Tom Burton: is Turnbull just putting lipstick on the ACMA pig?

By Tom Burton

Monday June 15, 2015

When a government announces a root-and-branch review of a regulator, you would expect to see some big changes.

Except if the regulator happens to oversee the sensitive communications industry. The sector with big, noisy, well-connected media and telco companies, the sector where the government has its own $40 billion NBN play, and the sector which is the third largest revenue-raiser for the Commonwealth, thanks to burgeoning spectrum sales.

It was no surprise when Communication’s Minister Malcolm Turnbull announced a departmental review of the Australian Communications and Media Authority on Friday.

The review had been mooted for several months, as the government considered the future of telco regulation — post its clean up of the NBN — and reform of patently outdated media laws. And as the government considers who to replace ACMA’s long serving chairman, Chris Chapman, when he steps down early next year.

The real question is: will this be another lipstick-on-the-pig exercise, where the same regulatory deck chairs are shuffled around various Canberra agencies yet again, or does the department — and whoever is its minister — have the policy and political capacity to drive more fundamental change?

In many ways the ACMA review is a litmus test for the government’s deregulatory agenda. As serious observers inside and outside the bureaucracy know, the regulatory repeal days the government is so fond of, have really just been spring cleaning.

Indeed, despite the deregulation fervor of the new government, in the communications sector we have seen two new major regulatory interventions. The metadata requirement on telcos and ISPs is estimated to cost the industry up to $320 billion, and we now have a whole new entity called the Children’s Safety Commissioner which will oversee the take-down of bullying and other inappropriate content from the likes of Facebook, Twitter and YouTube. Good luck with that.

Importantly the review effectively sidelines the future of communications and media regulation , as the government considers the recommendations of the broader Harper competition review. For a government with a real appetite for big reform, Harper was potentially an opportunity to remove a lot of sectoral regulation, leaving the Australian Competition and Consumer Commission as the uber trans-economy regulator.

The government’s dramatic loss of political capital over the last 12 months means there is no cabinet appetite for taking on the big vested-interest groups, so any enthusiasm for a clean sweep of the cacophony of industry-specific regulation has gone.

ACMA has been through various incarnations over the last 25 years, operated as a series of specialist small regulatory agencies — telco, media, spectrum — but was brought together in 2005 to recognise the digital convergence that makes technology-specific regulation look so arcane today.

The aim was to review and repeal the suitcase of laws and media regulations, which the ACMA was set up to oversee. This never happened and today the ACMA is a $90-million-a-year agency, overseeing a rule book which every intelligent observer knows has to change, if not be burnt.

Regulatory reform comes first

The obvious point is that a root-and-branch review of a regulator begs the question what regulation it should oversee.

There would be no need to have a large taxpayer-funded media complaints entity if the broadcasters took their customer complaints more seriously.

Nor do you require the mountain of licencing rules and legal arcanery, if we accept the internet and powerful satellites means we don’t anymore need complex media concentration rules to ensure diversity.

It is also no surprise the most innovative areas of wireless are the unregulated frequencies such as wi-fi. A much more market driven system for spectrum would also drag Australia out of a system which still feels too much like the old Postmaster-General’s Department.

Ditto numbering, which is still managed as a secret, slow moving, bureaucratic science, despite recent attempts to move it to industry.

We now have a national consumer law (the Australian Consumer Law) which purports to create one regime for all consumer regulation, so this would be the perfect timing to fold telco consumer regulation into that regime.

And now we seem to finally have a settled NBN 2.0, it might just be possible for the government to get out of the business of managing the price of accessing the core telco network, which is now, for better or worse, going to be a government monopoly network.

Two regulators, one industry

The ACL and access pricing are under the remit of the ACCC and the problem of multiple regulators is an obvious live issue, especially for the telco industry, which is caught in two regulatory worlds.

The ACCC is not on Turnbull’s favourite list — with various NBN reviews targeting the ACCC for giving the green light to the NBN and more fundamentally creating a pricing regime that encouraged ISPs, but stymied network development.

Arguably if the pricing had been right, Telstra would have rolled out a high speed network under its own steam, rather than effectively cross subsidising the ISPs, which Canberra wanted to enourage in the hope of competition.

While any media changes will grab headlines, where telco policy and regulation goes is the key to what the future regulator looks like and its remit. If Turnbull’s instincts are to pull it out of the ACCC — a fight he and the Department of Communications will have to win over Treasurer Hockey and his powerful portfolio — he will need the telcos on side — and the only one that really counts is Telstra. For the telcos it is a vexed call.

Significantly the only telco rep on the advisory panel is from Vodaphone — which has been vociferous about Telstra’s dominance, especially in the regions.

Broadcasters sharpen their knives

On the media front the selection of Seven’s well respected regulatory chief, Bridget Fair, to be on the advisory reference group is equally telling. Seven have been the most litigious of the media groups against the ACMA, contesting — mostly without success — a whole series of the ACMA’s breach findings, which followed audience complaints. After the High Court found in favour of the ACMA over the legality of its breach finding against 2DAY FM’s infamous nurse prank call, the broadcast networks were almost shrill in their complaints about the ACMA’s regulatory overreach.

Seven of course don’t need a seat at the review table to get their message through. Turnbull’s great personal and business mate is Seven’s commercial director, Bruce McWilliam, and the venerable McWilliam is a sophisticated business critic of the ACMA.

Chapman was a former managing director at Seven for a short period in the 1990s and has been at the head of the ACMA for the entire period of its existence. Unusually, Chapman is both Chair and CEO, something that also irks his former broadcast colleagues. Chapman was appointed by the Howard government and reappointed by Senator Conroy. It was never personal, but Turnbull had hoped Chapman would step aside when the new government came to power, but that has not come to be and there has been a steely standoff ever since.

Black letter versus discretion

Unlike most regulators who tend to defend their rule book, Chapman has been an outspoken critic of the current regulatory regime, producing a wealth of material exposing the problems and arguing for a much more flexible regime of mid-tier powers.

This is especially so in the digital space where the networks and services are truly global — and where regulatory intervention demands a far more nimble, fit-for-purpose approach than setting up yet another statutory regulator with heavy duty compliance powers.

Turnbull is old fashioned when it comes to regulation and prefers clearly articulated requirements so everyone knows where they stand, and more importantly, you don’t have regulators who have significant discretionary power. Especially when its comes to the media, where governments of all colours like to keep these rules tightly managed by themselves.

The problem is that over 25 years we have been piling regulation on top of regulation. One of the reasons the ACMA now has such a swag of complex regulations to administer, is that governments are famously good at throwing over the regulatory fence their latest dead-cat policy initiative. Kids e-safety is just the last of a long line that has included live sports betting, and local news content in the regions.

Repealing these costly and mostly ineffective rules would be a good starter for the departmental deputy secretary, Nerida O’Loughlin, and her colleagues charged with the review. O’Loughlin is a veteran Canberra player, has worked at the ACMA, and if history is a guide will take a pragmatic approach. However unravelling the bigger mess will require a piece of high quality policy and stakeholder work, and a key question is if the Department of Communications has the political, policy and intellectual firepower to pull off this type of fundamental review.

The review is as wide as you can make it and will need to cover and absorb a huge amount of deeply challenging regulatory design and application thinking, in a space where there are not any easy examples to copy or build on. The ACMA, which has the intellectual smarts, if not the remit and courage to reform itself, is not even on the advisory group over seeing the review — a review which reports before Christmas.

Digital problem needs digital response

It is relatively easy to point to the obvious problems with the current regulations. But neither the department, the ACMA, the media and telco industries, nor the academic community, have yet been able to come up with a practical, well-conceived regime that addresses the broad space of digital services and walks the Commonwealth out of the current bible of micro technology rules.

Drew Clarke, the secretary at Communications, has made great strides — with help from the Boston Consulting Group — to re-orientate the department’s world around digital. But only the most optimistic would think that in six months, we will have all the answers for what will be the foundation piece of whatever the new order is.

The advisory group are well credentialed, and includes some internationals . But with all respect, it looks and feel like the same intellectual industry and policy group which has been tweaking and playing with the comms regulatory system for the last 25 years. If the world is undergoing profound digital transformation, then instinctively that is where the solutions are likely to come from. The lack of deep digital knowledge on the reference group is a glaring omission and says a lot of about the likelihood of success.

Meet the gorilla in the room

And no matter how good the department’s work is, there is still the gorilla-like politics in telco and media land. This means any proposal has to pass though Turnbull’s office and the Prime Minister’s office. As we all know, the ongoing cold war between Turnbull and Abbott and their respective offices, makes it even more problematic for designing and settling on a well thought-out package. Any package will require well crafted stakeholder tradeoffs and political determination. In the current distrust that pervades Cabinet and the ministerial hallways it is hard to see how this gets managed.

Guessing where the prime ministerial leadership struggles end is pure speculation. But we have already seen Turnbull’s ambition to push for media ownership reforms thwarted by Abbott, who did not want to open up a brawl with News Corp over the sports anti-siphoning pay TV rules.

We also saw any chance of Julia Gillard’s comeback thwarted by the big media companies when Conroy tried to railroad his convergence review through the Parliament in 2012. With Abbott struggling to get even the most basic reform through the Senate, it would be unlikely the government in this electoral cycle would waste its capital on this piranha pit.

Without being a pessimist, at best what might emerge is some solid thinking around the oversight of the digital world and a transition plan to get there — which, if well done, could be the basis for the next government to act on.

The author worked at the ACMA for four years, overseeing the agency’s digital engagement and transformation program.

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HRH Sir Snerk OBE
HRH Sir Snerk OBE
6 years ago

Well Tom; Chris wasn’t there the whole time. We had an ABA person acting for the first 9 months. And what a mess that was!!
My one comment would be that while the ACMA has shrunk in terms of staff over the past few years the executive has grown. It probably had 2 too many Band 1s and 2s.
I have also noted the Department moving into the spectrum space a bit. Not always to the benefit of Australia in my view.

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