No guts, no vision: the politics of media diversity in Australia

Legislation before the Senate this month represents the kiss of death for the development of a multi-billion dollar datacasting industry in Australia, and heralds a widening of the information divide between the city and the bush.

Australians are entitled to ask by what mandate the government can use spectrum that belongs to all of us to favour the commercial interests of the free-to-air broadcasters (FTAs) at the expense of everyone else.

Senator Alston relies on a fairly spurious argument that the FTAs have an obligation to broadcast Australian content, so somehow we are protecting content creators by protecting the FTA cartel. On close examination this argument fails. First, the obligation exists only in relation to content for which there is market failure eg. drama and children's programming, not all content. Second, any content creator who wants to produce for television these days has to find overseas distribution backing before they even embark on production, because the ever-diminishing license fees that our local FTAs are paying will not cover the investment. Third, datacasters would probably be quite happy to agree to minimum-content rules provided they could compete with the networks on an equal footing. So too would any fourth commercial TV broadcaster. The fact is, opening up the airwaves to competition is the best opportunity for stimulating the production of Australian content that we could ever have.

Of course, the more modes of content delivery there are, the less control governments have over what the public sees. This has not been lost on Asian observers who see Howard's agenda in more sinister terms, if not from our perspective, certainly from theirs. As Lim Say Boon of the South China Morning Post wrote on 24 June:

...[t]his is Mr. More-Liberal-Than-Thou who not that long ago deigned to let his crisis-hit Asian neighbours in on the virtues of an open, competitive modern economy. This time around, there is little Mr. Howard can teach his neighbours about transiting to a New Economy that they couldn't learn from Beijing - circa 1989. Worse, Mr. More-Liberal-Than-Thou is sending a frightening message to his Asian neighbours - with copies to every politically thin-skinned government in the region - about how even a liberal democracy like Australia can justify Internet censorship for commercial purposes, let alone for social and political reasons.

IIA members are outraged and in total disbelief at the cynicism underlying the policy. "Convergence" has taken on a whole new meaning. It describes the government's vision of the future and the opportunity for competition in the new media. Both are now narrowing to the size of a small dot on a screen once the power is switched off.

Everything this government has said about its commitment to an
information economy is now open to question. This was the single biggest hope for reinventing Australia as a new economy - we could have leap-frogged the US in both penetration and advanced deployment of broadband services. We could have had almost the entire Australian population on line within three years. That possibility is now about to evaporate.

The legislation will send a negative signal to the international investment community. Pity the Aussie dollar and the effect on interest rates. This government had a choice - and it chose the old economy over the new. The only winners here are the old-economy television broadcasters.

The losers will be Australians in regional areas who have struggled with slow and expensive access. There is a widening gap between the information-rich in the city and the information- poor in the regions. People in the bush have every right to be very, very angry over what is about to happen. Datacasting could have provided alternatives to the closure of bank branches and the loss of other services in the bush. While technically they can still receive these, the business case for fast rollout of the enhanced technologies is now dead in the water. Now they will just have to wait.

The battlers in the metropolitan areas will also be losers. For the foreseeable future, it is mainly the children of the rich who will get to use the Net for homework. Anyone sitting on the other side of the information divide in Australia will probably never realise how close they came to sharing in the benefits of the online revolution. They too will just have to wait.

In one fell swoop, this legislation turns the idea of ubiquitous, cheap Internet access from a very real prospect into a failed dream. We had the chance to provide every Australian family with a television set with fast Internet access. Now they will just get TV - with a few more bells and whistles maybe - but still only TV. Data is the killer application of digital TV - this legislation kills the killer app.

A more open policy would have provided Australia with sufficient critical mass of online users to kick-start an e-commerce explosion that might otherwise take years to occur. Indeed, there was a strong commercial case for giving set-top boxes away just to get more of the market on line. This legislation torpedoes the business case for such a play and condemns the majority of Australians to a slow and arduous climb up the data slope to the 21st century economy.

On the industry side, the losers will be the startups and content developers who dreamed of unparalleled opportunities for pioneering developments, and those who saw the possibility of broadening the diversity of media control and delivery in Australia. We were about to become a test bed for the development of datacasting technologies for export into countries like India and China which, like Australia, have poor communications infrastructure in their remote areas. That opportunity will now probably be lost.

The patently artificial constraints on the type of content that can be datacast would emasculate the commercial case for investment in the new medium. Potential competitors to free-to-air broadcasters now have no incentive to invest in either broadband content development for, or delivery via, spectrum. We have already seen all the main prospective datacasters abandon their planned trials. Theirs is a rational response to an irrational policy.

It gets worse. Not only can't you deliver most genres of video content over spectrum, but the government has signalled the possibility of a ban on audio and video streaming over the traditional Internet. You don't have a review by the ABA on whether this might breach the spirit of the new law unless you want to leave open the opportunity of banning it. How the government would ever implement this is hard to fathom, but the damage that could be done by even trying should be enough to worry every ISP in Australia and anyone else with aspirations to deliver broadband content over non-spectral media.

The breadth and intended effect of these policies are indefensible, even on the basis of preserving the government's decision to not issue any further television licenses. The measures are a hugely disproportionate imposition on the emerging media compared to the risk to the incumbents' businesses.

The Federal Opposition is not blameless in this debate, having supported the general thrust of the government's legislation in 1998 which gave the FTAs free use of spectrum for eight years, while everyone else had to pay.

If Labor were serious about reversing the damage of this bad policy, why would they come out with two options in their proposed amendments, a hard option and a soft option? The political strategy is pretty transparent if you think about it. If they were truly committed to reform, they would nail their flag to the competition mast and argue for radical changes to reverse or at least severely limit the damage. Then they would argue like hell for those reforms. But instead we see an each-way bet that says in effect, well if the hard option is too much for parliament to swallow, here is a soft option that tinkers around the edges, looks good but leaves the worst aspects of the regime intact. The heat then moves off the ALP to the Democrats who hold the casting vote in the Senate. If the Democrats back the hard option, they bear the brunt of the wrath of the FTAs. If they back the soft option, Labor says "don't blame us, they were the ones who squibbed".

The Democrats must support Labor's "Option A" amendments if they are serious about salvaging the nascent datacasting industry. We may need to help them along a little here. For Natasha Stott-Despoja, a self-confessed political advocate for the Internet community, and Vicki Bourne, the champion of competition of the airwaves, this is the moment of truth. The Internet industry in Australia calls upon you to do what you know is right, not what is politically expedient. After all, as Democrats, that is your charter.

If this legislation is passed without major surgery, the Internet industry in Australia will be retarded and the skill-base and investment will have yet another reason to move offshore. Content developers will soon be packing their bags for the US, and who can blame them?

Though in truth, the best thing to really do with this legislation is to throw it out entirely. It has become so complex and full of compromises that its workability will be a real issue. Industry players in other leading information economies are not encumbered by the artificial barriers to entry we see here. Whichever way you look at it, the legislation really just represents more impediments to competition, content development, investment and innovation.

We are still very concerned about the government's proposed ABA review of whether Internet-delivered streamed media might constitute broadcasting. The Labor amendments did not rule this review out. The consequences of such a finding would be highly destructive to both investment in content development and investment in broadband infrastructure. Why build the pipes if you need a broadcasting licence to deliver streamed audio and video over it? There is no need to extend the datacasting review to cover Internet content unless you want to extend by stealth the broadcasters' monopoly.

In the online world we talk about old economy companies being "Amazoned" by new startups who can innovate, free of the legacy of offline investments. This principle operates on a national level too. We are not suggesting that there is no value to traditional television services, but the incumbent television broadcasters have had a pretty good run for the past 44 years. The introduction of television in the 50s did not destroy radio - they are complementary and serve different needs. So too will be datacasting and other forms of Internet content delivery.

This legislation tries to artificially limit technological convergence by regulatory means. This is not in the long-term national interest and will ultimately prove futile as everything moves to the Internet.

If this legislation passes largely intact, digital spectrum that belongs to all Australians will have been squandered, its value slashed, its potential hobbled. This will be the biggest sellout in the history of the Net in this country. It need not be this way – but it will take some enlightened and courageous intervention over the next few days to avoid the wreckage that otherwise lies ahead.