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Administration MBE 148/45 Glenferrie Road Malvern, Vic 3144 Phone: 03 9507 2315 Fax: 03 9507 2316 Email

: Website: ABN 85 070 619 608 Executive Director Tel: +61 (0)2 9251 3816 Fax: +61 (0)2 9251 3817 Email: Music. Play for Life campaign Tel: 02) 4454 3887 or 0439 022 257 Email: Website: Australia’s representative to the International Music Council

Music Council of Australia

The Music Council of Australia appreciates the opportunity to comment on the Digital Dividend Green Paper released by the Department of Broadband, Communications and the Digital Economy. Executive Summary The Music Council agrees with the Minister who, in his foreword to the Green Paper, says that while “[s]pectrum is valuable to potential purchasers … of far greater benefit are the opportunities it can offer to all Australians by providing new services for individuals and businesses”. The Music Council welcomes the Minister’s commitment that: … there is no ‘either/or’ approach in terms of free-to-air digital television and the digital dividend. The Government is committed to ensuring that the high quality free-to-air digital services that Australians enjoy will continue to be provided. The transition from analogue to digital offers a once-in-a-generation opportunity, an opportunity that must be seized for the benefit of all Australians. It is not the intention of, nor within the expertise of, the Music Council to comment on how spectrum might best be stacked to maximize the digital dividend. The Music Council accepts that it is technically possible to achieve the target digital dividend of 126 MHz. Rather, in this submission, the Music Council focuses on the outcomes that might be achieved with this amount of spectrum becoming available. The Music Council considers that the proposed spectrum stacking should accommodate capacity for the following: • • • • • three public free-to-air national broadcasters, with multi-channel capacity, namely the ABC, SBS and NITV; four free-to-air national commercial broadcasters with multi-channel capacity – allowing for the continued existence of the incumbents and the possibility of a new entrant to drive competition, diversity and audience choice the continued viability of community broadcasting – television and radio – following analogue switch-off the needs of digital radio services in regional Australia allocation of spectrum for the adequate provision of government services including defence services, national security, law enforcement, emergency services, public and community services, health services and education accommodation of class-licensed uses for wireless audio devices including radio microphones and guitar and keyboard transmitters reservation of sufficient spectrum for future uses and technological applications either not used or not known at present

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As is the case today, and consistent with long-standing bipartisan recognition of the benefits that accrue from access to spectrum for commercial uses, access to digital spectrum must continue to be regulated in a manner consistent with the national interest by way of must carry rules and local content obligations. Further, there should be no distinction made between television and television-like services – regardless of delivery platform, local content and classification regulation and must carry rules should apply equally. The Music Council does not agree that the commercial free-to-air broadcasters are currently in terminal decline. Rather, they currently remain profitable enterprises. However, the Music Council does recognize the possibility that, in coming years in a dramatically changed environment, it is possible that the financial models now underpinning free-to-air commercial broadcasting might not be able to sustain current levels of Australian content. With that possibility in mind, the Music Council believes that the financial dividend that will accrue to government with the auctioning of spectrum licences could be invested in a manner that might be utilised at some point in the future to offset some of the costs associated with the production of local content if required. Broadcasting landscape in 2010 Although originally designed for switch-off in 2007, the Government is now giving effect to a transition timetable that will allow analogue switch-off in 2013, starting in regional areas with the Mildura and the Sunraysia region switching to digital-only television on 30 June 2010. The media landscape is changing rapidly and will continue to do so, especially given that the national broadband network will facilitate the distribution of IPTV and other television-like services. The national broadband network will provide fibre to the premise and be augmented by next generation wireless and satellite technologies to deliver high speed broadband services. The NBN Co Limited will be established to build and operate “a wholesale-only company offering open and equivalent access” to a national broadband network. Exposure drafts of the legislation establishing the regulatory framework within which the company will operate were released this week for public comment1. The Department of Broadcasting, Communications and the Digital Economy is currently reviewing multichannelling. A discussion paper, Content and access: The future of program standards and captioning requirements on digital television multi-channels was released by the Department in December 2009. In its submission to that inquiry, the Music Council argued that fifty years of broadcast history in Australia has consistently demonstrated that, in the absence of content regulation, the market place will not deliver levels of Australian content consistent with the Government’s social and cultural objectives. Consequently, the Music Council argued that content regulation be applied in a multi-channel environment to the maximum level possible given the constraints imposed on its capacity to do so by the concessions made in the Australia United States Free Trade Agreement. While much has been said in the media about the fracturing of the advertising market, it is unarguable that free-to-air commercial broadcasting in Australia remains at present highly profitable2, including by reference to their international peers. Further, last year the Australian Communications and Media Authority reviewed the Commercial Television Industry Code of Practice with Free TV Australia. The result was changes that came into effect on 1 January this year that will enable the networks to boost their advertising revenue, giving them “the ability to raise hundreds of millions of dollars a year in extra ad revenue … (which) … could eventually generate an extra 510% of revenue a year. The networks have had a big win, especially on the extra ads for their new digital channels which will develop into low-cost gold mines.”3

Draft Legislation Released for NBN Co Operations, Joint Media Release The Hon Lindsay Tanner MP, Minister for Finance and Deregulation and Senator the Hon Stephen Conroy, Minister for Broadband, Communications and the Digital Economy, 24 February 2010, see online at

Broadcast profit margin before tax of Australian commercial television stations, 1957/58–2005/06, Screen Australia, see online at 3 New code will have TV networks rolling in the dough, Glenn Dyer, in Crikey, 21 December 2009

Next year the Government will conduct a statutory review of whether one or more additional free-to-air commercial broadcasting licences should be allocated and, before 2013, will consider long term arrangements for community television broadcasters. While recognizing that the Green Paper “is not intended to review whether or not particular types of services should or should not be allowed or supported” including whether or not a fourth terrestrial commercial licence should be allocated, it is difficult to address the issues raised in the absence of such considerations. The Digital Dividend Within this complex landscape, the Music Council considers the Government’s priority must be maximizing the digital dividend, ensuring that those entities that will stand to benefit commercially from access to spectrum are required to acquit the social and cultural obligations that have long been held to arise as a result of such access. The switching off of the analogue signal will allow Australia to build a comprehensive broadcasting framework comprising commercial, public and community broadcasting in a media landscape that will, if appropriately designed, foster greater competition, enhanced diversity and viewer choice. Australia already has in place a broadcasting system that allows for a mix of public, commercial and community broadcasters. There are, however, problems which can be resolved with the switch-off of analogue. Australia has two national free-to-air public broadcasters – the ABC with its remit to provide a comprehensive service and the SBS with its somewhat more tightly focused remit requiring it to deliver services with a focus on offering services for those Australians whose first language is not English. The third and newest public broadcaster, NITV, is available free-to-air to very few Australians. Whilst, for instance, it is currently being trialled digitally free-to-air in Sydney on Channel 40, for most Australians access is only possible through subscription television services. Switching off analogue allows the opportunity to allocate spectrum to enable NITV to take its place as a genuine free-to-air national public broadcaster. In November 2009 the Government announced it would temporarily allocate one of the two vacant channels – Channels A and B, both originally envisaged as being available only for datacasting and mobile television services – to community broadcasters in Sydney, Melbourne, Brisbane and Adelaide to simulcast until the full switch to digital in capital cities in 2013 with the community licensee in Perth commencing digital only broadcasts early this year. However, as set out in the Green Paper, “Under this arrangement the allocated spectrum is still potentially available for inclusion in the digital dividend after 2013. However, the Government has indicated it will consider longer term arrangement for Community TV prior to the completion of digital switchover in 2013”. The Music Council considers that part of the digital dividend must be spectrum allocation that accommodates the long term viability of community broadcasting across Australia. Whilst noting that consideration of the allocation of a fourth commercial free-to-air licence is not part of the terms of reference for this review, it will none-the-less be necessary to ensure that the spectrum is available in the event a decision is taken following the 2011 review that it is in the national interest, in the interests of diversity, competition and programming choice, to do so – an outcome that the Music Council would support. As has been argued in many arenas over the past decade, a competitive broadcasting industry must countenance the entry of new players. The previous government afforded the incumbent networks protection from further competition in recognition of the costs associated with simulcasting and the costs of migrating to digital. However, the protections and incentives that have been offered to the incumbent networks over the past ten years, including the most recent licence fee rebate, must by now have provided them with the best possible basis on which to compete effectively with a new entrant. In any event, without debating the timing for the entry of a new player/s, the need to allocate spectrum must be ensured in the planning for the spectrum restacking if Australia is to reap the maximum benefit from the digital dividend and keep open the possibility of enhanced competition in the broadcasting sector.

The Music Council understands that the digital dividend relates to UHF, rather than VHF, spectrum and that digital radio has commenced in capital cities using VHF spectrum. However, given that decisions regarding the rollout of digital radio in regional Australia have yet to be made, the needs of digital radio will need to be considered, especially in light of the effect it might have on restacking of UHF spectrum. Clearly, the needs of regional Australia cannot be compromised during the planning for the digital dividend. Further, the Music Council considers that, consistent with the Government’s cultural objectives, local content requirements should apply to all commercial digital radio services. Currently, Commercial Radio Australia is proposing that Code 4 of the Commercial Radio Industry Code of Practice be amended to exempt all “digital only commercial radio services” from any local content obligations. This is clearly at odds with the Government’s cultural objectives, demonstrates scant respect for the importance of local content by Commercial Radio Australia, is inconsistent with the government’s purpose in signing the UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions and highlights the need for codes of practice such as Commercial Radio Industry Code of Practice to be subject to greater oversight by the Australian Communications and Media Authority. Content quotas for commercial radio stations must be central to any digital dividend designed to be in the national interest. The Music Council notes that the Green Paper expressed the view that “Demand for spectrum for Government uses is expected to remain steady if not increase in the future.” Any consideration of spectrum stacking to maximize access to spectrum axiomatically must accommodate government needs including its current and future requirements in respect of defence services, national security, law enforcement, emergency services, public and community services, health services and education. The Music Council is not equipped to contribute to a discussion regarding how much spectrum will be required by such services, other than to observe that future as well as current capacity will need to be considered. The Music Council welcomes the references to class-licensed uses. While often given scant regard in discussions of spectrum allocation, access for biomedical telemetry and underground communications transmitters is clearly essential. However, just as important for the live performance and concert industries is access to spectrum for radio microphones, guitar and keyboard transmitters, and the like. Spectrum access for radio mikes is also important for the film and broadcasting industries. In addition to the impact this will have in the professional sector, it will also affect both educational institutions and amateur performing arts companies. Other than noting its importance, however, the Music Council does not have the technical engineering expertise to provide comment on how much access will be required in a restacked spectrum environment. However, the Music Council is aware of the financial burden that will accrue as a result of the need to decommission existing equipment and acquire new equipment appropriate to new and as yet undetermined frequencies. Given the financial dividend that will accrue to the government from the auctioning of digital spectrum licences, the Music Council considers that the financial impost that will fall to those organisations using equipment under Low Interference Portable Devices licence arrangements needs to be accommodated by Government. In respect of spectrum restacking, the Music Council considers capacity must be reserved for uses not yet developed and technologies not yet invented. Some future-proofing needs to be accommodated within the digital dividend. Content regulation and must carry rules In the new media environment in which Australia will find itself in 2013, if Australian content is to remain central in the broadcasting landscape, it is important that the Government sets a framework in which obligations in this regard are not confined to the free-to-air commercial television networks’ primary channels. Otherwise, Australian content will become increasingly marginalized. As noted above, the Music Council considers local content regulation on the free-to-air commercial multichannels should be introduced to the extent possible within the terms of Australia United States Free Trade Agreement. However, to do no more than this would create an unequal playing field. It would place the free-to-air commercial broadcasters in a difficult position competing with IPTV and the television-like services that will be carried on the national broadband network and the television-like services that will increasingly be delivered by mobile telephony.

The Music Council believes the Determination made by the then Minister for Communications, Information Technology and the Arts in 2000 that television-like services delivered over IP networks are not captured by provisions covering broadcasting services, meaning content and classification regulations cannot be imposed, was a flawed determination and one that did not adequately grasp changes in delivery platforms. It is certainly not a distinction likely to be apparent to audiences. Consequently, the Music Council considers this Decision should be rescinded and content and classification regulations be imposed on television-like services that will be delivered via IPTV or distributed via the national broadband network. Indeed, content and classification regulation, together with must carry provisions, should apply to all radio, television and television-like services regardless of the delivery platform. Thank you again for the opportunity to make this submission. We would be pleased to answer your questions or offer clarifications or elaborations of any of our proposals. Yours sincerely Dr Richard Letts AM Executive Director