BROADCASTING LEGISLATION AMENDMENT (DIGITAL TELEVISION) BILL 2006 Explanatory Memorandum

Commonwealth of Australia Explanatory Memoranda

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BROADCASTING LEGISLATION AMENDMENT (DIGITAL TELEVISION) BILL 2006

2004-2005-2006 THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA SENATE BROADCASTING LEGISLATION AMENDMENT (DIGITAL TELEVISION) BILL 2006 SUPPLEMENTARY EXPLANATORY MEMORANDUM Amendments and New Clauses to be Moved on Behalf of the Government (Sheet Number QS390) (Circulated by authority of Senator the Hon. Helen Coonan, Minister for Communications, Information Technology and the Arts)

GOVERNMENT AMENDMENTS TO THE BROADCASTING SERVICES AMENDMENT (DIGITAL TELEVISION) BILL 2006 OUTLINE The Broadcasting Legislation Amendment (Digital Television) Bill 2006 (the Bill) contains provisions which implement the Government's decision to reform several aspects of the digital television and commercial television broadcasting regime. PROPOSED GOVERNMENT AMENDMENTS One component of the Government's reform of the digital television and commercial television broadcasting regime relates to decisions to allocate spectrum to provide new digital services. Other amendments, contained in sheet QS385, give effect to that component of the reform. These amendments (Sheet QS390) introduce an access regime which requires persons wishing to participate in the allocation process for a Channel B datacasting transmitter licence to make an access undertaking, and for the ACCC to accept or reject that undertaking. The access undertaking will provide for access to services that enable or facilitate the transmission of content services by content service providers. The ACCC is expected to develop criteria relating to its decision to accept or reject an access undertaking or variation of an access undertaking. The criteria will be a legislative instrument. A person will not be not eligible to apply for a Channel B datacasting transmitter licence unless they have submitted an access undertaking, and the ACCC has accepted it. An accepted undertaking will become binding on a person who acquires a Channel B datacasting transmitter licence. � Adherence to the terms of an undertaking will be a condition of the Channel B datacasting transmitter licence. � If a the ACCC or a person affected by the undertaking considers that a person may have breached an undertaking, the ACCC or the affected person may apply to the Federal Court for an order to comply with the undertaking, or for compensation for damages. The undertaking remains in force for the duration of the licence and is transferred if the licence is transferred. However, undertakings may be varied with the agreement of the ACCC. FINANCIAL IMPACT The amendments are expected to have no significant impact on Commonwealth expenditure. The allocation of datacasting transmitter licences is likely to result in

2 receipt of revenue from price-based allocation of these licences. This revenue may be reduced as a result of the imposition of an access regime. However, at this stage it is not possible to predict with any accuracy the quantum of revenue likely to be received, not the likely revenue reduction from the access obligations.

3 NOTES ON AMENDMENTS ON SHEET QS390 The amendments on sheet QS390 amend provisions in Schedule 2 to the Bill which amend the Radiocommunications Act 1992 (the RA). Amendment (1) Amendment (1) inserts a series of new items into Schedule 2 of the Bill. Section 109A New item 92QA inserts another licence condition in subsection 109A(1) of the Act (new paragraph 109A(1)(ij)). It will be a condition of a channel B datacasting transmitter licence that the licensee and any third party user authorised by the licensee under section 114 must comply with an access undertaking in force in relation to that licence under new Division 4A of Part 3.3 of the RA. New Division 4A of Part 3.3 of the RA - Access to channel B datacasting transmitter licences New item 92UA inserts new Division 4A of Part 3.3. Division 4A will deal with access to channel B datacasting transmitter licences. It contains provisions that describe the essential features of access undertakings (proposed sections 118A, 118B, 118E, 118J and 118M), the process and criteria for acceptance or rejection of an access undertaking by the ACCC (proposed sections 118C, 118D, 118H, and 118L), the variation of an access undertaking that is in force (proposed sections 118F, 118G and 118H) and the rights to enforce access undertakings in the Federal Court (proposed section 118K). An access undertaking will establish the basis under which a person will be able to obtain access to services that enable or facilitate the transmission of content services under a channel B datacasting transmitter licence (see new sections 118A and 118B). New section 118A defines access for the purposes of new Division 4A, to mean access to services that enable or facilitate the transmission of one or more content services under the channel B datacasting transmitter licence for the purpose of enabling one or more content service providers to provide one or more content services. � For these purposes, a content service is a service of a kind authorised under the Broadcasting Services Act 1992 (BSA) that the holder of a channel B datacasting transmitter licence will be able to provide under the conditions of that licence (see new section 118M). A content service provider is a company that provides, or proposes to provide such a content service (new section 118M). � The concept of access here does not necessarily require that the holder of the relevant BSA licence or person who provides a service under a BSA class licence enter into a direct relationship with the holder of the licence. It would be possible for access to be provided by the holder of the licence to a broker or aggregator of content services, who in turn had commercial arrangements

4 with other entities that provided the relevant service for the purposes of the BSA. � The concept of `services that enable or facilitate the transmission of one or more content services' would cover the operation of a digital multiplex which aggregates content for transmission using a radiocommunications transmitter, rather than the transmitter itself. New section 118B provides that a person is not eligible to apply for a channel B datacasting transmitter licence unless that person has submitted an access undertaking to the ACCC and the ACCC has accepted it. The access undertaking is an undertaking that any holder of the licence and any person authorised to operate the licence will comply with the access obligations provided for in the undertaking. This access must be provided either on terms and conditions which are agreed or, if there is no agreement, as provided for by the access undertaking. These provisions are not intended to preclude an applicant from submitting a relatively simple undertaking. For example, one means by which access might be provided would be for the licence holder to auction off rights to a specified proportion of the transmission capacity. Content services making use of that capacity would be supplied to the transmitter operator to be broadcast with the other services supplied using that transmitter. The ACCC is able to make a legislative instrument that sets out rules about its practice and procedure under new Division 4A (see new section 118L). These rules, known as Procedural Rules, will enable the ACCC to determine an administration fee which would need to accompany an undertaking given to the ACCC (see new subsection 118B(3)). The Procedural Rules can also impose time limits for giving an undertaking to the ACCC (new subsection 118B(5)). New section 118C provides for the ACCC to request the applicant to provide further information about the undertaking. The ACCC may refuse to consider the undertaking until the information is provided. Information obtained under this section will be subject to the same confidentiality provisions that apply to information obtained by the ACCC under Part XIB or XIC of the Trade Practices Act 1974. New section 118D provides that the ACCC may accept or reject an undertaking. This decision will be governed by any criteria made by the ACCC by legislative instrument under new section 118H. If the ACCC decides to reject an undertaking, it will be able to specify an altered version of the undertaking that it would be prepared to accept (new subsection 118D(3)). New section 118E specifies the period that an undertaking remains in force. An undertaking comes into force when the licence to which it relates is issued. It continues in force while the licence is in force, although it is suspended for any period that the licence itself is suspended (new subsection 118E(1)). Where a licence is renewed under section 130, the undertaking continues to apply to the renewed licence in the same way that it applied to the original licence (new subsection 118E(3)). An undertaking also continues in effect in the same way if the licence is transferred to another person (new subsection 118E(2)).

5 New section 118F provides that the ACCC may accept or reject a variation of an undertaking proposed by a licensee. The decision will be governed by any criteria made by the ACCC by legislative instrument under new section 118H. If the ACCC decides to reject a variation, it will be able to specify an altered version of the variation that it would be prepared to accept (new subsection 118F(4)). New section 118G provides for the ACCC to request the applicant to provide further information about the proposed variation. The ACCC may refuse to consider the variation until the information is provided. Information obtained under this section will be subject to the same confidentiality provisions that apply to information obtained by the ACCC under Part XIB or XIC of the Trade Practices Act 1974. New section 118H provides for the ACCC to determine, by legislative instrument, criteria that it must apply in its decisions whether or not to accept an access undertaking or a variation of an access undertaking. New section 118J requires the ACCC to keep a register of all access undertakings that are in force. This includes any undertaking currently varied under section 118F. New section 118K relates to the enforcement of access undertakings. It enables the ACCC or any person whose interests are affected by an access undertaking in force to apply to the Federal Court for orders against a person who has breached the access undertaking. The orders that the Court may make where it finds that a person has breached the access undertaking include orders to comply with the undertaking and to pay compensation (new subsection 118K(3)). New section 118M contains definitions of terms used in new Division 4A. Note that a content service is defined as a service covered by covered by subparagraph 109A(1)(i)(i) or (ii), but does not include a service covered by subparagraph 109A(1)(ib)(i) or (ii). � The services covered by subparagraph 109A(1)(i) are any service provided under BSA datacasting or broadcasting licence allocated under the BSA authorising the provision of that service (subparagraph 109A(1)(i)(i)) or any service provided in accordance with a class licence under the BSA (subparagraph 109A(1)(i)(ii)). These are the services that, in general, may be provided from 1 January 2007 using a datacasting transmitter licence issued under the Act. � However, in the case of a channel B datacasting transmitter licence, it will be a condition of the licence that the transmitter may not be operated to provide (i) a commercial broadcasting service or (ii) a subscription television broadcasting service that is capable of being received by a domestic digital television receiver (new subparagraphs 109A(1)(ib)(i) and (ii), to be inserted by Amendment (1) on Sheet QS385). The effect of this is that a content service will be a service belonging to one of the categories of broadcasting services under the BSA (see BSA section 11), or a datacasting service provided under a BSA datacasting licence, that the holder of a channel B datacasting transmitter licence will be able to provide in accordance with section 109A(1) of the Act.

6 New item 92VA amends paragraph 125(1)(a) of the Act to include a reference to the licence condition to be inserted into subsection 109A(1) by new item 92QA above. Section 125 makes provision in connection with the suspension or cancellation of apparatus licences for breaches of licence conditions other than certain licence conditions that apply only to datacasting transmitter licences. As the new licence condition (new paragraph 109A(1)(ij)) relates to a particular kind of datacasting transmitter licence, this amendment adds it to the list of licence conditions to which section 125 does not apply. New items 92WA and 92XA amend sections 128C and 128D to include a reference to the licence condition to be inserted into subsection 109A(1) by new item 92QA above. Sections 128C and 128D relate to the suspension or cancellation of datacasting transmitter licences for breach of one of the conditions specific to such licences. As the new licence condition (new paragraph 109A(1)(ij)) relates to a particular kind of datacasting transmitter licence, this amendment adds it to the list of licence conditions to which these sections apply.

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