Commercial Radio Australia National Radio Conference
9.30am, Friday, 17 October 2003
(Check against delivery)
Introduction
Joan Warner [CEO Commercial Radio Australia]; Lindsay Tanner and John Cherry [Labor and Democrat spokesmen on communications]; conference delegates.
We live in an age in which news headlines and family snapshots can be sent to a mobile phone, when Internet chat rooms have replaced the back fence and when newspapers can be read online. In an era of such dramatic and ongoing technological change, it would be a brave person who would predict how our children's children will keep in touch with their world.
In the midst of all this, radio has been a rare oasis of certainty. Technology has changed radio too, of course. The huge wireless that once dominated the lounge room has been replaced by miniaturised technology so lightweight it can be clipped to a jogger's waistband.
The advent of FM has transformed sound quality since the 1980s. And in the next few years the advent of digital radio will continue the evolution. But radio continues to play the role in our lives that it has fulfilled since the 1960s. The very simplicity of the medium is its greatest strength.
We still turn to radio when we need instant confirmation of breaking news, or updates during an emergency. It is radio that keeps us company late at night, or while we commute.
More than 20 per cent of all radio listening occurs in cars.
During the devastating bushfires that affected so many parts of the country last summer, it was to radio that many of us instinctively turned for immediate and up-to-date information.
During floods, fires and other emergencies over the decades our instinct has been the same.
For those on the land, radio delivers weather warnings right to the paddock in which the farmer works. For those of us who commute in peak hour, radio tells us which roads to avoid.
Australians listen to an average of two hours of radio a day. But they might not be only listening to the radio. They might be washing up or driving or cooking the dinner at the same time. That is one of the great beauties of the medium.
Radio accompanies us through life, rather than diverting us from life. Television couldn't kill off radio and the Internet hasn't done it either. However, technology will continue to refine the radio-listening experience.
The big changes in the coming years will be as a result of digital technology. But first some decisions have to be made. The proposed reform of media ownership, as it relates to radio; the issue of new commercial radio licences; and how the Government is tackling radio black spots I know are issues of particular interest to this audience.
Digital Radio
As you know, free-to-air digital television is now a reality in the capital cities and in a growing number of regional centres. By the end of this year more than a quarter of a million Australian homes will have widescreen TVs designed for digital images. Sales of set-top boxes this year reached 145,000 by the end of August. This is significantly higher than the 30,000 or so sold by the end of last year. And it almost eclipses Commercial Television Australia's prediction, made as recently as July, of sales of 150,000 by the end of the year.
Digital radio is potentially next to experience this phenomenal growth. There are lessons we can learn from the implementation of digital TV. But we must also recognise that radio and television are different forms of media with different industry structures.
Digital radio promises benefits for listeners and broadcasters. This includes better audio fidelity and more robust transmission systems. There is also the possibility of ancillary services like images and text information regarding song titles and artist details, news, sports, stock exchange information, traffic updates, warnings and weather.
Digital radio services have begun in a number of countries But they are still in their infancy.
No country has yet achieved a fully successful commercial service.
From Australia's point of view, one of the big quandaries is which technology we should adopt. Across the world a number of systems are being trialed. The United States favours IBOC technology for terrestrial digital radio. This delivers a digital signal alongside an existing analog signal, allowing incumbent broadcasters to use their existing spectrum allocation to deliver both analog and digital services.
The US is also moving ahead with digital satellite services. Two companies, Sirius and XM Radio, each deliver about 100 channels of subscription digital radio via dedicated satellite networks. Eureka 147 is the system presently employed for terrestrial digital radio in the UK, Germany, Canada and parts of Asia.
Advocates believe its higher data-carrying potential greatly increases its potential for delivering innovative services. A hybrid model using Eureka technology and the still largely untested DRM (Digital Radio Mondiale) technology has also been suggested.
At this stage, it is fair to say that neither the Government nor industry is ready to commit to a preferred digital technology. What is clear is that the technology we choose will affect whatever implementation strategy we put in place.
For instance, the adoption of IBOC would not require the allocation of new spectrum, while the adoption of a Eureka-style system would. In addition, the type of spectrum used to deliver the digital service - for example L Band, VHF Band III, or a combination of the two - will affect implementation.
These are matters that need careful consideration. That is why, in May this year, the Australian Government announced the formation of a Digital Radio Study Group. This group includes representatives from the Department of Communications, Information Technology and the Arts, the Australian Broadcasting Authority (ABA) and the Australian Communications Authority (ACA).
The group's main task is to report on digital radio technologies being used around the world.
This information that will help inform the Government as it works through the policy issues associated with rolling out digital radio here in Australia.
Last month, a Digital Radio Forum was held to give the industry an opportunity to raise some of the key issues it thinks should be considered. And of course the trials of Eureka 147 that are being coordinated by Commercial Radio Australia in Sydney, involving both the commercial and national broadcasters, will help inform our thinking. The study group is expected to report by late next month. I look forward to seeing that report and the outcome of the industry trials.
Proposed reform of Media Ownership legislation
The Government introduced legislation into Parliament last year to remove industry-specific foreign ownership restrictions and to create exemptions to the cross-media rules.
The arguments for creating a more flexible ownership regime would be familiar to you all.
Essentially, our domestic media operators need to be able to compete and to grow if they are to maintain the quality of their product and remain competitive on the world stage.
To do that, they need better access to overseas capital and new technology. They need to be in a position to realise the benefits of scale and scope that cross-media mergers will offer.
The Government's Bill would allow the Australian Broadcasting Authority to grant cross-media 'exemption certificates' in cases where applicants could demonstrate that each of the 'merged' enterprises under an ownership umbrella would retain separate editorial decision-making powers. The Bill also contains a range of safeguards to protect diversity of ownership.
These include a national 'two out of three' rule, which would limit owners to controlling two of the three types of media - commercial television, radio and newspapers - in a single market.
In regional areas, small, local newspapers will be included in the 'two out of three' test. There will be a mandated minimum of five independently owned commercial media outlets in metropolitan areas and four in regional markets. And a limit of one newspaper per exemption certificate holder, per market.
There will also be local content requirements on regional radio broadcasters holding exemption certificates and on television broadcasters in some markets. The Bill also prohibits any attempts to restrict the program format of commercial radio stations that would have the effect of reducing diversity and therefore competition for audience and advertisers.
In other words, we don't want to see deliberate attempts to stifle services through manipulation of the market. The Government remains committed to reforming Australia's media ownership laws. However, the extent and the pace of those reforms depends on the Parliament.
Unfortunately, the Senate was ultimately unable to reach agreement on the Government's reforms after 15 months of protracted debate and intensive negotiation and the Bill was laid aside in the House of
Representatives in June this year.
New commercial radio licences
This audience knows better than most that the planning of broadcasting spectrum is a complex matter. The Australian Broadcasting Authority plans services in the context of the objectives of the Broadcasting Services Act 1992 and criteria which emphasise the importance of an appropriate market structure.
The ABA has now determined licence area plans for analog radio throughout Australia.
And it has proposed four new commercial licences to be offered in Adelaide, Sydney, Melbourne and Brisbane respectively. The ABA will auction the first of these new commercial radio licences in Adelaide on Friday 31 October. Further auctions will be held in the other nominated cities over the next 18 months.
The ABA does not envisage that any further allocations of analog commercial radio licences will be made for at least five years, once the present round of allocations is complete. And the ABA has made it clear that it is by no means automatic that allocations will resume after five years.
Obviously, any decisions about the implementation of digital radio that are made within those five years will have a bearing on the likely long term future of analog radio and on future plans for spectrum allocation.
Commercial Radio Blackspots
The Government is acutely aware of the role radio plays in keeping regional and remote Australians informed and in making them feel part of an identifiable community. We are also aware that, in a land as vast as this and with a population as dispersed as ours, ensuring that everyone has access to radio services is a challenge.
The Government's $5 million Commercial Radio Blackspots Program is helping to provide new or improved commercial radio services to regional and remote communities where it has not been commercially viable for licensees. One hundred and forty-two communities have been identified as potential radio black spots. In May, funding of more than $1 million was allocated to tackle 37 black spots, benefiting 36 communities across Australia. A further funding round is expected soon.
In addition, commercial broadcasters were recently invited to submit proposals for additional communities. The Department is now assessing those proposals.
Thank you to Commercial Radio Australia for convening this conference. This is a good opportunity to talk through some of the big issues facing commercial radio in the coming year and to come up with strategies to ensure that Australians continue to have reliable and ready access to high quality, diverse commercial radio services into the future.