Background / Introduction
After three years of turmoil in Australian media policy, as at March 2014 a clearer view is emerging as to the likely future course of Australian media regulation.
Australia’s electronic broadcasting media has long been highly regulated. Print media is lightly regulated, except in relation to cross-ownership of print media and broadcast media. Regulation of internet services has been mixed and inconsistent, but generally light. The Australian Communications and Media Authority (the ACMA) has been an active enforcer of standards that it is empowered to determine and codes of practice required to be developed and maintained by television and radio broadcasters. These codes address a wide range of matters, including children’s programming, advertising and advertorials, program classification, content standards and handling of complaints by broadcasters. By contrast, print media has been largely self-regulated by the industry funded Australian Press Council.
With both print and broadcast media converging onto broadband distribution, broadcasters argue that the regulatory burden on them is unfairly high as compared to print (which is, in any event, increasingly audio-visual in its internet based offerings). Print media argues that establishment and distribution cost barriers to entry to news reporting have been effectively eliminated and traditional print media should not be disadvantaged vis-à-vis new electronic news and commentary entrants such as The Guardian Australia, DailyMail Online and The Saturday Paper. Both traditional broadcast media and traditional print media argue that new media entrants and prospective entrants, and in particular over the top (OTT) internet service providers such as Netflix and YouTube Channels, are not significantly regulated at all. Many consumer advocates advocate greater regulation of all forms of media.
Australian media regulation therefore remains politically contentious.
The Coalition Government and Media Policy
Upon its election in September 2013 the incoming Federal (Liberal National Coalition) Government inherited a number of key reports as to electronic and print media regulation that had been commissioned by the former Labor Government. The two main reports, the Convergence Review Committee’s Final Report and Finkelstein Inquiry Report, had prompted the former government to propose a legislative package of bills, most of which were defeated or lapsed in the Federal Parliament. The incoming Minister for Communications, the Hon. Malcolm Turnbull, had campaigned principally around the allegedly excessive cost and impracticality of the Labor Government’s National Broadband Network initiative. By contrast, the Coalition’s media policy platform was relatively high level. It was clear that if the Coalition was elected, the new Government would develop its own proposals for reform of electronic and print media regulation implementing a broad de-regulatory agenda. The new Government might have regard to the Convergence Review Final Report and Finkelstein Inquiry Report, but it was not committed to adopting any of those Reports’ recommendations.
By March 2014 the broad themes of the Coalition Government’s response to media convergence were starting to emerge. The Government indicated that in rebalancing the high level of regulation of television and radio broadcasting and the low level of regulation of internet services (including new broadcasting like services such as over the top (OTT) audio-visual services), the Government’s priority was to lower the overall level of regulation. For example, the Minister for Communications stated in the House of Representatives on 3 March 2014,
“Labor believed that the arrival of the Internet required more regulation and less freedom. We say that the arrival of the Internet enables much more competition and therefore more freedom and that therefore there is a need for less regulation not more.” Or as more colourfully put by Prime Minister Tony Abbott on 11 March 2014, “It would be change in a deregulatory direction, but we are simply consulting at this time….. But I just want to stress that the main job of government right now is not to run around with a clipboard trying to micromanage Australians' lives."
The Coalition Government’s media policy themes now appear to be:
- erosion of barriers to entry in the provision of news, news commentary and entertainment through availability of broadband distribution platforms and content distribution systems, low cost content ingestion, hosting and publishing technologies, and availability of social media and other modes of publishing, marketing and publicising the availability of new content services; and
- lesser ‘share of voice’, or influence, of major media outlets, arising from declines in print media circulation and media consumers accessing news and commentary from a greater variety of services, including new media outlets such as Crikey and The Guardian Australia, streamed services such as BBC Worldwide and CNN, and social media.
Ownership and control rules have been the area most actively canvassed for early review by the Coalition Government. The table below summaries certain key rules under the Broadcasting Services Act 1992 (BSA).
Current ownership and control rules
Media diversity rules
Commercial free to air television, radio, newspapers
Minimum number of voices: the ‘4/5’ rule—there must be no fewer than five independent and separately controlled media operators or groups in a metropolitan commercial radio licence area, and no fewer than four in a regional area.
Commercial free to air television, radio, newspapers
‘2 out of 3’ rule—a person cannot control more than two out of three specified media platforms—commercial television, radio or an associated newspaper—in a commercial radio licence area.
Commercial free to air television
‘One-to-a-market’ rule—a person must not be able to exercise control of more than one commercial television broadcasting licence in a licence area, except for commercial licences issued under section 38C of the BSA.
‘Two-to-a-market’ rule—a person must not be able to exercise control of more than two commercial radio broadcasting licences in the same licence area, except for commercial licences issued under section 40 of the BSA.
Commercial free to air television
‘75 per cent audience reach’—a person must not be able to exercise control of commercial television broadcasting licences if the combined licence area exceeds 75 per cent of the Australian population.
These ownership and control restrictions reflect longstanding drivers of Australian media policy, including:
- ‘diversity of voice’ – the desire for diversity of voice both nationally and locally has been at the heart of many restrictions, including as to cross-media holdings and also upon total broadcasting audience reach. The 75% reach rule and the 2 out of 3 rule are the most recent iteration of earlier, more restrictive rules. Diversity of voice has also been the policy justification for various restrictions upon media mergers and consolidations. Particularly controversial was a proposal by the former government to add a ‘public interest’ test to assessment of media mergers, to operate in addition to the existing, economy wide, ‘substantial lessening of competition’ test as administered and media policy specific review by the Australian Treasurer of acquisitions by foreign persons of Australia media.
- ‘scarcity’ of broadcasting radiocommunications spectrum – traditionally scarcity has been that justification for limiting the number of free to air television and radio broadcasting licences on issue, for imposition of substantial, revenue based licence fees for use of broadcasting spectrum, and for quotas as to minimum Australian content in free to air and pay television broadcasting services.
Scarcity of radiocommunications spectrum was significantly ameliorated by the shift from analog to digital broadcasting and the restacking of broadcasting frequencies into a smaller radiocommunications band. However, and perhaps counter-intuitively, loss of scarcity is now cited as a reason not to issue of a fourth free to air commercial television broadcasting licence. It is suggested by existing free to air television licensees that the high one-off costs of deployment of digital broadcasting technologies to handle analog to digital conversion and the restack, and high ongoing costs in producing Australian audio-visual content, justify continued imposition of restrictions upon the use of freed up radiocommunications spectrum for provision of television-like program services.
A popular metaphor for desirable policy settings to address these anomalies has been ‘levelling the playing field’. Four sectors subject to very different levels of regulation have converged onto fixed and mobile broadband distribution platforms. Those sectors are:
- free to air television broadcasters;
- pay TV system operators (in particular, FOXTEL);
- traditional print through its digital offerings (News Online and Fairfax Online), and
- new news and entertainment offerings such as YouTube, DailyMail Online, Huffington Post and BuzzFeed.
The policy issue can be simply stated: in any ‘levelling of the (broadband) playing field’ to accommodate this new, superficially four way competition, should policy makers level up, or level down? The Minister for Communications’ response is equally clear: the Coalition’s policy agenda is biased towards levelling down, unless there is a compelling demonstrated policy justification for maintaining particular forms of regulation.
Another popular and closely related policy metaphor is ‘parity of regulation’. Parity was a key principle underlying recommendations of the Convergence Review Committee. On one dimension, regulatory parity is the same as the ‘level playing field’: where free or pay television like programming, news reporting and other entertainment offerings such as YouTube compete for audience, it is argued that they should be treated the same way. But ‘regulatory parity’ has
other, more complex dimensions. Does ‘parity’ mean that all persons doing something similar in nature should be regulated the same way, based upon the nature of that activity? So should a citizen commenting on news be subject to the same set of rules that apply to professional journalists operating independently? Should different rules apply to small publishers and large publishers?
A common view of regulatory parity in content services that ‘whoever controls the content’ should be subject to the same regulation. However, ‘control’ can be difficult to determine.
Often providers of the platforms over which content is delivered have no control, and sometimes no means of knowing in advance, audio-visual content available on that platform. In other cases the platform provider may have control as to what programming streams or services are available over its platform, but no control over the content of the individual programming streams or services. Derivation of revenue is sometimes suggested as a relevant factor. But in this case must revenue relate to provision of particular content, or is it enough that revenue is derived from provision of access to content? Even location of provision can be sometimes difficult to use as a basis for regulation. In the case of internet delivered services, is the location of servers, or of content distribution networks, relevant? Or is the relevant factor where the service is marketed? And if marketing activity is the relevant factor, what level of marketing activity targeting Australian viewers, as distinct from global or other trans-border marketing, should make an audio-visual service subject to Australian regulation?
In short, finding the right level for the ‘playing field’, or the appropriate basis for ‘regulatory parity’, is of itself contentious and currently unresolved in Australia. In addition, there are further areas of regulatory complexity. These include:
- a completely different system regulating Australian content on drama channels on pay television from the much more prescriptive and intrusive requirements imposed upon free to air television broadcasters;
- the anti-siphoning rules, which restrict pay television from bidding for rights to certain designated ‘events of national significance’ such as rugby matches in which the Wallabies are playing and so on to the exclusion of free to air television broadcasters, so that these events are available for free on free to air television channels;
- a completely different system of light regulation of the Australian public broadcasters, the Australian Broadcasting Corporation and Special Broadcasting Service. The commercial broadcasters argue that this light regulation unfairly advantages the public broadcasters.
To understand how the Coalition Government might address such matters and some of the detail of Australian media convergence policy, it is appropriate to delineate key policy areas that remain in active contention from those that appear to have been already resolved for the immediate future.
As already noted the main two reports, the Convergence Review Final Report and Finkelstein Inquiry Report, had led the previous (Labor) Government to propose a legislative package of bills, most of which were defeated or lapsed in the Federal Parliament. The Government’s initial package concentrated on protecting Australian produced content on commercial free-to-air television and provides substantial concessions to commercial broadcasters. Among many reforms, the Bills proposed:
- a complex new Australian content transmission quota for commercial television broadcasting licensees, including requiring licensee’s content to include 55% of Australian content transmitted through during targeted viewing hours (i.e. 6 a.m. to
midnight) on its primary/core channel and a stepping up an Australian content quota for digital multichannels to 1460 hours of Australian content programs in 2015 and beyond
- the establishment of a ‘public interest test’ to be assessed when two or more separately controlled ‘news media voices’ seek to merge or one seeks to acquire the other;
- a press standards model to be overseen by a newly appointed statutory-officer, the PIMA (Public Interest Media Advocate). The PIMA was proposed to be the primary decision maker in relation to the new public interest test which would apply to transactions involving nationally significant news media organisations. The PIMA would also assess the adequacy of self-regulatory schemes for significant providers of print and online news, and current affairs, to promote compliance with industry standards and handle complaints;
- making permanent what had been a temporary 50% reduction in licence fees paid by television broadcasters; and
The reform package was only partially enacted, with the Broadcasting Legislation Amendment (Convergence Review and Other Measures) Bill 2013 and the Television Licence Fees Amendment Bill 2013 passing into law with support of the Opposition. The new laws included the reduction in licence fees and new local content requirements for commercial television broadcasters.
As to a fourth commercial television network, the Convergence Review Committee had recommended that the sixth multiplex (after Seven, Nine, Ten and their respective regional affiliates, the ABC and the SBS) should not be allocated for the establishment of a fourth commercial free to air television network. The Broadcasting Legislation Amendment (Convergence Review and Other Measures) Act 2013 (Cth) prevents the ACMA from issuing more than three commercial licences that use the broadcasting services bands in any licence area.
The Opposition and key Independents opposed the establishment of the PIMA and its broad powers to remove news media organisations that failed to comply with standards from the journalism exemption in the Privacy Act 1988 (Cth), which would effectively remove a media organisation’s ability to undertake investigative journalism. The current Prime Minister, then Opposition Leader, The Right Hon Tony Abbott, described the reforms as a “draconian attempt to regulate media”.
The most radical concept that had been developed by the Convergence Review Committee was that simplified regulation should be directed principally at ‘significant content service enterprises’ (CSEs), with other, smaller enterprises effectively deregulated. The Committee concluded that continued media regulation was justified in three areas:
- media ownership: ‘A concentration of services in the hands of a small number of operators can hinder the free flow of news, commentary and debate in a democratic society. Media ownership and control rules are vital to ensure that a diversity of news and commentary is maintained’
- media content standards across all platforms. ‘Media and communications services available to Australians should reflect community standards and the expectations of the Australian public. As an example, children should be protected from inappropriate content’
- the production and distribution of Australian and local content. ‘There are considerable social and cultural benefits from the availability of content that reflects Australian identity, character and diversity. If left to the market alone, some culturally significant forms of Australian content, such as drama, documentary and children’s programs, would be under-produced’
Once the Committee concluded that there ‘should be a single cross-platform body responsible for news and commentary standards’, two options emerged:
- to move print and online media into statutory regulation, consistent with the recommendations of the Finkelstein Inquiry, or
- to move broadcast news and commentary into a self-regulatory structure together with print and online media.
The Committee opted for a bit of both, namely:
- a self-regulatory structure for all news and commentary in the first instance, and thereby moving the platform specific broadcasting industry code processes and the ACMA’s broadcasting content review functions to a proposed news standards body, as ‘the most effective way of promoting standards, adjudicating on complaints, and providing timely remedies’ and thereby allowing ‘the industry to demonstrate the effectiveness of platform- neutral, self-regulatory arrangements. Once this scheme has operated for a period of time, the government can determine whether self-regulation is working or whether further measures should be considered’; and
- a reserve power for the new communications regulator to set standards.
The Committee saw the essential characteristics of the ‘significant media enterprises that influence Australians’ access to professional content’ as being:
- ‘control over the content supplied;
- a large number of Australian users of that content; and
- derivation of a high level of revenue from supplying that content to Australians.’
The Committee proposed legislation that would require providers of news and commentary that qualify as ‘significant CSEs’ to become members of the new standards body.
The Committee also suggested that membership of the news standards body be available as an option to other, smaller CSEs, with the incentive that membership might be a condition of those CSEs retaining legal privileges currently provided for news media in Federal legislation, such as the media exemption from the provisions of the Competition and Consumer Act 2010 (concerning misleading and deceptive statements) and from the obligations of the Privacy Act 1988 that would otherwise apply to media organisations.
The Finkelstein Inquiry report had controversially proposed a low requirement for coverage by its proposed scheme, recommending that regulatory news media standards should be applied to a news publisher that distributes more than 3,000 copies of print per issue or a news internet site with a minimum of 15,000 hits per year. The Committee said that this proposed threshold was far too low and that smaller and emerging services should not be burdened by unnecessary regulatory requirements. The Committee recommended that for ownership and control transaction review and for general standards regulation, the threshold initially should be around AU$50 million a year of Australian-sourced and curated (and therefore not including user- generated content) professional content service revenue and audience/users of 500,000 per
month. The Committee proposed a separate, higher threshold, of AU$200 million and an audience threshold of 500,000 per month, for the proposed new uniform Australian content scheme to be ‘aimed at professional television-like services that offer drama, documentary or children’s programs’, however provided (i.e. whether free-to-air broadcast, by cable, mobile or OTT broadband internet. Based on modelling, the Committee expected that this would capture about 15 enterprises covering electronic or print media or both. Enterprises such as Google, Apple and Telstra would not be subject to the proposed new uniform Australian content scheme based on these estimates. The Committee also noted that, ‘in the future it is realistic to expect that this group of services will be joined by non-broadcast services as those services continue to expand in line with shifts in consumer preferences’.
- who is to be regulated
- the level of regulation
- the roles, functions and scope of responsibilities of the ACMA and the Australian Press Council or any successor to those bodies, and any overrides or other discretions exercisable by the Minister or other government authorities
The Government appears likely to strike out on its own course as to rules affecting ownership and control and media concentration, probably within a short time frame.
The time frame and direction of level playing field or regulatory parity reforms in convergence regulation is not clear. The Coalition Government might elect to take up some of the Convergence Review Committee’s recommendations as to change in regulatory institutions and as to new content rules. But the Committee’s controversial vision for a complete rewrite and simplification of content regulation ratcheted down the historical legacy of extensive regulation of broadcast television and ratcheted up regulation of pay TV, print media and new media. This ‘ratcheting up’ appears contrary to the Government’s announced broad policy goal of de- regulation.
In the last decade in Australia the focus of industry specific regulation has generally narrowed and focussed upon entities enjoying significant market power, even in the formerly more heavily regulated sectors such as telecommunications, electricity and other utilities. The Convergence Review Committee’s vision of journeying to a brave new world of simplified, more uniform regulation focussed upon the relatively few larger players that the Committee perceived to require regulation is now seriously in question. Without doubting the political courage of the new Minister of Communications, it remains to be seen whether there is the policy will within the Coalition Government to effect such a fundamental change to regulation of media convergence.