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Broadcasting Services Amendment (Review of Future Uses of Broadcasting Services Bands Spectrum) Bill 2011



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ISSN 1328-8091

Parliament of Australia Departmentof Parliamentary Services

Contents

Purpose .................................................................................................................................................... 2

Background .............................................................................................................................................. 2

Spectrum ............................................................................................................................................. 2

Sixth channel ....................................................................................................................................... 4

Digital dividend ................................................................................................................................... 6

Convergence Review ........................................................................................................................... 7

Committee consideration ........................................................................................................................ 9

Financial implications ............................................................................................................................... 9

Key provisions .......................................................................................................................................... 9

Concluding comments ........................................................................................................................... 10

BILLS DIGEST NO. 76, 2011-12 17 November 2011

Broadcasting Services Amendment (Review of Future Uses of Broadcasting Services Bands Spectrum) Bill 2011

Dr Rhonda Jolly Social Policy Section

2 Broadcasting Services Amendment (Review of Future Uses of Broadcasting Services Bands Spectrum) Bill 2011

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Broadcasting Services Amendment (Review of Future Uses of Broadcasting Services Bands Spectrum) Bill 2011

Date introduced: 2 November 2011

House: House of Representatives

Portfolio: Broadband, Communications and the Digital Economy

Commencement: The day after Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill's home page, or through http://www.aph.gov.au/bills/. When Bills have been passed and have received Royal Assent, they become Acts. These can be found at the ComLaw website: http://www.comlaw.gov.au/

Purpose

The primary purpose of the Broadcasting Services Amendment (Review of Future Uses of Broadcasting Services Bands Spectrum) Bill 2011 (the Bill) is to amend section 35A of the Broadcasting Services Act 1992 (the BSA) to change the timing of the Review into ‘whether one or more commercial television broadcasting licences that are broadcasting services bands licences should be allocated for particular areas of Australia’. The amendment is intended to facilitate review of the sixth channel spectrum.

The Bill also amends the scope of a review to allow for the consideration of other possible uses of unassigned broadcasting services bands spectrum.

Background

Spectrum

Radiofrequency spectrum refers to the electromagnetic frequencies used for communications. It includes the frequencies used for radio and television. In Australia and elsewhere, spectrum has traditionally been considered a scarce public resource which needs to be regulated by governments in the public interest. Philipp Behrendt and his colleagues explain:

Spectrum is a vital public resource because it is the major way modern long distance communications function. In order for different parts of the spectrum to be exploited in the most beneficial way for the public use, it must be carefully allocated because successful

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communication depends on each broadcaster using an unoccupied frequency within a geographical area. 1

The spectrum known in Australia as the ‘Broadcasting Services Bands’ refers to the designated parts of the radiofrequency spectrum which have been referred to the Australian Communications and Media Authority (ACMA) for planning and licence allocation.2

The issue of what to do with broadcasting bands spectrum has become increasingly controversial since the introduction of digital television was first considered in Australia in the 1990s. In 1997 for example, the Australian Broadcasting Authority (ABA) recommended that the Government should assist the existing three commercial and two national television services in the transition to digital by giving them free access to, and control of, 7MHz of spectrum.3

However, the idea of commercial broadcasters receiving free spectrum was not well received, however, with many stakeholders such as Telstra, subscription television operators and potential providers of online services believing spectrum should be allocated on a competitive basis. These stakeholders argued that competitive pricing of spectrum allocation would open up the market for new operators, and that this would, in turn, enhance choices for the viewing public.4

This approach to the management of spectrum was not accepted by the Howard Government which allocated the free spectrum to commercial free-to-air broadcasters in return for certain commitments, during the digital switchover period.5

At the same time as the Government allocated digital spectrum to existing commercial broadcasters, it decided to maintain an effective ban on the allocation of what has been called the ‘sixth channel’ spectrum in the broadcasting services bands for the establishment of a fourth commercial television licence. Much discussion had previously occurred about whether a fourth network would be viable in the Australian media environment. Restriction on establishing the licence was originally justified because of spectrum scarcity and the need to prevent interference between stations. However, it has been argued that despite advances in technology, which made more intensive uses of spectrum

1. P Behrendt, T Roydhouse and T Seidel, Spectrum Management Seminar, University of New South Wales Faculty of Law, 2000, viewed 11 November 2011, http://www.sentry.org/~trev/seminar/spectrum-mgt.html 2. Note: broadcasters pay licence fees to ACMA for the use of spectrum. These fees are related to their revenue, not their spectrum use. These are imposed under the Television Licence Fees Act 1964. 3. Australian Broadcasting Authority (ABA), Final report of the Australian Broadcasting Authority Digital Terrestrial

Television Specialist Group, Canberra, 1997. Note: the ABA merged with the Australian Communications Authority in 2005 to form the Australian Communications and Media Authority (ACMA). 4. K Jackson, Television Broadcasting Services (Digital Conversion) Bill 1998, Bills Digest, no. 178, 1997-98, Department of the Parliamentary Library, Canberra, 1998, viewed 11 November 2011,

http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillsdgs%2FJM105%2 2

5. R Alston (Minister for Communications Information Technology and the Arts), Community broadcasting sector wins again, media release, 24 December 1997, viewed 15 November 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressrel%2FWFP30%22

4 Broadcasting Services Amendment (Review of Future Uses of Broadcasting Services Bands Spectrum) Bill 2011

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possible, this ‘highly restrictive’ policy continued to be enforced ‘to protect incumbents from competition’.6

This Bill raises the issue of what to do with the sixth channel in the context of greater technological advances and possibilities; and with reference to decision making, about how a significant block of unassigned spectrum should be used once the switchover to digital television is compete.

Sixth channel

Planning for spectrum allocation for analogue television has been able to accommodate six high power television channels in most areas, but only five of these channels were in use by the early 1990s, when a House of Representatives Standing Committee considered the matter. That Committee recommended that the sixth channel should be used for community television until a decision could be reached on allocating the spectrum permanently.7 The 1997 ABA inquiry noted above also considered the possible future use of a sixth channel, concluding that it should be allocated for broadcasting services and supporting allocation of the spectrum to community television. While this recommendation was not accepted by the Government of the time, community broadcasters were given access to the spectrum on a temporary basis.8

Existing commercial networks have always contended that there are not enough viewers, advertising dollars or programs available to support a fourth commercial network and digital television legislation in 1998 appeared to be influenced by this view when it extended the ban on the establishment of new commercial broadcasting licences until December 2008. The Minister for Communications, Information Technology and the Arts, Richard Alston, was adamant the ban was in the interests of broadcasting diversity. Moreover, he implied that allowing community television to continue to use the channel was in the public interest.9

By 2000, suggestions intensified that sixth channel spectrum could be used for purposes other than traditional broadcasting over a fourth commercial network when innovations such as datacasting were proposed. Datacasting was able to use a range of interactive services through digital television, including access to the Internet, video on demand and games. The Government provided some encouragement in this area by allowing free‐to‐air broadcasters to use any part of their digital conversion loaned spectrum not taken up with broadcasting to provide these services.

6. B Cole, ‘What’s really preventing the expansion of broadcasting services?’ The Australian Quarterly, vol. 38, no. 3, cited in R Albon and F Papandrea, Media regulation in Australia and the public interest, Institute of Public Affairs, 1998, p. 44.

7. Australian Broadcasting Authority (ABA), Annual report 1992-93, Sydney, 1993, p. 28. 8. ABA, Inquiry into the future use of the sixth television channel: report to the Minister for Communications and the Arts, Sydney, February 1997, viewed 9 November 2011, http://www.acma.gov.au/webwr/aba/newspubs/radio_tv/investigations/documents/general/6final.pdf

9. R Alston (Minister for Communications Information Technology and the Arts), Community broadcasting sector wins again, op. cit.

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However, in effect sixth channel spectrum remained in limbo until the introduction of the Howard Government’s media reform package in 2006. The package proposed to allocate the spectrum through an auction process to two digital services. These were labelled Channel A, which was intended to deliver in-home narrowcasting services and Channel B, which was to be used for mobile television. Auctions of the channels were delayed for a number of reasons, including claims that Channel B would interfere with existing television services and eventually the concept was abandoned by a new Australian Labor Party (Labor) Government following the 2007 election.10

Initially, the new Government delayed the auction of the Channel A and B spectrum to consider options for its use. This refuelled the idea that a fourth commercial network was again on the agenda. It was suggested that the fragmentation of viewer habits with the advent of online video and mobile media could provide a great opportunity for the fourth network to provide ‘a very different mix of programming, including consumer-generated content’.11

In November 2009, the Minister for Broadband, Communications and the Digital Economy, Stephen Conroy, announced that spectrum which had been intended for Channel A would be allocated to community television in each mainland metropolitan market until analogue television was completely switched off in 2013. Later, the Government made spectrum that had been intended for Channel B available for authorisation by ACMA to a number of applicants for temporary use, such as authorised trials of 3D television.12

By 2009, it appeared that the fourth network was not a consideration for the Government; it had indeed been ‘mothballed’.13 The Minister for Broadband, Communications and the Digital Economy, Stephen Conroy, appeared keen that the digital dividend which would result from the analogue television switch off would be spent on a range of new technologies, rather than commercial broadcasting services. However, the Minister appeared to be ‘hedging his bets’, as he had previously stated in a ministerial directive to ACMA that at least in each metropolitan area provision would be made for six broadcasting channels following digital switchover.14

10. Australian Government, ‘Allocation of unassigned TV channels’, Australian Communications and Media Authority (ACMA) website, 23 November 2010, viewed 14 November 2011, http://www.acma.gov.au/WEB/STANDARD/pc=PC_101009

11. Comment by A Parsons, MediaCom Chief Executive in D Crow and N Shoebridge, ‘Extra channel on the program’, The Australian Financial Review, 22 May 2008, p. 4, viewed 11 November 2011, http://parlinfo/parlInfo/download/media/pressclp/OFIQ6/upload_binary/ofiq62.pdf;fileType=application%2Fpdf#se arch=%22extra%20channel%20on%20the%20program%22

12. S Jackson, ‘Datacasting trial to be switched off’, The Australian, 1 February 2010, p. 28, viewed 14 November 2011, http://parlinfo/parlInfo/download/media/pressclp/1QRV6/upload_binary/1qrv60.pdf;fileType=application%2Fpdf#s earch=%22conroy%20%20Channel%20B%22

13. G Elliott, ‘Fourth channel “off agenda’’’, The Australian, 21 September 2009, p. 32, viewed 11 November 2011, http://parlinfo/parlInfo/download/media/pressclp/K6QU6/upload_binary/k6qu60.pdf;fileType=application%2Fpdf#s earch=%22fourth%20channel%20off%20agenda%22

14. Australian Government, ‘Australian Communications and Media Authority (Realising the Digital Dividend) Direction 2010’, ComLaw website, viewed 14 November 2011, http://www.comlaw.gov.au/Series/F2010L01990

6 Broadcasting Services Amendment (Review of Future Uses of Broadcasting Services Bands Spectrum) Bill 2011

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Digital dividend

Almost immediately following its election victory the new Labor Government announced it would revise the Howard Government’s proposed digital television switchover dates—2013 was eventually set as the date for completion of the transition. As noted above, a ‘digital dividend’ of spectrum was to result from the change from analogue to digital transmission, and since the announcement of a dividend the question of what it will be used for has been increasingly asked.15

In January 2010, the Department of Broadband, Communications and the Digital Economy (DBCDE) released a discussion paper which canvassed a number of options for the use of the digital dividend.16 These included provision of mobile telecommunications services and mobile television, as well as improving the quality and scope of existing broadcasting services and the possible migration of broadcasting services to new standards in the future. The paper also noted the importance of having adequate spectrum available to deliver fast broadband services using wireless technologies in areas that will not be covered by the fixed services offered by the Government’s proposed National Broadband Network (NBN).

Submissions to the digital dividend paper on possible uses of spectrum freed up by digital conversion generally reflected the self‐interest of stakeholders. Community broadcasting and Commercial Radio Australia, for example, argued that the dividend would maximise benefits to the community and the economy if spectrum was allocated to secure the future of digital radio.17 FreeTV wanted sufficient spectrum retained from the dividend for free‐to‐air broadcasters to assist them to move to new standards and new technologies such as MPEG‐4 and 3DTV.18 Pay television on the other hand, believed free‐to‐air broadcasters had benefited sufficiently from the conversion to digital; they should receive no special treatment and should manage technology upgrades of their networks

15. H Mitchell, ‘Troubled offspring needs more than soap and water’, The Australian, 6 March 2008, p. 32, viewed 11 November 2011, http://parlinfo/parlInfo/download/media/pressclp/PYTP6/upload_binary/pytp62.pdf;fileType%3Dapplication%2Fpdf

16. Department of Broadband, Communications and the Digital Economy, (DBCDE), Digital dividend green paper, DBCDE, January 2010, viewed 11 November 2011, http://www.dbcde.gov.au/__data/assets/pdf_file/0005/125267/Digital_dividend_green_paper.pdf

17. Commercial Radio Australia, Submission by Commercial Radio Australia to the Department of Broadband, Communications and the Digital Economy, Digital dividend green paper, 5 March 2010, viewed 11 November 2011, http://www.dbcde.gov.au/__data/assets/pdf_file/0008/127277/Commercial_Radio_Australia.pdf, and Community Broadcasting Association of Australia, Broadcast and spectrum planning issues related to digital dividend green paper, March 2010, viewed 11 November 2011, http://www.dbcde.gov.au/__data/assets/pdf_file/0019/127351/Community_Broadcasting_Association_of_Australia.

pdf

18. Free TV Australia, Submission by FreeTV Australia Limited, Department of Broadband, Communications and the Digital Economy, Digital dividend green paper, 5 March 2010, viewed 11 November 2011, http://www.dbcde.gov.au/__data/assets/pdf_file/0014/127031/Free_TV_Australia.pdf

Broadcasting Services Amendment (Review of Future Uses of Broadcasting Services Bands Spectrum) Bill 2011 7

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without government assistance.19 Telstra was equally opposed to any allocation of the dividend to broadcasters, advocating that it was used for mobile telephony and broadband services.20

A decision on the size and location of the digital dividend was announced in June 2010. A contiguous block of 126 MHz of spectrum will be released in the upper ultra‐high frequency (UHF) band, comprising the frequency range 694 to 820 MHz inclusive, following the completion of digital switchover. The Government noted that it intended to auction the digital dividend spectrum in the second half of 2012.21

Given the task of considering spectrum reallocation, ACMA pointed out that consultations on the dividend had revealed a variety of potential uses for the dividend that ranged from e-health, public safety and security measures, as well as smart grids and smart meters, to the already noted broadcasting and mobile communications applications.22 It noted, however, that the majority of submissions were in favour of the dividend being used for the deployment of mobile telecommunications services, particularly Long Term Evolution Networks. It was of the opinion therefore that ‘the most likely configuration of the digital dividend spectrum will be for the deployment of mobile telecommunications services’.23

Convergence Review

Media convergence has occurred as improvements in communications and media technologies have changed the way consumers use and access television, radio, the Internet and telecommunications services. Convergence is described as:

... both a top-down corporate-driven process and a bottom-up consumer-driven process. Media companies are learning how to accelerate the flow of media content across delivery channels to expand revenue opportunities, broaden markets and reinforce viewer commitments.

Consumers are learning how to use these different media technologies to bring the flow of media more fully under their control and to interact with other users. They are fighting for the

19. ASTRA, Response to the digital dividend green paper, February 2010, viewed, 11 November 2011, http://www.dbcde.gov.au/__data/assets/pdf_file/0015/127023/Australian_Subscription_Television_and_Radio_Ass ociation_ASTRA.pdf

20. Telstra Corporation, Submission in response to the Department of Broadband, Communications and the Digital Economy’s (DBCDE), Digital dividend green paper, 26 February 2010, viewed 11 November 2011, http://www.dbcde.gov.au/__data/assets/pdf_file/0017/127034/Telstra_Corporation_Limited.pdf

21. S Conroy (Minister for Broadband, Communications and the Digital Economy), Size and location of the digital dividend, media release, 24 June 2010, viewed 11 November 2011, http://www.minister.dbcde.gov.au/media/media_releases/2010/062

22. ACMA, ‘Spectrum reallocation in the 700MHz digital dividend band’, Discussion paper, October 2010, viewed 14 November 2011, http://www.acma.gov.au/webwr/_assets/main/lib311973/ifc34_2010_spectrum_reallocation_700mhz_digital_divid end_band.pdf

23. Ibid.

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right to participate more fully in their culture, to control the flow of media in their lives and to talk back to mass market content. 24

The changes prompted by the convergence phenomenon have prompted calls for a review of existing policy and legislative frameworks which are now considered outdated. In response to these calls, in December 2010 the Government set up a Convergence Review Committee (Review Committee) to consider fundamental principles to underpin new media frameworks and the key issues which needed to be discussed.25

In relation to the question of what to do with spectrum, a Convergence Review emerging issues paper concluded that there is both a need to make difficult decisions in relation to competing uses and also to ensure that spectrum is used as efficiently as possible. The Review Committee argued that it is important therefore to develop a policy framework which ensures government plans and allocates spectrum to maximise the public benefit, with regard to commercial, community and public interest uses. The Review Committee argued further that the framework will require objective means of determining future allocations where competing uses for spectrum arise.

The Review Committee iterated the point that the Government intends that, after the replanning of digital television spectrum as a result of the digital dividend process, there will be six channels—each of 7 MHz of spectrum—planned for digital television in Australia’s metropolitan areas.26

The Review Committee raised the issue of possible new uses of the sixth channel:

Digitisation of broadcasting means that the sixth TV channel could support as many as five standard-definition linear programming streams (multichannels), and possibly 10 under newer coding technologies, such as MPEG-4. There is consequently significant capacity that could be used for additional services reflecting a range of business models, both non-profit and commercial.

The sixth channel also potentially offers an opportunity to transition to a new converged spectrum licensing and allocation framework. 27

The Review has sought submissions on the allocation of spectrum, concluding that it would be difficult to gauge genuine levels of interest in sixth channel capacity without ‘some kind of expression of interest phase’.28 It appears that a fundamental objective of the Statutory Review this

24. H Jenkins, ‘The cultural logic of media convergence’, International Journal of Cultural Studies, vol. 7, no. 1, 2004, viewed 11 November 2011, http://eng1131adaptations.pbworks.com/f/Jenkins,+Henry++-+The+Cultural+Logic+of+Media+Convergence.pdf

25. DBCDE, Convergence Review: framing paper, 2011, viewed 11 November 2011, http://www.dbcde.gov.au/__data/assets/pdf_file/0019/133903/Convergence_Review_Framing_Paper.pdf 26. Convergence Review, Discussion paper—spectrum allocation and management, Australian Government, 2011, viewed 14 November 2011, http://www.dbcde.gov.au/__data/assets/pdf_file/0005/139271/Paper-3_Spectrum-

paper_access.pdf 27. Ibid.

28. Ibid.

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Bill proposes to defer is to deliberate upon various expressions of interest gathered by the digital dividend discussion consultations and the Convergence Review consultations.

Committee consideration

At the time of writing, this Bill has not been referred to a committee for inquiry.

Financial implications

This Bill per se is not likely to have any financial implications. However, outcomes from the Review process may include considerable revenue gained from the auction of blocks of spectrum. The 2008 auction of a digital dividend of 108 MHz in the United States for example realised over US$19 billion.29 There have been estimates that the Australian spectrum could be worth up to $1 billion.30

Key provisions

Item 1 of this Bill proposes to insert a new section 35A at the end of Part 3 of the BSA which deals with planning of the broadcasting services bands. Item 2 of the Bill proposes to repeal the existing section 35A from Part 4 of the BSA which deals with commercial television broadcasting licences and commercial radio broadcasting licences.

The new section 35A will defer the date of the initial review of ‘whether broadcasting services bands spectrum that is, or may become, available for allocation should be used for a particular area or areas of Australia to provide television broadcasting services’ and, if so, what variations should be made to licence areas plans in force under section 26 of the BSA as a consequence.31

The effect of the amendment is that the date of the initial review will be deferred from 1 January 2012 to require it to be conducted before 1 January 2013.

The new section broadens the existing terms of the Review of broadcasting services bands spectrum to include whether the broadcasting services bands spectrum should be used ‘to provide services other than television broadcasting services’ (new paragraph 35A(1)(c)) and what licensing requirements, if any, should apply in relation to other services (new paragraph 35A(1)(d)).

29. Dailywireless.org , ‘Europe’s digital divide auction’, Dailywireless.org website, viewed 14 November 2011, http://www.dailywireless.org/2011/07/31/europes-digital-divide-auction/ 30. V Bloch, ‘Switching channels and changing laws: managing the radiofrequency spectrum’, Communications Law Bulletin, vol. 28, no. 3, 2009, viewed 11 November 2011,

http://parlinfo/parlInfo/download/library/jrnart/7EJV6/upload_binary/7EJV6.pdf;fileType=application%2Fpdf#search =%22Switching%20channels%20and%20changing%20%20managing%20the%20radiofrequency%20spectrum%22 31. Broadcasting Services Amendment (Review of Future Uses of Broadcasting Services Bands Spectrum) Bill 2011, viewed 9 November 2011,

http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr4699% 22

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As the Explanatory Memorandum points out, in other words, the section is intended to facilitate review of the sixth channel spectrum.32

New subsection 35A(2) proposes that the same terms of reference are to apply to any subsequent reviews of the broadcasting services bands spectrum—although it should be noted that there is no requirement that subsequent reviews be conducted.

New subsection 35A(4) proposes an expanded list of matters that must be taken into account in conducting the initial review, or a subsequent review of broadcasting services bands spectrum under new subsections 35A(1) or (2). The additional matters enunciated in new paragraphs 35A(4)(d) and (e) are about the impact that introducing new services may have on existing uses of the broadcasting services bands, spectrum and consumers.

New subsection 35A(9) provides that, for the purposes of the initial review and any subsequent reviews, spectrum is, or may become, ‘available for allocation’ if the Australian Communications and Media Authority had made, or may make, a determination under existing section 34 of the BSA in relation to the spectrum. The Explanatory Memorandum cites this as ‘the mechanism by which the scope of the Review will be narrowed to focus on the “sixth television channel”’.33

Concluding comments

It is clear that a number of complicated factors with regards to the allocation of broadcasting services band spectrum need to be addressed within the context of a changing media environment. There has been some attempt to do this through the digital dividend consultation process and further attempts are underway as part of the Convergence Review. In proposing to defer an initial statutory review of the broadcasting services bands this Bill provides an opportunity for wider consultation and discussion, which in turn may better inform decision making and improve outcomes for current and future users of spectrum resources.

32. Explanatory Memorandum, Broadcasting Services Amendment (Review of Future Uses of Broadcasting Services Bands Spectrum) Bill 2011, p. 2, viewed 9 November 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr4699% 22

33. Ibid.

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