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Changes in Telecommunications

   This paper will look into the problem of certain challenges that telecommunication industry is currently facing in the age of digital media. Issues such as access to and ownership and control of media, as well as broader questions of cultural and national interests, will also be addressed.

   In Australia, major technological innovation has led to the blurring of the boundaries between media, information technology and telecommunications. Convergence has changed the boundaries of participation of the major institutional players. The creation of fully digital networks capable of carrying any type of information – voice, data, text and video – has led to the redefinition of the notion of where media fit with new counterparts as members of what has come to be called ‘the networked society’ (Barr, cited in Cunningham and Turner, 2002, pp. 117-18).

   Telecommunications and information technology in Australia are now enabling technologies that underpin so many other economic functions, notably industry and manufacturing, finance and commerce, media and entertainment, social and cultural activities. Telecommunications now includes not only its staple diet, Plain Old Telephone Services, but also new mobile telephone services, many forms of newer data services, and also on-line directories, traded information services and electronic commerce. Australia’s biggest telecommunications company, Telstra, is no longer simply a telephone company but is now an information services corporation (Barr, cited in Cunningham and Turner, 2002, p. 118-19).

   In the face of such rapid changes in the telecommunications sector as well as convergent technologies already in place, questions regarding government regulation must be raised. Indeed, Wiseman notes that “the recent history of the commercialisation, deregulation and privatisation of Telstra in Australia needs to be understood in the context of the struggle to control convergent communications media industries” (1998, p. 82).

   Notwithstanding the importance of the role the Australian Government can play in the governance of new communication technologies, of significant concern is its very ability to devise and enforce effective regulations. According to the Australian Communications Authority, its vision is “to contribute to an efficient, competitive and increasingly self-regulated communications sector that meets the needs of the Australian community”. The keyword here, ‘self-regulated’, underlies the difficulties and challenges that the Australian government, and many other nation-states, face in regulating the increasing diversity of the global telecommunications network. Indeed, self-regulation remains the main priority in the ACA’s corporate plan as they work with the industry and consumers to deliver the benefits and overcome the challenges associated with a deregulated communications environment in Australia (Refer to Appendix – Australian Communications Authority Corporate Plan 2003-2006).

   Subsequently, the main dilemma being faced by the Australian government is in responding to the growing technological and economic pressures brought about by the convergence of global telecommunication networks, while safeguarding important social and political goals and objectives. While there is no correct blueprint for what makes government oversight successful, there are certain themes and characteristics that will determine the effectiveness and credibility of national regulation in Australia.

   In overcoming the challenges with regard to government regulation in the telecommunications industry, it is first important to recognise that the development of national policies toward communication technologies is a political process, and the nature of the political system and the dominant political ideology will be key factors in determining the nature and substance of the policy process. Second, the strength of the legal system within Australia will be critical for providing stability and enforceability of national communications policies. Finally, the nature and effectiveness of safeguarding institutions like the judiciary and the regulatory agencies and instruments developed to oversee telecommunication networks will be crucial to determining the effectiveness of the management of new technologies.

   Historically, the activities of communications firms in Australia tended to be confined within one industry. However, with changing technology, this is changing, particularly with telecommunication carriers increasingly expanding their interests in supplying content services such as pay television and video, rather than just confining their activities to carriage of information. These and other potential changes to the structure and nature of media industries are likely to erode the effectiveness of current regulatory mechanisms (Albon and Papandrea, 1998, p. 79). As the boundaries between services become increasingly blurred, the application of different rules will become increasingly unsustainable and will increasingly distort industry structures and competition.

   Another challenge to national sovereignty stems from the ability of computer networks to facilitate interactions between people and organisations residing in different legal jurisdictions. Legal differences between jurisdictions cut across multiple areas of law, including privacy, freedom of expression and intellectual property, and are often related to the different culture, history and attitudes of specific countries (Kirby, 1983, pp. 11-12). When communication crosses many jurisdictions and has effects in many places, including outside the country, the authority of the Australian government to apply laws becomes questionable. The ability of computer network communication to regularly cross national borders makes it difficult for the Federal Government to determine whether an activity or actor falls within its jurisdiction (Rogerson and Thomas, 1998, p. 430).

   Indeed, “borders are gradually becoming ‘totally porous’ and thus render ‘regulatory distinctions meaningless’. Governments can no longer control what comes into their countries nor can they stop the ‘inevitable global conversation’ made possible by new media technologies and a global marketplace” (Dennis and Merrill, 1992, p. 220). Such cases call for international and multilateral policy responses. Nevertheless, the authority of nations such as Australia to regulate across jurisdictions remains precarious, and national rules will be harder to assert over converging telecommunication networks absent an amenable network architecture and international cooperation.

   According to a policy statement updating the 1997 Telecommunications Act released in 2002, the Australian Government states that the Telecommunications policy in Australia has been “driven by the need to provide services to a population concentrated largely in cities separated by long distances, while also reaching remote areas with basic services, and linking the major cities with high capacity trunk services. A fundamental policy tenet has been that basic telecommunications services are reasonably accessible to all people in Australia on an equitable basis” (Refer to Appendix - Liberalisation of the telecommunications sector – Australia’s experience).

   Indeed, technological innovation and the transition to a global digital economy have focused new attention on the importance of access for all to telecommunications facilities and services. ‘Universal service’, meaning access to basic telephone service for all, remains the primary objective in Australia and has remained the cornerstone of the Australian telecommunications framework to date. However, the emergence of the Internet is forcing Australian policy-makers to rethink this concept, in terms of both what services should be universally available, and whether ‘access’ is a more appropriate goal for so-called ‘advanced services’.

   The concept of universal access must therefore be viewed in a context of changing economic, technological and policy environments in Australia. Three major trends driving these changes in Australia are the rapid introduction of new technologies and services; the restructuring of the telecommunications sector; and the globalisation of economies and of communications. Together these developments are changing not only the world of telecommunications, but the ways the Australian people work, learn and interact.

   In a joint media release announcing a comprehensive response to the independent Regional Telecommunications Inquiry, Senator Richard Alston and MP John Anderson addressed the issues of current and future access for Australian citizens as well as the structures of ownership with regards to Telstra. In it, the Australian Federal Government stated that they will accept all 39 recommendations of the Inquiry and invest $181 million in a comprehensive package to ensure all Australians have access to adequate telecommunications services, enhance a range of existing services, and ensure that regional Australia continues to share equitably in the benefits of future technologies.
Demonstrating the Government’s ongoing commitment to regional telecommunications, the response will be delivered in full regardless of any change in the future ownership of Telstra. The response also properly satisfies the Coalition’s election commitment that it would not progress any further sale of Telstra until arrangements are in place to ensure that Australians have access to adequate telecommunications services (Refer to Appendix - Government Response to Regional Telecommunications Inquiry).

   One issue to consider here is that the ownership and structure of telecommunications networks may influence goals and strategies for universal service. For example, government-owned monopolies in certain countries may heavily cross-subsidise local and domestic services to extend access; in a competitive environment such as Australia’s, dominant carriers such as Telstra, which are likely to be at least partially government owned, may have a special obligation to provide service in areas deemed to be unprofitable. In a fully competitive environment, efforts to ensure universal service must be based on competitively neutral policies such as incentives available to all carriers or explicitly targeted subsidies.
In relation to the structure and ownership of telecommunications media in Australia, the Federal Government has stated that “the telecommunications sector have developed progressively from a largely centralised, publicly controlled monopoly structure, through a managed competitive model, to an open and competitive market regime with an emphasis on industry self-regulation” (Refer to Appendix - Liberalisation of the telecommunications sector – Australia’s experience).

   The history of telecommunications has essentially been one of monopoly public ownership during decades of expensive and unprofitable public investment in building the networks (Barr, cited in Cunningham and Turner, 2002, p. 120). For much of the twentieth century and until the mid-1980s, the institutional structure for the operation of telecommunications was similar in most countries, including Australia, which was that of a legal monopoly with authority exercised directly or indirectly by the state. This natural monopoly model was long considered to be the only way of constructing national infrastructure and delivering telecommunications services to all (Barr, cited in Cunningham and Turner, 2002, pp. 120-21).

   For Australia, the development of telecommunications was always going to be of great national significance in a vast country so geographically isolated from the rest of the world. It is undeniable that liberalisation has delivered significant benefits to Australian businesses and consumers and to the wider economy. Australian users now have a greater choice of suppliers of telecommunications services offering a broad range of new and innovative services and products, but “it is still individuals and groups of individuals who determine, use and interpret the information content. And despite the diverse and creative possibilities of interactivity and interconnectivity, the convergence of technology has developed alongside the global convergence of the ownership and control of media content and the means of communicating information” (Wiseman, 1998, p. 74). Up until the introduction of limited competition in 1991, telecommunications services in Australia were provided by various publicly-owned monopoly organisations. For a lengthy period, operational and regulatory functions for all telecommunications services resided with the Postmaster General’s Department (PMG) (Refer to Appendix - Liberalisation of the telecommunications sector - Australia’s experience).

   In 1990 the Commonwealth Government, after considerable debate and consultation, announced further reforms of the structure and ownership of telecommunications networks. A phased approach was adopted to transition from a monopoly provider to open competition in basic services. Initially, a general carrier duopoly was established as an interim measure to foster competition. As part of the reform arrangements the second carrier would be given sufficient time and a relatively stable and predictable environment within which to establish itself in the marketplace before the advent of full competition from 1 July 1997 (Refer to Appendix - Liberalisation of the telecommunications sector – Australia’s experience).

   The goals were to position Australia’s telecommunications industry to be globally competitive by introducing sustainable network competition, minimise infrastructure duplication wherever possible, while still allowing for the Commonwealth Government’s social obligations and industry development objectives to be met. The reforms included regulatory measures designed to constrain the behaviour of the incumbent market dominant carrier (Refer to Appendix - Liberalisation of the telecommunications sector – Australia’s experience).

   Today, the policy environment in Australia is changing dramatically, with increasing emphasis on private sector ownership and market-driven competition. Following its election in March 1996, the new Commonwealth Government moved to implement the partial privatisation of Telstra by selling one third of its equity in Telstra. Deregulation was aimed, among other things, at better positioning Telstra to compete in an increasingly commercialised and globalised telecommunications market. Partial privatisation removed some previous constraints on Telstra’s structural and operational capacity at the time and provided a stimulus to Telstra’s ability to raise capital for network expansions and modernisation and to keep pace with changing technologies (Refer to Appendix - Liberalisation of the telecommunications sector - Australia’s experience). Today, Telstra has become increasingly privatised and may even become a fully-privatised company in the foreseeable future, with no control by the Federal Government.

   With regards to the role that convergent telecommunication technologies have played in shaping cultural and national interests in Australia, Ien Ang has drawn attention to the extent to which “global media do affect, but cannot control local meanings; as a result, the construction of a global culture…should not be conceived as a process of straightforward homogenisation, but rather local cultures everywhere tend to reproduce themselves…through the appropriation of global flows of mass-mediated forms and technologies” (1996, p. 153). In response to this, Merrill argues instead that “the new trend toward globalism, toward big media companies expanding worldwide, is an unhealthy trend and national values are endangered by the increased alien cultural material, especially advertising and entertainment of a sensational, vulgar nature” (1996, pp. 226-27).

   The issue of “re-territorialisation” has become increasingly possible with new and convergent telecommunications media such as the Internet and the creative use of household information technology and entertainment equipment. One of the fundamental characteristics of the twentieth century was the mass migration of people across the globe. This is especially relevant in Australia, which remains very much a migrant country. Many of these diasporic communities have sought to remain connected with originating cultures by maintaining links through use of media and communications systems. Such trends are a reminder of a major element regulating media globalisations, which is public policy, and the role it plays in regulating the relationships between global flows and their local impacts within the nation-state. Schlesinger proposes that “national media and cultural policies can be seen as exercises in ‘communicative boundary maintenance’, out of which emerge distinctive national media cultures, and particular configurations of local and imported media content and styles” (1991, p. 162).

   This is particularly apparent in Australian broadcasting, where national public broadcasters, national regulatory systems and audience preferences for locally produced material have intersected with economic and technological forces that promote imported programming, and political, cultural and linguistic factors which make Australia more or less open to imported English-language content, especially from the United States. Australia, which has always been highly exposed to globalising cultural influences, has therefore developed ‘hybrid’ programme forms that negotiate local, national and international cultural markets. Sustained exposure to overseas television programming has been in these instances the trigger for strengthening national production systems, through protectionist cultural policies of le defi americain (Schlesinger, 1991), cosmopolitan programme formats which ‘play at being American’ (Caughie, 1990), or the fashioning of ‘national champions’ which can compete in definable global audiovisual markets, such as ‘soaps’ and telenovellas (Sinclair et al., 1996; Moran, 1998).

   While national media and communications policies in Australia can set limits to the impact of media globalisation on national media cultures, such policies can also act as catalysts for globalisation. In Australia, the liberalisation of media and communications markets are fundamentally shaped by the interaction of domestic politics with global structures and flows, out of which frequently emerge opportunities that become available to local industries. Although corporations based in Europe and North America are most often cited as driving globalisation, it is the partnerships and opportunities they offer domestic businesses which often hold the key to market entry. The partnership between the US computer software giant Microsoft and powerful Australian media conglomerate Publishing & Broadcasting Ltd in Australia in building a web portal called NineMSN, that draws viewers from a range of existing television, print and software businesses to the new media, illustrates this trend (Barr, 2000, pp. 25-28).

   The converging telecommunications media, and the practices and institutions surrounding them, pose significant challenges to regulatory regimes not only in Australia, but all over the world. “Most Australians are now living in a world in which the widening reach and startling speed of both broadcast and interactive communications technologies have helped to compress dramatically all kinds of relationships across both time and space. The media in all its forms has become a central influence in the creation of individual, communal and national identities” (Wiseman, 1998, pg. 73). National control is further complicated by these convergent technologies whose reach and effect extend beyond the jurisdictional boundaries of nation-states. Many governments fear the loss of political and economic sovereignty, others the loss of cultural identity. New global media also raise fundamental questions and concerns about who will control communication systems and the terms and conditions of access to them. These questions and concerns cannot be addressed simply by turning to legal precedent or technological solutions. Rather, nations such as Australia must declare the principles that will define or re-define the social values and purposes of media systems in the world that we live in today.

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