When it comes to Australian media policy, spectrum access has long been at the centre of a basic deal between government and free-to-air broadcasters, that government protect incumbents, at the threat of negative coverage if they do not.

Spectrum has long been the prime real estate of Australian media, and preventing competitors from getting access to it the overarching goal of broadcasters. But as the internet shifts content delivery modes, spectrum’s role is changing for broadcasters and, more importantly, for to a range of other communications industries.

The Convergence Review straddles that transition.

During the analog era, the limited availability of broadcasting services bands in Australia meant incumbents were well-protected; there was really only enough spectrum for a single additional television licence in most larger centres and even then, reception problems in some areas meant there wasn’t even that. Governments’ continuing blanket prohibition on a fourth commercial licence looked after 7, 9 and 10, at the expense of consumer choice. Radio broadcasters had less political leverage, however, and faced both the long-delayed introduction of FM and additional AM licences in major centres, although the rules were changed to allow licensees to own two radio licences.

Then digital arrived, and threatened to wreck it all. Digital transmission, even HD transmission, consumes far less spectrum than analog signals, and the free-to-air television networks, led by Kerry Packer, rushed to ensure the Howard government wasn’t tempted to allow any competition to threaten the cartel. The result was the importation of the analog division of spectrum into digital, with broadcasters given 7MHz of spectrum each, far more than necessary to provide a service.

Kerry Packer didn’t want multichannelling either, whereas Kerry Stokes did, and Packer got his way there as well, with multichannelling banned. The figleaf for this wretched policy was the mandating of High Definition, with Packer and the Howard government pretending that was what consumers wanted, not more choice.

All that spectrum is currently estimated to be worth $1.6 billion a year in a report commissioned by ASTRA, given free to the broadcasters.

Oh, and a fourth network, even in digital-only form, remained banned. Richard Alston invented the single silliest idea in Australian media history to justify that: datacasting, where you could broadcast a service but had to make sure it didn’t have anything anyone wanted to watch.

As analog switchover looms and in the wake of the success of multichannelling, finally allowed in a limited form in the media law changes in 2006, the FTAs are now arguing that they should keep their 7MHz because of, wait for it, 3D television. But the arguments have lost their potency as spectrum has become less important as a specific broadcasting technology.

Protection from competition and access to more spectrum than they needed wasn’t all that the broadcasters got. They also demanded, and received, massive taxpayer support for the “digital switchover” process, particularly in regional areas — regional broadcasters received direct assistance; all broadcasters got taxpayer funding to tell viewers to go and buy digital equipment (what other industry has the government pay for its own advertising?); and the government is even spending money on handouts to people so that they can buy equipment to receive digital television. Assistance to regional broadcasters alone has totalled around $1.2 billion in the last decade.

And the funding hasn’t stopped yet. This has received no media attention, but in Tuesday’s budget, Labor gave the FTAs another huge handout: both commercial FTAs and the ABC and SBS will get $143 million to more quickly move off analog spectrum that is being “restacked” — that is, reallocated to other purposes once analog is switched off (sometimes that purpose might still be digital TV broadcasting, in order to address transmission blackspot issues say, in areas like the Gold Coast where reception is universally bad). That’s $143 million for broadcasters to do something they’ve known they were going to have to do for the last decade.

But wait, there’s more. The FTAs all use 2.5 gigahertz spectrum as well, not for transmission, but for internal distribution use (think live sports and news coverage). That spectrum is to be used for wireless applications, but yet again taxpayers are footing the bill — the commercial FTAs and the ABC will get another $53.5 million to move off the spectrum.

That’s in addition to the government’s decision, announced quietly earlier this year, that the commercial TV licence fee rebate will be continued for another six months, costing $70 million.

The Convergence Review has declined to take on the FTAs directly. It recommends against allocating a fourth commercial television licence, instead urging that the “sixth channel” spectrum be used for “new and innovative” services like community broadcasting. And, really, that horse has bolted. The FTAs might have prevented two generations of audiences from enjoying greater competition and diversity and established a cartel to gouge advertisers all to bolster the fortunes of Australia’s wealthiest families, but that’s in the past — Australians already have access to new sources of content and have done for a decade.

A new network would now struggle to survive, given Nine and Ten are doing it tough themselves as the media market struggles both the impact of the internet and the post-financial crisis shape of the Australian economy.What the review does recommend is a fundamental overhaul of the way government approaches spectrum. It recommends an end to the traditional distinction between Broadcasting Services Bands, which are tightly regulated by government (for political purposes, but the review doesn’t mention that) and other spectrum, which are allocated on a commercial basis, usually by auction.

What does this mean in practice? It means that broadcasting licences would be in effect delinked from access to broadcasting spectrum; accessing BSB spectrum would no longer come with the requirements of a broadcasting licence, with its content obligations and highly-regulated operation, but could be used in any way the licensee wished, including if they wanted to sub-let the spectrum to another user (something vaguely analogous happens now with digital radio multiplexes, where multiple digital radio signals are carried by a single provider, although that’s not a licensing issue).

This delinking would complement the broader approach of the review, to move right away from media regulation based on spectrum-based licence allocation. Freeing up spectrum access in this way will increase its value by ensuring the market can use it in the most valuable way, without the licensee having to provide one specific service on it.

Needless to say, this doesn’t please the incumbents. Both the FTA cartel’s lobby group, Free TV Australia, and commercial radio’s lobby group, CRA, attacked the idea of freeing up broadcasting spectrum in this way, mainly on the basis that broadcasting is, well, different to other forms of media (which is the exact reverse of the “regulatory parity” argument invoked by the broadcasters in others areas) and that it would reduce the value of incumbents’ licences. This is yet another re-run of the oldest tension in the Australian media industry, between incumbents who want to retain the status quo and potential innovation and services more responsive to consumer needs.

There are some positives for the incumbents, though: the review recommends greater certainty for licensees, with a simpler licence rollover process when licences expire. It also recommends that ministerial powers to reserve and allocate spectrum based on policy objectives be preserved, ensuring there is a political mechanism for interfering in allocation processes.

The review also recommends that the current licence fee approach, in which licensees pay a fixed level of their revenue, be abandoned in favour of the new media regulator determining the actual value of the spectrum and charging an annual fee based on that. Free TV, of course, simply argued broadcasters should pay a lot less — an outcome that the government appears only to willing to enable.

Nonetheless, content distribution is now moving into what might be, not entirely accurately, termed a post-broadcasting future, particularly given the arrival of the NBN. In that future, content distribution is via whatever means works most effectively for users — for example, broadband for heavy-duty traffic, wireless for mobile delivery, satellite for remote locations beyond the reach of normal infrastructure. The more flexible model proposed by the Review will facilitate that future.

All it needs is a government willing to take the unprecedented step of telling the FTA cartel that it can’t have everything it wants.