Australian Broadcasting Corporation
submission in response to the
Convergence Review Interim Report
February 2012
ABC submission in response to the Convergence Review Interim Report
January 2012
Introduction
The ABC welcomes the opportunity to provide further input to the important work being conducted by the Convergence Review. The changes foreshadowed in the Interim Report represent a significant transformation of the regulatory framework governing the media in Australia.
The Committee is working towards the establishment of a new regime for content and communications that is technology-neutral, promotes innovation, reduces unnecessary regulation and establishes a degree of certainty for a rapidly-evolving industry. The ABC understands the conceptual appeal of such an approach. However, the Committee’s recommendations raise several practical concerns.
There is no doubt that technological change is transforming the way media is produced, consumed and distributed. It is essential that outmoded regulation should not impede the ability of citizens and the media industry to take advantage of the benefits that advances in technology have made possible. In this process, however, policy-makers should not abandon or neglect regulatory tools that remain effective in delivering public policy outcomes. The Corporation believes that the Committee needs to be cautious about the transition path as the majority of Australians continue to use and value traditional media platforms to a greater or lesser degree.
Similarly, a desire to promote consistent content standards and regulatory obligations across platforms should take into account the significant differences between delivery platforms and the business models that have developed around them. Regulatory parity for its own sake may not deliver the best public policy outcomes.
For nearly 80 years, the ABC has served the Australian community in delivering key social objectives, including developing Australian culture, providing an independent news and current affairs service and enhancing the education of both young and old. Following a period
of rapid innovation, the ABC remains well placed to use the tools of the digital era to improve the service it offers to the community. This submission highlights some of these opportunities.
A new regulator for the digital economy
One of the central proposals in the Interim Report is the establishment of a unified regulatory regime applying to the whole of the content and communications sector and administered by a new converged industry regulator. As described, the regulator would have flexible rule- making powers and a broad remit that includes industry development, the encouragement of competition, complaints handling and content standards.
The Interim Report is, however, silent on the relationship between the national broadcasters and the proposed converged industry regulator.
The current broadcasting regulatory regime applies to the ABC and the Special Broadcasting Service (SBS) primarily in relation to technical and spectrum matters; the regulator, the Australian Communications and Media Authority (ACMA), has no input into the national broadcasters’ editorial processes. This reflects their specific accountability mechanisms, which provide parallel mechanisms for achieving editorial outcomes, and functions as a means of ensuring their independence.
The Corporation believes that it is vitally important that the national broadcasters have the same qualified relationship with any unified regulatory regime in order to preserve their independence. To give a future converged industry regulator greater input into the editorial processes of the ABC and SBS would significantly change the basis on which the national broadcasters operate. It would also impose a more onerous governance regime comprising their existing accountability obligations and those that apply to the rest of the industry for no defined public benefit or improved outcome in terms of content or standards.
Independence from all vested interests, particularly those of the Government of the day, is a central characteristic of effective public broadcasters around the world.1
In the case of Australia’s national broadcasters, editorial and operational independence is primarily secured through legislation. The ABC, for example, is an independent statutory body governed by its own Act of Parliament, the Australian Broadcasting Corporation Act 1983 (“ABC Act”), and is primarily accountable to its Board, particularly in relation to editorial matters. In addition, it is accountable to the Parliament through appearances at Senate Estimates hearings, questions on notice, appearances before Parliamentary committees and detailed reporting on a range of specified matters in its annual report.
It underpins their responsibility to provide impartial news and information services that support democratic institutions and serve the needs of the public as a whole. It also provides public broadcasters with the ability to take the creative risks required to innovate and reflect cultural diversity.
2
1 For an indicative list of the characteristics of public broadcasters, see: Broadcasting Research Unit. The Public Service Idea in British Broadcasting: Main Principles, 1985. Luton: John Libby.
As a Commonwealth entity, its financial and governance arrangements are subject to audit by the Australian National Audit Office. Unlike commercial media organisations, the ABC is subject to the Freedom of Information Act 1982.
2 ABC Act, s.80; Commonwealth Authorities and Companies Act 1997, s.9.
The ABC Board is, among other things, required to “maintain the independence and integrity” of the Corporation.3 It is responsible for developing codes of practice in relation to programming matters on the ABC’s services. These form the basis of the Corporation’s more detailed Editorial Policies, which specify the content standards that apply to program making, including specific stipulations in relation to impartiality, fairness and accuracy in reporting.
The ABC Board is required to notify the codes of practice that it develops to the ACMA.4 However, the regulator’s role in relation to such codes is confined to hearing unresolved complaints from members of the public alleging breaches by the ABC.5 By comparison, the ACMA is actively involved in the development and approval of the codes of practice for the commercial, subscription and community broadcasting sectors.6
The number of ABC-related complaints reaching the ACMA and its predecessor, the ABA, since 1992 has been consistently very small, both as a proportion of total audience feedback and in relation to the enormous amount of radio, television, online and mobile content provided by the Corporation. Of the ABC-related complaints which have reached the ACMA, the number of complaints upheld has been consistently low.
Maintaining the independence of the Corporation within the wider broadcasting regulatory regime has remained an important part of media policy under successive governments. The Government’s response to the Department of Broadband, Communications and the Digital Economy’s 2008 discussion paper on the ABC and SBS, “Strengthening our National Broadcasters”, recognised that “[i]ndependence is the foundation stone of national broadcasting in Australia”.7
Nonetheless, the ABC does not operate in isolation from the rest of the broadcasting industry. In providing its services, the Corporation is required to take into account “the broadcasting services provided by the commercial and community sectors of the Australian broadcasting system” and “the standards from time to time determined by the ACMA in respect of broadcasting services”.8
The primary piece of legislation establishing Australia’s broadcasting regulatory regime, the Broadcasting Services Act 1992 (“BSA”) applies to the ABC only in relation to a limited number of matters—essentially complaints escalation, as described above, and spectrum and technical matters. The BSA requires the ACMA to reserve spectrum for the national broadcasters, if so directed by the Minister,9 and ensures their inclusion in the digital television and radio schemes.10
3 ABC Act, s.8(1)(b).
Parts 9A and 9B of the BSA give the ACMA broad powers to develop or impose mandatory technical standards, industry codes and industry standards applying to any or all broadcasters, including the ABC. However, any such code or standard will have no effect on the Corporation, if it deals with matters already covered in a code of
4 ABC Act, s.8(1)(e).
5 BSA, ss.150–153.
6 BSA, s.123.
7 Department of Broadband, Communications and the Digital Economy. “Strengthening our National Broadcasters”, Government policy response, 12 May 2009, p. 13.
8 ABC Act, s.6(2)(a)(i) and (ii).
9 BSA, s.31.
10 See, e.g. BSA, ss.8AC, 25, 26C and 26D (digital radio) and Sch. 4 and 6 and passim (digital television).
practice developed by the ABC Board and notified to ACMA.11
SBS is subject to similar accountability measures and responsibilities under the Special Broadcasting Service Act 1991. It is subject to the BSA only to the same limited extent as the ABC.
In this way, the BSA simultaneously requires the national broadcasters to comply with relevant technical standards and spectrum regulation, while ensuring that editorial matters remain the preserve of the ABC Board.
Any unified regulatory regime should be likewise structured in order to preserve the independence of the national broadcasters. The ABC acknowledges that continuing convergence in Australia’s media sector may result in industry-wide regulatory changes that would be overseen by the proposed converged industry regulator. However, where such changes would affect the Corporation’s program-making activities and editorial output, their implementation should remain a matter for the ABC Board, rather than the regulator, and can be achieved through the codes of practice in relation to programming matters that the ABC Board is required to develop.12
The ABC and SBS have articulated similar arguments in relation to the specific question of classification in their joint submission to the Australian Law Reform Commission’s review of the National Classification Scheme, which proposed the introduction of unified classification obligations, categories and criteria under the supervision of a single, cross-platform regulator.
The Corporation believes that this mechanism would ensure appropriate harmonisation with the broader industry in relation to such changes, particularly if the Board’s existing obligation to take into account standards determined by the ACMA in respect of broadcasting services were transferred to standards determined by any future unified regulator.
13
Content Service Enterprises
The Committee has recommended the removal of broadcasting licences for the provision of content. Instead, a technology-neutral regulatory regime will apply to “Content Service Enterprises” (CSEs) which, the Interim Report suggests, will have obligations in relation to content standards, media diversity and Australian content.
The Report does not make clear if or how the concept of the CSE would apply to the ABC.
At present, the BSA distinguishes between different categories of broadcaster; national, community, subscription and commercial broadcasters are not subject to the same regulations.
Similarly, the Act differentiates between distribution platforms, imposing a greater level of regulation on television services than on radio and taking a light-touch approach to online and mobile delivery.
The ABC submits that the rationale for distinguishing between different types of broadcasting based on their business model remains. The CSE concept needs to be applied flexibly so that regulation can be graduated. For example, in the case of content regulation, the
11 BSA, s.130L.
12 Under ABC Act, s.8(1)(e).
13 ABC and SBS. “National Classification Scheme Review”, Joint Submission, November 2011, pp.2–9.
Corporation already has, as demonstrated above, an effective regime embodied in its Editorial Policies. Any proposal which seeks to impose greater external oversight of these procedures will undermine the ABC’s independence and well-established governance arrangements. The method of allocating spectrum is another case where public policy objectives are facilitated by regulation which distinguishes between the business models of broadcasters. In reflection of their specific roles within the broadcasting system, national broadcasters and community broadcasters access their spectrum by Ministerial reservation.14
The concept of CSEs appears to be born of the desire for “regulatory parity”. While the Corporation can understand the appeal of this principle, the Committee’s main focus should be on regulation that is practical and effective and which delivers the desired public policy objectives. The ABC believes that the idea of regulating CSEs in the online environment faces grave practical difficulties. Many of the most significant entities that fit within the scope of the definition suggested by the Committee are based offshore. Establishing a viable Australian connection for regulatory purposes is thus likely to be difficult, particularly where content is stored on servers located in other jurisdictions. Often these entities are just distribution platforms, not content creators. It is unclear why they should attract additional regulation or levies when a DVD shop in the main street does not. There is also a real risk that regulating CSEs based in Australia will stifle innovation and harm the development of the digital economy by driving business offshore. The Interim Report does not adequately consider or model the potential consequences of these complicating factors.
Similarly, content regulation differs according to platform and business model. For the ABC, the key issue is to ensure that the regulatory regime is sufficiently flexible to deal with the unique nature of public broadcasting.
In addition, there exists a fundamental difference in the approach to audiences between business models. Commercial free-to-air television, for example, is focused on attracting the highest possible audience at any one time to a program, whereas subscription models are about offering choice and hence spreading viewers across a range of programs. Achieving regulatory parity in such circumstances might be difficult or counterproductive.
Promoting Australian content
The ABC agrees with the Review Committee’s assessment that market intervention is required to ensure that the community has access to Australian content and that a variety of tools are required to ensure this outcome, including direct and indirect subsidy measures. Any intervention should, however, be taken in a strategic and holistic manner to ensure that objectives are set, appropriate funding and incentives are available and that funding models that deliver Australian content are supported and sustainable. While the ABC is supported by government appropriation to meet its public service obligations, commercial media, like any other commercial business, are driven by a fundamental imperative to return value. One obvious way of returning value is to reduce costs while maintaining revenue. Regulated market interventions must take into account that in the Australian content creation industry,
14 BSA, s.31.
one clear way to reduce costs is to reduce the expenditure on relatively-expensive local production. If investment levels drop so too will levels of Australian content.
A new uniform scheme for Australian content
The Committee envisages a transition away from the current system of content quotas imposed on broadcasters toward a model where all CSEs are required to support Australian content by:
• committing a percentage of total program expenditure to specified Australian content, or
• if that is not possible, by contributing to a converged content production fund.
As the ABC has noted in its previous submissions, while the Corporation is not subject to Australian content quotas, it does believe that quotas make a vital contribution to ensuring that there is a healthy “ecosystem” which supports the production and distribution of Australian content.
It is clear that the Committee intends to broaden the scope of the obligation to contribute to the production of Australian content beyond broadcasters to new media providers and content aggregators. The Committee recommends that the new scheme should be implemented as soon as practicable for CSEs that do not use broadcast spectrum.
Putting to one side the issue of whether it is desirable to apply such a regime to new media players, the ABC is not convinced that the new model proposed by the Committee delivers better public policy outcomes than the current quota system in relation to commercial broadcasters.
One of the key features of the existing system, in particular the 55% transmission quota, is that it generates a substantial volume of content. While the characteristics of the broadcast market ensure healthy competition for audiences, quotas create a competitive environment for the creation of Australian content. Quotas in effect create demand for local product. Subsidies and incentives (such as employed, for example, in New Zealand) cannot replicate the demand drivers that flow from a quota system.
Recently-released figures show that the current system delivered 25,000 hours of Australian content on commercial free-to-air television, including more than 700 hours of first- run drama and documentaries, and expenditure of $1.23 billion.15 Of course, a proportion of this content would still have been produced in the absence of quotas; however, the importance of the quota system is demonstrated by the low levels of Australian content on commercial digital multi-channels, which are not subject to Australian content quotas.16
The Committee’s proposal appears to be modelled on the requirements imposed on pay- television licensees that broadcast drama channels and drama-channel package providers to invest at least 10% of their total program expenditure on new Australian drama.
15 Free TV Australia, “Networks invest a record $1.23 billion in Aussie Programming”, Media Release, 23 October 2011.
16 The low levels of Australian content on commercial television multi-channels is documented in Screen Australia, Convergence 2011, pp. 64–5.
According to the ACMA, the Australian content requirements for pay-TV generated
$35 million in expenditure in 2009–10.17
While such an outcome may produce “event” television of a high quality, it will not promote diversity of content or the sustainability of a local independent production industry.
The pay-TV sector thus produced vastly fewer hours of Australian drama than free-to-air broadcasters. This difference reflects a number of factors.
First, by definition, an expenditure requirement focuses on expenditure, rather than hours of content broadcast; there is no requirement that qualifying expenditure necessarily results in broadcast hours. For example, development costs and investment in film festivals may well be counted toward total expenditure without any increase in broadcast hours. Further, an expenditure requirement may create greater incentives for certain types of production than others—for example, high-cost, high-quality, short-run drama may satisfy the expenditure requirement at the expense of cheaper longer-run formats.
It is important to note that the level of expenditure on Australian content by commercial free-to-air broadcasters is considerably greater than the 10% of program expenditure imposed on pay-TV providers. Any expenditure-based quota scheme would need to be properly calibrated to ensure that it doesn’t simply result in a massive windfall to commercial broadcasters and lead to a sharp reduction in the volume and diversity of Australian content on local television screens.
Before a decision is made to transition to a new regime based around program expenditure, the ABC believes that modelling work needs to be undertaken to ensure that the new system would produce a similar volume of content to present levels, similar levels of competition in the domestic content market and similar levels of competition for creative talent.
On-demand Australian content
Given the Committee’s concern about the need for Australian content to be available to consumers in an on-demand environment, the ABC would like to reemphasise the importance of ensuring that its online content distribution costs are explicitly funded in the same way that its costs for distributing content by terrestrial broadcast.
The ABC’s iview catch-up television service continues to rapidly grow in popularity. In 2011, iview recorded a monthly average of 2.9 million visits, an increase of 48% in one year. A growing number of Australians now regard having on-demand access to programs for a period after broadcast to be part of the free-to-air viewing experience. However, the costs of distributing content online are also increasing. Unlike commercial networks, the ABC is not able to recover its content distribution network (CDN) costs through advertising. Moreover, as high-resolution screens and fast broadband connections become increasingly common in Australian homes, the ABC is experiencing growing pressure from audiences to improve the image quality of iview, which will further increase the service’s bandwidth requirements.
17 ACMA. “The new eligible drama expenditure scheme results – 2009–10”, as updated 10 December 2011, http://www.acma.gov.au/WEB/STANDARD/pc=PC_310687.
Direct funding
The ABC concurs with the assessment of the Convergence Review Committee that ultimately it is likely that increased direct government funding will be required in order to maintain Australian content at an acceptable level.
In this context, it will be important for the Committee to consider the most efficient and effective way of ensuring as many Australians as possible benefit from access to content that is funded by all taxpayers. It would be a poor outcome from both a public policy and an efficiency perspective if relatively high amounts of public subsidy were directed towards content only accessible to those Australians willing or able to subscribe to a content service.
As indicated in its previous submission, the ABC believes that a targeted initiative designed to increase the amount of Australian content on ABC2 would be an effective way to increase the variety and quantity of Australian content on digital television, as well as online through iview. This would represent a superior return on investment for taxpayers. Moreover, such an approach would avoid imposing an additional regulatory burden on commercial free- to-air multi-channels, which commercial broadcasters have argued would be unsustainable.
With a modest additional investment by government, ABC2 could bring its Australian content levels to parity with ABC1 and ABC3.
Increased funding for Australian content on ABC2 would achieve a number of benefits, most notably allowing the channel to offer contemporary, targeted and engaging Australian television programs of a type and tone of television that is not served on ABC1 or the commercial networks and which thus serves the needs of otherwise underserved niche audiences.
Producer offset
The ABC welcomes the recommendation that television content should also be eligible for a 40% producer offset in the same way as film. It believes that increasing the offset to 40% for qualifying Australian productions will create a range of benefits for producers and broadcasters and increase Australian content production.
A move away from a reliance on direct funding for television productions will significantly reduce the administrative work required of producers and particularly the inefficiency in the system whereby due diligence investigations are essentially duplicated through the offset applications process, the funding application process and program selection process within broadcasters.
The Interim Report indicates that the tax offset only be available to “premium television content” in order to bring it into line with the current offset rate for feature film production.18
The existing rules for access to the offset have created a clear understanding within industry of what constitutes “high end” or “premium” television content. The ABC believes that the existing thresholds should continue to apply in the case of a 40% offset. In terms of While “premium television content” is not yet defined by the Committee, the ABC believes that the current definition of premium content should continue to be used.
18 Convergence Review Interim Report, p.11.
budget, a qualifying production should continue to be defined by the costs as stipulated today for each qualifying genre.
The ABC also believes that any increase in the producer offset should not be at the expense of funding to Screen Australia. An investment in the offset should be viewed as a necessary increase in the overall commitment to creating Australian content in response to a shifting marketplace. Screen Australia is ideally positioned to support content development, talent development, innovation and riskier content propositions.
Interactive content and the Converged Content Production Fund
The Committee has recommended that interactive content be eligible for the 20% producer offset scheme and have access to a converged content production fund.
The ABC welcomes these suggestions to stimulate the development of an innovative Australian digital content production industry. Broadband has not only transformed the delivery of media, but has also enabled new forms of content that are growing in popularity.
Given that the Committee’s recommendation to increase the producer offset to 40% for television will support traditional linear drama, documentaries and children’s programming, the focus of the converged content production fund should be on innovative, interactive content which harnesses the entertainment, informational and educational potential of fast broadband. The ABC acknowledges that many of the most innovative operators in the digital content sector are smaller enterprises. As the OECD has stated, while access to finance is a key issue for these firms, there is also a need to upgrade the capability of entrepreneurs to operate sustainable businesses.19
As stated in the Corporation’s earlier submission to the Review, the ABC would be prepared to administer a converged content production fund to commission digital content, including applications and services. To ensure that funds are spent effectively, it is important that content proposals are targeted to audience preferences. The ABC’s well-developed digital platform and its extensive knowledge of audiences means that it is ideally positioned to assist with the identification, distribution and commercialisation of interactive digital content.
Consequently, industry development and training should also be promoted by the fund.
In relation to the 20% producer offset, the ABC believes that criteria need to be developed to ensure that eligible projects will be accessible to sizeable audiences and deliver an appropriate economic and cultural return to the community.
Australian music content
The Committee has noted that the importance of Australian music and has indicated that it is considering extending regulation to capture digital radio and internet radio stations in keeping with principle of regulatory parity.
The ABC is not subject to Commercial Radio Code of Practice, which sets out Australian music quotas. Nevertheless, the ABC has set its own targets. The table below illustrates the strong performance of the ABC against these targets which equal or exceed those applying to commercial radio.
19 OECD (2010), Entrepreneurship and Innovation, OECD Studies on SMEs and Entrepreneurship, pp.5–6.
Australian music as a percentage of all music on ABC Radio networks, 2010–11
Network Target 30 June 2009
– 1 July 2010
30 June 2010 – 1 July 2011
ABC Radio National 25% 39.1% 38.8%
ABC Local Radio 25% 31.7% 31.3%
ABC Classic FM 30% 29.8% 31.2%
triple j 40% 42.9% 45.9%
ABC Dig Music (digital only) 40% 40.48% 43.29%
ABC Jazz (digital only) 25% 25.35% 25.97%
ABC Country (digital only) 25% 27.18% 30.96%
In a further demonstration of the ABC’s commitment to Australian music, the Corporation also launched triple j Unearthed, a digital radio station that broadcasts 100% Australian independent music, in October 2011.
In its previous submissions to the Committee, the ABC has highlighted the importance of extending digital radio beyond its current footprint in the five mainland capitals to ensure equity of service between metropolitan and regional Australia. As the table above demonstrates, the rollout of the infrastructure for digital radio nationwide would significantly improve the availability of Australian content as it would expand the terrestrial reach of the ABC’s four specialist music digital radio services.
The ABC submits that a proposal to impose Australian content obligations on commercial digital radio will only be fully effective if it is accompanied by a plan to complete the terrestrial roll-out.
Local content
The Convergence Review has reported strong support for local content as a powerful message from its public consultations.
The Committee’s recommendations focus on measures that can be used to encourage commercial broadcasters and the community sector to promote local content. In its Interim Report, the Committee notes the difficult economics involved for commercial radio and television in producing local content and how broadcasters have increasingly turned to networked content. In response, the Committee recommends a more flexible compliance and reporting regime to assist commercial broadcasters to meet their local content obligations. The Committee also recommends that the converged content production fund be used to direct resources to initiatives from local communities and content providers to deliver local content.
The ABC welcomes these proposals as they will contribute to a diverse and healthy media industry. The Corporation is concerned, however, that the Committee should also consider the contribution that additional funding of the national broadcaster can make to addressing market failure in the production of local content.
The ABC views the provision of local content as central to its Charter requirement to
“reflect the cultural diversity of the Australian community”. It has created a network of 51 regional bureaux across Australia. Local radio services remain critical to the providing high- quality and independent news, information and general programming to rural and regional communities throughout Australia. Increasingly, communities have come to rely on the ABC’s multi-media local online services. Through the ABC Open initiative, the ABC has also provided training and a platform for people in regional Australia to share their stories with the community. Across the country, the ABC is the town square where the issues of importance to the community can be discussed and debated.
The Corporation is strongly committed to local content and would seek to do more if it was able to access additional resources either through increased direct funding or by accessing the converged content production fund.
For example, the ABC currently has cross-media reporters in 34 of its 51 regional locations.
The Corporation would like expand this team of regionally-based video journalists, including specialist business and sports reporters, to provide rich video content from their communities.
These video journalists would be highly mobile and able to extend ABC video reporting to regional and remote areas of the country which are not currently serviced by the Corporation.
In many of these areas, there is minimal commercial and community-generated local content.
Increased funding for local content across the ABC would provide increased benefits to local communities in an environment in which many commercial providers have withdrawn or reduced their presence.
Spectrum
The Interim Report proposes the removal of the distinction between broadcasting and other spectrum on the basis that this will “lead to more efficient use of spectrum” and “[give]
entities more flexibility to deliver content on any platform in a converged world”.20
The Report does not demonstrate that this proposal will actually deliver greater efficiency in spectrum use. Moreover, while it seeks to establish licence fee charges that “reflect the value of the spectrum”, it appears to calculate the value of spectrum in purely monetary terms and does not account for the significant public and societal benefits of healthy local broadcast and production industries.
As described, it would entail the elimination of the regulatory concept of the broadcasting services bands and its associated planning regime, as set out in Part 3 of the BSA, as well as the conversion of existing radio and television broadcasting licences into tradeable spectrum licences.
The ABC operates radio and television services in the broadcasting services bands using spectrum reserved for the purpose by Ministerial direction under s.31 of the BSA. It has direct experience of the operations of the planning regime.
The regulatory arrangements for the broadcasting services bands set out in the BSA differ from the wider spectrum management regime established under the Radiocommunications Act 1992 (“RA”) because they are intended to achieve different objectives. Where the RA seeks to
20 Convergence Review Interim Report, p.6.
achieve unspecified public benefit “by ensuring the efficient allocation and use of the spectrum”,21 the BSA establishes a regulatory regime intended to deliver a range of specific public benefits.22 In particular, it ensures that, to the greatest possible extent, Australian audiences enjoy free access to a diverse array of high-quality commercial, public and community broadcasting radio and television services that provide, among other things, Australian content and locally-relevant news and information. Precisely because of the ACMA’s obligation to promote this wider set of public benefits, the efficient and economic use of the radiofrequency spectrum is only one of the factors that it is required to consider when planning the allocation of broadcasting services bands spectrum.23
The ABC acknowledges that various chapters of the Interim Report attempt to ensure the continued delivery of many of these public benefits. However, the Committee’s proposals are not presented in adequate detail or with sufficient underlying modelling of their impacts to demonstrate that shifting to a market-based allocation mechanism for all spectrum will indeed achieve that result. The Committee needs to better account for the longer-term consequences of significantly shifting the terms upon which access to spectrum is granted to broadcasters and the impacts such changes will have on the local free-to-air broadcasting and production industries and on Australia audiences.
For example, the discussion of the proposal to eliminate the category of broadcasting spectrum in the Interim Report acknowledges “public interest factors” that have contributed to sectoral diversity, but suggests only that a set of such factors may need to be incorporated into the new spectrum framework. In the absence of any concrete description of the form such additions to the framework might take, it is difficult to assess their likely effectiveness.
Moreover, such additions would appear to reintroduce broadcasting-specific elements into the Committee’s uniform spectrum planning regime, raising the question whether the same outcomes might not more easily be achieved by simply retaining the concept of the broadcasting services bands.
Unifying spectrum planning, as proposed in the Interim Report, also entails practical risks for broadcasters in relation to interference management and the potential for disruption to audiences that can result from it. These issues do not appear to have been considered by the Committee. Audiences for Australian broadcasting services expect their television and radio reception to be interference-free and almost universally available. They are quick to notice and complain, particularly to broadcasters, if any deterioration in quality occurs. The ACMA adopts an end-to-end approach to planning of spectrum in the broadcasting services bands that involves extensive investigation and detailed planning prior to spectrum allocation in order to ensure that broadcasting services will not be subject to interference before they begin transmission. By comparison, its planning of the remainder of the radiofrequency spectrum is based on a largely complaints-driven approach to interference that leaves interference management in the hands of the licensees of the spectrum. While less resource intensive, this approach results in greater uncertainty of transmission quality. As the planning regime for the broadcasting services bands is highly unlikely to be retained after they are eliminated, the Committee’s proposal is likely to create a greater risk of interference to broadcasting
21 Radiocommunications Act 1992, s.3(a).
22 BSA, s.3.
23 BSA, s.23.
transmissions, with a corresponding decline in audiences’ experiences of free-to-air television and radio and a rise in the level of resources that broadcasters are required to commit to handling reception-related complaints from the public. This is of particular concern in the context of new broadcasting services, such as the regional expansion of digital radio, and the potential introduction of non-broadcasting services, such as so-called “white spaces” wireless broadband systems, alongside or interleaved with existing radio and television services.
The ABC also notes that the conversion of radio and television licences to spectrum licences would effectively amount to a conversion of public assets into private and tradeable property. Currently, commercial and community broadcasters are provided with licensed access to spectrum on the condition that they contribute to the delivery of the public benefits created by the broadcasting regulatory regime and pay specified licence fees. Should a broadcaster decide that it no longer wishes to operate a broadcasting service, it is required to return its licence, which the ACMA is able to then re-auction and allocate to another prospective broadcaster. By comparison, the conversion of broadcasting licences to spectrum licences would create a situation where a broadcaster seeking to exit the industry or reduce the amount of spectrum it uses to deliver its services is instead able to on-sell its licence to the spectrum, including to non-broadcast users. The ABC believes that spectrum currently used for radio and television should continue to be allocated for broadcasting services until such time as a formal decision is taken by the Government to abandon broadcasting. The proposals that spectrum charges should reflect the value of spectrum—despite the inclusion of a set of public interest factors—and the capacity to on-sell spectrum for non-broadcasting purposes both pose significant threats to the longevity of free-to-air broadcasting and the social and cultural benefits it delivers.
Digital radio
The ABC notes that the Committee has reserved comment on the expansion of digital radio broadcasting into regional Australia for its Final Report. As the Corporation has previously indicated, it is a strong supporter of such an expansion. The delivery of digital radio services beyond the mainland state capitals would allow regional audiences to receive the same enlarged suite of digital radio services as are currently offered to metropolitan audiences.
As noted above, however, the ABC concerned about the potential interference risks to a future regional digital radio roll-out should it be undertaken under the less-rigorous planning regime currently used for non-broadcasting services. Radio services are one of the primary channels for communicating critical information to regional communities during natural disasters and other emergency situations. The possibility of unforeseen interference affecting digital radio transmissions may thus have more serious consequences than reduced audience amenity. Accordingly, the Corporation believes that any future digital radio expansion in regional Australia should be planned using the rigorous processes currently applied to all broadcasting services in the broadcasting services bands.
Public Broadcasting
Australian content quotas and the ABC
The Committee has recommended that ABC1 should be subject to a 55% Australian content transmission quota to bring it into line with arrangements for commercial free-to-air broadcasters.
The ABC believes that this proposal is misconceived for a number of reasons and, as presently drafted, is unlikely to promote the public policy objective of increasing either the quality or quantity of Australian content available to audiences.
It is important to note that there is no underlying market failure in relation to the Corporation’s broadcasting of Australian content that creates a policy need to impose a quota.
One of the main drivers for broadcasters to acquire overseas content is its low price and hence its potential to realise a greater profit than expensive, locally-produced content. As the ABC does not commission Australian content in order to derive a profit, it is not subject to this driver. Instead, the Corporation acts in accordance with its Charter, which requires it to
“provide broadcasting programs that contribute to a sense of national identity and inform and entertain, and reflect the cultural diversity of, the Australian community”.24
The Corporation already produces significant amounts of Australian Content across four television channels. In 2010–11, ABC1 broadcast 54.7% Australian content, ABC2 broadcast 26.3%, ABC3 50% and ABC News 24 100%.
Accordingly, the ABC commissions—and will continue to commission—as much Australian content as its funding permits.
25 In contrast, the commercial free-to-air broadcasters have to date shown very little Australian content on their digital multi- channels.26
The imposition of a transmission quota which focuses solely on the amount of Australian content on ABC1 neglects the substantial amount of Australian content screened on the ABC’s other digital channels. It is important to note that the 55% quota does not require the broadcast of new content; repeated programs also count towards to the total.
In the absence of additional funding, a 55% transmission quota would mean that the ABC would be forced to either:
• increase the number of repeats on ABC1, or
• move Australian content from ABC2, ABC3 and/or ABC News 24 to ABC1.
In either case, the ABC would lose some programming flexibility on ABC1 for no corresponding public benefit.
In addition, the ABC queries whether the Committee envisages that the proposed quota, which it suggests be imposed on ABC1 in order to be “consistent with the obligation of
24 ABC Act, s.6(1)(a)(i).
25 These figures reflect actual programming; they omit interstitial and promotional material.
26 The proportion of Australian content fell from 52% of total television hours broadcast across all free-to- air networks in 2008 to 38% in the first six months of 2011, Screen Australia, Convergence 2011, pp. 64–5.
commercial FTA television broadcasters”,27 will be lifted when the existing quota obligations applying to the commercial television networks are dismantled in favour of a broader scheme applying to CSEs based on total program expenditure levels.28
Charter Amendments
The Interim Report has recommended that the charters of the national broadcasters be updated to reflect the range of their existing services, including online activities.
As the Convergence Review has noted, audiences are moving beyond the broadcast platforms of radio and television and using the internet to access content on demand across multiple devices. The ABC has embraced the potential of digital technology and new consumer devices to make its content available to Australians at a time and place that suits them.
ABC audiences have responded extremely positively to these digital initiatives. ABC Online has a monthly reach of more than 3.7 million internet users. ABC news and current affairs websites reach an average of 1.8 million internet users each month. ABC iview is Australia’s most comprehensive catch-up TV service with an average of 873,000 monthly visitors. Podcasts of ABC radio programs reached 63.9 million in 2011. In addition, thousands of regional Australians are telling their own stories on ABC Open. As with the ABC’s domestic operations, Australia Network and Radio Australia are increasingly using digital technologies to reach and engage their Asian and Pacific audiences.29
As the Corporation indicated in its earlier submission to the Convergence Review, all these activities are within the scope of the ABC Act, so amending its Charter is not essential for the ABC to continue to provide these services to the public. Nonetheless, the Corporation agrees with the proposition put by the Committee that modernising the Charter to transparently reflect the scope of ABC activities is desirable.
The Corporation believes that this could be simply achieved by amending the ABC Charter to make clear that the ABC’s functions include broadcasting and “digital media services” in relation to both domestic and international services. The ABC would welcome further discussion with the Committee on the drafting of a revised Charter if that would be of assistance.
Content standards
The Interim Report provides no real opportunities to offer comment on content standards, as it effectively defers the formulation of its response on such matters to the Australian Law Reform Commission’s review of the National Classification Scheme and the Independent Media Inquiry, neither of which has publicly reported its findings. The Independent Media
27 Convergence Review Interim Report, p.15.
28 Convergence Review Interim Report, pp.11–12.
29 Radio Australia’s Podcasts increased by 24% from 3.8 million in 2009–10 to 4.7 million in 2010–11. In 2010–11, Australia Network had three programs in the ABC’s top ten vodcasts, with its programs averaging more than 180,000 downloads a month.
Inquiry has not produced an interim report for public consideration. As a result, the Committee’s proposals in relation to content standards will first appear in the Final Report and will thus not be the subject of public consultation.
The ABC has participated in the two reviews cited. However, it can offer little comment until their findings and recommendations are known and the Convergence Review’s decisions whether and how to adopt those findings and recommendations are known.
As discussed above, the Corporation believes strongly that the determination of the content standards that apply to its programming is, and should remain, a matter solely for the ABC Board to determine through the process of determining codes of practice in relation to programming matters on ABC services. Should the Committee determine that changes to the content standards applying to the wider industry be required, an appropriate level of harmonisation with the Corporation’s standards is likely to flow from the ABC Board’s obligation to take account of the standards determined by the regulator from time to time.
In relation to the Independent Media Inquiry, the ABC notes that it was established to inquire into the print media and that its terms of reference do not expressly require it to inquire into content standards in the broadcast media. It is not known whether the inquiry will confine its recommendations to the print media or attempt to extend them to the media as a whole.
In relation to content regulation, different and important considerations of principle and practice arise in relation to the print media from those that arise in relation to either commercial or public broadcasting. While some of these considerations were mentioned in the discussion paper “Layering, Licensing and Regulation”, not all were discussed. The Corporation would urge the Committee to be very cautious in attempting to develop a new regulatory framework for content standards for all media sectors that is based on print media, particularly in light of the lack of opportunity for public comment on its proposals.
Conclusion
The ABC recognises the Committee’s desire to streamline regulation and harmonise the regime that applies to entities delivering similar content. The Corporation believes, however, that a cautious approach is required. While technological convergence challenges Government to ensure the continued effectiveness of policy settings in a changing environment, it does not require changes where existing regulatory settings continue to deliver against policy goals.
Proposals to extend the ambit of regulation should be carefully scrutinised for their potential to inhibit innovation and investment to the detriment of Australian industry and consumers. Likewise, suggestions to extend the jurisdiction of the regulator must demonstrate that existing self-regulatory or co-regulatory arrangements are ineffective. In both cases, a clearly articulated public policy justification beyond a simple desire for regulatory harmony needs to underpin the intervention.
Digital technology has provided the ABC with the opportunity to transform the way it delivers content and engages with its audiences. The Corporation has been able to broaden the range of content that it is able to provide to its audience and make it more accessible than ever before. In an environment where foreign content is so easily available and the business models of traditional media players are under pressure, the role of the ABC is performing its Charter
responsibility to “contribute to a sense of national identity and inform and entertain” remains critically important. In drafting its final report, the ABC urges the Committee to consider the contribution that the Corporation can make as part of suite of policy measures to ensuring that the benefits of convergence are maximised for the Australian community.
