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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.
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