The Abbott Government’s Chance For Real Reform

The word “deregulation” has been steadily degraded over the last two decades. Like the word reform, it is both overused and overly abstract.

Earlier this month Malcolm Turnbull’s Department of Communications released a discussion paper on the way the government manages the radiofrequency spectrum.

The paper has received little attention. That’s not a surprise. Spectrum governance is about as interesting and accessible as how the tax office calculates franking credits.

But what’s being proposed is rather radical and incredibly important – a move away from the Soviet-style command-and-control regulation of spectrum to market-orientated governance.

It is, in other words, the sort of deregulation that the government is going to have to pursue if it wants to be remembered as a reforming government.

Spectrum is one of the economy’s most valuable assets.

We need spectrum for everything from broadcast television to mobile internet access.

The services and technologies that rely on spectrum add billions to the Australian economy. One British estimate of the economic value add of spectrum in that country was AU$90 billion.

Yet for all its economic significance we regulate and control it in an incredibly retrograde way – through central planning and government allocation.

Think of spectrum a little bit like land. There’s a limited amount of it, but it can be divided up almost infinitely and used in different ways.

And of course, some ways are better value than others. We’re using spectrum more efficiently than we used to (the spectrum that once could only fit one broadcast television channel can now fit many) but we’re also demanding more of it as new technologies are adopted.

The Australian Communications and Media Authority (ACMA) dictates how spectrum is allocated – which parts are used by broadcasters, which are free for domestic uses like WiFi, which parts are for military or law enforcement use.

Nobody seriously suggests that ACMA allocates spectrum efficiently – that is, to its best use. And basic economics tells us that inefficient resource allocation is an unnecessary burden on the economy, on long term growth, and ultimately on our living standards. And it slows the spread of new technologies.

Indeed, it is the government’s tight control of spectrum which has kept the entire broadcast sector so farcically protectionist. This archaic system of spectrum allocation is why there is so much rent-seeking and crony capitalism in broadcasting.

The commercial television broadcasters have long lobbied against a fourth television network which would undercut their profitability. When broadcasting moved from analogue to digital, the government gave away masses of spectrum to the existing broadcasters – shirking this once-in-a-century opportunity to inject some competition into the sector.

If you’re unhappy with the quality of commercial television in this country, well, blame the government’s spectrum protectionism.
Likewise, centralised spectrum management gives the government a stick to control the free speech of broadcast media. All those hapless ACMA investigations into Alan Jones are based on a threat – however distant – that station broadcasting licenses might be revoked.

Turnbull’s discussion paper raises a number of proposals to simplify spectrum management.

But the most important is number 8, under the rather bland title “Facilitate greater user involvement in spectrum management”.

Under this proposal, ACMA would devolve spectrum management to users and private spectrum band managers.

Users and private firms would decide how spectrum was allocated, the rules under which it was used, figure out pricing mechanisms, and they’d adjudicate disputes. ACMA would be reduced to a spectrum watchdog.

Imagine band managers with a financial incentive to allocate spectrum to the highest value. This would be a big step towards treating spectrum like an economic asset like any other.

Eventually the vast bulk of ACMA’s regulatory apparatus should be replaced by a property rights based spectrum regime. In other words, the market would decide how spectrum is allocated.

The idea that the market could allocate spectrum better than government planners is an old one in the history of economic thought.

The economist Ronald Coase won his 1991 Nobel Prize for a program of work that begun with an examination of how the Federal Communications Commission in the United States prevented the efficient allocation of spectrum.

A paper commissioned and published by ACMA itself in 2007 acknowledged some benefits of granting property rights in spectrum – not least in reducing the inefficiencies caused by command-and-control allocation.

And we’ve been inching towards a property rights based spectrum regime over the last few decades.

The government has been allocating some spectrum licences through competitive auctions since the early 1990s. The Gillard government’s Convergence Review called for “a market-based pricing approach” for all spectrum, broadcast and non-broadcast. And the Communications Department is trying to figure out how to create deeper secondary markets in spectrum trading.

In other words, fully embracing the property rights model of spectrum management would be reform in the direction we are already travelling.

The Abbott government has trumpeted loudly its deregulation and red tape reduction agenda. But it’s likely that the real reforms will come outside those highly publicised “repeal days”.

Government spectrum management dates back to the Wireless Telegraphy Act 1905, when the Commonwealth decided it wanted absolute control over the new communications technology.

That makes spectrum control one of the oldest and most stubborn regulatory constructs in Australian history.

For more than a century it has been a burden on the economy, a handbrake on the adoption of new technologies, and a weapon for suppressing free speech.

Deregulating spectrum might be one of the most important things the Abbott government could do.

Time To Ditch Antiquated Media Regulations

It is incredible to think the Australian government imposes largely the same regulations on media ownership that it did in the 1930s.

Waves of change in Australia’s economic system have come and gone in that time. Not to mention technologies.

Indeed, television was in its experimental infancy when the first broadcasting ownership limits were imposed.

Statutory Rule 104 of 1935 allowed no more than one metropolitan broadcasting licence per state, two metropolitan licences in the country, three regional stations per state, and so forth.

How different a world was it? When a joint parliamentary committee examined Australia’s broadcasting regulations seven years later, the other big topic was whether to nationalise the commercial broadcasters outright. (The committee was divided on this sensitive issue.)

Communications Minister Malcolm Turnbull is looking at finally eliminating some of the antiquated rules that limit how much traditional media one company can own.

The two major descendants of Statutory Rule 104 are the 75 per cent rule – which prevents a firm or individual from broadcasting to more than three quarters of the Australian population – and the two-out-of-three rule – which limits a firm or individual to owning only two of three out of television, radio, or newspaper in any given market.

There are a couple of others – and of course all mergers in all industries are subject to general competition law – but it is those two rules that are apparently in Turnbull’s sights.

As they should be. It is fundamentally absurd that the same restrictions, based on the very same arguments, are being applied to our media-rich world as were being applied to the media-constrained world of 1935.

The 1942 parliamentary report spoke of “the inherent dangers of allowing the control of commercial broadcasting to become a monopoly or a partial monopoly.”

A 2013 parliamentary report into media law changes made the same argument in different words: media ownership restrictions were all about protecting “diversity” in the media sector.

The shift in language is slight, but it’s also amusingly wrongheaded. Diversity is the one thing we now have in spades. The head of the press council, Julian Disney, even complains of the”cacophony” of voices on the internet.

Just a few years ago supporters of media ownership restrictions would argue that Australia’s narrow media landscape meant that Australians had little choice but to get their news and views from the big corporate media conglomerates.

Of course nobody could seriously make that argument anymore.

So now the argument is that while there might be lots of diversity online, most Australians still consume content produced by the big newspapers and broadcasters. As a consequence, the mainstream media still leads the discussion. The reasoning seems to be something like this: you can lead a horse to water, but you can’t make them drink.

The patronising paternalism of this argument should be obvious – as should be the implicit suggestion that the real media diversity problem is that Australians don’t want media diversity.

But it is not novel to point out that the internet has made all the old arguments for media ownership restrictions into laughable anachronisms. At Crikey, Bernard Keane and Glenn Dyer are right: It’s hard for the Government to claim it’s purely motivated by digital libertarianism in media ownership considering it also has plans for a social media censorship scheme and a “three strikes” policy for file sharing.

Broadcasting is one of the most highly protected sectors of the economy. The business is built almost entirely on rent-seeking. You can bet there’s a stream of media lobbyists filing in and out of parliament house every day. The media firms know exactly what they hope to get out of the next round of regulatory change. The deals have probably already been made.

None of that has changed since media ownership laws were last seriously revisited under the Howard government in 2006. (Labor tried to change the 75 per cent rule as part of its media regulation package early last year but that was fumbled along with the rest it.)

Then, as now, broadcasters were self-interested. The arrival of new online media firms was slightly more hypothetical eight years ago, but it was pretty obvious which way the wind was blowing.

What has changed since 2006 has been the incredible implosion of the legacy media firms. The slow erosion of newspaper profitability has become rapid disintegration. In 2012, Fairfax announced it was shedding an incredible 1900 staff. News Limited has been a bit more circumspect but the job losses are huge there as well.

Industry consolidation may be the only way to save some of our legacy media outlets.

The loss of classified advertising revenue makes the idea of a free-standing, traditionally-structured, independently-profitable newspaper a thing of the past. There has never been a more important time to ensure that the industry is institutionally flexible – capable of experimenting with ownership structures and capable of forming new alliances if necessary.

As Michelle Grattan puts it, there are big prizes about. And this is a sector that has found few prizes in recent years.

The irony is the 1930s rush by newspapers to buy radio broadcasting licences – the rush that inspired media ownership regulation in the first place – was out of fear that advertising revenue would migrate from print to the airwaves.

In the 1930s and ’40s the fear that newspapers would lose their rivers of gold was misplaced.

Now that fear has been completely, irreversibly realised.

Why keep ownership regulations that were so manifestly designed for another age?

Media Reform And A Missed Opportunity

Has Stephen Conroy forgotten why he began this media debate?

It wasn’t because of the phone hacking scandal in the United Kingdom. Nor was it Bob Brown describing News Limited papers as the “hate media”.

And it certainly wasn’t any discernible community unhappiness about the Australian Press Council. (Media Watch might be obsessed with newspaper codes of ethics but please try to remember that Media Watch is not a representative sample of the population.)

No, none of that. In 2010, Conroy launched an inquiry that the communications and media sector had long been desperate for – the Convergence Review.

This review was meant to take a holistic look at the way the technological change was undermining the regulations that govern media, telecommunications, and broadcasting. It was quite an undertaking. We’ve more than a century of built-up regulatory frameworks which limit what media we can enjoy and the circumstances in which we can enjoy it. It is universally agreed these frameworks are out of date and counter-productive. I covered some of the issues in the Drum in 2011.

Indeed, the Convergence Review was everything the Howard government’s 2006 media reform changes should have been. It was forward-thinking and technologically aware – rare qualities for government inquiries. Politicians like to talk about future-proofing but they’re always focused on the politics of the day.

(There was a smaller, now-forgotten review into converging media back in the days of Richard Alston. Nothing came of it. The government was mired in the grubby politics of the switch to digital television broadcasting.)

Sixty-nine separate organisations, from Skype to Blind Citizens Australia, gave submissions on the Convergence Review’s draft terms of reference alone.

The review released five comprehensive discussion papers and one interim report. There were hundreds of submissions along the way. There were public hearings in eight cities. The final report, published in March 2012, was 200 pages long.

I don’t want to be too complimentary. That final report had many problems. It had been given an impossible task. The Convergence Review had to a) radically overhaul the current regulatory framework to meet future challenges, and b) please all beneficiaries of the existing system. These two demands conflict. And then it tried to shoehorn itself into the debate about newspaper standards, exceeding its mandate and undermining its broader purpose.

Nevertheless, from a purely public policy perspective, dealing with the winds of change brought about by technological innovation was the main game. It still is.

We have to be much less generous about the Independent Inquiry into Media and Media Regulation, known as the Finkelstein Review. The end result – a 400-page report that traversed history, sociology, political science, psychology and media studies at a barely-undergraduate level – was in equal parts patronising and authoritarian. It recommended extraordinary government regulation of the free press.

Still, very little of all that effort comes out in the final media reform proposals. Last Tuesday Stephen Conroy supposedly announced his response to the Convergence Review and the Finkelstein review.

The Government wants a new Public Interest Media Advocate to regulate newspaper standards bodies (like the Australian Press Council) and to impose a public interest test on media mergers. He also wants to legislate a permanent cut in broadcasting licences, marginally increase Australian content requirements, and to tinker with the ABC’s charter.

Conroy says we’ve spent the last few years debating media regulation but these proposals are entirely new.

There’s no “Public Interest Media Advocate” in either the Convergence or Finkelstein review.

Admittedly, the idea of a “public interest test” did appear in the Convergence Review. But it was a tiny sliver of a much broader proposal to rationalise media regulation across all platforms. To rip three words out of the Convergence Review is to miss the point entirely. The purpose of the public interest test, as conceived in Convergence Review, is to completely remove “the old platform-specific media ownership rules”. Conroy doesn’t plan to do anything of the sort.

The Government has offered nothing – absolutely nothing – to deal with the issues raised by technological change.

For its part, the Finkelstein report inadvertently showed how far the media policy debate had moved from media reality.

The final Finkelstein report was released in March 2012. It had two jobs. The first was to investigate standards and media codes of practice. This received all the attention. But its second job was to look at technological change and how that affects media business models. Here’s an exact quote from the final report:

major newspaper publishers confidently presented a positive assessment of their future prospects.

Of course, just over three months later Fairfax media announced one of the single biggest restructurings in Australian media history, shedding nearly 2,000 staff. News Limited cut staff as well. Finkelstein was released in March. By June it was an anachronism.

And now we’re here. Conroy’s proposed Public Interest Media Advocate has serious freedom of the press problems. Those have been well-canvassed over the last week.

But of greater long-term importance is how a much-needed investigation into regulation and technological change turned into little more than a platform for politicians to express their feelings about Rupert Murdoch.

And what on earth is the use of that? All this sound and fury could achieve is just an extended exercise in political gamesmanship.

Another wildly missed opportunity. Another government distracted from necessary reform in the pursuit of its political agenda.

Opening statement to Commonwealth Environment and Communications Legislation Committee inquiry into the News Media Reform Package 2013

With Simon Breheny

The news media reform package 2013 is nothing less than an attack on freedom of speech and freedom of the press in Australia. It is absurd to claim that the government could institute a regulator to regulate media self-regulators like the Australian Press Council and pretend that doing so would not constitute substantial new government oversight of the free press. This is a fundamental conceptual error with very disturbing consequences and, in our view, government oversight of the press is unacceptable in a liberal democracy. The government has no business deciding what constitutes fairness or balance in a media whose job it is to hold them to account. That ought to be a bedrock principle accepted by all sides of political debate.

We have a number of specific points we would like to raise about the proposed public interest media advocate. The government-appointed PIMA would be responsible for deciding which news media self-regulation bodies’ members would receive an exemption from the Privacy Act and which would not. This regime means that news outlets will never be able to write about things that are claimed to be personal or sensitive. The news-gathering functions of a news media organisation would be shackled for fear of breaching the Privacy Act. To us, the coupling of Privacy Act exemptions with regulated membership clearly makes this a de facto licensing system, further emphasising the significance of the attack on free expression that the proposal represents.

The minister can directly and unilaterally appoint any person to the public interest media advocate role. Government members of this committee might reflect about whom a future government could appoint and whether instilling such significant powers over the press on a political appointee is democratically desirable. This is doubly so because of the entirely undefined concept of public interest that this entire project seems to be founded on. I am sure that our idea of what is in the public interest is different to the ideas of some members of the committee.

The proposed regime also undermines fundamental legal rights. The bills provide no avenue for appeal of a decision of the PIMA, they reverse the burden of proof in cases of proposed media mergers and they use ambiguous terms that give the PIMA enormous discretionary power.

The most disappointing part of this process is how the government has completely shirked the necessary reform to regulatory frameworks governing media and communications. There is almost nothing in these bills that deals with the serious and important problems in media regulation brought about by technological convergence. Instead, the process seems to have been entirely diverted by a partisan battle between one side of politics and one media company.

We have one final, broader concern. Chris Berg and I appeared before another Senate inquiry into another bill less than two months ago, on 23 January 2013, to defend freedom of speech against another real threat posed by legislation that this government proposed. That bill was the draft Human Rights and Anti-discrimination Bill 2012. Both pieces of legislation seek to shrink civil society by restricting free speech, one under the guise of human rights and the other under the guise of fairness and accuracy in the media. For these reasons, it is our view that the bills should be rejected.

It’s About More Than Just Phone Hacking … Unfortunately

If you want to know what actually happened in the British phone hacking scandal, you won’t find it in the Leveson inquiry report released last Thursday.

The report comprises almost 2,000 pages; it’s spread across four volumes and has 59 separate chapters. It has a lot of stuff about media history and ethics and philosophy; a lot of hand-wringing about press “culture” and personal friendships between Fleet Street and Westminster.

But not a lot about who committed what crime and when.

For instance, the fact that Rebekah Brooks and Andy Coulson (both ex-News of the World editors) are in court this week facing charges of corrupt payments to public officials does not inform the report.

Nor the fact that at least three public officials have been arrested for misconduct in a public office – that is, corruption.

Lord Justice Leveson is recommending statutory regulation of the press before his inquiry has gotten to the bottom of the phone hacking scandal.

Even by the woolly standards of judge-led policy advocacy, this is pretty stark. Especially considering his proposals would be a reversal of the four-century-old victory of free press over state power.

The Leveson inquiry’s terms of reference are split in two. Part 1 looks at the “culture, practices, and ethics of the press”. Part 2 investigates the specific allegations of unlawful conduct and corrupt payments between press and police.

This is the real issue, as I argued in July last year. Criminal acts are a bad thing and should be punished. But criminal acts with the assistance of police are much, much more disconcerting. Thursday’s report is Part 1. Part 2 hasn’t even started yet.

Operation Elveden – the Metropolitan Police Department’s investigation into corruption in the police force – is ongoing. Leveson writes that he doesn’t want to step on its toes. Repeatedly throughout the report, witnesses suggest serious things. For instance, unnamed senior officers are “rumoured to be corrupt”, but the story ends there, “for fear of undermining what could be an ongoing investigation”.

Still, the first report reveals a litany of errors, misjudgements and bureaucratic backside-covering that allowed the scandal to build before it exploded in 2011.

Between 2001 and 2003, the Devon and Cornwall Police discovered a ring of retired and serving police officers selling information from police databases to private investigators. The investigators were then selling that information to various clients, some of whom were journalists.

Such privacy breaches are not unusual. Over the last decade, more than 200 Metropolitan police officers and civilian administrators have been disciplined for wrongfully accessing the Police National Database. The current commissioner described this to the Leveson inquiry as a “chronic problem”.

But when the Devon and Cornwall Police cases went to court, the judges let the accused go with conditional discharges. They didn’t even get fined.

When the story surfaced again in 2006 (this time the Royal family was claiming its private phone messages were being listened to) memory of the pathetic sentences given to the earlier cases meant the London police were reluctant to aggressively push their investigations. It just wasn’t worth the effort. That, and Britain was at the height of the anti-terrorism campaign. In the wake of the London bombings, chasing privacy prosecutions was less a priority than hunting violent Islamists.

Still, one reporter – News of the World’s “one rogue reporter” – was prosecuted. As part of its investigations, the police found a huge list of potential victims, but it failed to notify them.
Three years later, the Guardian and the New York Times published allegations of widespread phone hacking. This time, the police stonewalled. The issue had already been dealt with. To admit that there was more to the case was to admit that they were wrong to draw a line under the rogue reporter in 2006.

The Milly Dowler story erupted in July 2011. The police had been in possession of seized documents with her name – and Hugh Grant’s name – since the first investigations in 2003.

I’ve dwelled on this timeline because it is the closest the Leveson report gets to an exploration of the specific failures that led to the phone hacking scandal.

It’s all well and good to wax lyrical about ethics and press culture. But if we want to link problem to solution – a basic requirement in the development of good public policy – we have to know what actually caused the events we’re concerned about.

And too much of the Leveson report is divorced from the phone hacking itself. You can understand why David Cameron offered Leveson such a wide brief – he was embarrassed about his relationship to the now disgraced Andy Coulson. But the distance between scandal detail and regulatory proposals undermines the point of the whole inquiry.

To be fair, Leveson’s effort is far better than Australia’s Finkelstein inquiry. Here, Justice Ray Finkelstein wasn’t even given a scandal to work with – he had to construct a justification for press regulation out of thin air. Where Britain had the Milly Dowler case, Australia had the vibe of the thing.

So it is not insignificant that the Finkelstein and Leveson recommendations were so similar: statutory regulation of the press disguised as “self-regulation”. In the UK this is apparently the solution to widespread criminality. In Australia it is apparently a solution to … well, what exactly? The strongest case Finkelstein could come up with was that newspapers gave an unbalanced presentation of climate science.

But there’s a vocal group of people who want a new regulator backed by government, so that’s what gets recommended. Is there anybody who didn’t think Leveson or Finkelstein would call for new regulation? The only suspense has been for the details.

Last week David Cameron rejected those details – he would not cross the Rubicon into press regulation. Hopefully, Julia Gillard and Stephen Conroy will do the same.

Stay tuned for the red underpants theory of bad TV

Occasionally, usually by accident (sometimes if they think nobody is listening) politicians say what they really believe.

“I have unfettered legal power,” Communications Minister Stephen Conroy told an obscure conference in New York in September. “If I say to everyone in this room, ‘If you want to bid in our spectrum auction you’d better wear red underpants on your head’, I’ve got some news for you. You’ll be wearing them on your head.”

Conroy was clearly having a bit of fun. But he’s right. He has complete, arbitrary and absolute control over who broadcasts on the airwaves and the circumstances in which they broadcast, and that control has been disastrous for television consumers.

Let’s call this the ”red underpants” theory of why Australian TV is so bad. Australia seems to have completely missed the great television renaissance. In the US and Britain, audiences are being treated to some of the most brilliant high-quality television the world has ever seen – think of everything from Mad Men to Breaking Bad to The Thick of It.

But Australian commercial TV is languishing. The networks are producing nothing comparable to what’s being made overseas. Their biggest problem is how quickly they can show foreign programs before everybody downloads them. This week Channel Ten announced both a full-year loss and voluntary redundancies. Channel Nine is buried in debt and flirting with receivership.

It’s easy to feel sympathy for those whose livelihoods are threatened. It’s hard to feel sympathy for the networks. The television broadcasting industry is probably Australia’s last, greatest vestige of crony capitalism.

Mr Conroy’s unfettered red underpants power – and that of the communications ministers who’ve gone before him – has been used to protect broadcasters from competition, lock out new technologies and entrench tired business models.

Basic economics tells us that when you deliberately limit competition you lower quality. Basic politics tells us when governments and corporations get into bed, consumers lose.

Broadcasting was a protected industry from day one. In 1905 the Commonwealth government took absolute control over the airwaves with the Wireless Telegraphy Act. The government had delayed passing the legislation for a few years. It was worried that the new wireless technology would be a competitive threat to the existing telegraph cable companies.

From then on, anybody who wanted to broadcast had to apply to the government for permission.

Throughout the 20th century, politicians forged close relationships with media moguls. Each scratched the other’s back. Politicians who played ball were treated kindly by the broadcasters. In return, governments kept away competition and protected advertising revenue. As one broadcasting regulator said in the 1970s, all decisions about the airwaves were ”very substantially influenced by political considerations”.

The number of radio and television stations has been strictly limited. It is extraordinary that in 2012 we still do not have a fourth television network.

New technologies were deliberately held back. The US had FM radio in the 1940s. There were experiments with FM transmission in Australia in 1947. But AM broadcasters didn’t want the competition. The government only licensed FM stations in 1974.

The delayed introduction of pay television was just as scandalous. There were several proposals to offer Australians pay TV services in the 1970s, but it wasn’t until the early 1990s the government relented. Even then it banned pay-TV advertising for the first few years – just to keep existing free-to-air broadcasters happy. Free-to-air television is still protected by laws that give it first dibs on the best sporting content. Don’t imagine this is done for the public’s benefit.

When the government finally got around to introducing digital television – a technology that allows the broadcast of dozens more channels on the same limited spectrum – the spectrum was offered exclusively to the three existing commercial networks. This is effectively a gift of hundreds of millions of dollars to a broadcasting cartel.

In 1959, Nobel Prize winning economist Ronald Coase proposed a way to get politics out of the airwaves. Treat radio spectrum like property, he argued, and let broadcasters use and trade their property as they see fit.

Because a government with unfettered power to force people to wear underpants on their head also has unfettered power to make deals with its media mates against the interests of the public.

Media Diversity Fears Are Absurd And Obsolete

The twin themes of the media debate – new regulation and creative destruction – coexist awkwardly.

Communications Minister Stephen Conroy told Channel Ten’s Meet the Press recently that his government’s proposed public interest test for media acquisitions was not aimed at Gina Rinehart’s investment in Fairfax. In fact, the mining magnate would pass the new test.

This revelation will disappoint many of his colleagues. But thank goodness. The Gillard Government is, happily, not so brazen as to write a new law to stop one particular critic from investing in the media. Doing so would be the essence of arbitrary government, and would be clearly in response to Gina Rinehart’s political views.

Not all media reform is a threat to free speech. But motives do matter. The Government’s hostility to News Limited damned the Finkelstein inquiry. Any new ownership regulation inspired by one specific proprietor would also be dodgy. Some in the government have suggested media purchases could be conditional on signing up to a charter of journalistic independence – which just happens to be the matter of dispute between Gina Rinehart and the Fairfax board. A coincidence, I’m sure.

So if the Labor government is backing away from such obviously political media laws, that’s good.

Yet Conroy’s defence on Meet the Press still struck a weird note. He argued that any suggestion the test was aimed at a specific person was false because the ALP has been campaigning for a public interest test for a long time.

That’s true. When the Howard government directed the Productivity Commission to look into media regulation in 1999, the Beazley opposition talked at length about public interest guidelines for ownership.

But that was a long time ago. Compare then and now. We had a very, very different media market in 1999. Google had only eight employees. Its news aggregation service was still three years away. And in the compressed history of the internet, Google is relatively old. MySpace didn’t launch until 2003. Most of what we think of as ‘new media’ didn’t exist. Facebook didn’t exist. YouTube didn’t exist. It wasn’t until mid-2000 that Apple starting thinking about music. The first iPod arrived in late 2001.

And when the Beazley-led opposition was first promoting a public interest test, Fairfax shares were trading at a price nearly 10 times greater than today. Indeed, the turn of the millennium seemed like a great time to get into newspapers.

In politics, consistency is usually admirable. Yet there is consistency and there is stubbornness. It’s bizarre hearing Conroy strike the exact same notes as Beazley did a dozen years ago. Everything has changed. Apparently the ideal policy has not.

For both Conroy and Beazley, the goal of extra media ownership restrictions would be to protect a diverse range of opinions and voices. But it is exactly the enormous choice of opinions and voices on the internet which is uprooting the media landscape.

Put it this way: budding moguls would not be able to buy press assets so easily if the newspaper business hadn’t been undercut by the very diversity Conroy claims is at risk. This is a weird recursive loop. Surely we do not believe the extraordinary growth of voices online is reducing the diversity of voices overall.

Yet that seems to be the logic behind the current push for a public interest test.

Policy proposals have use-by dates. Something that is arguable in one decade can be silly in the next. Press proprietors have never been less powerful than they are today. Newspapers and broadcasters do not have the monopoly on information they enjoyed in the past.

That Conroy’s views on this are about 10 years out of date shouldn’t be a surprise. Australia’s communications ministers are notorious for fighting the last war. They have a track record of either accidentally delaying or actively resisting the implications of technology. With motives good and bad, our ministers have held back the introduction of new radio stations, new television stations, pay television, and FM radio.

The Gillard Government’s Convergence Review was supposed to be a break with the past. Yet even it got caught up trying to impose anachronistic laws on new technologies. Local content requirements are one example of regulations which do not make sense in the internet age; ownership limits are another.

So the major policy outcome of the apparently forward-thinking Convergence and Finkelstein inquiries could be tackling obsolete fears of media moguls.

It is absurd to think that just as the newspaper industry is going through a once-in-a-century upheaval, the Government is devising ways to limit investment in the press. But in media regulation, absurd is not unusual.

Should Governments Protect Independent Journalism?

We already subsidise journalism heavily. The ABC’s budget for 2011-12 was $995 million. SBS got $223 million in the same period. And Parliament has specifically nominated the vast bulk of this money to “inform, educate and entertain audiences”.

So it’s peculiar that when media theorists devise clever schemes to subsidise journalism in order to protect democracy – such as publicly funded newspapers, or tax-deductibility for the print media – they rarely mention the money we give SBS and the ABC for that purpose.

Perhaps some people believe we should increase those broadcasters’ budgets. That’s a legitimate debate. Let’s all draw lines and argue it out. But pretending we do not already spend an enormous amount of the public’s money to inform the public is simply dishonest.

Our media debate is very provincial. Fairfax is at a crossroads. News Ltd is too, although that company is reluctant to admit it. Here, the US is about two to three years ahead of us. Their experience suggests the print media will shrink dramatically in the next few years. But it also tells us good journalism is good journalism, whether produced on paper or online.

I hope our two print giants develop new business models that suit the times. Certainly many others will. The online media in the US is vibrant and plentiful. Australian readers and writers have good reason to be optimistic, at least about the medium-term future.

If they want to be taken seriously, advocates of subsidies have to answer some basic questions. How many media outlets does healthy democracy require? We might assume more is better than fewer. But as the past year has demonstrated, many people believe some newspapers and radio stations should be run out of town. Several media critics suggest tabloids and talkback radio are hurting democracy . So just calling for “more journalism” is not much of a guide for policy-making.

Maybe the government should subsidise only “worthy” journalism, if there was a way to define such a thing. The business of the press has always been intimately connected with delivering something people want to read or watch. Right now, the case for even more journalism subsidies is little more than a thought bubble.

The Farce That Is The Leveson Inquiry

On October 7, 2009, News International chief Rebekah Brooks sent opposition leader David Cameron a text message:

I am so rooting for you tomorrow not just as a proud friend but because professionally we’re definitely in this together!

The “tomorrow” in question was the final day of that year’s Conservative Party conference. Cameron would not have been surprised by Brooks’s words. James Murdoch had told him the Sun newspaper would abandon Labour because the Conservatives would be better economic managers. During the Labour conference a week earlier the paper declared “Labour’s lost it”. So while Brooks put it in an unsophisticated way, she was right: professionally they were now “in this together”.

The uncovering of this bare little text message was the fruit of Cameron’s five hours of testimony to the Leveson inquiry into the phone-hacking scandal last week.

The message has been reported in headlines around the world, from the Huffington Post to the Calcutta Telegraph. It is, according to the Daily Mail, “explosive”, “cringe worthy”, “astonishing” and “incredibly embarrassing”.

But embarrassing for who, exactly? Cameron was the one giving testimony, not Brooks. It’s hard to see why an opposition leader securing the support of a media proprietor for an upcoming election should be cringe worthy. That is his job – to gather support where he can.

The Leveson inquiry started in November with Hugh Grant and the parents of the murdered school girl Milly Dowler. Back then, its themes were criminality and police corruption. It was surrounded by arrests and resignations and Scotland Yard. All serious stuff.

But six months later, what was a serious inquiry has devolved into a strange sort of puritanism. Participants are being judged against ethical rules unheard of before Leveson convened. For a newspaper to back a political party is apparently a breach of these novel rules. And friendship between politician and proprietor is outrageous.

The phone-hacking affair no longer has anything to do with phone-hacking. It’s trying to make scandals out of the basic practices of representative democracy.

Politicians cultivate relationships with journalists. They have to, if they want to achieve their political and policy goals. That might seem distasteful. We all share a romantic ideal about the fourth estate being implacably at odds with the first estate. But let’s not be too delicate. Democracy is about coalition-building. Journalists and editors are stakeholders. A politician that does not make friends in the media will not be a very successful politician.

But we also shouldn’t pretend Cameron’s fortunes were solely in the capricious hands of media moguls. Yes, only Brooks’s side of the SMS conversation has been released. But its clear impression is of a proprietor sucking up to an opposition leader – not, as those who imagine Rupert Murdoch has an iron-grip on politics expect, an opposition leader coming cap in hand to a proprietor.

So an ambitious Cameron convinced the Sun to editorialise in favour of his party in 2009. It’s questionable how big a coup this really was. Does anyone genuinely think Gordon Brown could have held on if he’d only had the Sun’s support? Labour had been in power for 12 years. Brown was astonishingly unpopular. And the British economy had collapsed. Tabloids have always chased popular sentiment more than they’ve led it.

In Australia, the Finkelstein Inquiry into media regulation flirted with deeper questions about the functioning of democracy. But, ultimately, Ray Finkelstein had a limited brief. His final report charged towards a single, digestible proposal for a new regulatory body. He steered clear of uncomfortable philosophical questions.

By contrast, the Leveson Inquiry lacks Finkelstein’s modesty. Lord Justice Leveson’s team has now grilled four Prime Ministers and nearly 20 cabinet ministers. They’ve interrogated them about press strategy and public relations, the use of anonymity and favouritism, leaks and friendships.

It’s Cameron’s fault. The phone-hacking was the scandal. But Cameron was embarrassed by having hired Andy Coulson, a former News of the World editor. So he gave Leveson virtually unlimited terms of reference. One of his tasks is to make recommendations concerning “the future conduct of relations between politicians and the press”, which would seem to encompass every aspect of political and government communication.

Future historians will no doubt appreciate Leveson’s forensic accounting of who had lunch with who. But it seems more designed to appeal to the coterie of media critics sure that democracy is on the slide.

There’s an absurdity that the Finkelstein and Leveson inquiries share. They both held court on the nature of democratic politics, and they were both conducted by a senior judge whose touted virtue is that they are independent and unaccountable – that is, completely undemocratic.

That Brooks’s artless text message is now seen as a scandal illustrates how farcical the Leveson circus has become.

Convergence Review Is Clever, Subtle … And Worrying

One pregnant sentence in the Convergence Review says, “It is important to note that the current Australian Press Council regime where members can opt out or reduce funding is not an acceptable situation.”

When the review’s draft terms of reference were released in 2010, nobody expected proposals to regulate ‘fairness’ in newspapers would form a core part of the review’s final report.

And that sentence’s claim – that voluntary press regulation is unacceptable, and regulation is necessary – undercuts the review’s repeated assertions that its “underlying approach [is] in favour of deregulation”.

The Convergence Review’s final report was released on Monday. Its task was to develop a framework whereby all media communications is regulated equally, regardless of whether it is distributed by radio, television, or the internet.

So it’s disappointing that the review got caught up in the swirling currents of vitriol between Rupert Murdoch’s newspapers and the Gillard Government.

The Convergence Review has proposed a new, mandatory agency to regulate “standards” in news journalism and commentary. In this, it offers a watered-down version of the proposals made by Ray Finkelstein in the Independent Media Inquiry earlier this year.

But Finkelstein Lite is also Finkelstein Possible.

Unlike Finkelstein’s proposal, this new body would not be a statutory authority, but “industry-led”. It would be funded by a mixture of private and government money. It would be analogous to the Australian Press Council, but no newspaper or broadcaster would be able to quit the new agency if they didn’t like the way they were being regulated – by law, membership would be compulsory.

And unlike the Finkelstein report’s proposal, it wouldn’t have an absurdly large jurisdiction. It wouldn’t catch those websites that had just 41 hits a day, or those tiny street magazines, or those email newsletters. Just the really big guys – Fairfax, News Limited, Ten, Foxtel, etc.

Indeed, the Convergence Review is a very clever document.

It avoids being too clear about what “sanctions” the industry-led regulator would have in its tool kit. And it is ambiguous as to how the regulator would enforce its sanctions. A short sentence buried in the report’s appendix suggests that enforcement would be “contractual” rather than legislative. This odd distinction raises many more questions than it answers.

But nowhere is the cleverness of the Convergence Review clearer than in a diagram which visually represents the media outlets that would fall under the jurisdiction of another new regulator – the “super-regulator” – which is to replace the Australian Communications and Media Authority. (The diagram is on page 12, for those playing along.)

Media organisations will have to meet certain revenue and audience thresholds to qualify. Those thresholds just happen to include all major newspapers and broadcasters, and they just happen to exclude all online media.

The thresholds have been drawn to make sure that Telstra, Apple and Google just fall just below them, and smaller broadcasters like Macquarie Radio Network and Grant Broadcasters pop just above. How convenient.

To be fair, this is thankfully a long way from the expansive plans of an interim convergence report released in December, which would have included everything except “emerging services, start-up businesses and individuals”.

But it’s pretty clear why the thresholds have been drawn so precisely. First: nobody wants to wake up to the headline “Gillard government’s plan to regulate the internet”. Second, and more critically: the Convergence Review doesn’t seem to have quite figured how converged regulation could actually work.

By deliberately excluding even the biggest websites, all the Convergence Review does is kick the ball down the court, and hope the super-regulator will take responsibility later.

It’s a neat way to avoid seriously rethinking the justification for old, legacy media regulations. And, given the Convergence Review’s focus on political feasibility above all else, it helpfully avoids upsetting the status quo too much.

Take for instance the Australian content requirements currently imposed on broadcasters. Sure, it would be tough to ween the culture industry off those long-standing subsidies. But it will be even tougher to shoehorn those requirements into the online world.

The best the Convergence Review can do is offer future online media outlets that provide “professional television-like drama, documentary or children’s content” an option to be taxed to support a “converged content production fund”.

Right now this is all hypothetical, because the Convergence Review draws its thresholds just above Telstra, Apple, and Google. Good decision. Another unhappy headline would be “Gillard Government to introduce internet tax”. But that is the practical upshot of its proposals … just not yet.

For the Government, the Convergence Review has the advantage of being possible to implement. It’s Conroy-ready.

But like Finkelstein’s proposal, the Convergence Review recommends a substantial intrusion into the free press.

Yes, not every little blog will be wrapped up in its regulatory arms. But it would still impose a regulatory body on newspapers, with some unspecified coercive powers, overseeing what is printed.

Don’t be deceived by the claim that the standards body would “industry-led”: it would be a compulsory regulator administering compulsory regulation. There is a world of difference between that and the currently voluntary Australian Press Council.

The authors of the Convergence Review have gone to a lot of effort to make their report subtle, not-too-obvious, politically feasible, and to avoid obviously upsetting the status quo.
But that shouldn’t be any comfort for those of us who still value freedom of the press.