“Appropriate” crops up a lot in the draft terms of reference for the federal government’s convergence review, on which Stephen Conroy is seeking comment until January 28. It crops up 11 times, in fact. “Appropriately competitive”, “appropriate regulatory settings”, “appropriate industry settings”, “appropriate ways to regulate content”. Some might go so far as to say there’s an inappropriate reliance on “appropriate”.

“Appropriate” has two meanings: one, which suitable or proper; the other, a verb, is to take something without permission, or to assert control over something. Which meaning do you think best describes the media industry’s reaction to media policy in the past two decades? The industry has been obsessed with trying to bend, twist or reshape that policy to fit their circumstances by reducing competition, cutting costs and increasing their revenue.

From local content on multichannels, to anti-siphoning, to news broadcasts in regional areas, to the amount of advertising time in prime time (especially the juicy election bonus of an extra minute), and the licence fee rebates this year that have helped dress up the results of the Nine and Seven networks in particular, the free-to-air TV industry has used media policy to appropriate revenue belonging to advertisers, sports rights holders and pay TV for decades and is still doing it.

Not that pay TV itself hasn’t tried to further its position by establishing what is now one of the industry’s most enduring monopolies and lobbying to avoid similar local content rules to those applying to FTAs. But they’re rank amateurs when compared to Seven, Nine and Ten.

Children’s or C classification material is another area of twisting and turning. The easing of content classification rules on the multichannels has allowed the FTAs more freedom in programming in what would normally be C times in the morning and afternoons. Restrictions on advertising in C times have been gradually tightened, but nowhere to the satisfaction of parents’ groups.

Kids’ television is a vexed issue for the industry. Quality kids’ programming is expensive, but parents utterly hate the advertising needed to pay for it. You can see down the track the wholesale abandonment of C classification programming on the FTA commercial networks’ main channels (there’ll be no “main channels” after digital switchover but there’ll be mainstream channels seeking the mass audiences that pull in the extra advertising dollars). The heavy lifting of kids’ television programming would move to the ABC, which is currently doing a reshuffle of children’s TV off its main channel and onto ABC 2 from 6am to 9am Monday to Friday.

Alternatively, after digital switchover, FTA networks should be allowed to start more channels, including a dedicated children’s channel for each network. The cost of the channels could be paid for by the wider range of ads that would be allowed in former C times on the networks’ main, mass-audience channel, especially in the mornings and on weekends.

But perhaps the biggest area of contention in the inquiry is what the government will give the FTAs (including ABC and SBS) in exchange for the analogue spectrum they currently use. More digital spectrum to block out competitors (you can already see the absurd demand for spectrum for 3D TV being pushed by the FTAs), and greater freedom to program channels according to perceived commercial need, stand out as the most obvious first-order offers.

But in the time-honoured way of Australian media policy, that means pay TV must get something as well — although rarely does pay get anything like a quid pro quo for what the FTAs get.

Foxtel and its masters have to decide what sort of operation it will be in the future. At present it is a geared operation costing very little to run while it uses up its tax losses (which are just about to run out) and returns cash to the three shareholder groups, News Ltd, Cons Media (controlled by James Packer, but with assistance from Kerry Stokes) and the blindly led main shareholder, Telstra.

But there is mounting evidence from the US that the pure cable-only operators are losing customers and revenues and face a doubtful future.

That’s partly due to the economic malaise now gripping America, but also to the upgraded business models now on offer from the likes of Comcast, Cablevision and Verizon. They’re offering high-speed internet services, which allow all forms of video streaming, bundled communications packages and other services. The cable groups that have improved their revenues and held customers this year in the US are those offering these premium services.

These can’t be offered by satellite with sufficient guarantees of speed and reliability — only terrestrial fibre networks. Foxtel and Austar (they will want to merge ahead of digital switchover) need to upgrade their networks because the NBN will be the great leveller and allow competitive offerings to emerge, especially from sports groups (which unlikely the Fetch TVs of the world aren’t caught by the anti-siphoning rules), that would either end the current sports rights set-up, or allow greater diversity of broadcasting via more outlets, but on an exclusive basis.

Foxtel at least is thinking innovatively in this area — something you’re forced to do when hemmed in by regulatory constraints — with its move this year into Xbox Live and internet delivery.

But the FTAs face the same challenge once the NBN is in place. Absent anything else, they’ll only have their brands and traditional viewing habits to enable them to stand out in a vast market of content. Only Seven seems to understand what is coming; Kerry Stokes has made some fitful investments into telephony (mobile, etc) and now seems to be heading the right way with his quasi 4G Network called Vivid.

Then there are the “known unknowns” group of online contenders. Google TV, Apple, Youtube, XBox Live, and Facebook too perhaps — all are heading down the convergence route and dragging Australia with it, first with early adopters or young audiences, and then with increasingly large mainstream audiences. The TV set is no longer controlled by broadcasters, not when most of the “content” on it is an XBox Live multiplayer game, or downloaded movies and TV shows, some of which aren’t even broadcast here.

Remember most of the traffic on the internet is illegal file-sharing of movies, TV and music. Converting that to legal, monetised traffic is the biggest regulatory/commercial challenges in content provision.

And that’s all to say nothing of the unknown unknowns, the apps and services that don’t even exist now but which in the space of a couple of years — e.g. Twitter — verge on mainstream.

We have no control over this, and, despite bizarre talk about extending local content rules to online, no obvious means to exercise control if we decided to. It’s where further big shocks to media business models will originate. If you thought the Past decade was tough for media strategists, hang on tight over the next two decades.

The central question for Stephen Conroy’s review should be, can we control this, do we need to control it, and if so in whose interests? If we try to impose standards, such as content (Australian, Childrens’) and news, how do we enforce it (via “soft” regulatory process, or via “hard” control of the infrastructure itself, which would defeat one of the purposes of the NBN)? Should all services by subject to these rules? And who should do the enforcing?

Generations of politicians have proclaimed their interest in a “technology neutral” media regulatory framework. But their very inability to see the future — and their desire to shelter their mogul mates from its impacts when it arrives — has always prevented that. It’s time for a different approach. By all means let’s have an inquiry, informing ourselves about possible future directions in the media is always valuable, but let’s not anchor it in 2012-2013 and try to control what emerges in 2015 or 2020.