policies, programs and legislation, including the public interest test that will apply to changes in control of content service enterprises.
  • Stage 2: New content services legislation should replace the Broadcasting Services Act 1992 and existing classification legislation.
  • Stage 3: The reform of communications legislation should be completed to provide a technology-neutral framework for the regulation of communications infrastructure, platforms, devices and services.

Similarly, no timeframe has been indicated with respect to the establishment of the new regulator, apart from an implication that it occur during Stage 1.

The assistance of Nicholas Rozenberg, Solicitor, of Addisons in the preparation of this article is noted and greatly appreciated

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.