Convergence Review: An opportunity to think broadly

David Havyatt writes that the Federal Government’s “Convergence Review” provides an opportunity to think broadly about the structure of the regulatory regime for communications and broadcasting services. But does it go far enough?

OPINION: Telecommunications and broadcasting are increasingly interdependent. In the all-IP world envisaged under the national broadband network, it will become increasingly difficult to distinguish between the two.

Credit then, should be given to Senator Conroy for releasing a consultation paper on the draft Terms of Reference for a “Convergence Review” – convergence in this case between telecommunications and media.

Specifically, the review looks at how devices such as televisions, mobile phones and computers and platforms such as broadcast, telecommunications and broadband that “once had distinct functions” may now support many different services and applications.

The review recognises it is time we started regulating telecommunications and broadcasting together.  

To date, convergence in technology and services has not been matched by changes in regulation.  While three formerly separate regulators were collapsed to form the Australian Communications and Media Authority (ACMA), there are separate Acts specifying rules for telecommunications, broadcasting and radio communications.

So historically, the broadcasting and telecommunications industries have been separate vertical industries and regulated accordingly.

But since the rise of next generation networks, reports by Communications Alliance predecessor ACIF (and a shorter Next Generation Networks Primer by the Government), see converged technology in terms of four horizontal layers: infrastructure, network services, value added services and information services.

These horizontal layers, it has been suggested, provide a more appropriate framework for regulation in a converged world.  In Malaysia for example, the regulatory regime delineates between network facility providers, network service providers, application service providers and content service providers. 

With this in mind, one reading of the documents released thus far would suggest Conroy’s “convergence” review doesn’t go far enough.

The background paper focuses only on the top layer and also suggests that the convergence review be kept separate from the regulatory issues arising with the NBN.  It cites the NBN and the formation of USO Co as examples of “other” regulatory activity to be considered separately.

Specifically, the paper said “the Review Committee has scope to consult appropriately and, where necessary, to accept or send referrals to other reviews.” 

This is reminiscent of the situation that confronted the Glasson review in reviewing the adequacy of regional telecommunications services at the same time as there was a review of USO policy.

The recommendations of that review - for a genuinely new framework for guaranteeing access to services - seem to have been completely ignored. 

Such a fragmentary approach to reviews runs the risk of simply continuing the process of a complex set of arrangements for different industry sectors, instead of simplifying regulation.

A simple framework promotes efficiency in firms and facilitates the protection of the interests of consumers and audiences. A simpler framework requires a more comprehensive review.

For example

An example of how complex the existing regime is - and how all aspects relate to another, is the Universal Service Obligation and the NBN. 

The USO is an obligation on a provider (Telstra) to provide a telephone service to anybody (with some limitations).  The obligation has no quality of service component, but this has been added as a Customer Service Guarantee mandated on all retail service providers. 

The CSG created another regulatory problem for retail service providers as their obligations were not matched by specific obligations placed on their wholesale provider (Telstra). 

The USO arrangement also places no price restriction on the USO provider.  Telstra is separately subject to retail price controls.  These were only amended to ensure uniform prices when Telstra suggested it would move to de-averaged retail prices to reflect de-averaged wholesale prices.

With the migration to the NBN infrastructure, the policy objective should still be nationally uniform (more technically – averaged) retail prices.  However, probably unintentionally, this has been stated as an obligation on uniform wholesale prices. 

The uniform pricing requirement is what spurred NBN Co to originally propose only 14 points of interconnect, and effectively bundle backhaul with its access network.

The way interconnection to the access network is achieved dramatically affects the economics of delivering content services over the NBN, and hence what kind of convergent services will be delivered over the NBN.

So the policies that relate to the NBN and USO Co have a very large impact on the way broadband can be delivered and hence the extent to which “convergence services” can appear.

That means the NBN is fundamental to this review, and should not be carved out from a true convergence review as is currently proposed. 

In its submission in response to the Government’s  National Broadband Network: Regulatory reform for 21st Century Broadband - Discussion paper, Communications Alliance suggested that as a consequence of the NBN “the industry-specific consumer protection regime will naturally arise for consideration and debate.”  They suggested that the discussion and debate should continue and inform the review which “has been flagged for 2011”.

But having got to that review we find that these precise issues seem to have been excluded.

The caution of the Minister and his advisers and their reluctance to consider a review of the whole regulatory framework for communications is understandable.  It does feel a bit like trying to boil the ocean. 

But if the opportunity is not taken now, we could be shackled with a fragmented and inconsistent regime for another decade at least.

The Minister, by putting the Terms of Reference out for consultation, has provided an opportunity for industry and citizens to be heard on what the review should address.  In what has become a time honoured tradition in the industry the consultation has been commenced in the shadow of Christmas and runs to the end of January.

Industry participants in all their forms as infrastructure providers, carriage service providers, content service providers and content creators, and citizens in their guises as consumers and audiences need to take some of their precious Aussie summer to make sure that the opportunity is fully utilised.

Now is the time to say whether we want a complete overhaul and simplification of regulation - or not.