Senator the Hon Helen Coonan
Minister for Communications,
Information Technology
and the Arts

Deputy Leader of the Government in the Senate

2007—reaping the benefits of the media reforms

Address to ABN AMRO Communications Conference 2007

Sydney

Tuesday 17 April 2007

Thank you Peter [Young]

It is a pleasure to be here today to speak about one of my favourite topics - the Australian media landscape and the importance of the Government’s media reform package to the future of the sector.

From the time I first spoke publicly about the media package last year, some commentators were concerned – even dismayed.

Part of the journalistic hysteria at the time was doubtless related to the potential impact of these reforms upon the media industry itself - an understandable reaction from the Fourth Estate- but the hyperbole became a little tedious!

Headlines from July last year which I particularly remember include:

‘MEDIA REFORMS THREATEN DIVERSITY’ –the Canberra Times. (CT 13/7/2006)

The Weekend Australian predicted ‘THE TAKEOVER TANGO’ (Weekend Australian 21/10/06)

Shadow Minister Stephen Conroy breathlessly predicted that the laws will ‘inevitably narrow the range of news and opinion available to the public,’ (The Age 25/8/06).

And my personal favourite – Mr Keating, in his inimitable style slammed the laws as ‘madness in the extreme.’ (AFR 24/07/06)

Of course Mr Keating’s approach to media regulation has always been confined to the silos of print, television and radio. The so called ‘Prince of Print’ and ‘ Queens of the Screen’.

But the internet has changed the dynamic irrevocably, and Mr Keating’s views will I predict become an historic footnote in the transition to the modernisation of media.

The fact that so many commentators got their predictions wrong, and that the sky has not fallen in since the media ownership laws commenced on 4 April might come as a surprise to some, but not to me.

This policy was always grounded in common sense. This Government stuck to its guns because the reforms were an essential modernisation of a sector that had not seen any structural change for 20 years.

Media reforms

For 20 years, Australia had a set of media control rules that amounted to a major restriction on how media markets and companies operate.

Things had to change. But we were mindful that diversity of ownership, particularly in the traditional media sector, remains critically important.

The new media framework demonstrates that diversity can be protected and maintained in a less regulated way.

I believe strongly that the amended ownership rules will let the media market operate more efficiently—benefiting industry and consumers and the broader economy.

And it is consumers who will be the big winners with more choice in a more competitive market.

I sometimes wonder whether some media commentators forget how consumer driven the media industry is as demonstrated by the ability one now has to interact and make personal entertainment choices. Woe betide any media business that does not understand the consumer appetite for choice and control.

I would prefer the media package be seen through this prism. By permitting greater competition and economies of scale and scope, the benefits will be shared across a large sector of the Australian economy.

‘Old’ versus ‘New’ media

Television, radio and newspapers were once the only news media. While they remain highly influential, clearly, they are no longer the sole source of news and information.

Now the Internet, pay-TV, digital radio ,video ipods and television over a mobile device including the DVB-H technology are all playing a role, or about to play a role in delivering news and information to consumers.

And while traditional news-gathering remains dominated by ‘old media’. Online news and information has emerged as a powerful and ever-increasing influence.

There is a generation of young (and also not so young) Australians who only ever seek their news and information online.

They are tech savvy and have a thirst for the ‘right now’ as opposed to ‘on the hour’ or being at the behest of the TV guide.

Online news and information is their first port of call and older Australians are also catching up.

This has of course had significant consequences for traditional journalism. While many may question the credibility of blogs, citizen journalism is now forming its own newsrooms and editorial policies.

And newspapers are increasingly moving their reporters to write for the web in the first instance and then freshen their copy for the print version later.

The media’s growing respect for online offerings may eventually debunk the claim that the Internet as a news source lacks credibility.

In fact, the Internet has revolutionised the distribution of opinion, making the market place of ideas and information more transparent than ever before.

It is bristling with blogs, websites, podcasts and chatrooms where thousands upon thousands of views and opinions are developed and spread.

And I was interested to note just recently that Nielsen ratings listed Google as having the second highest audience reach in Australia, with a massive reach of 78 per cent.

Its time for all of us to get with the times. We live in a digital age and these legislative changes better position Australia to take advantage of the digital revolution and to operate in a global environment.

Removal of ownership restrictions

The removal of foreign ownership restrictions was to some an alarming development. In fact it will provide greater competition in sectors that have long been protected.

It was one part of the media package which had the support of the Labor Party, although I could never understand why it would comfortably have allowed foreign ownership whilst keeping Australian media in a regulatory straightjacket.

However, it is not open slather, foreign investment in media is still subject to media being treated as a ‘sensitive sector’. The removal of cross-media restrictions have been replaced with safeguards which ensure no fewer than five independent media groups remain in State capitals and four in regional markets, and that mergers may combine no more than two of the three regulated platforms in any one licence area.

The regulator, the Australian Communications and Media Authority, has established an electronic register for media groups. The onus is on media companies considering undertaking a transaction, to check the Register to ensure that the transaction will not result in a breach of the Broadcasting Services Act.

ACMA will also play a significant role in monitoring the Government’s local content protections for regional areas, following a so called ‘trigger event’, broadly understood to be a change in ownership.

So far, since the so called floodgates of Proclamation opened, only one such trigger event has occurred.

This was the consequence of Seven increasing its stake in WA News from 14.9% to just over 15%.

On top of these safeguards, a merger may still fall foul of the Australian Competition and Consumer Commission which will assess transactions against section 50 of the Trade Practices Act 1974 and whether the merger will have the effect of substantially diminishing competition.

While there is no requirement for prior consultation with the ACCC in the Trades Practices Act, parties to major mergers in practice approach the ACCC, often with prepared undertakings, to obtain informal clearance.

Frankly I would be surprised if few, or any, cross-media transactions would proceed prior to consultation with the ACCC.

I would also add that much of the positioning which has been occurring over the past months was not contingent on the passage of the new cross-media laws. As I mentioned there has been little actual acquisition since the commencement of the act in April, although there has been a great deal of speculation about potential acquisitions. The deals made by PBC and the Seven Network with foreign private equity forums were able to be finalised with the commencement of the set and lifting of restrictions on foreign control of commercial television broadcasting licences.

A considered assessment of this legislation shows that it facilitates sensible business consolidations, without dismantling protection of local content.

ACMA and the ACCC promote a further layer of checks and balances. I believe that the next 12 months will bear out my view – that this is a wholly appropriate package of reforms to transcend the sector to more competitive settings.

Digital Action Plan

But reforming the way in which cross-media mergers can occur is of course only part of a much broader and comprehensive media package that has at its heart the interests of consumers.

In November last year, I launched Ready, Get Set, Go Digital – A Digital Action Plan for Australia – a blueprint for the cessation of the analogue television signal.

This will be the biggest change in Australian television since the introduction of colour. The quality and content options which digital transmission offers are simply amazing when compared to analogue.

The spectrum efficiencies of using digital signals rather than analogue are also significant.

It is this ‘digital dividend’ which we are keen for all Australians to reap the benefits of. But the Government understands that industry cannot effect that change alone. Which is why we have dedicated more than $20 million to the establishment of Digital Australia.

Digital Australia offices are presently being set up in Sydney. It is part of the Department, although will operate largely independently of it. It will be staffed by a small number of people experienced in both broadcasting and spectrum matters.

Digital Australia’s brief is simple – ensure Australia’s analogue television signal can begin to be switched off commencing in the period 2010-12.

To assist in that decision, ACMA is working on technical advice to me which will assist my determination of a suitable timetable for switchover for Digital Australia to implement. I expect to receive that advice in the coming months.

Once Digital Australia is fully operational, I will be receiving regular advice on progress with technical issues including the roll-out of digital infrastructure, digital take-up and the size and nature of digital black spots.

Digital Australia will also put together information campaigns to inform Australians about the benefits of digital. I have asked for easily understandable ‘point of sale’ information which will make clear to purchasers whether their new television is ‘digital ready’ or not.

The challenge is to ensure that no Australian household is left without access to a good digital television signal once the analogue one is switched off.

Without Digital Australia, industry would be left to manage switchover alone. I would point out that since the introduction of digital broadcasting in Australia in 2001, industry has not been able to progress digital take up with sufficient momentum to achieve switchover.

Although current digital take up rates are at 30%, and rising, more work needs to be done.

Overseas examples show us that Government leadership in this area is essential.

And there are no ‘quick fixes’ – buying Australians a Government funded set top box would not solve the myriad of technical and consumer issues which must be grappled with.

These issues include the conversion of ‘multi-unit dwellings’ such as apartment buildings, schools and hospitals. It is not yet clear where digital black spots are likely to emerge, and solutions to them will need to be developed.

I would also anticipate that some disadvantaged Australians, either by factor of age, location or means, may need some extra assistance.

Some commentators, namely the Labor party, believe that Digital Australia is unnecessary and would abolish it.

Whilst I appreciate Lindsay Tanner’s eagerness to find a $20 million dollar saving for use elsewhere in his spending plan, when one considers the complexity of the switchover task ahead, I am just astonished that Senator Conroy allowed this important change to digital to be highjacked.

By contrast, the Howard Government is confident that under the stewardship of Digital Australia, ably assisted by the Industry Advisory Group, we can look forward to digital only television transmission in Australia.

Recruitment of the head of Digital Australia is underway, and I look forward to having more to say about that next month.

In the meantime though, I was pleased to recently announce the membership of the Industry Advisory Group, having asked relevant sectors of the industry to nominate representatives.

The Group will consist of representatives from broadcasters, manufacturers, retailers, suppliers, transmission providers and consumer interest groups.

Its role will be crucial in providing Digital Australia with valuable industry perspectives on each of the tasks leading up to switchover. I would envisage that it would meet up to a dozen times a year, as a forum for industry views on the switchover tasks as they unfold.

In this way I can be confident that industry views are heard by Digital Australia.

Channels A & B

If one subscribes to the theory that new content complements digital take-up as well as improved picture quality then the Government’s decision to allocate two new digital television channels this year, known as Channel A and Channel B, is great news.

Many of you are already aware that Channel A will allow new free-to-air, in-home digital television services, augmenting that which you can presently access.

Channel B might be used for a wider range of services, including for mobile television.

I am anticipating that the ACCC will be making an announcement shortly in relation to its deliberations regarding appropriate access undertakings for Channel B.

I have decided not to impose any competition limits relating to the sale of Channels A and B, but the general competition restrictions contained in the Trade Practices Act will continue to apply.

I currently have a variety of other matters under consideration, including ensuring that Channel A services reach a significant majority of homes in both metropolitan and regional Australia.

The auction documents will be released by ACMA in relation to both Channels in the coming months.

We are very keen to avoid the spectrum being used for ‘same old’ services, which would be unlikely to excite consumers into investing in digital technologies.

Again, I am bemused by the Labor Party’s position in this area. Whilst we are forging ahead with exciting new digital services, Mr Tanner and Senator Conroy are toying with the idea of a fourth free to air television network – a ‘back to the future’ policy, if you will.

In my view, a fourth network would deliver very little in the way of new media benefits for consumers.

By contrast, the new services which we are introducing, once up and running, will contribute to diversity and innovation in the Australian market.

Mutichannelling

Multichannelling is another important part of the journey to digital.

The legislation permits commercial free-to-air television stations to broadcast one standard definition multichannel from 2009, and will allow full multichannelling no later than the time of digital switchover.

There is no longer a simulcast requirement for high definition programming and so high definition multichannelling is now able to occur.

The entertainment possibilities for viewers once the free to air broadcasters make full use of their multichannelling opportunities are endless as I am sure the Pay TV industry is only too keen to point out.

And it’s great to see the broadcasters choosing to move early to deliver high quality broadcasts to their viewers.

I was pleased to hear that Channel 10 is already planning to broadcast both the US Masters and its AFL games in high definition this year – which is fantastic news for sports fans.

Whilst the focus is often upon the commercial free to air broadcasters, it was also important that the national broadcasters are similarly able to move with the times.

To that end, the “genre” restrictions which had limited the types of programming which can be shown on ABC and SBS multichannels have now been removed.

Now pretty much anything that might be broadcast on the ABC and SBS main channels, with the exception of the premiere of an anti-siphoning list sport, can be broadcast on their multichannel.

Digital radio

From the first forays into AM services in the 1920, through to the progressive introduction of FM services in the 1970s and 80s, Australian radio has come to permeate virtually every aspect of our daily lives.

There are around 40 million radios in Australia, with receivers typically found in every car, home, caravan and workplace in the country.

However, its presence is so ubiquitous as to be sometimes underrated. Or perhaps we are more prepared to put up with the snap and crackle sounds of a poorly tuned radio than we are with a fuzzy television broadcast.

But, just like other major media platforms, radio is also moving into the digital age.

Evolving digital technologies, such as MP3 players, iPods and other hand-held digital audio devices, are altering listening patterns and re-shaping the way audio content is created, distributed and consumed.

In this context, it is notable that radio is the last significant broadcasting platform to remain analogue-only.

The Government has committed to providing radio broadcasters with an opportunity to establish a presence in the emerging digital landscape.

Legislation was recently introduced into the Parliament that will see the start of digital radio services in the state capital cities by 1 January 2009.

In line with overseas experience, the legislation is built around digital radio being a supplement to existing radio services in Australia, rather than a replacement technology.

This is because the replacement of some 40 million analogue radio sets would be a practical and expensive nightmare for both the Government and Australians.

In addition, the type of technology used to deliver digital radio is likely to differ depending on whether it is a metropolitan or a regional service. This has obvious implications for moveable radios, such as those in cars radios and requires some careful attention.

We are instead offering consumers a choice – after all there are doubtless some who rather like the existing analogue radio arrangements – even with the odd crackle.

But for those keen for a more interactive, high quality radio listening experience, digital radio will be a very exciting development.

Listeners can look forward to delivery of games, jokes or photos via their digital radio set. Sets can include larger, colour screens which would enable listeners to view and download CD covers and follow links to websites of interest.

Electronic Programme Guides are also a likely future benefit, making it easy to plan listening.

The digital radio legislation has now been referred to a Senate Committee for consideration with the committee due to report by 30 April 2007.

The successful introduction of digital radio in 2009 will be another exciting step for Australia into the new digital age.

Conclusion

Ladies and Gentlemen, I have no doubt that 2007 will be a year of further changes in the media landscape. But from where I sit, the media industry can look forward to positive changes.

Existing players can make the most of emerging digital media technologies and make the most of flexibility to become globally competitive media companies.

The package also allows encourages new entrants into the media market.

It places consumer’s front and centre – new digital services give them the power to tailor their own media experience.

This in turn helps to protect diversity.

I believe that Australia’s media sector is stronger, more consumer-driven and more competitive than ever before and is now well-placed to take advantage of the digital age.

Thank you.