Review of the spectrum allocation powers of the Australian Broadcasting Authority

Introduction

Paragraph 59A(1) of Schedule 4 to the Broadcasting Services Act 1992 (BSA) requires the Minister for Communications, Information Technology and the Arts to cause to be conducted before 31 October 2000, a review into:

The Act requires the Minister to ensure that, in the conduct of the review, provision is made for public consultation, and consultation with national and commercial broadcasters.

Review Process

The Department of Communications, Information Technology and the Arts (DCITA) released an issues paper, prepared in consultation with the ABA and the Australian Communications Authority (ACA), on 12 October 2000. The ABA has responsibility for the management of spectrum designated by the Minister for Communications, Information Technology and the Arts, for broadcasting purposes (the broadcasting services bands (BSB) spectrum). The ACA has responsibility for managing non-BSB radiocommunications spectrum.

In response to the issues paper, submissions were received from the following organisations:

• Australian Broadcasting Authority (ABA);
• Australian Broadcasting Corporation (ABC);
• Australian Communications Authority (ACA);
• Australian Information Industry Association (AIIA);
• Community Broadcasting Association of Australia (CBAA);
• Department of Commerce & Trade, Western Australia;
• Digital Convergence Australia (DCA);
• The Federation of Australian Commercial Television Stations (FACTS);
• John Fairfax Holdings Ltd;
• Network Ten Pty Ltd;
• ntl Australia Ltd;
• Special Broadcasting Service (SBS); and
• Telstra Corporation Ltd.

A summary of views expressed in submissions is at Review of the Spectrum Allocation Powers of the Australian Broadcasting Authority - Attachment A.

The review has also drawn on legal advice sought in relation to specific issues and options raised in submissions and further consultations with the ABA and the ACA.

Existing Spectrum Clearance Powers

The ABA has a number of powers to direct channel changes within BSB spectrum in the interest of spectrum efficiency.

Section 26 of the BSA gives the ABA the power to determine and vary a licence area plan (LAP). Commercial and community broadcasting licensees can be required to change channels under variations to the 'technical specifications' in the licence area plan, which have effect as conditions of the relevant transmitter licence under s.109(1)(d) of the Radiocommunications Act 1992 (RA).

Channels used by the national broadcasters, narrowcasting services, subscription broadcasting services and datacasting services (when licences are allocated), or by commercial and community broadcasting services in areas not covered by a current LAP, may be changed by direct amendment of the licence conditions of the relevant transmitter licence under s.111(1)(b) or (c) of the RA.

The ABA also has the power to reallocate channels under the National Television Conversion Scheme and the Commercial Television Conversion Scheme which provide for the conversion of existing analog services to digital mode. In particular, a Scheme may amend a LAP.

The ABA also has the power to resume unused channels. This is achieved by varying the relevant LAP or by a DCP which amends the LAP. In the case of commercial and community broadcasting service licences, the ABA can then vary the associated transmitter licence issued under s.102 or s.102A of the RA under powers delegated by the ACA to remove the authority to use the frequencies that are not, in practice, being used by the broadcaster. (The RA provides for the issue of one transmitter licence in respect of each commercial and community broadcasting service licence, with each transmitter licence authorising the operation of all transmitters used for a particular broadcasting service).

Such variation of the transmitter licence may also be used in its own right to resume unused channels where a LAP does not exist.

Existing Compensation Powers

Legal Entitlement to Compensation

There is no legal entitlement for compensation to broadcasters required to modify or change channels, provided that the broadcasting service can continue to be provided using the modified channel, or alternative, unencumbered channel provided to the broadcaster.

Broadcasting licences and the related transmitter licences confer only rights to provide a broadcasting service in a licence/coverage area using BSB spectrum rather than providing any permanent right to use any particular frequency. Further, legislation has always provided for the broadcast frequency to be altered. Hence, any such alteration in accordance with the relevant provisions in the BSA and/or RA is unlikely to amount to an 'acquisition' of 'property' without 'just terms' contrary to s.51(xxxi) of the Constitution.

There is also no legal requirement to compensate viewers for costs incurred in obtaining new reception equipment, where this is necessary to continue to receive broadcasting services as a result of channel changes.

Compensation is not normally payable in respect of channel changes affecting non-broadcasting spectrum.

Power to Direct Compensation

Powers Under the Broadcasting Services Act

The ABA considers that, in certain circumstances, it may have limited powers to impose a condition on a new commercial or community broadcasting licence requiring the licensee to compensate the licensee of the service that currently occupies a particular channel for the costs of moving to an alternative channel.

Specifically, the ABA considers that it can apply its power under s.26 to require an existing licensee to modify or change the channel on which their service is currently provided within a certain period after determination of the relevant licence area plan. The ABA can then attach a condition under s.43 to the new broadcasting licence made available in that licence area plan, requiring the licensee to:

• compensate or indemnify the licensee of the existing service for the costs of channel modification or moving to an alternative channel, and/or
  
  
• compensate viewers incurring costs associated with the channel change.

The ABA considers that it is only able to use this compensation mechanism where there is a sufficient nexus between the proposed channel modification or change to an existing service and the allocation of a new broadcasting licence to enable the ABA to utilise s.43. Such a nexus is likely to exist where:

The ABA considers that these powers may also be used to impose a condition on a new commercial or community broadcasting licensee requiring the licensee to compensate viewers who need to make changes to existing reception equipment as a result of channel changes.

Powers Under the Radiocommunications Act

The ABA considers that it may be able to impose a compensation or indemnification condition on the transmitter licences of national broadcasters under s.107(1)(g) of the RA, or commercial and community broadcasting services under s.109(1)(f) of the RA.

Key Issues

Spectrum Clearance Powers

In the context of ABA planning of digital television and datacasting services in the major metropolitan markets in 1998-2000, concerns were expressed by some industry participants that more efficient spectrum usage could possibly be achieved, and that the ABA's existing spectrum clearance powers might need to be enhanced.

The review examined the adequacy of current ABA spectrum clearance powers in this context, but also in the wider context of possible spectrum clearance requirements in respect of both analog and digital planning for television and radio services, as well as for datacasting services.

In its submission to the review, the ABA proposed that the Authority be empowered to cancel transmitter licences, if the channels authorised under these licences remain unused. The ABA had in mind, particularly, the resumption of those channels allocated to commercial television broadcasters to operate translators under television aggregation prior to 1992, but never used.

John Fairfax Holding Ltd and DCA proposed the imposition of a "squatters tax", along the lines of similar charges previously considered in the USA, to encourage the surrender of analog channels by incumbent commercial television broadcasters immediately at the end of the simulcast period.

Practical Limitations on Compensation Powers

While there is no right to compensation for channel changes or modifications, there remains the policy question of whether compensation should be payable in some or all circumstances either to facilitate those changes or in recognition of costs incurred.

The ABA has, in general, relied on lengthy clearance periods or voluntary agreements between broadcasters to implement most channel clearances, rather than imposing compensation arrangements. Where compensation mechanisms have been established, such as in the implementation of analog channel changes associated with the introduction of digital television, the Authority has primarily relied on voluntary, negotiated arrangements. The full extent of the Authority's power to impose compensation requirements has not, therefore, been tested in practice.

The implementation of voluntary arrangements, or other arrangements imposed under the ABA's compensation powers, can be impeded where the identity of the new licensee is unknown. This is the case, for example, in respect of any analog channel changes associated with the introduction of datacasting services the licences for which have not yet been allocated.

Ntl, in its submission to the review, proposed a so-called 'polluter pays' compensation model. Under this proposal the ABA would be empowered to make the allocation of new licences contingent upon clearance of any existing services that might be necessary to ensure maximum spectrum efficiency, and to either:

• direct that compensation be payable by the licensee of the new service to the affected broadcaster to cover the costs of the channel relocation, and to viewers to cover the costs of any changes to reception equipment which might be necessitated by the channel change; or
  
  
• mandate channel clearance within a specified period, with the new licensee having the right to negotiate commercial compensation arrangements with affected parties, if earlier clearance is desired.

Other issues

The ABA proposed removal of the provisions in the BSA relating to the Frequency Allotment Plan (FAP). The FAP was essentially a planning tool through which the ABA developed an initial notional picture of how broadcasting channels might be made available in each area of Australia on an equitable basis. Detailed planning of the number and type of broadcasting services in each market is subsequently undertaken by the ABA in completing a licence area plan (LAP) for each region. The ABA is also completing digital channel plans (DCPs) to allocate channels for the digital transmission of each national and commercial television broadcasting service provided in a LAP.

Currently, the FAP has to be adjusted to reflect any changes in channel allocations identified in licence area plans or digital channel plans. The proposed change is intended to achieve some administrative savings for the ABA.

Finally, some submissions suggested that the review was premature, pending actual experience with datacasting services (ABC, SBS), or too narrowly defined (AIIA), and supported further, wider reviews of spectrum allocation.

Discussion Of Issues

The ABA has substantial powers to direct reallocation of encumbered channels where this is considered necessary in the interest of spectrum efficiency. It also has the power to resume unused channels.

The ABA and ACA have advised that experience during the course of the review in planning digital television and datacasting services and other planning tasks suggests these powers are adequate for current and anticipated planning processes. The ACA is remedying an administrative anomaly that will enable the ABA to exercise current powers to vary transmitter licence conditions to resume unused channels.

The ABA's powers to direct compensation are not explicit. Rather they are based on broader powers to establish licence area plans and impose conditions on licences. These compensation powers are limited to particular circumstances and may not be capable of being efficiently implemented where the identity of a new licensee is not known. However, no clear demand has been identified for explicit, enhanced powers at this time. Nor did the review's consultations reveal any consensus on the form of an enhanced compensation power or how it might be implemented.

Key issues which would require resolution include:

• The trigger to start a mandatory compensation process, including what public interest criteria should be considered.
  
  
• Where the responsibility should lie for such a decision (the ABA or the Minister).
  
  
• The basis for assessing compensation, including governing regulations, arbitration arrangements and/or rights of appeal.
  
  
• What notification should be provided to implement channel clearances.

The introduction of a compensation regime would be a significant policy step, with potentially wide implications beyond the immediate broadcasting environment to other communications spectrum.

Further, a compensation regime would potentially require a substantial supporting infrastructure established by industry or the Government. For example, in the USA "spectrum clearing" houses have been established to broker compensation arrangements in relation to spectrum clearances. In the absence of such arrangements, a significant risk would exist that compensation between parties would become the subject of litigation. Either scenario would impose costs on the industry and community and would need to be justified on the basis of a clear, demonstrated need for large-scale spectrum clearance. No such need currently exists.

Any compensation regime for BSB spectrum should also be considered in the broader spectrum management policy and regulatory framework.

A number of policy processes are scheduled to take place over the next few years which will provide a more appropriate basis for consideration of compensation powers. Reviews scheduled to be conducted by 2005-06 under clause 60 and clause 60B of Schedule 4 to the BSA include those into efficient broadcasting spectrum structuring and use; the simulcast period; and regulatory arrangements applying after the scheduled end of the moratorium on the issue of new commercial television licences on 31 December 2006.

More generally, the ABA has undertaken to examine potential future scenarios that might indicate a possible requirement for further compensation powers.

Also, following the recent Radiocommunications Review by an interdepartmental task force, the ACA has established a Working Group to examine - in the context of non-BSB spectrum - issues of spectrum tenure, and compensation in relation to spectrum re-allocation before the expiry of licence terms. This will provide useful input to consideration of compensation issues for the BSB and for enabling a consistent approach to be taken across all bands where appropriate.

With regard to the ABA's proposal for removal of provisions relating to the FAP, the Authority recognises that this is not a legislative priority, particularly as channel planning is substantially complete in many areas. However, the opportunity could be taken to include relevant provisions in any suitable amendment bill.

Conclusion

The ABA's spectrum allocation and clearance powers are adequate at this time for current circumstances. Further consideration of these powers in relation to possible future requirements, including key issues such as compensation, should be undertaken in the wider context of:

• greater experience of the operation of digital broadcasting services and any datacasting services, to better assess relevant technical (for example, coverage) and market factors;
  
  
• statutory reviews scheduled to be undertaken under the BSA by 2005-06 into efficient broadcasting spectrum structuring and use; the simulcast period; and regulatory arrangements applying after the end of the moratorium on new commercial television licences (31 December 2006);
  
  
• input from the ABA study of future broadcasting clearance scenarios and the outcome of the ACA working group on spectrum tenure and compensation issues; and
  
  
• any relevant outcomes from the Productivity Commission review of the Radiocommunications Act (final report due in July 2002), in which spectrum clearance and compensation issues are being examined.