The Australian Government has committed to move towards 'platform neutral' media regulation that will cover both traditional and online delivery of media content to Australians. In November 2020, the Government issued its Media Reform Green Paper: Modernising Television Regulation in Australia (the Green Paper).

The Green Paper recognises that the traditional media providers are facing unprecedented challenges. While platforms like Facebook and Netflix are not subject to the same regulation as free-to-air and subscription TV providers, they are all competing for the same audiences and, often, the same revenue.

Against this background, the Paper sets out a potential plan for significant, and quite novel, reform as the basis for consultation with stakeholders. Its key aims are to:

• harmonise Australian content obligations between free-to-air television and internet based content providers; and
• support the free-to-air television sector by offering them a lower cost model using less radiofrequency spectrum.

Achieving these reforms, particularly by creating a 'digital dividend' would, in turn, secure a new funding source for Australian news and audio-visual content as well as supporting the ongoing delivery of this content across different platforms.

Harmonising Australian content obligations

The popularity of streaming-video-on-demand (SVOD) services such as Netflix and Disney+, as well as advertising-video-on-demand (AVOD) services such as Facebook and YouTube, has grown enormously in Australia. Despite this, unlike commercial free-to-air and subscription television broadcasters, they are not obliged to make local screen content available on their services. Consequently, they make relatively modest levels of Australian content available as a proportion of their overall catalogues. According to the Green Paper, where local Australian content is made available, it is largely older content with little newly commissioned content.

This is not the case in some international jurisdictions. For example, SVODs operating in the EU are currently required to devote 30% of their catalogue to European produced content. Similarly, France requires that the SVODs spend 16% of revenue earned in France on locally commissioned content whilst Germany requires Netflix and Amazon to invest in the German Federal Film Board.

To address the lack harmony between the content requirements of offline and online providers, the Australian Government proposes amending the Broadcasting Services Act 1992 (Cth) (BSA) to place Australian content investment obligations upon large SVODs and AVODs. The amendments would:

set out the percentage of Australian revenue that SVODs and AVODs will be expected to invest in Australian content, in the form of commissions, co-productions and acquisitions (with 5% being an indicative level); and

require that SVOD and AVODs report to the Australian Communication and Media Authority (ACMA) each year regarding performance against those expectations.

According to the Green Paper, the details of the minimum investment obligation would be informed by the consultation process together with reporting to the ACMA by the SVODs on their current levels of investment in Australian content which (as announced earlier this year) they will be required to do as of 1 January 2021.

The Green Paper seeks discussion in relation to all aspects of such a proposal including which types of internet-based content providers should be subject to the obligations, whether a proposed revenue threshold test of $100m is reasonable, whether a rate of expenditure of 5% of Australian revenue is reasonable, and how else the content obligation could be structured.

A new class of television broadcasting licence

The Green Paper proposes a new broadcasting licence and model.

It acknowledges that the BSA is outdated because, of course, it was drafted at a time when free-to-air was the dominant platform, and neither the internet nor the delivery of audio-visual content online were being contemplated. That is, the existing regulatory framework is designed to seek key policy outcomes solely from that part of the media industry that is now facing intense financial pressure i.e. the free-to-air and subscription TV services. 

To this end, the Paper proposed reducing the regulatory burden and expense on commercial free-to-air television licensees by offering them a one-time new commercial broadcasting licence ('new licence') without a commercial broadcasting tax; BUT on the condition that the licensee move to a model that involves the use of shared multiplexes. As explained further below, a 'multiplex' is a device that allows multiple digital (or analog) signals to be combined into one signal over a shared medium. Currently, the commercial television broadcasters do not share them.

Under a 'new licence' commercial broadcasters would still to be required to meet the Australian content requirements on their primary channels (being that 55% of content broadcast between 6pm and midnight be Australian produced) but they would have no such requirement on their multi-channels. 

For the reform to be viable, at least two commercial broadcasting licence holders would need to transition to 'new licences'. Once two licence holders have elected to transition, the Government would then:

• require the ABC and SBS to also move to a shared multiplex arrangement; and
• take steps to establish certain support mechanisms for the Australian news and content industries.

Although a complex and multi-staged process, the Government sees significant potential benefits in the proposal. As explained below, the sharing of 'multiplexes' by broadcasters would mean the broadcasters would use less spectrum and be exempt from broadcasting tax (which historically has been to cover the cost of spectrum). In turn, this would enable the surplus spectrum to be reallocated to other uses, such as wireless broadband.

The Green Paper seeks discussion in relation to all aspects of this proposal including whether the benefit on offer would be enough to induce commercial broadcasters to take it up, and what else would assist broadcasters in transitioning to a new, hopefully more sustainable model.

The benefit of sharing multiplexes

One of the Green Paper’s key themes is that a transition to new multiplex arrangements for free-to-air television networks presents an opportunity to realise a ‘digital dividend’ by freeing up spectrum and selling that spectrum.

In this context, the 'spectrum' is a continuous range of electromagnetic radiation waves that, at certain bandwidths, can be used for television and radio broadcasts. It can also be used for mobile communications. Importantly, spectrum is a finite and very valuable resource. As mentioned above, in very simple terms, a 'multiplex' is a device that allows multiple digital (or analog) signals to be combined into one signal over a shared medium. When it comes to digital television this allows several video and audio channels to be combined and sent together.

Currently in Australia each of the five free-to-air television services operating in any given area use their own dedicated multiplex to broadcast their channels. And each multiplex uses a significant amount of spectrum.

The Green Paper proposes that broadcasters who opt for a 'new licence' would "consolidate their services onto shared multiplexes, which would reduce the overall amount of spectrum required for television broadcasting". This would yield surplus broadcasting spectrum that would then be able to be sold or auctioned for other uses, such as for mobile broadband.

Australian is not alone in seeking to pursue a 'digital dividend' in this way. As set out in the Green Paper there is international precedent. In 2017 in the United States, 70 MHz (out of 84MHz) of spectrum was freed up from use by broadcasters and allocated for use by 5G mobile networks. And, similarly, in 2019 Canada auctioned 70 MHz (out of 84 MHz) of spectrum for 5G mobile users.

This would be Australia’s second digital dividend, the first being when television switched from analog to digital transmission in 2013, and the surplus spectrum was sold for over $1.9 billion. Read more about Australia’s first digital spectrum auction.

The Green Paper invites submissions in relation to all aspects of this proposal.

Using the 'digital dividend' to support broader media policy

If the first digital auction is anything to go by, the sale of spectrum could generate significant proceeds. This being the case, the Government proposes to make a portion of the proceeds available to support a stronger media sector. Although the Green Paper does not indicate what portion the Government has in mind this will, no doubt, become clearer as the consultation process takes place.

The Green Paper does, however, set out two ways in which the Government could use a portion of the dividend to support the media sectors. These include, firstly, establishing the Create Australian Screen Trust (CAST) and, secondly, the Public Interest News Gathering (PING) Trust

CAST

CAST would fund the creation and distribution of Australian content, giving additional support to the production sector.

CAST would be administered by Screen Australia, with recommendations for allocation of funding to be made to the Board of Screen Australia by the trustees of CAST, which would include people across the finance, business, distribution, content development, sales and acquisition sections.

It would have two funding pools.

• The first pool would be used to support projects of cultural significance; and
• The second pool would be used to focus on making commercial investments. That is, investments where there is a prospect of commercial return.

The PING Trust

The PING Trust would be to provide a capital fund that could be drawn down over time for grant funding to support the provision of newspaper, radio, television and online news services in regional Australia.

It is proposed that the PING Trust could be administered by a dedicated PING trustee (which would be an incorporated entity) with a board, including people with relevant industry and subject matter experience. Whist the remit of the Trust would be to make direct financing and equity investments, the Trust would have no capacity to control the editorial content.

The Green Paper seeks submissions in relation to all aspects of this proposal including whether there are examples of providing sustainable and targeted support in other jurisdictions.

Enhancing the role of the ABC and SBS

Finally, the Green Paper acknowledge that the ABC and SBS play a significant role in commissioning and broadcasting Australian content, yet they are not explicitly required to do so - nor are they required to broadcast any particular level or type of Australian content.

Currently, the ABC's charter requires it to broadcast programs that contribute to a sense of national identity, inform and entertain, and reflect the cultural diversity of the Australian community. But there is no local content quota as such that applies to the ABC.

As such, the Government proposes to amend the current legislation to establish an express requirement for the ABC and SBS to broadcast new Australian programming, in line with the obligations imposed (or proposed) for other sectors of the Australian media industry.

The Green Paper seeks submissions in relation to all aspects of this proposal including whether the current amount of local content produced and commissioned by the ABC and SBS is appropriate, and how a content obligation in relation to the ABC and SBS could be structured.

Next steps

The implementation of these reforms would be complex and completed in stages. To proceed, it will be necessary for:

• There to be sufficient support in response to the Green Paper and consultation process;
• Legislation to be drafted and pass the Parliament; and
• At least two commercial broadcaster licence holders to elect to transition to a new licence.

It is expected that the reforms would take place over a number of years, with the investment obligations on SVODs not being brought in until 2022/23 and the spectrum auctions to take place sometime in 2025.

The Government now seeks views from all broadcasters, stakeholders and interested parties.

The Government is not, however, seeking views exclusively in relation to the proposals in the Green Paper. The Green Paper but also invites other proposals that would contribute to the 'objective of a sustainable Australian broadcast sector.'

Submissions were to be received by the Department of Infrastructure, Transport, Regional Development and Communications by 5.00 PM AEST Sunday 7 March 2021.

Contact us for further information or assistance in making submissions.