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Broadcasting Services Amendment Bill (No. 3) 1999

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1998-99

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

 

 

 

BROADCASTING SERVICES AMENDMENT BILL (No. 3) 1999

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Communications, Information

Technology and the Arts, Senator the Hon Richard Alston)



 

BROADCASTING SERVICES AMENDMENT BILL (No. 3) 1999

 

OUTLINE

 

The Broadcasting Services Amendment Bill (No. 3) 1999 (the Bill) makes amendments to the Broadcasting Services Act 1992 (BSA), the Radiocommunications Act 1992 (RA) and a minor amendment to the Administrative Decisions (Judicial Review) Act 1977 (AD(JR) Act). 

 

The purposes of the amendments to the BSA are to:

·           impose licence conditions on subscription television broadcasting licensees in relation to expenditure on drama programs on subscription TV drama services (Schedule 1);                                                             

·           limit the scope of international obligations applicable to the Australian Broadcasting Authority (ABA) (Schedule 2); and

·           provide a scheme for the regulation of international broadcasting services transmitted  from Australia which requires the Minister for Foreign Affairs to make a national interest assessment of whether a service is likely to be contrary to the national interest (Schedule 3).

The amendments to the RA and the AD(JR) Act relate to the scheme for the regulation of international broadcasting in Schedule 3 of the Bill.

 

Schedule 1

 

Amendments concerning eligible drama expenditure on subscription television

 

The proposed amendments to the BSA in Schedule 1 of the Bill follow a review by the Minister for Communications, Information Technology and the Arts of Australian content on subscription television, including the operation of the current licence condition under section 102, conducted under subsection 215(2) of the BSA.  Subsection 215(2) of the BSA has since been repealed.  The licence condition in section 102 of the BSA requires a subscription television broadcasting licensee who provides a service predominantly devoted to drama programs to ensure that at least 10% of its program expenditure in relation to the service for each year be spent on new Australian drama programs.

 

The review of Australian content on subscription television concluded that the effectiveness and enforceability of this licence condition needed to be improved.   It became clear that since the commencement of subscription television in Australia in 1995, for the majority of subscription television services, including drama services, it was channel providers and not licensees who make most of the expenditure on programs.  Channel providers package programs as ‘channels’ for sale to subscription TV providers.  The ABA has taken the view that they are distinct and separate entities from subscription television broadcasting licensees.   Licensees who provide subscription TV drama services which have been supplied to them by a channel provider, have a nil amount of program expenditure when that expenditure is calculated in accordance with the licence condition in section 102.

 

The proposed amendments to the BSA in Schedule 1 of the Bill repeal section 102 of the BSA and propose a new set of licence conditions which require 10% of the total program expenditure on subscription TV drama services to be on new eligible drama programs.   The emphasis on subscription television broadcasting licensees bearing the responsibility for ensuring that the licence conditions are fulfilled remains in the proposed new conditions.   However, the application of the proposed new conditions depend upon who actually provides the channels for the particular subscription television service.

 

The recognition of the role of channel providers in the majority of subscription television services is reflected in proposed provisions requiring channel providers to report to the ABA and allowing a channel provider’s expenditure on new eligible drama programs for a particular service to be counted for the purposes of meeting the licensee’s licence condition.  In addition, in certain circumstances, the amendments introduce a new licence condition applying to an extra period of time in which a licensee can ‘make up’, or arrange to have made up, any shortfall in expenditure by its channel provider or pass-through provider, during the year to which the principal condition related.

 

Specific provision is made for services where a licensee is supplied with a channel by a pass-through provider (effectively a channel provider based overseas), where a licensee is not supplied with a channel by a channel provider or pass-through provider, and where a licensee is provided with a package of programs by a part-channel provider or a part-pass-through provider.  Subject to a special rule for the first year of operation of the new rules, where the licensee is its own supplier of programming, program expenditure is considered to be within the licensee’s control and no extra time is granted for meeting the proposed new licence condition.  Where the licensee has limited control over expenditure, the rules will enable the licensee to ensure that a shortfall in expenditure in one year is made up in the next year.

 

Part 1 of Schedule 1 of the Bill proposes to amend the BSA to insert a new Division 2A into Part 7.  Part 7 of the BSA deals with subscription television broadcasting services.   In summary:

Subdivision A of the new Division contains introductory provisions, including a simplified outline of the Division, relevant definitions, and provisions concerning expenditure;

Subdivisions B - G impose licence conditions concerning new eligible drama program expenditure on licensees in relation to various possible arrangements for the supply of channels or packages of programs;

Subdivision H imposes reporting requirements on both licensees and channel providers;

Subdivision I requires the ABA, having received the reports under Subdivision H, to issue a compliance certificate to licensees which specifies whether expenditure on new eligible drama has fallen short of the 10% requirement in relation to the service;

Subdivision J includes miscellaneous provisions which, amongst other things, include provision for review of the operation of this Division after 3 years; and

Subdivision K contains a number of special transitional rules for the financial year 1999-2000.

 

In relation to the licence conditions in Subdivisions B-G of the Bill, the emphasis is on expenditure in relation to new eligible drama programs, not televising of new eligible drama programs.  Although it is expected that subscription television operators would generally televise programming for which they have incurred expenditure, there is no legislative requirement that the new eligible drama programs on which expenditure is incurred must be televised in order for that expenditure to be able to be nominated for the purpose of the licence conditions.   For example, expenditure could be taken into account although incurred on an Australian feature film which is intended to have a cinema release.

 

Part 2 of Schedule 1 of the Bill contains a number of proposed amendments to the BSA that commence on 1 July 2000.  Some of these proposed amendments are consequential upon the introduction of proposed new Division 2A of Part 7.  In particular, an amendment to section 143 of the BSA made by item 13 ensures that a licensee whose licence is suspended or cancelled as a result of a breach of a licence condition set out in proposed new Division 2A of Part 7 cannot continue to provide that same or a similar service under the authority of another licence held by it or a related company.

 

Other proposed amendments in Part 2 of Schedule 1 of the Bill repeal provisions of the BSA and the special transitional rules contained in the Bill that will no longer apply after the end of the financial year beginning 1 July 1999.

 

Part 3 of Schedule 1 of the Bill contains amendments commencing on 1 July 2001.  These amendments repeal the remaining special transitional rules.

 

Schedule 2

 

Amendment limiting the scope of international obligations applicable to the ABA

 

Schedule 2 of the Bill limits the scope of international obligations applicable to the ABA.  The ABA will be required to perform its functions in a manner consistent with Australia’s obligations under the Protocol on Trade in Services to the Australia New Zealand Closer Economic Relations Trade Agreement. 

 

Schedule 3

 

Amendments to provide a scheme for the regulation of international broadcasting services transmitted from Australia

 

Schedule 3 of the Bill contains a new scheme for the regulation of international broadcasting services that are transmitted from Australia.  The scheme is being introduced because there is currently no regulatory regime in relation to international broadcasting from Australia.  The Bill enables the Minister for Foreign Affairs to determine whether an international broadcasting service is likely to be contrary to the national interest.  In determining this, the Minister for Foreign Affairs will have regard in particular to the likely effect of the service on Australia’s international relations.

 

The amendments to the BSA establish a scheme for the regulation of international broadcasting and make the necessary consequential amendments to the BSA.   Proposed new Part 8B of the BSA requires an Australian company who wishes to provide an international broadcasting service to apply to the ABA for an international broadcasting licence.  If the ABA verifies the applicant's corporate status and does not find the applicant to be unsuitable, the ABA must refer the application to the Minister for Foreign Affairs, who will make a national interest assessment as to whether the proposed international broadcasting service is likely to be contrary to the national interest.

 

The Minister for Foreign Affairs may direct the ABA not to allocate a licence to an applicant if, in the opinion of the Minister for Foreign Affairs, the proposed service is likely to be contrary to the national interest.  Alternatively, if he or she has no objection to the allocation of the licence as a result of the national interest assessment, the Minister for Foreign Affairs must direct the ABA to allocate the licence.

 

Division 3 of new Part 8B sets out the licence conditions for international broadcasting licences.  These conditions all deal with keeping records of broadcasts, and providing such records to the ABA as requested.

 

Division 4 of new Part 8B includes the prohibition on providing an international broadcasting service without a licence, and provides for the ABA to issue a notice to a person who is providing an unlicensed international broadcasting service directing the person to cease to provide the service.  Division 4 also contains an offence for breach of conditions of an international broadcasting licence, and empowers the ABA to cancel an international broadcasting licence if an international broadcasting licensee has not commenced to provide a service 2 years after the licence was allocated.  In addition, the Minister for Foreign Affairs may, if he or she is of the opinion that a service is contrary to the national interest, direct the ABA to do one of the following things: give a formal warning to the licensee, suspend the licence, or cancel the licence.

 

Division 5 of new Part 8B provides for the ABA to assist the Minister for Foreign Affairs by preparing a report about whether a specified international broadcasting service complies with the international broadcasting guidelines that will be developed by the ABA, and by obtaining records of broadcasts from an international broadcasting licensee.

 

The Bill also makes a number of amendments to the Radiocommunications Act 1992 (RA).  These amendments ensure that only persons who have an international broadcasting licence allocated by the ABA under the BSA may be issued with a transmitter licence authorising operation of a transmitter for transmitting an international broadcasting service by the Australian Communications Authority (ACA).

 

The amendments to the RA also require the ACA to cancel a transmitter licence that authorises use of a transmitter to transmit an international broadcasting service where each international broadcasting licence that authorised the provision of an international broadcasting service has been cancelled by the ABA or surrendered to the ABA.  

 

Schedule 3 of the Bill also contains a minor amendment to the Administrative Decisions (Judicial Review) Act 1977 (AD(JR) Act) so that decisions of the Minister for Foreign Affairs in relation to the proposed new international broadcasting scheme are not subject to the requirement in the AD(JR) Act to provide a statement of reasons. 

 

 

FINANCIAL IMPACT STATEMENT

 

 

Schedule 1

 

Each subscription television broadcasting licensee that provides a service devoted predominantly to drama programs will be required to ensure that at least 10 per cent of the program expenditure in relation to that service is spent on new eligible drama programs.  This will impose an additional financial obligation on those services that are not complying with the licence condition in section 102 of the BSA by currently spending less than 10 per cent on new eligible drama programs.  As the licence condition in section 102 has been part of the Act since 1992 - some three years before subscription broadcasting services commenced in Australia - subscription television operators have had full knowledge of there being a 10 per cent expenditure requirement prior to entering into the market to provide subscription TV drama services. 

 

Compliance should not impose significant additional paper burden costs on the industry, as most channel providers and licensees are already providing compliance information to the ABA.  Similarly, the new enforcement measures should not involve significant additional administrative costs for the ABA.

 

Schedule 2

 

The proposed amendment to paragraph 160(d) of the BSA will have no financial cost implications nor impose any additional administrative burden for commercial free-to-air broadcasters beyond the existing impact of their current obligations to comply with the ABA’s Australian Content Standard.  It will not impose any additional restrictions on their capacity to purchase foreign programming.

 

Schedule 3

 

A person who makes an application to the ABA for an international broadcasting licence will be required to pay a fee to the ABA.  The fee will be determined by the ABA.  Under section 207 of the BSA, the fee must be calculated on a cost-recovery basis.  A person who applies to the ACA for a licence to operate a radiocommunications transmitter to transmit an international broadcasting service will be required to pay an application fee determined by the ACA.  Under section 53 of the Australian Communications Authority Act 1997, the fee must be calculated on a cost-recovery basis.  In addition, a  radiocommunications transmitter licence tax is required to be paid annually.  The amount of this tax is determined by the ACA under the Radiocommunications (Transmitter Licence Tax) Act 1983.  

 

 

ABBREVIATIONS

 

The following abbreviations are used in this Explanatory Memorandum.

 

ABA:                                      the Australian Broadcasting Authority

 

ACA:                                      the Australian Communications Authority

 

AD(JR) Act:                           Administrative Decisions (Judicial Review) Act 1977

 

AIA:                                        Acts Interpretation Act 1901

 

BSA:                                       Broadcasting Services Act 1992

 

RA:                                         Radiocommunications Act 1992

 



REGULATION IMPACT STATEMENT

 

Two Regulation Impact Statements were prepared as part of the Government’s consideration of the matters dealt with in Schedule 1 and Schedule 2 of the Bill.  The Office of Regulation Review did not require a Regulation Impact Statement in relation to the measures contained in Schedule 3 of the Bill.

 

REGULATION IMPACT STATEMENT NO. 1

 

This first Regulation Impact Statement deals with the outcomes of the Review of Australian content on subscription television broadcasting services, and was prepared in March 1998 as part of the Government’s consideration of the outcomes of the Review.

 

A.                 PROBLEM IDENTIFICATION

 

Background

A key object of the Broadcasting Services Act 1992 (BSA) is to promote the role of broadcasting services in developing and reflecting a sense of Australian identity, character and cultural diversity (s.3(e)).  To give effect to this object, the BSA in s.102 places a licence condition on subscription television broadcasting (pay TV) licences which requires that for each year of operation, at least 10% of the licensee’s program expenditure is spent on new Australian drama programs (s.102). The inclusion in the BSA of the s102 program expenditure requirement reflected a perception that, in the absence of this form of regulatory intervention, the pay TV sector would be unlikely to support the cultural objectives of the Act, given the particular structure and economics of this sector of the broadcasting industry (described below).

 

Nature of the problem

2.         The BSA provides, in s.215(2), for a review of the operation of the s.102 licence condition by the Minister for Communications, the Information Economy and the Arts by 1 July 1997 (the Review), including into the feasibility of increasing to 20% the level of expenditure required under the condition.  The purpose of the Review was to revisit the condition to determine its continuing appropriateness at a time when the industry should have been well established.

 

3.         This Regulation Impact Statement addresses the means by which the Australian content requirement under the BSA may be met, following recommendations by the Review that pay TV operators should continue to meet Australian content obligations. The Review took place against a background of industry non-compliance with the s102 requirement. The Review found that total spending by pay TV operators on new Australian drama in the period ending June 1996 was $1.74 million, representing an aggregate spend of 7% rather than 10%.  The Australian Broadcasting Authority (ABA) recently reported that, on the basis of returns from the majority of relevant parties, the equivalent figure for 1996-97 had fallen to 3.4%.  This reflects the fact that, as currently worded, the licence condition applies only to program expenditure by pay TV licensees, whereas, in practice, expenditure is made by ‘channel providers’ - that is organisations, based in Australia or overseas, that acquire, commission and produce programs, and on sell them as a package or ‘channel’ to the pay TV broadcaster/licensee for distribution.  As these entities are outside the scope of the legislation, the ABA cannot require them to meet the 10% requirement, or to provide details of expenditure.

 

4.         The ABA has developed guidelines for expenditure by the channel providers on new Australian drama.  However compliance currently depends entirely on industry co-operation.

 

B.        POLICY OBJECTIVE

 

5.         The BSA expresses a clear objective with regard to the Australian content obligations of pay TV licensees.  As stated above, the broad objective underpinning s.102 is set out in the object in s.3(e) of the BSA, which is to promote the role of broadcasting services in developing and reflecting a sense of Australian identity, character and cultural diversity.  The s.102 condition also has an industry support objective, which recognises that the achievement of the cultural objective relies in large measure on the development of the local drama production industry.  Drama programming is seen as having a key role in shaping the sense of “Australian identity, character and cultural diversity”. However it is also the most expensive form of programming and therefore the most vulnerable to import replacement.  The importance to Australian cultural policy of drama and a healthy drama production industry, is manifest in the Government’s financial support of the film and television industry and through the Australian Content Standard for commercial television (also established as a licence condition), as well as the licence condition for pay TV in s.102, which applies only to predominantly drama services.

 

6.         The objective of the Review was to consider the continuing appropriateness of an Australian content obligation on pay TV services, including whether the expenditure model contained in s.102 is the most appropriate vehicle for achieving the cultural and industry support objectives of the BSA, and, if so, to determine the appropriate level of the requirement.  In the event that a continuing obligation on the pay TV sector was found to be necessary, a further objective of the Review was to determine how such regulation could be made effective and enforceable.

 

7.         The Minister was assisted in his review by the findings of an inquiry by the Australian Broadcasting Authority and by a related study by the Bureau of Transport and Communications Economics.  Their reports are available to the public.

 

C.        IDENTIFICATION OF OPTIONS

 

8.         As part of the Review, consideration was given to the feasibility of alternative Australian content requirements and mechanisms for encouraging expenditure on Australian produced programs.  These included:

a)     industry self -regulation (including through a code of practice);

b)    transmission quotas, such as contained in the Australian Content Standard for commercial free-to-air television licensees;

c)     a modified, enforceable expenditure requirement - this is distinct from the existing expenditure requirement.

 

9.         In addition consideration was given to widening the scope of the BSA to allow a broader range of programs to count towards the Australian content requirement for pay TV.

 

D.        IMPACT ANALYSIS

 

Option (a) Industry self-regulation

10.       Self regulation, based on industry codes of practice and supported by ABA oversight and sanctions in the BSA, operate in the free-to-air and pay TV industries for most program standards matters.  A self-regulation regime would be less interventionist relative to the mandated requirement for commercial broadcasting and hence would also be consistent with the general approach adopted in the legislation of regulating in proportion to the relative influence that particular broadcasting services have in shaping community views.

 

11.       However, for both the free-to-air and pay TV sectors, Parliament decided to make compliance with Australian content requirements a condition of licence, having regard to the significant deterrents to program expenditure in this area given the significantly higher program costs for Australian programs and the commercial incentive to substitute cheaper foreign product, in the absence of a mandated requirement.  These pressures are even stronger in the case of pay TV relative to commercial free to air television, given the lower budgets in the industry, reduced advertising opportunities, the greater number of programming hours to be filled, and the ready availability of lower cost imported product.  The ABA’s report noted that commercial television currently spends $504 million on Australian programs for approximately 3000 hours annually, and that pay TV would have to fill approximately fifteen times the amount of hours.  Total drama programming (Australian and foreign) for a commercial network would cost more than $200 million.  By contrast, program budgets for non-movie drama channels is approximately $6-8 million (ABA Report, p.131).

 

Option (b) Transmission quotas - such as required by

 the Australian content standard for commercial television

12.       An alternative approach would be to extend to the pay TV sector the approach to Australian content regulation which is applied to the free to air commercial television sector.  Under that regime, licensees are required to comply with the Australian Content Standard for commercial television.  There are two main mechanisms in the Standard:  an Australian transmission quota setting the annual overall minimum level of Australian programming at 55% of programming between 6:00 am and 12:00 midnight; and first release subquotas for minimum amounts of Australian drama, Australian children’s programs and Australian documentary programs.

 

13.       Transmission quotas, as distinct from expenditure requirements, have the obvious advantage that expenditure on Australian programming is guaranteed to translate into viewing opportunities for the Australian public, thereby directly promoting “the role of broadcasting in developing a sense of Australian, identity, character and cultural diversity” (objective 3(e) in the BSA).   This model is also favoured by the commercial television industry which argues generally for greater regulatory parity between the two broadcasting sectors.

 

14.       However, transmission quotas are inherently ill-adapted to the structures of pay TV outlines above.  Nor are they suited to the way in which viewers actually consume subscription services.  The concept of “prime time” as it operates on free-to-air television does not translate to the pay TV environment.  Pay TV channels often program in blocks throughout a day and some channels have a relatively high degree of repetition over a short period of time.

 

15.       From a practical perspective, the ABA found that applying to pay TV the same or similar, Australian content requirements as apply to commercial television would involve significant implementation and monitoring problems in a multichannel environment.  In particular, the Authority pointed to the lack of flexibility and difficulty in obtaining sufficient amounts of suitable material for the niche program formats of most pay TV channels.

 

16.       The ABA Report considered a possible adaptation of the free to air model for pay TV which involved setting an hours-based quota for particular program types, eg drama or documentary programs, etc that applied to individual channel providers.  Such a quota would ensure that channel providers broadcast a certain amount of new Australian drama or documentaries each year.  This amount would need to be set at a level that recognised the capacity of the industry, and at the same time ensured that significant amounts of money were spent to provide new production opportunities.  The ABA concluded  that the setting of such quotas would be complex and would not have some of the benefits of an expenditure requirement.  For example, it would not allow for any natural increase in programs broadcast over time as the budgets for programming increase.  (As explained below, the automatic increase in expenditure over time is an important side benefit of the expenditure model, which derives from the particular characteristics of programming agreements between the pay TV movie channels and the Hollywood studios).

 

Option (c) A modified expenditure requirement

17.       The existing unmodified expenditure model was originally chosen because it was seen as well-suited to the structure and economics of the pay TV industry.  The main advantage, particularly relative to a uniform transmission quota, is that it can be readily-adapted to the particular size and characteristics of the individual channels, from high spending movie channels through to low budget niche channels, which can each contribute the prescribed amount in proportion to their outlays.

 

18.       However, experience has shown that there is an internal incoherence in the provision, since it refers only to licensees ’ expenditure.  In practice, it is channel providers who actually make expenditure on programs, then sell them packaged as channels for retailing and distribution.  Thus the condition in s.102, as currently expressed, cannot deliver the objective of the regulation.  Hence the existing expenditure model needs to be modified to reflect these working arrangements and make the provision effective and enforceable.

 

19.       A modified expenditure requirement which addresses the deficiencies in the existing expenditure requirement would have a positive impact on the Australian production industry, even if the quota is maintained at the existing 10% level  (see below).  Expenditure on new Australian drama by predominantly drama channels in 1996-97 was $2.2 million.  Had expenditure occurred at the intended 10% level, the amount should have been $6 million.  To the extent that meeting the existing prescribed level can be shown to be within the capability of the industry, it is also likely to have positive benefits to subscribers who will gain access to Australian programs that would not otherwise be produced without facing any increases in subscription fees which the industry might otherwise seek to pass on if a higher expenditure level were to be imposed.  This would also encourage production of Australian programs, benefiting the Australian television production industry.

 

Level of the expenditure requirement

20.       The Bureau of Transport and Communications Economics (BTCE) analysed the likely contribution to drama production through the licence condition at the 10% and 20% levels of expenditure, and at intermediate levels of 12% and 15%.  The BTCE found that, at the existing 10% level, expenditure on Australian programming would grow significantly, to around $28 million in 2000-01, and up to $46 million in 2004-05, of which the movie channels would contribute $40 million. (The movie channels make payments to the Hollywood studios on a cost-per-subscriber basis, with minimum numbers of subscribers guaranteed, whereas the non-movie channels pay a much lower, set fee for the cost of programs which is not linked to subscriber levels.  Hence, in the case of movie channels, there is an inbuilt mechanism for program expenditure to increase with the growth in their subscriber levels.) The BTCE found that a 12.5% expenditure requirement should generate up to $58 million by 2004-05, of which the movie channels would contribute around $50 million. An increase in the requirement to 20% should generate expenditure of up to $102 million by 2004-05 for all drama channels, of which the movie channels would contribute $90 million.

 

21.       The BTCE found that 10% level should allow the movie channels to achieve profitability by 2001-02 (ie sufficient profit to recover all losses to that date), where subscriber numbers grow very strongly and program costs are at the lower range. For non-movie channels, where the channel attracts at least one half of all pay TV subscribers, profitability should be achieved by 2001-02.  At 12.5%, provided there is a strong increase in subscriber numbers and a reduction in programming costs (both significant variables), movie channels should be able to achieve profitability by 2001-02.  However, profitability levels would be lower than those estimated for the 10% level. For the non-movie channels, increases in the requirement to 12.5% would not significantly affect the timing of profitability, as it is the number of subscribers (not the relatively fixed program costs), which is the key determinant for profitability for these channels.  At the 20% level, there could be problems for the movie channels in virtually all scenarios analysed.  Profitability could not be achieved by 2001-02. Rather, the ongoing viability of the new movie channels, which are critical to the success of pay TV services, would be adversely affected. For the non-movie channels, increases in the requirement to 20% would not significantly affect the timing of profitability.

 

22.       Drawing on the BTCE’s findings, the ABA concluded that the Australian content expenditure obligation should remain at 10% of total expenditure.  The pay TV industry claims that any increase beyond 10% will make their services unviable. Industry figures indicate that pay TV has approximately 760,000 subscribers and a penetration rate of only 11.2% of households.  The industry has not grown at the rate expected when the 10% expenditure requirement was imposed and increasing the requirement at this early stage of the industry’s development would act as a disincentive to establish new predominantly drama channels, and adversely affect the achievement of profitability by the pay TV industry.  (Commercial broadcasters were not required to meet comparable local content requirements until they were well established).  Furthermore, a 10% expenditure requirement, when made enforceable, should translate into a significant expansion in Australian film and television production in future years, particularly as a result of the escalating nature of program expenditure by the movie channels as their subscriber levels increase. Retaining the existing 10% level would reduce the risk to subscribers of increases in subscription fees, that may otherwise follow from an increase in the 10% expenditure level.

 

23.       The proposed modified expenditure model will take into account the program expenditure made in respect of each predominantly drama channel, irrespective of which particular party makes it.  It will achieve a balance between recognising the critical role played by entities other than licensees in making expenditure on Australian programming, while maintaining the obligation on the licensee, consistent with the broad legislative framework of the BSA.  The licensee will be retained as the point of regulation.  However, the BSA will recognise channel providers, from whom the ABA will be empowered to obtain compliance information about program expenditure.  It is envisaged that, in most cases, the licensee or a related party acting on the licensee’s behalf, will contract with the channel provider to make the necessary expenditure.  Where the necessary expenditure is not made, the ABA will look to the licensee to remedy the breach. Industry will be consulted in finalising these new enforcement arrangements. The modified expenditure regime represents a continuing application of the current BSA requirements, but removes the deficiencies in the existing expenditure model.

 

Scope of Regulation

24.       The review considered whether the present scope of the regulation was appropriate, in particular whether the definition of eligible programs could be extended and whether the local content regulation could be applied more generally to program categories beyond designated drama channels .

 

Broadening the definition of eligible programs

25.       The ABA recommended that the definition of eligible expenditure be broadened from “new Australian drama” to “new Australian programs”.  The types of programming that would fall within an expanded definition would include, as well as drama, sketch and standup comedy, scripted interstitials (filler segments such as film reviews), magazine and variety programs, documentaries, quiz shows, and infotainment/lifestyle programs.  The ABA observed that a broadening of the definition of eligible programs from ‘new Australian drama’ to 'new Australian programs' should provide many more hours of programming, encouraging increased Australian content on non-movie channels.  The ABA believes broadening the definition would give channel providers greater flexibility to create and develop new Australian programs that are appropriate for their niche channel formats.

 

26.       However, the film production industry opposes a widening of the definition of eligible programs.  Drama is recognised as having a key role in shaping the sense of “identity, character and cultural diversity”, as demonstrated by the fact that only drama channels are subject to an Australian content obligation.  If the definition of eligible expenditure is broadened, there is a risk that some predominantly drama channels may fulfil their Australian content requirement without making any expenditure on new Australian drama, which is the most expensive form of programming, instead opting for a greater volume of cheaper, less culturally significant, Australian programming.  This would serve to undermine the object of s.102 of the BSA.

 

Possible extension of Australian content regulation to further channel types

27.       Currently the licence condition is imposed only in relation to predominantly drama channels. A number of submitters, including the commercial broadcasting industry and the Production Industry Group (representing the independent film production industry and several Government film agencies), argued that the requirement should be extended to other channel types.  Various submitters argued that an Australian content obligation should also apply to channels for documentary and scripted learning, sport, arts, music etc, with documentary channels in particular the subject of a considerable number of submissions.

 

28.       The importance of the documentary genre in cultural terms has been acknowledged through its inclusion in the Australian Content Standard for commercial television (which requires 10 hours of first run documentaries per broadcaster per year), and the genre is supported by the Government through investment by the Australian Film Finance Corporation and production by Film Australia. The ABA proposed monitoring the Australian content performance of documentary channels rather than imposing content regulation at this time.

 

E.        CONSULTATION

 

29.       The Review has involved extensive public and industry consultations.  In conducting their investigations the ABA and BTCE consulted widely with the pay TV industry, including pay TV broadcasters and channel providers, representatives of the commercial television industry and the production industry, and relevant government agencies. The Department conducted a further round of consultations on the basis of the ABA and BTCE reports prior to providing advice to the Minister.  An industry consultation phase is proposed to ensure that the revised legislative provisions are practicable.

 

30.       The views of the various industry sectors are summarised as follows.  The preferred option of the pay TV industry (licensees, broadcasters and channel providers) is that there be no mandated requirement.  The Australian Subscription Television and Radio Association (ASTRA) supports further examination of self regulation, industry codes of practice and industry development plans.  However, in the absence of self regulation, ASTRA would accept a mandated 10% expenditure requirement, provided it was confined to ‘predominantly drama channels’, and that eligible expenditure be broadened to “new Australian programs”, but strongly opposes any increase in the level of the requirement. The commercial television industry calls for a greater degree of parity between Australian content requirements on pay TV and commercial television, and supports transmission quota requirements similar to that which apply to the commercial television sector.  The Production Industry Group (representing the Australian film production industry and associated Government funding agencies) submits that the current requirement should be enhanced and strengthened to ensure that it continues to meet its policy objectives.  The Production Industry Group supports an increase in the expenditure requirement and that eligible expenditure should only be permitted in relation to ‘new Australian drama’, and also supports an extension of the requirement to other pay TV services, notably documentary channels.

 

F.  CONCLUSION AND RECOMMENDED OPTION

 

31.       The preferred option is Option (c), retention of the expenditure model as a licence condition in the BSA.  This option operates in conjunction with the following interrelated elements:

(a)                the introduction of amendments to the BSA to make the licence condition effective and enforceable, including recognition of the role of channel providers;

(b)                continuation of the current scope of the requirement ie that it should apply only to predominantly drama services and require expenditure on new Australian drama programs;

(c)                retention of the current expenditure level at 10% for each year of operation.

 

32.       This option provides scope and flexibility for individual channels to meet the requirement in a way which reflects their available budgets and perceived subscriber needs, and also allows for an increased commitment to Australian content as their viability increases. The option introduces certainty without imposing new regulatory burdens on the industry.  It does not raise the level nor widen the scope of regulation, and is consistent with the scheme of regulation under the BSA.

 

33.       Option (a), self-regulation, is not acceptable as it has already been demonstrated to result in non compliance and would not result in the cultural and industry support objectives of s.102 of the BSA being met. Option (b) is not feasible as a transmission quota can not be adapted to the structure and economics of the pay TV industry.  A transmission quota could also discourage the establishment of new drama channels and could therefore also off set any potential benefits to viewers resulting from the guaranteed screening of Australian programs through a transmission requirement.

 

34.       Option (c), the expenditure requirement, as amended to recognise the role of channel providers while retaining responsibility for compliance with the licensee, is the recommended option.  The expenditure model provides scope and flexibility for individual channels to meet the requirement in a way which reflects their available budgets and perceived subscriber needs, and also allows for an increased commitment to Australian content as their viability increases.  Transferring responsibility to the channel providers through licensing or other schemes would introduce additional layers of regulation and administrative burdens on the industry and be inconsistent with the scheme of regulation under the BSA which is centred on licensees.

 

35.       Maintaining the current requirement at 10% takes into account the financial capacity of the pay TV industry to meet its obligations with regard to Australian programming at this stage of its development, and the significant contribution that a 10% requirement under the modified expenditure model, will make to the Australian drama production industry and to the cultural benefit of Australian audiences.

 

36.       It is also proposed to maintain the existing scope of the Australian content regulation.  In order to ensure the presence of Australian drama on drama channels, it is necessary and appropriate that the existing 10% expenditure requirement should continue to apply only to “new Australian drama”, the programming genre which is most vulnerable to substitution by cheap foreign product.

 

37.       Similarly, it is not proposed to extend local content requirements to other channel types.  Applying local content regulations too freely across a broad range of services has no clear policy rationale and, in practice, may act as a disincentive in the establishment of new channels at this critical stage in the industry’s development.  Rather, as recommended by the ABA, the content performance of documentary channels should be monitored with a view to possible extension of the regulation to this genre at a later date.

 

38.       Option (c) is the culmination of an extensive consultation and review process which has taken into account the views of all stakeholders, and best balances the interests of these stakeholders.

 

G. IMPLEMENTATION AND REVIEW

 

39.       The Government will introduce amendments to the BSA to improve the effectiveness and enforceability of the licence condition.  There will be consultation with the industry and the ABA on the form of the amendments.  The procedures for the introduction of legislation include the preparation of explanatory material.

 

40.       In view of the fledgling state of the industry and the possibility of further rationalisation, including changes to existing programming arrangements, a further review three years from the date of introduction of the new measures arising out of this Review is proposed.  This will permit further consideration of the appropriate level of expenditure following a period of an enforceable regime (including whether it is appropriate to set separate targets for movie- and non -movie channels) and the feasibility of extending the Australian content requirement to predominantly documentary channels.

 

41.       Section 158(n) of the BSA, which requires the ABA to monitor, and report to the Minister for Communications, the Information Economy and the Arts, on the operation of the Act, will provide the mechanism for the ABA to regularly report to the Minister on the operation of the provision.

 

Administrative simplicity, economy and flexibility

42.       Compliance should not impose significant additional paper burden costs on the industry.  It should involve no more than a continuation of the processes currently operating under the voluntary ABA guidelines whereby most channel providers are providing compliance information.  Contractual arrangements between licensees and other parties are part of normal business practice.

 

REGULATION IMPACT STATEMENT NO. 2

 

This second Regulation Impact Statement deals with the Government’s consideration of the implications of the Protocol on Trade in Services to the Closer Economic Relations Agreement between Australia and New Zealand for Australian content requirements on commercial and subscription television licensees.  It was prepared in March 1999 as part of the Government’s consideration of this issue.

 

PROBLEM IDENTIFICATION

 

Background

 

Through entering into a binding international agreement, Australia has committed to the objectives of the CER Protocol, which include the strengthening of the trans-Tasman trading relationship by liberalising barriers to trade in services with New Zealand.  The CER Protocol contains a requirement to give national treatment to services provided by nationals of both countries, which includes services provided in the production of television programs for television.  

 

2.         On 28 April 1998, the High Court of Australia allowed an appeal by Project Blue Sky Inc, representing the New Zealand (NZ) film and television production industry, that the Australian Content Standard (the standard) was inconsistent with the Protocol on Trade in Services to the Closer Economic Relations Agreement (CER) with NZ.  This decision affected the standard for free-to-air television only.  However, the content quota for pay TV is also inconsistent with our obligation under the CER.

 

3.         This Regulation Impact Statement addresses the means by which the Government can amend the Broadcasting Services Act 1992 (BSA) to make it consistent with our obligations under the CER, whilst retaining the cultural policy objectives of the BSA, and provide greater regulatory certainty to the ABA and to the industry by obviating the possibility of flow ons to other trade agreements and treaties. It also addresses the implications of allowing New Zealand programs to count towards the Australian content requirement for pay TV.

 

Implications of the High Court decision for the Australian Content Standard for free-to-air television

4.         A key object of the BSA is to promote the role of broadcasting services in developing and reflecting a sense of Australian identity, character and cultural diversity (s.3(e)).  To give effect to this object, Section 122 of the Broadcasting Services Act 1992 (BSA) requires the ABA to determine a program standard for commercial television licensees relating to the Australian content of programs, which operates as a transmission quota. Section 160(d) of the BSA requires the ABA to perform its functions in a manner consistent with Australia’s international obligations.

 

 

5.         Following the High Court’s decision the ABA released the new Australian Content Standard for commercial television on 18 February 1999. The new standard, which meets our obligations under CER, took effect from 1 March 1999. (A separate Regulation Impact Statement has been prepared on this.)

 

6.         There are still concerns that section 160(d) of the BSA, left unamended, could result in possible flow on effects to other treaties.   Section 160(d) has recently been the subject of an Inquiry by the Senate Environment, Recreation, Communications, Information Technology and the Arts Legislation Committee. The Committee released its report on 17 February 1999.   The Committee’s recommendations focused on measures to limit any potential for the High Court’s decision to undermine the cultural objective of the standard or for it to flow on to other trade agreements.  The Government will be responding to the Committee’s report after proper consideration of its recommendations.

 

Australian content on pay TV

7.         Subscription television (pay TV) operators are subject to a requirement in s.102 of the Broadcasting Services Act (BSA) that 10% of a drama channel’s program expenditure must be on new Australian drama programs.  The review of Australian content on pay TV, conducted in 1997 by the Minister for Communications, Information Technology and the Arts in accordance with s.215(2) of the BSA, found that the requirement in s.102 of the BSA is unenforceable.  In March 1998 the Government considered the outcomes of the Ministerial review and decided to amend the BSA to make the Australian content requirement for pay TV enforceable.  A Regulation Impact Statement was prepared for the Government’s consideration in making that decision.  In June 1998 the Government decided to defer the introduction of the proposed legislative amendments until after it considered the outcome of the ABA’s proposals for the free-to-air standard, so that the Government had an opportunity to determine its approach to the pay TV requirement as part of its response to the Project Blue Sky issue.

 

Nature of the problem

 

Implications of the High Court decision for the Australian Content Standard for free-to-air television

8.         Whilst the ABA has revised the Australian Content Standard so that it meets Australia’s obligations under CER with New Zealand,  section 160(d) still poses a problem for the ABA as it is drafted broadly and contains a more onerous obligation than many other similar provisions in other statutes. The High Court recognised that not every obligation imposed by section 160(d) can be easily identified and applied.  Many international treaties are expressed in indeterminate language and Australia is party to over 900 treaties.  There is a tension between Australia’s trade and cultural objectives resulting from section 160(d), as recognised in the Senate Committee’s report.  Australia has close cultural as well as trade ties with New Zealand, but to allow other countries to benefit from regulation that has a primarily cultural objective would be unacceptable, especially as Australia’s approach in other trade negotiations, such as the General Agreement on Trade and Services, has been to exempt the audio-visual sector.

 

Australian content on pay TV

9.         The definition of ‘Australian drama program’ in the BSA in relation to the Australian content requirement for pay TV does not give national treatment to New Zealand television programs.  The Office of International Law has advised that though not unlawful, the pay TV requirement is inconsistent with Australia’s obligations under the Services Protocol to the Closer Economic Relations Agreement with New Zealand (the CER Protocol), and therefore places Australia in breach of its international obligations. The High Court’s judgment does not apply to the pay TV requirement as it is contained in the BSA itself, unlike the free-to-air standard which is determined by the ABA.   Accordingly, if the Government wishes to make the Australian content requirement for pay TV consistent with Australia’s CER obligations, amendment to the definition of ‘Australian drama program’ in the BSA will be required.

 

OBJECTIVES

 

Implications of the High Court decision for the Australian Content Standard for free-to-air television

10.       The objectives of the proposals outlined in this Regulation Impact Statement can be defined as to:

 

(a)        comply with Australia’s international obligations under the Closer Economic          Relations Protocol (CER) on Trade in Services with New Zealand;

(b)        (restrict the flow on consequences to other international agreements and treaties;

(c)        enable the Government to continue to meet its cultural policy objectives; and

(d)       provide greater regulatory certainty to the Australian Broadcasting Authority.

 

Australian content on pay TV

11.       The BSA expresses a clear objective with regard to the Australian content obligations of pay TV licensees. The broad objective underpinning s.102 is set out in the object in s.3(e) of the BSA, which is to promote the role of broadcasting services in developing and reflecting a sense of Australian identity, character and cultural diversity. The s.102 condition also has an industry support objective, which recognises that the achievement of the cultural objective relies in large measure on the development of the local drama production industry. 

 

12.       The decision whether to make New Zealand programs eligible for the pay TV requirement involves a consideration of competing cultural policy and trade policy objectives.  If expenditure by pay TV operators pursuant to the pay TV requirement  shifts from Australian programs to New Zealand programs, the achievement of the policy objective for the pay TV requirement will be diminished.  However, if the pay TV requirement is not amended to be consistent with Australia’s obligations under the CER Protocol, Australia will be acting in breach of its international obligations with broad international trade policy implications.   

 

IDENTIFICATION OF OPTIONS IN RELATION TO THE IMPLICATIONS OF THE HIGH COURT DECISION FOR THE AUSTRALIAN CONTENT STANDARD FOR FREE-TO-AIR TELEVISION

 

13.       The following two options are considered to be available to the Government in response to the High Court’s decision on Project Blue Sky v the ABA.

 

(a)        amend the Broadcasting Services Act so that the ABA is required to perform its    functions having regard to Australia’s obligations under any convention of which         the Minister has notified the ABA about in writing; and

(b)        amend section 160(d) of the Broadcasting Services Act to limit its scope to the      CER.

 

IMPACT ANALYSIS IN RELATION TO THE IMPLICATIONS OF THE HIGH COURT DECISION FOR THE AUSTRALIAN CONTENT STANDARD FOR FREE-TO-AIR TELEVISION

 

Option (a)

14.       Option (a) involves amending the BSA so that the ABA is required to perform its functions having regard to Australia’s obligations under any convention of which the Minister has notified the ABA about in writing.  This was a recommendation of the Senate Committee and mirrors section 580 of the Telecommunications Act 1997.

 

15.       Currently section 160(d) of the BSA requires the ABA to perform its functions in a manner consistent with Australia’s obligations under any convention to which Australia is a party or any agreement between Australia and a foreign country.  If 160(d) is retained in its current form the ABA would continue to be obliged to take into account international obligations in performing its functions, including international obligations which may arise under future treaties dealing with broadcasting and trade in broadcasting products or services.  The benefit of Option (a) is that it potentially provides a less onerous requirement on the ABA to carry out its functions compared to the current requirement.  Under this option, the ABA is provided with direction by the Minister as to which treaties or agreements it must have regard to.  Whilst this option  provides more direction for the ABA than the current requirement, it does not provide the required certainty to the industry.  This has been identified as a major concern of the industry and potential investors in the industry.  It would also weaken our current obligation to NZ as expressed in the BSA.

 

Option (b)

16.       Option (b) involves amending section 160(d) of the Broadcasting Services Act to limit its scope to New Zealand.  The benefit of option (b) is that it accommodates CER, retaining the special position of New Zealand with a stronger level of obligation than expressed in other domestic legislation while making it clear that there are no flow ons to other treaties. This option also assists the ABA in the exercise of its regulatory responsibilities.

 

17.       The Australian film and television industry would prefer to see section 160(d) repealed.  However the repeal of Section 160 (d) would only remove the requirement under the BSA that the ABA act in a manner consistent with our international obligations.  It would not remove Australia’s obligations to New Zealand under international law, and may undermine the benefits we get from rules-based world trade. 

 

18.       Neither option will have financial cost implications nor impose any additional administrative burden for commercial free-to-air broadcasters beyond the existing impact of their current obligations to comply with the ABA’s Australian Content Standard.  It will not impose any additional restrictions on their capacity to purchase foreign programming.

 

19.       By ensuring there is no flow on to other treaties from the High Court’s decision, both options seek to ensure that Australian television audiences continue to have access to Australian television programs.  There is currently strong audience demand for Australian series and serials and a recent study of Australian content regulation found widespread support for the current level of domestic programming on television and moderate support for an increase in local content. 

 

IDENTIFICATION OF OPTIONS IN RELATION TO AUSTRALIAN CONTENT ON PAY TV

 

20.       The previous Regulation Impact Statement prepared to support the Government’s decision to make the pay TV requirement enforceable addressed the appropriateness of non-regulatory measures as an alternative to regulation.  As the Government decided in March 1998 that the pay TV requirement should be made enforceable through amending the BSA, it is not appropriate for this Regulation Impact Statement to consider self-regulatory measures as options.

 

21.       In the absence of any renegotiation of the CER Protocol, there are two options available to the Government in relation to the CER implications for the Australian content requirement for pay TV:

(a)        continue the exclusion of New Zealand programs from the Australian content        requirement on pay TV.

(b)        amend the BSA to make the treatment of New Zealand programs in the pay TV    requirement consistent with the requirements of the CER Protocol.

 

IMPACT ANALYSIS IN RELATION TO AUSTRALIAN CONTENT ON

PAY TV

 

22.       Option (a) would result in an ongoing breach of Australia’s international obligations to New Zealand, at a time when the two nations are seeking to strengthen the CER relationship, and is likely to be a source of ongoing tension in the bilateral relationship. The New Zealand Government has submitted that it considers that the pay TV requirement breaches the CER Protocol, and that any measure which jeopardises the free trade principles of CER is regarded very seriously by New Zealand.

 

23.       Option (a) may also lead to further litigation by Project Blue Sky against the ABA which administers the pay TV requirement, as Project Blue Sky has argued that there are legal grounds on which New Zealand programs should qualify.  Although legal advice indicates that a challenge by Project Blue Sky against the pay TV requirement is unlikely to be successful in an Australian court, it acknowledges that Project Blue Sky has an arguable position.  Failure to amend the BSA could lead to another lengthy and costly legal battle.  If Australia is not to deliberately flout its international obligations, the uncertainty can be removed only by allowing NZ programs access to the Pay TV quota..

 

24.       Conversely, the benefits of option (b) are that it would ensure Australia’s obligations to New Zealand under the CER Protocol in respect of local content requirements for television services are fully met and remove any further room for challenge in Australian courts, providing certainty for the pay TV and production industries.

 

25.       Option (a) is supported by the Australian production industry as it would ensure that pay TV operators can only meet the pay TV requirement through expenditure on Australian-produced television programs.  The costs and benefits of making the pay TV requirement enforceable were fully addressed in the previous Regulation Impact Statement.  This had reported the estimates of the then Bureau of Transport and Communications Economics (BTCE) which found that, at the existing 10% level, expenditure on new Australian drama programming should grow significantly, to around $28 million in 2000-01, and up to $46 million in 2004-05.  The Australian production industry argues that if Option (b) is adopted, some of this expenditure could be redirected to the New Zealand production industry, resulting in the cost of lost production opportunities to the Australian production industry.

 

26.       It is difficult to predict the extent to which pay TV operators might shift their expenditure to New Zealand productions if option (b) is adopted.  The pay TV requirement is an expenditure quota.  Although New Zealand programming is likely to be cheaper than Australian programming, the cost to the broadcaster of meeting an expenditure quota is not reduced if it shifts its expenditure to New Zealand programming.  The only advantage to the pay TV broadcaster is that a greater number of cheaper programs could be purchased with the 10% requirement.  Thus, while there would be no additional cost to the pay TV broadcaster if option (b) is adopted, option (b) may be perceived as providing a benefit to the pay TV industry, in that pay TV operators would have a greater range of programs (ie from either country) on which to spend their expenditure quota monies.   

 

27.       Neither option is likely to have financial cost implications for pay TV subscribers as the cost of the obligation to the pay TV broadcaster will remain broadly the same, and therefore there are no additional costs or savings to be passed onto subscribers.   Although option (b) may result in fewer Australian productions for pay TV subscribers to watch, pay TV operators are likely to be responsive to subscriber demand, and may be more likely to apply quota obligation monies towards Australian productions than New Zealand productions if their subscribers indicate a preference for Australian programs.

 

28.       Neither option will affect the role of the regulatory authority responsible for administering the  pay TV requirement, the ABA.  The ABA will continue to monitor and oversee compliance by Australian pay TV channels, which will be required to submit annual returns showing their expenditure on programs which they wish to have counted towards meeting the requirement.  Whether or not this includes expenditure on New Zealand programs will not impose greater administrative burdens on the ABA, or the pay TV operators themselves.

 

CONSULTATION

 

Implications of the High Court decision for the Australian Content Standard for free-to-air television

29.       The Department of Communications, Information Technology and the Arts undertook consultation with the Australia film production industry.  In addition to face to face meetings with representatives of the film industry, the Department also considered the views of the Australian film and television production industry, broadcasters, the Federation of Australian Commercial Television Stations, the New Zealand Government, the New Zealand film and television production industry, and the broader community expressed in submissions to the Senate Environment, Recreation, Communications, Information Technology and the Arts Legislation Committee’s inquiry into the Australian Content Standard for television and Paragraph 160(d) of the Broadcasting Services Act 1992.  The majority of the submissions from the Australian film and television production industry recommended repealing section 160(d) of the Broadcasting Services Act.

 

30.       The Department also consulted closely with the Department of Foreign Affairs and Trade, the Attorney General’s Department and the Australian Broadcasting Authority on the development of the options.

 

31.       The Attorney General’s Department advised that if paragraph 160 (d) of the BSA were to be repealed, the ABA would no longer be bound, as a matter of domestic law, to take international obligations into account in carrying out its functions.  As a result the broadcasting standard which was found to have been unlawfully made in the Project Blue Sky case would not be unlawful if made again.  However, adherence to such a standard would continue to place Australia in breach of its obligations to New Zealand under the CER Trade in Services Protocol.  The Attorney General’s Department proposed the course of action set out in option (b) to the Senate Committee. 

 

32.       The Australian Broadcasting Authority noted that repealing 160(d) of the BSA was raised in submissions to them as part of their review of the Australian Content Standard and that this is a matter for Parliament to consider, rather than the ABA.  The ABA  did however, also note that an alternative approach for Parliament would be to limit the application of 160(d) to treaty obligations with New Zealand.

 

Australian content on Pay TV

33.       The main affected parties are Australian pay TV operators, the Australian television production industry and the New Zealand Government and the NZ television production industry.  The Department has consulted with representatives of the Australian pay TV industry and the Australian production industry through meetings with peak industry organisations. 

 

34.       The views of the various industry sectors are summarised as follows. The Australian Subscription Television and Radio Association (ASTRA) supports option (b) on the grounds that it would achieve consistency in the treatment of New Zealand programs between free-to-air television and pay TV, particularly in an era of convergence where some programs are jointly financed by the two television sectors.  The Screen Producers Association of Australia (SPAA), representing the Australian film and television production industry, and associated Government funding agencies, support option (a), submit that consistency in the treatment of New Zealand programs across the television sectors is not necessary, and argue that the cultural objective underpinning s.102 of the BSA should be given primacy over trade policy considerations.  Both the New Zealand Government and Project Blue Sky (representing the New Zealand production industry) strongly support option (b). Both parties submitted to the Ministerial review conducted in 1997 that they consider the pay TV requirement must be amended to admit New Zealand programs as the present exclusion of them from the pay TV requirement is in breach of the CER Protocol. 

 



CONCLUSION AND RECOMMENDED OPTIONS

 

Implications of the High Court decision for the Australian Content Standard for free-to-air television

35.       The preferred option is Option (b), that section 160(d) of the Broadcasting Services Act (1992) be amended to limit its scope to CER .  This option enables Australia to meet its obligations under the CER Protocol, provides greater regulatory certainty to the Australian Broadcasting Authority and enables the Australian Content Standard to achieve the Government’s cultural objectives for the Australian film and television production industry.

 

Australian content on Pay TV

36.       In view of the intractable problems associated with an ongoing breach of the CER Protocol, the only option available to resolve this breach of Australia’s international obligations is Option (b).  This option will also remove the threat of a legal challenge against the pay TV requirement by Project Blue Sky.  If it were possible to renegotiate the CER Protocol to exclude audiovisual services from its scope, option (a) would be preferable, as this option would preserve the integrity of the cultural objective underpinning s.102 of the BSA.  However, the Department of Foreign Affairs and Trade (DFAT) advises that a renegotiation of the CER Protocol is not possible.  On balance, having regard to the views of DFAT and the Attorney-General’s Department, the risk of a possible shift in some pay TV expenditure from Australian to New Zealand programs is outweighed by the potential damage resulting from a continuing breach of the CER Protocol, both to Australia’s relationship with New Zealand in particular, and more broadly to Australia’s standing as a nation which acts consistently with its international obligations.

 

37.       In order to accord equal treatment to both countries’ services, the same test that is used to determine an Australian program will apply to determine a New Zealand program, for the purpose of determining eligible expenditure for the pay TV quota.  It is proposed to follow the same approach as is applied in the revised Australian content standard, which has received the support of the New Zealand Government and industry.  That is, the same creative elements test will apply to determine eligible programs, and Australian official co-productions will also qualify.

 

 

IMPLEMENTATION AND REVIEW

 

Implications of the High Court decision for the Australian Content Standard for free-to-air television

38.       The Government will introduce an amendment to section 160(d) of the Broadcasting Services Act to limit its scope to the Closer Economic Relations Protocol between Australia and New Zealand.

 

39.       The ABA will closely monitor and review the revised Australian Content Standard after the first two years of operation to assess how well the standard is achieving its cultural purpose.

 

Australian Content on Pay TV

40.       The Government announced in April 1998 that it will introduce amendments to the BSA to make the pay TV requirement enforceable.  This Bill will provide a legislative vehicle to effect amendments to the definition of ‘Australian drama program’ which make the definition consistent with the terms of the CER Protocol, similar to the approach adopted by the revised ACS.  There will be consultation with the industry and the ABA on the form of the amendments.  The procedures for the introduction of legislation will include the preparation of explanatory material.

 

41.       As part of the Government’s April 1998 announcement to make the pay TV requirement enforceable, the Government announced that a review of the operation of the pay TV requirement would take place three years from the enactment of the amending legislation.  This Ministerial review will provide an opportunity to consider the extent to which expenditure on New Zealand programs has occurred, and any implications for the cultural objective underpinning the requirement.

 

42.               In addition, the ABA will be required to assess compliance with the pay TV requirement on an annual basis, and it would be appropriate for the ABA to monitor the extent to which expenditure is being made on New Zealand programs as part of its ongoing administration of the pay TV requirement.  Section 158(n) of the BSA, which requires the ABA to monitor and report on the operation of the Act to the Minister for Communications, Information Technology and the Arts, will provide the mechanism for the ABA to regularly report to the Minister on the operation of the provision.

 



NOTES ON CLAUSES

 

SCHEDULE 1 - ELIGIBLE DRAMA EXPENDITURE ON SUBSCRIPTION TELEVISION BROADCASTING

 

Part 1 - Amendments commencing on Royal Assent

 

Broadcasting Services Act 1992

 

Item 1 - Proposed amendment of section 102 of the Broadcasting Services Act 1992 to repeal section 102

 

This item repeals section 102 of the BSA which contains the subscription television Australian drama content expenditure licence condition that was the subject of a review by the Minister under subsection 215(2) of the BSA.

 

Item 2 - Proposed new Division 2A of Part 7 of the Broadcasting Services Act 1992

 

This item inserts into Part 7 of the BSA a proposed new Division 2A entitled “Eligible drama expenditure”.

 

Subdivision A - Introduction

 

Proposed new section 103A of the Broadcasting Services Act 1992 - Simplified outline

 

Proposed section 103A gives a simplified outline of proposed new Division 2A of Part 7.

 

Proposed new section 103B of the Broadcasting Services Act 1992 - Definitions

 

The terms used in proposed new Division 2A of Part 7 are defined in proposed new section 103B.

 

The term Australian Content Standard is defined in proposed new section 103B because the term eligible drama program is defined by reference to the Australian Content Standard, a Standard made by the ABA under paragraph 122(1)(a) of the BSA.

 

Channel is defined in proposed section 103B as a continuous stream of programs. Program is defined in section 6 of the BSA.

 

The definition of the term drama program is drawn from the current definition of Australian drama program in the Australian Content Standard.  In order for a program to be a drama program , it must have a fully scripted screenplay in which the dramatic elements of character, theme and plot are developed to form a narrative structure.  Any program which is a fully scripted sketch comedy, animated drama, or dramatised documentary would be a drama program for the purposes of proposed new Division 2A.  Any program that involves the incidental use of actors or is advertising or sponsorship matter would not be a drama program .

 

The term eligible drama program replaces the term Australian drama program used in section 102 of the BSA.  Four types of drama program are eligible drama programs They are a drama program that is, within the meaning of the Australian Content Standard, an Australian program; an Australian/New Zealand program; a New Zealand program; or an Australian official co-production.   As a result of defining eligible drama programs by reference to the Australian Content Standard, the eligible expenditure rules for subscription television broadcasting will apply to the same programs that are subject to the Australian content rules for commercial television.

 

In relation to the definition of eligible drama program , there is a special rule for 1999-2000 that is set out in proposed new section 103ZK.

 

The term expenditure in relation to a program or program material is defined to mean expenditure incurred in acquiring, producing, making an investment in the program or program material, or pre-production expenditure incurred in relation to a program or program material.   The term pre-production expenditure is also defined in proposed new section 103B, and is the subject of a special rule in proposed new section 103H.  Nil expenditure has been included in the definition of expenditure so that it is clear that nil expenditure is to be regarded as expenditure for the purposes of the calculations in proposed new Division 2A of Part 7 of the BSA.

 

Financial year is defined as the financial year beginning on 1 July 1999 or a later financial year.

 

The term incidental matter is defined to mean advertising or sponsorship matter; or a program promotion; or an announcement; or a hosting; or another interstitial program.   A hosting is where a person introduces a program such as a movie or a documentary, and interstitial programs are miscellaneous 'filler' programs, for example, short films, film reviews and ‘vox pop’ interviews of members of the public in the street.

 

The term subscription TV drama service is defined to mean a subscription television broadcasting service devoted predominantly to drama programs.  The definition therefore excludes subscription television narrowcasting services from the operation of the eligible drama expenditure rules for subscription television.  The purpose of the definition is to ensure that the eligible drama expenditure rules apply in respect of each subscription television broadcasting service that devotes more that 50 per cent of its programming schedule during a financial year to drama programs as defined in proposed section 103B.

 

Proposed new section 103C of the Broadcasting Services Act 1992 - Channel providers

 

Proposed new section 103C defines the term channel provider .  A channel provider packages a channel; supplies a subscription television broadcasting licensee with the channel; and carries on a business in Australia by means of a principal office or of a branch, that involves the supply of the channel; where the licensee televises the channel on the subscription TV drama service with or without the addition of any incidental matter.  

 

Channel is defined in proposed new section 103B as a continuous stream of programs.  Program is defined in section 6 of the BSA.

  

The reference to incidental matter is included in proposed new section 103C to ensure that it is clear that if a licensee inserts incidental matter (such as advertisements) into a channel supplied by a channel provider, the channel is still considered to be supplied by the channel provider.   The term incidental matter is defined in proposed new section 103B.

 

Some examples of current channel providers are Showtime, Nickelodeon, The Disney Channel and UKTV.

 

Proposed new section 103D of the Broadcasting Services Act 1992 - Part-channel providers

 

Proposed new section 103D defines the term part-channel provider .  A part-channel provider assembles a package of programs; supplies a subscription television broadcasting licensee with the package; and carries on a business in Australia by means of a principal office or of a branch, that involves the supply of the package; where: the package consists predominantly of drama programs; and the package constitutes a significant proportion of the program material that is televised by the licensee on the subscription TV drama service; and there is neither a channel provider, nor a pass-through provider in relation to the subscription TV drama service.  

 

Program is defined in section 6 of the BSA.  Program material is defined in proposed new section 103B.

 

An example of a part-channel provider is an Australian company that assembles a package of children’s drama programs for supply to the licensee of a subscription TV drama service, where the children’s drama programs are broadcast during daytime viewing hours.  An example of a second part-channel provider in relation to the subscription TV drama service is an Australian company that assembles a package of movies for the evening timeslots on the same service.

 

Proposed new section 103E of the Broadcasting Services Act 1992 - Pass-through providers

 

Proposed section 103E defines the term pass-through provider .  Like a channel provider, a pass-through provider packages a channel and supplies a subscription television broadcasting licensee with the channel, where the licensee televises the channel with or without the addition of any incidental matter. However, unlike a channel provider, a pass-through provider does not carry on a business in Australia, by means of a principal office or of a branch, that involves the supply of the channel.  A pass-through provider is effectively a channel provider not based in Australia.

 

Channel is defined in proposed section 103B as a continuous stream or programs.  Program is defined in section 6 of the BSA.

 

The reference to incidental matter is included in proposed new section 103E to ensure that it is clear that if a licensee inserts incidental matter (such as advertisements) into a channel supplied by a channel provider, the channel is still considered to be supplied by the channel provider.   The term incidental matter is also defined in proposed new section 103B.

 

The proposed new rules in Division 2A of Part 7 distinguish between channel providers and pass-through providers because it is not feasible for the ABA to obtain program expenditure information from pass-through providers, who do not have a principal office or a branch in Australia.

 

Some examples of current pass-through providers are TNT, The Cartoon Network and Hallmark.

 

Proposed new section 103F of the Broadcasting Services Act 1992 - Part-pass-through providers

 

Proposed new section 103F defines the term part-pass-through provider .  A part-pass-through provider assembles a package of programs; supplies a subscription television broadcasting licensee with the package; and does not carry on a business in Australia by means of a principal office or of a branch, that involves the supply of the package; where: the package consists predominantly of drama programs; the package constitutes a significant proportion of the program material that is televised by the licensee on the subscription TV drama service; and there is neither a channel provider, nor a pass-through provider in relation to the subscription TV drama service.  

 

Program in defined in section 6 of the BSA.  Program material is defined in proposed new section 103B.

 

An example of a part-pass-through provider is company based in the United States that assembles a package of movies for supply to the licensee of a subscription TV drama service, where the movies are broadcast on weekends.  An example of a second part-pass-through provider in relation to the subscription TV drama service is a company based in the United Kingdom that assembles a package of BBC drama programs for broadcast on weekdays on the same service.

 



Proposed new section 103G of the Broadcasting Services Act 1992 - Supply of channel or package

 

Proposed new section 103G makes clear that it is not necessary for the supply of a channel or package of programs to be direct for it to be a supply of a channel or package of programs for the purposes of proposed new Division 2A of Part 7.  The supply of the channel or package of programs can also take place through one or more interposed persons.  As a result of subsection 22(1) of the Acts Interpretation Act 1901 (AIA) , the term “persons” in this context includes both individuals and bodies corporate.

 

For example, if a channel provider supplies a channel to a subscription television broadcasting licensee and the licensee supplies that channel to a second licensee, the channel provider would be taken to have supplied the channel to the second licensee.  That is, the first subscription television broadcasting licensee is an “interposed person”, not a channel provider.

 

Proposed new section 103H of the Broadcasting Services Act 1992 - Pre-production expenditure not to be counted unless principal photography has commenced

 

Proposed new section 103H provides that pre-production expenditure is not to be counted for the purposes of the eligible expenditure rules unless principal photography has commenced.  The purpose of proposed new section 103H is to determine whether pre-production expenditure is counted at all for the purposes of the rules.  If principal photography has commenced, and pre-production expenditure may be counted for the purposes of the eligible expenditure rules, proposed new subsection 103J(2) sets out when the expenditure is incurred.

 

For example, screenplay development costs fall within the definition of

pre-production expenditure in proposed new section 103B.  If a licensee paid for the  screenplay development costs for a new eligible drama program, and principal photography of the program never commenced, that pre-production expenditure would not be counted for the purposes of the eligible expenditure rules.

 

Proposed new section 103J of the Broadcasting Services Act 1992 - Cash-based accounting - when expenditure is incurred

 

Proposed new section 103J sets out when expenditure is incurred for the purposes of Division 2A of Part 7.  This proposed new section includes a general rule in relation to an item of expenditure other than an item of pre-production expenditure and a special rule for an item of pre-production expenditure.

 

Proposed new subsection 103J(1) provides that an item of expenditure other than an item of pre-production expenditure is incurred only when actual expenditure is made.  For example, assuming that in the first year of operation of the proposed new rules, a payment is made by a channel provider to a production company on 30 June 2000 for the supply of program material for a subscription TV drama service, this would be expenditure which is counted for the purposes of the calculation of the channel provider’s new eligible drama expenditure for the financial year ending on 30 June 2000.  However, a commitment in a contract between a channel provider and a production company made on 30 June 2000 for the company to produce a program for the channel provider for $100,000, would be included in the calculation when the $100,000 is actually paid by the channel provider to the production company, if the whole amount is paid at the same time.  If the channel provider pays the production company in two instalments of $50,000, each $50,000 of expenditure is incurred when each instalment is paid to the production company.  

 

Similarly, assuming that in the first year of operation of the proposed new rules, a payment is made by a licensee to a pass-through provider on 30 June 2000 for the supply of a channel for a subscription TV drama service, this would be expenditure which is counted for the purposes of the calculation of the licensee’s new eligible drama expenditure for the financial year ending on 30 June 2000.  However, a commitment in a contract between a licensee and a pass-through provider made on 30 June 2000 for the pass-through provider to provide a channel to the licensee for $1,200,000, would be included in the calculation when the $1,200,000 is actually paid by the licensee to the pass-through provider, if the whole amount is paid at the same time.  If the licensee pays the pass-through provider in twelve instalments of $100,000, each $100,000 of expenditure is incurred when each instalment is paid to the pass-through provider.  

 

Proposed new subsection 103J(2) provides that, for an item of pre-production expenditure, expenditure is incurred at whichever is the later of:

(a)     the time when the expenditure is paid; or

(b)    when principal photography commences.

 

Subject to any contractual arrangements that make pre-production expenditure payments due at a time after the commencement of principal photography, as principal photography is the beginning of the production process, an item of pre-production expenditure would generally be paid before the commencement of principal photography.  However, if the item of pre-production expenditure was paid before the commencement of principal photography, as a result of proposed new subsection 103J(2), the expenditure will be incurred at the commencement of principal photography.

 

For example, if a licensee paid for the screenplay development costs for an eligible drama program in the first year of the operation of the rules, and principal photography of that program commenced in the second year of operation of the rules, that expenditure on screenplay development costs will be incurred in the second year. 

 

This rule is intended to limit the opportunities to avoid the operation of the rules by manufacturing expenditure on projects never likely to proceed.

 



Proposed new section 103K of the Broadcasting Services Act 1992  - When expenditure incurred on a new eligible drama program 

 

Proposed new subsection 103K(1) provides that, for the purposes of Division 2A of Part 7 of the BSA, an eligible drama program is only new if a whole or a substantial part of the program has not been televised in Australia or New Zealand at any time before the expenditure is incurred. 

 

Proposed subsection 103K(2), which provides that for the purposes of subsection 103K(1), it is to be assumed that the definition of broadcasting service extended to matters and things in New Zealand, is necessary because the BSA does not apply  outside Australia.

 

As a result of proposed new section 103K, expenditure incurred in relation to an eligible drama program that has already been shown on television in Australia or New Zealand at the time the expenditure is incurred will not be expenditure which may be counted for the purposes of the eligible expenditure rules.  This is the case whether the program has been televised on a commercial, community, subscription or national broadcasting service or a narrowcasting service in Australia or New Zealand.

 

Proposed new section 103K does not prevent expenditure on episodes of a second series of drama programs from counting towards the eligible expenditure requirements if episodes of the first series have already been televised in Australia or New Zealand.  

 

Proposed new section 103L of the Broadcasting Services Act 1992  - ABA may make determinations about what constitutes program expenditure

 

This proposed new section gives the ABA power to make written determinations setting out general rules about what expenditure is, and what expenditure is not, taken to be expenditure incurred in acquiring, investing in or producing program material or new eligible drama programs, for the purposes of the Division (proposed new subsections 103L(1)-(4)).  This power has been provided to the ABA to ensure that if necessary, the ABA may clarify what is relevant expenditure.

 

An example of a determination that the ABA could make under proposed new subsection 103L(3) would be a determination that salaries and on-costs of staff directly involved in the production of a program is taken to be expenditure incurred on a new eligible drama program.   An example of a determination that the ABA could make under proposed new subsection 103L(4) would be a determination that expenditure on marketing expenses is taken not to be expenditure on a new eligible drama program.

 

Proposed new subsection 103L(6) provides that a determination under this section is to be an instrument of a legislative character.  An instrument of a legislative character is an instrument that sets out rules that are of general application.  The examples of  determinations that the ABA could make given above are examples of determinations of a legislative character.

 

An example of a determination that is not of a legislative character, and therefore could not be made by the ABA under proposed new section 103L, would be a determination that particular expenditure on a specific eligible drama program is expenditure incurred on an eligible drama program.

 

A determination under this proposed new section is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 (subsection (7)).

 

Proposed new section 103M of the Broadcasting Services Act 1992  - Expenditure to be nominated only once in meeting licence conditions

 

Proposed new section 103M is designed to prevent double counting of expenditure in relation to the same subscription TV drama service between different provisions of Division 2A of Part 7.   To prevent double counting within provisions, the relevant provisions include special rules which are identified in the discussion of those provisions. 

 

Proposed new subsection 103M(1) is intended to prevent a channel provider which has nominated certain expenditure in relation to a particular service in a particular year for the purpose of the licensee’s new eligible drama expenditure from also nominating that same expenditure for the purpose of the application of any other provision in the Division (subparagraph (1)(c)).  So, for example, a channel provider may not count expenditure nominated as make-up expenditure in relation to a financial year under section 103P towards its principal expenditure obligation for the next financial year under section 103N.

 

The provision also prevents the channel provider which, under section 103N, has nominated expenditure on new eligible drama programs for one service, from counting any of this expenditure towards any other service’s new eligible drama expenditure where the two services are provided by the same licensee (see proposed new paragraph 103M(1)(d)), or where the two services are supplied by different licensees (see proposed new paragraph 103M(1)(e)).

 

Proposed new subsection 103M(2) provides an exception to the general rule in proposed new paragraph 103M(1)(e).  The exception allows a channel provider who supplies a channel which is the same or substantially similar to the channel provided to the first licensee to a second licensee, to count the expenditure incurred in relation to both subscription TV drama services.  This will have the effect of allowing expenditure by the channel provider on new eligible drama programs to be counted towards the new eligible drama expenditure of all the licensees to which the channel is provided.  This exception acknowledges the practice in the subscription television broadcasting industry of different subscription television broadcasting licensees being supplied with the same or substantially similar channels by channel providers.

 

Proposed new subsection 103M(3) is intended to prevent a licensee which has nominated certain expenditure in relation to a particular service in a particular year for the purpose of the new eligible drama program expenditure licence condition (proposed new sections 103R or 103T) also nominating that same expenditure for the purpose of the application of any other provision in the Division (paragraph 103M(3)(c)).  If, for example, a licensee nominates some or all of its expenditure on new eligible drama programs under section 103R, it could not also nominate this same expenditure as its make-up expenditure under section 103P in respect of an expenditure shortfall by its channel provider in the previous financial year.

 

The provision is also intended to prevent a licensee counting any of its expenditure on new eligible drama programs in respect of one of the services provided by it towards its new eligible drama program expenditure for any other service provided by it (paragraph 103M(3)(d)).

 

 

Subdivision B - Channel provider supplies channel 

 

Proposed Subdivision B imposes licence conditions on a licensee who provides a subscription TV drama service and is supplied with a channel by a channel provider.  These licence conditions are the general licence condition and make-up expenditure licence conditions.  There are two make-up expenditure licence conditions: one which applies where a channel is supplied exclusively to one licensee, the other which applies where a channel is supplied to multiple licensees.

 

Proposed new section 103N of the Broadcasting Services Act 1992 - 10% minimum eligible drama expenditure - channel provider supplies channel

 

The general licence condition in proposed new subsection 103N(1) requires expenditure by the channel provider on new eligible drama programs in relation to the subscription TV drama service for each financial year to equal or exceed 10% of the total program expenditure by the channel provider in relation to the channel.

 

This licence condition refers to expenditure by the channel provider because, where a licensee is supplied with a channel by a channel provider, the licensee is supplied with a complete channel.  As a result, the scope for the licensee to vary programs in the channel, and therefore increase the amount of eligible drama expenditure, is likely to be either non-existent or very limited.  Consequently, it is the channel provider’s expenditure on new eligible drama programs that will determine whether the licensee complies with the licence condition.

 

Proposed subsection 103N(2) provides definitions of terms used in subsection (1). Channel provider’s new eligible drama expenditure , in relation to the subscription TV drama service, means so much of the total expenditure incurred by the channel provider during the financial year on new eligible drama programs as the channel provider nominates for the purposes of the licence condition in subsection (1).

 

Channel provider’s total program expenditure ,in relation to the channel, means the total expenditure incurred by the channel provider during the financial year on the program material that is included, or is available to be included, in the channel.  Reference is made to program material that is ‘available to be included’ in the channel to take account of industry practice whereby, in some situations, a channel provider may acquire rights to a package of programs from a program supplier, not all of which it actually includes in its programming schedule for its channel. For example, if a channel provider paid $10 million to a Hollywood movie studio for the rights to 100 movies, and it then packaged 90 of these movies into a channel and supplied this channel to a licensee, the channel provider’s total program expenditure must include the whole $10 million, and not some lesser amount which takes account of the fact that not all of the 100 movies were packaged into the channel.  Similarly, if a channel provider incurred expenditure on a program that it does not include in its program schedule until a subsequent financial year, the expenditure incurred on that program would comprise part of total program expenditure in the year in which the expenditure was incurred, not the subsequent year in which it is televised. 

 

In summary, the intention of the reference to program material that is ‘available to be included’ is to ensure that all expenditure incurred on programs by a channel provider in relation to the channel forms part of total program expenditure in the year in which the expenditure is incurred, irrespective of whether, or when, each individual program on which expenditure has been incurred is subsequently included in the channel.

 

Note that under proposed new section 103N, it is open for a channel provider which provides more than one channel to more than one licensee who provides a subscription TV drama service, to pool monies expended on new eligible drama programs provided to those licensees and, for the purpose of calculating the new eligible drama expenditure, to attribute that expenditure to those subscription TV drama services in such proportions as it sees fit.  If the channel provider chooses to do this, it must not contravene the double counting rules in proposed new section 103M.

 

As a result of proposed new section 103G, a channel provider’s total program expenditure may include expenditure where the channel provider supplies a channel through an interposed person.

 

Proposed new subsection 103N(3) provides that Division 3 of Part 10 of the BSA does not apply to the condition in proposed new subsection 103N(1).  This is because if there is a breach of the licence condition because the amount of the channel provider’s new eligible drama expenditure falls short of 10% of the channel provider’s total expenditure, the shortfall may be made-up in the following year under either proposed new section 103P or 103Q.   Breach of the licence conditions in proposed new sections 103P and 103Q are subject to Division 3 of Part 10.

 



Proposed new section 103P of the Broadcasting Services Act 1992 - Shortfall of eligible drama expenditure - channel provider supplies channel exclusively to licensee

 

Proposed new subsection 103P(1) provides that section 103P applies if a channel provider supplies only one licensee with a particular channel; and the channel provider’s new eligible drama expenditure in relation to the subscription TV drama service for a particular financial year is less than 10% of the channel provider’s total program expenditure in relation to the channel supplied to the licensee for that financial year (ie there is a shortfall amount).

 

The use of the term “first licensee” in subsection 103P(1) is a drafting device used because there is more than one licensee mentioned in the section.  It allows identification of the licensee to which the section has application when mentioned again later in the section. 

 

A licence condition is imposed by proposed subsection 103P(2) so that for the next financial year, the amount that expenditure fell short of the 10% requirement must be made up in one of three specified ways:

(a)     by the channel provider under paragraph 103P(2)(a) (the channel provider’s make-up expenditure equals the shortfall amount); or

(b)    by the licensee under paragraph 103P(2)(b) (the licensee’s make-up expenditure equals the shortfall amount); or

(c)     by the channel provider and the licensee together under paragraph 103P(2)(c) (the sum of their respective amounts of make-up expenditure equals the shortfall amount).

 

The licensee or the channel provider, or both, can nominate a part or the whole of their respective amounts of total new eligible drama expenditure as being their expenditure for the purpose of making up the shortfall amount.  The proportions in which each party bears the responsibility for making up the shortfall amount (as specified in the compliance certificate) is not dealt with in the legislation and is therefore a matter for the parties to arrange between themselves.

 

Proposed subsection 103P(3) defines terms used in subsection (2).  The definition of first licensee’s make-up expenditure contains an element to remove the possibility of double counting.  The effect of this is that the licensee’s make-up expenditure may only be direct expenditure on new eligible drama programs by the licensee, and may not be expenditure on programs included, or available to be included, in the channel supplied to the licensee by the channel provider.  This would be expenditure that the channel provider could nominate for the purposes of the definition of channel provider’s make-up expenditure .

 

For example, if a licensee acquires the rights to televise a new eligible drama program for the purposes of the make-up rules, that expenditure may count as licensee’s make-up expenditure.  However, if the channel provider acquires the rights to televise a new eligible drama program, the licensee may not count this expenditure as licensee’s make-up expenditure because this is expenditure that may be counted by the channel provider as channel provider’s make-up expenditure.

 

Proposed new section 103Q of the Broadcasting Services Act 1992 - Shortfall of eligible drama expenditure - channel provider supplies channel to multiple licensees

 

Proposed new subsection 103Q(1) provides that section 103Q applies if a channel provider supplies more than one licensee with the same or a substantially similar channel and the channel provider’s new eligible drama expenditure is less than 10% of the channel provider’s total program expenditure (ie there is a shortfall amount).

 

The use of the term “first licensee” in subsection 103Q(1) is a drafting device used because there is more than one licensee mentioned in the section.  It allows identification of the licensee to which the section has application when mentioned again later in the section.  The section has application to any licensee to which subsection (1) would apply.

 

A licence condition is imposed by proposed subsection 103Q(2) so that, for the next financial year, the amount that expenditure fell short of the 10% requirement must be made up in one of the specified ways:

(a)     by the channel provider under paragraph 103Q(2)(a) (the channel provider’s make-up expenditure equals the shortfall amount); or

(b)    by the licensee under paragraph 103Q(2)(b) (the licensee’s make-up expenditure equals the licensee’s subscriber percentage of the shortfall amount); or

(c)      if the channel provider’s make-up expenditure is less than the shortfall amount - the first licensee’s make-up expenditure is equal to the first licensee’s subscriber percentage of the difference between the shortfall amount and the channel provider’s make-up expenditure (paragraph 103Q(2)(c)).

 

A formula for the calculation of a licensee’s subscriber percentage and definitions of relevant terms are set out in proposed new subsection 103Q(3).  The total number of monthly subscribers to the licensee’s service at the end of the financial year in which there was a shortfall is to be worked out as a percentage of the sum of the total number of monthly subscribers to the licensee’s service and the additional licensees’ services at the end of that shortfall year.  Note that if a person subscribed to more than one service, that person would be counted as a subscriber to each of those services (that is, the person would be counted more than once in the total number of subscribers to all the relevant services).

 

The subscriber percentage in respect of each licensee for each subscription TV drama service will be calculated by the ABA, not by licensees themselves.  In order to do the necessary calculations, the ABA will draw on subscriber numbers for the subscription TV drama service supplied in the annual returns lodged by each licensee pursuant to proposed section 103ZA.  Where multiple licensees are supplied with the same channel, each licensee will be notified of its subscriber percentage in the compliance certificate provided by the ABA.

 

The definition of first licensee’s make-up expenditure contains an element to remove the possibility of double counting.  The effect of this is that the licensee’s make-up expenditure may only be direct expenditure on new eligible drama programs by the licensee, and may not be expenditure on programs included, or available to be included, in the channel supplied to the licensee by the channel provider.  This would be expenditure that the channel provider could nominate for the purposes of the definition of channel provider’s make-up expenditure.

 

For example, if a licensee acquires the rights to televise a new eligible drama program for the purposes of the make-up rules, that expenditure may count as licensee’s make-up expenditure.  However, if the channel provider acquires the rights to televise a new eligible drama program, the licensee may not count this expenditure as licensee’s make-up expenditure because this is expenditure that may be counted by the channel provider as channel provider’s make-up expenditure.

 

 

Subdivision C - Pass-through provider supplies channel

 

Proposed Subdivision C imposes licence conditions on a licensee who provides a subscription TV drama service and is supplied with a channel by a pass-through  provider.  These licence conditions are the general licence condition and the make-up expenditure licence condition.

 

Proposed new section 103R of the Broadcasting Services Act 1992 - Pass-through provider supplies a channel

 

Proposed new subsection 103R(1) provides that if a licensee provides a subscription TV drama service; and there is a pass-through provider in relation to the service because a pass-through provider supplies a channel; it is a condition of the licence that, for each financial year of operation, the licensee’s new eligible drama expenditure equals or exceeds 10% of the licensee’s total program expenditure in relation to the channel.

 

The licence condition in proposed new section 103R refers to expenditure by the licensee because a pass-through provider is not based in Australia, and as a result, it is not feasible to enforce on a pass-through provider the obligation to make an annual return of expenditure to the ABA. 

 

Proposed subsection 103R(2) provides definitions of terms used in subsection (1).

Licensee’s new eligible drama expenditure , in relation to the subscription TV drama service, means the sum of:

(a)     so much of the total expenditure incurred by the licensee during the financial year on new eligible drama programs as the licensee nominates for the purpose of meeting the licence condition in subsection (1); and

(b)    so much of the total expenditure incurred by the pass-through provider during the financial year on new eligible drama as the licensee nominates for the purpose of meeting the licence condition in subsection (1).

Licensee’s total program expenditure , in relation to the channel, means the total expenditure incurred by the licensee during the financial year in respect of the supply by the pass-through provider, of the channel.

 

In relation to nominations by a licensee under paragraph (a) of the definition of licensee’s new eligible drama expenditure , as a matter of practice, it is expected that a licensee would nominate make-up expenditure under paragraph (a) that the licensee incurred directly.  An example of expenditure that a licensee would incur directly would be expenditure incurred making an investment in a new eligible drama program. 

 

Proposed new subsection 103R(3) is a provision intended to deal with possible double counting which arises under section 103R because a licensee could potentially nominate expenditure under both paragraphs (a) and (b) of the definition of licensee’s new eligible drama expenditure in subsection 103R(2).  The effect of subsection 103R(3) is that,if a pass-through provider incurred expenditure on a new eligible drama program, and the licensee nominated that expenditure as make-up expenditure under paragraph (a) of the definition of licensee’s new eligible drama expenditure, the licensee may not also nominate that expenditure as expenditure incurred by the pass-through provider for the purposes of paragraph (b) of that definition.

 

Proposed new subsection 103R(4) provides that Division 3 of Part 10 of the BSA does not apply to the condition in proposed new subsection 103R(1). This is because if there is a breach of the licence condition because the amount of the licensee’s new eligible drama expenditure falls short of 10% of the licensee’s total expenditure, the shortfall may be made-up in the following year under proposed new section 103S.   Breach of the licence condition in proposed new section 103S is subject to Division 3 of Part 10 of the BSA.

 

Proposed new section 103S of the Broadcasting Services Act 1992 - Shortfall of eligible drama expenditure - pass-through provider supplies channel

 

Proposed new subsection 103S(1) provides that section 103S applies if a licensee provides a subscription TV drama service; and a person is a pass-through provider in relation to the service because the person supplies a channel; and the licensee’s new eligible drama expenditure for a particular financial year is less than 10% of the licensee’s total program expenditure for that year (ie there is a shortfall amount).

 

A licence condition is imposed by proposed subsection 103S(2) so that new eligible drama expenditure that falls short of the 10% expenditure requirement is to be made up by the licensee in the following year.  In making up this expenditure, the licensee may nominate expenditure on new eligible drama by the pass-through provider.

 

Proposed new subsection 103S(3) defines licensee’s make up expenditure for section 103S as the sum of:

(a)     so much of the total expenditure incurred by the licensee during the make-up year on new eligible drama programs as the licensee nominates; and

(b)    so much of the total expenditure incurred by the pass-through provider during the make-up year on new eligible drama programs as the licensee nominates.

 

In relation to nominations by a licensee under paragraph (a) of the definition of licensee’s make-up expenditure , as a matter of practice, it is expected that a licensee would nominate make-up expenditure under paragraph (a) that the licensee incurred directly.  An example of expenditure that a licensee would incur directly would be expenditure incurred making an investment in a new eligible drama program.

 

Proposed new subsection 103S(4) is a provision intended to deal with possible double counting which arises under section 103S.   The effect of subsection 103S(4) is that, if a pass-through provider incurred expenditure on a new eligible drama program, and the licensee nominated that expenditure as make-up expenditure under paragraph (a) of the definition of licensee’s make-up expenditure , the licensee may not also nominate that expenditure as expenditure incurred by the pass-through provider for the purposes of paragraph (b) of that definition.

 

For example if a pass-through provider acquired rights to televise a new eligible drama program, the licensee who is required to make-up expenditure due to a shortfall could either:

(a)     nominate that expenditure as expenditure incurred by the licensee; or

(b)    nominate the expenditure as expenditure incurred by the pass-through provider.

 

 

Subdivision D - Licensee supplies all program material

 

Proposed new Subdivision D imposes a licence condition where a subscription television broadcasting licensee supplies all program material on the subscription TV drama service.  Subject to the special transitional rule in Subdivision K for the financial year beginning 1 July 1999, there is no make-up licence condition where a licensee supplies all program material.  This is because where the licensee supplies all the program material on the service, it has control over the proportion of the total program expenditure expended on new eligible drama programs.

 

Proposed new section 103T of the Broadcasting Services Act 1992 - 10% minimum eligible drama expenditure - licensee supplies all program material

 

Proposed new subsection 103T(1) provides that, if a licensee itself supplies all the program material on a subscription TV drama service, it is a condition of the  licence that, for each financial year of operation, the licensee’s new eligible drama expenditure equals or exceeds 10% of the licensee’s total program expenditure in relation to the channel.

 

Proposed new subsection 103T(2) defines terms used in subsection 103T(1).  Licensee’s new eligible drama expenditure , in relation to the subscription TV drama service, means so much of the total expenditure incurred by the licensee during the financial year on new eligible drama programs as the licensee nominates for the purpose of meeting the licence condition in subsection (1).

 

Licensee’s total program expenditure , in relation to the subscription TV drama service, means the total expenditure incurred by the licensee during the financial year on program material that is for televising, or available for televising, by the licensee on the subscription TV drama service.

 

In summary, the intention of the reference to program material that is ‘available to be included’ is to ensure that all expenditure incurred on programs by a licensee in relation to the service forms part of total program expenditure in the year in which the expenditure is incurred, irrespective of whether, or when, each individual program on which expenditure has been incurred is subsequently televised on the service.

 

 

Subdivision E - Part-channel provider supplies package of programs

 

Proposed new Subdivision E imposes licence conditions on a licensee who provides a subscription TV drama service and is supplied with a package of programs by a part-channel provider. These licence conditions are the general licence condition and make-up expenditure licence conditions.  There are two make-up expenditure licence conditions: one which applies where a package of programs is supplied exclusively to one licensee, the other which applies where a package of programs is supplied to multiple licensees.

 

Proposed new section 103U of the Broadcasting Services Act 1992 - 10% minimum eligible drama expenditure - part-channel provider supplies package of programs

 

Proposed new subsection 103U(1) provides that if a licensee provides a subscription TV drama service; and there is a part-channel provider in relation to the service because a part-channel provider supplies a package of programs; it is a condition of the licence that, for each financial year of operation, the part-channel provider’s  eligible drama expenditure equals or exceeds 10% of the part-channel provider’s total program expenditure in relation to the package of programs.

 

Consistent with the licence condition in proposed new subsection 103N(2), the licence condition in proposed new section 103U refers to expenditure by the part-channel provider because, where a licensee is supplied with a package of programs by a part-channel provider, the licensee is generally supplied with a complete package by the part-channel provider.

 

Proposed subsection 103U(2) provides definitions of terms used in subsection (1).

Part-channel provider’s new eligible drama expenditure , in relation to the subscription TV drama service, means so much of the total expenditure incurred by the part-channel provider during the financial year on new eligible drama programs as the part-channel provider nominates for the purpose of the application of subsection (1).

 

Part-channel provider’s total program expenditure , in relation to the package of programs, means the total expenditure incurred by the part-channel provider during the financial year on the program material that is included, or available to be included, in the package of programs.

 

In summary, the intention of the reference to program material that is ‘available to be included’ is to ensure that all expenditure incurred on programs by a part-channel provider in relation to the package of programs forms part of total program expenditure in the year in which the expenditure is incurred, irrespective of whether, or when, each individual program on which expenditure has been incurred is subsequently included in the package of programs.

 

As a result of proposed new section 103G, a part-channel provider’s total program expenditure may include expenditure where the part-channel provider supplies a package of programs through an interposed person.

 

Proposed new subsection 103U(3) provides that Division 3 of Part 10 of the BSA does not apply to the condition in proposed new subsection 103U(1). This is because if there is a breach of the licence condition because the amount of the part-channel provider’s new eligible drama expenditure falls short of 10% of the part-channel provider’s total expenditure, the shortfall may be made-up in the following year under either proposed new section 103V or 103W.   Breach of the licence conditions in proposed new sections 103V and 103W are subject to Division 3 of Part 10.

 

Proposed new section 103V of the Broadcasting Services Act 1992 - Shortfall of eligible drama expenditure - part-channel provider supplies a package of programs exclusively to licensee

 

Proposed new subsection 103V(1) provides that section 103V applies if there is a part-channel provider in relation to a subscription TV drama service; and the part-channel provider does not supply the same or a substantially similar package of programs to another licensee on another subscription TV drama service; and the part-channel provider’s new eligible drama expenditure in relation to the first subscription drama service for a particular financial year is less than 10% of the part-channel provider’s total program expenditure in relation to the package of programs for that year (ie there is a shortfall amount).

 

The use of the term “first licensee” in subsection 103V(1) is a drafting device used because there is more than one licensee mentioned in the section.  It allows identification of the licensee to which the section has application when mentioned again later in the section. 

 

A licence condition is imposed by proposed subsection 103V(2) so that, for the next financial year, the amount that expenditure fell short of the 10% requirement must be made up in one of three specified ways:

(a)     by the part-channel provider under paragraph 103V(2)(a) (its make-up expenditure equals the shortfall amount);

(b)    by the licensee under paragraph 103V(2)(b) (its make-up expenditure equals the shortfall amount); or

(c)      by the part-channel provider and the licensee together under paragraph 103V(2)(c) (the sum of their respective amounts of make-up expenditure equals the shortfall amount).

 

The licensee or the part-channel provider, or both, can nominate a part or the whole of their respective amounts of total new eligible drama expenditure as being their expenditure for the purpose of making up the shortfall amount.  The proportions in which each party bears the responsibility for making up the shortfall amount (as specified in the compliance certificate) is not dealt with in the legislation and is therefore a matter for the parties to arrange between themselves.

 

Proposed subsection 103V(3) defines terms used in subsection (2). The definition of first licensee’s make-up expenditure contains an element to remove the possibility of double counting.  The effect of this is that the licensee’s make-up expenditure may only be direct expenditure on new eligible drama programs by the licensee, and may not be expenditure on programs included, or available to be included, in the package or programs supplied to the licensee by the part-channel provider.  This would be expenditure that the part-channel provider could nominate for the purposes of the definition of part-channel provider’s make-up expenditure .

 

For example, if a licensee acquires the rights to televise a new eligible drama program for the purposes of the make-up rules, that expenditure may count as licensee’s make-up expenditure.  However, if the part-channel provider acquires the rights to televise a new eligible drama program, the licensee may not count this expenditure as licensee’s make-up expenditure because this is expenditure that may be counted by the part-channel provider as part-channel provider’s make-up expenditure.

 

Proposed new section 103W of the Broadcasting Services Act 1992 - Shortfall of eligible drama expenditure - part-channel provider supplies channel to multiple licensees

 

Proposed new subsection 103W(1) provides that section 103W applies if a part-channel provider supplies more than one licensee with a particular package of programs; and the part-channel provider’s new eligible drama expenditure for a particular financial year is less than 10% of the part-channel provider’s total program expenditure in relation to the package of programs provided to the first licensee for that financial year (ie there is a shortfall amount).

 

The use of the term “first licensee” in subsection 103W(1) is a drafting device used because there is more than one licensee mentioned in the section.  It allows identification of the licensee to which the section has application when mentioned again later in the section.  The section has application to any licensee to which subsection (1) would apply.

 

Proposed new subsection 103W(2) provides that it is a condition of the licence that, for the make-up year, the shortfall amount is made up in one of the specified ways:

(a)     the part-channel provider’s make-up expenditure is equal to the shortfall amount; or

(b)     the first licensee’s make-up expenditure is equal to the shortfall amount; or

(c)      if the part-channel provider’s make-up expenditure is less than the shortfall amount - the first licensee’s make-up expenditure is equal to the first licensee’s subscriber percentage of the difference between the shortfall amount and the part-channel provider’s make-up expenditure.

As a result, the licensee is only liable to make-up a percentage of the amount not made up by the part-channel provider.

 

A formula for the calculation of a licensee’s subscriber percentage and definitions of relevant terms are set out in proposed new subsection 103W(3).  The total number of monthly subscribers to the licensee’s service at the end of the financial year in which there was a shortfall is to be worked out as a percentage of the sum of the total number of monthly subscribers to the licensee’s service and the additional licensees’ services at the end of that shortfall year.  Note that if a person subscribed to more than one service, that person would be counted as a subscriber to each of those services (that is, the person would be counted more than once in the total number of subscribers to all the relevant services).

 

The subscriber percentage in respect of each licensee for each subscription TV drama service will be calculated by the ABA, not by licensees themselves.  In order to do the necessary calculations, the ABA will draw on subscriber numbers for the subscription TV drama service supplied in the annual returns lodged by each licensee pursuant to proposed section 103ZA.  Where relevant, licensees will be notified of their  subscriber percentage in the compliance certificate provided by the ABA.

 

Proposed subsection 103W(3) defines terms used in subsection (2). The definition of first licensee’s make-up expenditure contains an element to remove the possibility of double counting.  The effect of this is that the licensee’s make-up expenditure may only be direct expenditure on new eligible drama programs by the licensee, and may not be expenditure on programs included, or available to be included, in the package of programs supplied to the licensee by the part-channel provider.  This would be expenditure that the part-channel provider could nominate for the purposes of the definition of part-channel provider’s make-up expenditure .

 

For example, if a licensee acquires the rights to televise a new eligible drama program for the purposes of the make-up rules, that expenditure may count as a licensee’s make-up expenditure.  However, if the part-channel provider acquires the rights to televise a new eligible drama program, the licensee may not count this expenditure as licensee’s make-up expenditure because this is expenditure that may be counted by the part-channel provider as part-channel provider’s make-up expenditure.

 

Subdivision F - Part-pass-through provider supplies package of programs

 

Proposed new Subdivision F imposes licence conditions on a licensee who provides a subscription TV drama service and is supplied with a package of programs by a part-pass-through provider.  These licence conditions are the general licence condition and the make-up expenditure licence condition.

 

Proposed new section 103X of the Broadcasting Services Act 1992 - 10% minimum eligible drama expenditure - part-pass-through provider supplies package of programs

 

Proposed new subsection 103X(1) provides that if a licensee provides a subscription TV drama service; and there is a part-pass-through provider in relation to the service because a part-pass-through provider supplies a package of programs; it is a condition of the licence that, for each financial year of operation, the licensee’s eligible drama expenditure equals or exceeds 10% of the licensee’s total program expenditure in relation to the package of programs.

 

Proposed subsection 103X(2) provides definitions of terms used in subsection (1).

Licensee’s new eligible drama expenditure , in relation to the subscription TV drama service, means the sum of:

(a)     so much of the total expenditure incurred by the licensee during the financial year on new eligible drama programs as the licensee nominates for the purpose of meeting the licence condition in subsection (1); and

(b)    so much of the total expenditure incurred by the part-pass-through provider during the financial year on new eligible drama as the licensee nominates for the purpose of meeting the licence condition in subsection (1).

 

Licensee’s total program expenditure , in relation to the package of programs, means the total expenditure incurred by the licensee during the financial year in respect of the supply by the part-pass-through provider, of the package of programs. 

 

In relation to nominations by a licensee under paragraph (a) of the definition of licensee’s new eligible drama expenditure , as a matter of practice, it is expected that a licensee would nominate make-up expenditure under paragraph (a) that the licensee incurred directly.  An example of expenditure that a licensee would incur directly would be expenditure incurred making an investment in a new eligible drama program.

 

Proposed new subsection 103X(3) is a provision intended to deal with possible double-counting which arises under section 103X.  Proposed new subsection 103X(3) provides that, if the licensee nominates the whole or part of particular expenditure under paragraph (a) of the definition of licensee’s new eligible drama expenditure in subsection 103X(2); and that expenditure is attributable to a new eligible drama program on which expenditure was incurred by the part-pass-through provider; that new eligible drama program is to be disregarded in determining the expenditure that may be nominated by the licensee under paragraph (b) of that definition.

Proposed new subsection 103X(4) provides that Division 3 of Part 10 of the BSA does not apply to the condition in proposed new subsection 103X(1). This is because if there is a breach of the licence condition because the amount of the licensee’s new eligible drama expenditure falls short of 10% of the licensee’s total expenditure, the shortfall may be made-up in the following year under proposed new section 103Y.   Breach of the licence condition in proposed new section 103Y is subject to Division 3 of Part 10 of the BSA.

 

Proposed new section 103Y of the Broadcasting Services Act 1992 - Shortfall of eligible drama expenditure - part-pass-through provider supplies package of programs

 

Proposed new subsection 103Y(1) provides that section 103Y applies if a licensee provides a subscription TV drama service; and a person is a part-pass-through provider in relation to the service because the person supplies a package of programs; and the licensee’s new eligible drama expenditure for a particular financial year is less than 10% of the licensee’s total program expenditure in relation to the package of programs for that year (ie there is a shortfall amount).

 

A licence condition is imposed by proposed new subsection 103Y(2) on the licence so that for the next financial year, the licensee’s make-up expenditure must be equal to the shortfall amount.

 

Proposed new subsection 103Y(3) defines licensee’s make up expenditure for section 103Y as the sum of:

(a)     so much of the total expenditure incurred by the licensee during the make-up year on new eligible drama programs as the licensee nominates; and

(b)     so much of the total expenditure incurred by the part-pass-through provider during the make-up year on new eligible drama programs as the licensee nominates.

 

In relation to nominations by a licensee under paragraph (a) of the definition of licensee’s make-up expenditure , as a matter of practice, it is expected that a licensee would nominate make-up expenditure under paragraph (a) that the licensee incurred directly.  An example of expenditure that a licensee would incur directly would be expenditure incurred making an investment in a new eligible drama program.

 

Proposed new subsection 103Y(4) is a provision intended to deal with possible double counting which arises under section 103Y.  Proposed new subsection 103Y(4) provides that, if the licensee nominates the whole or part of particular expenditure under paragraph (a) of the definition of licensee’s make-up expenditure in subsection 103Y(3); and that expenditure is attributable to a new eligible drama program on which expenditure was incurred by the part-pass-through provider; that new eligible drama program is to be disregarded in determining the expenditure that may be nominated by the licensee under paragraph (b) of that definition. 

 



Subdivision G - Licensee supplies part of program material

 

Proposed new Subdivision G imposes a licence condition where a subscription television broadcasting licensee supplies part of the program material on the subscription TV drama service, and the remainder of the program material is supplied by a part-channel provider or a part-pass-through provider.  Subject to the special transitional make-up licence condition in Subdivision K for the financial year beginning 1 July 1999, there is no make-up licence condition where a licensee supplies part of the program material.  This is because the licensee has control over the proportion of the total program expenditure expended on new eligible drama in relation to that part of the program material that is not supplied by a part-channel provider or part-pass-through provider.

 

Proposed new section 103Z of the Broadcasting Services Act 1992 - 10% minimum eligible drama expenditure - licensee supplies part of program material

 

Proposed new subsection 103Z(1) provides that, if a licensee itself supplies part of the  program material on a subscription TV drama service, and some of the program material is supplied by a part-channel provider or a part-pass-through provider, it is a condition of the  licence that, for each financial year of operation, the licensee’s new eligible drama expenditure in relation to the subscription TV drama service equals or exceeds 10% of the licensee’s total program expenditure in relation to the service.

 

Proposed new subsection 103Z(2) defines terms for the purposes of the licence condition in subsection (1).  Licensee’s new eligible drama expenditure , in relation to the subscription TV drama service, means so much of the total expenditure incurred by the licensee during the financial year on new eligible drama programs not included in a package of programs supplied by a part-channel provider or part-pass-through provider as the licensee nominates for the purpose of the licence condition in subsection (1).  That is, the licensee’s expenditure on new eligible drama programs in the program material it supplies for the subscription TV drama service.

 

Licensee’s total program expenditure , in relation to the subscription TV drama service, means the total expenditure incurred by the licensee during the financial year on program material that is not included in the package of program material supplied by a part-channel provider or part-pass-through provider and that is for televising, or available for televising, by the licensee on the subscription TV drama service. 

 

 

Subdivision H - Annual returns

 

Proposed new section 103ZA of the Broadcasting Services Act 1992 - Licensee to lodge annual return

 

Proposed new section 103ZA requires a licensee who provides one or more subscription TV drama services to lodge a return with the ABA within 60 days after the end of the financial year.  The return must be in a form approved by the ABA, and contain such information as the form requires in relation to the application of Division 2A of Part 7 in connection with the licensee’s service.  It must also be accompanied by a certificate by a registered auditor, also in a form approved by the ABA, stating that in the auditor's opinion the return is correct.  Registered auditor is defined in proposed new section 103B.

 

It is an offence for a licensee to intentionally contravene the requirement to provide an annual return (subsection 103ZA(2)).    It should be noted that, by virtue of subsection 4K(2) of the Crimes Act 1914 , a licensee would be guilty of an offence in respect of each day during which any contravention continues.  Section 213 of the BSA provides that the maximum penalty for each day that the offence continues is 10% of the maximum penalty for the principal offence.

 

Proposed new section 103ZB of the Broadcasting Services Act 1992 - Channel provider and part-channel provider to lodge annual return

 

Proposed new subsection 103ZB(1) places the same obligation on a channel provider and part-channel provider to lodge an annual return for a particular financial year as proposed new section 103ZA(1) places on licensees.  It is an offence for a channel provider to intentionally contravene the requirement in subsection (1) (proposed new subsection 103ZB(2)).  It should be noted that, by virtue of subsection 4K(2) of the Crimes Act 1914 , a channel provider will be guilty of an offence in respect of each day during which any contravention continues.  Section 213 of the BSA provides that the maximum penalty for each day that the offence continues is 10% of the maximum penalty for the principal offence.

 

The ABA is required, under proposed new subsection 103ZB(3), to inform the relevant licensee in writing if its channel provider or part-channel provider fails to provide a return as required by proposed new subsection 103ZB(1).

 

Proposed new section 103ZC of the Broadcasting Services Act 1992 - ABA may inquire into the correctness of an annual return

 

This provision gives the ABA power to make inquiries in order to determine whether a return lodged by a licensee or channel provider under this Subdivision contains correct information.

 

Proposed new section 103ZD of the Broadcasting Services Act 1992 - Nominations to be attached to annual returns

 

This provision requires a licensee, channel provider, and part-channel provider,   when lodging an annual return, to also provide with that return its nominations under any provision of the Division.

 



Subdivision I - Compliance certificates

 

Proposed new Subdivision I includes provisions dealing with compliance certificates - certificates that the ABA is required to issue to licensees, channel providers and part-channel providers, which state whether new eligible drama expenditure requirements have been met by persons other than licensees, or whether there is a shortfall that needs to be made up the following year.

 

Proposed new section 103ZE of the Broadcasting Services Act 1992 - ABA to issue compliance certificate

 

Proposed new subsection 103ZE(1) provides that, where a channel provider supplies  a channel to a subscription television broadcasting licensee who provides a subscription TV drama service for a particular financial year, the ABA is required to give the licensee a written certificate specifying whether there is a shortfall by the channel provider in expenditure on new eligible drama programs for the particular financial year, and, if so, the shortfall amount.  The ABA is also required to give the channel provider a copy of the certificate.

 

Proposed new subsection 103ZE(2) provides that, where a pass-through provider supplies a channel to a subscription television broadcasting licensee who provides a subscription TV drama service for a particular financial year, the ABA is required to give the licensee a written certificate specifying whether there is a shortfall by the licensee in expenditure on new eligible drama programs for the particular financial year, and, if so, the shortfall amount.

 

Proposed new subsection 103ZE(3) mirrors proposed new subsection 103ZE(1) and applies where a part-channel provider supplies a package of programs to a licensee who provides a subscription TV drama service.

 

Proposed new subsection 103ZE(4) mirrors proposed new subsection 103ZE(2) and applies where a part-pass-through provider supplies a package of programs to a licensee who provides a subscription TV drama service.

 

Proposed new section 103ZF of the Broadcasting Services Act 1992 - Compliance certificate to be prima evidence

 

Proposed new section 103ZF provides that a compliance certificate is prima facie evidence of the matters in the certificate.  As a result, it will be a matter for the licensee to whom the certificate relates bring evidence to rebut this prima facie evidence in any court proceedings arising under the Act.

 



Subdivision J - Miscellaneous

 

Proposed new section 103ZG of the Broadcasting Services Act 1992 - - Anti-avoidance - transactions between persons not at arm’s length

 

Proposed new section 103ZG applies where a person has incurred expenditure in a transaction where the parties to the transaction are not at arm’s length, and the amount of the expenditure is either greater or less than is reasonable.  The ABA is given the power to make a determination that a particular amount of expenditure that a licensee or channel provider has counted for the purposes of the application of the Division should be replaced with an amount that would have been reasonable if the parties to the transaction had been dealing with each other at arm’s length.

 

Proposed new section 103ZH of the Broadcasting Services Act 1992 - Expenditure to be expressed in Australian currency

 

Proposed new section 103ZH requires expenditure to be expressed in Australian currency at the rate agreed in connection with the transaction concerned or in other cases, at a rate equal to the exchange rate applicable at the time when the expenditure was incurred.

 

Proposed new section 103ZJ of the Broadcasting Services Act 1992 - Review before 31 March 2003

 

Proposed new section 103ZJ makes provision for the Minister to cause to be conducted, before 31 March 2003, a review relating to Australian and New Zealand  content on subscription television broadcasting services.  The report of the review must be tabled in each House of Parliament within 15 sitting days of its completion.

 

Subdivision K - Transitional

 

Proposed new section 103ZK of the Broadcasting Services Act 1992 - - Extended meaning of eligible drama program

 

Proposed new section 103ZK provides a special rule in relation to expenditure incurred in the financial year beginning 1 July 1999.  The effect of the rule is that a drama program that satisfies the definition of Australian drama program in section 6 of the BSA will be taken to be an eligible drama program for the purposes of calculating whether a licensee meets the licence conditions in proposed new Division 2A of Part 7. 

 

Proposed new section 103ZL of the Broadcasting Services Act 1992 - - Licensee supplies program material during 1999-2000 - enforcement of licence conditions

 

Proposed new section 103ZL provides that the enforcement regime in Division 3 of Part 10 of the BSA does not apply to the licence condition in subsection 103T(1) or 103Z(1) in the financial year that begins on 1 July 1999.  These are the licence conditions that apply to a licensee who supplies all or part of the program material on a subscription TV drama service.

 

Proposed new section 103ZL is consequential upon the special make-up licence conditions set out in proposed new section 103ZM and 103ZN.  Proposed new sections 103ZM and 103ZN allow a licensee who supplies all or part of the program material on its subscription TV drama service to make-up an expenditure shortfall for the financial year beginning 1 July 1999 in the financial year beginning 1 July 2000. 

 

Proposed new section 103ZM of the Broadcasting Services Act 1992 - - Licensee supplies all program material during 1999-2000 - shortfall to be made up during 2000-2001

 

Proposed new section 103ZM provides that if a licensee provides a subscription TV drama service, and supplies all the program material on the service, and the licensee’s expenditure on new eligible drama in relation the service is less than 10% of the licensee’s total expenditure in relation to the service for the financial year beginning 1 July 1999, it is a condition of the licence that the licensee make-up that expenditure shortfall in the financial year beginning 1 July 2000.

 

Proposed new section 103ZN of the Broadcasting Services Act 1992 - - Licensee supplies part of program material during 1999-2000 - shortfall to be made up during 2000-2001

 

Proposed new section 103ZN applies where a licensee provides a subscription TV drama service in relation to which it supplies only part of the program material, and the licensee’s expenditure for the financial year beginning 1 July 1999 on new eligible drama in relation that program material that it supplies is less than 10% of the licensee’s total expenditure on that program material that it supplies.  It is a condition of the licence that the licensee make-up that expenditure shortfall in the financial year beginning 1 July 2000.

 

Item 3 - Proposed amendment of section 208 of the Broadcasting Services Act 1992

 

This item amends section 208 of the BSA so that the offence of making a false or misleading statement applies to statements in an annual return given to the ABA by a licensee, channel provider or part-channel provider under proposed new sections 103ZA or 103ZB.

 

Item 4 - Proposed amendment of subclause 18(2) of Schedule 3 of the Broadcasting Services Act 1992

 

This item amends subclause 18(2) of Schedule 3 of the BSA to include the ABA’s power to make determinations under proposed new section 103L in the list of powers in subclause 18(2) that the ABA may not delegate.

 

Item 5 - Transitional - section 102 of the Broadcasting Services Act 1992

 

This item provides that, despite the repeal of the licence condition in section 102 on Royal Assent, section 102 continues to apply in relation to any financial year earlier than the financial year beginning 1 July 1999.  

 

Part 2 - Amendments commencing on 1 July 2000

 

Broadcasting Services Act 1992

 

Item 6 - Proposed amendment of subsection 6(1) of the

Broadcasting Services Act 1992 (definition of Australian drama program)

 

This item repeals the definition of Australian drama program in subsection 6(1) of the BSA.  The definition is replaced by the definition of eligible drama program in proposed new section 103B.

 

Item 7 - Proposed amendment of subsection 6(1) of the

Broadcasting Services Act 1992 (definition of drama program )

 

This item repeals the definition of drama program in subsection 6(1) of the BSA.  The definition is replaced by a new definition of drama program for proposed new Division 2A of Part 7.  The new definition is in proposed new section 103B. 

 

Item 8 - Proposed amendment of subsection 6(3) of the

Broadcasting Services Act 1992 to repeal subsection 6(3)

 

This item repeals subsection 6(3) of the BSA.  The repeal of subsection 6(3) is consequential upon the inclusion in the Bill of the proposed definition of eligible drama program .

 

Item 9 - Proposed amendment of the Broadcasting Services Act 1992 to repeal the note at the end of the definition of eligible drama program in section 103B

 

This item repeals a note referring to a special rule for the financial year beginning

1 July 1999.

 

Item 10 - Proposed amendment of the Broadcasting Services Act 1992 to repeal the note at the end of section 103T

 

This item repeals a note referring to a special rule for the financial year beginning

1 July 1999.

 



Item 11 - Proposed amendment of the Broadcasting Services Act 1992 to repeal the note at the end of section 103Z

 

This item repeals a note referring to a special rule for the financial year beginning

1 July 1999.

 

Item 12 - Proposed amendment of the Broadcasting Services Act 1992 to repeal sections 103ZK and 103ZL

 

This item repeals sections 103ZK and 103ZL - special transitional rules for the financial year beginning 1 July 1999.

 

Item 13 - Proposed amendment of subsection 139(2) of the

Broadcasting Services Act 1992

 

This item amends subsection 139(2) of the BSA so that breach of the proposed new licence conditions in sections 103P, 103Q, 103S, 103T, 103V, 103W, 103Y, 103Z, 103ZM and 103ZN are offences under subsection 139(2) with a maximum penalty of 1000 penalty units.

 

Item 14 - Proposed amendment of section 143 of the Broadcasting Services Act 1992

 

This item amends section 143 of the BSA to add new subsections 143(1A) and (1B).  Proposed new subsection 143(1A) provides that if a subscription television broadcasting licensee provides a subscription TV drama service, and the licence is suspended because of a breach of a condition set out in Division 2A of Part 7, the ABA may suspend one or more subscription television broadcasting licences held by the licensee or a related body corporate of the licensee as the ABA considers necessary to ensure that either the same, or a substantially similar, service is not transmitted by the licensee or the related body corporate during the period of suspension.

 

Proposed new subsection 143(1B) provides that if a subscription television broadcasting licensee provides a subscription TV drama service, and the licence is cancelled because of a breach of a condition set out in Division 2A of Part 7, the ABA may cancel one or more subscription television broadcasting licences held by the licensee or a related body corporate of the licensee as the ABA considers necessary to ensure that either the same, or a substantially similar, service is not transmitted by the licensee or the related body corporate during the period of cancellation. 

 

Proposed new subsections 143(1A) and (1B) are intended to ensure that action against a licensee for breach of a condition in Division 2A of Part 7 by the ABA, is not undermined by the licensee, or a related body corporate of the licensee, providing the same or a substantially similar service to that which has been suspended or cancelled under a different licence.  

 

Item 15 - Proposed amendment of subsection 143(2) of the Broadcasting Services Act 1992

 

This item amends subsection 143(2) of the BSA so that subsection 143(2) applies to proposed action by the ABA to suspend or cancel a licence for breach of the licence conditions in Division 2A of Part 7.  Subsection 143(2) of the BSA requires the ABA to give notice of its intention to suspend or cancel a licence; and provide a reasonable opportunity to make representations to the ABA in relation to the proposed action.

 

Item 16 - Proposed amendment of section 143 of the Broadcasting Services Act 1992

 

This item amends adds a new subsection 143(3) to the BSA which sets out that in section 143, the term related body corporate has the same meaning as in the Corporations Law.

 

Item 17 - Proposed amendment of section 204 of the Broadcasting Services Act 1992 (table item dealing with declaration that a program is not an Australian drama program)

 

This item amends section 204 of the BSA (a table setting out decisions under the BSA that are reviewable by the Administrative Appeals Tribunal and who may apply for  review) to remove the reference to subsection 6(3) declarations following the repeal of subsection 6(3) by item 8 of Schedule 1 to the Bill.

 

Item 18 - Proposed amendment of section 204 of the Broadcasting Services Act 1992 (table item dealing with suspension or cancellation of licence)

 

This item amends section 204 of the BSA (a table setting out decisions under the BSA that are reviewable by the Administrative Appeals Tribunal and who may apply for  review) to omit subsection 143(1) and replace it with section 143.  This proposed amendment is consequential upon the proposed amendment at item 14 of the Bill.

 

Item 19 - Transitional - expenditure incurred before 1 July 2000

 

Item 19(1) provides that, despite the amendments of sections 6 and 204 of the BSA  which commence on 1 July 2000, those sections continue to apply in relation to expenditure incurred during the financial year beginning on 1 July 1999, or an earlier financial year, as if the amendments had not been made.

 

Item 19(2) provides that, despite the amendments of Division 2A of Part 7 of the BSA which commence on 1 July 2000, the BSA continues to apply in relation to expenditure incurred during the financial year beginning on 1 July 1999, as if the amendments had not been made.

 



Part 3 - Amendments commencing on 1 July 2001

 

Broadcasting Services Act 1992

 

Item 20 - Proposed repeal of Subdivision K of Division 2A of Part 7 of the

Broadcasting Services Act 1992

 

This item repeals Subdivision K, a transitional Subdivision that ceases to have any effect at the end of the financial year that begins on 1 July 2000.

 

Item 21 - Proposed amendment of subsection 139(2) of the Broadcasting Services Act 1992

 

This item amends subsection 139(2) to remove sections 103ZM and 103ZN from subsection 139(2).  Proposed new sections 103ZM and 103ZN are transitional licence conditions that only apply for the financial year beginning on 1 July 2000.  

 

Item 22 - Transitional - expenditure incurred before 1 July 2001

 

This transitional provision provides that, despite the amendments to the BSA which commence on 1 July 2001, the BSA applies in relation to expenditure incurred before the financial year beginning on 1 July 2001, as if the amendments had not been made.

 

 



SCHEDULE 2 - INTERNATIONAL OBLIGATIONS

 

Broadcasting Services Act 1992

 

Item 1 - Proposed amendment of subsection 6(1) of the Broadcasting Services Act 1992 - definition of CER Trade in Services Protocol

 

Section 6 of the BSA contains definitions of key terms used in that Act.  This item adds a definition of CER Trade in Services Protocol to section 6, and is consequential on the amendment made to paragraph 160(d) by item 2.

 

Item 2 - Proposed amendment of paragraph 160(d) of the Broadcasting Services Act 1992

 

Paragraph 160(d) of the BSA currently requires the ABA to perform its functions in a manner consistent with Australia’s obligations under any convention to which Australia is a party or any agreement between Australia and a foreign country. 

 

This item amends paragraph 160(d) to restrict its scope to Australia’s obligations under the Protocol on Trade in Services to the Australia New Zealand Closer Economic Relations Trade Agreement (“the CER Trade in Services Protocol”).

 

The general law will apply to the ABA in the performance of its functions in relation to treaties other than the CER Trade in Services Protocol.

 

 



SCHEDULE 3  - INTERNATIONAL BROADCASTING SERVICES

 

Part 1 - Amendments

 

Administrative Decisions (Judicial Review) Act 1977

 

Item 1 - Proposed amendment of Schedule 2 of the Administrative Decisions (Judicial Review) Act 1977 

 

Item 1 adds a new paragraph (zc) to the end of Schedule 2 of the AD(JR) Act.  Schedule 2 of the AD(JR) Act sets out administrative decisions in Commonwealth legislation that are not subject to the requirement in section 13 of the Act that a decision maker provide a statement of reasons to a person who requests a statement of reasons under the AD(JR) Act.

 

The item has the effect that decisions of the Minister for Foreign Affairs under proposed new Part 8B of the BSA, which deals with international broadcasting services, are not decisions in relation to which the Minister for Foreign Affairs is required to provide a statement of reasons.

 

Under proposed new Part 8B of the BSA, the Minister for Foreign Affairs may make the following decisions:

(a)                 that he or she is of the opinion that an application for an international broadcasting licence should be refused because the proposed service is likely to be contrary to Australia's national interest;

(b)                that he or she is of the opinion that a formal warning should be given to a licensee of an international broadcasting service because the service is contrary to Australia's national interest;

(c)                 that he or she is of the opinion that a licensed international broadcasting service should be suspended because the service is contrary to Australia's national interest; or

(d)                that he or she is of the opinion that a licensed international broadcasting service should be cancelled because the service is contrary to Australia's national interest.

 

The nature of these decisions is such that exposure of the reasons for the decisions could itself be contrary to Australia's national interest.  For this reason, the Minister for Foreign Affairs is not required to provide a statement of reasons under section 13 of the AD(JR) Act.

 



Broadcasting Services Act 1992

 

Item 2 - Proposed amendment of the Broadcasting Services Act 1992 to insert a new  paragraph 3(1)(ja)

 

Item 2 inserts a new paragraph 3(1)(ja) into the BSA so that the objects of the BSA include ensuring that international broadcasting services are not provided contrary to Australia's national interest.

 

Item 3 - Proposed amendment of the Broadcasting Services Act 1992 to insert a new subsection 4(3A)

 

This item inserts a new subsection 4(3A) into the BSA which provides that the regulatory policy set out in section 4 of the BSA does not apply to Part 8B of the BSA which deals with international broadcasting services.

 

Item 4 - Proposed amendment of subsection 6(1) of the Broadcasting Services Act 1992 to insert a definition of international broadcasting guidelines

 

Item 4 inserts a definition of international broadcasting guidelines into section 6, the interpretation section of the BSA.

 

Item 5 - Proposed amendment of subsection 6(1) of the Broadcasting Services Act 1992 to insert a definition of international broadcasting licence

 

  Item 5 inserts a definition of international broadcasting licence into section 6, the interpretation section of the BSA.

 

Item 6 - Proposed amendment of subsection 6(1) of the Broadcasting Services Act 1992 to insert a definition of international broadcasting service

 

Item 6 inserts a definition of international broadcasting service into section 6, the interpretation section of the BSA.  The term international broadcasting service has the meaning given by proposed new section 18A.

 

Item 7 - Proposed amendment of subsection 6(1) of the Broadcasting Services Act 1992 to insert a definition of Minister for Foreign Affairs

 

Item 7 inserts a definition of Minister for Foreign Affairs into section 6, the interpretation section of the BSA.

 



Item 8 - Proposed amendment of the Broadcasting Services Act 1992 to insert a new  paragraph 11(fa)

 

Item 8 inserts into section 11 of the BSA a proposed new paragraph (fa), which provides that international broadcasting services are one of the categories of broadcasting services under the BSA.

 

Item 9 - Proposed amendment of the Broadcasting Services Act 1992 to insert a new section 11A

 

Item 9 inserts into the BSA a proposed new section 11A, Dual categorisation of broadcasting services, which provides that an international broadcasting service may also fall into another category of broadcasting services.

 

Proposed new section 11A has been included to make it clear that a broadcasting service may be both an international broadcasting service, as defined in proposed new section 18A, and another kind of broadcasting service.  This clarification is necessary as the current categories of broadcasting service in section 11 are intended to be mutually exclusive.  An international broadcasting service may also fall into another category of broadcasting service where it is not only delivered to an audience outside Australia, but is also delivered to persons in Australia.

 

Item 10 - Proposed amendment of subsection 12(1) of the Broadcasting Services Act 1992 

 

Item 10 proposes to amend subsection 12(1) of the BSA to reflect that the method of regulating international broadcasting services is through individual licences which are allocated by the Australian Broadcasting Authority (ABA).  Currently, commercial broadcasting services, community broadcasting services and subscription television broadcasting services all require individual licences allocated by the ABA.  Applicants for individual licences are subject to a suitability test as part of the application process.  In contrast, subscription radio broadcasting and subscription narrowcasting services, and open narrowcasting services are provided under class licences.  A class licence contains conditions with which the person providing a service must comply.  However, a person need not apply for a class licence.  National broadcasting services are a category of broadcasting services, but are not regulated by either individual or class licences.

 

Item 11 - Proposed amendment of section 12 of the Broadcasting Services Act 1992

 

Item 11 adds proposed new subsections 12(3), 12(4), 12(5) and 12(6) to the BSA which deal with licensing of international broadcasting services where the broadcasting service falls into the category of an international broadcasting service and another category of broadcasting service.  Item 11 complements the proposed amendments at items 9 and 12.

 

Proposed new subsection 12(3) provides that an international broadcasting service that also falls into the category of commercial broadcasting services requires both an international broadcasting licence and either a commercial radio broadcasting licence or  a commercial television broadcasting licence.

 

A service would be an international broadcasting service if it is a service of the kind which is described in proposed new section 18A of the BSA.  Proposed new section 18A provides that, subject to certain exceptions, international broadcasting services are services targeted, to a significant extent, to audiences outside Australia, where the means of delivery of the service involves the use of a transmitter in Australia.  A service is a commercial broadcasting service if it is a service of the kind described in section 14 of the Act.  As a result of paragraph 21(b) of the AIA , references to the "general public" in section 14 mean the general public in Australia.  Paragraph 21(b) of the AIA provides, among other things, that unless the contrary intention appears, references to localities, jurisdictions and other matters and things shall be construed as references to localities, jurisdictions and other matters and things in and of the Commonwealth.  

 

Proposed new subsection 12(4) provides that an international broadcasting service that also falls into the category of community broadcasting services requires both an international broadcasting licence and a community broadcasting licence.

 

A service would be an international broadcasting service if it is a service of the kind which is described in proposed new section 18A of the BSA.  Proposed new section 18A provides that, subject to certain exceptions, international broadcasting services are services targeted, to a significant extent, to audiences outside Australia, where the means of delivery of the service involves the use of a transmitter in Australia.  A service is a community broadcasting service if it is a service of the kind described in section 15 of the Act.  Section 15 of the Act provides that, among other things, community broadcasting services are services that provide programs that are made available free to the general public. As a result of paragraph 21(b) of the AIA , references to the "general public" in section 15 mean the general public in Australia.  Paragraph 21(b) of the AIA provides, among other things, that unless the contrary intention appears, references to localities, jurisdictions and other matters and things shall be construed as references to localities, jurisdictions and other matters and things in and of the Commonwealth.  

 

Proposed new subsection 12(5) provides that an international broadcasting service that also falls into the category of subscription television broadcasting services requires both an international broadcasting licence and a subscription television broadcasting licence.   

 

A service would be an international broadcasting service if it is a service of the kind which is described in proposed new section 18A of the BSA.  Proposed new section 18A provides that, subject to certain exceptions, international broadcasting services are services targeted, to a significant extent, to audiences outside Australia, where the means of delivery of the service involves the use of a transmitter in Australia.  A service is a subscription television broadcasting service if it is a television service of the kind described in section 16 of the Act.  Section 16 of the Act provides that, among other things, subscription broadcasting services are services that provide programs that appear intended to appeal to the general public, and are made available to the general public on payment of subscription fees. As a result of paragraph 21(b) of the AIA , references to the "general public" in section 16 mean the general public in Australia.  Paragraph 21(b) of the AIA provides, among other things, that unless the contrary intention appears, references to localities, jurisdictions and other matters and things shall be construed as references to localities, jurisdictions and other matters and things in and of the Commonwealth.

 

Proposed new subsection 12(6) provides that, where an international broadcasting service also falls into the category of broadcasting services covered by subsection 12(2) of the BSA, the service requires an international broadcasting licence and is to be provided under the relevant class licence.  The categories of broadcasting services covered by subsection 12(2) of the BSA are subscription radio broadcasting and subscription narrowcasting services and open narrowcasting services.  These are all services that are provided under class licences.

 

A service would be an international broadcasting service if it is a service of the kind which is described in proposed new section 18A of the BSA.  Proposed new section 18A provides that, subject to certain exceptions, international broadcasting services are services targeted, to a significant extent, to audiences outside Australia, where the means of delivery of the service involves the use of a transmitter in Australia.

 

A service is a subscription radio broadcasting service if it is a radio service of the kind described in section 16 of the Act.  Section 16 of the Act provides that, among other things, subscription broadcasting services are services that provide programs that appear intended to appeal to the general public, and are made available to the general public on payment of subscription fees. As a result of paragraph 21(b) of the AIA , references to the "general public" in section 16 mean the general public in Australia.  Paragraph 21(b) of the AIA provides, among other things, that unless the contrary intention appears, references to localities, jurisdictions and other matters and things shall be construed as references to localities, jurisdictions and other matters and things in and of the Commonwealth.

 

A service is a subscription narrowcasting service or an open narrowcasting service if, among other things, its reception is limited for various reasons.  As a result of paragraph 21(b) of the AIA , references to “reception” in sections 17 and 18 of the BSA means reception in Australia.  Paragraph 21(b) of the AIA provides, among other things, that unless the contrary intention appears, references to localities, jurisdictions and other matters and things shall be construed as references to localities, jurisdictions and other matters and things in and of the Commonwealth.

 

It is intended that no second licence and no class licence requirements apply where an international broadcasting service is received wholly outside Australia.

 



Item 12 - Proposed amendment of the Broadcasting Services Act 1992 to insert a new  section 18A

 

Item 12 inserts a proposed new section 18A into the BSA that sets out when a service would be an international broadcasting service.

 

Proposed new subsection 18A(1) provides that international broadcasting services are services targeted, to a significant extent, to audiences outside Australia, where:

(a)     the means of delivery of the service involves the use of a radiocommunications transmitter in Australia; and

(b)    the services comply with any determinations or clarifications by the ABA under section 19 of the BSA.

 

The proposed provision is intended to ensure that only those broadcasting services that are targeted to an audience outside Australia and transmitted from Australia, and not those services that are fortuitously received outside Australia, will be subject to regulation under the BSA as international broadcasting services.

 

The reference to use of a radiocommunications transmitter in Australia is limited to use of a radiocommunications transmitter in Australia in the normal geographical sense of Australia (as modified by the definition in new subsection 18A(5)).  It does not extend to the use of a radiocommunications transmitter on a satellite which, under regulations made under the RA, is an Australian satellite . While section 16 of the RA provides that the RA applies outside Australia in relation to Australian satellites, the BSA does not extend outside Australia.

 

Proposed new subsection 18A(2) provides that a broadcasting service is not an international broadcasting service if the service is provided either by the Australian Broadcasting Corporation (ABC) in accordance with section 6 of the Australian Broadcasting Corporation Act 1983 or by the Special Broadcasting Service Corporation (SBS) in accordance with section 6 of the Special Broadcasting Corporation Act 1991 ; or is an exempt broadcasting service .   The effect of this proposed new provision is that ABC and SBS Charter services and broadcasting services of the kind set out in proposed new subsection 18A(3) are not international broadcasting services for the purposes of the BSA.

 

Proposed new subsection 18A(3) provides that a broadcasting service is an exempt broadcasting service if all of the following conditions apply:

(a)     the service delivers only programs packaged outside Australia; and

(b)    all relevant programming decisions are made outside Australia; and

(c)     the service is transmitted from a place outside Australia to an earth station in Australia for the sole purpose of being immediately re-transmitted to a satellite; and

(d)    the satellite is a means of delivering the service.

 

Proposed new subsection 18A(3) is intended to remove from the regulation of the BSA all satellite pass-through broadcasting services where all of the packaging of programs and all of the programming decisions are made outside Australia.  An example of such a service would be a television service which comprises programs packaged in the United States, where all the programming decisions are made in the United States, that is transmitted to an earth station in Australia by satellite or cable and is immediately re-transmitted to a satellite which delivers the television service to Indonesia.   This exemption is intended to ensure that the amendments do not affect any commercial proposals to make Australia a programming up-link hub for broadcasting services delivered by satellite.

 

Proposed new subsection 18A(4) provides that the references to localities in proposed new section 18A are not intended to affect the application of paragraph 21(b) of the AIA and section 10 of the BSA to a provision of the BSA that deals with a category of broadcasting services other than international broadcasting services.  Paragraph 21(b) of the AIA provides, among other things, that unless the contrary intention appears, references to localities, jurisdictions and other matters and things shall be construed as references to localities, jurisdictions and other matters and things in and of the Commonwealth.  Section 10 of the BSA provides that the BSA extends to all external territories.

 

Proposed new subsection 18A(4) is included to ensure that it is clear that the references to localities outside Australia in proposed new subsection 18A(3) does not displace the general rule of interpretation in paragraph 21(b) of the AIA, or rule in section 10 of the BSA.

 

Proposed new subsection 18A(5) provides that, in section 18A, Australia includes the external territories, and radiocommunications transmitter has the same meaning as in the Radiocommunications Act 1992 .   There is a definition of radiocommunications transmitter at subsection 7(2) of that Act.  

 

Item 13 - Proposed amendment of paragraphs 19(1)(a) and (b) of the Broadcasting Services Act 1992

 

Item 13 is a proposed amendment to include references to proposed new section 18A in  paragraphs 19(1)(a) and (b).  The effect of the item is that the ABA will have the power, by notice in the Gazette , to determine additional criteria to those specified in section 18A, or clarify the criteria specified in section 18A, for the purposes of distinguishing between categories of broadcasting services.  Proposed new section 18A sets out the criteria for an international broadcasting service.

 

Item 14 - Proposed amendment of subsection 21(1) of the Broadcasting Services Act 1992

 

Item 14 is a minor amendment consequential upon the proposed amendment at item 9, which provides that an international broadcasting service may also fall into another category of broadcasting services.

 

Item 15 - Proposed amendment of subsection 21(2) of the Broadcasting Services Act 1992

 

Item 15 is a minor amendment consequential upon the proposed amendment at item 9, which provides that an international broadcasting service may also fall into another category of broadcasting services.

 

Item 16 - Proposed amendment of subsection 21(4) of the Broadcasting Services Act 1992  

 

Item 16 is a minor amendment consequential upon the proposed amendment at item 9, which provides that an international broadcasting service may also fall into another category of broadcasting services.

 

Item 17 - Proposed amendment of paragraph 21(5)(a) of the Broadcasting Services Act 1992

 

Item 17 is a minor amendment consequential upon the proposed amendment at item 9, which provides that an international broadcasting service may also fall into another category of broadcasting services.  

 

Item 18 - Proposed amendment of paragraph 21(5)(b) of the Broadcasting Services Act 1992

 

Item 18 is a minor amendment consequential upon the proposed amendment at item 9, which provides that an international broadcasting service may also fall into another category of broadcasting services.

 

Item 19 - Proposed amendment of paragraph 21(5)(b) of the Broadcasting Services Act 1992

 

Item 19 is a minor amendment consequential upon the proposed amendment at item 9, which provides that an international broadcasting service may also fall into another category of broadcasting services.

 

Item 20 - Proposed amendment of subsection 21(6) of the Broadcasting Services Act 1992

 

Item 20 is a minor amendment consequential upon the proposed amendment at item 9, which provides that an international broadcasting service may also fall into another category of broadcasting services.

 

Item 21 - Proposed amendment of the Broadcasting Services Act 1992 to insert new subsections 21(8) and 21(9)

 

This item proposes to add new subsections 21(8) and 21(9) to the BSA.

 

Proposed new subsection 21(8) provides that the ABA must not give an opinion under section 21 that a particular broadcasting service falls into more than one category of broadcasting service unless one of the categories is international broadcasting services. 

 

Proposed new subsection 21(9) provides that a person must not, in an application to the ABA for an opinion as to which category of broadcasting services a broadcasting service falls into, state an opinion that a broadcasting service falls into more than one category of broadcasting services, unless one of the categories is international broadcasting services.   This provision has been included because subsection 21(6) of the Act provides that if the ABA does not give an opinion under section 21 within 45 days, the ABA will be taken to have given the opinion that accords with the applicant’s opinion.

 

Item 22 - Proposed amendment of the Broadcasting Services Act 1992 to insert a new Part 8B before Part 9

 

Item 22 inserts a new Part 8B into the BSA that deals with international broadcasting licences.

 

Part 8B - International broadcasting licences

 

Division 1 - Simplified outline

 

Proposed new section 121F of the Broadcasting Services Act 1992 - Simplified outline

 

Proposed new section 121F sets out a simplified outline of proposed new Part 8B of the BSA.

 

Division 2 - Allocation of international broadcasting licences

 

Proposed new section 121FA of the Broadcasting Services Act 1992 - Application for international broadcasting licence

 

Proposed new section 121FA provides that a person may apply to the ABA for a licence to provide an international broadcasting service (subsection 121FA(1)), and that the application must be in accordance with a form approved in writing by the ABA, and accompanied by the application fee determined in writing by the ABA (subsection 121FA(2)).

 

Proposed new section 121FB of the Broadcasting Services Act 1992 - Corporate status and suitability

 

Proposed new section 121FB sets out the corporate status and suitability requirements that must be satisfied by an applicant for an international broadcasting licence.

 

Proposed new subsection 121FB(1) provides that, if the ABA is satisfied that an applicant for an international broadcasting licence is company that is formed in Australia, and does not decide that the applicant is an unsuitable applicant under proposed new section 121FC, the ABA must refer the application to the Minister for Foreign Affairs and give the Minister a report about whether the proposed international broadcasting service complies with the international broadcasting guidelines.  The international broadcasting guidelines are guidelines that will be developed by the ABA in consultation with the Minister for Foreign Affairs.

 

Proposed new subsection 121FB(2) provides that if the ABA is not satisfied that an applicant for an international broadcasting licence is a company that is formed in Australia, or decides that the applicant is an unsuitable applicant under proposed new section 121FC, the ABA must refuse to allocate an international broadcasting licence to the applicant. 

 

Proposed new subsection 121FB(3) provides that, if under subsection 121FB(2), the ABA refuses to allocate an international broadcasting licence to an applicant, the ABA must give written notice of the refusal to the applicant.

 

The effect of proposed new section 121FB is that there are two preconditions that an applicant for an international broadcasting licence must meet before the application is referred to the Minister for Foreign Affairs for the national interest assessment.  An applicant must be a company formed in Australia and not be an unsuitable applicant under proposed new section 121FC.   If the applicant does not meet these preconditions, the ABA must refuse to allocate the licence and inform the applicant in writing.

 

Consideration of the corporate status and suitability of an applicant for an international broadcasting licence by the ABA is not intended to preclude general corporate status and suitability issues from being considered in the context of Australia’s national interest under proposed new Part 8B of the BSA.

 

Proposed new section 121FC of the Broadcasting Services Act 1992 - Unsuitable applicant

 

Proposed new section 121FC deals with when an applicant is an unsuitable applicant.

 

Proposed new subsection 121FC(1) provides that the ABA may decide that an applicant is an unsuitable applicant if it is satisfied that allowing a particular company to provide an international broadcasting service under an international broadcasting licence would lead to a significant risk of either an offence against the Act or any regulations under the Act, or a breach of the licence conditions.

 

Proposed new subsection 121FC(2) sets out the factors that the ABA is to take into account in deciding whether there exists a significant risk of either an offence against the Act or any regulations under the Act or a breach of the licence conditions.  These factors include factors relevant to the company and persons in a position to control the company.

 

The effect of proposed new section 121FC is that the ABA must form a view as to whether the applicant is an unsuitable applicant, having regard to the factors in proposed new subsection 121FC(2).  These factors are the same factors that the ABA is required to take into account in the application process for commercial, community or subscription television broadcasting licences.

 

Proposed new section 121FD of the Broadcasting Services Act 1992 - Australia's national interest

 

Proposed new section 121FD sets out the role of the Minister for Foreign Affairs in the international broadcasting licence application process.

 

Proposed new subsection 121FD(1) provides that if an application for an international broadcasting licence is referred to the Minister for Foreign Affairs by the ABA under subsection 121FB(1), and the Minister for Foreign Affairs is of the opinion that the proposed international broadcasting service is likely to be contrary to Australia's national interest, the Minister for Foreign Affairs may, by written notice to the ABA, direct the ABA not to allocate an international broadcasting licence to the applicant.   The effect of the provision is that the ABA must refuse to allocate an  international broadcasting licence to a person if, in the opinion of the Minister for Foreign Affairs, the proposed broadcasting service may be contrary to the national interest.

 

Proposed new subsection 121FD(2) provides that if an application for an international broadcasting licence is referred to the Minister for Foreign Affairs under proposed new subsection 121FB(1), and the Minister for Foreign Affairs is not of the opinion that the international broadcasting service concerned is likely to be contrary to the national interest, the Minister for Foreign Affairs must, by written notice to the ABA, inform the ABA that he or she has no objection to the allocation of an international broadcasting licence to the applicant.

 

Proposed new subsection 121FD(3) provides that, for the purposes of proposed new section 121FD, in determining whether a proposed international broadcasting service is likely to be contrary to Australia's national interest, the Minister for Foreign Affairs must have regard to the likely effect of the proposed service on Australia's international relations.

 

Proposed new subsection 121FD(4) provides that, for the purposes of proposed new section 121FD, in determining whether a proposed international broadcasting service is likely to be contrary to Australia's national interest, the Minister for Foreign Affairs may have regard to a report given by the ABA under proposed new subsection 121FB(1).

 

The effect of proposed new subsection 121FD(4) is that the Minister for Foreign Affairs may have regard to the ABA report about whether the proposed international broadcasting service complies with the international broadcasting guidelines.  The Minister for Foreign Affairs may also have regard to any other material that he or she considers relevant.

 

Proposed new subsection 121FD(5) requires the Minister for Foreign Affairs to make reasonable efforts to, within 60 days of a referral from the ABA of an application for an international broadcasting licence, either direct the ABA not to allocate the licence because he or she is of the opinion that the proposed international broadcasting service is likely to be contrary to the national interest, or inform the ABA that he or she does not object to the allocation of an international broadcasting licence to the applicant. 

 

Proposed new subsection 121FD(6) provides that, if the Minister for Foreign Affairs directs the ABA not to allocate an international broadcasting licence to an applicant, the ABA is required to give written notice of the direction to the applicant.

 

Proposed new section 121FE of the Broadcasting Services Act 1992 - Allocation of licence

 

Proposed new section 121FE provides that if the Minister for Foreign Affairs informs the ABA under subsection 121FD(2) of the BSA that he or she has no objection to the allocation of an international broadcasting licence to an applicant, the ABA must allocate the licence to the applicant.

 

The effect of proposed new section 121FE is that the ABA has no discretion in relation to the allocation of an international broadcasting licence once the Minister for Foreign Affairs has informed the ABA that he or she has no objection on national interest grounds to the allocation of the licence.

 

Division 3 - Obligations of international broadcasting licensees

 

Proposed new section 121FF of the Broadcasting Services Act 1992 - Conditions of international broadcasting licences

 

Proposed new section 121FF sets out the conditions to which each international broadcasting licence is subject.  A licensee of an international broadcasting licence is subject to the following conditions:

(a)     to make a record of programs broadcast on the service in a form approved by the ABA;

(b)    to retain this record of broadcast for 90 days after the broadcast; and

(c)     to make this record available to the ABA on request and free of charge.

 

The purpose of the record keeping licence conditions is to ensure that the ABA will receive from licensees records of broadcasts if the ABA requests these records of broadcasts on behalf of the Minister for Foreign Affairs under proposed new section 121FN. 

 



Division 4 - Remedies

 

Proposed new section 121FG of the Broadcasting Services Act 1992 - Prohibition on providing an international broadcasting service without a licence

 

Proposed new subsection 121FG(1) provides that a person is guilty of an offence if the person intentionally provides an international broadcasting service and does not have a licence to provide that service and is reckless as to that fact.  The penalty for this offence is 20,000 penalty units.  Currently a penalty unit is $110, so the current penalty is $2,200,000.  Under subsection 4B(3) of the Crimes Act 1914, if a body corporate is convicted of an offence against a Commonwealth law, the Court may impose a penalty of up to 5 times the amount of the maximum penalty that could be imposed on a natural person.

 

Proposed new subsection 121FG(2) provides that a person who contravenes subsection 121FG(1) is guilty of a separate offence in respect of each day during which the contravention continues. Section 213 of the BSA provides that the maximum penalty for each day that an offence that is a continuing offence continues is 10% of the maximum penalty for the principal offence.

 

Proposed new section 121FH of the Broadcasting Services Act 1992 - Notice for providing an international broadcasting service without a licence

 

Proposed new subsection 121FH(1) provides for the ABA to issue a notice to a person   who the ABA is satisfied is providing an international broadcasting service without a licence for that service, directing that person to cease providing the service.

 

Proposed new subsection 121FH(2) provides that a person is guilty of an offence if the person has been issued with a notice by the ABA under subsection 121FH(1) and the person intentionally fails to comply with the notice.  The penalty for this offence is  20,000 penalty units.  Currently a penalty unit is $110, so the current penalty is $2,200,000.  Under subsection 4B(3) of the Crimes Act 1914, if a body corporate is convicted of an offence against a Commonwealth law, the Court may impose a penalty of up to 5 times the amount of the maximum penalty that could be imposed on a natural person.

 

 Proposed new subsection 121FH(3) provides that a person who contravenes subsection 121FH(2) is guilty of a separate offence in respect of each day during which the contravention continues. Section 213 of the BSA provides that the maximum penalty for each day that an offence that is a continuing offence continues is 10% of the maximum penalty for the principal offence.

 



Proposed new section 121FJ of the Broadcasting Services Act 1992 - Offence for breach of conditions of international broadcasting licence

 

Proposed new section 121FJ provides that a person is guilty of an offence if the person is an international broadcasting licensee, and the person intentionally breaches a condition of the licence.  The penalty is 2,000 penalty units, which is currently $220,000.

 

Subsection 4B(3) of the Crimes Act 1914 would not apply to this penalty as the offence only applies to licensees and applicants for licences must be a company.

 

Proposed new section 121FK of the Broadcasting Services Act 1992 - Cancellation of licence if service does not commence within 2 years

 

Proposed new section 121FK provides for cancellation of an international broadcasting licence by the ABA if the licensee does not start providing the service within 2 years.   Proposed new section 121FK also requires the ABA to give written notice of the intention to cancel a licence, and to notify the ACA that an international broadcasting licence has been cancelled.

 

Proposed new subsection 121FK(1) empowers the ABA to cancel a licence if the person who was allocated the licence has not commenced to provide the international broadcasting service within 2 years of allocation of the licence.  This provision is intended to ensure that a national interest assessment, which is part of the licence allocation process for an international broadcasting licence, will be reasonably current when the proposed service commences.  As the ABA will have the discretion to cancel the licence, and is required to seek representations from a licensee if the ABA is proposing to cancel the licence, the ABA will be obliged to take any matters raised by the licensee into account before cancelling the licence under this proposed new provision.   

 

Proposed new subsection 121FK(2) requires the ABA to give the licensee notice of its intention to cancel a licence under subsection 121FK(1), and to provide a licensee with a reasonable opportunity to make representations in relation to the proposed cancellation.  This is intended to ensure that the ABA takes all relevant issues into account in any decision to cancel a licence under proposed new section 121FK.

 

Proposed new subsection 121FK(3) provides that, if the ABA cancels a licence under subsection 121FK(1), the ABA must notify the cancellation to the ACA.  This provision is relevant to the proposed amendments in the Bill to the Radiocommunications Act 1992 (RA) which include that the ABA must cancel a transmitter licence that authorises the operation of a radiocommunications transmitter used to transmit an international broadcasting service, where the international broadcasting licence that authorises the provision of the international broadcasting service has been cancelled or surrendered (see proposed new section 128A of the RA).

 

Proposed new section 121FL of the Broadcasting Services Act 1992 - Formal warning, or cancellation or suspension of licence, where service is contrary to Australia's national interest

 

Proposed new section 121FL provides for formal warning, suspension and cancellation of international broadcasting licences by the ABA, on the direction of the Minister for Foreign Affairs, on national interest grounds.   Proposed new section 121FL provides the Minister for Foreign Affairs with a choice of three enforcement options so that he or she may choose the option that he or she believes is warranted in the circumstances.  The Minister for Foreign Affairs is not, for example, required to direct the ABA to issue a formal warning to an international broadcasting licensee before he or she may direct the ABA to suspend or cancel an international broadcasting licence.

 

Proposed new subsection 121FL(1) provides that, if the Minister for Foreign Affairs is of the opinion that a licensed international broadcasting service is contrary to the national interest, and the Minister for Foreign Affairs directs the ABA to issue a formal warning to the licensee, the ABA must issue the formal warning to the licensee.  

 

Proposed new subsection 121FL(2) provides that, if the ABA issues a formal warning to a licensee under proposed new subsection 121FL(1), the ABA must notify the warning to the ACA.

 

Proposed new subsection 121FL(3) provides that if the Minister for Foreign Affairs is of the opinion that a licensed international broadcasting service is contrary to the national interest, and the Minister for Foreign Affairs directs the ABA to suspend the licence for a period specified in the direction, the ABA must suspend the licence for the period specified in the direction.  If the holder of an international broadcasting licence has been informed by the ABA that its licence has been suspended, and the service continues during that period of suspension, the holder of the licence would be guilty of the offence of providing an international broadcasting service without a licence (proposed new  section 121FG).

 

Proposed new subsection 121FL(4) provides that, if the ABA suspends a licence under  subsection 121FL(3), the ABA must notify the suspension to the ACA.

 

Proposed new subsection 121FL(5) provides that, if the Minister for Foreign Affairs is of the opinion that a licensed international broadcasting service is contrary to the national interest, and the Minister for Foreign Affairs directs the ABA to cancel the licence, the ABA must cancel the licence.

 

Proposed new subsection 121FL(6) provides that, if the Minister for Foreign Affairs proposes to direct the ABA to cancel an international broadcasting licence, he or she must direct the ABA to give the licensee written notice of that intention, and give the licensee a reasonable opportunity to send a submission to the ABA in relation to the proposed direction to cancel the licence, and forward any submission to the Minister for Foreign Affairs.

 

Proposed new subsection 121FL(6) is intended to provide a mechanism to ensure that before the Minister for Foreign Affairs may direct the ABA to cancel an international broadcasting licence on national interest grounds, the holder of the licence will have been given the opportunity to raise any relevant matters that should be taken into account by the Minister for Foreign Affairs before proceeding to direct the ABA to cancel the licence.

 

Proposed new subsection 121FL(7) provides that, if the ABA cancels a licence under subsection 121FL(5), the ABA must notify the cancellation to the ACA.

 

Proposed new subsection 121FL(8) provides that, in determining whether an international broadcasting service is contrary to the national interest for the purposes of section 121FL, the Minister for Foreign Affairs must have regard to the effect of the service on Australia's international relations.

 

In determining whether an international broadcasting service is contrary to the national interest under proposed new subsection 121FL(8) the Minister for Foreign Affairs is not precluded from having regard to the corporate status and continuing suitability of a licensee.

 

Proposed new subsection 121FL (9) provides that, for the purposes of proposed new section 121FL, the Minister for Foreign Affairs may, in determining whether an international broadcasting service is contrary to the national interest, have regard to a report given by the ABA under section 121FM.  Proposed new section 121FM provides that the Minister for Foreign Affairs may direct the ABA to prepare a report about whether a specified international broadcasting service complies with the international broadcasting guidelines.

 

Proposed new subsection 121FL(9) has been included in section 121FL so that it is clear that an ABA report under section 121FM is not the only source of material to which the Minister for Foreign Affairs may have regard when he or she decides whether to direct the ABA to give a formal warning to an international broadcasting licensee, or to suspend or cancel an international broadcasting licence. 

 

Division 5 - ABA to assist the Minister for Foreign Affairs

 

Proposed new section 121FM of the Broadcasting Services Act 1992 - Report about compliance with international broadcasting guidelines

 

Proposed new section 121FM provides that the Minister for Foreign Affairs may direct the ABA to prepare a report about whether a specified international broadcasting service complies with the international broadcasting guidelines.

 



Proposed new section 121FN of the Broadcasting Services Act 1992 - Records of broadcasts

 

Proposed new section 121FN provides that the Minister for Foreign Affairs may direct the ABA to obtain specified records or copies of records of broadcasts from an international broadcasting licensee and give the records or copies to the Minister for Foreign Affairs.

 

The purpose of the provision is to ensure that, if the Minister for Foreign Affairs wishes to review specific broadcasts which he or she is concerned may be contrary to the national interest, he or she may direct the ABA to acquire the relevant records of broadcasts.  The licensee should have these records as keeping records of broadcasts for 90 days and giving the records to the ABA on request are licence conditions to which all international broadcasting licensees are subject as a result of proposed new section 121FF.

 

Division 6 - Miscellaneous

 

Proposed new section 121FP of the Broadcasting Services Act 1992 - International broadcasting guidelines

 

Proposed new subsection 121FP(1) requires the ABA to formulate written guidelines relating to international broadcasting services.  Proposed new subsection 121FP(2) provides that international broadcasting guidelines may deal with matters other than Australia's national interest.

 

Proposed new section 121FQ of the Broadcasting Services Act 1992 - Surrender of international broadcasting licences

 

Proposed new subsection 121FQ(1) provides that an international broadcasting licensee may surrender the licence by giving written notice to the ABA.

 

Proposed new subsection 121FQ(2) provides that the ABA must notify the ACA if a licence is surrendered under subsection 121FQ(1). 

 

Proposed new section 121FR of the Broadcasting Services Act 1992 - Complaints about international broadcasting services 

 

Proposed new section 121FR provides that it is not a function of the ABA to monitor and investigate complaints concerning international broadcasting services.  However, if an international broadcasting service also falls into another category of broadcasting services, proposed new section 121FR does not prevent the ABA from performing its function of monitoring and investigating complaints about the service in the service's capacity as a service that falls into that other category.

 

Item 23 - Proposed amendment of section 204 of the Broadcasting Services Act 1992 (to add a table item before item dealing with refusal to include a code of practice in the Register)

 

Item 23 amends the table in section 204 of the Act so that an appeal to the Administrative Appeals Tribunal is available from a decision of the ABA that a company is an unsuitable applicant for an international broadcasting licence (under proposed new section 121FC) and a decision of the ABA to cancel an international broadcasting licence under proposed new section 121FK).

 

Item 24 - Proposed amendment of subsection 214(1) of the Broadcasting Services Act 1992

 

This item amends subsection 214(1) of the BSA so that subsection 214(1) contains a reference to subsections 121FG(2) and 121FH(3).  Section 214 provides for the procedure in relation to continuing offences under the BSA.  Proposed new subsections 121FG(2) and 121FH(3) provide that the offences in subsection 121FG(1) and 121FH(2) respectively are continuing offences.   

 

Item 25 - Proposed amendment of subclause 1(1) of Schedule 1 of the Broadcasting Services Act 1992

 

Item 25 amends subclause 1(1) of Schedule 1 of the Act to include international broadcasting licences in the list of broadcasting licences.  Schedule 1 is intended to provide a means of finding out who is in a position to exercise control of broadcasting licences, newspapers and companies and a means of tracing company interests.  Subclause 1(1) has been amended to include international broadcasting licences because under proposed new section 121FC, in deciding whether an applicant for an international broadcasting licence is an unsuitable applicant, the ABA is required to take into account the business record of each person who would be in the position to control an international broadcasting licence, and the record in situations requiring trust and candour of each person who would be in the position to control an international broadcasting licence. 

 

Item 26 - Proposed amendment of subclause 4(4) of Schedule 1 of the Broadcasting Services Act 1992 to amend the definition of media company

 

Item 26 amends the definition of media company in subclause 4(4) of Schedule 1 of the BSA so that the definition includes a company that holds an international broadcasting licence.

 



Radiocommunications Act 1992

 

Item 27 - Proposed amendment of section 5 of the Radiocommunications Act 1992 to insert a definition of international broadcasting licence

 

Item 27 inserts a definition of international broadcasting licence into section 5, the interpretation section of the RA.

 

Item 28 - Proposed amendment of section 5 of the Radiocommunications Act 1992 to insert a definition of international broadcasting service

 

Item 28 inserts a definition of international broadcasting service into section 5, the interpretation section of the RA.

 

Item 29 - Proposed amendment of section 100 of the Radiocommunications Act 1992 to insert a new subsection 100(3B)

 

Item 29 inserts proposed new subsection 100(3B) into the RA.

 

Proposed new subsection 100(3B) provides that the ACA must not issue a transmitter licence authorising operation of a radiocommunications transmitter for transmitting an international broadcasting service unless there is in force an international broadcasting licence that authorises provision of that service.

 

Proposed new subsection 100(3B) ensures that a person who wishes to provide an international broadcasting service obtains an international broadcasting licence to authorise provision of the international broadcasting service before they obtain a transmitter licence which authorises the use of a transmitter to transmit the international broadcasting service.  This is intended to ensure that the national interest assessment which must take place before the ABA may allocate an international broadcasting licence to a person has been completed before the ACA is required to consider an application for a transmitter licence to authorise use of a transmitter to transmit an international broadcasting service. 

 

Item 30 - Proposed amendment of subsection 108(2) of the Radiocommunications Act 1992 to insert a new paragraph 108(2)(da)

 

Item 30 inserts a proposed new paragraph 108(2)(da) into the RA that provides that it is a condition of a transmitter licence that the licensee and any person authorised by the licensee under section 114 of the RA, must not operate, or permit operation of, a transmitter for transmitting an international broadcasting service unless there is in force an international broadcasting licence authorising provision of that service.

 

Breach of the licence condition in proposed new 108(2)(da) is an offence under section 113 of the RA, and is a ground for the ACA to suspend or cancel a licence under Division 6 of Part 3.3 of the RA.  Including the proposed new condition in the RA is intended to discourage the holder of a transmitter licence from transmitting an international broadcasting service in relation to which there is not in force an international broadcasting licence.

 

Item 31 - Proposed amendment of paragraph 118(1)(d) of the Radiocommunications Act 1992

 

Item 31 amends paragraph 118(1)(d) of the RA so that, among the things that a licensee must notify a person authorised to use a transmitter under a transmitter licence, is a notice under proposed new subsection 128B(1) cancelling the licence.

 

Item 32 - Proposed amendment of the Radiocommunications Act 1992 to insert a new heading before section 125

 

Item 32 inserts a new heading "Subdivision A - General Provisions" into Division 6 of Part 3.3 of the RA.  This is necessary because item 34 adds a new Subdivision B at the end of Division 6 of Part 3.3, and the current Division 6 will become Subdivision A. 

 

  Item 33 - Proposed amendment of section 125 of the Radiocommunications Act 1992

 

Item 33 amends section 125 so that all references to "this Division" are references to "this Subdivision".

 

Item 34 - Proposed amendment of the Radiocommunications Act 1992 to insert a new Subdivision at the end of Division 6 of Part 3.3

 

Item 34 adds a new Subdivision B to Division 6 of Part 3.3 which contains the special cancellation rules that apply only in relation to transmitter licences used for the transmission of international broadcasting services.

 

Proposed new section 128A provides that Subdivision B applies to a transmitter licence if the licence authorises the operation of a radiocommunications transmitter for transmitting one or more international broadcasting services, and each international broadcasting licence that authorised the provision of those international broadcasting services has been surrendered or cancelled.  Under the proposed amendments to the BSA in this Bill, the ABA is required to notify the ACA if an international broadcasting licence is surrendered or cancelled. 

 

Proposed new section 128B provides that the ACA must, by written notice to the holder of the transmitter licence, cancel the licence and that the notice must give the reasons for cancelling the licence.   In this case, the reasons for cancelling the licence will be that the ACA has been advised by the ABA that the international broadcasting licence in relation to the international broadcasting service has been surrendered or cancelled.

 

If a transmitter licence that authorises use of a transmitter for transmitting an international broadcasting service also authorises use of a transmitter for another purpose, and that transmitter licence is cancelled by the ACA under proposed new section 128B of the RA, it is intended that the ACA will issue a new transmitter licence in relation to that other purpose.

 

Item 35 - Proposed amendment of paragraph 148(c) of the Radiocommunications Act 1992

 

Item 35 amends paragraph 148(c) so that reference to cancellation of a licence under proposed new 128B is included in the paragraph.   Section 148 of the RA requires the ACA to update the Register of Radiocommunications Licences which the ACA is required to establish and keep under section 143 of the RA.

 

Part 2 - Transitional Provisions

 

Item 36 - Transitional - existing providers of international broadcasting services

 

Item 36 is a transitional provision which will be of relevance to persons who are providing international broadcasting services when the scheme for regulating international broadcasting commences.

 

Subclause (1) of this item provides that the prohibition on providing an international broadcasting service in proposed new sections 121FG and 121FH of the BSA, and the licence condition in proposed new paragraph 108(2)(da) of the RA, do not apply until:

(a)     if the person does not apply for an international broadcasting service within 30 days of the commencement of this item - the end of 30 days after the item commences;

(b)    if the person applies for an international broadcasting licence for the service within 30 days but the licence is not allocated to the person, the time when the person receives notification from the ABA that the licence is refused because the person is not a company or a suitable applicant, or because the Minister for Foreign Affairs is of the opinion that the proposed international broadcasting service is likely to be contrary to the national interest;

(c)     if the person applies for an international broadcasting licence and the licence is allocated to the person - the time when the licence is allocated.

 

Item 36 is intended to ensure that a person who is already providing an international broadcasting service when proposed new Part 8B commences is given adequate time to apply for an international broadcasting licence, during which time the offences of providing an international broadcasting service without a licence, or failing to comply with an ABA direction to cease providing an unlicensed international broadcasting service, do not apply to them.

 

Subclause (2) of item 36 provides that if a person was providing an international broadcasting service before the commencement of item 36, proposed new sections 121FB and 121FD of the BSA, which refer to proposed international broadcasting services, have effect as if the service was a proposed service.