Bills Digest no. 31 2008–09
Broadcasting Legislation Amendment (Digital Radio) Bill 2008
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Date introduced:
17 September 2008
House:
Senate
Portfolio:
Broadband, Communications and the Digital Economy
Commencement:
On the day after the date of the Royal Assent
Links: The relevant
links to the Bill, Explanatory Memorandum and second reading speech
can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills
have been passed they can be found at ComLaw, which is at http://www.comlaw.gov.au/.
The purpose of the Bill is to modify
the existing framework for the introduction of digital radio. The Bill
amends the Broadcasting Services Act 1992 (Broadcasting Services
Act) and the Radiocommunications Act 1992 (Radiocommunications
Act) so that:
- the deadline for commercial broadcasters to commence digital radio
services in the mainland state capital cities will be extended to 1
July 2009
- broadcasters in Hobart need only commence digital radio services at
the same time as other markets of comparable size, and
- community radio stations have a further opportunity to take up shares
in the joint venture companies managing the transmission of digital
radio services.
Digital radio technologies turn
sound into digital signals which are then compressed, transmitted and
decoded back into sound by digital radio receivers.[1] Digital radio can provide an improved
listening experience for audiences in comparison with AM and FM broadcasting.
Its benefits include better sound quality and reception and, due to its
more efficient use of radio spectrum, greater choice of stations and potentially
a greater number of specialist program formats.[2]
It is also able to use single frequency network technology which allows
the broadcast of stations through a number of transmitters on the same
frequency across a region or nationally. This is not possible with analogue
transmissions ‘as in areas that receive signals from different transmitters
broadcasting on the same frequency there is considerable mutual interference’.[3]
The adoption of digital radio using the Eureka DAB technology
was first recommended in 1997 by the Digital Radio Advisory Committee
(DRAC).[4] By March 1998, the then Minister for Communications, Information
Technology and the Arts Richard Alston announced that digital radio would
be available to Australians by 2001.[5] However, delays in the commencement
of digital radio trials and uncertainty about the merits of various digital
radio technologies meant that, at the time of the 2004 election, digital
radio was still not a reality. At the time this situation evoked extensive
criticism of the Howard Government. However, during the 2004 election
campaign, the government responded to this criticism with a commitment
to work with the radio industry in developing digital radio policy. It
announced a five-year moratorium on the issue of new commercial digital
radio licences, arguing that this timeframe was needed to resolve technology
and spectrum issues and to determine the timetable for the rollout of
digital services.[6]
In October 2005, the government introduced a policy framework
for digital radio. The framework was particularly welcomed by commercial
broadcasters who committed to investing an estimated $400 million to make
digital radio happen.[7]
In March 2007, legislation was introduced into Federal
Parliament to implement the government’s digital radio plans. The legislation
was referred to a Senate inquiry which noted some of the issues that will
affect the introduction of digital radio and which had been previously
raised by stakeholders. These included the scarcity of spectrum available
for digital transmissions, limitations of the DAB technology in servicing
regional and remote areas and the need for broadcasters to co-operate
in the use of a single data stream within the DAB technology multiplexes.[8]
The majority of the Senate committee considered the concerns were insufficient
to delay the introduction of digital radio further and supported the legislation.
Relevant amendments to the Broadcasting Services Act 1992 to give
effect to the digital radio framework were passed in May 2007.[9]
At the same time as legislation was introduced into Parliament,
the radio industry announced that a new, superior standard for Eureka
147 technology, the DAB+ standard, had been developed and that this technology
would be used when digital radio was launched in Australia. The first
digital radio services were due to commence in the state capital city
markets on 1 January 2009.
Following the 2007 election, the Rudd Government provided
an option in its first Budget for broadcasters to delay this requirement
to commence digital transmissions by six months. It noted at the time,
however, that this extension did not prevent operators from commencing
broadcasts of digital radio services on 1 January 2009 as had been legislated
by the previous government.[10] There was initially some confusion as to the intent of this
announcement, but this was quickly overcome and a number of broadcasters
indicated that while this option may be available for some operators that
many intended to commence digital transmission from 1 January 2009.[11]
In a submission to the Senate inquiry into the digital
radio legislation in 2007 the Community Broadcasting Association of Australia
(CBAA) raised a number of concerns about how the legislative framework
for transition to digital would affect community broadcasting. The first
concern was that the legislation did ‘not provide capacity for community
radio broadcasting services on all available multiplexes[12],
which had previously been guaranteed in the Howard Government’s digital
radio framework.
Secondly, the CBAA expressed concern about the collaborative
management structure that would be imposed on wide-coverage community
radio broadcasters by way of a ‘digital representative company’.[13]
Under the collaborative structure, Digital
Representative Companies were to determine how the community radio stations
in each city collectively and collaboratively accessed digital spectrum.
The companies were also required to become shareholders with commercial
radio licensees in what were labelled joint venture companies. These joint
venture companies would then own and operate transmission multiplexes.
CBAA argued that imposing this extra layer of management
obligation on the community radio sector was unduly prescriptive. CBAA
suggested that instead of the proposed model, a direct licensing model
similar to that which applied to commercial broadcasting be adopted.[14]
The community station Triple R also expressed its concern
to the Senate committee about the proposed digital representative companies
which Triple R believed placed ‘unnecessary additional management requirements
and costs on the community broadcasting sector’ and which it considered
would restrict the development of ‘more creative solutions to content
collaboration, management and delivery’ in a digital environment.[15]
In its submission to the committee, Commercial Radio
Australia, on the other hand, considered that the community sector had
been given ‘excessive’ access to DAB multiplexes. It was also supportive
of the idea that community radio was required to form digital representative
companies believing this to be ‘a far more workable approach’ than that
suggested by CBAA.[16]
The Senate committee sought advice on this and a number
of other relevant matters from the Department of Communications, Information
Technology and the Arts and eventually concluded that it was likely the
community radio sector’s concerns were ‘unduly pessimistic’.[17] The Digital Radio Bill was passed without changes
to the company provisions.[18] This meant that eligible metro-wide
community radio stations had to elect to join a digital representative
company by 9 April 2008, that these companies needed to join with joint
venture companies by 21 April 2008 and that joint venture companies were
required to apply for multiplex apparatus licenses by 9 May 2008.[19]
Following the 2007 election, the CBAA petitioned the
Rudd Government to bring forward $2.4 million of the funding promised
by the previous government to help the community sector to comply with
these deadlines. When the government did not respond by the April 2008
deadline, media commentator Margaret Simons made the point that:
Without signing [to establish joint venture companies],
community radio risks being locked out of the discussions that will
guide the future of digital radio. Yet signing meant making major financial
commitments to companies effectively managed by the commercial radio
stations, without any clarity on the potential liabilities in the future.
Around the country community radio has been scraping
the bottom of the till to find the money to sign up. Some stations simply
haven’t been able to pay their share, and are either locked out or else
being subsidised by others.[20]
Simons was of the opinion that even those community stations
that managed to join joint venture companies would be dominated within
the companies by commercial radio members and further disadvantaged by
the fact that they would receive access to significantly less spectrum
than the commercial sector.[21]
There was no funding provided to assist the community
radio sector in transferring to digital technology in the 2008–09 Budget,
but it appears that funding of $11.2 million provided over three years
has been set aside from the 2009–10 financial year.[22] The President of the CBAA has been quoted as being relieved
that this funding will give community radio some sort of ‘digital future’.[23]
The Explanatory Memorandum to this Bill acknowledges
that the government’s decisions to defer funding for community broadcasters
prevented representative companies from obtaining shares in joint venture
companies. This bill ‘seeks to extend to the community broadcasting sector
the option of taking up shares in [joint venture companies]’.[24]
Australia Labor Party members on the Senate committee
that considered the digital radio legislation in 2007 argued that the
condition imposed on community broadcasters was ‘onerous’.[25]
There appears to be no comments from the other parties
recorded in relation to this Bill.
The first measure in this legislation provides
more flexibility for commercial radio broadcasters who may be experiencing
difficulty in meeting the previously legislated deadline for the introduction
of digital radio.[26]
The measure does not, however, disadvantage those operators who may be
able to meet the earlier deadline.
The second measure also provides flexibility
for the capital city market of Hobart to commence digital transmissions
within a time frame more suitable to a market of its size.[27]
It is the third measure in the Bill which
is regarded as the most contentious.[28]
It can be argued that given the difficulty that community radio stations
experienced in raising sufficient capital to participate in the joint
venture companies that will own digital radio transmission infrastructure,
the extension of time to allow them a further opportunity to become part
of the digital radio landscape is also a reasonable concession to this
broadcasting sector. However, the argument advanced by the community
sector that the requirement – which is maintained in this Bill - to form
digital representative companies in each capital city is excessively onerous
has some merit.
While there is a concession in this Bill which accommodates
market size for commercial radio in relation to the Hobart case, there
is no such consideration in relation to the community sector. As the CBAA
noted in 2007, because of the nature of the sector, collaboration and
cooperation for a number of community stations may be more appropriate
at a national or a ‘communities of interest’ level, rather than on a city
by city basis.[29] While there clearly needs to
be a management structure for digital radio infrastructure, it appears
that the one chosen previously and perpetuated in this bill does not best
serve the interests of all broadcasters who will be required to share
digital multiplexes.
At its meeting of 18 September 2008, the Selection of Bills
Committee deferred consideration of the Bill until its next meeting.[30]
According to the Explanatory Memorandum, the measures
in the Bill are not expected to have any financial impact on Commonwealth
revenue.[31] However, it should be noted
that the Bill provides that if, as a result of the amendments in the Bill,
there is an acquisition of property from a person otherwise than on just
terms, the Commonwealth will be liable to pay a reasonable amount of compensation.
Items 1-3 of the Bill
amend existing section 8AC of the Broadcasting Services Act which provides
for the digital radio start-up day.
Existing paragraph 8AC(3)(a) provides that the Australian
Communications and Media Authority (ACMA) must ensure that the digital
radio start-up day for a metropolitan licence area[32] is not later than 1 January 2009. Item 1 amends paragraph
8AC(3)(a) so that the start-up day is 1 July 2009.
Existing subsection 8AC(8) defines the term ‘metropolitan
licence area’ as a licence area in which is situated the General
Post Office of the capital city of each of the states of Australia. Items
2 and 3 amend existing paragraphs 8AC(8)(e) and (f) so that Tasmania
is removed from the definition. The effect of this amendment is to remove
the requirement for broadcasters to commence digital radio services in
Hobart by the extended deadline of 1 July 2009.[33]
Items 4 and 5 amend the Radiocommunications Act.
Existing section 109D sets out the various conditions which apply to ‘foundation
digital radio multiplex transmitter licences’.
Spectrum issues have been a factor in the development
of Australia’s digital radio framework. In Australia, much of the spectrum
suitable for digital radio broadcasting is already being used for analog
and digital television, and Defence communications. As a result, unoccupied
spectrum appropriate for digital radio services is limited, particularly
in Sydney and Melbourne. For digital radio, the spectrum is split into
‘multiplexes’, allowing a number of different streams of content to be
broadcast within the one spectrum band. Overseas experience has shown
that management of each multiplex can be a contentious issue, as the manager
or ‘owner’ has a potential gatekeeper function with respect to access
to content streams.[34]
According to the relevant
Bills Digest[35], the Broadcasting Legislation
Amendment (Digital Radio) Act 2007 implemented the following multiplex
management and access arrangements:
- drawing a distinction between foundation digital radio multiplex
transmitter licences and non-foundation digital radio multiplex
transmitter licences:
- foundation digital radio multiplex
transmitter licences are licences that provide standard access
entitlements for digital commercial, digital community and digital
national radio broadcasting operators in an area. They are licences
designed to accommodate incumbent operators.
- non-foundation digital radio multiplex
transmitter licences are any additional licences issued in an area
which do not provide for standard access entitlements. They are
licences intended to accommodate any future digital radio broadcasters.
- licences are divided into three categories:
- Category 1 licences are provided to commercial
broadcasters and wide-coverage community broadcasters who elect
to jointly operate multiplexes for a service in their licence area.
Any such election is subject to minimum requirements for community
broadcasters, to ensure the joint venture operates
fairly and transparently.[36]
- Category 2 licences are offered to joint
ventures which may comprise commercial, community and national
broadcasters. Incumbents were offered first choice to take up the
licence, for an administration fee only. If incumbents choose not
to apply for a Category 2 licence, or the application is rejected,
ACMA may allocate the licence to newcomers on an auction system.[37]
- Category 3 licences are reserved for
the national broadcasters (ABC and SBS), to jointly manage a multiplex
in all markets, separate from the other broadcasters.[38]
Item 4 of this Bill inserts proposed subsections
109D(3)-(5) which contain further conditions for foundation digital
radio multiplex transmitter licences. Those conditions relate to the
ownership of shares in the joint venture company.
Proposed subsection 109D(3) operates when each
of the following circumstances is satisfied:
- there is a digital community radio broadcasting representative
company[39] which gives
the licensee[40] a written
request to be issued with shares in the licensee and
- that request is made either before the relevant digital start-up day
or within 12 months after the digital radio start-up day and
- no shares were issued to the digital community radio
broadcasting representative company even if an invitation was made to
it under either paragraph 102C(5)(a) or 102D(5)(a) in relation to the
formation of the licensee.
In that case the licensee must do all of the following:
give the digital community radio broadcasting
representative company a written offer of a number of shares in the licensee
which, if accepted, would give the digital community radio
broadcasting representative company two‑ninths of the shares in
the licensee: proposed paragraph 109D(3)(e)
- make the offer to the digital community radio broadcasting
representative company within 30 days after the written request is received:
proposed paragraph 109D(3)(f)
- keep the offer open for at least 120 days: proposed paragraph 109D(3)(g)
- make sure that any rights and restrictions attached to the shares
are the same those attached to the shares held by existing shareholders
in the licensee: proposed paragraph 109D(3)(h) and
- ensure that the offer price per share does not exceed the amount worked
out using prescribed formula: proposed paragraph 109D(3)(i)
Under proposed subsection
109D(4) digital community radio broadcasting representative
company is entitled to make only one request under proposed subsection
109D(3). However, where a licensee fails to comply with the terms of
proposed subsection 109D(3) then any request by the digital community
radio broadcasting representative company is to be disregarded for the
purposes of the once only request limit in section 109D(4): proposed
subsection 109D(5).
There is, entrenched in section 51(xxxi) of the Constitution,
a guarantee which stipulates that property acquired by the Commonwealth
Government must be acquired ‘on just terms’.
Item 5 refers to an acquisition otherwise than
on just terms in the context of section 51(xxxi) of the Constitution
but then provides that the Commonwealth is liable to pay a 'reasonable
amount of compensation'. It should be noted that proposed section
113A:
- does not specifically apply paragraph 51(xxxi) of the Constitution
to the acquisition
- does not require ‘just terms’
- provides that the Commonwealth is liable to pay a ‘reasonable amount
of compensation’, as distinct from ‘just terms’.
However, use of such a provision is commonplace, for example,
section 152AQC of the Trade Practices Act 1974 and in section 60
of the Northern Territory Emergency Response Act 2007.
[4]. DAB radio uses a multiplex to combine a number
of programs into a single data stream for transmission. A DAB multiplex
is made up of ‘bits’ which are used for carrying audio, data and an error
protection system against transmission errors. It is possible to allocate
a different number of bits on a multiplex to different services at different
times and stations. Typically, DAB radio can deliver five compact disc
quality stereo radio services (or more, if the services are of lesser
audio quality) over a medium bandwidth of approximately 1.5 MHz.
[40]. For a spectrum licence,
the term ‘licensee’ is defined in section 5 as the person specified in
the licence as the licensee, whether the licence was originally issued
to that person or subsequently assigned to him or her.
Rhonda Jolly and Paula Pyburne
24 September 2008
Bills Digest Service
Parliamentary Library
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