Conroy shifts the media goal posts

Recommendations in Canberra's interim media convergence report could well spark a wave of merger activity, but they wouldn't lead to less regulation – only a shift of emphasis.

The potential for another outbreak of merger mania within the ‘old’ media is capturing most of the attention in responses to the interim report of the federal government’s convergence review. The more significant aspect of the report, however, lies in its recommendations that would extend regulation of content across the media landscape.

At the heart of the interim recommendations is a new structure for media regulation – the creation of a new "independent" regulator with as yet ill-defined but broad powers and discretion to make rules relating to industry structure and content.

Existing content licences tied to spectrum allocations would be abolished and a new, far broader and technology-neutral concept of "content service enterprises" would be created. Those "CSEs" would be defined by their scale and the nature of their content services. In effect, requirements like the local content quotas that free-to-air networks are currently subjected to would be extended across the spectrum of delivery technologies.

It is the recognition that in a digital and convergent environment regulation essentially based on the nature of the delivery platform is anachronistic that has led the review to recommend the radical shift away from platform-specific regulation to platform-neutral regulation, focused on content rather than the delivery channel.

That leads to the conclusion that the existing ownership rules, based on the notion of limited distribution channels and high barriers to entry, are equally anachronistic.

Hence the recommendations that the rules limiting ownership of television licences to an audience reach of 75 per cent of the population, or prohibiting ownership of more than two of the three forms of mass media in a market, or owning more than two radio licences or one TV licence in a licence area, should be abolished.

A public interest test, which would take into account diversity, would be introduced but diversity would be measured against the broader landscape of content providers created by the concept of the CSEs.

It is the abolition of most of the existing cross-media ownership rules that has led to the speculation that implementation of the interim recommendations would ignite merger activity among the traditional media, as it well might.

If content is the new focus for media competition policy, is there a need for a new regulator to police it? The Australian Competition and Consumer Commission would still regulate mergers and acquisitions and is already acutely aware that dominance of content could produce anti-competitive outcomes. If necessary it could, as it does for telecommunications, regulate a media-specific section of competition law which could include a public interest test.

The review’s focus, however, isn’t just on ownership or control but on content. It wants to extend the local content regime across all the CSEs, which would be obliged to either carry a minimum percentage of "specified" Australian content or contribute to a "converged content production fund."

The review accepts that there might be "challenges" in attempting to regulate overseas enterprises delivering content into the Australian market, but says the CSE concept will probably capture international brands and that there are legal and financial avenues as well as strong brand and market incentives to encourage those entities to comply with relevant Australian regulations. That’s hopeful.

In fact, the global reality of the internet will challenge the core philosophy of the review that content regulation can and should be extended from those who hold licences today to anyone of significance supplying content into this market. It would level the media playing field to a degree, but largely by handicapping the challengers with new obligations, imposts and intrusions.

There is a lot of detail that will be filled in between the interim report and its final version but it is clear that the fundamental question that was posed by Stephen Conroy’s establishment of the review is being answered.

If its recommendations were adopted, there would be some deregulation of ownership of the old media and a shift in the direction of regulation from platforms to content.

It wouldn’t, however, lead to less regulation per se, but rather different regulation, a broader catchment area for that regulation and bureaucratic intrusion into the nature of the content the sector generates.