Convergence Review Final Report: More regulation, or more effective regulation?

Subscribe
8 June 2012

After 12 months of investigations into media ownership, standards and content, including considering 340 submissions from individuals and organisations and over 28,000 comments, the Convergence Review Committee presented its final report to the Government on 30 March 2012.

The Convergence Review (Review), chaired by former IBM chief executive, Glenn Boreham, recommends a principles-based, technology-neutral approach to the policy framework for communications in a converged environment, that can adapt to new services, platforms and technologies and be a sustainable structure in a changing media landscape. 

A summary of the key recommendations in the report is set out below.

1. ‘Content Service Enterprises’

The Review recommends that the new regulatory framework would apply to ‘content service enterprises’ (CSEs), regardless of how these organisations deliver their services.  Organisations would be defined as CSEs if they have control over the professional content they deliver and have high levels of both Australian users of content and revenue derived from supplying that content to Australians.

The Review proposes that certain criteria apply, including revenue thresholds, before an organisation would be considered to be a CSE and that these thresholds be set at a high level to exclude small and emerging content providers, and reviewed periodically by the regulator.  The Review sets initial thresholds at around $50 million a year of Australian-sourced content service revenue and audience/users of 500,000 per month.  The Review indicates there are currently approximately 15 organisations that would be defined as CSEs, including existing broadcasters (such as Foxtel, Southern Cross Austereo and DMG Radio Australia) and the larger newspaper publishers (News Limited and Fairfax Media).

Interestingly, Telstra, Apple and Google fall outside the recommended thresholds and would not be caught by the proposed new regulatory regime applicable to CSEs in Australia.

Under the new framework, CSEs would be subject to new ownership rules and would have proposed changes in ownership scrutinised.  CSEs would also be expected to continue to meet community expectations about standards applicable to the content they provide and to contribute to the availability of Australian content.

2. New Communications Regulator

The Review recommends a new statutory communications regulator to replace the Australian Communications and Media Authority (ACMA).  The communications regulator would be responsible for all compliance matters relating to media content standards, except for news and commentary.  This new body would define the thresholds for CSEs, administer ownership rules, and ensure Australian and local content obligations are applied.  It would operate at arm’s length from government direction, except in a limited range of matters. 

The communications regulator would have direct enforcement powers in response to a breach of codes or standards, and a graduated range of effective remedies to ensure compliance.  It would also have flexible powers to deal with content-related competition issues in a way that ‘complements’ the existing powers of the Australian Competition and Consumer Commission (ACCC).

3. News Standards Body

Unlike the News Media Council proposed by the recent Independent Media Inquiry, the Review recommends an industry-led body for news standards rather than a statutory body.  This new independent, self-regulatory body would absorb the functions of the ACMA and the Australian Press Council in relation to news and commentary.  

CSEs would be required to be members of the news standards body and would provide the majority of its funding (with government contributions limited to specific purposes or projects).  However, media organisations that fell outside the thresholds for CSEs could elect to become members.

The news standards body would cover all platforms (print and online, television and radio), and would be established to develop and enforce a media code aimed at promoting fairness, accuracy and transparency in professional news and commentary, adjudicating on complaints and providing timely remedies.  The body would also have the authority to refer serious or persistent breaches of the media code to the communications regulator.

Whereas internet news sites which exceeded thresholds of 15,000 hits and 3,000 print copies were to come within the jurisdiction of the News Media Council recommended by the Independent Media Inquiry, the news standards body recommended by the Review would only have jurisdiction over CSEs (and organisations that ‘opted-in’), so social media would escape regulation.

4. Media Ownership

The Review states that ‘although a range of new platforms now provide news and commentary, many are simply extensions of existing services, linking to information from a traditional provider’ and considers that media ownership and control rules are vital to ensure that a diversity of news and commentary is maintained. 

The Review recommends that ownership of local media should continue to be regulated through a ‘minimum number of owners’ rule, with the existing ‘4/5’ rule updated to take account of all entities that provide a news and commentary service and have a significant influence in the local market.  It also proposes that the ‘minimum number of owners’ rule and a ‘public interest’ test replace the current ’75 per cent of audience reach’, ‘2 out of 3’, ‘two to a market’ and ‘one to a market’ rules.  

The new communications regulator would have the power to examine and block proposed changes in control of ‘CSEs of national significance’ if it considers the proposal is not in the public interest having regard to diversity considerations.

The Review considers it ‘vital’ that the decision-making process relating to the public-interest test is independent from government, however a number of media players, including News Limited, have already expressed their concerns about what they consider to be the vague nature of the new public interest test and the potential for political interference in decision-making.

5. Australian content

The Review proposes a ‘uniform content scheme’ to ensure Australian content  continues to be supported.  It recommends that content quotas and minimum expenditure obligations be repealed.  Instead, qualifying CSEs should be required to invest a percentage of their total revenue from professional television content into either Australian dramas, documentaries or children’s programs, or alternatively, a new converged content production fund.  Similar to the existing direct subsidy programs administered by Screen Australia, the converged content production fund would invest in content productions on a competitive basis.  The fund’s mission would be to develop new and innovative content suitable for all platforms and would focus on innovation in service delivery in both audio and audiovisual content, with a special emphasis on regional and community content service providers.  As well as being funded through contributions from eligible content service enterprises under the uniform content scheme, the Review recommends that the converged content production fund would be funded by direct appropriations from government and spectrum fees paid by radio and television broadcasters.

6. Spectrum Allocation and Management

This is a significant, and arguably the most revolutionary, recommendation of the Review.

The Review recommends a common approach to the planning, allocation and management of both broadcasting and non-broadcasting spectrum, that would include a market-based pricing approach (in line with arrangements for other types of radiocommunications spectrum), planning mechanism that consider public interest factors, and certainty for spectrum licence holders about the licence renewal process.

Under the proposed approach, existing holders of commercial broadcasting licences would have their apparatus licences replaced by spectrum licences planned for the supply of broadcasting services.  Broadcasting licence fees would be abolished and replaced by annual spectrum access fees based on the value of the spectrum as planned for broadcasting use.

Issues

The Review’s recommendations give rise to a number of issues that are sure to be raised by industry players including, but not just limited to, potential CSEs.  What confidence can they have about the thresholds and should changes to the thresholds require legislative support, rather than just regulatory whim?  Will content standards stifle the development of emerging content service initiatives, even where those initiatives are housed within larger organisations that qualify as CSEs?  How will the significant investment made to date by organisations who have paid substantial amounts for spectrum, such as television networks, radio networks and mobile carriers, be protected against inroads made by content service providers who avoid the use of such spectrum?  How, if at all, can the News Media Council proposed by the Independent Media Inquiry sit comfortably with the new standards body that the Review recommends?  The debates around these, and many other issues, have only just begun.

What next?

The Government will now consider the Review’s recommendations.  The Minister for Broadband, Communications and the Digital Economy, Senator Stephen Conroy, has encouraged stakeholders to engage with the Committee’s recommendations, and has indicated that the Government will respond ‘in due course’.

Key Recommendations

  • Replace silo-based regulation with platform and device-neutral regulatory framework.
  • Introduce new concept of “Content Service Enterprises” or “CSEs” and limit regulatory framework to these organisations.  Excludes the likes of Telstra, Apple and social media from reach of media regulation.  
  • New statutory regulator to replace the ACMA.  This new regulator to have the power to examine changes in control of CSEs of national significance and to block proposed transactions based on public interest considerations.
  • New self-regulatory body to oversee journalistic standards for news and commentary across all platforms.
  • A ‘minimum number of owners’ rule and ‘public interest’ test to replace the current ‘75 per cent of audience reach’, ‘2 out of 3’, ‘two to a market’ and ‘one to a market’ rules.
  • Ownership of local media to be regulated through a ‘minimum number of owners’ rule with the existing ‘4/5’ rule updated to take account of all entities that provide a news and commentary service and have a significant influence in the local market.
  • Introduce a new Communications Act.
  • Repeal  content quotas and minimum expenditure obligations and replace them with production requirements or contributions to a new converged content production fund.
  • A common approach to planning, allocating and managing spectrum to be implemented, including a market-based pricing approach, consideration of public interest factors, and certainty for spectrum licence holders in the renewal process.
  • Existing holders of commercial broadcasting licences to have their apparatus licences replaced by spectrum licences.  Broadcasting licence fees to be abolished and replaced by annual spectrum access fees.

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.


Related Content