Australia

The level of Government activity regarding media content stepped up again last week with the release by DBCDE of five Discussion Papers for the Convergence Review. The Discussion Papers cover:

Media Diversity, Competition and Market Structure
Layering, Licensing and Regulation
Spectrum Allocation and Management
Australian and Local Content
Community Standards

The Discussion Papers are open for comment until 28 October 2011, following which DBCDE will review all comments and put its recommendations for change to Government. This is a major undertaking, and it is right to say that this would be one of the first full government reviews of how to deal with converged content, over multiple delivery platforms to multiple end-user devices. Not an easy task – especially if the Government is going to avoid the inevitable temptation of all governments to try and "pick the winners", and the equally inevitable pleas of special circumstance from various "specific interests". One of the Review Committee members, Malcolm Long, has gone so far as to tell the industry¹:

"it's fair to say that a lot of the responses we've got, especially from the industry, have been defending positions, and we've been working very hard – and these discussion papers, we hope, will achieve this as well – to try and get people beyond restating their positions to begin to think about a better way of doing it overall, in the interests of everyone . . . the message we'd be putting out is "pull back from your specific interests for a bit – because here is a unique opportunity". We're one of the first countries in the world that has adopted such a broad review of this whole convergent area, here is a unique opportunity to contribute to a fresh way of looking at the way the industry is structured in policy and regulatory terms . . ."

The content of the Discussion Papers is very broad, running from the issues of industry structure and competition, through licensing and technical regulation, to the rules regarding content classification and origin and how to reflect community standards in content regardless of its origin. For industry participants, the major issues that the Discussion Papers raise, and on which they seek specific comment, are as follows.

Media Diversity, Competition and Market Structure

Ordinarily, this topic alone would be more than sufficient for a major Government review, but in the context of all of the Discussion Papers, it seems almost underplayed. That said, the issues it raises for comment are ones that should attract enormous attention. For example:

Is there merit in the scope of cross-media ownership and control rules being abolished or extended? In other words, are the rules relevant at all, or even more relevant now?
Should a "public interest" test for media mergers and acquisitions be introduced?
Should the 75% audience reach provisions be amended or removed?
Should incremental acquisitions in the media sector be addressed through competition law?

Further, in relation to content rights:

How should exclusive rights to content (both movies and sport) be regulated, if at all? This goes to both the duration of the exclusivity and also the number of different delivery platforms to which the exclusivity applies.
Are content bundles efficient business practice or anti-competitive?
Is vertical integration of some industry participants a problem?

Layering, Licensing and Regulation

This Discussion Paper looks at the current requirements for different licence types across the current broadcasting and telecommunications industries. It then poses a number of issues for comment regarding the need for licences and what particular aspects of the broader industry should require licences, as the distinctions between currently separately licensed activities break down.

The specific questions for comment are²:

How might a layered approach‟ to media regulation be best used?
What regulatory obligations and incentives might be appropriately placed at which layer?
What exceptions to regulatory parity principle are appropriate?
Should the principle that that all content be treated the same regardless of the manner of its distribution underpin any new regulatory framework?
In what circumstances should such regulatory parity not apply?
Are some delivery mechanisms better than others at delivering particular objectives?
If so, which ones?
Is there a case for different regulatory arrangements in any of the following examples:
- terrestrial broadcast radio versus internet radio?
- audiovisual content on mobile devices versus home-based devices?
- online newspaper sites versus print editions of newspapers?
Are there alternatives to layering? If so, what form might they take?

In relation to licensing, following a discussion of the rationale for different types of licences generally (scarce resources, proper training and quality, specific policies) the Discussion Paper calls for comment on the following questions³:

What entities/services/functions subject to regulatory obligations/incentives need to be licensed?
In what circumstances, if any, should it be a requirement to hold a licence in order to communicate (for example, to provide a broadcasting service or other content service)?
What future benefits are there in retaining the current system of licence areas? Are the benefits for radio licence areas greater than for television?
Is licensing useful to distinguish business models?

A key concept that emerges in this Discussion Paper, and in the Discussion Papers regarding content regulation, is "regulatory parity". The Discussion Papers do not endorse the concept automatically, although they note that a number of industry participants have already called for the concept to be applied wherever possible. However, this will undoubtedly continue to be a strong focus of a number of industry participants who feel they may end up under greater regulatory burden than others due to already existing regulations.

For those participants not currently regulated in particular areas (or who are under much milder regulation) a potential concern from this Review process will be pressure on the Government to lift the level of regulation to match that imposed on the most heavily regulated players. The Government is unlikely to agree to remove all regulation from currently regulated players, and so the alternative of imposing that regulation on others who are currently "less regulated" will seem easy and, at first glance, "fair".

Mr Long has, however, sought to downplay the risk of increased regulation by saying that the Review Committee is not looking to impose more regulation⁴:

"Our task, of course, is to review the current framework and recommend any changes. It is not intrinsically re-regulatory – and indeed the committee has, I think it's fair to say, a bias towards de-regulation. It's a process of assessing the current regulatory framework, the committee making some decisions about how it feels its ten principles might be achieved – and then looking at what tools might be available to government to achieve them. So it's not necessarily more regulation at all".

The Discussion Paper does ask: why regulate, and examines the reasons for, and the different types of services and facilities that could be subject to, regulation.

Again, these questions would, in other circumstances, be enough for their own review and consultation process and industry participants will need to give careful thought to these questions and to provide comments on them if at all concerned about this issue.

Spectrum Allocation and Management

This discussion paper concerns itself with two primary issues – how to ensure the maximum public benefit from the use of RF spectrum, and how the spectrum should be priced, in particular broadcasting spectrum. There are also questions around the use of spectrum for digital services and a section dealing with the possibility of a sixth digital television channel.

Clearly, these are issues of critical importance to those industry participants who use or are seeking to use RF spectrum in providing services. It should be noted that, in addition to the questions in this Discussion Paper, ACMA has also released its decision regarding the choice of auction method for the sale of digital dividend spectrum.⁵

Australian and Local Content

Readers may or may not be surprise to learn that this Discussion Paper is the longest of the 5. The real issue at work in this section is whether, and if so how, Australian and local content rules can be applied to content delivery media that are not broadcasting (as we now know it). The Paper takes the view that⁶:

"The growth of content consumption on alternative platforms will mean that a growing proportion of content will not be subject to existing Australian content regulation. Unless there is an effective policy response, it is likely that the amount of Australian content consumed as a proportion of all content will fall. In addition, commercial broadcasters may argue for a weakening of Australian content requirements on television because their nonbroadcast competitors are free of such impositions".

Taking this as its starting point, the Paper then asks for comments on the following⁷:

Should Australian content rules be extended to convergent platforms?
What characteristics or features of a service should qualify it for inclusion in an Australian content regime?
In a converging media environment, should the Australian Government move away from minimum content requirements on platforms and towards a subsidy model?

The Paper asks similar questions in relation to regional local content⁸:

What alternative ways are there to support production and access to local content in regional communities?
Should local content rules seek to build critical mass by encouraging cross-platform collaboration, or by implementing a system of tradeable quotas‟ to concentrate resources?
Should regional broadcasters be encouraged to develop innovative ways of providing local content to the communities they service, including through non-broadcast services?
Should existing local content rules be removed?

This is going to be difficult for many industry participants outside the broadcasting sector. Content used by, or made available by, online services does not conceptually fit into a local v foreign model. For the online content provider, it is what the end user requests that is the important factor. Indeed, increasing amounts of content are user generated in any event.

There is a wealth of opportunity for comment in relation to this Discussion Paper and industry participants should pay particular attention to it and to their response if they are at all involved in content production or delivery.

Community Standards

"Many consumers expect the broadcast environment to be a safe place for young people based on time zones and access controls. The availability of internet content on smart TVs' means viewers can jump easily between regulated broadcast content and unregulated internet content. While many consumers expect content they see will be regulated with due warnings and censorship on television‟, the stark difference in content regulation for internet-delivered content means users can inadvertently encounter inappropriate content".⁹

This is another area where there may be concern for currently non- or less-regulated industry participants. The concept of regulatory parity arises in the context of content standards as well as content origin.

The issues that this Discussion Paper raises are well-known. In response to the discussion, the Paper asks for comment on the following issues that are relevant to online content providers¹⁰:

What kind of regulatory responses are appropriate for community standards?
- Should these differ across platforms?
- Should more parental controls and opt-in mechanisms be adopted?
- Should age verification be standard for internet content regulation?
- How can these measures be enforced or encouraged?
What kind of incentives might encourage industry participants to observe community standards in content regulation?
To what extent is it appropriate to regulate community standards through:
- rules enacted by the Australian Government?
- industry codes of practice?
- conditions imposed by the regulator on a case by case basis?
Is the current range of sanctions available to the regulator adequate?

Summary

This is a huge set of issues for a review and consultation. Given the range of issues, and the complexities in many of them, the comment period is not a long one. However, for any industry participant there will be any number of issues relevant to their business arising in these Discussion Papers. Further, issues such as content regulation arouse particular passions and are politically volatile. Participants who provide content will need to think very carefully about their business and how they want the future to look for content production and delivery in Australia.

Richard Pascoe
Special Counsel
Truman Hoyle Lawyers

1 Communications Day, Issue 4066, 21 September 2011

2 Convergence Review Discussion Paper: Layering, Licensing and Regulation, page 14. Available at http://www.dbcde.gov.au/__data/assets/pdf_file/0006/139254/Layering_licensing_and_regulation_20_September_web.pdf

3 Id, page 18

4 Communications Day, Issue 4066, 21 September 2011

5 See http://www.acma.gov.au/WEB/STANDARD/pc=PC_410164

6 Discussion Paper: Australian and Local Content, page 11. Available at http://www.dbcde.gov.au/__data/assets/pdf_file/0007/139255/Australian_and_local_content_20_September_web.pdf

7 Id. Page 16

8 Id. Page 26

9 Discussion Paper: Community Standards, page 14. Available at http://www.dbcde.gov.au/__data/assets/pdf_file/0008/139274/Community_standards_19_September_web.pdf

10 Id. Page 22

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.

Convergence Review; media and entertainment

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