in the public interest?

Contents

Executive summary
Introduction
Media and the public interest
The American experience
New Media
Contemplating the Australian reforms
Change: First indications
Conclusion lessons for Australia?
Appendix A
Appendix B
Appendix C
Appendix D
Endnotes

Introduction

The media

There are a number of assessments of the role the media play in society. Most acknowledge their importance in shaping the way people think and their influence on personal choices. Generally, it is agreed that the media play multiple roles in society. The most obvious of these are: Collection and dissemination of information; transmission of social and cultural values; education; and entertainment.

These roles in turn can involve a number of aspects, for example, the information function of the media can include the generation of political and social ideas and the shaping of policy agendas and priorities. In providing information the media can also be responsible for the inspiration and mobilization of political and social groups. Or the media s information role can involve an accountability aspect; they monitor and criticise governments, bureaucracies and social institutions.

I acknowledge the importance of the various roles of the media. However, this research brief deliberately emphasises their role in providing the public with an informed basis upon which views can be expressed and decisions made about political and social issues. That is, the brief seeks to discuss the media in the context of their role as the collectors and disseminators of information and not to consider the other roles of the media. The paper emphasises also that the role of information collection and dissemination is multi dimensional dissemination of information means therefore, not just providing information but providing a variety of information and views.

In short, the arguments in the paper have been presented from the perspective that the role of the media in civil society is not only to inform, but also to clarify and illuminate on the information provided. In this way the media act in the public interest.

In defining traditional media, this research brief also restricts discussion to mainstream media. It is not possible within the limitations of the brief to consider ethnic media in either the United States or Australia. It should be noted, however, that there are, for example, hundreds of ethnic newspapers in the United States and that these are published in over 40 languages. [1] Despite this, and while it appears that ethnic media in the United States is growing rapidly, there has been little attempt to date by large media companies to take over ownership of ethnic media outlets. [2]

In Australia, in the 2001 Census, over 3 million people identified themselves as speaking a language other than English. There are over 200 ethnic newspapers in languages ranging from Nepalese to Urdu, as well as a number of ethnic radio stations. The major media companies in Australia to date, have not shown interest in purchasing ethnic media. [3]

I am aware also that there is a community broadcasting sector in Australia that clearly can be defined as public broadcasting. [4] The sector also clearly provides diversity of opinion and alternative media outlets for non English speaking Australians. [5] Given the limitations of this research brief, I am unable to discuss this sector in depth. However, the arguments presented concerning the principal public broadcaster, the Australian Broadcasting Corporation, and the Special Broadcasting Service, apply similarly to the community broadcasting sector. These are principally that the sector needs to be appropriately funded and supported for it to function effectively.

United States

In America, the press has been afforded protection under the First Amendment to the American Constitution, in appreciation of the crucial role it plays in maintaining a free society . [6] Judicial interpretation in relation to programming also indicates special protection rights apply similarly to broadcasters as protectors of democratic values. [7]

United States media is most often perceived to be commercial media. While public broadcasting exists and commands a substantial audience, it is often not perceived as a central feature of the media landscape. [8] This is possibly because American broadcasting ideology has maintained that a free commercial press, unfettered by public restraint, will deliver a more progressive, socially responsible private enterprise. As one commentator remarks, the fundamental American belief has been that possible failures in a privately dominated media system could be corrected by appeals to private broadcasters conscience, gentle regulatory coercion and an ETV [Educational Television] service supported at minimal levels . [9]

For most of the twentieth century, it was generally accepted in the United States that some form of media ownership regulation of the commercial media was essential to serve the public interest. Ownership regulation was considered important because it ensured there were a number of media voices and that these voices delivered a plethora of opinion. Since the 1980s, this view has been challenged. The introduction of new media technologies and new types of media, which coincided in America with an ascendancy of thinking about freeing up the marketplace, resulted in moves towards a more deregulatory media environment.

Prior to the late 1970s, media ownership policy in the United States also relied on regulation created and applied under the auspices of a Federal Communications Commission (FCC). It aimed to achieve accountability through fostering diversity of opinion and opportunity for criticism of political and social mores. In the last thirty years, however, while the rhetoric of promoting democratic values has continued, media ownership policy under the FCC has increasingly moved from ownership regulation to embrace and encourage deregulatory action.

A number of ownership deregulatory measures have been introduced since the 1980s; the most radical of these was the Telecommunications Act 1996. This Act was initially well received as the changes it promised to telecommunications in five areas, including broadcasting, were promoted as potentially beneficial to all Americans. However, as noted throughout this research brief, some Americans have begun to wonder about the accuracy of the claims made about the Telecommunications Act. These were essentially that ownership deregulation would deliver an abundance of media types that would ensure an abundance of opinion would continue to be generated and promulgated to an abundance of people in a deregulated media environment. (See Appendix A for a discussion of the arguments in support of ownership deregulation).

There is evidence to suggest that despite realisation of the promised increase in media sources, ownership deregulation has at the same time reduced the range of media voices available. As such, some critics of ownership deregulation argue it has undermined free speech and homogenised opinion. (Appendix A considers the arguments against ownership deregulation in more depth).

The most recent proposals for media reform in America were launched amidst considerable grassroots public protest. Prior to the 2006 Congressional elections further ownership deregulatory moves were also stalled in the light of judicial decisions. In tandem with judicial questioning of ownership deregulation, crucial debates about the extent to which media ownership regulation protects the public interest have polarised and intensified. (For a more detailed background on the history of American media tradition and the moves towards deregulation see Appendix B).

Australia

The print media in Australia enjoy a similar freedom from government regulation as in the United States, although there is no constitutional protection. The broadcast media have been subject to regulation in both countries and broadcasting rules were introduced around the same time. Nevertheless, there have been a number of differences between both media environments.

Unlike America, in Australia a number of authorities have been responsible for regulation of the broadcasting sector. The Australian Communications and Media Authority is the latest of these. ACMA s responsibilities are listed as including the protection of consumers and other users and fostering an environment in which the electronic media respects community standards and responds to audience and user needs. [11]

Media regulation has been sporadic and inconsistent in the Australian context. This in part has contributed to a more concentrated media environment in Australia. Geography and population density have also been contributing factors in this concentration, as has the sometimes overt influence of major media owners.

The concept of the media as a vital tool to foster the public interest is also less frequently and passionately articulated in Australia than in America. It is possible this is because Australians are more confident that their version of public broadcasting, inherited principally from the United Kingdom, will provide the necessary diversity and media balance to serve the public interest.

Claims about the influence of major media owners on Australian governments, regardless of the political persuasion of those administrations, have been made frequently. Many Australian politicians have believed media barons can deliver electoral consequences and as such, media owners preferences have often been indulged in media policy-making. [12] One media observer claims, for example, that Prime Ministers Lyons, Menzies, Fraser, Hawke and Keating blatantly favoured major media proprietors in allocation of broadcasting licences. [13]

Limiting expenses has been an important factor in the Australian media environment. This has been a constant in a market geographically almost the size of America, but considerably smaller in terms of population.

Arguably, diversity of views in the Australian media has always been less than in the American press (and the press in many other democracies, such as the United Kingdom). This may be because of the small Australian market place or the fact that there is less political polarisation in Australia. It is likely, however, that diversity has always been a potential casualty of the same economic considerations which limited outlays and encouraged media concentration. As Trevor Barr notes, the Australian media are dominated by a commercial ideology which, while it reflects the institutional reality of economics, also inevitably restricts the range of diverse and antagonistic views the commercial media system can offer the public. [14]

Print media in Australia has been on the road to concentration since the 1920s. In 1926, there were 26 capital city newspapers published on a daily basis and 21 independent owners. In 2005, this had reduced to 12 newspapers predominantly owned by John Fairfax Holdings and News Corporation. [15]

Radio ownership was initially dominated by major print owners and while this is no longer the case, it continues to be concentrated in few hands. Four metropolitan companies own the majority of metropolitan stations and each has a radio audience reach of over 50 per cent; one company owns almost 45 per cent of all regional stations. [16]

Television is a similar story. Kerry Stokes Seven Network and the Ten Network (effectively controlled by the Canadian company Canwest, despite existing foreign ownership regulation see later comment) own the majority of stations in metropolitan areas. Win Corp and Prime Television own the majority of regional broadcasters. [17]

The concept of a public broadcaster as an essential feature on the media landscape represents a vital difference between Australia and America. The public broadcaster idea easily transferred to Australia from Britain early in the twentieth century and since then public broadcasting has been seen as a type of public service. From this perspective it has been defined as a cultural, moral and educative force for the improvement of knowledge, taste and manners . [19] At the same time, it has been seen as a unifying force in the creation of an informed and enlightened democracy , [20] just as the private media has been lauded as the guardian of American democracy. As such, it may be possible that the existence of a strongly supported and nurtured public broadcasting system could be a vital counter against any vagaries which may result from ownership deregulation, in a way not conceivable in the United States. The potential countervailing influence of an Australian public broadcaster culture is likely only to be influential in a deregulatory environment, however, if it is supported and nurtured to act for this purpose.

Donald McDonald notes that in the concentrated Australian media market, the Australian model of public broadcasting is unique. It is an amalgam of the British and American experiences and the software of effective democracy . [21] In McDonald s view, the principal public broadcaster, the Australian Broadcasting Corporation (ABC), therefore not only provides the public with news reports, but also with a variety of investigative and other fare not available from Australian commercial media.

Some have criticised the ABC as elitist and consider a public broadcaster unnecessary in an age where a certain proportion at least of the niche programs it broadcasts can be seen on pay television and where pay television has more channels to cater responsively to the needs of audiences. But niche programming is only part of the public broadcaster role. The further functions of that role include producing innovative programming that promotes a sense of national identity and cultural diversity and encourages an understanding of the world.

It appears the value of a public broadcaster in achieving these aims is recognised by the majority of Australians [22] and that they agree with the view that the ABC is the yardstick by which the commercials are kept honest . [23] In short, as Ken Inglis notes, for Australians, the ABC as a public broadcaster is a cherished and trusted institution. [24] (For more detail on Australian media traditions, attempts to address concentration and the media landscape prior to the 2006 media ownership reforms, see Appendix C).

Media and the public interest

One view of the media is that it simply delivers what interests the public; it is no different from other commodities in producing and delivering goods. [25] According to this view, news and entertainment that has broad, mainstream appeal, which attracts and retains advertisers and sells products is valuable. Everything else is narrow and highbrow , the prerogative of elites who seek to impose their preferences on unwilling citizens. In defending this view in an American context, Adam Thierer accuses past policymakers of promoting fairy tale rhetoric in attempting to direct the content or character of the media towards some obscure, non existent noble end what they label the public interest . According to Thierer, there is no such thing because in a democracy the public interest is indefinable. In a democracy there can only be numerous and changing interested publics. [26]

Definition of the public interest is a challenging task. This is because the term necessarily alters over time to reflect changes in society and because it involves at least a degree of subjectivity. The public interest can be related to ideas, like common advantage , common good , public good , public benefit or general will . For example, a common good can be defined as a factor or set of factors that direct a person s collaboration with others and likewise, that directs their collaboration with each other and with that person. Following from this perspective, public benefits or goods must be protected in the public interest and for the common good. [27] Another interpretation is that the public interest can also mean more generally what is considered beneficial to the public, that is, that the public interest does not mean what is of interest to the public but what is in the interest of the public . [28]

There is also the issue of to what extent the public interest is a moving feast . Despite rhetoric in America about how the media should serve the public interest, there has been some discussion about whether original interpretations of the public interest are actually in contrast to current thinking. It has been argued, for example, that invoking the public interest as a condition for the licensing of radio stations in America in the 1920s meant that authorities could ban, in the name of public interest, convenience and necessity , broadcasts of the so called subversive ideas of unions, socialists, communists, evolutionists, improper thinkers, non-Christians, and immigrants . [29]

With reference to the media and taking Thierer s conclusion as a starting point, however, and for the purposes of the arguments put forward in this research brief, it is possible to define what constitutes the public interest in certain terms. These relate to the capacity of the media to provide citizens with the information, education and quality entertainment they need to participate in political and social life to be interested citizens, or in Thierer s terminology, publics. It is possible to conclude from such a definition that, unlike other industries, the media is unique in this capability.

A continuous diet of Big Brother style entertainment, [30] or sensationalised news promoted in a homogenised and corporatised environment that discourages public dialogue and fails to expose people to new and /or different ideas, does not correspond with such a definition. In serving the public interest the media needs to:

This view of the media appears particularly to represent the ideas of a number of Americans, from varying political and social strata, who have rallied for a re evaluation of the direction media policy in the United States has taken since the 1980s.

While the same intensity in rhetoric about the public interest is not commonplace in Australia, public interest considerations have not been entirely missing in references to the media s role. A 1954 Royal Commission, which considered the introduction of television to Australia, for example, stressed that the medium should be entrusted to commercial and public broadcasters on the basis that it was to be used to benefit all members of society. [32]

On the other hand, a number of media critics argue the idea of a public interest has played no role in media policy making in Australia. In reflecting on the Hawke Labor Government s reshaping of the media industry in 1986, it is Julianne Schultz view, for example, that the public interest was not considered. According to Schultz, there was talk of takeovers, share price movements and accusations of deals for mates, but no discussion of why the ownership of the media is important in a liberal democracy. [33]

Regardless of the extent to which the public interest has been of concern in determining past media policy in Australia, it clearly has not been as dominant a concern as in America. It is possible that the confidence Australians place in a principal public broadcaster explains this situation. The Charter of the Australian prime public broadcaster, the ABC, has been clearly framed to reflect public interest criteria. The public broadcaster is required to provide an independent national broadcasting service which educates, informs and promotes awareness for Australians about national and international affairs. Its service is also to contribute to a sense of national identity and to reflect and enrich the cultural diversity of the Australian community. [34]

Australians appear comfortable with this role for public broadcasters. It appears they are also comfortable with a situation where public broadcasters are charged with acting responsibly and independently in protecting the public interest. [35] Such a situation relies on the assumption that a public broadcaster of this type will always be adequately resourced to discharge its responsibilities. [36]

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The American experience

Overview

On signing the Telecommunications Act in 1996, President Bill Clinton predicted an overhaul of media ownership regulation introduced under the Act would deliver lower prices for American consumers and better quality services and greater choices. At the same time it would ensure the benefits of a diversity of voices and viewpoints in radio, television and print media . [37]

The following table would suggest that the Act has not delivered these benefits.

Radio

Regulation of radio broadcasting from 1927 was beneficial to local American communities. It not only promoted competition between small local operators, but fostered a diversity of local viewpoints. [39] The Telecommunications Act immediately and dramatically changed this situation. By 2002, one out of every three previous owners had left the radio industry after sales saw more than 4400 stations bought and sold during 1996 and 1997 alone. [40] The industry went from one serviced by a myriad of independent radio broadcasters, to one controlled by radio giants , (as is illustrated by the example of Clear Channel Communications in Box 1).

The deregulated radio environment has been labelled as unresponsive to the needs and interests of local communities. [48] Other criticisms of radio ownership deregulation include the claims of one study that links an average 90 per cent increase in advertising rates between 1996 and 2002 to the decline in independent radio owners. [49] Programming decisions too are seen as increasingly affecting play time for local artists and there are allegations that broadcasting companies regularly ban particular songs for political reasons. [50]

Australian comparisons

In Australia, local content requirements will apply to regional radio markets from January 2008, despite the introduction of a deregulatory media ownership regime. From that time licence conditions will require stations to broadcast a minimum level of material of local significance. [51] Local content plans will need to be submitted to ACMA when the ownership or control of regional stations is changed. There will also be a requirement that a minimum number of media groups remains in both metropolitan and regional radio licence areas, regardless of any media merger or take over activities. ACMA is to establish a register to identify the ownership and control of media groups. [52]

Television

There is evidence to suggest changes to television ownership rules in America under the Telecommunications Act have led to greatly increased concentration in this market. Between 1995 and 2003, ten of the largest television station owners went from owning 104 stations to 299 stations and more than doubling their revenue return from (US) $5.9 billion to (US) $11.8 billion. [53]

In 1996, mergers in the television market began even before the Telecommunications Act was passed by the American Congress, as corporations anticipated the relaxation of existing rules. Takeovers accelerated once the legislation came into force. Five companies Viacom (owner of CBS), Disney (owner of ABC), News Corporation, NBC and AOL (owners of Time Warner), now control 75 per cent of all prime-time viewing in American homes. [54]

Liberalisation of cable broadcast cross ownership rules under the Telecommunications Act prompted broadcast networks to expand their ownership of cable networks that commanded the largest audiences. Ninety per cent of the top 50 cable stations are now owned by the same parent companies that own the broadcast networks.

Adam Thierer s interpretation of FCC data contradicts claims that the largest networks dominate television broadcasting. Thierer argues the statistics show that the major companies own less than ten per cent of full power commercial television stations in the United States. [55] Thierer continues that the national ownership cap currently in place actually gives smaller operators an unfair advantage over the large networks since smaller operators face no artificial regulatory constraints when looking to expand their media operations . [56]

Another view, however, is that while the existence of hundreds of television channels can superficially be seen as an indication of diversity, in reality there is a paucity of programming choices. This is because the major corporations act as gatekeepers and decision makers for broadcast approvals and content inclusions. [57]

According to Charles Layton of the American Journalism Review, local programming content has been reduced on American television. [58] In arguing against further deregulation, Alan Frank of USA Today notes also that even under existing rules, large networks have threatened to penalise individual stations that pre-empt more than a few hours of network programming for local items. [59]

The Media Access Project, a non-profit, public interest telecommunications law firm, considers that the experience of radio deregulation provides an object lesson on what can happen to television, cable and daily newspapers if the market is allowed to assess what is in the public interest. [60]

Australian comparisons

Australian television in the deregulated market will maintain a previous audience reach cap of 75 per cent in relation to ownership regulation. This is higher than the United States audience reach cap, which prevents a television network reaching more than 39 per cent of the American audience with broadcasts from stations it owns directly. The audience reach cap in Australia does not prevent affiliated stations from taking most of their programming from the major networks. For example, regional stations owned by Win Corp are affiliated with the Nine Network and able to broadcast Nine Network programming.

There is, however, a requirement for affiliated stations to broadcast a minimum amount of programs about matters of local significance . This requirement was imposed after community concerns were raised about the closure of a number of news bureaux in 2001 and the adequacy of local television programming and investigations by the then media regulator, the Australian Broadcasting Authority. [61]

Newspapers

The (free press) constitutional First Amendment limits United States government interference in the publishing of news, information and opinions. Lack of specific regulation has not, however, prevented the FCC in the past from prohibiting newspapers from purchasing broadcast radio and television stations in the same market. In justifying the introduction of this restriction, the FCC invoked public interest terminology: the rule both curbed media power in particular communities and promoted diversity of views. [62]

It has been lamented that the print media has been in a slow decline in the United States since World War II. [63] In 1964, 81 per cent of Americans read a daily newspaper, but this figure has since dropped to around 54 per cent, with the slump most obvious for younger Americans. It has been reported that as recently as 1997, 39 per cent of Americans aged 8 to 34 were reading newspapers regularly. By 2001, the figure was as low as 26 per cent. [64] From the 1970s, some attempts have been made to stem decline of the industry. [65] Such attempts have produced marginal results.

What is important in this context is that over the last few decades two thirds of the independent newspapers, which were the defining feature of the American print industry, have disappeared and large conglomerates are the norm (as can be seen in the case presented in Box 2). Less than 275 of America s 1500 daily newspapers are independently owned and more than half the market is dominated by one paper. [66] The combined weekday circulation of all daily newspapers in the United States decreased from 62.8 million in 1985 to 55.2 million in 2002. [67]

The American newspaper sector contends a relaxation of current cross media ownership rules will help stem the decline of print and at the same time increase diversity. The industry argues economies of scale generated in cross sector news production will release resources for innovation; coverage of a greater number of topics and subjects will result and these could be tailored to the needs and interests of individuals. [69]

The opposing argument is that consolidated newspapers are not in economic trouble and that newspaper corporation profits have risen. The argument continues that removing cross media ownership regulation will not be the saving grace of the independent American newspaper; it has already disappeared. However, removing cross media ownership will add to the profits of mega newspaper publishers. Indeed, it is argued that eliminating cross ownership rules will have profoundly negative implications for the public interest as newspaper/television combinations further dominate the local political and cultural discourse. This will seriously challenge the rights of individuals in a free society to speak and receive all manner of communications . [70]

Australian comparisons

Cross media ownership rules in Australia have prevented newspaper/television combinations. These rules have not been able to prevent concentration within industry sectors, however. The print sector is perhaps the most vivid example of this phenomenon.

The newspaper industry in Australia is dominated by two companies, News Corporation and John Fairfax Holdings. This has caused concern because research indicates that notwithstanding the rise of new media, 54.6 per cent of the 16.5 million Australians who are over 15 years read a Monday to Friday newspaper, 63.5 per cent read a Saturday paper and 65.5 per cent read the Sunday newspapers. [71]

As the table in Box 3 indicates, these readership figures have remained relatively stable since 2002.

Source: Australian Press Council [72]

In light of these statistics, The Australian Press Council makes the point:

It can be argued that the actual numbers of newspaper titles are not indicative of the problem in achieving this Press Council aim. There are 49 English language newspapers that service a relatively small Australian population; the problem is the lack of diversity of opinion that Australia s concentrated ownership produces within these publications. Prior to the 2006 media reform legislation only two of the forty nine titles, The Canberra Times and The West Australian, were controlled by proprietors independent of News and Fairfax. Since the passage of the legislation, Fairfax has announced its intention to merge with the third largest media group, Rural Press, the owners of The Canberra Times, in what has been suggested is a move to make it less desirable as a takeover target under the new environment. [74]

There is the risk, according to some, that not only would this move further restrict diversity, but management changes which would be a likely result of the proposed merger would potentially affect content and journalistic standards. [75]

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New Media

Cable/pay

In June 2003, there were approximately 70 million cable subscribers in America. [76] In exchange for the grant of local monopolies, cable operators have been expected to deliver a number of public interest benefits. These have included constructing, maintaining and operating facilities for public, education and government access (the PEG channels) and providing service guarantees and discounted rates for older, disadvantaged and disabled customers. [77]

Some specific rules relating to cable systems were established by the FCC in 1965, but generally, until October 1984 cable television operators were subject to provisions similar to radio and television broadcasters. In 1984, Congress tempered regulations on cable broadcasters but as this action resulted in dramatic price increases, in 1992 certain conditions were re imposed. [78]

The 1992 regulations placed a 30 per cent (horizontal) limit on the number of subscribers each cable operator could serve nationally and a 40 per cent (vertical) limit on the number of cable channels operators could control. Limiting control and reach was seen as promoting the public interest: it allowed companies to expand within reasonable limits and restricted the market power of the largest companies, thereby ensuring diversity in ownership and program delivery.

In March 2001, a federal appeals court ruled that restricting cable ownership limits was not constitutionally valid. [82] The court found that the rules not only restricted the ability of operators to obtain customers and curtailed editorial control, but they also prevented them from responding to developments in the market.

The FCC reviewed the cable rules late in 2001. At that time public interest groups argued that the Commission needed to articulate better the rationale for the retention of regulation, as abandoning it would mean cable companies would dictate customer prices and terms of service. The largest operators would also inevitably stifle competition by excluding independent programmers from access to their services. [83]

In response, the FCC concluded that while it was obliged to establish vertical and horizontal limits at some number , it would suspend this enforcement pending further consideration of the rules. [84] It sought additional comment on the cable horizontal and vertical ownership limits in May 2005, but no clear future policy direction emerged from that consultation.

The Telecommunications Act removed restrictions on rates charged to cable consumers for non basic cable services, permitted the FCC to relax broadcast cable cross ownership and telephone cable cross ownership restrictions and prohibited states from enforcing laws impeding competition, for example, laws that required carriers to share their networks with potential competitors. [85]

Since the removal of these restrictions, cable subscription rates to consumers have increased significantly; one estimate is by over 90 per cent. [86] The relaxation of cross ownership restrictions has allowed the major broadcasting companies to expand their interests by acquiring successful cable networks. All cable news networks, including CNN, CNN Headline News, Fox, MSNBC, and CNBC are owned by Time Warner, GE and News Corporation. In addition, as cable companies have increasingly faced competition from digital television, they have begun to limit programming from external sources. [87]

Australian comparisons

Pay television was introduced in Australia in the 1990s when the government owned domestic communications satellite, Aussat, was sold to private enterprise. Satellite delivery of pay television was given preference initially, but from the mid 1990s, cable and wireless platforms have also been used.

ACMA is the technical licensor and regulator for the telecommunications industry. The Australian Competition and Consumer Commission (ACCC), in addition to having a general role as competition regulator, is responsible for telecommunications specific regulation of anti competitive conduct, access and monitoring of price controls.

There have been few domestic ownership regulations imposed on subscription television in Australia. [88] Foreign ownership of pay television has been restricted, however, [89] and ACMA, has the power to specify conditions which may apply to particular licensees.

There are three major Australian pay television providers, Foxtel, Optus and Austar. Foxtel, which is jointly owned by Telstra, News Ltd (wholly owned by News Corporation) and Publishing and Broadcasting Ltd, has the largest number of subscribers and the widest reach on cable and satellite networks with almost 1.3 million homes directly connected, or in receipt of services provided to other companies on a wholesale basis. As such, prior to the media reforms, Foxtel already controlled most of the programs available on pay television in Australia through ownership or distribution arrangements. [90]

Internet

Americans originally accessed the Internet through dial up telephone lines which, according to laws relating to common carriers, were accessible to a variety of companies. During the 1990s, as cable operators developed broadband technologies, the right of entry to the Internet became the lines used to transmit cable television.

In 2002, the FCC agreed to a petition from cable operators that they were not common carriers. As such, the cable operators were not required to provide access to other operators; a decision confirmed by the Supreme Court in 2005. Following the Supreme Court decision, telephone companies also persuaded the FCC to deny other operators access to their telephone lines. [91] These rulings have meant that cable and telephone companies now have considerable control over the Internet experiences of Americans. Some critics claim that despite rhetoric about the freedom the Web provides for participants, these companies control and restrict the range of sites people can visit, as well as divert traffic to their own, or preferred sites. [92] Allegations that cable and telephone companies block Web sites are not proven, but there is evidence that tolls are charged for priority services. This situation may imply that those who are unable to pay for priority service may be marginalised. [93]

Members of the American Congress and public interest advocates have expressed concern that such practices may become commonplace and have called for the introduction of a policy of Net neutrality . This concept is discussed in more detail later in this paper.

Australian comparisons

To date, the main debate on Internet access in Australia has focussed on whether laws that censor material deemed objectionable or unsuitable for minors should be in place. The federal government believes these laws have made the Internet safer [95] and ACMA argues regulation has effectively addressed community concerns about content while not placing an unnecessary burden on the Internet industry and encouraging Internet take-up. [96]

On the other side of this debate, Electronic Frontiers, an on line civil liberties group, claims the laws are draconian, that they have not made the Internet safer and they have resulted in adults censoring their speech in offline publications in Australia or paying overseas Internet Service Providers or Content Hosts to host their web pages. [97]

Further American reform?

Under the Telecommunications Act, the FCC is required to review media regulation every four years [98] and in its 2002 review a Republican dominated Commission [99] adjudged that further media ownership deregulation would be in the public interest. In making this judgement the FCC argued a plethora of media choices and unprecedented access to information available to Americans in the twenty first century made broadcast ownership rules redundant. [100]

Two Commissioners dissented from this view. They claimed that the same big companies that owned networks and newspaper chains also dominated cable, satellite and Internet media. In a dissenting statement Democrat Commissioner Michael Copps insisted further that ownership deregulation would be disastrous, leading to more media control by ever fewer corporate giants . [101]

The majority Commissioners dismissed Copps argument and in June 2003 signalled their intention to relax ownership controls further.

Response to the United States reforms

The FCC announcement caused immediate public outrage, with various critics decrying the failure of the Commission to convey its intentions regarding cross media ownership and of the media to publicise the decision making processes. [103]

Many groups also argued the FCC proposal could only deliver more power to the largest corporations. [104] Conservative organisations led by the National Rifle Association and the Parents Television Council, joined hundreds of other groups, from all sides of the political spectrum, to protest against the proposed rule changes. Concern expressed by these groups ranged from apprehension about the negative impacts on democracy which would result from the increased influence of media corporations over journalism, culture and public opinion, to fear that allowing further media concentration would violate the notion of competition in the marketplace. [105] The outpouring of dissent, the greatest in the history of the FCC, overwhelmed the Commission s phone lines and Internet server, but failed to elicit much response from the organisation, which held only one official public consultation. [106]

Ironically, much of the initial conservative interest was kindled after pop star Janet Jackson, revealed one of her breasts to an estimated United States television audience of 140 million during half time entertainment at a football grand final. The conservative debate centred on the powers of the FCC to censure impropriety on radio and television, which initially distracted attention from the media regulation issue. It later combined with thinking about the ownership deregulatory regime, however, and led many to conclude that ownership deregulation had given large media corporations enormous political clout and defanged the FCC . [107] Conservative religious and social groups blamed media concentration for the airing of vulgar and sexually explicit programs that offend community standards [108] and many believed more ownership concentration would exacerbate the problem. [109]

The FCC s proposal also initiated considerable debate in Congress. The House of Representatives passed a resolution in July 2003 calling on the Commission to reconsider the decision to lift the audience reach cap from 35 to 45 per cent. The Senate approved a rarely invoked resolution of disapproval in 2004 for a repeal of the new rules and the restoration of stricter limitations on ownership. In response to these actions, President George W. Bush threatened to veto any legislation preventing the FCC changes and at one stage Congress considered the option of a congressional veto to override the President. [114] In the end, Congress compromised by allowing broadcasters to own up to 39 per cent of media outlets in a local market.

Stanford Washington Research analyst Paul Gallant concluded from this effective closure of the review process that there was a low probability the FCC could significantly relax ownership rules in the future. [115] The irony may be therefore, that at the same time deregulation succeeded in delivering the impetus for the consolidation major media companies desired, it released a social and political backlash, which may be a serious impediment to further amalgamation and concentration.

While support from conservative groups has waned, a plethora of interest groups, such as Free Press and Common Cause, [116] remain committed to continuing protest action on media ownership rules.

Net neutrality an added complication?

Since 2005, the American debate about the public interest has extended to encompass concern about the new media, particularly in relation to the Internet. Particular unease in this area is about proposals to impose fees on access to broadband infrastructure. Public interest advocates have argued that adopting such policies will further inhibit public debate by limiting information sharing on the Internet.

The code of Net neutrality is based on equal access by users to content of choice and the running of applications and devices they prefer. Maintaining Net neutrality means that the job of carriers is to move data not choose which data to privilege with higher quality service . [117] But this principle is considered under threat as the result of the actions and proposals of broadband carriers. Carriers who want to restrict access, have lobbied the American Government to pass legislation which will allow them to discriminate and determine who is able to receive content and under what conditions. [118]

Many critics argue the demise of Net neutrality would stifle the phenomenon of citizen journalism, which the new media has fostered. This, in turn, would further limit opportunities for people to access differing opinion and information. The media reform group, Free Press, cites possible situations that may result from allowing broadband carriers to restrict Internet access some search engines would pay more fees to be able to open faster than others, advocacy groups would be required to pay protection fees to ensure their sites work correctly and bloggers would be priced off the Net. [124]

United States telephone companies in particular oppose the principle of Net neutrality. They consider they are entitled to practice net discrimination to exert control over material that is accessed through their high speed networks. However, there is little evidence that any of them have actually prohibited access to their services. [125]

The FCC has stated its support for the principles of Net neutrality, but arguably it has done little to enforce those principles. In 2006, it noted that Net neutrality operates within the construct of the freedom of Internet service providers to offer tiers of services with variable speeds of access to different sites. [126]

Telecommunications companies have also opposed the delivery of non profit high speed Internet services by some municipalities to remedy the fact that in 2005, only about 24 per cent of United States households in rural areas had this access. [127] The telecommunications companies have argued that providing public Internet access amounts to unfair competition with private enterprise. They have successfully lobbied some state governments to prevent government entities from offering these Internet services.

Since 2005, in the context of deliberations on the updating of the Telecommunications Act and consideration of the issue of public access to the Internet, Congress has debated the possibility of including Net neutrality in legislation a number of times. However, despite an increase in public lobbying and the receipt in 2006 of over one million signatures supporting a fee free Web, Congress failed to approve Democrats proposals to include comprehensive Net neutrality provisions in telecommunications bills introduced in May and June 2006. [128] One Republican argued the enactment of Net neutrality would result in a reduction in broadband infrastructure investment, making it increasingly difficult to sustain necessary capital in the industry. [129] Other opponents considered the Democrat backed proposal would let the FCC exercise complete discretion over the Internet and begin down the dangerous path of Internet regulation . [130]

Australian comparisons

In Australia, the prinicple of Net neutrality is only beginning to elicit serious discusssion. One blogger recently was amused to discover that service providers appear not to recognise the term. [131] But that perception, as media commentator Dan Warne suggests, is naive. The major telcommunications carrier, Telstra, is not happy that competitiors piggyback on its network. [132] It has hinted that it will start prioritising Internet traffic according to the type and source of the data . [133] Journalist Nick Miller predicts that the end of Net neutrality in Australia is unavoidable because users have high expectations of what they can access and because prioritisation is necessary for next generation Internet applications. [134]

What happens with regards to regulation of the Net in the United States will affect Australia, in spite of any local policy on the Net. [136] Nearly sixty per cent of Australian online visits are currently directed to overseas websites. [137] These directions could be exclusively controlled by United States telecommunications carriers unless the principle of Net neutrality is maintained in America.

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Contemplating the Australian reforms

Proposal

The policy on broadcasting that the Howard Government took to the 2004 election contained similar justifications for reform as had been argued in the United States since the 1980s. Media regulation was antiquated; it needed to change to cope with the digital age. Abolition of out dated rules would increase competition in the Australian media sector, which in turn, would benefit the sector itself and media consumers. [138] (Appendix A discusses the opposing arguments relating to ownership deregulation in more depth).

Following its third election victory in 2004 and some consultation with the public, [139] the government introduced legislation in 2006 to amend the Broadcasting Services Act 1992 to

Certain regulatory requirements were to remain under the new media regime. Cross media transactions, for example, would not be allowed unless a minimum number of commercial media groups remained in relevant markets (four in regional markets, five in mainland state capitals) following takeovers or mergers. The legislation was also to maintain existing limits on broadcasting licences including a 75 per cent national television coverage limit. The ACCC was to assess the competitive impacts of transactions and the media was to remain a sensitive sector under the nation s Foreign Investment Policy. [140]

Similar promises also accompanied the recent media ownership legislation in Australia as had accompanied the Telecommunications Act in America; changes would advantage the media industry allowing it to pass on benefits to consumers.

In addition, the Australian legislation was promoted as promising a new media environment that would:

It was argued also that Australian consumers would benefit because a less concentrated commercial media market would emerge from a deregulated environment. Further, they would continue to enjoy a greater diversity of media delivered by the principal public broadcaster, the supplementary multicultural public broadcaster, the Special Broadcasting Service (SBS) and the community broadcasting sector. [149]

Debates, minor concessions and the final outcome

As in the American case, the potential to enhance industry efficiency was an important selling point of the deregulatory proposal. Some traditional media owners in particular lauded the legislation as their saviour; a means to combat what they insisted was increasing irrelevance as the result of the rise of the new media. [150]

Similar arguments to those put forward in the American context surfaced in the reform debates and they were as passionate, if not as prevalent. (See Appendix A for a more detailed account of the arguments for and against deregulation). The press in particular was critical of the legislation with sections publishing warnings of the consequences of ownership deregulation (as can be seen in the commentary example in Box 10). Opposing views were largely ignored, however.

The government did make some concessions to placate the concerns of a number of its backbenchers, but these did not satisfy all the backbencher demands. One government Senator, who crossed the floor in support of further amendments, expressed particular disappointment that more people were not willing to stand up to protect the freedom of the fourth estate. [151]

The media ownership legislation was passed by both houses of the Australian Parliament in October 2006. [152]

The new media regime will not entail the total deregulation that some in the industry desired. It will retain certain safety net provisions. These include:

There is speculation that these protections will not achieve their stated aims. Some critics argue for example that the two out of three rule will do little to protect diversity of ownership or opinion. They say this is because in devising the rule there was no consideration of who controls pay television, magazines and Internet sites; it was focussed only on traditional media television, radio and newspapers. So it is possible, despite this restriction, for powerful media owners effectively to dominate five of the six current sources of information and opinion in markets across Australia.

Similarly, the legislation has been criticised because it does not take into account the disproportionate power of certain media voices. The legislation defines media groups, not individual voices. Media groups are two or more operations, with operations meaning a commercial television broadcasting licence, or a commercial radio broadcasting licence or a newspaper associated with either a commercial television licence or a commercial radio broadcasting licence. But the differing corporate profiles of operations are not taken into consideration; all operators big or small, influential or inconsequential are considered equal under the new environment. All are patently not equal. According to the critics, small, regional radio stations and newspapers do not have the resources or influence of metropolitan radio and television in Sydney or Melbourne. Nor does a small, independent metropolitan radio station devoted to broadcasting horse racing, provide a competing voice against a national media group.

There is speculation also that the local content requirement may not actually be enforced. The requirement is currently under review by ACMA and its final form will not be known until after the review is completed in June 2007. The suggestion is that the broadcast requirement of four and a half hours of local content each business day may well be diluted in deference to the arguments of regional radio owners. [154]

Change: First indications

The public

The only formal public comment to date on the media changes was recorded in August 2006. A small majority recorded opposition (52 per cent) to the removal of cross media restrictions and a clear majority (64 per cent) opposed relaxation of foreign ownership restrictions. [155]

Over one third of Australians (36 per cent) believed changes to media laws would have a negative impact on the integrity of reporting and 35 per cent believed reform would reduce diversity in the media landscape. [157]

These results are significant, particularly given Australians reliance on traditional media sources to obtain information and opinion as is illustrated in the following table.

The regulators

The ACCC released a report prior to the passage of the legislation that provides an indication of how it will approach the new media environment. The report acknowledged to some extent that assessment of potential media mergers will need to consider whether they will reduce the quality and diversity of media content. Despite this acknowledgment, the agency saw its job primarily as investigating mergers in terms of the ways they may substantially lessen competition. [158]

While the ACCC claimed it will consider the unique characteristics of the media in making decisions, there is no clear statement that these characteristics will include reflections on the pivotal role the media plays in a democracy. On the contrary, the Commission specifically noted that the media is like all sectors of the economy in that each sector exhibits particular features. As such, it appears the ACCC has defined the media s role in providing information, analysis and a variety of considered opinions to assist people in understanding and participating in social and political life as only a category to be considered in assessing competition. [159]

It will therefore be necessary under the new media regime in Australia to notify the ACCC about cross media mergers. But approval of the mergers may not involve consideration of media specific effects of the mergers, for example, the diminution of the number of viewpoints in a particular area as the result of syndication of news and information over television radio and newspaper services.

ACMA will be the principal, day to day regulator under the new media landscape. ACMA, like the FCC, will have considerable discretionary power. There is provision for the Minister for Communications, Information Technology and the Arts to direct ACMA in certain instances, but generally decisions will remain with the regulator. In fashioning the legislation the government argued this situation would ensure independent assessment and process. [160] It can be argued that the risk in giving a regulator such powers, as the United States experience suggests, is that its interpretations can impact significantly on the functioning of democratic processes. Some Australian broadcasters in criticising this aspect of the reforms believe the expansion of ACMA s power is an affront to democracy. They have expressed concern that non elected bureaucrats will have the power to determine content and editorial control and have called for an independent court to be established to make these decisions. [161]

Given the recent United States experience, which has seen the FCC continue to make decisions clearly dismissive of public opinion, this suggestion is not without merit. Under such an arrangement, comprehensive public interest guidelines could be established in consultation with all stakeholders, so that judicial interpretation with regard to all aspects of media regulation could help to regulate the deregulated ownership environment.

The industry

The ownership deregulation debates illustrated that media proprietors were keen for media reform generally. Despite this, some argued against specific aspects of the recent regulatory reform. News Corporation was not supportive of the final package for example, [162] possibly because it saw too few benefits for its Foxtel pay television network arising. Similarly, Fairfax Holdings withdrew support for the reforms in light of the government s decision to allow free to air networks to bid for one of two new digital television channels to be auctioned in 2007. [163]

As happened in America, since the passage of the media reform legislation, the major media proprietors have begun manoeuvring strategically to ensure they are in the most favourable positions to take advantage of the new media regime.

There is talk of many other deals in the pipeline. Journalist Lisa Murray remarks, [t]he list of potential deals is long, with media analysts devoting pages of research reports to possible tie-ups, asset swaps and ownership changes [164] but at the same time analysts do not appear to have anticipated all the nuances involved in ownership moves. News Corporation s quick turn around of its Fairfax purchase for example. [165]

ACMA has warned media owners that it will use its powers to stop mergers that threaten to undermine media diversity and will compel media owners to divest assets if necessary. [175] At this stage it remains to be seen to what extent ACMA is willing to use its powers in this manner and to what extent the largest media companies may seek to evade legislative requirements. 

Conclusion lessons for Australia?

In 1996, in light of the decline of traditional readership and viewing patterns in America and the emergence of new forms of media that promised to revolutionise the media landscape, the passage of the Telecommunications Act was marketed as essential and visionary. It was cited as the catalyst for the transformation of tradition and culture, operations and strategic thinking in response to an America where consumers increasingly demanded news and information on their terms. At the same time, it was promoted as a tool that would nurture the public interest. It would deliver more competition, diversity, lower prices, industry jobs and economic advantage.

The same type of argument for reform has recently been advanced in Australia. The promises about what ownership reform can deliver have also been familiar. The media reform package recently passed by the federal parliament has been promoted as a far-sighted approach, which will allow the traditional media to respond to ongoing change, encourage the growth of new media and deliver positive outcomes for consumers. In addition, the Australian package has been promoted as maintaining safeguards that will ensure media diversity.

Evidence from the past ten years in America suggests the Telecommunications Act has indeed transformed the traditional media landscape. But it appears that transformation has not encompassed promised outcomes in the public interest. The numbers of media outlets have diminished, takeovers and mergers have consolidated the power of major groups and independent media voices have declined in America since 1996. Opportunities for the expression of political and social viewpoints and commentaries in the traditional media have also been reduced. Outlets for artistic expression, a source, arguably, of some of the most influential and profound ideas, have been closed. Similarly, while the citizen journalism of the Internet has compensated to some extent for the loss of traditional media voices , the potential of this media source is threatened if the power of infrastructure corporations and merged media conglomerates increases further.

Not all concerned Americans agree with the United States Senator Ron Wyden s prediction:

But it appears many consider that further ownership deregulation is not in the public interest.

First indications are that there is a strong risk a similar, comprehensive transformation of the media landscape may take place in Australia. More safeguards are in place than in the American case and these are premised on acknowledgement that it is not the numbers of media voices as much as the diversity of opinion those voices deliver that is important. Furthermore, diversity in the Australian environment is enhanced by the existence of a public broadcaster culture and by the esteem in which it is held. At the same time, however, the Australian media has been more concentrated than its American counterpart at the time of ownership deregulation. As the Productivity Commission noted in its 2000 report, this situation is potentially problematic for the public interest, unless countervailing conditions are in place.

In this context, the lesson that could be taken into a deregulated media ownership environment in Australia is that maintaining the role of a public broadcaster with a clear charter that directs it to work in the public interest is critical. Therefore, it is crucial to consider that while the Australian model of public broadcasting at present continues to represent diverse and sometimes controversial viewpoints, real budgetary cuts in recent years, [177] combined with board appointments that some have seen as contradictory to the public interest, [178] have possibly reduced the counter effectiveness of this tool. In a similar context, pressures exist, such as those for the public broadcaster to accept advertising, which may need to be re assessed to ensure the ability of public broadcasters to produce programming in the public interest is not undermined.

SBS, for example, has accepted advertising, but until recently, not within programs. This policy change at SBS may have undermined its ability to produce programming which will continue to be in the public interest. While it can be argued that SBS (and the ABC if it takes this road) would always be able to refuse advertising, the experience of TVNZ which operates under a Charter introduced in 2003 under the New Zealand Labour Government illustrates the difficulty a public broadcaster experiences when it accepts advertising. TVNZ is required to maintain commercial performance, while simultaneously attempting to provide public service broadcasting. The TVNZ Charter, however, requires it also to feature the highest standards of programming that informs, entertains and educates general and niche audiences as well to provide a significant Maori voice in programming. [179] TVNZ s efforts to balance commercial performance with these Charter objectives appear to have been unsuccessful. Despite some investment in local programs, content on its stations consists mainly of light entertainment and reality shows.

Similarly, the American experience illustrates that public broadcasting of the type that has developed in Australia is a valuable asset that needs to be protected in a deregulated media ownership environment. But it is likely this asset will only remain valuable if it is independent and well resourced.

Future media policy in the United States will have to take account of, and work within a transformed media landscape. There can be no going back to a pre Internet media environment. The outcome of current FCC deliberations will be crucial in shaping a future media environment in the United States. Prior to the November 2006 Congressional elections, it seemed that more ownership deregulation was inevitable; that the views of a Republican dominated Commission would not be swayed by public concern or judicial directives. The Democrat mid term election victory, however, suggests the Commission may need to be more circumspect in its decisions. Initial indications are the Democrats disagree with the FCC in a number of key areas Net neutrality and the relaxation of cross ownership rules in particular.

While it is not conclusive, it appears the FCC will need to scrutinise decisions which result in further ownership deregulation in the context of thinking that the media should work firstly, and principally, in the public interest. As such, the media are not simply a commodity to be left to the vagaries of the market. The FCC s recent decision regarding the AT&T merger does indicate a minor and subtle shift towards this type of thinking.

A further lesson for Australia it could be argued may be that there is a need to heed the recent United States experience in relation to media regulators. It may be that the ACCC and ACMA will not act in the same manner as the FCC; that they will avoid the trap of being captured by the ideological and/or political thinking of the day, but it seems unlikely, given statements already made by the ACCC [180] and the failures of ACMA and its predecessors to get tough on media infringements. Although it should be acknowledged that ACMA will be able to function more effectively (if it so chooses) as the result of new powers it has gained from legislation passed in conjunction with the ownership package. It will therefore be able to be more flexible and to use a set of graduated powers, not previously available to it, in assessing media situations. [181]

It may be impossible to achieve, but it is worth attempting to create a truly independent media regulator with specific power to deal with media proposals. The supplementary legislation to give ACMA more real power is a step in this direction, but it has yet to be seen if this body has sufficient clout and resolve to regulate an unregulated market.

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Appendix A

Media Ownership debates

In favour of deregulation

Traditional media owners in America contend that media regulation is a relic of the past. They say it hinders transition processes for the old media to assist it to cope with a dynamic and changing media landscape. Large corporations in particular insist the removal of cross media ownership restrictions will help them deliver better quality news and public affairs. [182] They accuse critics of further reform of relying on emotion, utopian visions, and anecdotes to the detriment of sound media policy making . [183]

American media owners insist the media is not more highly concentrated as a result of the Telecommunications Act. They argue the Act has delivered a more vibrant landscape that allows major players to change market positions frequently, to appear inexplicably and, at times to disappear. They see this as representative of a strong, competitive market, which in turn functions in the public interest.

Owners of the old Australian media have argued along similar lines that media reform is essential for traditional sources to survive. They have been reported as saying that the recent media reforms either do not go far enough or that they are not well targeted. [184]

Supporters of more ownership deregulation in the American market argue that critics falsely claim a loss of diversity in the industry. One makes the point that twenty five years ago there were few programming choices, but:

Further, supporters of ownership deregulation dismiss the idea that diversity is fostered by smaller media entities and that these entities produce better quality and quantity of news and public affairs. They continue that claims commonly owned media in the same market create a single voice are equally invalid. They cite proof from the Federal Communications Commission Media (FCC) Ownership Policy Working Group reports. These indicate that local television stations owned by large broadcast networks receive more awards for news excellence and produce more news and public affairs programming than non network owned affiliates. [186]

The notion that local owners are inherently more objective than large corporations is equally contentious they say. Some of the most biased United States newspapers of the past for example were locally owned and local owners are more likely than corporate owners to have ties to local political and business establishments. [187]

A version of this argument was used in support of the lifting of foreign ownership restrictions in Australia. According to the Productivity Commission, regulatory requirements or commercial imperatives were the reasons Australian owners, like other media proprietors, broadcast or printed stories in the national interest. At the same time, the Productivity Commission considered it was possible that foreign owners may be less likely to interfere in domestic reporting or to experience local conflicts of interest. [188]

Arguments for ownership deregulation favour mergers and acquisitions because they consider these play an important role in the evolution of the media. Mergers are a defensive strategy that achieves economies of scale to meet the demands of modern media consumers and to respond to competition from new outlets and technologies. [189] The economics of the mass media in the twenty first century are not those of a lemonade stand according to one commentator. Scale and scope is needed to provide information and entertainment at a reasonable cost and small outlets are not able to provide coverage from the front lines of an overseas conflict one minute and then switch back to coverage of a local trial the next . [190] This argument was cited specifically in the case for the removal of Australian cross media restrictions, which were seen as significant deterrents to media organisations pursuing economies of scope. [191]

The plethora of new media sources, which have delivered an age of abundance and hyper choice and the convergence of media sources, makes the question of who owns what media irrelevant for supporters of deregulation. They argue this is because:

Against deregulation

In opposition, American consumer groups in particular maintain regulation serves the public interest well. Regulation should not be abandoned therefore unless it can be clearly shown that to do so would further enhance that interest. [193] From this perspective, there are profoundly negative implications for democracy if cross media ownership rules in particular are relaxed. It is argued further that if further ownership deregulatory changes are introduced in America by the FCC they will produce media custodians able to dominate local political and cultural discourse and prevent people from voicing opinion or hearing the opinions of others. [194] Retention of cross ownership rules are crucial therefore in preventing media monopolies which would be able to constrain reporting by carefully avoiding some subjects and enthusiastically pursuing others . [195]

American critics have keenly embraced the notion of tradition in mounting their arguments to retain media regulation. Profit, they contend, has not been the sole intention of United States communications policy; public interest has been the crucial component. This is inevitably diminished if media discourse is increasingly provided by one voice, albeit over different formats. [196]

Moreover, the American critics of deregulation cite United States jurisprudence support for the proposition that acceptable media policy is about more than economics; it requires concern for preservation of a vigorous debate that includes the presentation of a diversity of views on a broad array of issues . [197]

Supporters of regulation conclude that the media represents not a marketplace, but a marketplace of ideas in which there will be long-term and transitory effects from concentration; long term effects, such as censorship, and short term effects, such as the manipulation of opinion for specific purposes or gain. [198]

The choice is not between regulation and deregulation they say, but between:

Australian context

These key themes were continually raised in the Australian media reform debates. For example, academic Franco Papandrea argued:

Paul Neville, National Party Member for Hinkler, also argued that diversity of opinion and an informed community were not esoteric concepts but essential components of democracy that entailed some form of regulatory control to ensure they persisted. [201]

The Communications Law Centre, an independent, non-profit, public interest organisation stated its belief that:

Arguments for retention of regulation inevitably address the claims that regardless of the effects of deregulation, the public interest will be served by the Internet and the numerous citizen journalists who inhabit it. These arguments note that clearly, the Internet does deliver information, but they ask whether the Net can consistently deliver considered opinion. More importantly for the question of what constitutes the public interest, they ask: can the Net actually take the place of traditional media?

American critics pose the question:

A similar situation applies in Australia. The top news websites are mostly under the control of media giants . Fairfax, News Ltd, Channel Nine make up the top three. The only major new operator in Internet news is Telstra Corporation. However, Telstra s new service consists of AAP news stories and AAP is jointly controlled by News Ltd and Fairfax. [205] As a counterpoint, it is worth noting that the Internet news site of the principal public broadcaster ranks fourth in popularity.

These arguments about deregulation in relation to the Internet will most likely become increasingly important. Clearly, this is because of the thinking that there is a new world where everyone can be a journalist, publisher, opinion writer or social commentator. At the same time, however, the opposing view is that: A Web site may be great but it becomes even greater, and only really valuable, when you also own TV stations and newspapers . [206]

As long as innate problems plague citizen journalism, it will be argued that ownership regulation of the traditional media cannot be abandoned. All citizen journalists, even those with the most influence, have limited time and resources to engage in investigative journalism. This is because, for the moment at least, citizen journalism is mostly a voluntary activity. As a result, many issues are only cursorily explored, despite suggestions to the contrary. Additionally, the informational value of citizen journalism is undermined by partisan bloggers who focus on issues and events that reinforce particular views, ignoring anything that may question their approaches. [207] These flaws it can be claimed necessarily distort claims that the Internet has delivered a new world of honesty and accountability in journalism to replace biased reporting in the traditional media.

The reach of the Internet it can be claimed is equally problematic. Whereas the less affluent have traditionally been able to access opinion and information on radio or in their local newspaper, the Internet is mostly accessible in the United States and Australia to more affluent citizens. It could be argued that it is hardly in the overall public interest if affluence equates to access, as research indicates is the case at present in both the United States and Australia. [208]

The Australian case proves that not all regulation delivers diversity of reporting or opinion. Even with cross media ownership rules in place a media situation has existed in which a select group of proprietors, who represent similar ideological perspectives, wielded potentially at least, immense power to influence editorial policy and content. Numerous claims have been made in fact that this power has been regularly used. Kerry Packer is cited as exerting a direct and at times hands-on influence on the content of news bulletins , for example. [209] It may be, however, that rather than proving the case for deregulation, the Australian context emphasises a need for better regulation.

Appendix B

United States: Media tradition

Beginnings

From the 1790s, the American press has been subject to little regulatory constraint. However, when radio developed in the early 1900s, its requirement to function within a limited electromagnetic spectrum, made regulation of this new media sector media appear desirable and practical. Radio licences were therefore introduced to ensure only those who served the public interest were able to broadcast.

The Radio Act 1927 was the first standard imposed on broadcast licensees in the United States to guarantee they operated within assigned technical and programming requirements. The Communications Act of 1934 [210] expanded upon principles in the Radio Act to include regulation for telephone and telegraph and later, for television and cable. Despite the introduction of consequent legislation, which modified a number of its provisions, the Communications Act remains a cornerstone of broadcast communications policymaking in the United States. The FCC established by the Act, continues to act as the regulating body for interstate and international communications by radio, television, wire, satellite and cable. [211]

Prior to the 1980s, the FCC consistently viewed broadcast licensees as public trustees with obligations to provide as many opportunities as possible for discussion of contrasting points of view on controversial issues of public importance. [212] Consequently, it prohibited cross media ownership, which might have diminished such opportunities.

After Republican Ronald Reagan was elected to the American Presidency in 1981, policy approaches generally began to change as arguments were advanced that the Communications Act represented anachronistic legislation, not suitable to regulate media in a digital age. [213]

The Telecommunications Act 1996

While deregulation commenced under President Ronald Reagan, the most significant change to broadcast regulation, the Telecommunications Act 1996, [218] occurred under the administration of Democrat President, Bill Clinton (1993 2001). After a Republican controlled Congress passed the Telecommunications Act with a clear majority, on signing the Act in February 1996, President Clinton also showed his support for the Act. He argued the
Act would enable telecommunications laws to deliver benefits for consumers and the broadcast industry, while at the same time enhancing competition and private investment, promoting universal service for customers and providing flexible government regulation. [219]

Reforms under the Act were introduced in five major areas: radio and television broadcasting, cable television and telephone services, Internet and on-line computer services and telecommunications equipment manufacturing. [220]

Foreign ownership restrictions imposed by the Communications Act continued under the Telecommunications Act [221] allowing the FCC to deny common carrier licenses to corporations with more that 25 per cent foreign ownership or control if it considered that rejection to be in the public interest. [222]

From the outset, however, not everyone shared President Clinton s enthusiasm for the Telecommunications Act. The New York Times, for example, argued that the Act s antiregulatory zeal went too far, and in so doing it endangered the competition it was meant to create. [223]

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Appendix C

Australia: Media Tradition

Beginnings

As was the case with the United States, the press in Australia has been largely unconstrained by specific regulation. Historically, it is most likely this was for similar reasons as in the United States, although in Australia, there has been little accompanying rhetoric about the crucial role of the press in a democratic society.

As in the United States, the first specific broadcast media regulations were introduced in Australia in the 1920s. Regulation was initially concerned with licensing and operational and technical standards. Unlike the United States, the task of protecting culture and ensuring programs were suitable for the public has been undertaken by a number of regulatory agencies. Initially, the task was allocated to the Postmaster General s Department, but over time responsibility transferred to a number of statutory authorities, the latest of which is the Australian Communications and Media Authority (ACMA). ACMA is responsible for the regulation of broadcasting, radio communications, telecommunications and online content. ACMA s responsibilities are listed as including the protection of consumers and other users and fostering an environment in which the electronic media respects community standards and responds to audience and user needs. [225]

From at least 1935, various Australian governments expressed concern about increasing ownership concentration in the broadcast media. As a consequence, media ownership rules were introduced in the 1930s to restrict the number of radio stations a single proprietor could control. But as W.G. Gibson, Chair of the Parliamentary Committee on Wireless Broadcasting noted, these were watered down within weeks of their introduction; the result of the concerted efforts of broadcasters. [228]

The influence of broadcasters over government has been a source of concern to a number of Australian media commentators. Trevor Barr argues for example that Australia s media history is littered with special manifestations of Ozzie mateship towards media barons . [229] Barr cites a number of these instances including amendments to legislation made under the Fraser Government that removed the power of the then regulatory body to make decisions on broadcasting licences with reference to the public interest. [230]

By 1942, a Joint Parliamentary Committee on Wireless Broadcasting was concerned that misuse of the power and influence of radio broadcasting should not corrode the fabric of the nation. The Committee considered there should be some measure of public control to prevent improper use of the medium. It expected also that the medium should exercise a positive influence for good on the individual and national character . [231] This Committee was influential in the framing of the Broadcasting Act 1942, many of the provisions of which were only substantially rewritten fifty years later in the Broadcasting Services Act 1992.

The Australian Broadcasting Control Board (ABCB) was established in 1948 to ensure commercial broadcasters presented programs that served the public interest. But as Albon and Papandrea point out, the ABCB saw existing broadcasters, not the public, as its constituents and its actions reflected this perception. [232] Consequently, it restricted the issue of licences to assist incumbent broadcasters to remain financially viable.

When television was introduced in the 1950s, radio broadcasting legislation was extended to encompass this medium and the ABCB was given licensing control. Australian commercial operators were restricted to ownership of a maximum of two licences and foreigners were precluded from owning or controlling television licences.

While local content rules have been in place in Australia since the early 1960s, maintaining local content has been problematic and various solutions have been sought to ensure rural and regional areas in particular, receive local views and information. For example, in 2003, in response to community concern about declining local news and programming, the then regulating body, the Australian Broadcasting Authority, imposed additional licence conditions on regional television broadcasters to broadcast minimum amounts of local content in certain regions. [233]

Addressing media concentration

Despite attempts to limit ownership, by the 1970s it was obvious the Australian media was highly concentrated. Critics including Paul Keating, who as Prime Minister was later to oversee major regulatory changes under the Broadcasting Services Act, argued that such situation would have been intolerable in other democracies. [234]

In 1987, a Labor Government introduced substantial changes. These included abolition of a two station television ownership rule, which was replaced with a national population reach limit for commercial television. [235] But it appears that contrary to any intention that these changes would increase diversity, within twelve months, media ownership and control had concentrated further. Indeed, Julianne Schultz argues that the Labor changes triggered a fundamental and far reaching transformation that at the time received little public scrutiny and resulted in the media becoming just another business albeit one with greater power than any other to influence society . [236]

Yet another attempt at addressing media concentration, the Broadcasting Services Act 1992 (BSA), intended to impose a new broadcasting regime by introducing certain cross ownership regulation provisions. The BSA prevented common ownership of newspapers and radio and television broadcast licences in the same region. It also supposedly prevented foreign ownership of television. Despite these intentions, during the 2006 media ownership debates it was argued the BSA was as ineffectual as its predecessors in regulating the media. For instance, its existence did not prevent the Canadian media giant Canwest from effectively owning over 50 per cent of the Network Ten television network. [237] Nor was it able to prevent considerable cross media ownership between new and old media. Additionally, under the BSA, audience reach limits were considerably higher and more flexible (75 per cent audience reach) than those imposed under a deregulated American regime (39 per cent).

The emergence of new media in the 1990s was seen by some as illustrating the inadequacies of existing legislation in Australia. In addition, arguments about the impact of new media along the same lines as those already raised in the United States surfaced. Specific restrictions on the ownership and control of media enterprises were increasingly criticised, as old media moguls argued their businesses could not cope with the challenges of a changed media landscape and as they calculated the potential commercial opportunities offered by new phenomenon, such as globalisation and convergence.

The Howard Government

Under the influence of such ideas and armed with a deregulatory philosophy, in 1996 a newly elected Liberal/National Government undertook a review of cross media and foreign ownership regulations with a view to liberalising the laws. Despite receiving in principle support from most major media organisations, no changes resulted, however.

One important reason for this was that the government was unable to develop a proposal for change that satisfied the ambitions of all the major media owners. Political reality was also a factor the opposition parties, which at the time commanded a Senate majority, opposed the idea and a number of the government s own backbenchers were concerned any liberalisation would further concentrate media ownership. [238]

The government was, however, seriously committed to media reform. To this end, in 1999, it directed the Productivity Commission to inquire into broadcasting regulation. Following from the Productivity Commission inquiry, the government decided to introduce legislation in 2002 to remove controls on the foreign ownership of television, to introduce exemptions to cross media rules and to ensure that local news services were maintained in regional areas subject to those exemptions. The legislation was passed by the House of Representatives in December 2003 with amendments, but was not approved by the Senate and lapsed with the Federal election of October 2004.

Appendix D

Summary of Australian media ownership controls in the Broadcasting Services Act 1992 (BSA) revised under the Howard Government reform package.

Television

Under section 53 of the BSA : A person must not control television broadcasting licences whose combined licence area exceeds 75 per cent of the population of Australia, or more than one licence within a licence area;

Foreign persons must not be in a position to control a licence and the total of foreign interests must not exceed 20 per cent.

Section 55 sets limits on multiple directorships and section 58 on foreign directors.

Radio

A person must not be in a position to control more than two licences in the same licence area.

Multiple directorships are also limited under section 55.

Cross-Media Control

Under section 60 a person must not control:

• a commercial television broadcasting licence and a commercial radio broadcasting licence having the same licence area;
• a commercial television broadcasting licence and a newspaper associated with that licence area; or
• a commercial radio broadcasting licence and newspaper associated with that licence area.

Section 6 of Schedule 1 of the BSA provides a simple 15 per cent rule for establishing whether a person has control of a company. If a person has interests in a company exceeding 15 per cent, then in the absence of proof to the contrary, the person is deemed to be in a position to exercise control of the company.

There are also similar limits on cross media directorships. 

Subscription Television Broadcasting Licences

A foreign person must not have company interests exceeding 20 per cent in a broadcasting subscription licence, and the total of foreign company interests in any licence must not exceed 35 per cent.

Foreign Investment Controls

There are a number of controls on foreign investment in the media in addition to those contained in the Act. All (non portfolio) proposals by foreign interests to invest in the media sector, irrespective of size, are subject to prior approval under the Government s Foreign Investment Policy. Proposals involving portfolio share holdings of five per cent or more must also be approved.

The maximum permitted aggregate foreign (non portfolio) interest in national and metropolitan newspapers is 30 per cent, with a 25 per cent limit on any single foreign shareholder. The aggregate non-portfolio limit for provincial and suburban newspapers is fifty per cent.

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Endnotes