Review of ABA and ACA

The Federal Government is exploring the possibility of creating a single regulator to cover radio and television and the Internet, which may spell changes for the Australian Broadcasting Authority and the Australian Communications Authority. A discussion paper has just been released by the Department of Communications to stimulate debate on possible reforms.

The ABA regulates the broadcasting services bands and has recently also been given responsibility for internet content, and the ACA manages spectrum. Both areas have been affected by changes in media and communications and are also in the spot light as part of wider thinking about media ownership and cross-media laws in this country. A review by the Productivity Commission will heavily influence the review process.

The ¡§Review of the Roles of the ABA and the ACA¡¨ will take into account the ¡§significant changes in the communications environment including: the inception of Pay TV; substantial growth in Internet take-up and the use of broadband; the introduction of digital television; and the development of other new services including the impending introduction of third generation mobile phones.¡¨

The review will focus on ¡§the most effective future arrangements for the management of broadcasting and telecommunications spectrum.¡¨ The discussion paper seeks comment on a number of options ranging from merging the ABA and the ACA, to retaining both bodies but merging a number of their functions.

The discussion paper canvasses three options:

1. Combine the ABA and ACA into a single organisation

2. Transfer of planning, licence allocation and enforcement functions from the ABA to the ACA

3. Transfer broadcasting planning functions from the ABA to the ACA

Key sections of the discussion paper include:

The current arrangements for spectrum management have been in place for nearly a decade, during which there have been significant developments in the communications environment:

digital technologies have facilitated convergence of communications services;

there has been substantial growth in the take-up of Internet services;

pay television has emerged as an important part of the broadcasting industry;

there has been a significant increase in the rollout of analog services, including commercial radio, SBS TV and ABC radio;

digital television has been introduced with the prospect of significant efficiencies in spectrum usage over time;

and the telecommunications sector has seen increased availability and take-up of broadband services, rapid growth in mobile phone take-up and the impending introduction of third generation mobile services.

The above changes, amongst others, have given rise to a significant increase in the demand for radiocommunications spectrum and, in some cases, calls for changes in spectrum management practices. In due course analog broadcasting spectrum will be returned to the Government for potential re-use. Clearly, such a process will need to result in efficient outcomes in an environment where demand for spectrum is likely to continue.

In view of the similar and sometimes complementary functions of the two organisations in relation to radiospectrum management there is reason to ask if there would be benefits from combining all or parts of the two organisations.

There is a range of ways in which the two organisations might be restructured: from the combination of the organisations to create a single authority to limited transfer of those functions where similar expertise is required, for example the technical planning of radiofrequency spectrum.

This paper is principally concerned with spectrum management issues relating to the ABA and ACA, rather than the other functions undertaken by either organisation. Any option would seek to minimise disruption to the industry and the existing planning and licensing timetable.

The Productivity Commission (PC), in its March 2000 Broadcasting Report, emphasised the need for efficient spectrum planning outcomes. The PC has argued that the charging approach used for commercial broadcasters is not efficient in relation to the allocation of spectrum as the fee is not directly linked to the amount or value of the spectrum used by the broadcaster. The PC recommended that:

„h responsibility for planning and licensing the Broadcasting Services Bands (BSB) should be transferred to the ACA and managed under the RA;

„h the ABA should retain responsibility for issuing licences to broadcasters, and for determining the number of non-commercial broadcasting licences in an area;

„h the ABA should also retain responsibility for regulating content, enforcing codes of practice and monitoring ownership;

„h licenses granting access to spectrum should be separated from content related licences that grant permission to broadcast;

„h spectrum for new broadcasters should be sold competitively, subject to ongoing licence fees. The level of ongoing fees should be adjusted to reflect significant changes in the value of spectrum; and

„h licence fees for existing commercial radio and television broadcasters should be converted to fees that reflect the opportunity cost of spectrum used. Revenue based licence fees for each service type (television, FM radio and AM radio) in each licence area should be converted to spectrum-based licence fees. These fees should be revenue neutral in the first year and set thereafter on a basis similar to fees for other spectrum.

The PC proposed this approach as part of a much broader series of recommendations for promoting competition in broadcasting.

In contemplating change to the planning and allocation of broadcasting spectrum, such as adoption of spectrum pricing, comment is sought on the following:

„h is there merit in moving to replace the current broadcasting licence fees with transmitter licence fees that reflect the amount of spectrum used?

„h how could spectrum be priced to maintain incentives to retain or improve existing coverage levels?

„h should there be stronger statutory imperatives on the regulator to optimise returns from the sale of broadcasting spectrum?

„h how would the value of existing broadcasting licences be determined if spectrum pricing for the associated transmitter licences was introduced?

how would any such imperatives be reconciled with the desirability of promoting a diverse range of broadcasting services for audiences throughout Australia?

Public submissions on the discussion paper are sought by Friday 6 September 2002 to:

Mr Gordon Neil, General Manager, Licensed Broadcasting

Department of Communications, Information Technology and the Arts

GPO Box 2154