19 December 2011

Convergence and other Reviews

We're still imbued by the deregulatory zeitgeist, judging by the 22 page interim report [PDF] of the Australian Government's Convergence Review, concerned with "the policy and regulatory frameworks that apply to the converged media and communications landscape in Australia". The review is independent of the concurrent Independent Media Inquiry being undertaken by Finkelstein and Ricketson.

In summary, the interim report (for public comment by early February) emphasises reduced regulation, recommending -
• a platform-neutral regulatory framework focused on the new concept of Content Services Enterprises
• a new independent regulator for communications in the digital economy
• removal of content-related licenses
The key recommendations are -
A platform-neutral regulatory framework focused on the new concept of Content Service Enterprises

The regulatory framework should centre on entities classified as ‘Content Service Enterprises’. The technology-neutral definition of a Content Service Enterprise would be set intentionally high and should include threshold criteria relating to the scale and nature of entities supplying content services.

A new independent regulator for content and communications in the digital economy

A new independent regulator for content and communications that operates at arms-length from government and industry. The regulator should have flexible powers to make rules within the principles and policy frameworks established by legislation.

Removal of content-related licenses

Content licences should no longer be required to provide a content service.

New diversity and competition arrangements

The minimum number of voices rule in a local market should be revised to include all Content Service Enterprises. This new rule could cover entities such as national newspapers, subscription television and online providers, where they qualify as a Content Service Enterprise.

A public interest test should be developed to ensure that diversity considerations are taken into account where Content Service Enterprises with significant influence at a national level are involved in mergers or acquisitions.

The new regulator should be given broad and flexible powers to issue directions and make rules in order to promote fair and effective competition in content and communications markets.

Reform of spectrum planning and allocation arrangements

The government should develop a common and consistent approach to the allocation and management of both broadcasting and non-broadcasting spectrum. This approach will separate most existing content-related obligations of broadcast enterprises from licenses to use spectrum.

New platform-neutral Australian content arrangements

All Content Service Enterprises that provide audio-visual content, whether linear or non-linear, should be required to support Australian content. This could be done by either:
• Committing a percentage of total program expenditure to producing specified Australian content, or where this is not practicable,
• Contributing to a converged content production fund.
Commercial free-to-air (FTA) television broadcasters will eventually fall under the Content Service Enterprises arrangements. Transitional measures for commercial FTA television broadcasters include:
• 55% Australian content quota on the main channel to continue in the interim
• Some increase in Australian sub quota content obligations should be flexibly applied to reflect the two additional channels each broadcaster currently operates without content requirements.
Promotion of local content and community broadcasters

Commercial FTA broadcasters using spectrum should continue to devote a minimum amount of programming to material of local significance. A more flexible compliance and reporting regime for this content should be implemented.
Community broadcasters and local content providers should be encouraged to explore innovative ways to deliver local content, including on new delivery platforms.

Reinforcing the role of public broadcasters

The ABC and SBS charters should expressly reflect their range of existing services, including online activities. This will give commercial operators increased certainty about the boundaries of public broadcaster activities. Australian content quotas should apply to public broadcasters.
The interim report could usefully be read in conjunction with Malcolm Turnbull's recent lecture on 'Politics, Journalism and the 24/7 News Cycle' [PDF] at Melbourne University's Centre for Advanced Journalism.

The Productivity Commission, sea-green incorruptibles all, has concurrently released a report on Identifying and Evaluating Regulation Reform [PDF].

The Commission was asked to -
1. examine lessons gathered in Australia and overseas in reviewing regulation, identifying regulatory reform opportunities and priorities, and evaluating regulation reform outcomes.

2. build on such lessons to analyse possible frameworks and approaches for identifying poorly performing areas of regulation and regulatory reform priorities, and both qualitative and quantitative methods for evaluating regulation reform outcomes

3. In proposing enhanced frameworks and approaches to identify poorly performing areas of regulation and regulatory reform priorities, and methods for evaluating reform outcomes, to
• seek public submissions and consult with interested parties as necessary
• have regard to any other relevant current or recent reviews commissioned by Australian governments’ and
• have regard to the assessment of the OECD in its 2009 Review of Regulatory Reform in Australia — Towards a Seamless National Economy that there is likely to be limited scope for gains to regulatory quality through a further tightening of existing processes.
Its report indicates that -
The regulatory system should ensure that new regulation and the existing ‘stock’ are appropriate, effective and efficient. This requires the robust vetting of proposed regulation; ‘fine tuning’ of existing regulations and selecting key areas for reform. It also requires that these be performed in a coordinated and cost-effective way, with political leadership a key factor in all this.

There is a range of approaches to reviewing existing regulation and identifying necessary reforms. Some are more ‘routine’, making incremental improvements through ongoing management of the stock; some involve reviews that are programmed, and some are more ad-hoc.

Designed for different purposes, the techniques within these three categories can complement each other, though their usefulness varies.
• Among ‘management’ approaches, red tape targets can be a good way to commence a burden reduction program. But ‘one-in, one-out’ rules have more disadvantages than advantages. Regulator practices can play a key role in compliance burdens, with scope apparent for improvement.
• Reviews embedded in legislation can usefully target areas of uncertainty. Sunsetting can help eliminate redundant regulation and ensure that re-made regulation is ‘fit for purpose’, but requires good preparation. Post implementation reviews, triggered by the avoidance of a regulation impact statement, are an important failsafe mechanism but need strengthening.
• Public stocktakes cast a wide net and can identify cross-jurisdictional and cumulative burdens. Reviews based on a screening principle, particularly the competition test, have been highly effective and could be extended. In-depth reviews are best for identifying options for reform in more complex areas, while benchmarking can point to leading practices.
Good design features vary for the individual techniques, but all require sound governance and effective consultation. For significant reviews, public exposure of preliminary findings is a key success factor.

While Australia’s regulatory system now has the necessary institutions and processes broadly in place, there remains scope for improvement in:
• prioritisation and sequencing of reviews and reforms — with greater attention paid to the costs of developing and undertaking reforms
• monitoring of reviews and the implementation of reforms
• advance information to achieve better focused consultations
• incentives and mechanisms for good practice by regulators — with a further review needed to identify the best approaches
• building public sector skills in evaluation and review.