Evidence-Informed regulatory practice Speech by Richard Bean, Deputy Chair
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Evidence-Informed regulatory practice Speech by Richard Bean, Deputy Chair Australian Communications and Media Authority QUT DMRC Symposium: Rethinking regulation in the digital economy, Brisbane, 11 August 2015 Thank you for the opportunity to share some thoughts with you about how the ACMA makes use of research and evidence to inform our regulatory practice. The ACMA has striven to be an evidence-informed regulator since its formation in 2005. We operate in an environment of ongoing change and we undertake research to
We want to
We also gather evidence to
We look to identify new technology developments and changing consumer use that drives demand for public resources such as spectrum, and assist for example in the regular updating of spectrum demand forecasts. In our deregulatory work, we want to fully understand the costs of regulation and identify opportunities to reduce unnecessary burdens on industry, as well as improve our understanding of the changing profile of risks and harms that inform the design of important consumer and citizen safeguards. Last year saw the launch of our researchacma brand, under which we publish our research products for different audiences, our thought leadership work and evidence supporting Authority decisions. As some of you here may be aware, over a period of years, the ACMA has framed questions about the future of regulation in communications and media in three major regulatory practice research pieces:
Taken together these frame our view about the need for the development of a unified coherent regulatory framework for media and communications. However, in the absence of fundamental reform of the legislative and regulatory construct in which we operate, our approach to evidence gathering and environment scanning is an important part of keeping the ACMA’s regulatory practice current. So, now I’d like to share with you five concrete examples of how different kinds of research have specifically informed our work. Reconnecting the Customer inquiry 2009 saw record levels of consumer complaints to the Telecommunications Industry Ombudsman (the TIO), which coincided with a scheduled review of the Telecommunications Consumer Protections Code by the industry association, Communications Alliance, which is the body responsible for the development of the TCP code. In April 2010, the ACMA commenced a public inquiry to examine customer care in the telecommunications industry. The Reconnecting the Customer inquiry examined four key issues:
In gathering evidence to address these four issues, the ACMA obtained information from a range of sources, including
This evidence was complemented by five research studies the ACMA commissioned specifically to inform its thinking on the RTC inquiry:
These five studies found that:
As a result of the inquiry, in September 2011 the ACMA proposed substantive changes to provider practices to make buying and using a mobile phone or internet service much simpler. Industry updated the TCP code, and in September 2012, a revised Code took effect, progressively introducing changes that were designed to improve consumer outcomes in the following areas where harm had been identified:
It was then necessary to monitor the impact of the new Code. In 2013, we conducted a national survey to set a baseline in evaluating the effectiveness of the changes to the TCP Code and other outcomes of the RTC inquiry. Findings at that point included that:
These results provide a baseline, from a time very early in the implementation of the new code, to which future changes can be compared—but the findings about the new ease of comparing and understanding products was gratifying. The ACMA has continued to both track the implementation of the TCP code, including monitoring spend management tools, and measure the economic benefits of the revised TCP code. This research will be published in the near future. Broadcasting codes My second example involves our responsibilities in regulating television and radio broadcasting. The take up of online subscription video services like the Australian Netflix service, Presto and Stan during this year has marked an important watershed in video content delivery in Australia, but of course content delivery changes have been occurring for a number of years. As you probably know, in Australia broadcasting codes of practice are developed by industry, in consultation with the ACMA. The ACMA can then give effect to a code by registering it, but we may only (and must) register if, among other things, we are satisfied that the code provides appropriate community safeguards. So, it is critical that we gather evidence about relevant community attitudes. Now, a review of the codes was due and the commercial television broadcasters were keen to modernise them—with considerable justification they see themselves as regulated in a way that their new competitors are not. So early in 2013 the ACMA commenced the Contemporary community safeguards inquiry to assess what contemporary broadcasting codes of practice ought to be like in a converging media environment—and to focus the codes on what really matters. The ACMA commissioned qualitative and quantitative community research with Australians 15 years and older. This community research explored community attitudes to, and experiences and expectations of content broadcast on television and radio. We also commissioned economic research into the financial performance of the commercial, subscription and community broadcasting sectors, and the financial impact of codes of practice on those sectors. These specially-commissioned studies contributed alongside other sources of evidence such as previous research by the ACMA and others, the ACMA’s experience in administering complaints, feedback on an issues paper, and public forums under the title Citizen conversations. Citizen conversations were held about:
This evidence revealed a high level of consensus and confirmed the core matters that should be reflected in contemporary broadcasting codes under the current co-regulatory constructs. These public interest considerations were strongly correlated with those areas specified in legislation that broadcasting codes may address, and within parameters that did not impose unnecessary financial and administrative burdens on broadcasting service providers. The matters that broadcasting codes may cover is set out in Section 123 of the Broadcasting Services Act 1992, and includes:
The research also emphasised that these safeguards will need to be sufficiently flexible to accommodate a changing media environment—one that is being radically transformed by content delivered over the internet. It also demonstrated strong support for contemporary community safeguards across radio and television. We found a solid rationale for maintaining code-based regulation that enables adults to make their own informed decisions about:
We also found strong support for
There was also strong support for codes to ensure appropriate complaints-handling systems are available. Significantly, there was a much lower level of consensus around how these matters should be operationalised in codes. For example, it is easy to agree that codes should protect children, but harder to agree how that might most appropriately be done and whether different broadcasting platforms, models and genres logically suggest different methods. But, there is no doubt that there is scope and support for rationalisation, simplification and adaptation to changes in media markets and practices. The economic research we commissioned reported on the most significant costs of compliance with the various codes, including the need to provide staff with training, and fund the activities of industry representative bodies to ensure compliance. Broadcasters noted that complaints-handling imposes the most significant compliance burden on their organisations. Free to air and subscription television, broadcasters also nominated the cost of classification of content as significant, and free to air broadcasters noted costs associated with scheduling of compliant content as significant. The key opportunity costs identified by free to air television broadcasters were time limits on advertising, time zone restrictions, and the requirement to publicise on air the television code of practice and the complaints procedures. All these things will be considered as part of the code review. Radio broadcasters nominated a range of other compliance costs, include complying with Australian music requirements, accuracy and fairness, and publicising the existence of codes. However, there was no consensus about the extent of these burdens across the industry. Now Free TV Australia has recently revised its commercial television industry code of practice and will submit it to the ACMA for registration in the near future. Free TV Australia has taken into account the ACMA’s Contemporary community safeguards inquiry research in developing its revised code. And in another example of how the Inquiry research is being used, the compliance cost findings have been useful as an information base as we cost deregulatory changes to broadcasting industry reporting requirements being considered and implemented as part of the government’s red tape reduction agenda. Local content obligations My third example is the investigation we recently conducted into the effectiveness of current regulatory arrangements for the broadcast of material of local significance. We conducted community research, economic research, and television audience data analysis. s. 43A of the Broadcasting Services Act requires licensees in large regional markets to meet targets for local content, with the scheme providing greatest weight for local news bulletins. This investigation was informed by public submissions, industry submissions, case studies, community research with regional Australians, compliance data, regional ratings data and an economic analysis of relevant cost and revenue trends for regional commercial licensees. The evidence made it clear
But the underlying business model for the provision of local content is changing. With funding pressures likely to continue, the commercial incentive for regional broadcasters to provide local content is likely to come under increasing pressure. Mobile broadband Now let’s have a look at how the ACMA use evidence to inform its spectrum management functions. Radiofrequency spectrum is an important and finite public resource and a critical input to a networked economy and society. The ACMA’s stewardship of this resource is of critical importance to Australia economically and socially. ACMA research has identified new technology developments and changing consumer use patterns that drive demand for spectrum, and contributes to the regular updating of spectrum demand forecasts. Our paper The Economic impacts of mobile broadband on the Australian economy, from 2006 to 2013 contains findings that mobile broadband has improved productivity and overall economic growth, leading to a $33.8 billion increase in Australia's economic activity in 2013 (measured in terms of GDP). In addition, a broad projection of the economic value of spectrum in Australia, recently undertaken for the Department of Communications Spectrum Review suggested national benefits could be as high as $177 billion over a 15-year period, depending on the factors included. Of course, facilitating the re-purposing of spectrum for mobile broadband is inherently difficult as spectrum attractive for mobile broadband is usually also attractive to and used by other services. This tension is at the heart of the mobile broadband spectrum management challenges faced by the ACMA and other spectrum regulators around the world. Of course, providers of mobile broadband services have the ability and responsibility to ensure that other mechanisms that increase capacity, such as increases in network infrastructure and deployment of the latest most efficient technology, are also utilised. Generally, mobile network operators have three options when it comes to meeting demand requirements: acquiring additional spectrum, deploying additional sites (that is, more mobile phone base stations) or using more efficient technologies. To help inform how this interaction works, and to deepen our understanding of elements of spectrum demand, the ACMA commissioned Analysys Mason to develop a mobile network infrastructure forecasting model, which we released in June this year. The model, developed with input from mobile network operators, makes projections about the infrastructure requirements for the mobile sector. Results are presented in terms of the number of sites a mobile operator requires to satisfy different forecasts for data demand. The model and accompanying report address a number of the ACMA’s strategic spectrum information requirements including:
As a matter of course we try to make our work as useful to industry and other researchers as useful as possible, and the model is publicly available—for example to mobile network operators to use in undertaking their own assessment of their future spectrum, infrastructure and technology requirements, and it forms part of the ACMA’s ongoing commitment to building capabilities through an open data approach. All of the examples I’ve mentioned today are supported by published research, which is available on our website. Let me add just one further example, this time of work we are currently finalising and will be publishing soon. The ACMA is currently reviewing its mobile broadband strategy and, as part of our usual evidence-gathering process, expects to release a draft for consultation in the near future. While still to be finalised, some of the ideas being considered in this updated strategy include:
An evidence-based regulator must consider the quality and appropriateness of the evidence it relies on. In the area of managing spectrum for future mobile broadband demands, the ACMA has identified challenges with the approach of setting targets. These challenges include that the models used in these estimates are highly sensitive to inputs and variables, which are difficult to accurately predict too far into the future. This can make long-term estimates useful as a guide for trend analysis only, rather than for determining specific spectrum targets. Quantitative targets also do not shed any light on the quality of spectrum in terms of spectrum harmonisation and technology standardisation factors. A more agile alternative to setting specific targets for additional spectrum is a ‘contingency planning’ approach. The regulator would continue to work with others with a role to play, both domestic and international, to identify the most promising potential candidate bands and their stages of maturity, with a view to making additional spectrum available for mobile broadband when mobile broadband is clearly emerging as the highest value use of the particular band in question. This will involve gathering evidence about spectrum use at the right time, and should maximise the international harmonisation of the bands made available, and incidentally protect the legitimate interests of existing users of spectrum by avoiding unnecessary or unwarranted disruption to their businesses. I hope these five examples have illustrated just how much store the ACMA places on evidence in exercising its regulatory functions. Let me finish by bringing to your attention the ACMA overview paper, Evidence-informed regulatory practice—an adaptive response 2005–2015, which we published in April this year. In it, we bring together, under an overarching strategic framework, the body of research the ACMA has conducted over the past decade. This framework is intended to illustrate and integrate the ACMA’s use of research to:
Our research has assisted us to dissect specific regulatory problems, providing definition and scope to assess the changing nature of benefits and risks and quantification of costs and benefits of regulatory and non-regulatory interventions. I would also like to acknowledge that the ACMA’s evidence base benefits significantly from the research conducted by others—industry, consumer groups, other arms of government and of course you in the academy. The profoundly interconnected and fast-changing environment we operate in means that we must constantly update our evidence and test our pre-existing views, so that, to modify a much disputed but famous remark, we can know when the facts change, and we can change our minds. Thanks for your attention this morning. ENDS
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