Saturday, 17 March 2012

Convergence comes to Australia, Department of Innovation says "No"

Photo by State Records NSW CC-BY-2.0
Austar CEO John Porter decided to "suspend political correctness" this week to talk about convergence: "Telstra needs to let Foxtel sell broadband".

Convergence has come to Australia.

But in an admirable attempt to hold back the tide, the Department of Innovation says "No" to convergence.

Convergence is not new, nor is it necessarily the result of new technologies. Since the time of the telegraph and telephone (particularly in countries which did not establish public monopolies), most communications industries have been deliberately diverged to create distinct markets - not because of technology, but because of corporate interests.

For example, Canada’s broadcasting and telecommunications industries were deliberately diverged by numerous corporate agreements established amid government policies based on the idea that telecommunications was a natural monopoly. However, by the 1990s, regulators and key industry players were arguing for the (re)convergence of these industries.

During the 1990s, while Canadians were arguing for (re)convergence, Telstra was doing the opposite: extending divergence to take advantage of pay-TV.

Telstra, as part of the FOXTEL pay-TV service, deployed broadband cables and had 200,000 pay-TV customers by 1997. Telstra’s BigPond service utilised the cable to offer high-speed broadband Internet services via cable modem to customers in Sydney and Melbourne, but this was largely an after-thought. Further, the initial deployment of cable broadband services was deliberately delayed by Telstra and News Ltd for financial reasons:
While we are hopeful about the future potential for broadband services, we recognise the need to balance investment with returns in the context of the changing competitive environment and developing markets and services. Telstra has worked closely and productively with our partners and other players in the Pay-TV industry during the second half of the financial year to seek to resolve some of the financial issues that have contributed to the instability of the industry. The outcome of these discussions is that Telstra and News have further agreed to limit, at this time, Telstra’s broadband cable rollout obligation to 2.5 million homes by the end of 1997. Any resumption of additional broadband cable rollout will be delayed until overall market conditions justify such investment (Telstra 1997 Annual Report).
Due to a proposed merger between FOXTEL and Australis at the time, a pay-TV provider with a satellite and microwave distribution system, there was no commercial reason for Telstra to continue expanding cable infrastructure to compete in the pay-TV market. Atkinson, Correa & Hedlund (2008: 53) found that:
The Australian government allowed Telstra, the incumbent telecommunications operator, to take over the nascent cable companies in the early 1990s, thereby dramatically limiting broadband cable competition. Consequently Australia has among the lowest cable penetration in the OECD.
However, it would appear that whatever value was gained by keeping the industries diverged in Australia is nearing the end of its useful life. Now that the Foxtel-Austar merger will go ahead, change is in the air.

Expect to see an increase in the provision of paid content - not just pay-TV but paid media content, too - as the old paper-based industries die out quickly. Indeed, it would appear that enough consumers are willing to pay for content that the "paywall" may soon be ubiquitous.

It was only a matter of time. Unless you are in the innovation game.


A key strategy of the Department's war on convergence is to provide targeted support to the print-based industries. In 2012, research which is published in electronic-only formats does not count in the Higher Education Research Data Collection (HERDC) rules.

In a recent revision, the Department of Innovation decided to exercise its authority over technology and put research back on paper where it belongs: 
“[B]ooks only published electronically"... do not meet the criteria [and] "books and book chapters only published electronically” can not be included under HERDC.
In light of industry's re-convergence, the Department of Innovation is certainly being innovative. Thankfully, paper refuses to receive ink from lesser researchers, and simply by excluding e-publishing, DIISRTA has significantly improved the quality of Australian research in what is a very clever policy.




Creative Commons License Except where indicated otherwise, Le Flâneur Politique by Michael de Percy is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 2.5 Australia License. Based on a work at politicalscience.com.au. Background image ©Depositphotos.com/ @redshinestudio