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Coonan Signals New Media Ownership Laws

The Federal Communications Minister, Senator Helen Coonan, has revealed she is considering changes to media ownership laws that would allow a single company to own newspapers and radio and television stations in the same market.

CoonanAddressing the National Press Club in Canberra, Coonan outlined technological changes which she argued have altered the media playing field. She said: “The evolution of media presents both challenges and opportunities for the industry that, in my view, mean we cannot stand still. Digital technologies allow completely new ways of packaging and delivering audio-visual services, entertainment and information.”

The current ownership laws restrict a media company to owning only one of the three forms of major media in a single market. The Government’s last attempt at relaxing media ownership laws was subjected to amendments and delays by a hostile Senate.

In her speech, Coonan suggested that a “diversity test” could be applied which would also allow one media organisation to own a newspaper, television station and radio station in the one market.

  • Listen to Senator Coonan’s Address to the National Press Club (60m)

Text of the address to the National Press Club by the Minister for Communications, Information Technology and the Arts, Senator Helen Coonan.

The New Multimedia World

A BIT OF HISTORY

As we inch closer towards the 50th anniversary of television in Australia, my how the box has changed.

In uttering the first words ever broadcast on television “good evening and welcome to television” in 1956, the late Bruce Gyngell could not have imagined that 50 years down the track we would be watching a plethora of reality TV – including live footage of people in their 20s, cavorting in spa baths as in a recent episode of Big Brother.

Quite obviously the world of broadcasting has moved on. For much of the 20th century, Australia had one of the most highly concentrated media sectors in the Western world.

Traditionally, it took major technological evolutions for fundamental shifts in media policy in Australia – for instance the advent of radio in the 20s and 30s; television in the 50s and 60s and the introduction of an Australian domestic satellite in the 1980s.

Many of you would recall what were some fairly tumultuous times for the media industry during the 1980s and early 1990s. But since that time, there has been fairly minimal change both in ownership and regulation, apart from the introduction of pay-TV and the move to digital.

Of course, since the election of the Howard Government we have tried on several occasions to implement cross media ownership reforms and to lift the foreign ownership restrictions relating to media, but have been blocked by a hostile Senate.

One commentator in BRW magazine recently accused the Government of having ‘policy constipation’ when it comes to media reforms. I obviously disagree with this assessment, but concede that digitisation of communications and convergence means we have reached another major milestone in media – one that requires a determined and dynamic policy response from Government.

The Government’s desire to release Australia’s media industry from its current lock-step is well known. How we might approach this in conjunction with the challenges of digitisation has been the subject of much speculation.

A BRAVE NEW WORLD

I should say right now that I am an admirer of the traditional media services available in Australia. I believe our media are amongst the best in the world.

But the evolution of media presents both challenges and opportunities for the industry that, in my view, mean we cannot stand still. Digital technologies allow completely new ways of packaging and delivering audio-visual services, entertainment and information.

And it allows the traditionally distinct telecommunications, broadcasting, print and IT sectors to deliver an increasingly common range of services. This convergence of sectors means the media landscape is now populated with a range of new players, new platforms, new services and new possibilities.

For example, traditional telcos, in particular, are now seriously pursuing media strategies. Telstra, and other major broadband providers such as Optus, are acquiring content to enable them to deliver TV, or TV-like, services over their broadband platforms – IPTV and third generation mobile devices.

TV over broadband could include a range of channels, including services offering video on demand, repeats of TV series and specialty programming and games. Provided that it is not offered as a free to air commercial broadcasting service – a la channels 9, 7 or 10 – the current regulatory regime would not prevent TV over broadband.

Internet streaming, which has until recent times been largely limited to the rebroadcast of radio services, is now moving into video services. Broadband is increasing the capacity of the Internet to deliver greater volumes of data at real time speeds.

Bigpond has recently launched a new streaming service providing customers with access to live coverage of V8 car races and a range of interactive content such as a ‘virtual dashboard’ with statistics such as car speed, and live updates on current positions of cars.

New technologies such as 3G mobile phones and broadcast standards optimised for mobile reception (DVB-H and DMB) are allowing people to receive television programs on their mobile phone or other mobile devices. DVB-H mobile television trials have started in Sydney, Optus already offers access to limited TV services on its platform and video on demand services are already available in Australia.

However it develops, it is fair to say that traditional media will be just another service on the myriad of networks that enter our homes. There will be untold opportunities to build infrastructure, to buy and create content and to package attractive consumer deals.

I noticed Unwired’s Steve Cosser in a recent article on broadband capacity, comparing this opportunity as akin to building the railroads in America in the 1900s. Steve quite rightly said: ‘this opportunity is not going to come along again’.

CHALLENGES FOR INDUSTRY

All of these new platforms and services bypass the traditional definition of media. They continue to attract audiences away from traditional television, radio and newspaper providers because consumers value the choice, innovation and control that is on offer.

This represents a real challenge to the business models of existing players that are reliant on traditional revenue and advertising streams.

Even Rupert Murdoch, a media veteran and a highly decorated one at that, admitted to burying his head in the sand about the impact of the Internet on his newspaper and multi-media empire. He said recently that he had been ‘complacent’ when it came to adapting his 175 newspapers from around the world to the Internet and had ‘quietly hoped that this thing called the digital revolution would simply go away’.

So, this is truly a glass half-full or half-empty moment for the industry. The forces of change are unstoppable and, while they do challenge some business models, actually present real opportunities to embrace new ways of doing business and to provide significant benefits to consumers.

It is an exciting picture and very different terrain from what Paul Keating not so neatly divided into Princes of Print, Queens of the Screen and Rajahs of Radio.

For the Government’s part, these new platforms are challenging the effectiveness of existing regulatory structures. Media policy has traditionally achieved its objectives by closely controlling who may enter the market and what services they may offer.

In a converged environment it will become almost impossible, and certainly counterproductive, to stop new players and new services from emerging. In my view, regulatory strategies need to move away from relying on controlling market structures in the way they have to date, to a new framework that allows some efficiencies of scale and scope while encouraging new players, new investment and new services.

CURRENT SETTINGS

There is an obvious need for Government to respond and release the media industry from its current lock-step. But I have said publicly that without broad industry support it is difficult to see reforms to the media sector working effectively.

The restrictions of the foreign ownership rules, cross media and specific media rules have defined the industry since the early 1990s. These rules are well known. However, what may not be so well known is that due to existing legislative provisions, there are regulatory changes coming down the pipeline, ready or not.

January 1 2007 is shaping up as a red-letter day for the media industry as a number of self-executing provisions in the broadcasting regime take effect.

First, the moratorium on allocating new commercial television broadcasting licences expires. From this date, if changes are not made to the current legislative arrangements, the regulator – ACMA – will have the capacity to allocate new free-to-air commercial television licences in the broadcasting services band.

Secondly, the moratorium will also end on the allocation of new free-to-air TV services delivered over other platforms such as wireless, satellite and cable broadband networks. Thirdly, in keeping with the Government’s desire to ensure that new services become available, from January 1 2007, the restrictions on data-casting will be substantially lifted and new data-casting transmitter licences could be used to provide a wider range of services such as pay-TV, niche (narrowcast) free to air channels and DVB-H services (ie: TV over mobile devices) over currently reserved spectrum. Fourthly, the existing free to air television licensees are currently prohibited from acquiring a data-casting transmitter licence and unless some steps are taken, that prohibition would remain.

They would still be able to provide data-casting services over their existing spectrum, as they can today, but not acquire any new expanded data-casting licence over the reserved spectrum.

But before people start picking up the phone, I should make the point that the Government committed at the last election to transferring the power to allocate new free to air commercial TV licences in the broadcasting services band from the regulator to the Government of the day.

Other industry settings will remain unchanged after January 1, 2007 without Government intervention. These include cross media and foreign restrictions, restrictions on multi-channelling, the anti-siphoning regime, high definition television quotas and the 2008 date for analogue switch-off.

OBJECTIVES OF MEDIA REFORM

So with the challenges of the digital age and convergence, how should the Government build on earlier work and further develop policy to create opportunities for innovation and exciting new services for consumers post January 1, 2007?

The long term objective of media reform should be to move to an open and competitive market environment without artificial and arbitrary restrictions which prevent Australian media groups from developing into globally competitive firms.

Policies need to ensure diversity of ownership and services in the local media market and we must embrace the potential of a competitive digital marketplace. We are, however, in a transition period and it is also important that the community knows they are not going to lose a set of services that they value highly today, such as the FTA broadcast platform. It is all about striking the right balance.

A PLAN FOR REFORM

In discussing a possible framework for media reform I have tried to be comprehensive – to understand and factor in the looming digital challenges without discarding the best features of the current system.

The Government’s previous Media Ownership Bill had reached a point where a series of amendments and compromises had turned it into a fairly complex package.

It contained a series of tests and provisions such as the ‘two out of three’ limit on ownership within a market and editorial separation requirements and it finally reached a stalemate with what became known as the ‘Harradine amendment’ – this would have prevented television and newspaper mergers in mainland capital cities.

In looking at media ownership reform again, it seems clear to me that while the Government’s objectives remain the same, things have moved on. We have an opportunity to bring forward a simpler, less interventionist approach to reform, which will provide greater certainty for industry but will still have significant protections for diversity.

The simplest way to protect diversity is to place a floor under the number of media groups permitted in a market to preclude undue concentration of ownership. If we do this in an environment that allows us to balance any greater concentration of ownership amongst existing players with opportunities for new services, I think we will have a more attractive approach than the regime proposed last time.

The current cross media rules prohibit control of more than one commercial television licence or two commercial radio licences or an associated newspaper in the same licence area.

There are also licence and reach limits which prohibit control of more than one television or two radio licences in a market, or commercial television licences that reach more than 75 per cent of the population.

Subject to retaining these licence and reach limits, I am considering an approach where mergers could take place between the regulated platforms – television, radio and newspapers – within a licence area.

This would mean, for example, there could be common ownership of a television licence, two radio stations and an associated newspaper, or other combinations, in that same market. 

Mergers would be subject to there remaining a minimum number of commercial media groups in the relevant regional and metropolitan markets –four voices in regional markets and five in mainland state capitals. So, the number of mergers that could occur in a market would be limited by this floor.

The cross media rules would not include the national broadcasters, pay television, the Internet or out of area newspapers and other potential new services over other platforms which provide increasing and important additional sources of news and opinion.

It also seeks to find a balance between establishing too high a threshold that would prevent any mergers taking place and ensuring protection for a minimum number of voices and media outlets. Obviously, under this approach, the scope for mergers would be far greater in metropolitan areas than regional areas where there are many markets that would already be close to, or at, this threshold.

The Government is also committed to removing the restrictions on foreign investment in commercial and pay-TV and amending the Foreign Investment Policy to remove specific restrictions on newspaper ownership.

This would permit foreign investment in those sectors on a similar basis to other sectors of the economy, although under the Foreign Investment Policy the media is prescribed as a sensitive sector and any material foreign investment in Australian media would still be subject to review by the Treasurer.

These changes will remove unnecessarily constraining limits on foreign investment, but ensure that all significant investments are appropriately scrutinised.

The protection of diversity and the maintenance of local content are central issues, particularly in rural and regional Australia, and I am well aware of concerns raised in the past about the impact of media ownership changes on local news and information in regional markets.

Cross media reform could help to limit reductions in local content in regional areas by enabling media proprietors to achieve economies across platforms in one market. Specific measures such as quotas can also be put in place to ensure that levels of local content are preserved.

The broadcasting and communications regulator, ACMA, would look after the diversity side of the equation. ACMA would have the power to grant an exemption certificate in respect of a cross media transaction where the transaction does not breach the floor.

In addition to safeguards on diversity, the ACCC would play a critical role in assessing competition issues associated with mergers, most particularly whether the proposed merger would lead to a substantial lessening of competition in a market.

ACCC Chairman, Graeme Samuel, has made some public comments recently which give some insight into the approach the ACCC may take to media mergers.

The ACCC is clearly interested in broader issues than simply mergers between the regulated platforms of newspapers, television and radio. It is looking at potential markets which are emerging as a result of new technologies and platforms giving rise to new forms of competition for control of or acquisition of content.

I should also note that the acquisition of exclusive rights to premium sporting events is an area of particular interest to the ACCC in the context of emerging platforms and acquisition of content.

The Government appreciates that from industry’s point of view, a high level of regulatory certainty is desirable. The ACCC already has published guidelines detailing the factors they take into account in assessing mergers. They are also able to provide informal clearances for mergers. Following the passage of legislation giving effect to the Dawson Review, the ACCC will also have the power to provide binding merger clearances.

Once the Government’s media reform framework has been settled, there would also be value in the ACCC articulating more clearly how it would propose to deal with media mergers in the future. All these measures will contribute to parties being able to proceed with confidence.

RESPONSES TO DIGITAL REVIEWS

As you are no doubt aware, given the enormous challenges in the digital environment, my Department has been conducting a series of reviews into the digital television regime.

These reviews, which have attracted a considerable number of submissions from interested parties, have covered a broad range of issues and the results are feeding directly into my thinking on a possible media reform framework.

They have covered a range of issues including the moratorium on commercial free to air licences, data-casting, multi-channelling, HDTV standards and the efficient allocation of spectrum for digital broadcasting.

FOURTH CHANNEL

As I mentioned earlier the current legislated moratorium on a new commercial free-to-air television licence expires at the end of next year.

I have said on many occasions I do not think there is a compelling case for a fourth free-to-air commercial station at this stage.

The media sector is changing rapidly and many opportunities for new services are emerging. In my view, the current arrangements with three free-to-air commercial TV broadcasters are working well in delivering quality services to Australian viewers.

Consumers will be better served by media policy that encourages new content and innovative services by opening up opportunities for television-like services over other platforms rather than encouraging ‘more of the same’ in Australia’s television services at the possible expense of a service that consumers value highly.

But, if there is no fourth free-to-air service in the near future the question is, what could be done with the reserved spectrum that would be available for any service other than a competing free-to-air terrestrial channel?

DATA-CASTING

Which brings me to data-casting. Despite data-casting having a bit of a chequered history, on 1 January 2007 it will have the potential to offer significant new services.

 

Data-casting is the digital delivery of content such as text, data, visual images, speech or music. In short, data-casting can be anything that does not replicate traditional terrestrial free-to-air television. As I mentioned previously, from 1 January 2007, a holder of a data-casting transmitter licence will be able to provide not only data-casting services, but a range of other services including pay-TV, narrowcast television or DVB-H.

While it is not up to the Government to come up with the business case for these applications, there does appear to be a level of interest from both existing and new players in obtaining access to this spectrum to provide new niche services that appeal to consumers.

Any new entrant will face relatively high start-up costs and other challenges but already there is interest from some players in looking at whether a pay-TV service could be offered over one or both of the data-casting channels.

With MPEG4 compression technology, I am advised that multiple channels would be possible. I’m sure there are other players who might be interested in other types of services that could be provided on this spectrum.

My inclination is that all players, including the free-to-air broadcasters and pay operators if they wish, should have an opportunity to come up with innovative and competitive strategies for using this valuable spectrum in the interests of consumers.

Clearly the Government would wish to see innovative new services for consumers to help drive digital take-up and to provide greater choice and diversity.

Whether the allocation of this spectrum is made by a beauty parade, tender or auction, data-casting offers real opportunities for new services that will clearly enlarge the choices available to viewers without replicating a fourth free-to-air TV channel.

MULTI-CHANNELLING

Both data-casting and multi-channelling (providing several programming streams within a single digital channel) have the potential to be key drivers of digital take-up providing they can meaningfully deliver new content, which is globally recognised as a key driver for digital TV.

In Australia, multi-channelling is prohibited for the commercial channels while the national broadcasters face significant genre restrictions on what can be shown on their multi-channels.

While multi-channelling obviously offers the potential for more content and flexibility with programming, it also presents challenges for broadcasters and other stakeholders in the cost of content and fragmentation of the advertising market.

Government policy to date places emphasis on the picture and sound quality improvements provided by spectrum hungry high definition television and given current spectrum constraints it may do so at the expense of encouraging new content through multi-channelling.

The policy settings require all television broadcasters in Australia to show at least 1040 hours per year of high definition television. It has been put to me that you cannot do both HDTV and multi-channelling.

There is a significant difference of opinion amongst stakeholders in Australia about the merits of multi-channelling from a commercial perspective and some of the technical issues relating to the use of the spectrum.

I am currently seeking advice from industry engineers on the technical capacity of broadcasters to provide both multi-channelling and high quality HDTV in their digital spectrum in the short term.

But it is already apparent that, in the longer term, improved compression technologies such as the MPEG 4 standard will allow any technical difficulties that may exist with combining multi-channelling and HDTV to be overcome.

Putting technical issues aside, there are good reasons for the Government to eventually move to a point where we remove multi-channelling restrictions on broadcasters to allow them to pursue strategies some may consider commercially attractive.
ANTI-SIPHONING

Another issue, not the subject of a review, that will need to be considered as part of broader reforms, is the anti-siphoning list.

Anti-siphoning rules were introduced to ensure that important sporting events which have traditionally been available on free-to-air television would continue to be available to free-to-air broadcasters, despite the introduction of pay-TV.

But over time the existence of the list has come under some pressure as the viewing public becomes more resistant to rescheduling of their favourite programs.

The decision by free-to-air broadcasters in 1997 and 2001 to broadcast only limited footage of the Ashes Test and the reluctance of free-to-air broadcasters to televise the current series is an illustration of the programming conflict that exists.

Generally I think the policy rationale for retaining the anti-siphoning list remains, but I also think there is scope for further scrutiny of the list and the number of events on it. Australians are generally unaware how the list works and how many events are currently on the list.

Many people have an expectation that if an event is on the list it will be shown on free-to-air television and many more believe that its inclusion on the list also means the event will be shown live. Neither is true.

The new list, which runs from 2006 to 2010, contains well over 1000 annual individual events compared to around 10 events on the UK equivalent of the anti-siphoning list. But in Australia, contrary to popular belief, only a small amount of these events are shown live.

For example, in 2005 only 55 of the 415 Wimbledon matches protected by the anti-siphoning regime were shown.

Few people know that all matches played at Wimbledon are on the list – from the men’s singles final on centre court to the first round women’s doubles match on the most remote court.

There are lots of events on the list that are not seen on free to air and because they are on the list, they are not shown on pay-TV either. There is an opportunity to take another look at the list, prune some of these lesser events and implement better monitoring of the list.

The Government made a commitment in the last election to further monitoring of the list. I propose to task the regulator ACMA with the job of objectively monitoring whether the events on the list are shown on free-to-air television or at least offered to pay-TV. This monitoring will feed into any fine tuning of the list or could be used in conjunction with the development of a ‘use it, or lose it’ scheme, if warranted.

But before my political opponents jump on a very predictable and noisy bandwagon, let me say that iconic sporting events such as the Olympics, Commonwealth Games, major football matches and cricket among others should remain on the list.

My proposals are not about dismantling the anti-siphoning list but looking at ways to make the list work more effectively, ensuring the scheme works as intended and providing more opportunity for consumers to watch events they enjoy.

Whatever we do, we need to be mindful not only of the interests of broadcasters and consumers, but also the interests of the sports bodies who are the rights holders and who rely on a continuation of live free-to-air games and other games shown on pay-TV to maximise audience reach.

Their voices tend to get lost in the heated debates which inevitably arise when the issue of sports rights and television comes up for discussion.

 

DRIVING DIGITAL TAKE-UP

Overseas models, and evidence here in Australia, suggests that one of the drivers of take-up of digital services is more content and more choice.

FTA digital take-up in Australia, while ever-improving, has a long way to go.

Even though around 96 per cent of the population can access at least one digital signal, around 12 per cent of the population have taken advantage of digital so far.

If you take into account the nearly 16 per cent of households that subscribe to digital pay television then these figures vastly improve.

While allowing the market to operate more freely is a necessary component to driving digital switchover, it is likely that this alone will not be sufficient to bring all consumers across.

Further measures may need to be considered to drive over reluctant consumers and deal with issues such as consumers owning more than one TV.

Of course we can be confident that technology is changing constantly and it is not at all fanciful to think that by 2012 it may be feasible to have one affordable digital converter for all the TV sets in a household.

To get people over the line on digital take-up we are likely to need to get the sector (broadcasters, retailers, manufacturers, Government and consumer groups) to work more closely together, possibly along the lines of the UK Switchco model.

My Department will soon be conducting a review into the simulcast period.

I have said publicly on many occasions that I think given the current level of digital take-up, an analogue switch-off date of 2008 is unrealistic, but that setting some benchmarks or milestones for digital take-up is likely to be useful in working towards the point where Australia will be ready to end the expensive simulcast period.

I am keen for industry and manufacturers to coordinate and drive digital take-up in each region of Australia.

In the run-up to analogue switch-off we need to raise the awareness of consumers; provide support to consumers during switch-over; look at labelling of products, the availability and installation of digital equipment and to maximise the range of options for consumers in the lead-up to analogue switch-off.

Therefore I will be taking a broad and comprehensive approach to the simulcast review to look beyond the appropriateness of the current switch off date and to develop a comprehensive Digital Action Plan to achieve analogue switch-off.

The review will consider whether the switch-off date should be market driven or Government mandated; look at measures to drive digital take-up; determine whether technical standards or other measures need to be addressed to speed up the take-up of digital and what measures can be brought together into a digital action plan to drive digital take-up.

The Government has invested significantly in digital technology. Our existing commitment to digital TV is well over $1 billion to help both our national broadcasters convert to digital.

We are also spending around $250 million on the Regional Equalisation Plan, which is assisting regional broadcasters in their conversion. Frankly, we are yet to see much of a return for that investment.

I also acknowledge that a significant investment in infrastructure has been made by both FTAs and Pay-TV in Australia and that will only continue as we simulcast.

Digital has now developed to the point where, in my view, the Government’s policy settings need to be revisited. What we don’t want is for Australia to be left behind as other advanced markets enjoy a revolution in how their populations access news, information and entertainment.

CONCLUSION

It will be apparent from my remarks that I have been working on a range of issues to put some flesh on the bare bones of the Government’s longstanding policy to reform the media sector.

The Prime Minister and my Cabinet colleagues have tasked me with consulting stakeholders to gauge the extent of support for change.

I am now in the process of concluding some informal discussions with industry stakeholders before I finalise a view on the best way forward.

I hope to have in place a framework before the end of the year that would enable the Government to consult with consumer groups and the community more broadly about our reform plans.

While it may not be possible to have legislation introduced by the end of the year, I would certainly like to be in the position of having a settled framework by that time which I can take forward early in 2006.

In drawing together all these ideas I believe it is possible to develop a far reaching plan to take the media industry forward both in the short and longer term.

What is abundantly clear in a fast paced and constantly evolving industry is that the policy settings should be enabling and not constraining.

I believe fundamental change is not something that should be forced on the industry but there are obvious and unstoppable challenges that will not countenance standing still.

I want industry to work with me so that the Government’s policy settings will provide a framework to allow media businesses to develop and prosper in the new multi-media world so that consumers will not be left behind.

For these reasons it is abundantly clear that I am looking at media ownership and foreign investment reform in conjunction with the broader policy questions relating to digital technology and new communications platforms. This is just common sense.

To succeed, the whole picture will involve strategic responses by industry. Without some trade-offs I do not imagine significant regulatory reforms can be achieved.

The Prime Minister has made it plain that if we can come up with a workable proposition that is clearly in the public interest, the Government will act on it.

For the Government, the end-game is diversity and clear benefits for Australian consumers. For industry this offer to work with Government on reform should be seen for what it is – an opportunity, not a threat.

I believe the benefits are clear and the time has come to truly move media in Australia into the 21 st century.

Thank you.

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