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1. Executive Summary and Main Recommendations
1.1 It is our contention that these independent electronic media producers
are a leading indicator of and powerhouse behind the development of new
media production and distribution forms, as they were for computer-based
communications and the film and television industries in the 70's and
early 80's, and that their views are undervalued and consequently overlooked
in the development of policy and legislation for broadcast and new media
industries .(2.5)
1.2 Smaller media companies are truly innovative in ways large, mainstream
companies cannot be, are flexible and can best deal with ongoing cultural
and technological change, and so can provide a leading indicator for not
only the broadcasting and media industries, but for sectors as diverse
as the financial, IT, education, leisure, and manufacturing sectors. (2.6)
1.3 We recommend that these smaller media companies be recognised for
their benefits to the Australian community by policy makers and that therefore
support for this vital part of the media and information economy should
be reflected in policy and underpinned by legislation.(2.10)
1.4 To deal with the ongoing and relentless dynamism of new media and
technology that the government institute a regular formal review of relevant
legislation and make allowance in other ways for this dynamism.(2.9.3)
1.5 In our opinion, legislation has entrenched existing large media companies
as the effective sole owners of and gatekeepers to economically viable
distribution platforms, whether those of broadcasting, cable or the newer
internet.(3.6)
1.6 We can predict that the trend of vital small to medium players being
forced out of independent operation of their businesses, or being forced
overseas, will continue and accelerate. This "brain drain" also includes
skilled individuals who are leaving for overseas positions. (3.7)
1.7 The need for a return on investment in new media companies will necessitate
the creation of a "choice" in the provision of different levels of interconnectivity,
resulting in a tiered delivery of services, many of them increasingly
pay services, that will mean some information and entertainment will only
be available to those with the economic means, and will become more expensive
to deliver or will only deliver poor quality services to regional or low
socio-economic demographic regions of suburban Australia.(3.10)
1.8 Anti-competitive behaviour and the operation of overseas companies
outside of Australian tax laws by large media companies and organisations
that effectively "pirate" Australian online consumers and the potential
revenues from the new economy, taking them offshore, are the greatest
threats to Australia's new media and information economy.(4.1)
1.9 Using the Australian book selling industry as an example, it is clear
that the local Australian book selling industry is potentially heading
for collapse as large heavily financed companies such as Amazon online
bookstore take their market. (4.2)
1.10 We recommend that the Commission examine ways in which government
and government legislation can reduce the anti-competitive threat posed
to Australian industry through the loss of customers and revenue to overseas
companies outside of the Australian taxation system.(4.5)
1.11 Of lesser but nonetheless significant importance is local anti-competitive
behaviour by large media companies and organisations, including Telstra,
the ABC, the CMC's and universities, which is compromising the viability
of smaller media players vital to the success of the Australian media
and information economy.(4.6)
1.12 We therefore recommend that provisions of the TPA be tightened to
prevent anti-competitive behaviour by large Australian media and communications
companies and organisations that weakens smaller companies and impedes
their ability to be genuinely competitive in the Australian and international
marketplaces.(4.9)
1.13 We would argue that simple deregulation has negatively impacted both
economically and culturally on the Australian consumer and the broadcasting
and media industries, and is against the principles expressed in the objects
of the BSA itself.(5.1)
1.14 We recommend that regulation be kept "light", be written in plain
English, and be tightened in areas that ensure equity, diversity, advertising
limits, regulated violence and sexual reference, and particularly for
the regulation of gambling using all media. (5.3)
1.15 Convergence brings together the broadcasting, media and communications
industries. It encourages consolidation and reduces diversity. "Reduced
diversity" actually means vital smaller players, such as our company,
are threatened with loss of business and eventual closure in this country.
(6.1)
1.16 We recommend that the consolidation occurring in the media industries
must be, as far as possible, reflected in a targeted consolidation of
the Acts currently regulating those industries. This will mean that only
the areas common to these converging industries is commonly regulated,
whilst areas that are wholly or substantially different remain regulated
by Acts that are currently addressing these differences. (6.3)
1.17 We recommend that this common or shared digital language of the broadcasting,
IT, media, communications, and telecommunications sectors be the prerequisite
for an industry to be called a "broadcasting" or "media" or "communications"
company in the first instance, and hence would become the prerequisite
for inclusion within the ambit of a revamped Digital Distribution (Broadcasting
and Datacasting) Act, overseen by a suitable regulatory Authority whose
aims are clearer due to the clarity of definition achieved in this strategy.
(6.5)
1.18 We recommend that broadcasting and related legislation must take
into account this strong tendency to consolidate brought on by convergence,
ideally at the level of tax incentives for small business and disincentives
for consolidation, or failing that, at intervention at the level of direct
government support through research and development funding targeted at
smaller players, and continued support for government organisations fostering
innovative content production and cultural infrastructure. (6.11)
1.19 A policy of technologically neutral legislation could ameliorate
distortions caused by inappropriate political intervention in determining
policy and legislation that allows anti- competitive and inefficient industrial
practices to occur among media players. (7.2)
1.20 We would recommend that all forms of non technologically neutral
legislation be identified and changed to reflect economic and cultural
outcomes, not technological outcomes. (7.5)
1.21 We are concerned that new media and particularly the internet are
being used as the reason for a relaxation of media controls. This is because
simple access to the internet is not sufficient to engage in genuine and
reasonable competition with larger, stronger companies operating on the
internet. (8.3)
1.22 To achieve a healthy media and information economy we recommend:
1) that legislation ensure access for new and smaller independent media
companies and relevant non-profit media organisations to all domains of
media distribution through the reservation of a limited number of FTA
and cable channels and/or bandwidth (see Tier Zero in Appendices); and
2) that legislation ensure continued support for production funding bodies
that assist new and smaller independent media companies and relevant non-profit
media organisations because of the significant cultural and economic benefits
they afford the Australian community. (8.7)
1.23 We also recommend that the idea of a "communications commons" in
all domains of the new media be enshrined in the objectives of the Act
(see Tier Zero below). (8.8)
1.24 For FTA services we recommend that the national Sixth Channel be
used for distributing the program material of members of the CBAA, and
that commercial interests be prevented from accessing this channel. This
will ensure diversity in the domain of FTA broadcasting. (8.9)
1.25 For cable we recommend that a multi-tiered system of access, similar
to that operating in the US, be mandated on all cable and other media
distribution systems. (8.11)
1.26 For the internet we recommend that a small percentage of bandwidth
be set aside for community, cultural and educational non-profit (CCEN)
use. (8.12)
2. Overview
2.1 This paper is presented from the viewpoint of small to medium independent
media producers and distributors who either sell their material (content,
production services) to a third party distributor (such as a TV or cable
network, "large" internet group, or other "large" distributor using the
internet, CD ROM, video or similar electronic media distribution platform)
or who independently distribute their material through the internet, CD
ROM, video or similar electronic media distribution platforms. They include
both new and smaller independent media companies and also relevant non-profit
media organisations who are mostly overseen by the Community Broadcasting
Association of Australia.
2.2 Further, we consider that the Broadcast Services Act 1992 (BSA), is
legislation whose ambit affects and therefore includes those industry
sectors that produce or distribute all forms of media. Due to the wide
range of influence the broadcast industries exert over our lives and culture,
and the interrelated nature of media, technology and broadcasting, the
BSA also has influence over the working of Acts related to media, communications,
telecommunications and cultural support sectors, a fact sensibly reflected
in the mix of economic, social and cultural issues outlined in the Broadcasting
Inquiry Issues Paper.
2.3 As such, these smaller media players have a direct and vital role
to play in the future of broadcasting, the new media industries and the
media and information economy and hence this inquiry, their unique circumstances
and contribution affording them significant economic influence on the
industry and our cultural environment as a whole out of proportion to
their relatively small economic size.
2.4 These smaller companies would fit into the SME category, are the primary
employers for the sector employing an estimated 65% of the workforce of
the broadcasting and new media industries, a figure increasing as the
trend to outsourcing and contracting continues, and also increasing as
the costs of production of electronic media continue to fall.
2.5 It is our contention that these independent electronic media producers
are a leading indicator of and powerhouse behind the development of new
media production and distribution forms, as they were for computer-based
communications and for the film and television industries in the 70's
and early 80's, and that their views are undervalued and consequently
overlooked in the development of policy and legislation for broadcast
and new media industries. This omission results in poorly framed legislation
that leads to inefficient and anti-competitive practices by large media
companies in areas such as the Broadcast Services Act, the Telecommunications
Act and the Trade Practices Act that would not have occurred if the views
and special needs of this independent sector where properly taken into
account and reflected accordingly in policy and subsequent legislation.
2.6 Smaller media companies are truly innovative in ways large, mainstream
companies cannot be, are flexible and can best deal with ongoing cultural
and technological change, and so can provide a leading indicator for not
only the broadcasting and media industries, but for sectors as diverse
as the financial, IT, education, leisure, and manufacturing sectors.
2.7 Smaller media companies are, in effect, a necessary research and development
"arm" of the larger companies.
2.8 Smaller independent media companies provide many benefits to Australia's
media and information economy including:
a) access for smaller educational providers, contemporary arts groups
and artists, multicultural and Aboriginal groups and other similar groups
and individuals;
b) a new model of efficient horizontal and scalable organisation utilising
the latest in IT products and services;
c) training and work experience in production and distribution;
d) distribution of this independent material through the smaller window
of independent media distribution channels, albeit access restricted by
lack of financial and marketing strength.; and
e) the cultural infrastructure operated by Australians to produce and
distribute definably Australian information, education and entertainment
content.
2.9 It is the position of our company that:
2.9.1 accessibility to and meaningful engagement with new media technologies
and forms is a necessary precondition if the wider Australian community
is to benefit ("to make the most out of the opportunities presented by
new technologies and new ways of doing things" p 9, Issues Paper, 1999,
) from efficient delivery of media and information, education and entertainment
material;
2.9.2 that such efficient delivery depends, not only on the future efficient
operation of the Australian broadcasting and communications regimes, but
also on the recognition of and accommodation in policy and legislative
frameworks to the needs of small to medium new media "players" (producers
and distributors) whose experiences are vital to prospective analysis
of the greenfields new media industries, and provide the most significant
areas of product and service development innovation through research and
development into "the opportunities presented by new technologies and
ways of doing things" (p 9, Issues Paper);
2.9.3 that to deal with the ongoing and relentless dynamism of new media
and technology that the government institute a regular formal review of
relevant legislation and make allowance in other ways for this dynamism;
and
2.9.4 that the existing broadcasting regime does not adequately deal with
the needs of small to medium producers because of: the use of increasingly
obsolete terms and concepts such as "broadcasting"; a failure of government
and legislation to ensure open access for new players to the new technologies
of delivery; and a failure of legislation to protect small business from
anti-competitive activities of the large media companies.
2.10 We recommend that these smaller media companies be recognised for
their benefits to the Australian community (outlined above) by policy
makers and that therefore support for this vital part of the media and
information economy should be reflected in policy and underpinned by legislation.
2.11 This does not mean that older, larger and more mainstream companies
do not have an important part to play in innovation, but this part is
primarily to realise economies of scope and scale in manufacture, marketing,
distribution and other functions in exploiting the soft and hard assets
developed, in the first instance, by smaller innovative companies.
2.12 For example, the three great barriers to the success of smaller media
companies are: a) a lack of access to economically viable independent
distribution platforms that are genuine alternatives to those provided
by mainstream or larger media companies; b) the need for ongoing support
for certain special kinds of services and content provided by a range
of government production funding bodies; and c) a lack of a comprehensive
and coherent set of policies and legislative instruments to ensure the
ongoing access and production support.
2.13 This paper will address only those questions raised in the Inquiry
Issues Paper that relate to the linkages between, on the one hand, new
small to medium media producers and distributors and, on the other, the
"well-being of the community as a whole, rather than just the interests
of any particular industry or group" (Issues Paper, p 6.). As such, only
those areas will be discussed where a change to the government's policy
on small players will benefit the wider community as a whole. Where appropriate,
issues additional to the questions posed by the Issues Paper will be raised
and discussed.
2.14 We do this in the knowledge that our experience in over 15 government
inquiries has proven that our views will be largely ignored by this inquiry
in favour of those of large media companies, and that this inquiry may
therefore entrench inappropriate policies and legislation. Nonetheless,
we do however regard as important the opportunity afforded by this inquiry
for smaller players to put forward their views and wish to contribute
as a matter of record.
3. New Developments in Broadcasting, Media and Technology in the Short
to Medium Term
3.1 From our experience, broadcasting, media and communications are industries
which have more in common than they have differences but this has not
yet been recognised in the Acts that control these areas. This has given
a huge competitive advantage to large companies operating in these fields
in terms of forming alliances to carry out effectively collusive behaviour
disguised by operating under different Acts, and accelerating the consolidation
that was already underway in Australian broadcasting and related industries.
We will outline issues in this area in the Convergence section below.
3.2 Our company is in a unique position to comment on the futures of broadcasting,
media and new technology as it has spent the last 15 years at the forefront
of new technologies in computing, design, media production, broadcasting,
cable and internet. We often work in communications and technology areas
many years before the larger media companies. As mentioned we and our
associates have contributed to many government inquiries in the past.
3.3 Being a smaller company working at the leading edge of technology
and change has allowed us to predict with some accuracy which technologies
are likely to gain consumer support in the future and which will not.
Often these predictions are rejected by large media companies that we
have worked with or have provided advice to, reflecting their inbuilt
resistance to change driven by the legacies of older technologies and
business systems that handicap larger media companies in determining and
appropriately addressing prospective cultural and technological change.
3.4 Our company, like many smaller media companies, can make valid or
more likely predictions because of its smaller size and resultant flexibility,
and its technological skills in using leading edge technologies well ahead
of the rest, something smaller companies, unlike the larger media companies,
are forced to do to stay in business. New producers, like technologically
literate consumers, are the "early adopters" of new technologies, not
large communications and broadcasting companies.
3.5 The fact that smaller companies are in the best position to achieve
a high level of accuracy in analysing and predicting new developments
in broadcasting and technology is often poorly realised in policies which
determine the economic circumstances that these smaller companies operate
in. As such the significant benefits and opportunities that smaller companies
could and should afford Australian industries and the community is wasted,
and the efficient operation of media companies both large and small is
impeded.
3.6 In our opinion, legislation has entrenched existing large media companies
as the effective sole owners of and gatekeepers to economically viable
distribution platforms, whether those of broadcasting, cable or the newer
internet. For example, the granting of sole control over digital datacasting
to existing broadcast players for the most valuable first years of operation,
and the takeover of all major Australian internet portals (the most popular
web sites) by existing large players - Publishing and Broadcasting Limited,
Microsoft, Fairfax, the ABC, and the News Ltd's Australian - before the
mainstream web audience has even arrived, and before government can properly
determine legislation. This further entrenches the position of large scale
and inefficient media companies and walls out or seriously impedes new
players, innovation, and the potential competitive advantage that correct
prediction of social and technological change affords Australia and its
new media and information economy.
3.7 We can predict that the trend of vital small to medium players being
forced out of independent operation of their businesses, or being forced
overseas, will continue and accelerate. This "brain drain" also includes
skilled individuals who are leaving for overseas positions. Our company
is at the present time seriously considering one of these unpalatable
steps in the face of the anti-competitive effects on small companies of
poor legislation, and of the many anti- competitive practices of large
companies that are prejudicial to the profitable operation of smaller
concerns.
3.8 Unless the government appropriately and wisely intervenes to ensure
access to economically viable distribution platforms for smaller media
players we can see the inevitable formation of an oligopoly of new media
players, many of them wholly or partially owned by existing Australian
players, or by existing overseas players working or soon to work in the
Australian market. Such an outcome will seriously compromise the future
benefits for the Australian consumer of media products and services that
this Inquiry seeks to ensure.
3.9 Another important trend, against the hype of "information wants to
be free", is that the internet is beginning to exhibit features of cable
delivery, not the least because existing cable companies are now offering
internet services and content, but also because large new media companies
are about to rapidly move to a cost-recovery basis in the provision of
content and services as the huge price to earnings rations of internet,
computing and communications companies returns from the 300's to more
realistic values.
3.10 Shareholders of new media companies will eventually require a return
on investment and this will necessitate the creation of a "choice" in
the provision of different levels of interconnectivity, resulting in a
tiered delivery of services, many of them increasingly pay services, that
will mean some information and entertainment will only be available to
those with the economic means, and will become more expensive to deliver
or will only deliver poor quality services to regional or low socio-economic
demographic regions of suburban Australia.
3.11 This makes our proposals for the establishment of a "communications
common" outlined below an important regulatory instrument to ensure the
maintenance of a minimal level of services available to all Australians,
regardless of the technology that produces and delivers these services.
4. Economic and Social Dimensions, the Objectives of Legislation
4.1 Anti-competitive behaviour and the operation of overseas companies
outside of Australian tax laws by large media companies and organisations
that effectively "pirate" Australian online consumers and the potential
revenues from the new economy, taking them offshore, are the greatest
threats to Australia's new media and information economy.
4.2 Using the Australian book selling industry (for which our company
builds online ecommerce sites) as an example, it is clear that the local
Australian book selling industry is potentially heading for collapse.
This collapse is underway in the US at the present time, initially with
the closure of many smaller stores, as large heavily financed companies
such as Amazon online bookstore take their market. In Australia, companies
such as Amazon "cherry pick" the best of the Australian online market
and take trade away from local Australian businesses while escaping our
taxation system entirely. With a potential GST on the way this becomes
a significant problem which must be overcome by addressing this issue
through legislation.
4.3 The same offshore "pirating" occurs for CDs, newspapers and magazines
and other related goods and services offered globally online, and the
same basically applies to all companies offering goods or services that
can be offered online from another country.
4.4 The offshore pirating of Australian consumers online by large US companies
operating free of Australian legislation and taxation regime is particularly
damaging to the prospects of small to medium media players. This "pirating"
causes damage to Australian industry and its international competitiveness
by:
a) discouraging proprietors away from upgrading their IT systems. For
example the main bookstore database used in Australia, Bookscan, is an
obsolete MS DOS system made in the early 80's that would best be in a
museum, not operating as a fundamental part of Australia's IT industry;
b) discouraging proprietors from investing the significant amounts required
to set up and operate a full ecommerce site;
c) widening the competitive gap between smaller and large media companies
in favour of those with the financial strength to compete with large overseas
companies; and
d) the loss of the valuable online "brand" establishment to large overseas
companies who, using the reticence of the Australian industry to go online,
can be first to market in the race for the new consumer.
4.5 We recommend that the Commission examine ways in which government
policy and government legislation can reduce the anti-competitive threat
posed to Australian industry through the loss of customers and revenue
to overseas companies outside of the Australian taxation system.
4.6 Of lesser but nonetheless significant importance is local anti-competitive
behaviour by large media companies and organisations, including Telstra,
the ABC, the CMC's and universities, which is compromising the viability
of smaller media players vital to the success of the Australian media
and information economy.
4.7 Larger companies, able to skirt the provisions of the TPA because
of an outmoded and nominal separation of industry sectors and non-specific
legislation, are unconscionably and non- competitively using their market
and financial strength to dominate the broadcasting, media and communications
industries. This is weakening and rendering unprofitable many smaller
players who often were previously industry leaders, not simply because
of their size, but because of their innovation in production. This weakening
causes many companies to fail, as many have already done, for the wrong
reasons.
4.8 For example, the use of loss leader strategies by:
4.8.1 Telstra which is able to offer media services such as hosting, interconnect
and related services at prices far below that of smaller companies. Our
company has lost several contracts to Telstra who offered some clients
free hosting and sponsorship as part of the deal;
4.8.2 Spike, Australia's largest web company, then in collusion with the
ISP Microplex, used a loss leader strategy to dominate the cultural sector.
Our company was in negotiation with both the Art Gallery of NSW and the
Museum of Contemporary Art in Sydney, two of Australia's most significant
website clients, to provide culturally-oriented websites when Spike offered
to do the site for free and took the contract; and
4.8.3 universities and the CMC's are the next most anti-competitive institutions,
using government funding they receive to undercut proper market pricing
mechanisms for the supply of goods and services. They have been forced
into a cost-recovery situation for each department and consequently departments
of computing, design and communications, using university equipment, premises
and cheap student (work experience) labour, can offer prices below the
true market price for goods and services.
4.9 We therefore recommend that provisions of the TPA be tightened to
prevent anti-competitive behaviour by large Australian media and communications
companies and organisations that weakens smaller companies and impedes
their ability to be genuinely competitive in the Australian and international
marketplaces.
4.10 We would also argue that many of the economic and cultural issues
are in fact closely related and dependent upon one another, but their
close relationship has been disguised and distorted by existing players
opposed to a genuinely more open and flexible regulatory regime. Such
a regime would bring a genuine competitive environment to Australia's
media and information industries.
4.11 As is reflected in the Objectives of the BSA and the Issues Paper
for this Inquiry, the intent is to take into account the need to balance
"the social, cultural and economic dimensions of the public interest"
to achieve the best result of this Inquiry for Australians. In order that
this balance be maintained we recommend that the Inquiry recognise the
close relations between the public interest and the economic and cultural
regulation of the industry as a whole.
5. Deregulation
5.1 We would argue that simple deregulation has negatively impacted both
economically and culturally on the Australian consumer and the broadcasting
and media industries, and is against the principles expressed in the objects
of the BSA itself.
5.2 For example, due to the negative impact of deregulation:
5.2.1 the Australian consumer now has less local television and diversity
of programming through the disastrous policy of aggregation in radio and
television. We predict that there will be a sale of one of more Australian
networks to an American company which will see much more American radio
and television programming in regional and urban markets;
5.2.2 the Australian consumer has more violence and sexually titillating
programming and advertising on Australian television thanks to the failed
idea of industry self-regulation. We predict that this will soon be the
same for the internet, led by the largest media companies operating there.
For example, one of ninemsn's most popular services is a sex site, albeit
masquerading under the auspices of "health"; and
5.2.3 the Australian consumer must unwillingly endure significant increased
amounts of advertising and advertorial "lifestyle" programming, with Channel
Nine and other networks consistently breaking self-regulated "limits"
to on-air advertising. This has led to Australians being the first in
the world to have to endure ads on pay TV, and we can further predict,
that without proper regulation, advertising will become ubiquitous, across
all media and platforms, filling an inappropriately large amount of media
space and consumers' time.
5.3 We recommend that regulation be kept "light", be written in plain
English, and be tightened in areas that ensure equity, diversity, advertising
limits, regulated violence and sexual reference.
5.4 We also recommend that particular emphasis should be placed on the
strict regulation of gambling - or gaming as the popular euphemism puts
it - in all domains of media with special emphasis on the simultaneous
access of gambling and ecommerce services. Such simultaneous access will
mean that gamblers can connect their credit card to the casino through
an ecommerce supplier.
5.5 It should be noted that it is likely that the trend of large media
companies buying into and operating on-air, online and remote gambling
services will increase, requiring special skills and resources on the
part of government to regulate such an industry that has potentially disastrous
economic consequences for Australian consumers - not just for "problem
gamblers" - but also for lower-income households with children who are
already experiencing economic stress as the gap between the wealthy and
poor increases.
5.6 It should also be noted that the Broadcasting industry currently circumvents
the weak regulation of the BSA in regards of gambling on free to air (FTA)
services through the operation of programs on Channel Nine and Seven that
use loopholes in the law to allow contestants to effectively gamble for
large sums of money over the air. This contravenes the BSA's Objectives
(h) and (j), and also flouts the spirit of this section of the BSA.
5.7 We recommend that the Objectives of the Act be updated to include
new media forms and be strengthened in regards of providing Australians
with a comprehensive and free media service delivering information, education
and entertainment throughout Australia, to complement those provided by
pay TV services. Such an objective protects the regional Australian community
as USOs are degraded, and as pay TV services seek to supplant the FTA
market.
6. Convergence
6.1 Convergence brings together the broadcasting, media and communications
industries. It encourages consolidation and reduces diversity. "Reduced
diversity" actually means vital smaller players, such as our company,
are threatened with loss of business and eventual closure in this country.
6.2 Convergence, in bringing together the broadcasting, media and communications
industries, encourages consolidation and reduced diversity precisely because
of the many different Acts that govern and regulate these previously largely
separate industries. The formulation of Acts, primarily the BSA, the TCA
and the TPA, has been manipulated by the large broadcasting and media
companies through the "capture" of the regulatory bodies in the full knowledge
that such manipulation provides effective legislative sanction for anti-competitive
practices, too subtle to be caught by the Acts. For example, the television
industry here and in the US supported the idea of a split between "narrowcasting"
and "broadcasting", thereby quarantining any competition to narrowcast
services, and maintaining the oligopoly in television broadcasting.
6.3 Therefore, we recommend that the consolidation occurring in the media
industries must be, as far as possible, reflected in a targeted consolidation
of the Acts currently regulating those industries. This will mean that
only the areas common to these converging industries is commonly regulated,
whilst areas that are wholly or substantially different remain regulated
by Acts that currently address these different domains.
6.4 It is our opinion that the area common to all these industries, and
not yet recognised in policy or legislation, is the common media content
"language" of the digital domain. We also appreciate that what we are
about to propose is a major shift in the strategy for fostering and maintaining
Australia's media and information economy and its benefits for the Australian
community.
6.5 We recommend that this common or shared digital language of the broadcasting,
IT, media, communications, and telecommunications sectors be the prerequisite
for an industry to be called a "broadcasting" or "media" or "communications"
company in the first instance, and hence would become the prerequisite
for inclusion within the ambit of a revamped Digital Distribution (Broadcasting
and Datacasting) Act, overseen by a suitable regulatory Authority whose
aims are clearer due to the clarity of definition achieved in this strategy.
6.6 A consequence of this action would be the potential for a complementary
Digital Production (Broadcasting and Datacasting) Act that regulates content
industries. This would also afford the opportunity of consolidation of
existing government support for the ABC, SBS, the AFC, the FFC, the AFTRS,
and others.
6.7 While we predict that changes such as we have proposed will very likely
be forced on our economy and culture eventually we feel that it would
be timely to make a move such as this now to maintain a leading position
on the world stage. We are also aware that the political realities of
change have before now meant a laborious incrementalism in policy development
and a slow pace of real change. This legislative inertia plagues our broadcasting
and communications policy development. Such legacies in the fast moving
world of the media and information economy also represent a significant
competitive disadvantage for Australia.
6.8 For our smaller media players' sector, convergence simply means more
competition from larger players in areas that are traditionally ours.
For example, large advertising companies had no direct involvement with
the internet until convergence allowed them to repurpose or reuse already
existing systems of client networks and contracts to move onto and take
over the majority of work in new media production work on the internet.
6.9 Currently over 75% of the revenue from publishing on the internet
in Australia is taken by just five or six large players. We can predict
that within two years, over 95% of internet production and publishing
revenue will be made by just two or three large players forming an effective
oligopoly. We can also predict that there is a significant likelihood
that these two or three companies will be existing large players currently
regulated by the BSA.
6.10 We anticipate both the further consolidation of large media, advertising,
telecommunications, publishing and broadcasting companies, together with
an influx of large overseas media companies that will accelerate this
consolidation. This will greatly diminish the likelihood of profitable
operation for smaller companies with the consequent lessening of innovation,
diversity and potential for a leading edge development base for local
media and information industries.
6.11 We recommend that broadcasting and related legislation must take
into account this strong tendency to consolidate brought on by convergence,
ideally at the level of tax incentives for small business and disincentives
for consolidation, or failing that, at intervention at the level of direct
government support through research and development funding targeted at
smaller players, and continued support for government organisations such
as the Australian Film Commission, the Australian Council, Cinemedia,
NSW Film and Television Office and other similar organisations fostering
innovative content production and cultural infrastructure.
6.12 Better co-ordination between government entities that regulate media
and communications, and those that support the production of content for
these industries, would also improve the situation provided the social
and cultural dimensions of such regulation and support are balanced with
that of the economic dimension, as suggested in the Issues Paper.
6.13 However, although we propose some level of consolidation in the Acts,
the government regulatory and "content" bodies, we would not recommend
that consolidation be taken to a point where the very different circumstances
of companies that work in different industries, even those sharing the
core digital systems, and the very different needs of different States
and regional areas, be forgotten. If fact, we recommend that particular
and increased attention be given to the unique needs of:
a) different geographical areas and socio-economic circumstances of the
audience;
b) different economic strengths of organisations; and
c) the different aims and objectives of for-profit and non-profit media
organisations, including libraries.
7. Technology "Neutral" Legislation
7.1 Government legislation should ideally be technologically "transparent"
or "neutral", something that has never been properly achieved, as demonstrated
by the failed mandating of microwave and satellite delivery of pay TV,
through to the current technologically "opaque" legislation mandating
digital television. Technologically transparent legislation would create
legislation that could better deal with: entrenched media interests and
the resultant regulatory "capture"; the unforeseeable future social and
economic circumstances resulting from the ongoing technological dynamism
of the communications and broadcasting industries; and the changes in
cultural and social practice and patterns that affect and are affected
by these changes.
7.2 A policy of technologically neutral legislation could ameliorate distortions
caused by inappropriate political intervention in policy development and
legislation that allows anti- competitive and inefficient industrial practices
to occur among media players.
7.3 Similarly, a policy of technologically neutral legislation would ensure
that policy development affords the maximum opportunities and benefits
to the Australian community and industries.
7.4 A policy of technologically neutral legislation is identical in intent
to the policies expressed through Australian competition legislation,
and is also fundamental to the proper operation of the Productivity Commission
itself.
7.5 We would recommend that all forms of non technologically neutral legislation
be identified and changed to reflect economic and cultural outcomes, not
technological outcomes. This would have the affect of making the debate
over the introduction of digital television and datacasting services largely
redundant.
8. New Media and Its Benefits
8.1 For our company "new media" can be defined as "information, education
and entertainment media digitally generated, manipulated, stored, transmitted
or distributed to the public".
8.2 This means that "new" media is not a subset of the "old" media, but
rather, new media has absorbed the old media almost entirely, with the
only exception being the paper-based and analogue video or film distribution
of media. The remaining not-yet-fully-digital media of paper, film and
video are undergoing rapid digitalisation, potentially leaving only some
paper-based distribution, and some users of older media, in the non-digital
domain in 5 years time. As such we have suggested changes to the relevant
Acts to cover this new conceptualisation of media and the changed circumstances
of the broadcasting, media and communications industries.
8.3 We are concerned that new media and particularly the internet are
being used as the reason for a relaxation of media controls. While we
would agree that ownership - provided content regulation remains - is
not an issue, in our opinion controls over the maximum "reach" or audience
for one related company, that is cross-media regulation, must be strengthened.
This is because simple access to the internet is not sufficient to engage
in genuine and reasonable competition with larger, stronger companies
operating on the internet.
8.4 This is because the internet is analogous to the television industry
model only in terms of the competitive advantage that large companies
have over smaller ones as regards marketing, equipment and finance raising.
As such, the internet cannot be truly considered a new media model in
this case as these older "laws" of the broadcasting and media market also
hold for the new market of the internet justifying government intervention
and regulation to achieve genuine competition between large and small
companies.
8.5 Therefore, just as new independent broadcast players are excluded
from access to cable delivery platforms because of the artificially-raised
cost of access or a falsely induced "scarcity" of channels, so are new
independent media players denied equitable access to an economically viable
distribution platform on the internet, hampered by lack of financial backing
and marketing strength.
8.6 A healthy media and information economy requires many players, large
and small, competing in a fair and reasonable manner to best deliver the
benefits such an economy can offer and we feel that only appropriate regulation
can protect this diversity against market failure.
8.7 To achieve a healthy media and information economy we recommend:
8.7.1 that legislation ensure access for new and smaller independent media
companies and relevant non-profit media organisations to all domains of
media distribution through the reservation of a limited number of FTA
and cable channels and/or bandwidth (see Tier Zero in Appendices); and
8.7.2 that legislation ensure continued support for production funding
bodies that assist new and smaller independent media companies and relevant
non-profit media organisations because of the significant cultural and
economic benefits they afford the Australian community.
8.8 We also recommend that the idea of a "communications commons" in all
domains of the new media be enshrined in the objectives of the Act (see
Tier Zero below). This is the best and most efficient way to ensure access
and equity in all domains of media. Such a strategy would provide media
domains and accessible distribution systems complementary to those provided
by large-scale commercial enterprises, and would further benefit those
larger companies with an output of skilled producers, innovative programming,
and a media and technology literate audience comfortable with new technologies,
thereby growing the potential market for media services. This mandated
space in all domains of communications would include FTA, cable, the internet
and any new future media or delivery system (see Tier Zero below).
8.9 For FTA services, we recommend that the national Sixth Channel be
used for distributing the program material of members of the CBAA, and
that commercial interests be prevented from accessing this channel. This
will ensure diversity in the domain of FTA broadcasting.
8.10 However, given the problems experienced to date by community FTA
stations, we would recommend that only formally accredited members of
the CBAA who conform to strict CBAA non-profit guidelines be allowed to
hold licenses.
8.11 For cable, we recommend, as we have to the Duopoly, Telecommunications
and related Inquiries, that a multi-tiered system of access, similar to
that operating in the US, be mandated on all cable and other media distribution
systems in the form of:
a) a Basic Tier delivered free (see "Tier Zero" in Appendices) carrying
non-profit independent community and education channels, parliamentary
broadcasting, a program guide, "samples" of pay programming to attract
customers to pay services, and, ideally, retransmitted FTA channels;
b) a Premium Tier delivering pay services and carrying program material
currently available;
c) additional Premium Tiers carrying pay-per-view and other similar pay
programs of a high-value and high-cost nature.
8.12 For the internet, and particularly because the changing nature of
internet delivery will not deliver services to all Australians if left
to "market forces", we recommend that a small percentage of bandwidth
be set aside for community, cultural and educational non-profit (CCEN)
use. The government's recent intervention to ensure supply of a minimum
necessary bandwidth to regional Australia is similar to this strategy
and is to be commended.
8.13 However, simply ensuring ISDN or similar connection to all Australians
does not legislatively underpin the regulation of likely future cost increases
that may see this service increase significantly in cost in the next few
years, effectively denying access to the internet to many Australians.
Telstra is notorious for such cost increases but it is likely that competing
services will follow the same basic pattern, particularly for service
supply in regional areas.
8.14 To ensure that regional Australia and socio-economically disadvantaged
groups have access to the same quality of service that urban Australia
enjoys regardless of the state of the economy or Australian industry,
we recommend that this access be enshrined in legislation, ideally as
part of a legislatively-mandated "communications common" or public lifeline
in all forms of media. For further background on the idea of the communications
common see Tier Zero in the Appendices.
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