Wrong test, wrong prescription: cross-media rules are still critical!

Professor Flint, Chair of the Australian Broadcasting Authority, has called for the abolition of the cross-media rules, citing as evidence the recent survey undertaken by the ABA. The views and concerns of actual consumers are airily dismissed as plain wrong, but the assertions of people employed in the industry are happily accepted. In our opinion it strikes us as bordering on the absurd to call for the end to cross-media rules on the basis of views expressed by industry insiders in a single survey. These rules must be retained while media ownership stays the way it is. Rather than being abandoned as the marketplace changes, they must adapt and change with it.

When the Productivity Commission reported on its review of broadcasting early last year, it laid out a set of threshold competition conditions before the cross media rules should be removed. This finding emphasised that a comprehensive list of marketplace conditions must be met before even considering removal of these rules.

Our criticism at the time of the Productivity Commission broadcasting report was the lack of any test or a time frame for the effectiveness of these competition conditions to relax cross-media rules. Whatever framework is proposed, it must be established and operating successfully before it can be used to justify removing cross media rules. In our experience, simple public interest tests have often failed to deliver genuine public interest outcomes.

There are genuine dilemmas with the cross-media rules. It is true they are not perfect, and that various changes such as digital television and the Internet place them under challenge. But this is no reason to throw them away. The processes of convergence are dissolving the convenient markers used in regulation (broadcaster – transmitter, phone company – copper wires, newspaper – printing presses). These couplings have been useful in the past, but will become increasingly unhelpful into the future. However convergence is often used to justify changes that will not benefit consumers. There is the additional challenge of timing. Move too early, and convergence has become the tail that wags the dog. Incumbent interests can achieve long treasured and wholly analogue goals in digital disguise. On the other hand, delay the adaptation of the regulatory apparatus and the new choke points can generate their own class of robber barons.

Ownership in the current media marketplace is already highly concentrated. Further concentration is perilously close and the rules are the single thing standing against this. We are not persuaded that Australia could safely rely on the general provisions of the Trade Practices Act to guarantee current levels of choice and diversity in broadcast media for consumers, let alone set the stage for any improvement. This is precisely the argument we have made to the Productivity Commission in their current review of Telecommunications Specific Competition Regulation.

The need for such specific rules is in the nature of network industries. As a consequence the need for competition and marketplace rules tailored to their characteristics is a permanent feature of the modern economy rather than a temporary transitional requirement. Specific regulation should be retained and expanded to deal with network industries, including the Internet, broadcasting, computer software and hardware platforms. There would certainly seem to have been ample scope for the application of competition principles and insights to the recent decision making with regard to digital television. The definition of datacasting in particular seemed to miss the notion of competition entirely, as it focussed on preserving the bailiwick of incumbents and squeezing the space for innovative services so tightly as to discourage all but the most brave (or foolhardy) of aspirants. There was an expeditious and perhaps expedient review in the negative of the question as to whether streaming audio and video over the Internet should be regarded as broadcasting. While this has saved the Australian Internet from the indignity of genre-based rule and the banishment of entertainment from its portals, it would be far better if such questions were resolved in a pro-competitive regulatory environment, rather than a politically fraught scramble.

While extremely important, competition alone does not guarantee consumer outcomes. Competition will not ensure diversity in media away from a lowest common denominator impelled by commercial pressure – herein lies the invaluable role of the national broadcasters. It is not always enough to supply non-price outcomes such as diversity, innovation, quality-of-service, and universal service. Regulation has a part to play here, and it will inevitably be specific to any industry as important as providing information services to the nation. The goal to ensure diversity in media voice as well as commercial competition remains, and the convergent changes increase rather then decrease the need for specific regulation. The policy challenge is to devise new systems of regulatory encouragement to ensure the required diversity of media content ownership – notions such of share of voice and other measures need to be explored.