Opening the ABA’s Canberra conference, Communications Minister Richard Alston outlined his priorities for the year ahead as far as the Communications portfolio is concerned.

He believes that “many of the other issues that occupied our attention a year ago are similarly still occupying our attention in May 2003, though not always in precisely the same shape or form.” Those issues are:

· Digital broadcasting television and, increasingly, digital radio;

· Pay TV-particularly in the wake of the Foxtel/Optus content-sharing agreement;

· The future of spectrum management;

· Online regulation-including the complex issue of interactive gambling, and

· Free-to-air issues, including the CTVA code review and the carriage of local content.

On the major issues Alston said:

Media ownership reform

“To put it bluntly, Australia’s media-ownership regulations belong in the 1980s.

Australians in 2003 can get their news and information from a wider range of sources than ever before, and in an ever-increasing variety of formats.

One in two households is connected to the Internet. Almost one quarter of households have pay TV. Digital television is a reality. There are more community broadcast licences than ever.

And yet we have an ownership regime designed for an age when our media choices consisted largely of newspapers, radio and television.

Faced with similar realities, both the UK and the US are reviewing their own cross-media restrictions.

The UK has established a minimum three-voices test for commercial TV. The US is expected to release details of its reforms shortly with current restrictions expected to be substantially relaxed.

In Australia, the Bill before the Parliament repeals media-specific limitations on foreign ownership and introduces a system of exemptions to the cross-media rules, subject to safeguards for editorial separation and the provision of local news in regional areas-and I think the good work the ABA has undertaken has probably superseded the local news provisions in the Bill.

The Bill also requires commercial media entities to disclose a cross-media relationship in specified circumstances, and limits cross-ownership in regional areas to two of the three types of media (television, radio and newspapers).

The Foreign Acquisitions and Takeovers Act 1975 and Australia’s general foreign investment framework will still apply and some important limits on media consolidation will remain. All acquisitions will continue to be subject to scrutiny by the ACCC.

I have heard it said that the ACCC’s current view is that it would be likely to regard radio, television and newspaper markets as separate for the purposes of competition, and therefore all the competition effects of potential cross-media mergers will therefore not be properly examined unless laws are amended to impose a new definition of a media market.

We do not believe this to be the case. The ACCC already has the ability to examine different ‘markets’ when looking at a merger. This is exactly what it did when assessing the Foxtel / Optus content sharing arrangements, examining a range of markets, including those for pay TV content, 3G telephony, telecommunications and broadband content access.

In its submission to the Senate inquiry into the Government’s Bill, the ACCC argued that because of the changing nature of media markets, issues of definition needed to be looked at case by case. In other words, it’s a matter for the regulator to take into account issues of convergence, not for the Parliament.

I share that view. An artificially expanded definition of a media market may actually allow a degree of concentration that would be prevented under the current legislation, since the market used to test any lessening of competition would be larger.

We continue to negotiate with various parties in the Senate-those with open minds, which does not include the Labor Party.

Digital Television

Of all the emerging sources of news, information and entertainment, the one that has possibly the greatest potential to reshape our expectations of the mass media is digital television.

We are now in our third year of terrestrial digital television broadcasting and coverage is now available to 75 per cent of Australian homes. We are likely also to see the digitisation of our cable operators commence in the next year.

There is no denying that, as in the US, the early take-up of terrestrial digital television here has been modest. To February this year, industry estimates are that about 53,000 free-to-air digital set-top boxes have been sold nationwide-well up from the 35,000 STBs in the market at the end of 2002.

The level of take-up is consistent with trends for other new consumer technologies and it’s on the rise. Only 22,000 DVD players were sold in the first year the technology was available in Australia. Last year, almost 900,000 DVD players were sold. Mobile telephony also experienced a modest start-up followed by phenomenal expansion.

That is not to say that take-up of digital television will look after itself. DVDs and mobiles were eventually embraced because Australians were convinced that these products would improve their lives. If consumers are to embrace digital television they need a good reason to do so. The availability of a digital signal is a pre-requisite, not a reason.

Content is an important element, price of set-top boxes is another…

Ultimately though the task of encouraging consumers to part with their cash belongs to industry. The digital terrestrial platform is within reach of most households. And the analog networks, which already have a warm welcome in those households, are powerful vehicles for marketing the benefits of digital television. Despite threatening to do so for some months, the free-to-airs have not launched a major advertising campaign extolling the virtues of digital TV…

Digital Radio

Compared to digital TV which is in a state of relative infancy, digital radio is still in the gestation period.

However, a number of technologies exist with increasingly interesting possibilities. The United States favours IBOC technology, which delivers a digital signal alongside an existing analog signal thereby allowing broadcasters to retain their existing spectrum allocation and consumers to retain their receivers. The US Federal Communications Commission (FCC) likes this solution because no new spectrum allocation is involved, and in the US, even more so than here, spectrum is very precious. The FFC approved IBOC as the national standard for digital radio on 11 October last.

Eureka 147 is the system presently employed for terrestrial digital radio in the UK, Canada, Europe and parts of Asia. Advocates of Eureka 147 believe that with its higher data-carrying potential it greatly increases the potential for innovative new services to emerge. In the UK, for instance, Eureka has allowed the broadcasting of traffic information, local weather maps and song lyrics.

While there has been some testing of this technology already in Australia using L-Band spectrum, the Commercial Radio Australia trials will concentrate on VHF Band III. It may be that there is a place for Eureka technology in Australia using both bands. The results of the CRA trials and those already conducted in the L-Band will allow a comparison of the potential diversity and flexibility that Eureka 147 technology might be able to deliver.

Digital Radio Mondiale (DRM) is a European digital radio system which is designed to deliver very wide coverage using the high and medium frequency bands. It could be used in regional areas to deliver wide coverage services like Radio Australia. However DRM has considerable limitations in terms of the ancillary services it can provide.

Finally there are digital satellite solutions. In the USA there are now two companies, Sirius and X-M, delivering around 100 channels each of subscription digital radio to US motorists (principally) using hybrid satellite-terrestrial systems. However there is a strong view that Australia does not have the market to support such a model here.

I think it’s some years ago now that I first spoke to the commercial radio industry about the potential of digital radio broadcasting and I remain of the belief that digital radio has considerable potential for the consumer. However, it is also the case that around the world the business case for digital radio has been relatively slow to emerge. It is for these reasons that the ABA facilitated the use of spectrum for digital radio trials in Sydney by CRA.

We are keen to see the CRA trials in Sydney on behalf of both the commercial and national broadcasters make rapid progress and I understand that some leading CRA members are almost ready to begin transmission.

The more informed we are at the outset, the greater the prospect of making digital radio work-for Australian industry and equally importantly for Australian consumers.

To that end, I am pleased to announce today the formation of a Digital Radio Study Group involving DCITA, the ABA and the ACA.

This Study Group will analyse digital radio technologies and implementation around the world and assess their potential application here in Australia… It is important that we are as conversant as possible about the relative merits of alternative digital radio formats in order that we maximise the potential benefits to consumers and to industry.

We certainly hope that the initiation of this Study Group will act as a catalyst for industry and regulators towards realising the potential of this promising form of broadcast technology.

Pay television: Foxtel/Optus

Digital also looms as a big issue for pay TV in 2003.

Some pay TV operators already operate digital services via satellite. But digitisation of cable will greatly enhance the capacity of the network and allow for the introduction of interactive services and other forms of value-adding.

A significant aspect of last year’s Foxtel/Optus content-sharing agreement was the proposal by Foxtel and Optus to digitise the pay TV platform.

The increased service options and competitive dynamic from these developments are to be welcomed and I look forward with interest to seeing how Australians respond to the retail offering

As you’d be aware, the ACCC has been asked to provide advice on the wider competition implications of emerging industry structures in the pay TV sector. The Government will examine the advice with interest and will release it for independent comment as we consider any recommendations.

Content

Another big issue looming on the horizon relates to content, with the imminent receipt of the ABA review of Australian pay TV content requirements and the revised CTVA Code.

One area of content over which the regulators have decided to exert some influence recently is the provision of local news and information…

Regulation of online content is also looming larger as a public policy issue.

My Department is currently reviewing the regulation of online services. We start from the view that you never achieve 100 per cent success in any area, but if you can address mainstream concerns you’re a long way towards achieving success…

The Government is committed to taking a strong stand against spam by sending a clear message to spammers that spamming in Australia will not be tolerated and will be punished wherever possible. So we have effectively outlawed unsolicited email and will be doing out best to ensure that our actions address the spam problem.

Interactive Gambling

Interactive gambling is one area where this notion of responsibility comes to the fore. As you know, the Department is currently reviewing the Act and several issues came up in the course of the review.

As most of you know, online wagering is not prohibited by the IGA, except where wagers are accepted online after a sporting event has started. Some have argued that real-time, ‘ball by ball’ betting may not be the highly addictive pastime that we consider it to be and should be permitted.

Similarly online lotteries and the online sale of lottery tickets are not prohibited by the IGA. Should they be? Australian wagering and sportsbetting operators have also expressed concern about offshore wagering operations providing services to Australians.

Submissions to the review have now closed. I expect the Department to report to me in the near future.

Spectrum management (ABA/ACA merger)

Changes to communications technology over the past decade have had enormous implications right across communications policy-not least on policies concerning spectrum management…

Australia has two main spectrum management agencies-the Australian Communications Authority and the Australian Broadcasting Authority. Recently, some have questioned whether this separation is appropriate in a convergent world, where access to content is as important as access to a delivery platform – although I think there is some broad degree of scepticism in the community about whether convergence is proceeding as well as it should.

The Productivity Commission has argued that the regulation of content ought to be separated from the regulation of spectrum-in part to ensure spectrum is allocated efficiently, without reference to other policy considerations.

Others vigorously disagree. To date, no single approach seems to have found universal favour.

In the UK, a single agency known as OFCOM is drawing together five existing regulators.

In the United States, the Federal Communications Commission is technically a single agency but in practice employs a range of policy approaches across its many bureaux. The FCC is currently reviewing its approach to spectrum management.

The Department of Communications, Information Technology and the Arts released a discussion paper in August last year reviewing current institutional arrangements in Australia and flagging a possible merger between the ABA and the ACA.

We’re currently considering our response to this review, mindful of the need to come up with a solution that causes minimum disruption to the industry and to the existing planning and licensing timetable.