Designing a regulatory framework

Regulatory models

38. The regulatory form is a central concept in establishing a framework for classification of media content. Regulatory forms can be placed on a continuum of government oversight ranging from self-regulation, through quasi-regulation and co-regulation, to direct government regulation.^[23]

• Self-regulation is generally characterised by industry-formulated rules and codes of conduct, with industry solely responsible for enforcement.

• Quasi-regulation describes those arrangements where government influences businesses to comply, but which do not form part of explicit government regulation.

• Co-regulation typically refers to situations where industry develops and administers its own arrangements, but government provides legislative backing to enable the arrangements to be enforced.

• Direct government regulation comprises primary and subordinate legislation. It is the most commonly used form of regulation.^[24]

39. Current regulation of media content in Australia takes several different regulatory forms. For example, audio material is currently self-regulated under the Recorded Music Labelling Code of Practice.^[25] There is no legislation and individual record companies are responsible for labelling recordings under a code that outlines labelling provisions and establishes a complaints-handling mechanism.

40. An example of quasi-regulation is the agreement by Telstra, Optus and Primus to filter voluntarily a list of child abuse URLs compiled and maintained by ACMA. This arrangement was entered into against the background of the Australian Government’s proposed system for mandatory ISP-level filtering of URLs.^[26]

41. As discussed above, a co-regulatory scheme for online content is established under the Broadcasting Services Act. This scheme allows for and encourages industry development of codes of practice for ISPs and content service providers of online and mobile content. The matters that must be dealt with in the codes are specified in the legislation. For example, sch 5 of the Broadcasting Services Act provides that a code or industry standard must deal with, among other things, giving customers information about the availability, use and appropriate application of internet content filtering software.

42. Regulation of radio and television content is also co-regulatory. Industry groups have developed codes under s 123 of the Broadcasting Services Act and in consultation with ACMA. Most aspects of program content are governed by these codes, which include the Commercial Television Industry Code of Practice and the Commercial Radio Australia Code of Practice and Guidelines. ACMA only registers industry codes of practice once it is satisfied that broadcasters have undertaken public consultation and the codes are endorsed by the majority of broadcasters in the relevant sector and contain appropriate community safeguards. Once implemented, ACMA monitors these codes and deals with unresolved complaints made under them. The industry codes of practice require consumer complaints to be forwarded to the relevant broadcaster in the first instance.

43. Direct government regulation applies to the classification of publications, films and computer games under the Classification Act. For example, state and territory classification laws provide that films must usually be classified before they can be legally sold and exhibited. Classification decisions are made by the Classification Board in accordance with criteria set out in the Classification Act, the National Classification Code and Classification Guidelines.

Factors in determining regulatory forms

44. The Australian Government Best Practice Regulation Handbook states that direct government regulation should be considered when, among other things: the problem is high-risk, of high impact or significance; the community requires the certainty provided by legal sanctions; and there is a systemic compliance problem with a history of intractable disputes and repeated or flagrant breaches of fair trading principles, with no possibility of effective sanctions.^[27]

45. On the other hand, self-regulation—or by extension, more co-regulation—may be a feasible option if: there is no strong public interest concern, in particular no major public health and safety concerns; the problem is a low-risk event, of low impact or significance; and the problem can be fixed by the market itself—for example, if there are market incentives for individuals and groups to develop and comply with self-regulatory arrangements.^[28]

46. Practical factors may also favour more self- or co-regulation if the time, effort or cost of government regulation outweighs its benefits.

47. An overarching issue for this Inquiry is assessing an appropriate regulatory form or forms for a content classification scheme. Questions include whether direct government regulation remains an appropriate and effective model for classifying publications, films and computer games; what regulatory model is most appropriate and effective for online material; and what the relationship should be between the regulatory models. These fundamental questions underpin much of the following discussion.

48. Evaluating and developing a framework for classification laws in Australia in a changed media landscape may be approached from first principles by asking four broad questions:

• Why classify and regulate content?

• What content should be classified and regulated?

• How should access to content be controlled?

• Who should classify and regulate content?

49. These questions, all of which are closely related, will be considered in the following sections. The answers will assist the ALRC to evaluate and develop options for reform of the classification system.

Why classify and regulate content?

50. Regulating and classifying content may be seen to have three key purposes:

• providing advice to consumers to help inform their viewing choices, including warning them of material they might find offensive;

• protecting children from harmful or disturbing content; and

• restricting all Australians from accessing certain types of content.

51. The purpose of providing advice to consumers is reflected in the more recent preference, in policy discourse, for the term ‘classification’ rather than ‘censorship’—though any classification scheme is likely to also involve some censorship. Gareth Griffith has observed:

Prima facie classification implies that nothing is banned only restricted if necessary. Classification has certainly a more neutral flavour than the more pejorative term censorship … Whereas censorship is suggestive of public order and idea of the public good, classification is associated with the facilitation of informed choice in a community of diverse standards.^[29]

52. These purposes are currently reflected in the National Classification Code, which provides that classification decisions are to give effect, as far as possible, to the following principles:

(a) adults should be able to read, hear and see what they want;

(b) minors should be protected from material likely to harm or disturb them;

(c) everyone should be protected from exposure to unsolicited material that they find offensive;

(d) the need to take account of community concerns about:

(i) depictions that condone or incite violence, particularly sexual violence; and

(ii) the portrayal of persons in a demeaning manner.^[30]

53. The Convergence Review committee has suggested that policy objectives suitable for a converging media environment should include that:

• communications and media services available to Australians should reflect community standards and the views and expectations of the Australian public; and

• Australians should have access to the broadest possible range of content across platforms and services.^[31]

54. The Broadcasting Services Act itself contains similar objectives including, for example, ensuring that broadcasters and internet service and content providers ‘respect community standards’ in relation to content, while promoting the availability of a diverse range of broadcasting and datacasting services.^[32]

What content should be classified and regulated?

55. Determining what should be classified might be expected to follow from the primary purposes of regulating content, discussed above. If the purpose of classification is to give Australians information about content they might choose to view, hear or play, and to protect people from harmful or distressing material, then this might suggest that most content should be classified—and certainly as much potentially harmful content as possible. However, even if it were thought useful for everything to be classified—to provide Australians with as much information as possible—this is unlikely to be practically possible or cost-effective. Excessive regulation might also place an unreasonable cost burden on industry, and be particularly disadvantageous to sole traders and small-to-medium enterprises who form the backbone of an emergent digital media content sector.^[33]

56. Therefore, any new or reformed classification scheme must select which types of content should be classified or regulated. There are a number of possible ways of thinking about content for the purpose of deciding which content should be classified. The following tablehighlights some ways in which content may be differentiated for these purposes. Some of the distinguishing features in the table are built into the current classification scheme. It is important to note that the criteria listed below are not mutually exclusive, nor is it likely that one criterion will usefully determine what should be classified. Instead, a number of overlapping criteria are likely to help determine what should be classified.

57. Some of these important distinguishing features of content will be the focus of the following discussion about what should be classified. However, a number of other issues also bear on the question of what should be classified, including:

• who should be responsible for classification—if an independent body, such as the Classification Board or a government entity, is required to classify all content that should be classified, then what must be classified may depend on what is practically possible or cost-effective for such a body. If industry had a greater role in classification, it might be possible to regulate more content.

• cost of classifying material—the more regulation, the greater the likely cost to industry and to the public. The high cost of classifying and regulating certain content might call for increased industry involvement in classification or for some content to be excluded completely from the regulatory regime. There is also a need for cost-effective solutions for the large number of start-up businesses, sole traders and small-to-medium enterprises engaged in the emergent digital content industries.

• compliance with classification laws—if compliance with some classification laws depends on active enforcement, and enforcement resources are better directed elsewhere, it may be important to craft classification laws that do not require high levels of enforcement.

Media and technology platforms

58. The growth, diversity and convergence of media technologies has arguably undermined the distinctions between media that underpin the current classification scheme. Currently, similar content may be subject to different regulatory requirements, classification processes and rules, depending on the medium, technology, platform or storage device used to access and deliver the content. For example, the same film may be subject to different regulation, or subject to classification or not, depending on whether it is shown in a cinema, sold or rented as a DVD, accessed through the internet, broadcast on television or narrowcast on subscription television.

59. Another media-based distinction built into the NCS is the distinction between film-media and print-media. Each has separate guidelines and although most films must be classified to be sold, only some publications need to be classified (sexually explicit magazines, for the most part).

60. Some argue that the media used to deliver content is irrelevant to the question of whether the content should be classified. A child will be no less distressed watching a violent film downloaded from the internet than they would be watching the same film hired from a DVD store. Therefore, it is argued, if films on DVD must be classified, then so too should films delivered on the internet.

61. However, the same factors might be used to argue for less regulation. If it is impossible or prohibitively costly to regulate content delivered by one medium (eg, the internet), then it may be argued that the content should also not be regulated when delivered on other media (eg, DVDs). The argument for consistency or parity could therefore lead to less regulation—and less information about, and protection from, content for Australians.^[34]

62. As noted above, many factors arguably undermine the effect of existing Australian state and territory classification laws, including the sheer quantity of content that may be delivered via new media, the speed with which it is released, and the fact that much content is ‘user-generated’ or produced by small entities throughout the world. The nature of media consumers has also changed, from passive recipients of media content to active co-creators in a more participatory media culture, as seen with multi-player online games, blogs, citizen journalism and social media sites such as Facebook, Flickr and Twitter.^[35]

63. The growth and convergence of media technology may suggest that the type of media on which content is delivered should not determine whether the content should be classified.

Complaints

64. Another way of distinguishing content for the purpose of deciding whether it needs to be classified is whether the content has been the subject of a complaint—for example, to ACMA, the Classification Board, the police or other enforcement bodies—or has been otherwise singled out by regulators.

65. The classification of online content is now largely a complaints-based system: online content will often only be classified if someone has lodged a complaint with ACMA and if ACMA decides the content requires classification. Submittable publications, films and computer games, on the other hand, must usually be classified whether or not anyone has complained about their content (although the Director of the Classification Board may, upon receiving a complaint about unclassified offline content, issue a notice requiring the relevant person to submit the content for classification).^[36]

66. Complaints-based regulation may only result in a very small proportion of content being classified, and the number of complaints is unlikely to capture all relevant content.^[37] Regulators may struggle to handle the number of complaints about online content. Further, an effective complaints-based system requires high public awareness and public confidence in decision-makers.

67. However, it may be a useful way to target the most extreme and offensive content, without placing too high a regulatory burden on industry or government regulatory authorities.

Impact level and children’s content

68. The need to protect children from harmful or distressing content, and to warn all consumers about potentially distressing content, might suggest that it is more important to regulate higher-level content. This is reflected in the current regulation of online content, which targets material that is or would be restricted offline, and in government proposals to introduce ISP-level filtering of content classified RC. It may be that some content does not need to be classified at all, because it is likely to have no impact, or a negligible impact, on any viewer.

69. On the other hand many parents and guardians rely on classification information to guide their choice of entertainment for young children. For these individuals, the differences between lower-level content—for example, the impact of a film classified G (very mild) and a film classified PG (mild)—may be more important.

Content from certain producers and distributors

70. Classification laws could also be directed at content distributed by companies and corporations and exclude content distributed by individuals, such as ‘user-generated content’. Large organisations and companies, such as the major distributors of publications, films and computer games, may have the resources to ensure their material is classified and, under a new scheme, may also be able to employ their own classifiers for some content.

71. Regulation targeting major distributors may mean that most of the content that has traditionally been classified and regulated in Australia would continue to be. This content generally has the largest potential audience, and the Australian community may particularly value and expect classification of ‘mainstream’ content.

Other criteria for determining what should be classified

72. There are many other ways of determining what content should be classified. Another way of thinking about this question is to ask what type of content should not need to be classified. Explicit exemptions are made for some types of film, computer game and publication under the existing NCS.^[38] Other types of content (eg, artworks) have generally been understood to be outside the scheme, though there has been recent debate about whether potentially contentious displays of visual art in public galleries should be subject to classification laws.

73. Whether content must be classified now also partly depends on what is done with the content. Possessing an unclassified film is usually not illegal under state and territory classification laws, but selling and exhibiting an unclassified film generally is.

74. The criteria used to determine what should be classified may overlap, and it is unlikely that any one criterion will be sufficient to determine what should be classified. The ALRC welcomes any further comments or suggestions on what content should be regulated.

How should access to content be controlled?

75. Methods of giving information about, and controlling access to, content may include the following:

• prohibiting the possession of certain content (eg, owning a film containing child abuse; downloading RC material);

• blocking or filtering certain online content;

• prohibiting or restricting the sale, demonstration, public exhibition, broadcasting of certain content (eg, sale of unclassified material and RC films);

• prohibiting the creation of certain content (eg, making a film containing child abuse; uploading RC material);

• prohibiting making certain content publicly available;

• prohibiting the importation of certain content;

• restricting access—online and/or offline—to adults;

• requiring certain content to display special markings, warnings or consumer advice; and

• requiring certain content to be sold only in opaque plastic.

76. These and other methods of giving information about and controlling access to content are not mutually exclusive—some content might need to be subject to multiple forms of regulation. For example, laws may prohibit the sale of RC content, and ISPs may be required to filter that same content. Also, it is unlikely that any one form of regulation will be suitable for all types of content. Some content may be regulated in some ways, other content in other ways, and some content might not need to be regulated at all.^[39]

77. Regulating online content has proved difficult. Obstacles to effective regulation of online content include:

• the quantity of online content—for example, with over one trillion unique URLs on the web, compiling a comprehensive list of prohibited sites is considered a common weakness in systems meant to filter online material.^[40] It has also been estimated that there were 500,000 apps available for downloading to mobile phones in early 2011.^[41]

• the content is dynamic or mutable—much online content changes constantly, making it difficult to establish what precisely should be classified or regulated.

• the number of persons producing content—a largely discrete and identifiable group of bodies distribute magazines, films and computer games offline, but millions of users produce content online.

• content is produced and hosted all over the world—even if a scheme effectively regulates content hosted in Australia, the practical effect will be ‘limited due to the vast volume of unrestricted content hosted overseas’.^[42]

• the difficulty of determining age and of restricting content to adults—a shop-owner can refuse to sell a violent film to a ten-year-old; it is more difficult to verify age accurately and efficiently online.

78. There are also difficulties with regulating offline content. Although most films and computer games offered for sale in cinemas and retail outlets have been classified and carry the appropriate classification markings, compliance with laws restricting the sale of adult content is low. Unclassified and X 18+ films are sold illegally throughout Australia, and many sexually explicit magazines are not classified or carry incorrect classification markings. Such breaches of classification laws draw particular criticism when minors are exposed to or able to access adult content.

Who should classify and regulate content?

79. Closely related to the question of what content should be classified is the question of who should classify the content. This Inquiry will consider who currently classifies or examines such content and whether there are more effective ways to assess content, especially given its changing nature and increasing volume.

80. This question concerns allocating responsibility to an independent body or bodies, to government, to industry, or to a combination of these. The answer to this question may vary with content and will depend on the regulatory model chosen. Some options (variations of which could be combined) include:

• a government agency or independent board classifying all content that must be classified;

• a government agency or independent board classifying all content that must be classified, but relying on industry assessments or recommendations for some or all content;

• industry classifying all content that must be classified using statutory guidelines and trained and approved assessors;

• industry classifying all content under an industry-developed, but government approved, code of practice, with decisions subject to review and audit by a government agency or independent board;

• a government agency or independent board classifying some content, and industry classifying other content, with industry decisions subject to review and audit by government agencies; and

• individual organisations implementing their own measures for assessing material and dealing with inappropriate content—for example, the online video service YouTube allows users to flag videos which are then reviewed by YouTube specialist content reviewers and removed if they violate the company’s community guidelines.

81. Even where industry takes the leading role in classifying content, a government agency or other independent body may be involved in responding to complaints, managing consumer information and awareness, providing training, conducting compliance audits and other regulatory activities.

82. Before considering the roles of government and industry under the current classification scheme, it is useful to outline some of the important considerations relevant in deciding who should classify content.

Organisational factors

• independence and the perception of independence—government agencies may be more independent and are likely to be seen as more independent than industry classifiers. Industry may sometimes have an interest in giving their content a lower classification than is appropriate.

• experience and expertise—trained and experienced classifiers may be more likely to make reliable classification decisions. Government or independently established bodies with committed, fulltime classifiers may be better placed to ensure classifiers have adequate experience and proper training.

• consistent decision-making—decisions made by the one body are more likely to be consistent. Such a body would also have built-in checks and safeguards, such as the ability of classifiers to discuss approaches with fellow classifiers.

• cost efficiency—industry may be able to classify its own content more efficiently and at a lower cost than a government or other independent body.

• speed—industry may have the capacity to make quicker decisions particularly if each industry sector or individual company is responsible for its content. That is, the volume of classification work is spread over multiple classifiers in multiple organisations.

• international reach—industry, for example mobile telecommunications providers, may manage content assessment across jurisdictions more efficiently than nationally-based classifiers and content regulators.^[43]

The nature of the content to be classified

• straightforward and uncontentious—it may be unnecessary and burdensome for such material to be classified by a government or independent body, for example, ‘simple’ computer games such as Tetris, Snake and Chess that are almost certain to be classified G.

• sexually explicit material—most films that would be classified X 18+ and most submittable publications containing sexual activity and nudity may be reasonably easy to classify.

• content substantially similar to already classified content—it is not cost efficient or effective to duplicate classification actions. For example, if a government agency or independent entity has classified the 3D version of a film, then classification of the 2D version is likely to be straightforward.

• content that is likely to fall within advisory classifications—less risk of harm or distress is attached to content that does not require restriction to particular age groups—for example, DVDs and computer games likely to be classified G, PG and M.

83. The range of schemes already in use under the NCS and in the regulation of other content, as described below, may provide useful models for the allocation of roles and responsibilities under a new or reformed classification scheme.

Classifiers and assessors under the current scheme

84. All publications, films and computer games that are classified in Australia are classified by the Classification Board and the Classification Review Board. Online content that is referred under ACMA’s complaints-based system is also classified by the Boards.

85. The Classification Board is a full-time board comprised of a Director, a Deputy Director, a Senior Classifier and, at present, nine other members,^[44] intended to be broadly representative of the community. The Board makes approximately 7,000 classification decisions annually.^[45]

86. The Classification Review Board is a part-time board that convenes in response to an application for review. The Classification Review Board is currently comprised of a Convenor, Deputy Convenor and four other members.^[46] In 2009–10 the Classification Review Board made eight classification decisions.^[47]

87. The Director and Convenor determine the procedures of the Boards. The Director decides the constitution of panels for each classification application. For example, sexually explicit DVDs may be considered by one Board member, while a high profile or controversial public exhibition film may be viewed by the full Board.

Other government decision-makers

88. Government employees also assess content pursuant to obligations outlined in Commonwealth and state and territory legislation. For example, the Director of the Classification Board can delegate content assessment to employees of the Attorney-General’s Department; Customs officers intercept prohibited imports and exports; ACMA employees investigate complaints about online content; and some state and territory law enforcement officers issue notices regarding the likely classification of material for the purpose of prosecutions.

Industry assessors under the current scheme

89. There are also three schemes that allow industry-based assessors to submit reports and make classification and consumer advice recommendations to the Classification Board when submitting a classification application. The final classification decision rests with the Board.

90. These schemes provide for the classification of computer games that are likely to be classified G, PG or M; classified or exempt films for sale or hire that contain additional content (eg, cast interviews, director’s commentary, deleted scenes); and television series sold as films for sale or hire.^[48] Since July 2009, authorised advertising assessors have been able to self-assess the likely classification of an unclassified film or computer game so that distributors can advertise these products before they are classified by the Classification Board.^[49]

91. Assessors under these schemes must complete training approved by the Director of the Board and be authorised by the Director to provide assessments. While each scheme varies in its detail, they all have eligibility criteria, application conditions, sanctions and other safeguards to maintain the integrity of classification decisions and deal with misconduct by assessors.^[50]

Other industry assessors under codes of practice

92. Some content that falls outside the NCS is subject to classification or assessment by industry under self- or co-regulatory codes of practice. Under these schemes, for example:

• industry classifiers engaged by recording companies assess music recordings for the purpose of labelling products with warnings if it contains offensive lyrics;

• industry classifiers engaged by subscription television channels apply the classification guidelines and markings used by the Classification Board to classify content;

• industry classifiers engaged by commercial television broadcast licensees apply industry-developed classification guidelines and symbols to classify content; and

• industry classifiers (‘trained content assessors’) engaged by mobile and online content service providers apply the guidelines used by the Classification Board to determine whether a restricted access system is required.^[51]

Classification fees

93. The regulatory model, responsibility for content assessment and the scope of content captured under a new or reformed scheme, will affect classification costs. Who bears those costs is an important consideration.

94. Direct government regulation requires significant administration to develop policies and procedures, establish standards, support day-to-day operations, monitor compliance and enforce laws. Greater public expectations of transparency and accountability have implications for administrative workload. Statutory boards add a further resourcing and remuneration dimension. As such, government regulation can be costly.

95. The costs of the Boards classifying material, including secretariat support provided by the Attorney-General’s Department, are largely recovered through classification fees charged to industry.^[52] Some ‘public good’ activities are partly or fully government funded—for example, a substantial proportion of the cost of reviews.

96. Classification fees are prescribed in the Classification (Publications, Films and Computer Games) Regulations 2005 (Cth). Under the NCS fees are set to recover the costs of classification services.^[53] This is consistent with Australian Government cost recovery guidelines.^[54]

97. Fees are calculated according to the length of the material submitted for classification, which in turn drives viewing time and consequently the resources required to provide a classification decision.

98. Criticisms of the existing classification fee regime include:

• fees are prohibitive for smaller, independent film distributors, computer games developers and developers of mobile phone applications, which may adversely affect the development of Australian creative and digital content industries (considered to be the primary drivers of content innovation);

• fees for classifications under assessor schemes are not substantially lower to reflect that industry takes on a significant part of the classification process;

• fees are not reduced for the classification of products that are substantially the same as already classified products (eg. cinema films later released on DVD);

• fees continue to increase even though classification processes or outcomes have not changed significantly; and

• fees should be calculated on a basis other than the length of the material.^[55]

99. There is also widespread opposition to the flat fee for reviews of classification decisions. Some industry stakeholders, such as independent film distributors, consider the high fee a barrier to applying for a review even though there may be legitimate grounds for seeking a review. Likewise, community interest groups claim that the high fee ostensibly excludes them from the review process.

100. The NCS does recognise that there are applicants for whom it is difficult to comply with classification requirements due to classification costs. The Classification Act provides for full or partial fee waivers for eligible applicants under specific circumstances—for example, where it is in the public interest to do so for public health or educational reasons or for a short film from a new filmmaker with limited distribution.^[56] The processing of film festival exemptions is publicly funded, facilitating the screening of hundreds of unclassified festival films annually. A wide range of other material is also exempt entirely from classification.