John Fairfax Holdings Limited
ACN 008 663 161

How fast Australians switch to digital TV will depend on whether they find the services it offers compelling enough to pay for the equipment needed to convert to digital.

As foreshadowed in our Datacasting & Enhanced Programming Submission, multi-channelling by the ABC and SBS is an important component in making digital TV a compelling consumer offering. It will enhance the quality and variety of Australian television and encourage consumers to convert to digital.

Fairfax’s proposed definition of datacasting, which brings enhanced programming under the same regime, means that multi-channelling by the ABC and SBS can be implemented simply, without the need for additional definitions or complex conceptual distinctions.

Consumers will weigh up the value of what digital TV offers them against the cost of the equipment when deciding whether to convert to digital. For digital TV to succeed in Australia, Government and Industry need to ensure that the additional services consumers get warrant the $400-$1,000 for a Set Top Box (STB) or $7,000-$10,000 for a HDTV set.

As it stands, digital TV will offer Australian consumers three benefits:

1. Datacasting services, including enhanced programming, provided by datacasters (including Fairfax) and the Free to Air (FTA) broadcasters.
2. Enhanced picture and sound quality.
3. Potentially additional ABC and SBS channels.

As highlighted in our Datacasting & Enhanced Programming Submission, the ability to receive multiple channels has been the main driver of take-up of digital TV in the UK and France. While Australians will not be provided with 100+ new channels as in those countries, the ability to receive 2 or 3 new ABC and SBS channels will be an important factor for a significant number of consumers in the decision to convert to digital TV. Given the demographics of ABC and SBS audiences, this will be particularly important for early adopters who are typically highly educated, high income earners.

The definitions we proposed in our Datacasting & Enhanced Programming Submission allow for a simple implementation of multi-channelling by the ABC & SBS without the need for additional definitions or substantial legislative changes. By covering datacasting and enhanced programming within the one regime (so that it covers all uses of the broadcasting bands other than broadcasting), the distinction between multi-channelling and datacasting and between multi-channelling and enhanced programming is already drawn. Multi-channelling is part of broadcasting, while enhanced programming is part of datacasting. No further definitional changes are required.

All that is required to implement ABC & SBS multi-channelling is to remove the current prohibition on national broadcaster multi-channelling, while preserving the simulcast obligation, by modifying clause 35(1) of Schedule 4 to read:

"If there is a simulcast period for a coverage area, a national broadcaster must broadcast any television program broadcast in analog mode in that area simultaneously in digital mode in that area."

This will allow the national broadcasters freedom to use the digital spectrum left over after fulfilling their simulcast and HDTV obligations for both datacasting and broadcasting additional television channels in any way which is consistent with their Charters.

This proposal does not confuse fundamental differences between uses of the broadcasting spectrum (broadcasting and datacasting) with temporary or transitional obligations or restrictions in relation to the use of the broadcasting spectrum (requirement to simulcast, HDTV obligations, prohibition on commercial FTA multi-channelling). This will enhance regulatory certainty by allowing consistent definitions and concepts to be maintained over the long term.

In addition to simplifying the implementation of ABC & SBS multi-channelling as noted above, Fairfax’s proposal to include enhanced ("incidental and directly linked") programming within the datacasting regime has a number of other benefits which impact on this review.

1. By including enhanced programming within datacasting, and thus imposing the same limitations on the transmission of continuous unrepeated video and audio as apply to datacasting, a consistent approach to what is considered a separate channel is established. Continuous, unrepeated video and audio transmission below the datacasting limits may be conducted by commercial FTA broadcasters, national broadcasters and datacasters, while transmission above the limits (other than simulcast of analog mode programming) may only be conducted by the ABC & SBS.

This approach eliminates any loopholes which would be created by a separate enhanced programming category. If enhanced programming is made a separate category the commercial FTA’s could use to undermine the distinction between multi-channelling and enhanced programming, thus eroding the special status of the ABC & SBS.

2. Adopting our proposal that enhanced programming comes under the datacasting regime and that multi-channelling be part of broadcasting, simplifying the difficult task of distinguishing between four legislative concepts (broadcasting, datacasting, enhanced programming and multi-channelling) to distinguishing between two (broadcasting and datacasting). This makes the Department’s job in implementing ABC & SBS multi-channelling significantly easier.

OTHER ISSUES

Impact on Commercial FTAs

Fairfax considers that commercial FTAs are very unlikely to suffer any loss of advertising revenues due to national broadcaster multi-channelling. Firstly, it is far from clear that such multi-channelling would significantly increase national broadcaster audiences as opposed to simply providing better services to those same audiences. Secondly, given advertisers can’t place advertising on the ABC and are very limited in their ability to place advertising on SBS, it is questionable whether any audience loss would translate into an advertising revenue loss for the commercial FTAs. In any case, any advertising revenue losses from national broadcaster multi-channelling will be more than offset by additional revenues gained from datacasting.

Anti-Siphoning Provisions

The Department’s Issues Paper raises a concern that the objectives of the anti-siphoning regime may not be met if events on the anti-siphoning list are broadcast on non-simulcast ABC or SBS digital channels when only a small proportion of viewers will have converted to digital TV. Fairfax shares this concern but feels that it must be balanced against the policy objective of ensuring that digital TV is a success and that all consumers have converted to digital TV by the end of the simulcast period. Fairfax considers that while restrictions on the broadcasting of programs on the anti-siphoning list on non-simulcast channels may be appropriate for the first year or two, they should gradually be relaxed over the next two to three years so as to provide consumers with a staged incentive to convert to digital TV.

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