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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