Harnessing digital disruption

Digital disruption describes how new technologies drive substantial change across the economy for households and businesses. These changes can impose significant adjustments as they make investments obsolete and change how citizens access goods, services and employment. Importantly, digital disruption and new technologies offer opportunities for the creation of innovative businesses, a greater range of products, and new ways for governments to address policy problems. In this way, digital disruption can generate higher productivity growth and improve living standards.

Over the course of the year, we worked to modernise regulatory and policy frameworks to better reflect consumer and business requirements in a digital world. We progressed reforms relating to telecommunications regulatory frameworks, copyright and classification. We also progressed the implementation of the ACMADefinition:Australian Communications and Media Authority review.

Table 2.2 Performance criteria outcomes

Telecommunications regulatory reform

In 2016–17, we developed legislation to promote competition and to improve access to broadband services for all Australians, especially those in regional, rural and remote areas.

On 22 June 2017, the Telecommunications Legislation Amendment (Competition and Consumer) Bill 2017 and Telecommunications (Regional Broadband Scheme) Charge Bill 2017 were introduced into Parliament. The reform package has three major components:

• Wholesale–retail separation—To create new commercial and competitive opportunities, existing rules requiring new broadband networks to be wholesale only are being reformed so network operators can also operate retail businesses on a functionally separated or arms-length basis with the approval of the Australian Competition and Consumer Commission. The wholesale-only rules are also being removed from networks servicing small businesses, given they increasingly have access to competing fixed line infrastructure.
• Statutory infrastructure providers—NBN Co (and other carriers, where appropriate) will be subject to clear obligations to connect premises to its network and supply wholesale high-speed broadband services to retail service providers. While the NBN is being rolled out, the obligations will apply in areas as they become ready for service. Once the NBN is complete, NBN Co will be the default statutory infrastructure provider for all of Australia.
• Regional Broadband Scheme—NBN Co’s fixed wireless and satellite networks are estimated to lose around $9.8 billion over 30 years, with these losses currently funded entirely from an internal cross-subsidy from its fixed line networks. The Regional Broadband Scheme makes this existing cost transparent and spreads it across all NBN comparable networks, with NBN Co continuing to pay around 95 per cent of the cost.

Over the year, we assisted the development of these reforms by providing evidence-based policy advice to the Minister for Communications and the Minister for Regional Communications, and undertaking extensive stakeholder engagement, including the release of exposure draft legislation on 12 December 2016.

The Department progressed a range of other telecommunications regulatory reforms in 2016–17:

• On 2 December 2016 the Minister signed the Telecommunications (Fibre-ready Facilities—Exempt Real Estate Development Projects) Instrument 2016. The Instrument enables real estate developments in regional and remote areas that meet four criteria to be exempted from pit and pipe requirements that can be costly and difficult to justify in rural and remote areas. By 30 June 2017, the Department had received exemption notifications for 144 developments, with attendant savings for the developers.
• The Competition and Consumer Amendment (Misuse of Market Power) Bill 2017 amends the Competition and Consumer Act 2010 to give effect to the 2015 Harper Review’s recommendation to strengthen the misuse of market power law in Section 46 of the Act. The Bill also makes amendments to repeal the telecommunications-specific anti-competitive conduct laws in Part XIB of the same Act in light of the strengthening of Section 46. It passed the House of Representatives on 28 March 2017.
• The Communications Legislation Amendment (Deregulation and Other Measures) Bill 2017 contains measures that will reduce the regulatory burden on the broadcasting and telecommunications industries in a number of areas. The Bill focuses on creating a framework to enable a transition to industry management of telephone numbering, a function currently undertaken by the ACMA. The Bill was introduced into the House of Representatives on 29 March 2017.
• A consultation paper on reforms to telecommunications carrier powers and immunities was released on 9 June 2017. The reforms modernise the arrangements to help carriers roll out infrastructure faster and at a lower cost, with follow-on benefits for consumers.

Copyright reform

Intellectual property (IP) and copyright arrangements are a critical element of Australia’s broader innovation and competition system. They provide opportunities for Australians with new and valuable knowledge to contribute to the economic and social wellbeing of the nation by ensuring that the creators of that knowledge secure sufficient returns on their investment in content.

Since the last major changes to the Copyright Act 1968 in 2005, there have been significant changes in the online environment and the environment remains very fluid. Internationally, many countries are grappling with the rapidly changing copyright environment, which has moved on from being principally about ‘piracy’ to one which has complex competition and revenue implications. This ongoing major shift will influence the development of future reform options for Australia’s copyright framework.

A Productivity Commission inquiry found that Australia’s IP arrangements need improvement.¹⁵ Without an appropriately balanced regulatory framework, many of the Government’s signature initiatives, including those being implemented under the National Innovation and Science Agenda, will be less effective in delivering their outcomes.

Over the year, we undertook measures to address some of the issues raised by the Productivity Commission, with further reforms planned in 2017–18. We assisted the Government’s passage of the Copyright Amendment (Disability Access and Other Measures) Bill 2017 through Parliament.

Our work on copyright law reform in 2016–17 has been largely preparatory, with a focus on developing the Government’s response to the Productivity Commission’s recommendations. The implementation of copyright law reforms will be a multi-year process. The effectiveness of the reforms will be monitored over the long term.

Classification

In 2016–17, we provided policy advice regarding content-related consumer safeguards and supported the delivery of the National Classification Scheme. Classification helps inform the Australian community about how they interact with a range of content and is an important mechanism for preventing harm, particularly for children.

Research undertaken by the Department in November 2016 indicates that while community confidence in Australia’s National Classification Scheme is positive, there is anxiety about protecting children from harmful online content.¹⁶

Over the year, we focused on strengthening classification legislation. Our advice assisted the Government’s introduction of legislative amendments that streamline classification regulation and reduce the regulatory burden on industry.

Figure 2.7 Community concern about children and young people with regard to online content

Figure 2.8 Classification amendments

Another important initiative relating to classification during the year was the development of a world-first classification tool that streamlines the process of classifying Netflix content.

We will continue to assist with delivery of the Government’s classification reforms in the coming years. Longer term, our effectiveness in progressing classification reforms will be measured through stakeholder survey results, and the extent to which Australian citizens consider classification arrangements successfully minimise harm.

In terms of supporting the National Classification Scheme, over the year we ensured all:

• classifications were made within statutory timeframes
• training and classification fees were collected
• decisions were published to the National Classification Database
• active assessors were accredited and accreditation maintained.

We also ensured compliance with auditing requirements for classification tools (including the Netflix classification tool).

Australian Communications and Media Authority review

In June 2015, the Minister for Communications announced a review of the ACMA to ensure that it could continue to discharge its regulatory functions effectively in the face of challenges arising from a rapidly changing communications sector.

On 22 May 2017, the Government released the final report of the ACMA review, along with its responses to the report’s recommendations. These responses cover the ACMA’s remit, objectives, functions, governance, performance and resource base, and seek to ensure that the ACMA remains a modern, agile and responsive fit-for-purpose communications regulator. The Government has indicated that it supports, or supports in principle, all 27 recommendations of the report.

Over the course of the year, we commenced implementing the ACMA review’s recommendations. We also worked with the ACMA to facilitate the transfer of the Australian Internet Security Initiative from the ACMA to the Attorney-General’s portfolio. This will result in better alignment and delivery of the Government’s cybersecurity programs. The transfer of the program and its resources occurred on 1 July 2017.

References

¹⁵ Productivity Commission, 2016, Intellectual property arrangements, inquiry report, overview and recommendations.

¹⁶ Department of Communications and the Arts, November 2016, Classification: usage and attitudes study.