Media sector 'ripe for change': ACCC

The Australian media sector was ripe for change, Australian Competition and Consumer Commission Chairman, Mr Graeme Samuel, said today.*

There had been a lot of speculation about possible acquisitions in the media area if the current cross-media ownership restrictions were eased and more common ownership of newspapers, free-to-air television and radio was permitted, he said.

"In my view, much of this speculation misses the point", he said. "It's possible that the emphasis of potential media acquirers will shift from one end of the media spectrum – the means by which customers access their news (newspapers, radio stations, free-to-air TV, pay-TV, the internet), which may be using outdated technology or business plans – to control of the pipes that are increasingly being used to deliver media content, and control of the content itself.

"Relative to most industries, the Australian media is highly regulated. Protection of the free-to-air television networks is the cornerstone of this regulation, on the grounds that it ensures diversity in the services available to Australians at large.

"There is an outright prohibition on new entry into free-to-air television markets. Existing free-to-air broadcasters also have first rights of refusal over the most popular sporting content, with competition from pay-TV precluded by anti-siphoning legislation. Other potential competitors have spectrum available, but are defined as datacasters and subject to extensive limitations on the types of content they can offer.

"On the flip-side, there is a prohibition on free-to-air broadcasters using currently available technology and spectrum capacity to start multi-channelling; that is, offering additional channels and choices to consumers, either on a subscription or free-to-air basis. This lessens the competitive pressures faced by pay-TV providers.

"But these protective regulations are dependent not only on continuing government support, but on the maintenance of the existing top down structure of the Australian media, and it's now clear the environment is ripe for change".

Mr Samuel said that tomorrow's media providers would be the key driver of the next wave of competition to the current media players and the markets traditionally defined as 'media' would change.

"And the possibility is there for not one, but hundreds of new competitors to today's broadcasters", he said.

The pressure these new players would bring to bear on the market would provide the stimulus for higher quality, lower prices and greater diversity for consumers.

"But it poses challenges for policy-makers and regulators alike", he said.

Mr Samuel said the convergence of media and telecommunications meant that it was "absolutely crucial" that existing network owners not be allowed to use their market power to close down new forms of competition. This could happen through the rollout of new technologies and networks being impeded or through existing network owners obtaining exclusive control of content, such as sport, that could be offered on the new networks.

"There is a risk that the exclusive acquisition of such rights for new and emerging markets like DSL broadband and 3G mobiles will allow the rights-holders to shut out competition across a range of services delivered over these new networks. Ultimately, this could deprive consumers of choice and quality not only for broadcasting, but also voice, internet and innovative services such as video calls and determine the success or failure of a new competitor. I like to put it this way: if you can't control the arteries, what you do is get hold of the blood".

The ACCC would closely scrutinise the acquisition of exclusive rights to content to ensure that no carrier was able to create a major barrier to entry into infrastructure markets and that no broadcaster foreclosed competition in free-to-air services.

The upshot of all the technological changes was that in the future the media market may be defined by content, such as classified advertising, or even just employment advertising, rather than the medium used to convey the content, such as newspapers, radio or television.

"In other words, the ACCC won't simply be saying, 'one newspaper, one radio and one TV' doesn't amount to a substantial lessening of competition. In certain markets, that may no longer be the case".

"A substantial lessening of competition in any one market could raise implications under Section 50 [the substantive merger provision of the Trade Practices Act 1974] and be possible grounds for us to intervene".

Mr Samuel said that the Australian media environment was at a point in time where technological change and convergence could change the way consumers access news, information and entertainment.

"The question for regulators and government alike is do these technological developments result in:

• a consequent diminution in the importance and relevance of traditional modes for conveying information
• the need for a significant re-examination of the relevant markets affected by acquisitions in the media
• an answer to concerns that reduced regulation of the media will lead to diminishing diversity of news and information services
• the increasing irrelevance of existing regulations impacting on so many sectors of the media.

"In short, is the technology making many of our existing concerns about media regulation irrelevant? These are questions that will need to be addressed by policy makers and regulators as we face the inexorable impact of new technology on consumer demands and preferences.

"As I've made clear today, it is not the job of the ACCC to decide whether it is better for people to access their news and entertainment through the TV, or ADSL2+ or fibre or wireless or even through the mobile phone.

"But it is our job to ensure that existing players not be allowed to use their market power to close down new forms of competition, and that, as far as possible, it be left to consumers to decide what form this revolution takes and what services and content they wish to access".

*Mr Samuel was addressing the Melbourne Press Club's Journalism 2005 Conference in Melbourne.