Media Regulators Consistently Sell Australians Short
also published in Canberra Times, 17 December 1998
If anyone wants examples of how politicians and bureaucrats can make things worse, then the history of media regulation provides all the cases one needs to make the point.
We regulate media in order to---it is alleged---restrict foreign ownership and encourage media diversity. Yet we have a media which is substantially foreign-owned with the most concentrated ownership in the Western world.
In fact, the goals of encouraging diversity and restricting ownership contradict each other. Intelligent media management is a scarce commodity. For example, by blocking foreigners with proven track records of media management---such as Conrad Black---our media regulators ensure that no-one equal to the stature of Rupert Murdoch can compete in our newspaper markets.
It is simply not clever, in a global information age, to cut ourselves off from good, innovative media management and services simply because Conrad Black is a Canadian or Tony O'Reilly is Irish.
While there are some 'natural monopoly' elements in media---for example, economies of scale create a natural tendency to one or two daily newspaper per city---the decisions of regulators have actually encouraged concentration of ownership. By delaying new media technologies our media regulators have, again and again, favoured existing media players and blocked potential new entrants.
Regulation effectively blocked the introduction of new radio stations from 1951 to 1974. Regulation blocked the introduction of commercial FM radio until 1980. Regulation delayed the introduction of cable television until 1995. Regulation is still blocking access to new services such as digital TV by new entrants. The recent decision by Minister Alston giving digital TV to the existing free-to-air licence holders advantages the present TV owners.
The regulators have consistently sold the taxpayer short. Use of the airwaves is a valuable asset. Until 1987, licences were allocated via 'beauty contests', rather than being auctioned off at their real value. The recent failure to auction off the digital TV rights continues this socially undesirable tradition.
A classic example of the stupidity of the 'beauty contest' approach was provided in the mid 1980s in Perth over the allocation of the third commercial TV licence.
Instead of a simple auction, the regulators spent four years---including 117 sitting days---deciding on the appropriate new licence holder, with each of the two new aspirants spending at least $1 million on their case. The winner of the 'beauty contest' promptly sold the licence for an undisclosed sum---realising the auction value that should have gone to the taxpayers.
Again and again, our politicians and bureaucrats have been too scared that Australians---you and me---might make the 'wrong' choices, and too scared of upsetting the incumbents, to allow open markets.
A new book by Dr Robert Albon (ANU) and Dr Franco Papandrea---Media Regulaton in Australia and the Public Interest, published by the Institute of Public Affairs---documents the follies of past media regulation and argues that the media should be freed from the 'special treatment' that has blocked and delayed the provision of improved services to Australians, that the solution to this mess is to 'normalise' the media.
There is already a mechanism to stop excessive market concentration---the Trade Practices Act as administered by the Australian Competition and Consumer Commission (ACCC) chaired by Prof. Alan Fels. Newspapers are within its jurisdiction.
Decisions should be taken out of the politicised discretion of the Minister for Communications and done openly by the ACCC according to the rules of the Trade Practices Act, as they are for other industries. The media should be opened up to competition so entrepreneurs can compete openly to provide new services.
A more diverse media---with more free-to-air television and radio licences---would allow more variety.
The history of media regulation in this country is a sad saga of timid delays, privileged access and selling Australians short. We will never get it right by treating the media as a special case. It is time to stop politicians playing political games with media regulation and to place it under the same set of general rules as everyone else, so Australians can make their own decisions from as wide a set of choices as practicable.