Date created: 14/4/07
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John Quiggin

Public missing out, again

John Quiggin Australian Financial Review

16 March 2006

If we needed further evidence on the undesirability of a government having control of the Senate, the media policy announced by Communications Minister Helen Coonan is a perfect example. Although it takes the form of a discussion paper, there is little doubt that the main proposals will pass into law.

The policy is a cosy deal between the government and the media monopolies it has created through the grant of TV and radio licenses, and through the half-public, half-private chimera that is Telstra. The interests of the Australian public in diversity, choice and competition have been disregarded completely.

Such a deal could never have been pushed through an Opposition-controlled Senate. This is not because Labor is more devoted to consumer interests than Liberals. Rather, it is always in the interests of opposition parties to block a deal that is bound to secure favorable media treatment for the government. Standing up for consumers can only benefit them.

Looking at the proposal in detail, the big win for the industry is the removal of restrictions on cross-media ownership and on foreign ownership in general. Not surprisingly, there is an industry consensus in favour of these changes, which can only increase the value of existing media assets.

Another big win for the monopolists is the removal of the threat of a fourth free-to-air television network. Under the existing rules, the Australian Communications and Media Authority could have allowed such a network to commence in 2007. The government plans to take over this power, but not to exercise it. Consultations with the incumbents have revealed, unsurprisingly, that there is no need for any more competition in the free-to-air market.

The authoritarian plan to force consumers to abandon analog TV and video equipment, or pay for expensive converters, remains in force. It has long been evident that the planned date of 2008 could not possibly be met without inciting a mass revolt. But rather than rethink the issue, Senator Coonan has just deferred the problem until 2010 and promised a Digital Action Plan to enforce the change.

Such compulsion would not be needed if digital providers were allowed to offer services consumers actually want, instead of a bigger, brighter version of the status quo. The deferral of the phaseout has been accompanied by an extension of existing prohibitions on multichannelling, limitations on datacasting, requirements for high-definition TV broadcasting and so on.

It is dismaying to think about all the options that are being foreclosed here. We could have dozens of channels, limited only by the availability of content to fill them (a limitation that is becoming steadily less severe as the digital revolution reduces the costs of creating video). There are all sorts of possibilities for niche services, most of which will never see the light of day. Instead we are being offered the same half a dozen options we’ve had for more than a decade: three commercial free to air networks, two public broadcasters and Foxtel monopoly, with some grudging extensions for datacasting.

There is still time to change all this. Rather than continuing on the command-and-control path for another five to ten years, the government could announce that spectrum will progressively be freed from control and allocated to whatever use the market finds most valuable. The practice of giving spectrum away to favored monopolists should be replaced by an auction similar to that used for other parts to the telecommunications spectrum.

The decision as to when to cease analog broadcasts could be left to the commercial judgement of broadcasters themselves, while households could make up their own minds about whether to switch to digital, or stick with analog equipment and buy converters when the necessity arises.

The possibility is still open, but there is little hope that it will be realised. The government has come up with a deal that suits everyone that matters. The Packers, Murdochs and Trujillos will all be happy, and there are even some concessions to placate the ABC and SBS. It is only the public who miss out.

If this legislation had to pass a potentially hostile Senate, there would be some chance of beneficial amendments. As it is, and assuming there’s nothing here to cause Barnaby Joyce any difficulties, it will sail through the Parliament. We can look forward to waiting a decade or more before the whole system breaks down under its own weight and we finally realise some benefits from the digital broadcasting revolution.

John Quiggin is an ARC Federation Fellow in Economics and Political Science at the University of Queensland.

John Quiggin is an Australian Research Council Federation Fellow in Economics and Political Science at the University of Queensland.

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