THE OFFICIAL PUBLICATION OF THE COMMUNICATIONSAND MED%A LAW ASSOCtATtON (CAMLA)

Registered by AusYpJia Post. NBG 4~74

B"U. L’ L-IE- T.

The cellular mobile phone debate:the shape of things to come

Peter White argues that the curTent inquiry should focus on service type

rather than technology "

A ustel is currently conducti~ aninquiry into the implications oflicensing an additional operatorof cellular mobile telephone set v-

ices (CMTS). On the surface the inquiry canbe seen as the first major debate about theintroduction of competition into the supplyor actualteIecommunicatinns services sincethe government’s new telecommunicationsframework was legislated into being earlierthis yem’.The government’s decision t o atiowfor competition in the cabling of buildingsand in the supply of an expanded range ofPABX equipment does not really impinge onthe supply of telecommunications servicesthemselves. Given this reading of the agenda,it is not su~rising that the inquiry shonidhave received submissions from a range oforganizations with an ultimate interest in thesupply of actual telecommunications serv-ices. And taken within this framework thedebate is about the economic costs andbenefits of varying forms of competition inthe supply of cellular mobile telephone serv-ices.

But another reading of the CM’I2S in-qu~iry sees the issues raised by this particular

- inquiry in a much broader context. And thisbroader context raises important questionsabout the way in which Australian telecom-munications and communications policy isconceived.

One inquiry, two agendas

The broader context emerges when itbecomes apparent that underpining theCM~S debate are two conflicting views of theservice. And these views embody two ffdfer-eat visions of the future development of theoverall telecommunications system, Thesetwo conflicting views are embodied in the

Telecom Ansh’alh’s submJasioa to the in-quiry and the submission which was madeby Henry Ergas and others associated withthe Manash Information and Communica-tions Technology Centre.

The Telecom submission sees an in-creas’mgpropor tion ofstumiard tele-phone calls as having a mobile corn,ponent. So that while calls which

either end ha, or originate from cellularmobile telephone services wiilr emain a smallbut significant proportion of all telephonecalls, new technology will see an increasingemphasis on a mobile handsel The secondwave of innovations will make it possible toboth originate and receive telephone callsfrom a personal mobile handset within aspecified area. The long term vision of thefuture is the widespread use of small hand-beld personally owned handsets which canreceive and originate calls from any location.Such a service would be able to lecate sub-scribers no matter where they were, andcharge the handset owner for the use of theservices which are integrated with the stun-

In this Issue -Dowd on NSW defamation lawreform

¯ Saunderson explains the sub-scription television report

¯ Tradingin the radio spectrum: alookat broadcasting deregulation in NZ

¯ Ros Kelly on reform of broadcastingregulation

¯ The Bond amendments explained

dard telephone service wherever that ec-out’red. This scenario sees the current cellu-lar mobile telephone service as a precursorto a variety of services which are integratedwith the standard telephone service whichwe know today. According to this view thedistinctionbetweeu mobile, semi-mobile andfixed telephone ser viceswill become inereas-iagiy blurred.

By contrast. Ergas argues thatthere islittle reason to consider CMTS as apart of thepublic switched telephone network (PSTN).He argues from the perspective of econondctheory that there is little substitution be-tween the mobile and fixed telephone serv-ices, that the joint provision of the PSTN andCMTS does not lead to any economies, andthat the CMTS is more akin to the mobileservices such as paging and messaging.As aconsequence, he argues that the CMTSshould not be seen as a part of Telecom’smooopoly reserved service.

The Trojan Horse

But why is this debate about the concep-tual status of the CMTS and its successors soimportant? This is because the new Austra-lian telecommunications framework grantsTelecom a monopoly over the provision ofthe PSTN. So according to Telecom’s argu-ment, any regulatory derision an the licens-ing of a second CMTS operator has implica-tions for =the orderly and efficient devalop-meat of the national telecommunicationssystem" (Ministerial Guidelines, 1989). Forif there is an increasing blurring of the dis-tinction between other furms of semimobileservices and the traditinoal forms of accessto the FSTN, the decision to license a second

continued on p2

CMTS operator has consequences forTelecom’s monopoly on that telephone net-work While any decision to license a secondcellular mobi/e telephone service would havelittle impact on Telecom’s current operafinns,it would be seen as the Trojan Horse bywhich competition on the basic infrastruc-ture would be introduced.

Should regulation be serviceor technology based?

It is tempting to enter the fray and dis-cuss the merits of the arguments, but it ismore interesting to see this debate as amanifestation of a more fundamental prob-lem for Australian communications policymaking. This is a problem created by thepolicy making and regulation which is pri-marily based on’tochnologies’ as opposed toa regime which is oriented towards ’serv-ices’. What we can see in Austel’s C/vITSinquiry is that it is essentially an inquiry intoa particular technology which is currentlybeing used to provide a specific service.

Even though the inquiry’s terms of refer-ence oblige Austel to consider the qJkelyfuture development of this [CIVITS] techno!-ogy and the iraplications growth may havefor the orderly and efficient development ofthe national telecommunications system’,even this reference starts from the stand-point of’technology’ rather than the questionof ’service’.

Placed within this framework it is pos-sible to see the two positions outfined aboveas disputes about the relative weight whichshould be given to ’technologically orientedregulation’ as opposed to a ’service orientedregulation’.Telecom’s pesition that the cellu-lar mobile telephone service should be seenas an expansion of the standard telephoneservice can be seen as operationally andconceptually distinct from the publicswitched telephone service and this £~stinc-tion arises, at least in part. from the cellulartelephone technology itself.

The emphasis on regulation of specifictechnologies varies across the Communica-tions pot ffolio. For example Aussat is largelylimited to the exploitation of sateRite technol-ogy. Telecom employs a range of technolo-gies to provide even its standard telephoneservice. These include traditional cable-based communications as well as analogueand digital radio techniques. On the otherhand OTC’sgoverninglegislalion focuses onthe provision of a range of geographicallyspecific services and makes it possible forthe organization to make use of a range oftechnologies.

The transmission of television is regu-lated in different ways depending on whethcrunfettered access to the programming is al-lowed such as in broadcasting, or whether

access is restricted by criteria such as loca-tion or the payment of a fee for that service.For example the Broadcasi£ng Act regulatesbroadcast programs and ~ome narrow-castprograms such as the Remote CommercialTelevisiun Service, while the Radiocommu-nications A~t regulates narrow~ast televi-sion ser vices such as Sky Channel,which areprovided under the Video Audio Entertain-ment and Information Service regime. Hereit is possible to see a mixture of technologi-cally oriented and service orientated regula-tion.

’7 roadbandco m m u nications .... willplace great strains on

Australia’s broadcastingand telecommunicationslegislative framework"

So even within existing Communicationsportfolio legislation there is no clear pathwhich has been followed. But can this state ofafairs remain? If one looks at the rate oftechnological change and the rapidly chang-ing service expectations of users, the answerwonid need to be no.

Regulation must takeaccount of evolution

Essentially regulation must take accountof evolution on two fronts. On the first, tech-nolugies develop and mature quite rapidly sothat an appropriate technology for a givenservice might be less than appropriate withina relatively short time frame. This can beseen in the shift away from long distancepoint to point transmission via satellite infavour of optical cable. On the second frontthere are gradual shifts in the nature of serv-ices. So a standard telephone service be-comes redefined in the eyes ofsubseribers inrelatively shorttime frames. Forexampletheavailability of automatic, STD and ISD tele-phone facilities has come to be the expectednorm in the last 15 years. It is possible that anelement of mobility provided by cellularmobile telephone services and their succes-sors will come to be seen as an essential partof what we now know as the standard tele-phone service in the next few years.

Given this problem, the governmentneeds to address the issue of regulafinns inan area of rapidly changing technologicaloptions and expectations of tetecommunica-

2

tions services. It also needs to ensure thatregulation is only applied where it is abso-lutely necessary. One way this can occurwould be through a regime which regulatedin terms of services rather than in terms oftechnologies. Such a regime would providemaximum encouragement for the use of themost appropriate technologies for specificservices and encourage technological andservice innovation. It would also make itpossible to clarify which services requiredongoing regulation and which did not.

But if this was to occur the principal taskof the current Austel inquirywould involve adecision on whether the cellular mobile tele-phone service should be seen as an integralpart of the public telephone service. Such anapproach would alse encourage definition ofTelecom’s monopolies as monopolies onparticular services The monopoly on thebasic network and public switched telephoneoperations would be seen as monopolies onnetwork and telephone services. Therewould be no resections on the technologieswhich could be employed to provide thoseservices. On a broader scale such an ap-proach would encourage a greater integra-tion of Aussatinto the multi-technologyinfra-structure provided by OTC internationallyand Teleeom domestically. A service-ori-ented approach would also make it possibleto place technical regulatory responsibilitieswith one agency. For example Austel couldbe responsible for licensing and frequencyallocation in the telecomraunications andbroadcasting areas. While those areas whichdealt with the content of areas such as broad-casting, could be dealt with by anotheragency along the lines of the AustralianBroadcasting Tribunal.

The development of broadband commu-nications capabilities and services will plseegreat strains on Australia’s broadcasting andtelecommunications legislative framework.The debate about the nature of the cellularmobile telephone service is likely to be re-poated when the Government is faced withthe introduction of a satellite-based mobiletelephone service which can be provided bythe next generation of Aussat satellites.Similar issues will arise with the introductionof broadband cable services, capable of deliv-ering telecommunications, data and enter-talnment services. A rethinking of the regu-latory boundaries with a focus on services,rather than technologies, might help to clm:-ify a situation which is becoming increas-ingly complex.

Peter& White is Associate Director of theMonash Information and CommunicationTechnology Centre, Monash University.

Defamation law reform in NSWThe Attorney General, John Dowd, discu~:~ sc..-:= are:__= in ~.~_~ of ref;~m

The whole question of reform of defa-

marion law is difficult, because it isnot simply abut freedom of speech.Rather, it is about the conflict be-

.tween the values, both social and democratic,m freedom of speech, and the values re-flected in such concerns as the legitimatedemands for the respect of individual pri-.racy, freedom of association, careful report-rag, encouraginggood people into public life,and even the free speech of othecs. Theintemperate or flippant condemnation of aplay or film, for example, can have the veryreal effect of stifling the free speech of thoseinvolved in its production and the fights ofthose who might otherwise have beentempted to see it.

The recent round of high damagesawards has sparked renewed calls for revi-sion of defamation laws. There is no doubt inmy mind that the very high awards of recenttimes cannot be justified in the absence ofevidence establishing either a malevolentand calculated campaign for boosting theprofits of the media organisation concerned,or proof by the plaintiff of a sizeable eco-nomic loss.

Some commentators have seen the exag-gerated damages awards as an indication ofcommunity disenchantment of the morenotorious reporting habits of the media ingeneral, and, one suspects some of the jour-nalists in particular. If this is so, one mightspeculate as to the reasons for this evidenceof disenchantment being so uniform in Aus-tralia and England. Viewed in that light, theverdicts have come to be defended as part ofthe general public’s revenge against themonopolistic and predatory practices of themedia.

It is my contention that such a defence isuntenable. No justice system can fairly put amedia organisation on trial to answer for thewhole of its reporting style, content andcoverage in general. I would add that by thesame token, no one in public life should beplaced in the position of having to defend thewhole of his or her private behavionr, nomatter howurtrelated to matters legitimatelyin the public domain.

Public figure defence

The adoption of a public tigure test is areform proposal which has been submittedfor the government’s consideration. Theeffect of this proposal would be that those ina position of public interest would receive

less in damages than private individuals onthe grounds that theirpublic activities shouldbe open to comment and criticism. I haveconsiderable reservations about this pro-posal. I am not persuaded that the conclu-sions follow from the grounds advanced.

Wc all know that interest in thelife-stylcsof the rich and famous selis a lot of papers andmagazines. We all know, also, that the vigor-ous public debate upon which democracydepends often requires a canvassing of mat-teas about the chief protagonists in the de-b ate ha question which might otherwise haveremained private. Having said that, however,it most also be said that in the absence ofspecific provision to remedy substantial andunwarranted infringements of privacy, defa-mafion law must serve as a passable criterionfor distinguishing between the private andpublic arenas.

Adiminufinn in the ability of publicfigures to seek redress for de-famatory statements carries thevery serious risk of adding yet

another disincentive to good people becom-ing involved in public affairs at whateverlevel. Many people in public life already ac-cept considerable interference with theklifeand leisure pursuits. However, as was pointedout in the Australian Law Reform Commis-sion Report, there is a point at which anyperson should be able to seek protectionagainst the retailing of private informationwhich has no bearing on their public affairs.The justifications which have been given forproposing a higher threshold for public fig-ures wanting to sue for defamation are two-fold. First, it is said that a public person has agreater opportunity to counteract false state-ments. Secondly, it is argued that those ingovernmental positions or otherwise seek-hag publicity, voluntarily subject themselvesto closer public scrutiny. I do not fully acceptthese arguments, and am, moreover, of the~iew that people in public life are enlitied toas much protection as any other citizen.

Another concern with the public figure!est is the manner in which the public figureis created. One sees too often in journalisticdebate the bringing together of public inter-est and media interest. Given the increasingfrequency with which the media first con-structs, and then claims to reflect, the publicinterest, I am naturally suspicious of how itwill set about defining a person who is or hasbecome a public figure.

A further concern is the unpredictabilityand impracticality of the public figure test. In

the United States, where the constitutionalguarantee of free speech has tipped the bal-ance against the competing interest of indi-vidual privacy, the use of the public tiguretest has often descended to minor govern-ment officers, including noh-gnvermnentfigures whose prominence may be only tran-sient. The lives of the families of those in highprofile positions are also detrimentally af-fected. While members of Parliament areclearly public figures, one might ask at whatstage the definition ceases to apply to mem-bers of their family. Who and what will be-come fair game?

Criminal defamation

The government has already repealedthat part of the statute law allowing privatelyinstituted proceedings for criminal defama-

Section 50 of the NSW Defamation Actprovides that it is an offence to publish de-famatory materialwithout lawful exense.Theoffence is not committed unless the pub-lisher intended to cause serious harm to aperson or knew that it was probable thatserious harm would be caused. Some have.suggested that a criminal defamation offenceis unnecessary. However, the view of mygovernment has been that the law of criminaldefamation should be retained, but with therequirement that the Attorney General’sconsent be obtained prior to the commence-ment of proceedings.

In practice, this prosecutorial discrnflonis exercised by the Director of PublicProsecutions on my behalf.Tiffs delega-tion of authority imposes a very neces-

ss~’Y con~’olfing factor which will prevent theabuse of this type of prosecution. Lir~tationon free speech by way nf criminal prosecu-tion can be justified only if invoked for theprotection of the community as a whole, andnot for reasons of personal or political inter-est in suppressing criticism or dissent. WhileI expect that these provisions will be usedonly rarely, there will be cirCUmstanceswhere a prosecution may be appropriate.These include cases where there is a ten-dency to create a breach of the peace; whereunfounded abuse is repeated by a person ofno financial substance against whom civilproceedings would be ineffective; or wherethe defamation has the tendency to destroyconfidence in a public office.

continued on p4

Defamation law reform

Limitation periodThe government is also assessing the

need for a six-year limitation period in bring-ing proceedings for defamation. Where aperson’s reputation has been impugned, itcould be expected that the maligned personwould wish to clear his or her reputation atthe earliest possinle opportunity. The gnv-eminent is considering reducing the six-year period, possibly to as little as six months.This would mean that people wishing to suefor defamation would be required to com-mence proceedings within the six monthperiled after learning efthe publication.

Truth and public benefit

Some commentators have urged theadoption of truth being a defence in itself.Four jurisdictions in Australia currentlyprovide a defence of truth and public benefit.In Victoria, South Australia and the North-ern Territory, no statutory provisions apply,and accordingly the common law applies. InNew South Wales there is a defeane when animputation is a matter of substantial truthand the imputation either relates to a matterof continuing public interest, or is publishedunder quaEfied privilege. The New SouthWales statute also provides that it is for thecourt to determine what constitutes a matterof public interest.

I am opposed to the idea of introducingany stticter test to the definition of publicinterest than those currently applying. Butthe government has yet to be convinced thatthe community will be better served by abel-ishing the requirement that the defence oftruth also include an element of public bene-fit. In saying this, I am not repudiafin~ thefundamental importance of free spe. ~ in ademocratic society. It is simply that to maketruth an ultimate value in preference to anindividual’s privacy and reputation, withoutany requirement that it be in the public inter-est, is to tip the balance unfairly.

The common law rule, which appliesin some jurisdictions, is that it isdefamatory to publish materialwhich exposes a person to hatred,

ridicule or contempt, or which will cause himor her to be shunned or avoided by others.Where truth alone is a defeuce, materialwhich leads to such a result can be publishedwithout adverse legal consequences¯ State-ments which are true, but unnecessary andcruel, have exposed to ridicule people suchas the intellectually an physical disabled,people of non-English speaking back-grounds, and other minority groups.Society’s respect for the truth is an insuffi-

cient justification for publication of purelyprivate matters efno real public interest, butof gratuitous cruelty, which are not andshould not be the subject of publicity withoutconsent.

The amount of damages

Recent record verdicts, both in NewSouth Wales and elsewhere, have drownmuch o’itlcism regarding the availability ofmonetary d amages. There are several issuesinvolved here.

One option which is worth considering isthe legislative establishment of deductiblesand caps for damages for non-economic loss.Proven financialloss which can be quantifiedshould always be recoverable. But damagesfor wounded feelings are qualitatively differ-ent, hnditmaybe that we should set alimit onthem.

I am of the view that victims who havesuffered unwarranted damage to their repu-tations should be entitled to financial com-pensstion, even though they may be unableto prove economic loss. An individual’s repu-tation is extremely important to his or hersellpercepfinn and social standing. As a civi-lised community, we must maintain ourcommitment to the protection of anindividual’s sense of dignity and sell esteem,and also to the recognition of the importanceto individuals of their ability to socialise.

There might, however, be a case forsetting a threshold requirement be-fore damages for non-economic losscan be awarded. The very real, but

temporary, hurt of no lasting consequencemight have to be regarded as being out bal-anced by other, more pressing, claims uponcourt time.

There has also been considersble critl-dsm of late of spectacularly high verdicts fornon-economic loss, where the implicationseems to be that injury to reputation canfetch more in damages than very significantbodily injury as a result of a motor accident..hist as in motor accidents, my governmenthas set a eeiling or cap on damages for non-economicloss, it might be worth coasideringsetting a cap upon damages for non-eco-nomic loss in defamation actions. If this weredone, it might be quantified as a percentage.of.the cap for non-pecuniary loss for physicalinjury thus establishing an order of prioritybetween the physical and the reputationinjuries.

Judge and juryThe defamation jury is extremely impor-

tant. But some of the criticisms of recentawards have focussed on the wide variationswhich can be expected in the size of an awardas computed by a jury.There might be a casefor redefining the relationship between the

judge and the jury with a view to bringing agreater sense nf predictability in defamationawards.

In criminal matters, the jury determinesliability while the judge determines the sen-tenee. It might be appropriate, par tlcularlyinthese days of increasingly disproportionateverdicts, to give the judge the task of assess-ing damages in defamation cases. The onlyguidelines that juries have when assessingthese damages are the well publicised re-ports of large verdicts in previous cases.Such reports must naturally have an infla-rio nary impact upon the general level of defa-mafinn damages, as juries will tend to con-sider the larger and therefore reported, ver-dicts as the norm.

Judges are in a far better position toassess where a particular case falls withinthe whole spectrum of civil damages cases,and also to be aware of the other end of thedefamation scale, at which most cases settlefor an apology and little more than costs.Judges are also better placed to take accountof mitigating factors and the relevance ofcosts.

To move respensibility for the assess-ment of damages to the judge should lead togreater consistency and thus predictabilityin defamation awards. This in turn shouldencourage more out of court settlements. Itmay also reduce the incidence of appeals inthese matters. The appeal mechar,~sm is aless cost-effective way of controlling fin-grantlyinappropriate damages assessments.

RetractionsThe case for a mandatory retraction or

apology in lieu of a damages award has beenmuch pressed of late. While it is an optionworth considering, I must confess to someinitial hesitancy on how it might work. How,for example, would an order for cost operatewhere a retraction order is the only remedygranted? Howwould one distinguish, in coststerms, between the derisory and the com-ponsstory award? The costs consequencesof a verdict for one cent are obvious. Not sothe costs implications of a verdict requiring aretraction. And where would the retractionbe placed? On page 1, or page 27? Would it begnven a promanence equal to that of the de-famatory article? Even if there were to be a

legislative requirement of equal prominenee,would that be effective to eradicate or negatethe original defamation? How, for example,does one withdraw an imputation that aminister is a child molester?’With a frontpage disclaimer?

At common law, the making of an apologyby a defendant in the defamation action canbe taken into account in calculating the ex-tent of liability for damages.’I’here has beenstatutory recognition of this fact in all Austra-lian jufisdicfinns except New South Wales,

and it is likely that this anomaly will be re.dressed when amendments to the Act arefinalised.

Qualified privilege

The government is also committed toexamining the provisions relating to thereasonable conduct of the publisher, oneelement of the defeuce of qualified privilegeas established under the New South WalesAct.

The operation of the defence of qualifiedprivilege has recently received judicial con-sidemtion in the New South WalesSupremeCourt decision ofThis matter concerned an editorial writtenby Mr Paddy Mc Guiness, which stronglycriticised a paper written by the plaintiff asbeing, in effect, u nprofession al. The de fencesof truth and fair comment failed, hut thenewspaper succeeded with its defence ofstatutory qualified privilege under s.22 of theDefamation Act. Justice Matthews upheldthe s.22 defence on the basis that thepublisher’s conduct was reasonable in thecircumstances. She took into considerationfactors such as the editorial writer’s exper-tise and extensive experience, the materialon which he was commenting, the groundsfor the writer’s belief in the logic of his view-point, and the reasonableness of that beliefgiven the information which was properlyavailable to the publisher at the time of pub-lication. Another factor influencing the deci-sion appears to have been the very greatimportance of the subject matter, AussatCommunications.

Justice Matthews further stated that inthe circumstances, the newspaper’s failureto check every element of the report was notunreasonable. Itwoald be imposing an unfairand unrealistic burden on publishers tosuggest that exhaustive inquiries shouldalways be made.

The Morgan decision has naturally beenwelcomed by the media, and is in line withthe government’s intention to review s.22generally to emphasise the need for consid-eration of all the surrounding circumstanceswhen determining reasonableness of publi-cation. It should be pointed out that the caseis still subject to appeal.

Conclusion

I would like to conclude by acknowledg-ing the need for revision of the law of defama-tion, whilst emphatically denying the needfor partial or total abolition. There are noeasy solutions.

This article is an edited version of a paperdelivered by Mr Dowd to an Australia PressCouncil Seminar on 27 October 198Y.

Lawyers respond toDowd speech

lan Angus is a Partner in the Sydney office of the legal firm

Mallesons, Stephen, Jacques

Public figure defenceThis is well travelled ground. The media

in general are supportive of the introductionof such a defence. If one analyses the natureof the majority of defamation claims whichreach litigation, one cannot but sympathieewith the media’s view.The bulk are by peoplewho would clearly pass the United Statespublic figure test and who are often in theposition of being able to respond in kind towhat has been said about them.

Unfortunately, Mr. Dowd is vague as tohow the submission on a public figure de.fence will be treated by the government,apart from a general statement that he has"considerable reservations~ about the pro-posal. The pros and cons have been amplyand publicly debated for many years. Whatthe government must decide now is whetherit considers there should be freedom ofspeech and discussion about persons in-volved in public life at the expense of thosefew cases where there should be restrictionson discussion however public the ligure is.Unfortunately, it is the politicians who standto lose most if a public figure defence isintroduced. It is those same politicians whowill have to take the decision to introduce thede fence.

Criminal DefamationI agree, that if the offence of criminal

defamation is to remain, proceedings shouldrequire the Attorney General’s fiat. How-ever, I am concerned that Mr. Dowd envis-ages criminal proceedings being com-menced where, for instance, civil proceed-ings would be ineffective against a person ofno financial substance or where the defama-tion has a tendency to destroy confidence ina public office. Thus, defamatory publica-tions would be elevated to criminal offenceswhich would not hitherto have attractedcriminal sanction, qTnere is considerablescope for misuse if those are the sorts offactors to be taken into account. Indeed, thiscould result in a marked increase in the

number of cases of criminal defamationcoming before the court rather than a de-

Limitation periodIf a person considers he or she has been

defamed, there should be an obligation tosue immediately or not at all I would wel-come a reduction in the limitation periodfrom six years to six months. Too often plain-tiffs sue many months or even years after theevent when witnesses and vital documentshave long disappeared, thus makingit impos-sible to hold a fair trial. Indeed, I believe aneven shorter period is warranted - threemonths at the most.

Truth and public benefit

I agree with the Attorney General thatthe furthest the legislation should go i,s torequire that the defamatory imputation istrue and should relate to a matter of publicinterest. However, I believe that the truth ofthe matter complained of should be stfffi-cient to establish a defence for a defendant.The Attorney General refers to the usualarguments for restricting the truth defence.However, I believe the requirements of free-dom of speech outweigh the risk of an inva-sion of privacy in a small nunfi~er of cases. Itcannot be suggested that the press in Victo-ria, South Australia or the Northern Terri-tory is guilty of more invasion of privacy thanthe other States because of the availability ofthe truth alone defence. I am also not surethat the requirement of a public interest ele-ment in the defence prevents the ridiculingof "minoritygroups’. The requirement in thedefence is for the imputation to "relate" to amatter of public interest not for that imputa-tion to be published "in the public interest".

Damages

I agree with the Attorney General’s ap-parent view that damages awards are out ofcontrol. Often there is simply no apparentbasis for a jury’s award. One suspects that

too much weight is given to a newspaper’scirculation at the expense of a reasonedevaluation of actual damage to reputationsuffered within the community. The obvioussolution is for the jury to make a finding for oragainst the plaintiff and for the judge to as-seas damages, as suggested by Mr. Dowd.

RetractionsI agree with Mr. Dowd’s reservations in

relation to mandatory retractions or apolo-gies except that I believe his hesitancy shouldbe more than "initial’. It would be completelyimpractical for the many reasons enumer-ated by Mr. Dowd for a judge to decide whena retraction should be published. Very oRenwhether or not a retraction and apology iswarranted in particular circumstances re-quires a subjective decision on the limitedfacts available at the time. ORen a judgewould be called upon to make a rapid deci-sion based on incomplete material and infor-marion. At present, a newspaper has to makethat decision and, il it is the wrong one, nodoubt it will suffer in the future in the form ofa proper damages award. Certainly, newspa-pers make serious errors of fact and thoseerrors should be corrected. However, gener-ally speaking a newspaper will be ready tomake such a correction and there is no needfor judidal intervention.

One small point - the Attorney Generalappears to suggest that an apology" cannot betaken into account in calculating damages inNew South Wales. That is not so. Apologiesare often pleaded in mitigation ofdanmges inNew South Wales actions. In other words,the common law on this point applies in NewSouth Wales.

Mark O’Brien is a Partner at the Sydney office of the

legal firm Gadens Ridgeway

Defamation damages have recentlyreached new heights both in the amountawarded and the type of article attacked,prompting some of the victims to appeal for achange of rules. John Dowd’s proposed re-forms offer little hope to publishers echoingonly the usual placatory noises made previ-ously for reform in this area. The three sig-niiicant proposals tilted at by Mr Dowd of asix month limitation period, sealing on dam-ages and a public figure defence have littlechance of reaching first base in New SouthWales or of be’rag adopted in other states.

Limitation periodA six month limitation period for com-

mencement of actions does have some merit.The main head of damages for a defamatorypublication is the hurt to the plaintiff’s feel-ings. If, after six months, the plaintiff is un-aware of or unconcerned about a publications/he realistically cannot complain of suchhurt and should not be free to sue at a laterdate for other financial advantage.A plaintiffwho is genuinely unaware of the publicationyet feels great hurt and damage to his or herreputation as a result should always be at]iberty to apply for an extension of the periodunder the existing provisions of the Limita-tion Act-

Ceiling on damagesA ceiling on damages may become a

signpost to a jury resulting in most awards at

the top of that range.Thls seems a dangerousdeparture from the general principles ofcompensatory damages applicable in tort.Assessment of damages by the trial judgewould be preferable. Another option wouldbe to dispense completely with a jury. A qu ad-riplegic and a whip-lash victim should not besubject to the same ceding on damages nei-ther should a bank manager accused in thenational press of involvement in a heroin ringbe limited to the same damages as a hair-dresser slandered at a Darling Point dinnerparty.

Public figure defence

The public figure ddenceis the proposalleast likely to fly par ticnlarly with politidansat the controls, Many public f~rures are thecreation of the media and intense media in-terest alone should not amount to a defunce.On this proposal Mr Dowd candidly con-cedes little interest or enthusiasm. While itmay have some merit as adopted in othercounh’ies, vat ticularly t~e United States, themedia in Australia should still bc compelledto make all reasonable attempts for accuracyin reporting on public figures and of coursewould then have a defencc of qualified privi-lege or at worst substantial Iruth. If the mediaproperly pcrfurm tbeir function a public fig-ure defunce should be superfluous to thosealready available.

¯ Qualified privilegeThe ~uture of the statutory defe~re of

qualified privilege (S. 22 of the DefamationAct NSW) will depend on the final outcome ofthe Morn’an v Fairf~ case led: this case wasreported in the last issue of the CLB and iscurrently set down for appeal before theCourt of Appeal in March 1990]. Section 22,which was initially thought by many to haveprovided newspapers with a qualified privi-lege defence for mass publication has been agreat disappointment for the media. Judgeshave always managed to find somethingwrong with a newspaper’s or televisionstation’s treatment of a defamatory story in-stead of considering the matter at a moregeneral level. They have tended to take avery analylical and technicalappr oachwhlchhas invariably resulted in a finding againstthe media defendant. Perhaps the answer isto give the jury the task of deciding iI apublication is reasonable in all the circum-stances.

Terry Tobin, Q.C., argues that Mr.Dowd’s proposals confuse

~hurt feelings" with "damaged reputation" and illustrateshis point with the recent Lord Aldington case.

The Attorney-General makes two pro-posals to deal with what he described asrecent unjustifiably high awards of damagesin defamation trials: impose a limit on theamount which can be awarded for non-eco-nomic loss; and take away from juries thefunction of assessing damages and give it tojudges.

The idea of a cap on non-economic loss toreputation and injury to feelings overlooksthe central social function of such damages,namely the vindication of the plaintiffs repu-tation.

This is weli-ilinstrated by the recent ac-tion bronght by Lord Aldington (the formerBrigadier Toby Low) against Count NikdialTolstoy over a pamphlet concerning his rolein the enforced repatriation of Cossacks and

6

Yugoslavs by the British Army at the end ofthe European war.’I’he pamphlet was writtenby the epigonous Count Totstoy and distrib-uted by Mr. Nigel Watts, a property devel-oper who is said to have harboured a per-sonal grudge against Lord Aldington.

Tolstoy wrote that "the man who issuedevery order and arranged every detail of thelying and brutality which resulted in thesemassacres was Brigadier Toby LoW’. Hedescribed the conduct of the then BrigadierLow as comparable to the "worst butchers ofNazi Germany or the Soviet Union". Thedefendants pleaded justification and con-ducted the trial as a stage upon which theallegations against the British military ingeneral and Lord Aldington in particularwould be paraded and justified. Tolstoy was

joined as a defendant only after he had threat-ened to issue a summons seeking to be madea defendant. "I remember being puzzledbecause I had never before heard of anyunevolunteering to be a defendant in a libelaction’, Lord Aldingtun told the defencecounsel, Mr. Richard Rampton Q.C.

During the trial, the defendant’s counselwas reported to have clashed many timeswith the plaintiff during the days of cross-examination.

He told Lord Aldington when he beganhiscross-examination that although theywerelikely to agree on little, they could agree thatthe allegations against Lord Aldington were"as brutal as character-assassinafinn as youare likely to see". He accused him of lying onoathabout the datehegaveofhisreturu fromthe war zone to England - which, if acceptedby the jury, meant he could not have writtencrucial military orders for repatriation: "Youhave deliberately given the jury false evi-deoce." He suggested that the plaintiff couldfairly be described as a war criminal were heproved to have forcibly repatriated 70,000Cossack and Yugoslav prisoners, knowinghe was sending them to theh- deaths.

The trial itself was described as Britain’sfirst War Crimes Trial and the defence wasconducted on the basis that the allegationswere true.

In the end, after some two months incourt, the jury returned averdict the sterlingequivalent ofA$3 miflion for the plaintiff.

In a case where the defendant sets out toprove that a leading public figure is a warcriminal, and falls, it is difficult to see why ajury verdict of this size should not stand. Ofcourse, if limited to injury to feelings alone, alibel verdict could never exceed the highestawards for personal injvxies. As for damageto reputafinn however, there must be circum-stances where vindication of the plaintiffrequires eanrmous damages.Aldington’s wasa case where the defeoce itself described thecharges as character assassination in thefirst degree, accepted the challenge of prov-ing the plaintiff was a war criminal, com-pared him to a Nazi butcher and failed toobtain a verdict from the jury.

It will be difficult to find informed presscomment on this case which does not reflectthe journalist’s special vulnerability to andabhorrence of such verdicts. Moreover, it isnot possible here to do justice to the widerdebate about the role of juries other than toassert that the "solution" of abolishing thejury’s role should be resisted. While theoutcome of their deliberations may not bepredictable - as to who wins or by how much- there is such general agreement amonglawyers as to the innate sense of justice inmostjuryverdicts thatthe task ofvindicalionof the plaintiff in libel actions should remainwith the jury.

The "Bond amendments"Paul Marx explains the Broadcasting Amendments Bill 1989

T he Br,~adcusting Amendment Bill1989 ( the Bill"), which amends theBroadcasting Act 1942 ("the Act)was introduced into the House of

Representatives on 1 November 1989. In hisSecond Reading Speech the Minister forTransport and Communications, the Hon.Ralph Willis MP, observed that the Act ~hasrightly been described as a complex, un-wieldy piece oflegislafinn".The amendmentsproposed by the Bill, however, make the Actmore complex.

The Bill seeks to amend the ownershipand control provisions of the Act so as toovercome problems with the currentlegisin-tion perceived by some in the course of re-cent inquiries by the Australian Broadcast-ing Tribunal, most notably its inquiry intomatters concerning licensee companiescontrolled by Mr Alan Bond. These prob-lems were described as follows by the Min-ster in his Second Reading Speech:

"At present, the Tdbunalwould be facedwith extremely limited options if, after con-ducting an inquiry that it was required tohold, it were to find that a commercial licen-see was no longer ’fit and proper’, or nolonger had the financial, technical or man-agement capacity to provide an adequate andcomprehensive service. It presently may onlyimpose licence conditions or suspend, re-voke or not renew the license. But if thelicensee’s unsuitability was due to the con-duct or character of a person in a position tocontrol the licensee company or its opera-tions, licence conditions may not be an effec-tive remedy. This is because the conditionsmay not be cupable of affecting the influenceof the relevant person on the licensee com-pany. The only other remedies available -suspension, revocation or refusal to renewthe licence- would put the service of f the air."

Supplementary and publiclicences

In addition to the significant changes tothe ownership and control provisions, theBill also contsins amendments relating to thegrant of licences for supplementary radioservices in regional areas and to the nature ofmaterial which may be broadcast by theholders of public licences. In summary, thoseamendments:(a) clarify the Minster’s power to initiate

joint inquiries into the grant of a licencefor a supplementary or a so-called"independent" commercial FM radioservice in a regional area. Theamendments also confirm the

procedures to be adopted by the Tribunalwhen holding such a joint inquiry;,

(b) permit aspiring public broadcasters totransmit sponsorship announcementswhen conductingtest~ransmissions;and

(c) permit public licensees to broadcastcommunity promotional material.

The amendments relating to the grant ofsupplementary/independent commercialFM licences are as a consequence of thechanged approach to the planning of suchservices announced by the then Minister ofCommunications, Michael Duff’y, on 24February 1987. Under that approach to plan-ning, the Minister forms a prima fade view asto whether an area or market is able to sup-port a new, competing service. Where theMinister is in doubt an to the viabifity of a new"independenff service the Tribunal consid-ers simultaneously relevant supplementarylicence applications and applications lodgedwith the Tribunal for the grant of a newlicence.The original provisions of the Princi-pal Act containing criteria for the grant ofsupplementary licences were drafted at atime when it was contemplated that supple-mentary licence applications would be con-sidered by theTdbunal prior to a determina-tion of any relevant "independent" licenceapplications. In amending the Act to reflectsuch changed planning procedures the Billprovides that the amendments are not to betaken to imply either that a power conferredon the Minister or the Tribunal by the amend-ments was not previously possessed by theMinister or the Tribunal.

Suitability requirementsCentral to the amendments to the owner-

ship and control provisions is a definition ofthe term "suitability requirements~ which isinserted in s.4 of the Act. The holder of acommerciallicence fails to meet the suitabil-ity requirements that apply to a licence if thelicensee is no longer a fit and proper personto hold the licence or no longer has thefinancial, technical and management capa-bilities necessary to provide an adequate andcomprehensive service pursuant to the li-cence. Similar "suitability requirements"apply in respect of applications for approvalof relevant share transactions involving li-censee companies.

Renewal of commerciallicences

The nature and extent of the new powersconferred on the Tribunal by the Bill can be

summarized conveniently by reference tothe provisions relating to the renewal ofcommercial licences. Similar provisions areinserted in the Act in relation to the suspen-sion and revocation of licences and the a~-proval of share transactions.

As regards licorice renewals, the Billinserts a new s.86AAA in the Act followingthe existing s.86AA, which latter sectioncontains the criteria for renewal of such li-cences. The new s.86AAA empowers theTribunal to do any one or more of the follow-ing where it is satisfied that the holder of acommercial licenee has failed to meet the"suitability requirements" that apply to theliceoce:(a) revoke, vary ur impose conditions

the liconee;(b) give directions under s.92M(1A); (c) give directions under s.92N(2A).

Directions under sections92M and 92N

The Bifi expands the nature of directionswhich may be given by the Tribunal in cir-cumstances in which the Tribunal is satisfiedthat the holder of a commcrcial licencc hasfailed to meet the "suitability requirements’.Anew subsection (1A) is inserted in s.92M the Act under which the Tribunal may give aperson directions for the purposes(a) enabling or requiring the ticcnsec

meet the’suitability requircmcnts" thatapply to the licence; or

(b) preventing the person from doing an actor thing that is likely to have an adverseeffect on a number of matters such asthe licensee’s operations in providingthe relevant service and the selection orprovision of programs to be broadcast.Directions may be given to a wide class of

persons in addition to the relevant licensee.Such persons include a person who is in aposition to exercise conta’ol of thelieera person whose conduct, character or capac-itygives rise to, orcontributes to thcliceosee’sfailure to meet the "suitabifity requirements’.The directions may be given to a servant oragent of such a person or, where the relevantperson is a company, a director of that com-pany.

It is conceivable that it would be open tothe Tribunal to give directions under s.92Mto persons such as bankers and programsuppliers should it be of the view that theirconduct or capacity gave rise, for example, toa licensee’s failure to possess the requisitefinancial capability to provide an adequateand comprehensive service pursuant to a

Similarly, the provisions for divestiture ofinterests in a company arc expanded as aconsequence of amendments made by theBill to s.92N of the Act. In circumstances inwhich theTribunal is satistied that the holderofacommercialliceece has failed to meet the

"suitability requirements" and that the hold-ing by a person of particular interests in acompany gives rise to or contributes to thelicensee’s failure to meet the "suitabilityrequirements" directions may be given re-quiring the relevant person to divest theparticular interests. The Tribunal also maygive directions to prevent that person dispos-ing of the interests to a specified person orpersons included in a specified class of per-SOUS.

Amendments to section86AA

in addition to the amendments referredto above, the Bill amends s.86AA of theAct byinserting after subsection (4) the followingsubscctiom(4A)In determining whether it is advisable

in the public interest to refuse to renewa commercial liconce under paragraph4(b), the Tribunal is to have regard to:

(a) the existence of the powers referred in section 86AAA; and

(b) such other matters as the Tribunal

considers relevant." (emphasis added).On first reading, the provisions contained

in the new s.86AA(4A) (b) could be taken restore the Tribunal to the position thatprevailed prior to the 1981 amendments tothe Act in which it had full discretion torefuse to renew a licence rather than thecurrent limited discretion having regard tocriteria enumerated in theAct. However, thatapparently was not the intention of thoseresponsible for drafting the B~I.

Although little guidance can beohizined from either theMinlster’sSecond Reading Speech or theexplanatory memorandum it

would seem that the new s.86AA(4A) (b) the ACt is designed to make it clear that in de-termining whether it is in the public interestto refuse to renew a commercial llcence in asituation in which a licensee fails to meet the"suitability requirements" the tribunal can-tinues to have a wide discretion, limited onlyby the scope and purpose of the Act. Any con-fusion caused by the drslfing of the news.86AA(4A) probably is a result of"gr’a~ng"the new provisions onto the existing legisla-finn rather than makinga fuedamentalchangeto the scheme of the Act. A similar approachhas been adopted in relation to the arnend-mcnts madc to the Act in respect of thesuspension and revocations of commercialliceoces [see the new s,88(2A) (b)].

Never theless, the amendments made bythe Bill evince a clear legislative intentionthat the Tribunal should have regard to theother available remedies in the public inter-est before refusing to renew or suspendingor revoking a commercial licence in circum-stances where the holder of a licence fails tomeet "the suitability requirementS" applyingto that liceoce.

8

Time limits for divestiture ofinterests

As stated above, s.92N gdves theTribunalexpanded powers requiring persons to di-vest interests in licensee companies.S.92N(2A) (c) provides that the Tribunal the relevant circu instances may %.give suchdirections as it thinks necessary to ensurethat the person ceases, before the end of theperiod for 6 months commencing on the dayon which the direction is given, to hold speci-fied interests in the company ..."

Itisinconceivable thnt any directim~wmfld

be authorized under s.92N(2A)(c) unless itwas one which required the divestiture ofinterests within the period of six months. In-deed, in his Second Reading Speech theMinister stated:

~If a relevant interest is directed to bedivested a strict six month deadline will apply.This is because by then it would have beenfuliy established by the Tribunal, if neces-sary through court and Administrative Ap-peals Tribunal avenues, that the licenseefailed to meet the suitability requirementsand that divestment was the appropriateremedy."

imilar amendments are made to ss90JA and 92FAA of the Act, whichsections deal with the approval of

~ share and other transac-tions. In circumstances where the Tribunalrefuses to approve such transactions becausethe relevant applicant has failed to meet the"suitability requirements" that apply to thelicence, the Bill provides that the Tribunal isnot to grant an extension of the period of sixmonths for divestiture.

It is arguable that the lack of tlexibility inrespect of the time period allowed for dives-titure could be contrary to the public interestin some circumstances. There may be goodreasons which (but for the amendmentscontemplated by the Bill) would lead theTribunal to conclude that it would be in thepublic interest to permit a person 1o nger th ansix months to divest. For example, for rea-sonable commercial reasons it may not bepossible to complete a sale and purchase of arelevant interest prior to seven or eightmonths after a direction to divest has beenreceived from the Tribunal. The option topermit a vendor such an indulgence in thepublic interest is removed by the Bill in itspresent form. It remains to he seen whetherthe Bill will be amended.

As at the date of writing, the Bill is still inthe Senate having been adjourned at theSecond Reading stage. Consequently, thefinal form of the amendments to be made tothe Act is yet to be settled. Nevertheless, inthe current economic climate the "suitabilityrequirements" (particularly financial andmanagement capabilities) will come underclose scrutiny by the Tribunal in the course

Offer of amends defence succeeds:Brennan v Nationwide News

Jillian Anderson and David Casperson

report on the first successful reliance on the apology defence in NSW

Background

I n a recent defamation trial befure JusticeBadgery-Parker and a jnry in the NewSouth Wales Supreme Cour t, the offer ofamends defence provided in Division 8

of the DefamationAct, 1974 (NS) as success-fuliyr~sedbythepublisherofTheAustraliannewspaper. The. defence provides that, incertain circumstances, an offer to publish anapologs~ and pay costs is a defence to a claimfor damages for defamation. It is rarelypleaded, and never successfully.

The first article complained of by Mr.Brennan, "Casualties of the MediFrand War’,as published in The Australian on 23 March1988. T~e Australian published a follow -uparticle on 26-27 March 1988 in the WeekendAustralian which as also sued upon. Both thearticles concerned an investigation of DnFrank Summers, a Newcastle general practi-tioner, by officers of the Health h~suranceCommission. The articles described activi-ties of the HIC’s Investigation Unit "led byMr. John Brennan" and referred in detail tohis activities in the course of that investiga-tion. The article reported interviews withseveral of Dr. Sunwners’patients, all of whomcomplained about the activities of the officerwho carried out the investigations in New-caste.

In May 1988, a statement of claim wasserved on the publisher of The AustralianThe plaintiff was described as John Brennan.Therew as no request, prior to the issue ofthe statement of claim, for an apology or cor-rection to be published.

In September 1988, its acting chief ofstall authorised republication of the originalarticle in "New South W ales Doctor", thejournal of the New South Wales branch of theAustralian Medical Association. In Novem-ber 1988, Mr. Breanan amended his state-ment of claim to include this republication.

Mistaken identityDuring the months following the service

of the statement of claim, the newspaper’ssolicitors, made enquiries and investigationsconcerning the matters raised in the articlesand subsequently in October 1988 the news-paper flied a defence of truth and qualifiedprivilege.

On 3 February 1989, in a conversation at

the Defamation List, Mr. Brennan’s counsel,Mr. Evatt. made the newspaper’s solicitoraware for the first time of the fact that therewere two persons known as John Brennanemployed in the New South Wales HIC In-vestigations Branch. The solicitor found outthat the plaintiffas the manager of the Branchand had not conducted the investigation re-ferred to in the article, which as conductedby an investigations officer also called JohnBrennan. At the Defamation List, thenewspaper’s solicitor obtained leave to file anamended defence withdrawing the defencesof truth and qualified privilege.

The offer of amendsOn 17 February 1989, the newspaper

made an offer of amends to Mr. Brennanpursuant to Part 3 Divisinn 8 of the Defama-tion Act 1974 (NS). The offer was not ac-cepted and on 3 March 1989 the newspaperobtained leave to file, and subsequently filed,a defence pleading the making of that offer.The newspaper also published an apology toMr. Brennan, even though the offer had notbeen accepted.

In order to comply with the pro~isinns ofthe Act. the newspaper had to establish thatthe publication of the articles as innocent.When an article is published and it may bedefamatory of a person, the article is inno-cent only if at and before publication thepublisher and the servants and agents con-cerned with its pubhcation:(a) exercised reasonable care in relation

the article and its publication;(b) did not intend the article to

defamatory of that person; and(c) did not know of circumstances

reason of which it may be defamatory ofthat person.

When the offer is made and not accepted,it is a defence to proceedings brought inrespect of the article that:(a) its publication was innocent in relation

to the plaintiff;Co) the offeror made the offer as soon as

practicable after becoming aware thatthe matter in question is or may bedefamatory of the plaintiff;

(c) the newspaper was ready and willing perform anyagreement arising by theacceptance of its offer before thecommencement of the trial; and

9

(d) the author of the article was notmotivated by ill will.

The paper proves its caseTo prove its case, the newspaper called

the journalist who wrote the articles, MarkMcEvoy. He gave evidence of the extensiveinquiries which he had made prior to writingthe articles. He had spoken to each of thepersons mentioned in the articles, and hadcopies of writtan statements from some ofthose persons. He had also attempted tocontact the investigator, John Brennan, atthe HIC but had been told that he as unavail-able. The journalist’s evidence was that hewas not made aw are by anyone at the HICthat there was more than one John Brennanemployed there, or that the Manager flnves-tigafions) of the HIC’s New South Walesbranch went by the name of John Brannan.He was completely unaware of the plaintiffsexistence. This evidence was accepted bythe jury.

The editor of The Australian at thetime the articles were published,Alan Farrelly, and the editor-in-chiefof the newspaper at the time, Les

Itoliings, also gave evidence of proceduresadopted by the newspaper and eftheir rote inthe preparation and publication of the at-ficles, Neither of them were aware prior topublication of the existence of the secondJohn Breanan.

The newspaper’s solicitor gave evidencethat she believed the, John Brennan de-scribed as the plaintiff in the statement ofdakn to be the same person described in thearticles, and she was not aware until theconversation with Mr. Evatt on II February1989 that the plaintiff was in fact a differentperson to the person to whom the articleintended to refer. This as despite inqu’uieswhich she had undertaken in about August1988 which provided some evidence thatthere was some information available to thenewspaper and its legal advisers at that timesuggesting that another John Brennan hadconducted the patient interviews in New-castle.

The trial Judge held, in a ruling duringthe trial, that the knowledge referred to in S.43(1) (b) of the Defamation Act meant actualknowledge, not constructive knowledge. Forthis reason, the relevant time when the

newspaper became aw are that the ar ticlewas or may be defamatory of the plaintiff wasin February 1989, rather than in August 1988or earlier. The offer being put o n sh or tly afterthat time as therefore made by the newspa-per =as soon as practicable after becoming

The trial judge ruled that the offerscomplied as a matter of law with the formali-ties required by the Act and left them to theiury in regard to all three poblicafioas.

The judge also directed the jury that Mr,Breiman was not entitled to damages in re-spect of avuldahle loss, that is, loss which bythe exercise of reasonable steps on his ownbehalf he might have avoided. Therefore, hecould not recover damages resulting fromthe failure of the newspaper to publish acorrection and apology until almost a yearafter publication of the original articles, asthe plaintiff could have reduced the harmsuffered by bringing to the newspaper’s at-tention the fact that there were two personsknown as John Breiman within the HIC.

In respect of the first and second articlessued upon, the jury found in favour of thenewspaper. The jury found each of thosepublications were innocent in relation to theplalntiffand the offer of amends was made assoon as reasonably practicable after the de-feedant had become aware of the true facts.

In relation to the republication in NewSouth Wales Doctor Magazine, the jury foundthat the matter complained of w as not inno-cent in relation to the plaintiff. The basis ofthat answer was a finding by the jury that thenewspaper had not exercised reasonahiecare in allowing republication of an articleupon which a statement of claim had alreadybeen issued.The iur y awarded the plaintiff inrespect of the third article $10,000 damages.

fillian Anderson is a solicitor in the SydneyOffice of Blake Dawson, Waldron. DavidC.a@e~son is a Sydney barrister

The Bond amendmentsfrom p7

of lieence renewal inquh’ies and transactioninquiries. It should not be long before thepractical implementation by the Tribunal ofthe amendments contemplated by the Billwill be seen.

In his Second Reading Speech the Minis-ter stated that the Bill "represents the firststage of legislation to reform the operation ofbroadcasting regulation." We await the "fur-ther reforms" which are to be contained inamendments to be introduced in the Autonmand Budget Sittings d Parliament in 1990.

Paul Marx is a Partner with the SydneyLegal firm of Boyd, House and Partners.

The Newspaper RuleGrant Hattam examines the development of this rule and its

recent application in Victoria.

Background

W~ hat is told to journalists is not

rated in law with the sameimportance as what is told topriests, doctors or lawyers.

The latter three professions have an absoluteprivilege. They do not have to reveal underany circumstances what has been told tothem. Journalists don’t have that privilege.What I’m told as a lawyer will never be re-vealed.Ajournalist, however, if ordered by acourt to do so, must reveal his or her sourceor face the consequences.

That does not mean, of course, that ajournalist wift necessarily reveal the identityof the source, even though ordered by acourt. He or she may refuse to do so therebyabiding by the journalists’ code of ethics. Asa result, there can be a conviction for con-tempt which may mean gaol.

That will only happen if a court in the firstplace refuses to apply what is known as "thenewspaper rule".

Recently, the Supreme Court of Victoriadid apply the newspaper rule and refused anapplication by the Guide Dog Owners andFriends Association (the Lady Nell School)for the journalists who wrote a story in TheMelbourne Herald to disclose their sources.

Cynics say that the rule has evolveds’imply because some judges could not bearthe adverse publicity of sending iournaliststo gaol for refusing to divulge their sourcesuntil absolutely necessary. In other words, asort of semi-privi/ege has been afforded tojournalists that has evolved as a matter ofpractice.

The Conjuangco CaseTo understand the Cojuangco case is to

understand the newspaper rule.In an artlcle in The Sydney MorMng Herald,

a man called Cojuangco was allegedlydefamed.The article concerned his affairs inthe Philippines and the allegation that he wascorrupt. He felt sufficiently aggrieved towantto issue proceedings in Australia fordefamation. But who could he sue? In NewSouth Wales, there is a statutory defenceavailable to a newspaper. Cojuangco wasuulikely to succeed if be sued the newspaperbecause of this defimce.

Therefore, what could he do in order tohave his reputation, as he saw it, restored? Asthe article itseif placed great reliance on the

I0

sources mentioned in the article for the hffor-marion relied on, Cojuasgco made applica-tion that the journalist concerned shouldreveal his sources. Indeed, the whole articlehad the striking feature of being based onstatements from leading and senior figures.The court, whose ruling was upheld in sub-sequent appeals, agreed with Cojuangco’sapplication.

The courts significantly found that thereis such a thing as "the newspaper rule" whichprotects journalists from revealing sources.But that rule will not apply ifiusticc demandsthat it should not.

Justicein the Cnjuasg~o case did makesuch a demand. The courts felt thathe would have been prejudiced with-nut such disclosure. C~uangco did

not liave any successful prospocts of an ac-tion against the paper because of the spedaldefence available to the newspaper. Such adefence, however, was not available to thesources. It was only by having the sources asdefendants that Cnjnangcu could endeavnurto restore his reputation. The court made itclear, however, that if he bad had a reason-able action against the newspaper the jour-nalist, at least until the N~I ol the action,would not have to reveal the identity of the

The Sydney Mor~ivg Herald was facedwith the prospect ol its journalist having toreveal his sources. It is not surprising that avery logical step then tonk place, The news-pspor simply stated to the court that it wouldnot rely upon the statutory defence. It wouldsimply rely on other defenees such as truth.It stol~ed itself frnm being in any betterposition of defending an actinn than anysource would be.

Accordingly, the newspaper rule wasapplied upon the under t~ng by The SydneyMorning Herald to abandon its statutorydefence and the journalist did not have todisclose his sources. Cojuangco, in otherwords, was left with an action against TheSydney Morning Heraldwhich was inn n betterposition to defend that action that any sourcewould be.

The Lady Nell CaseIn the recent Victorian Lady Nell case,

the Full Court of the Supreme Court believedthat iustice would not he denied to theplaintiffs if the newspaper rule was applied.The defendants in that case akeady had an

existing’actian against TheMelbourneHerald.How could justice demand that the plaintiffsknow the sources of the information as well?The paper was in no better pesition to defendthe case than any source would be. As amatter of fact, the paper abandoned itsdefences of qualified privilege and faircomment and simply said that it would relyon the defence of truth. That being so thepaper could not be in any better position todefend the action thatwhat any source wouldbe. Further, as the paper was in a position topay any damages that may be awarded to theplaintiffs in the case itwas simply unnecessaryto have any sources added as defendants.

The newspaper rule has produced anextraordinarily bizarre situation. Ira plaintiffseeks preliminary disclosure of a journalist’ssource, he will not obtain that order if he hasan effective remedy against the newspaper.Where it appears, however, that the newspa-per may have a stronger defence than thesource, then disclosure may be ordered infavour of the plaintiff in the interest or justice.Accordingly, a court hearing an applicationfor disclosure of a source must take into ac-count the merits of the newspaper’s de.fence.If follows, therefore, that it is in the plaintiff’sinterest to demonstrate to a court, as far asshe/he can, when making an application fordisclosure, that she/he does not have an ef-fective right of action against the newspaper.It also follows that it is in the newspaper’sinterests to demonstrate to a court that theplaintiffalready has an effective action again stit. It is a curious situation when the parties toan action try to demonslrate the weaknessesof their case to the court. Indeed, if a news-paper defendant’s defence is looldng betterthan what the source’s defence might be,then the newspaper, as in the Cojuangco casewillprobablywish to weaken its case by aban-doning defences that are not available to thesource.

The Implications of the rule

The recent Lady Neil decision is indeedimportant. Imagine if a paper was faced witha source application every time a plaintiffissued a defamation proceeding against it.The newspaper, regardless of the merit eft_heplaintiff’s defamation case, would in manycases feel the pressure not to reveal thesource, because to do so would be to breachthe undertaking of a journalist. Accordingly,in an effort to resist disclosure, the newspa-per may offer money to the plaintiff in orderfor the plaintiffnot to proceed with the appli-cation for disclosure of sources. This will beparticularly painful and against the publicinterest because the plaintiff’s defamationaction may have no merit at all.

Alternatively, the paper could adopt thestance of instructing its journalists to say tosources that, if called upon by a court, theywill have to reveal the sources’ identity. If this

policy was adopted by the newspapers, itcould mean an end of news as the publicknows i t to day. Sources would simply dry up.The collection of news, in many cases, in-volves leaks from unidentified members ofparliament, government bureaucracies,major corporations and many different or-ganlsations, In many cases, the most terriblewrongs in society might not be brnught tothe public’s attention but the anonymity ofthe source of the information provided. Thisis a fact of life. If is, after all, the media whichaccepts the responsibility and liability for thematters that are published.

The decision in the Lady Nell casedoes not mean that the newspaperrule will automatically be applied bya court to protect journalists from

revealing sources. It does mean, however,that it will be applied unless the plaintiff candemonstrate that his or her case may beprejudiced unless an order for disclosure ismade. As Mr Justice Hunt said in the initialCojuangco decision, the existence of an ef-fective right of action by a plaintiff against anewspaper would seem to him to be a sufti-cient answer to an application for disclosure.He also said, "It is difficult to see how thepursuit of a merely person al satisfaction couldbe in the interests of justice". Accordingly,the onus rests upon the plaintiff to demon-strate that justice requires disclosure.

The rule’s applicationsshould be extended

It is submitted that the operation of thenewspaper rule should be extended to theactual trial of the action itseif as well as thepretrial process. After ail, the High Court in

Cojuangco stated that the existence of therule is a factor to he taken into account in theexercise of judicial discretion pursuant to theSupreme Court discovery rules in Victoriaand New South Wales. Why not extend therule to the actual trial?

The same prindples that justify theexistence of the newspaper rule inthe preqaS.al process should also jus-tify its existence in the actual trial

itseK It is often, after all, the newspaper thatsuffers by not calling its source at the lrial togive evidence.

This, in effect, has been reeognised inthe United I~Sugdom through S. 10 of theContempt af Court Act 1981. That sectionprovides in general terms that no court mayrequire a person to disclose, nor is any per-ann guilty of contempt of court for refusing todisclose, the source of information containedin a publication for which he is responsibleunless it is established that disclosure isnecessary ha the interest of justice, nationalsecurity or for preventiun of disorder or crime.It can be seen that the effect of this section isto extend the newspaper rule to the sctualtrial of the action.

The courts over the last 100 years havecarefully weighed the competing principlesand have come to the coeclasion that theproper flow in disaeminatinn of the informa-tion would be significantly hampered if thenewspaper rule and the pr~dples whichsupport it were not given significant weight.For these reasons, the newspaper rnle shouldbe maintained, strictly enforced and ex-tended.

Grant Hattam is a lawyer in the Melbourneof~ce of Corrs, Solicitors

TELEVISION 2000-CHOICES ANDCHALLENGES

Ros Kelly, Minister for Telecommunications, discusses the

government’s agenda for reform of the Broadcasting Act

ince coming to this portfolio ear-lier this year, I have been greatlyimpressed by two things.

The first is the rapid pace ofin communications. The second is

the growiug~ter-relationship between tele-communications, radiocommunications, andbroadcasting.

I see several fundamental questions. Whatsort of broadcasting system do we want inthe year 2000? What will technology permit

11

us to do? Whatwillwe be able to afford? Whatwill be the role of government? Will theindustry we now know undergo furthersubstantial change?

These questions are important for thegovernment, the public, and the industry.

High definition television

I want to make particular mention of oneaspect of technological change - high defmi-

The government’s concerns are twofold.Firstly, wc wish to ensu~ that the develop-ment of international standards for HD’IWavoids the mist&kes of the past and that weproperly respond to Australia’s future re-qulrement~

I believe we would be best served by asingle worldwide production standard forHDTV. This would enhance internationalprogram exchange, and recognise the ad-vantages of equipment compatibility.

Secondly, when assessing the optionspresented by ~and other developmentsin television technology, the government willbe looking to systems that give the maximumbenefit to consumers at an affordable cost.

We will also consider the interests of thebroadcasting, program production, andmanufacturing industries.

The choices and challengers

Changein broadcasting presents choicesand challenges:choiceswb2ch must be madeand challenges which must be me~.

Change is by its nature difficult to pre-dict. The government is concerned that theinterests of Australian audiences are safe-guarded, and thatlicencees continue to meettheir obligations to provide quality servicesthat comply with prevailing standards.

Their obligations are not discretion-ary. They are a condition of the li-ccnces.They need to bc met, just asmuch as financial obligations need

to bc met, if the present licensees are to re-main in business. Leaving aside currentproblems, pressing though they are, broad-casters, public interest groups and govern-ment should welcome social and technologi-cal change and work co-operatively to struc-ture a system that serves all Australians.

I have often heard it said that we in Aus-tralia have one of the best broadcasting sys-tems in the world. Unless we rise to thechallenge of change our system ~ become~ffedor to those ha the rest of the world.

The government accepts the responsibil-ity to ensure that the regulation of broadcast-ing is set at an appropriate level. We are facedwith making choices which affect the sin-cerely held views of different groups. Theseare d~fficuif issues which require carefulconsideration. We only have limited oppor tu-nities to get the answers right. In fulfillingour responsibilities, we will be looking to theindustry and public interest groups for sup-port and c~operatinn.

The government expects all groups inthe broadcasting industry to look beyondtheir immediate seif-imercst or concerns,

wtKle recngnising the operatom" right tu makea fair return on investment- Allinterest groupsshould also consider whether existiug regu-lation arrangements remain the best way toachieve our various goals including highquality and diversity in programming.

The reform agenda

The government intends to bring for-wnrd in the autamn sittinga of 1990 a packageof measures to improve the effldency of theownership and control scheme. We Hill alsobelookingto streamline theAustralian Broad-ca6fingTribanars public inquiry processes.

While we are taking these immediateactions, we remain conscious of the need toexamine the wider perspective of broadcast-ing regulation.

It is fair to say that this remains a complextask. Those who would pursue simplisticsolutions based on either naive deregalatoryapproaches or on heavy-handed prescriptiveregulation fail to appreciate this complexity.They fail to appreciate the changing tecimc-logical, community and economic environ-ment within which this industry Hill need tooperate.

ur basic premise is that futurelegislation must more clearlyserve explicit policy objectives,and that the industry is subject

only to the minimum regulation necessary.Tnegover nmcnt has akcady made it clear

that full deregulation of broadcasting is notbe appropriate. People recognise that broad-casting is different in many ways from otherindustries, as it involves so many importantpublic interest issues. This means that wewill still nccd a proper regime of licensingand standards, as well as rules relating toownership.The regulatinns that remain mustbe capable of efficient administration, whileproviding certainty, appropriate public ae-ccss and natural justice.

These objectives do not mean that thegovernment plans the abolition oftheAustra-lian Broadcasting Tribunal, the abolition oramendment of the ownership levels, the re-laxation of foreign ownership rules, or toallow self-rngulatien in areas such as theAustralian content and children’s programrequirements.

The key issues

In the context of the overall review thegovernment has an open mind and will beaddress’rag seven key areas:

¯ how future broadcastinglegislalion canbest serve the government’s explicit

policy obiectives includhg the aim thatthere be no morereg~lation of industrythan is necessary to support statedobjectives;

* the regulatory implications of theinteractions between existing andemerging communications servicesand the needs of the legislation thatgoverns them;

¯ the re-structuring of communicationsplanning processes to provide greaterscope for broadcasters to take theimtiativewhile also providing for properaccountability through a moreIransparent process;

¯ aspects of the ownership and controlscheme in broadcasting;,

¯ the need for a more efticient and rationalapproach to licence allocation, review,and renewal;

¯ examination of the regulation ofprngrmmning standards to ensure thatqualityis malntainedin the broadcastingsystem under any new arrangements;and

¯ re-examination of the nature,responsibilities and method of operationof the regulatory agencies and theff~vision of responsibilities betweenthem and the government‘

These are difficult and important is-sues.Weintend this to be agenuinelywide-ranging review that is free toexplore all options and test them

against the political, community and eco-nomic context before the government makesany decisions.

We will be providing opportunities forconsultation, andhopcthat the debate,whichwiU no doubt be robust, will also be obiectiveand constructive. We should remember thatthe Australian Broadcasting Tribunal hascarried out a difficult task over the past fewyears. Indeed, some would argue that it hashad an imposs’~ble task.

The Tribunal has had to carry out itsstatutory respons~ilities in a rapidly chang-ing social and technological environment_ Ithas had to do so within a legislative frame-work that is far ~rom satisfactory.

This is an edited version of the openingspeech by the Honourable Ros Kelly, MP,given in her capacity as then Acting Ministerfor Transport and Communications to theAustralian Broadcasting Tribunalconference "Television 2000 - Choices andChallenges" on 16 November 1989.

12

The role of Austel inderegulation

Judy Stack, of Bond Communications

argues that deregulation must be anchored in vigorous

regulation by Austel.

In the Australian telecommunicationsarena today, "deregulation~" is the buzzword, regulation is the anathema butderegulation cannot be achieved with-

out regulation.Regulation and free enterprise are words

rarely found in the same sentence. However,free ente~risein the communications indus-’a-y can only prosper i/Austel actively regu-lates Teleeom’s activities. There is a tremen-dous imbalance in the power of those o~rat-ingin the marketplace. While a monopoly ofthis s’tze and power continues unchecked,effective competition from the private sectoris all but impossible.

Monopolies are terrible things unlessyou happen to own one. In telecommunica-tions, regulation of the monopoly is essentiali~ deregulation is to proceed. So what then isAustel’s role?

Austei’s task

Austel is a lean organlsation with acces-S’lble staff however its existence has set veryhigh expectations within the industry.

Austel has three major constituencies:¯ its political masters being

- cabinet- minister (departmenO

¯ the telecommunications industry- public sector (carriers)- private sector (telecommunications

companies)- unions and associations

¯ and of course the general pob~c- the system users (corporations) and- basic telephone users(Mr and Mrs

Average)Austel will obviously have difficulty satis-

fying the interests of all three groups but i~deregulation is the des’wed end then Austelmust provide the means, and the means isfound in achieving a balance between thesegroupings. Balance can only be foundthrough regulation and the creation ofalevelplaying field between the monopoly, Tele-corn, and the private sector.

Robin Davey, chairman of Austel, hasconstantly espoused Austel as a facilitator.Being a’facilitator~ is fine, but being a’regu-lator’ is essential. What is needed is a regu-latoc to redress the imbalance in the market

- Telecom has to be regulated.The telecommunications industry has

long been subjected to an intolerable farce,that is, Telecom as a commercial servicesprovider and regulator. The 25 May 1088Statement recognised this and sought toresolve the conflict by creating an independ-ent regulatory authority with five major ar-eas of responsibility:, technical regulation;protecting the carriers monopely;protectingcompetitors from unfair carrier practices;protecting consumers against misuse nfthecarriers’ monopoly powers; and finally, pro-motion of efficiency of carriers especiaUy inrelation to the public carders’ communityservice obligations.

The Telecommunications Act 1989, ree-ognises the need for a regulator role and thisis clearly spelt out in ss. 18-24- those sectionsdealing with the general functions of Austel.Section 24 gives it the power to carry outthose functions.

If Austel is to work towards the creationof a level playing field, it must take an aggres-sive regulatory role to correct the imbalancein the market.

Telecom has restricted not only the pri-vate sector but also the other carriers. Assathas been brought to its knees financiallybecauseitwasprevented from functio~ng asit was designed to do. The protection ofTelecom has been at great cost to the comemunity both financially and in limited serviceofferings.

Alevel playing field can only be achievedthrough reducing Telecom to the same op-l~r tunity level as the private sector;, or regu-lation to avoid, in the words of Henry Ergas,"the incumbent’s accumulated dominancefrom distorting the competitive process"together with the provision of compensationto the private sector, for instance, tax rebates.Telecom could also be excluded from themarket for a limited period. There is a goodcase which can be put for baring Telecomfrom the non-reserved services market for 3- 5 years.

Accounting practices

Most important is policing the relation-ship between carriers and competitive sup-pliers and the ability of Telecom to cross

subsidise its commercial activities from itsreserved service activities. The conflict isenormous and the potential for abuse is verytempting. Separate accounting measuresincluded in the Telecommunications Act toassist in controlfing un~Sair practices by carri-ers is not enough.

IfTeleeom is to be allowed to continue tooperate in the non-reserved services mar-ket, Austel should require Telecom to havearms length companies where it operates inthe competitive arena. This structural sepa-ration is essential to give the private sectorgreater confidence that monopoly abuse byTelecom will be eliminated.

Further, the accounting policies andturn on ~vestmeat criteria of these compa-nies must be regularly monitored. Telecomshould not be allowed to use its market anddominant financiul position to enter intoventures where it will not see a commercia/return just to block the successful entry ofother parties.

Austel must be vigilant in peticing poten-tial unfair practices by carders. It has thepower to do so. Section 20 of the Telecom-munications Act says:

~[~he functions of Austel include protect-ing the suppliers of competitive facilities andservices from unfair practices of the carriers,and generally promoting fair and efficientmarket conduct in relation to the supply ofcompetitive facilities and services, and forthose purposes:

(a) regulating the manner in which thereserved ~cilifies and services of carriersare made available to suppliers of competi-tive facilities and services; and

(b) regulating the manner in which thecarriers supply competitive facilities and

Further reading of the Act suggestsAustel not only has the power to act as aregulator, it must be a regulator whether itdesires to be or not.

Community serviceobligations

Bond Communicafinns inifiated Free-dom of Ieformation Act requests to uncoverthe results of the Bureau of Transport andCommunications Economics’ study into thecosts ef Telecom’s community service obli-gutions (CSOs).

I am very glad to state that our attempts,and those of others,have now beee rewardedwith the publication of the Bureau’s findings.As we have long suspected, the CS0’s costeda mere $240 million in 1987/1988.

The CS0s have long been the bogeybehind which Telecom has asserted its rightto the monopoly and, in Iact, this b ogeyformsthe fundamental basis for the whole thrust of

cwntinued on p15

13

The ’commercial viability criterion’:Wesgo Communications & beyond

Ken Brimaud examines the development of the ABT’s approach

to this topical requirement in the Broadcasting Act

The recent unreported judgment ofthe full court of the Federal Court in~ v "~:esgo Communications(1989) provides a timely opportunity,

particularly given the present happer~ngs inthe broadcasting industry, to examine justwhere the concept of commercial viabilitystands today and its likely future.

The nexus between good programs andthe ability to pay for them has provided fromthe beginning the basis for the view thatlicences for new commercial stations shouldnot bc granted unless the proposed stationwould be financially viable. However, it wasonly in 1977 that amendments to the Broad-casting Act gave this concern legislativeexpression and the Australian BroadcastingTribunal (ABT) was required to have "dueregard" to the commercial viability of thecommercial broadcasting or television sta-tions in the relevant area served or to beserved when granting or renewing alicence.

The U.S. Position

In the U.S case of FCC v Sanders Broth-trs Radio Station (1949) the US SupremeCourt held that although the Federal Com-missions Act was neither intended nor de-signed to protect licensees against competi-tion, such competition is not to bc disrs-garded entirely by the Federal Communica-tions Commission flvCC) because in certa~instances it may become so ruinous as tocause not only financial hardship to thecompoting s~afion, hut also an overall degra-dation of service to the public. In such situ-ations, the court concluded that the effectcompetition should be considered by theFCC in implementing its licensing policy.

The FCC in subsequent years adopted alicensing policy premised on the theory thatcompetition could not be adverse to thepublic interest but in 1958 the Court of Ap-peals for the District of Columbia Circuit in(~ari’oll Broadcasting Comoanv vFC~ de-finitively established the relevance ofnomic injury to the public interest and madeit incumbent upon the FCC to consider thisfactor in allocating uses and wave lengthsassigned for commercial broadcasting be-tween competing uses and geographicalareas to ensure the most efficient use in thepublic interest. The FCC was to issue a li-eenccwhen the applicant could showthat the

grant would serve the public "interest, con-venlence, or necessity".

The ABT approach

In the first detailed investigations of"commercial viability ~ by the ABT in theCoifs Harbour Hcence Grant inquiry and inits Albany Commercial Viability inquirydm’ing 1983~4, a definition of commercialviability was decided upon which in succes-sive years remained basically intact. TheTribunal said that the proper interpretationof commercial viability as used in the Broad-casting Act:

" means the ability of a broadcasting ortelevision station to survive commerciallywhile effectively @erating in accordance ~ththe condition~ of its licence and providing anadequate and comprehensive service pursuantto the undertaking required to be ~ven undertke Act"

The Tribunal had regard to the FCE. itssister authority in the US, and concluded thatthere was "a significant similarity in theapproach required to be taken by the FCCand the Tribunal". Indeed it expressly statedthat in its view it had a "prbnary duty to act inthe public interest".

The Perth inquiry

This general approach to the Interpreta-tion and application of the commercial viabil-ity criterion continued in subsequent years.In the first metropolitan television licencegrant inquiry for 20 years (for a third com-mercial television station to serve Fer th) theTribunal endorsed and more hilly expandedupon the principles enunciated and devel-oped in the Coffs Harbour and Albany inquir-

It adopted the same definition of ’com-mercial viability’, considering that criterionwithin the context of the public interest andsaying that it wonld not feel constrained frommalting a decisinn which could ]eopurdisethe commercial viab~ity of existing stationsbut would "explore the degree of likeRhoodand balance that degree against other publicinterest factors".

The Tribunal in the Perth licence grantthquiry took a very practical approach to theapplication of the criterion equating its as-sessment with that made:

"of Plat~s for other publie services, such as

14

roads, airlines, sporting grounds and unive~i-ties because there is rarely one simple daminat-in~ factor. A facility which extends existingservices inevitably affects existing services tosom~ extent’.

uch an approach placed the com-mercial viability criterion nohigher than other ~actors to beconsidered in the public interest.

The Tribunal rejected the use of the expres-sion ’commercial viability’ "in a special com-mercial or trade sense" refus’mg to equate itsimply "with profitability or rate of return oninvestment, although both those elementsare among useful indicators" which it mustconsider.

The significance of the Tribunal’s deci-sion in the Perth inquiry was its considera-tion of the "commercial viability~ criterion ina practical, commonsense and non-legalisticmanner within the context of the other statu-tory criteria and public interest considera-tions which both the Broadcasting Act andexperience require the Tribunal to "haveregard to".

This approach was not far removed fromthe approach in the United States followingthe decision in the Carroll case.

The 1985 amendments

The link between viability and service tothe community was perhaps more positivelyreflected in fur ther amendments to the Act in1985 which introduced the service-basedconcept of planning and licensing. Section83(6)(c)0ii) provided that the Tribunalshould not refuse to grant the licence unlessit appeared to the Tribunal that it was advis-able in the public interest to refuse to do so,having regard to the treed for the commercialviability of the service provided pursuant tothe existing licence.

In considering the grant of a commerciallicence, the Tribunal was now no longerobliged to consider the commercial viabilityof the broadcasting and television stations~a-eady serving the proposed area of thelicence applicant, but to have regard to "theneed for the commercial viability of the serv-ice or services provided pursuant to the otherlicense or other licances" having serviceareas that overlap the service area.

The first licence grant inquiry conductedby theTribunal under the 1985 amendments

to the Broadcasting Act was in relation to agrant ot’a new commercial FM licence in thesame area as that served by the applicant’sexisting AM radio station ’2GO Gosford’. Inthat 1988 inquiry the Tribunal adopted theprinciples formulated and method of analy-sis applied in previous licence grant inquir-ies. In reaching its decision to grant a newcommercial FM mdio licence to serve theGosford Wyong area.

In 1989, Wesgu Communications appeal-ing the 2GO decision succeeded in its sub-mission to the Federal Court that the Tribu-nal erred by considering not the commercialviability of the service provided by Weago,but the conunercial viability of Weago itseif,irrespective of the service it was providingpursuant to the 2GO ticence 0Ares~o Com-munications vABT). Because the Tribunalhad extensively referred to earlier decisionsall made under earlier legallsetion, madefrequent references to commercial viabilityin the context of a broadcasting station’sviability and failed to specifically use theexpression ’commercial viability of the serv-ice’ Justice Sheppard, although recognisingthat the Tribunal was aware of and may haveconsidered the new legislation, concludedthat theTribunal had erred in its applicationors. 83(6) (c) (lii). He appeared to have the view that the 1985 amendments to theActsubstituting the expression ’service’ for ’sta-tion’ signified a substantive change.

The ABT vindicatedThe matter went on appeal to the Full

Court of the Federal Court which held thatthe 1985 amendment to s. 83(6) (c) (ill):

~was not designed to effect any relevantsubstantive change to the law; rather it was aconsequential amendment designed to adjustthe terms of the Broadcasting Act consequentupon the change of the basis of licensing fromsingle ’stations" (which referred to physicalstructures) to "service areas’, that is to say, inrelation to a licence, the area to be servedpursuant to the licence~.

The Full Court took the view that whenthe Parliament directed the attention of theTribunal to the need for the commerdalviability of the service or services providedpursuant to other llcences "it was dealingwith a practical question which turned uponthe financial feasibility of the operationsconducted by the relevant licensee with therespect to the relevant service". Althoughthe ’service’ comprises the programs thatare broadcast, these do not stand apart fromthe general conduct of the operations of thelicensee pursuant to the licence. The FullCourt said that:

~lt is too limited a reading of the expressionof sub-s 83(6) ~he commercial viability of theseruice ...... provided pursuant to the otherlicence’, to treat it as referring merely to the

program material provided to the listening

public in the service area"Rather, what is involved is a "a practical

test designed to enable the Tribunal to lookat the provision of the relevant service by aparticular licensee, and to consider if it iscommercially viable or not in the sense offinancially sustainable".

The Full Court therefore endorsed whata long line of Tribunal dedalons in licencegrant inquiries, particularly in the Perthinqniry, had said about the practical nature ofthe task the Tribunal had to perform whenapplying the ’commerdal viability’ criterionin the particular instance: that is, that onepractically has to look at the total picture- theoperations being cunducted by the licenseepursuant to, and in accordance with, its li-cence, as well as the particular market envi-ronment in which it does so.

In 1988 ss. 83 and 86 were repealed butnew sections substituted which includedcommerdal viability as a criterion for grant oflicences (except limited licences), for a re-newal of licences and for their variation,revocation or the imposition of new llcenceconditions.

The criterion under threatIn the United States the Carroll doctrine

has come under attack as being contrary tothe First Amendment to the U.S Constitutionguaranteeing freedom of speech and of thepress. The cost in t~ne and money to bothparties and to the government of requiringconsideration of the Carroll issue againstwhat many consider the relatively remotepossibility of actual harm to the public inter-est has been another source of criticism.Indeed, in May 1987 the FCC undertook aninquiry to consider abolishing the Carrolldoctrine.

Interestingiy, the same reservationsabout the concept ofcommerdal viahil-ity have recently emerged in Australia.The July 1989 Discussion Paper by the

Broadcasting Review Group of the Depart-ment of Transport and Communications(DOTAC) concluded that there was a casefor re-examining the role of viability in theplanning and licensing process. Striking asimilar note to the FCC’s Inquiry Notice, theReview Group identified a number of"specialproblems" associated with the ’commercialviability’ criterion. For instance, it was theconcept ofcommercialviability as forming "abarrier to envy allowing incumbent licen-sees to carry on business under its protec-tion".

The Review Group also saw a "conflict ofaims" between the general objectives of thegovernment to remove unnecessary regula-tion, promote free markets, provide greatercompetition and increase variety of pro-grarnmes with the protectionism inherent inthe concept. It referred to the "complexity oflicensing inquiries, the cost to participants in

15

the inquiry, the amount of related litigationand the delays in delivery of new services tothe pubticL

The Federal Government has not stoodstill. Stage II of the National MetropolitanRadio Plan in which there will be allocated bytender up to two new commerdal FM radiolicences in each capital city, envisaged thatthe Tribunal, although involved In awardingthese new license, "will not have regard toviability of the proposed service or the effecton the viability of existing servicesL

The Federation of Australia RadioBroadcasters has taken a strongstand against the reform, referringto the development as "the most sig-

nificant and far reaching reversal of broad-cast planning policy in the history of Austra-lian Broadcasting.

The recent upheavals In the Industrycaused largely by the financial problemsexperienced by the major television net-works (or their owners) have exposed thein-adequacy of present broadcasting legisla-tion. Comments by the Deputy Secretary ofD 0TAC, Mr Mike Hutchinson, advocating areversalofcertain fundamental tenets whichhave guver ned broadcastinglawinAustralla,and the Minister’s mixed response, suggestthat serious reconsideration of the basicpolicy doctrines of Australian broadcastingis taking place beneath the surface.

The commercial viability criterion isobviously one of the many policies beingcurrently assessed in the light of the newtypes of services and the changing environ-ment of the broadcasting industry.

Ken B~imaud is a solicitor with the Sydneylegal firm Michell, Sillar, McPhee, Mey~

The role of Austel fromthe 1989 Telecommunications Act.

I note that the Minister must also see thelow cost of the CSO’s as an embarrassmentand we welcome his announcement yester-day that the government is bringing forwardits plans to look at the structural arrange-meats between the three carriers.

This review must extend to a full inquiryinto whether or not there is any future justi-llcation for the continued Telecom monopolyover any or all of the reserved services.Austel is the appropriate body to conductthat inquiry.

Communications is a sunrise high techindustry. Australia needs private enterpriseentrepreneurial energy to ensure that we areinternationally competitive in this industrythat is so vital to our economic health.

This is an e&’ted version o fan address JudyStack gave to a CAMLA Luncheon on 7December 1989.

To pay or not to pay?John Saunderson, MP, in presenting the report of the House of Representatives Committee

on subscription television, explains its recommendations and

calls on the government to make decisions

This report which deals primarily butnot exclusively with pay television isthe third of its kind in 7 years. I trustthat it is the last. There is now a

mountain ofkfformatiou on the subject. Whatis required now is not further inquiries andmore mountains ofiafar mation but decialons- decisions on the introduction of pay TV,decisions on its market structure and deci-sions on the extent of regulation and theregulatory framework.

The committee report has blazed a trailfor making and taking such decisions. Thereport offers thegovernment a model for thesuccessful implementation of pay TV inAustralia. This model has the following 5major features:1 cable/microwave multi-point distribution

(MDS) - and later cable as the primarydelivery mechanism for pay "IV;

2 multi-channel systems operating in a largenumber of markets with exclusivefranchises for each pay TV operator,

3 legislative requirement for each operatorto provide one channel initially, for localand community programming;,

4 licences awarded to the highest bidderwith renewal virtually automatic; and

5 minimal regulation because of the valuefor money characteristics and direct sub-scriber/operator relationship of pay’IV.

Why pay TV?ARer a very thorough examination of

these issues the majority of the committeesupports the introduction of pay TV. Tldsconclusion was reached after the appllcatianof two approaches - the net serial value ap-proach and the market (why not pay TV)approach. The report says that [f properlymanaged payTV provides net sodal benefitsby:¯ increasing diversity not only through

market driven programm~g but also bylocal and community prograIm~ng; and

¯ promoting the plurality of views inAustralian society through diversity ofownership and non-commercialprogramming.

In other words although pay "IV is acommercial product and will live or die by itscommercialism, this is a once in a lifetimeopportunity to achieve non-cormnercial ob-jectives. These twin goals dominate thecommittee model.

Preferred delivery system

If these sodalobjectives are tobe achievedthe choice of delivery system cannot be leRto the market and there is therefore a role forgovernment. Such objectives become crite-ria in the selection and the table on compara-tive advantages of delivery systems appliesthese and other criteria. Application of suchselection criteria has led the committee torecommend cable/MDS with conversion toful/cable when it becomes available, ~s theprimary method of delivery for pay TV.

Direct broadcasting by satellite has beenrejected as a delivery mechanism because itcannot satisfy several selection criteria. Itcan provide little diversity of ownershipbecause it serves the national market andtherefore there are no opportunities for localand community programming. It cannotprovide for advanced television capacity. Butperhaps the biggest disadvantage is cost tosubscribers. Due to the cost of ear thstationsoutside the 52 DBW contour, Aussat sees payTV being delivered only by community own-ership arrangements. This could affect ad-versely market penelration ofpayTVin theseareas, further there is the investment loss formetropolitan subscribers who switch to thebigger capacity cable tecknology when itbecomes available.

The Committee does not support thesatellite/MDS options proposed byAussat and Independent TelevisionNewcastle. It is clear from the table

on comparative advantages of delivery sys-tems that cable should be the pay TV deliv-ery system in the long-term. The superiorityof cable is recognised by almost everyone.Care should be taken not to put in placeshort-term measures which inhibit the intro-duction of cable, The use of indirect broad-casting by satellite with MDS as the primarymethod of delivery for pay TV, particularlywith "soft eniry" pricing and long-term con-tracts for satellite delivery, would inhibit theintroduction of cable.

The attempt to cater for hical and commu-nity programming by having a satellite/MDSdelivery system in markets which can sup-port commercially such programming, (andthe extra cost of MDS) is unreafistic. It isvery unlikely that the option will be taken up.Such non-commercial programming needsto be subsidised or cross-subsidised and is

16

unlikely to survive otherwise. The experi-ence of public radio and concern about pub-lic television underline this need. Thus mar-ket driven localism and community program-m/ng is self<tefeating.

-Market structure

The establishment of a particular marketstructure lies at the heart of policy develop-ment for payTV and the desirable amount ofregulation for that structure. TheCommittee’s approach to market structurewas irffluenced by three factors:¯ increasing diversity of programming,

both commercial and non-commerdal;¯ promoting diversity of ownership; and¯ ensuring the commercialviability of pay

TV.In view of these, the Committee has rec-

ommended that the market structure for paytelevision in Australia cont~n the fullowingthree elements:¯ multi-channel systems;¯ a large number of markets based on

present broadcasting areas with morethan one market for each capital city;and

¯ exclusive franchises for each market.It could be said that these recommenda-

tions will create "local monopolies". Themonopoly argument is exaggerated. If intro-duced pay TV would be in competition withbroadcast television and the VC1L The sub-stitutes are not perfect but, par ticalarly withthe VCR and the pay’IV movie channel, aresufficiently dose to restrain the abuse ofalleged monopoly power.

Interestingly, the Federal Communica-tions Commission (FCC) in the USAuses the existence of broadcast televi-sion in its equation of effective competi-

tion.The FCC has decreed that where thereis such competition there is no need for rateregulation of pay 2W.

There is also the public benefit test ofexclusivity. Given the characteristics of Aus-tralianindustry (competition among the few),the view that the small size of the Australianmarket may not support more than two op-erators, the increase in programme diver-sity, and the existence of substitutes for payTV, the Committee concludes that therewould be net public benefit from exclusivefr~chises,

Trading in the radio spectrum:A new management rights approach

Bruce Slane examines the final legislative stage in New Zealand’s program of

telecommunications and broadcasting deregulation which became law this month

Introduction

As part of its reform of telecum-

municationsincluding regulationof broadcasting in New Zealand,the third stage of the

government’s legislative programme wasreached with the passage of the Radiocom-muaicationsAct. It covers both telecommuni-cations and broadcasting and has the follow-ing purposes:(a) to establish a management regime for

the radio frequencyspectrum whichwillfacilitate the opening up of commercialtelecommunications and broadcastingand the introduction of new services;and

(b) to maintain within the new m~’~agementsystem allocation of radio frequency

purposes such as public s~ety, defence

commercial broadcasting services.

Background

Formerly a telecommunications monop-oly was maintained by the New Zealand PostOffice with some exceptions, notably for theBroadcasting Corporation of New Zealand inrespect of television networks. Sound-radioand television broadcasting was licensed bythe Broadcasting Tribunal. The industrywasdominated by services operated by theBroadcasting Corporation which had inher-ited a former state monopoly. A few sound-radio services had been licensed by the for-mer Broadcasting Authority prior to 1972and many by the BroadcastingTribunal since1977.

In the first wave of deregulation the PostOffice’s telecommunications operationsbecame a state owned enterprise (relecom)and its monopoly powers werewhittled away.In the second stage decisions were made toabolish the Broadcasting Tribunal and sub-stitute a StandardsAuthority, a BroadcastingCommissiou and a spectrum management

The Commission and the Authority cameinto being on 1 July 1989. The Commission’sresponsibility is to collect a public broadcast-hag fee paid by households nshag televisionreceivers and to distribute the proceeds forthe purpose of maintairdng non-commercialservices, services to remote areas and tosubaidise indigenous televisinn program-ming.

Late in 1988 the Broadcasting Corpora-tion was split into two organizations, Televi-sion New Zealand Ltd and Radio New Zea-land Ltd. Both state owned enterprises, whichwere given commercial objectives.

In August 1989 the Tribunal licensed athird television service. Attempts at judicialreview f~ed and appeals were withdrawn.Amodified version oftheproposal approved bytheTribunal cummenced transmission at theend of November 1989.

The Broadcasting Standards Authorityhas taken over the Broadcasting Tribunal’scomplaints functions buthasin addition beenrequired to set or approve industry stan-dasds in accordance with statutory require-ments. It has more extensive powers to legis-late as to programming standards. Its deci-sions on complaints are subject to an appealto the High Court. The Authority has s~’ongpowers of enforcement including a power toclose down radio and television services forup to 24 hours in respect of each complaintupheld.

The Standards Authority also has theright to award compensation of up to$5,000.00 for breach of privacy.

The present scheme of licensingis established under Part 2 of the Telecom-munications Act 1987 and the Radio Regula-tions 1987. Licensing of broadcasting de-rived from decisions of the BroadcastingTribunal which went out of existence on 31December 1989.

The policy decision taken by the Govern-ment was that, to achieve greater efficiency,economic growth and choice, barriers tonew entrants should be abolished.

Thegovernment commissioned a reportfrom National Economic Research Associ-ates (NERA) of London to conduct a re’dew.

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It recommended spectrum managementmechanisms for the new economic environ-meat. Before the report was published therecommendations were adopted by" the gov-ernment_

Radiocommunications Act

The main features of the NERA reporthave been incorporated in theAct. It is clearhowever that they have been subject to con-siderable re~tement by the officials of theMinistry of Commerce who in an extremelytechnical field have produced acomplexpieceof legislation alter individual consultationswith major frequency user groups but withlittle public debate. This legislation waspassed into law in December but the text ofall the changes fi’om the Bill which was in tro-duced into Parliament in August 1989 are notavailable for comment at the time of writing.

The Act is complex and detailed andnot easy to absorb. In a sense itcreates something comparable to aland registry f~r the spectrum. In

particular:.1 Rights to spectrum use within defined

radio engineering parameters arecreated in the form of managementrights with an intended ~e of 20 years.The rights are accorded certainattributes of property under the Actincludiugarightoftransfer, aggregafionor division. They may be pledged forborrowing purposes.

2 The holders of such management rights,called managers, may confer licences onothers or on themselves for the use ofthe management rights within theparameters of those fights. In otherwords, the holder of the managementrights of a frequency may confer licenceson others to use that frequency inparticular circumstances in particularplaces. The management rights aresubject to statutory obligations andminimum standards desired to avn’~dradio interference. In addition toenforcement by the Secretary of

Commerce of statutory prohibitionsagainst certain unlawful exercise offights, the Act also give others a right toseek remedies.

A computerised registration scheme willbe established for the recording of details ofmanagement rights and the liceuces as wellas other Wansactions such as tran~ers, ag-gregations and mortgages.

The intention is that, where demand forspectrum is less than spectrum availability,allocations will largely be made as required.

To establish whetherornot there is moredemand than spectrum availab~ty the Sec-retary will call for expressions of interest inparts of the spectrum and will then teclmi-cally define the rights in accordance withperceived demands arigmg from the expres-sion of interest and subsequent consulta-tions.This planning role w~l have a profoundeffect on the future development of the use ofthe frequencies in the medium term. Theprocess by which it decides how to tailorwhat is made ava~able as it sees the needs o[users, includes more extensive powers thanany held previously by the BroadcastingTdbunal.

Following the definition of those fights asealed bid "second price" tender arrange-ment will be used. The successful tendererwill be the party bidding the highest sum forthe management Hgbt but the price paid willbe that bid by the second h~ghest tenderer.

The crown ~ be likely to retain amajor role as a manager of somespectrum. The use of some frequen-cies will be constrained by interna-

tional convention or agreement and may, insome instances, requke management by theradio frequency service. Frequencies fordefence, national security and pubfic safetyuses by government agencies will have to beprotected and will most ]kkely be dealt withby radio fi-equency service licences.

It is expected that it wi[[ take about 5years before the commercially used spec-trum is entirely moved into the new regime.

Transitional rights

All incumbent users will have the right toa minimum three year use of the frequencywithout rental from the date when manage-ment rights have been h’ansfer red under thetender systerru Commercialbroadcasterswillalso have incumbency rights for 20 years inreturn for a rental of 1,5 per cent of grossrevenue. This can be discounted on favour-able terms to a lump sum payment.

In the mobile telephone bands New Zea-land Teleeom will be treated (for the purposeof exercising h-ansitional rights) as havingmanagement rights in the whole band.

Telecom’s three year incumbency fight willtherefore give reasonable expansion of busi-ness wiffdn the band and Tclecom wilt alsobe able to match and pay any tender pricethat would otherwise succeed in displacingits operation after the thtree years.

The matching bid for historical reasonsis not considered appropriate for the twofrequency land mobiles.

"the government has retained the fightto allocate specified frequencies by anymeans it chooses"

Arealproblem has occurred in rela-finn to non-commercial broadcust-ing services. Some existing soundradio warrant holders, both com-

mercial and noncommercial, have been se-lected by the government to be entitled toincumbency fights in respect of short-termbroadcasting authodsations granted by sys-tem of ficens’mg short-term broadcastingstations for specific events or for holidayperiods or for recreational winter stations inmountain areas.

The government also licensed some stu-dent stations under this provision for tenmonths of each year to broadcast fi’om usu~

ally lower powered transmitters to the stu-dent audience. The student stations filledl aminority interest market niche. A prsgmaficdecision to continue those rights in the Actfor 20 years was controversial A major Chris-tian broadcaster with an expanding networkacquired under the Tribunal system wasexcluded although it is non-commerciaLLater, under electoral pressure, the broad-caster gained rent-free incumbency. Some ofthose obtaining incumbency rights underthe special provision which will give themthe use of the frequencies free of rental,accept advertising although not with profit-making motives.

"the government hasretained the right to

allocate specifiedfrequencies by any means

it chooses"

$igaificanfly, the government has re-tained the fight to allocate specified frequen-cies by any means it chooses, This patronageby the Minister of Broadcasting would ap-pear to be a reversal of the previous policyover a number of years to take the govern-ment out of any direct conO’ol in relation tobroadcasting and to provide for its operatingindependence from the government. Itpears that during the "expressions of inter-

18

esff period the government could assessnon-commerdal needs and provide for them-But in the event of competing claims noindependent system for resolving coeftictinginterests is provided.

The previous ficensing system provideda regulatory code limiting the aggregationand the ownership of stations and this hasbeen abolished. Although the provisions ofthe Commerce Act and specific provision inthe Broadcasting Act are intended to avoiddomination of particular markets, it is likelythat there will be no effective control ofaggregation of ownership or controlofbroad-casting stations unless there is dominationor market competition rules are breached./~a small country, with nearly all the dailynewspaper circulation in the hands of twocompanies (one a mult]-nafionalnewsgroup),it might have been expected there would beconcern at aggregation of ownership orcontrol for social policy reasons.

Regulations similar to the existing codewere included in earlier legislation to res~ictoverseas ownership which is limited to 15% inthe case of television and with the consent ofthe Minister up to 25% in the case of sound-radio.

Conclusion

The proposals are radical. They will beimplemented and will be watched with inter-est by the communleations industry, bread-casters and the lawyers who service them.

The system has been made possiblepartly because of New Zealand’s remotelocation which gives it a freedom to deal withVHF and UHF spectrumwithout referenceto other jurisdictions.

The Broadcasting Commission has aresemblance to the proposals 6fthe PeacockCommittee in Great Britain and will bewatched with interest by those concerned toensure public service elements of broadcast-ing continue in a commercial environment.

The legislation is interesting for lawyersbecause it puts into effect many of the ideasof the Torrens land title system but acceptsand attempts to deal with the extraordinarycompfications and complexities which arisefrom the use of the radio spectrum which donot arise from the use oHand.

Bruce Slane is a partner in Cairns Slane,Barristers & Solicitors, Auckland andChairman of the now defunct New ZealandBroadcasting Tribunal from its inception in1977.

Broadcast regulation in a changingenvironment

Henry Geller su~_~.~-sts Australia can learn from the US experience.

Director of the Washington Centre for Public Policy Research at Duke Unive#~|tY

s the century draws to a close, fdlhs of the cable households can tune in to deal.Apublic trustee shovld therefore m.akeA there is great ferment in the 30 or more channels, avallablenotonlycartoonsbutprograrnmmg

world’s broadcasting systems, It may be argued thatthe munbers mean that inlorms and educates as well as enter-~t driven largely by technology and little in the way of quality: that the American talus. And to reach young children, it mustbe

the market. Government policy must be system is stifi defivering "chewing gu.m fo.rage specific. The FCC gutted the require-

responsive to those driving factors, and yet the eyes." Much of the new programming ~s ment for age-specific educationalor informa-

still be alert to insure broadcast operations aptly so described and necessarily soin light tional fare. The FCC Chairman stated that

are consistent with vital national interests, of the giant maw that television is today. But the Commission will not hold licensees to

I will focus here on the U.S. altuation, and there has been a substantial contribution to any duty to serve children.

not just because I am familiar with that sys- diversity.There has been a marked increase A public trustee must devote time to

tern. There are lessons to be learned from in in-depth informational programming and controversial issues so as to inform the pub-

the U.S. experience. We have implemented cultural and educational progn~nnfing as lic, and must do so fairly. But the FCC hasnow eliminated the fairness doctrine.Stafionone policy goal very well, but failed misera- well.owners can feel strongly on many issues and

bly in other important respects. Australia cantake note of those failures and adopt different they can now use their stations simply as

propaganda operations. The Commissioncourses,believes that the hands-off publishing regu-

Diversity in programmingThe U.S. model of a strong, wide-open

system nf private outlets, does seem to be onthe ascendancy throughout the word. Thelargest benefit from this policy is the result-ing much greater diversity in programmingavailable to the public. There are now over9000 commercial radio stations, and 1300noncommercial ones; over 1000 commercialTV outlets and 330 noncommercial TV sta-tions. But the strongest case for greater di-versity stems from the opportunity for othertechnologies.There are windows of such op-por tunity, and several new delivery systemshave become entrenched.

The VCR is now in roughly two-thirds ofall U.S. TV households, and has spawned asubstantial payTV industry.

Cable television is the rising force in theU.S. video scene. Using the satellite for effi-cient distribution, cable (which now candeliver over 60 programming channels) is in57% of U.S.TVhouseholds, and passes 86% ofsuch households. Its eventual penetrationrate may be close to 70~.

"the American systemis still delivering chewing

gum for the eyes".It is clear, however, that cable will con-

tinue to splinter the TV audience and thetrend in the U.S. is to receive TV via pay. It isalso clear that cable has stymied the growthof dh’ect broadcast satellite (DBS) opera-tions. While several are still projected, therehas been no rush to implementation.

Seventy-one percent of U.S. householdsnow receive nine or moreTV stations. Four-

latory model, rather than the broadcastmodel, is better policy. Indeed, the Chalrma~of the FCC said that "television is just atoaster with pictures."

The FCC has eliminated its policy again sth-afficking in station licenses. The Commis-sion now states that getting stations to theirhigher valued use serves the public interest.But a trafficker by definifion tales to run upthe price of the station, and to do that, onedoesn’t present public service in the form ofin-depth informational shows or educationalchildren’s fare. To get such fare, the FCCpreviously recognized that the broadcasters"must put profit in second place and childrenin first. "The FCC now says the opposite, andstations are bought and sold like pork bellies.

Failings of the Americansystem

What then are the failures of policy Ireferred to? First, even with abundance,there can be market deficiencies in meetingpublic interest goals. We certainly have anabundance of commercial radio stations inthe U.S. But while these stations supply agreat number nf enter taiament formata, theydo not provide in<tepth informational pro-gramming, children’s programs, culturalfare, and similar public service presentafions.

Second, government policy to insureoperation by commercial broadcasters in thepublic interest has been a failure. The statueadopts a public trustee concept based onspectrum scarcity. Congress decided to allo-cate the radio spectrum to various uses andaward licenses to prevent engineering chaos.In broadcasting, Congress decided upon asystem of short term licenses to private enti-ties who volunteer to serve the public inter-est and then at renewal of license, demon-strate to the Federal Communications Com-mission (FCC), that their overall operationshave done so. At renewal, the public has theright to participate, and new par ties can seekto displace the incumbent licensee on theground that they will do a better job in serv-ing the public interest - a process calledcomparative renewal.

The comparative renewal process hasbeen a failure. The incumbent always wins,no matter how poor its past record has been.The FCC has long urged abandoning theprocess.

Worse, the ordinary renewal process hasbeen a similar fiasco. At renewal, the licenseesimply sends the FCC a postcard.The Com-mission is therefore renewing licenses with-out the least notion of what public service, ffany, has been rendered.

Young children watch television a great19

Lessons for Australia

I turn now to the possible lessons forAustralia. Do not try to hold to the limited(UK) approach in light of the strong world-wide market and technology treads. But donot immediately embrace the American dis-ease of letting all systems go.

There are windows of opportunity fornew services like pay "IV. In light of its largesize, its relafively sparse populafion, and thedesirability of delivering the new services towidely scattered communities, it might bethe best course forAustraliato opt for DBS todeliver new pay services, and not authorizeany cable "IV operations at this time. Instead,it might anthodzeTelecom to begin not onlytrunking but installing fiber optic cable to thehome as soon as possible and over the nextdecade or so, to gradually build a broadbandhighway to the home. Even more important,this would allow Australia early in the nextcentury to have an ideal system: video pub-

lishing over a common carrier.This would bea wedding of the publishing and commoncarrier models. That is. a separation of corntent and conduit as in publishing, wheremagazines, pamphlets, etc., all move over thepostal service. In the meantime, the publicwould be able to receive new TV servicesquickly and throughout the nation over highpowered DBS.

"Diversification of thesources of information is

vitally important to ademocracy"

There is a need for objective, effectiveregulations to secure the public interest infree-te-alr broadcasting for the next decadeand into the next century.

For tunately for Australia, unliketheU.S.this requires maintenance and refinement ofexisting regulation,

There is a need to promote a sia-ongpublic telecommunications system, sincesuch a system is morivated and dedicated topresenting publicinterestlike children’s edu-cational programming. If there is effectiveregulation of the commercial system, thefinancial support for noncommercial broad-casting should come from the general t~eas-ury. if the regulatory process is weak andcannot be strengthened, I recommend fur-ther deregulation accompanied by substan-tial fees from the commercial system, so as tobetter support public telecommunications.

Multiple ownership res~crions, both onthe local and national level, should be main-tained. Diversification of the sources of Juror-marion is vitally important to a democracy,and thus should be reflected in bestowingscarce broadcasting privileges. Both ourcountries face what Yeats called the "roughbeast" of change. Certainly that beast chal-lenges us and poses great problems. But italso offers the opportunity forgreat benefits.

ContributionsFrom members and non-membersof the Association in the form ofletters~ features, articles, extracts~case notes, etc. are appreciated.Members are also welcome tomake suggestions on the coatentand format of the Bulletin.

Contributions and commentsshould be forwarded to:

Grantly BrownEditorCommunications LawBulletinc/Gilbert & Tobin LawyersGPO Box 3810SYDNEY NSW 2001

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In order to debate and discuss these issu’bs ~AMLA organises a range ofseminars and lunches featuring speakers prominent in commtmicafions andmedia law and policy.

Speakers have included Ministers, Attorneys General, judges mad members ofgovernment bodies such as the Australian Broadcasting Tribunal, Telecom,the Film Censorship Board, the Australian Fikn Commission and overseasexperts,

CAMLA also publishes a regular journal covering communications law andpolicy issues -the Communications Law Bulletin.

The Association is also a useful way to establish informal contacts with otherpeople working in the business of communications and media. It is’stronglyindependent, and includes people with diverse political and professional con-nections. To join the Communications and Media Law Association, or tosubscribe to the Communications Law Bulletin, complete the form below andforward it to CAMLA.

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