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Tuesday, 22 November 2011
Page: 13461


Mr TURNBULL (Wentworth) (16:28): I rise today to speak on the Broadcasting Services Amendment (Review of Future Uses of Broadcasting Services Bands Spectrum) Bill 2011. This bill seeks to do two things. Firstly, it seeks to amend section 35A of the Broadcasting Services Act 1992 to defer the initial statutory review of whether to allocate one or more additional television broadcasting licences. The current act requires a review to be conducted by 1 January 2012. This amendment will defer that date to 1 January 2013 to allow for the completion and reporting of the Convergence Review, which is scheduled to report to the government in early 2012. Secondly, the bill seeks to amend the act to expand the scope of the statutory review to consider possible uses of the unassigned broadcasting services band spectrum available for both television broadcasting services and non-broadcasting services. The expanded scope of the review will examine any impact that the introduction of new services using the unassigned broadcasting service band spectrum will have on current broadcasting services and consumers. As the statutory review will no longer exclusively examine the commercial television broadcasting services, this bill moves section 35A to the relevant section of the Broadcasting Services Act 1992 to part 3, which covers the planning of broadcasting services spectrum.

Importantly, the deferred review reporting date will allow, as I noted, for the convergence review to be completed and to report. The convergence review is a very important step in re-evaluating the fundamental principles underpinning the media's regulatory environment. It is prudent that any review into the use of the so-called sixth channel broadcasting services band spectrum take into account the convergence review's recommendations. Given the rapid advances in technology—which will be ever thus, I fear, characteristically well ahead of the legislation and the policy and regulation—it is important that our legislation reflect insofar as it can the ever-expanding possibilities for spectrum allocation. It is for this reason that the coalition is supporting this bill. It is a prudent step to provide further time for the convergence review to report.

Spectrum is a finite resource and, as such, requires careful planning and management in order to maximise both public and private benefit. There has been a great deal of debate surrounding the question of what to do with the broadcasting services band spectrum or the sixth channel spectrum since the switch-over to digital television was considered in the 1990s. There are currently seven frequency channels of broadcasting services band spectrum that are available to deliver television services. They will be reduced to six once the digital switch is complete and the seven megahertz broadcasting spectrum digital dividend that will exist as a result of the completion of the digital switch-over and spectrum restack also underway will create the opportunity for either a sixth television network or use with new technologies.

As I mentioned, this issue of the creation of a sixth channel or a fourth commercial network has been a long-running one. While it has been possible with analog transmission to accommodate a sixth channel, successive governments have deemed the environment not appropriate for the introduction of an additional commercial network. Indeed, the commercial broadcasters have argued—and I suppose you could say that they would argue that, wouldn't they?—that there simply were not the revenues to enable an additional commercial television network to be licensed, at least not the revenues available that would enable it to be profitable and, indeed, to enable the commercial broadcasting industry to continue to fulfil the expensive obligations it has to provide, for example, Australian content and drama and the other obligations that they bear.

To what extent these arguments are valid depends a lot on the economic circumstances and the technology. The cost of running a television station from a technical point of view is much reduced; however, the cost of content, if anything, is becoming more expensive. It is a moot point. I recall 20 years ago when the Ten Network went into receivership and I was advising the new owners, Westpac, about how to restructure the Ten Network, which we were able to successfully do. There are a lot of people, a lot of so-called media experts at the time, who said there was not even room for that network to survive and that there was not room in Australia for more than two commercial television networks. A lot of very credible figures made that case. Now looking back that seems absurd. So I just note in passing that, while I am not signing up to the proposition that there is not a commercial basis for an additional commercial television network, I think we have always got to review these assertions of what the economics of the industry are in the circumstances at the time and take into account that everybody has a vested interest—or everyone in the industry does. In 1997 the Howard government allocated the sixth channel spectrum for use by community free-to-air broadcasters and maintained the restriction on the establishment of a fourth television licence. In 1998 this policy was extended until December 2008 and the media reform package introduced in 2006 offered the first signs that there may be some certainty over the use of the sixth channel spectrum with the then prime minister announcing spectrum would be auctioned off to allow for two digital services. This policy was overturned in 2007 and the future of this spectrum has become much less certain.

The way Australians now consume news, entertainment and other content is rapidly changing and we have to rethink our basic assumptions about how we access and consume digital content. Regulators are constantly faced with the challenge of creating policy that keeps pace with technological change while taking into account the potential future demand for services. Australians are rapid adopters of new technology and in regard to the means of accessing content we now have more choice than ever before. With the advent of tablets, smartphones, smart TVs, IPTV and, of course, the arrival of cloud computing, the traditional media landscape is almost unrecognisable from what we have today and the environment is only becoming more competitive. We are moving into what I have described elsewhere as arguably a post-channel environment, which has very significant implications for regulation. So much of our protection of Australian content, or our promotion of Australian content, is premised on there being limited number of channels licensed by the government which enable the licensee to broadcast content into the homes of Australians. A condition of having one of those channels is to have so much Australian content, so much drama, so much children's content and so forth.

As long as those channels are basically the only ones that were available for most Australians, that regulation had some force. But now in a thoroughly IP world we are in a position where, increasingly, the fundamental business model of free-to-air television is under question. There are people that are saying the business model of free-to-air television is doomed. I do not think there is any evidence—right at the moment anyway—to suggest that that is a realistic prophecy. Having said that, those people who predicted doom for the business model of newspapers ten years ago, and in some cases even five or six years ago, were being criticised as doomsayers. This is a rapidly developing area and we are seeing creative destruction—if that is the right term—on a very large scale. Rupert Murdoch himself famously said that, as I frequently repeat—although on one occasion he told me he did not recall saying this, but I know he did say it. It was a very profound insight. Mr Murdoch said that the internet will destroy more profitable businesses than it will create. That has certainly been so for his company at least. What this means is that we have a very different media environment. What is the appropriate means of regulating or promoting Australian content if the free-to-air channel becomes less and less important as the medium through which Australians view digital content, especially drama and children's programs? One can see free to air becoming increasingly dependent on live events—a grand final or the latest news—where turning on the program a day later or even a half-hour later is of no benefit to you. What about the other types of cultural content that are so important?

It is a brave new world. This area of convergence poses huge challenges, most significantly in the area of entertainment—drama in particular. The United States internet movie download company Netflix is now the largest source of internet traffic in North America. That is something to reflect on when we talk about the benefits of the NBN, because the bulk of the bandwidth on the NBN will in fact be used for exactly the same thing: video entertainment. Netflix accounts for 30 per cent of peak downstream traffic in the United States, and similar digital content—that is to say, video entertainment, video streaming and downloads—brings the total up to over 50 per cent. That is what the internet traffic in the United States is largely made up of. Why is that? I am not suggesting that that is the most important part of internet traffic—far from it—but the reason it takes up so much of the traffic is that they are very big files compared to an email or most business data.

There are more than 45 million users of IPTV, internet protocol enabled television, worldwide today. That number is rapidly expanding. It is expected that the Asia-Pacific region, our region, will have the largest number of subscribers to IPTV. That means that every television set will become connected to the internet and that a consumer will be able to view a video on YouTube, a movie download, streaming video content, video content delivered by a newspaper website such as the Sydney Morning Herald or the Australian—any video content that can be delivered over the internet. Those channels that used to be fixed windows, the only windows through which you could see content, are now just some among an almost infinite range of windows or portholes through which consumers can see content.

In September, the Department of Broadband, Communications and the Digital Economy released a discussion paper on the allocation of spectrum. It said that ACMA should take five principles into account when allocating spectrum:

1. allocate spectrum to the highest value use or uses

2. enable and encourage spectrum to move to its highest value use or uses—

In other words, ideally not have the government telling people what they should do with the spectrum but allow it to be determined by the market—

3. use the least cost and least restrictive approach to achieving policy objectives

4. the extent possible, promote both certainty and flexibility

5. balance the cost of interference and the benefits of greater spectrum utilisation.

So the convergence review is being asked to report. But none of the questions it is being asked to report on are easy so that we can better understand how these priorities have shifted in the new environment. There are some very important questions, over and above the ones I have canvassed, that need to be addressed. How do we maximise long-term revenue from allocating spectrum in an environment where the licence holders are now competing not only with each other but with other companies delivering content over the internet? The big content providers used to be the free-to-air television stations and Pay TV channels. But it is now, increasingly, what are called the over-the-top companies—Google, Amazon and many others—who are able to deliver content over the internet directly to the consumer as and where the consumer wants it.

We have to address how vital services, such as emergency services and police, and railways, who have specialised spectrum requirements, are going to be addressed. They are more dependent on the allocation of spectrum than ever in a wireless world. How do we ensure—and this is arguably one of the most challenging issues for the review—that the old objectives of regulation, such as ensuring a level of local content, are maintained when the government no longer has control over the delivery platforms, when we move into a post-channel environment? This is a gigantic issue for the Australian film and television industry and for Australian-content providers generally.

As the department's discussion paper notes, digitisation of broadcasting means that a sixth TV channel, for example, could deliver as many as five standard-definition streams, or multichannels. If it used newer coding technologies such as MPEG4, it could deliver even more, possibly up to 10, multichannels. But we have to ask ourselves whether spectrum of this kind, which could be used for so many other applications—it can be used for what we call generically mobile data—should be allocated for broadcasting at all.

High-speed broadband is now delivered on a fixed-line basis to most premises, and that will be so whether the government continues with its fibre-to-the-home rollout or whether other, more cost-effective technologies are deployed, as we have recommended, and wireless broadband continues to become more and more compelling because of the functionality of mobility. In that environment, there is a powerful argument for saying that spectrum should, as far as possible, be allocated in such a way that it represents a neutral platform that can be deployed in accordance with market demands, consumers' demands and preferences, for whatever content they seek—whether it is video or some other form of content, and obviously different types of content and videocommunications.

All in all, this is a prudent measure, but I think we need to be very alert to the changes that we are seeing in the digital world. There are huge issues associated with this. What we have seen, for example, in the newspaper industry has very big implications for our democracy. We often talk about quality journalism. I think some people think that that means an article in the Australian, the Age, or the Sydney Morning Herald as opposed to something in the Daily Telegraph or the Herald Sun. That is not the case. When we talk about quality journalism we are talking about journalism in the traditional sense, where journalists are paid or employed to go out and make inquiries, do research, ask questions and actually do the legwork, which of course takes time and costs money. There is nothing cheap about good journalism because it takes time and journalists have to be paid.

The resources that are available to newspapers are shrinking all the time. They have traditionally been the place where most of our quality journalism has been deployed, because they have had the space. The decline in revenues, in advertising, has been extraordinary. It was not so long ago that we used to talk about the Fairfax broadsheets, the Age and the Sydney Morning Herald, as having 'rivers of gold'—classified rivers of gold. Those classifieds have moved, substantially if not entirely, onto an online environment. The owners of those assets—and they shared this error with newspaper owners everywhere else in the world—facing the classic dilemma of every incumbent who sees a challenge to their existing franchise, had the choice of whether to move onto the new technological platform themselves and cannibalise their own legacy business, or try to protect their legacy business for as long as they could. But the truth is that, if you take the latter course of action, which is what most publishers have done, you end up with your legacy business being cannibalised; it is just that it is cannibalised by somebody else.

But the critical thing is that the revenues that were available for advertising in newspapers—the classifieds, almost entirely now, and, increasingly, display advertising—while they have not moved in the sense of 100 cents in the dollar to the digital platform, have been replaced by advertising which is much, much cheaper and more cost-effective and, in most cases, has greater functionality as well. Who nowadays would imagine ploughing through pages and pages of newsprint, as we used to, to find a flat to rent or a car to buy or to see if somebody had found your lost goldfish? All of that has gone by the by.

That type of challenge is also seen as being there for free-to-air television—although, as I said earlier, I am not as gloomy about their prospects. If there is a question that the media inquiry that the government set up—in a pretty transparently cynical, even by their standards, effort to have a slap at News Ltd—should be looking into, and of course it is something that the convergence review should take into account as well, it is: what are the implications for democracy of the decline of journalism? The Americans are very alert to this. What happens, what is the quality of the democratic process—perhaps not here in the federal parliament but in a state parliament, or in a local council—if there are no longer any journalists, if there is no longer a business model that can support the journalists to do their work: to report on what is going on, to question, to probe, to be a challenge—to undertake the traditional role of the media? Who guards the guardians when there is no business model to support journalism?

This is a gigantic issue. We often talk about the anxieties and neuroses of politicians, and every three years or less we face the judgment of our electors and they may well choose, right or wrongly, to throw us out. But the most anxious people in this building are not in the chamber anymore; they are in the press gallery. There are hundreds of journalists up there—and the younger ones are the most anxious—who are asking themselves: 'Have I signed up to an industry that really has a future? Where is the revenue, where is the business model, that is going to support my job?' And they see the newsroom shrinking. They see their ability to do the research, do the work and actually fulfil the traditional role of journalism being diminished. So this raises big questions for the importance of public broadcasting. Many could make a case that it is now more important than ever because obviously it is not as threatened by this, being supported by the taxpayer.

So these are important, vital issues. We should, and it is appropriate to, put off this question of the allocation of the so-called sixth channel spectrum. But the issue that we need to turn our minds to as parliamentarians—and I think all Australians need to think about this—is: what price our democracy when journalism no longer has a business model that can support it? We tend to assume that everything about the internet and the digital world is good. Most of it is good, but there are some very big implications. Until now we have had the dogged determination of hundreds of journalists working away, holding us to account, holding lots of other people to account, sometimes getting it right, sometimes getting it wrong, but nonetheless playing their role in our democracy. Do we really imagine that that can be replaced by a world of Twitterers—or tweeps, as we Twitterers are called—bloggers and Facebookers? Is that really going to cut the mustard? Is that going to be enough? We have read a lot about social media being a great adjunct and addition to news gathering, but is it a substitute for it? Can it replace it, or will we just be left in a sort of wilderness of opinion?

We support this bill, but it raises issues of great moment and issues that I trust all of us in this place will be focusing on. It gets back to what Jefferson said. He of course had plenty of disagreements with newspapers. They were even more pungent in those days than they are today. He said that, if he were given a choice between a government with no newspapers or newspapers with no government, he would choose newspapers every time. I think all of us recognise the important role of the press and of freedom of the press, but we also have to recognise that the business model that has supported it—whether it is the press in terms of newsprint or free-to-air television news—is under very, very serious threat. There are big issues for our democracy in the area of convergence.