|
|
|
Submission of John Fairfax Holdings Limited on the Broadcasting Services Amendment (Digital Television and Datacasting) Bill 2000 Senate Environment, Communications, Information Technology and the Arts Legislation Committee, May 23, 2000 To the Committee: Fairfax appreciates the opportunity to provide this submission on the Digital Television and Datacasting legislation. In addition to an overall discussion, this paper reviews the following issues:
There is also a concluding section on the issue of migration from analogue to digital television. 1. Introduction and Summary John Fairfax Holdings is one of Australia’s leading publishing groups. Its mastheads include The Sydney Morning Herald, The Australian Financial Review, The Age, The Sun Herald, and BRW. In addition, the company publishes financial and consumer magazines, and provides online and interactive services. In 1999, the company had revenues of over $1.1 billion. Fairfax, through f2, its wholly owned subsidiary online and interactive business, is building a strong position in e-commerce and as a leading content provider on the Internet. f2 has over 2.3 million page views per day (2.4 million site visits per week) across a network of sites including news, business, investing, personal finance, motoring, sports, auctions, property, employment, freemail, search/homepage, shopping, travel, technology, city guides, and directories. Fairfax hopes the policy decisions taken by the Government, and the legislation to be enacted, will permit the emergence of datacasting as a new service to Australians. Fairfax aims to be a leader in this new area of broadband media. Fairfax has created in the past four years almost 300 new jobs in its online businesses. Datacasting has the potential to be the new broadband digital media for every home in Australia. As has been widely recognised, datacasting has the potential to deliver an enormous variety of services, some yet to be invented. This will not happen if the datacasting legislation restricts the products which may be offered to such an extent that a viable business is not sustainable. Datacasting could also deliver Internet content, rich media, and e-commerce services to the majority of Australians who do not have a computer with internet access and to those in country and regional areas who may never gain access to broadband cable or xDSL technologies and for whom a satellite connection has substantial up front costs (eg dish as well as set top box). These are important policy objectives in their own right, consistent with the Universal Service Obligation in the Telecommunications Act 1997. Just as radio leveraged off print, and television off radio and movies, in each case creating new media forms, datacasting is a potentially similar leap forward. It will bring new types of news, information, commerce, and entertainment services to homes. Fairfax supports policy choices that will bring the full benefits of digital television and datacasting to all Australian households, at reasonable cost. Australia should strive for a vigorous policy to promote new digital datacasting services to the community. In 1998, the Government doubled spectrum allocation to free-to-air networks in order to facilitate conversion to digital television. The free-to-airs were also guaranteed the opportunity to provide datacasting. As the Minister worked through the issues leading to his December 21, 1999 policy statement, most of those who want to participate in the datacasting industry, along with leaders in the consumer movement, reached a consensus on the key requirements to establishment of new datacasting services: • A broad definition of datacasting. • Technical standards that facilitate affordable, world-standard set top boxes. To this end, standard definition and high definition digital signals should be broadcast together. • Spectrum planning should allow the maximum number of new entrants. Fairfax believes that the Bill is in many respects consistent with the policy framework announced by the Minister on December 21, 1999. However, some defects need to be addressed if datacasting is to evolve from an appealing concept to being both an attractive service to consumers, and a sustainable business for service providers. The scope of services that datacasters can offer under the Bill are overly restrictive, particularly with respect to information programs, e-commerce and education. To be made more workable, and to facilitate espoused policy outcomes, the Bill needs modification. The requirement for "must carry" of a standard definition signal is a critical win for consumers and is indispensable to the uptake of digital TV. We support this requirement wholeheartedly. The Minister’s December 1999 statement guaranteeing at least two datacasting licenses for each market is welcome. However, with responsible spectrum management, through Single Frequency Networks, more 7 MHz licenses for datacasting could be available. The Committee should consider including further guidance in the Act on the achievement of efficient use of spectrum. The Bill delivers some easing of previously proposed restrictions on access to the Internet via datacasting, but in its current form is of very limited utility because it prevents datacasters deploying the most efficient means of Internet content delivery. There are serious disparities in the treatment of datacasting licensees at the end of the license term, and we urge like-for-like treatment for all broadcasting band spectrum licensees. Fairfax supports prompt enactment of an amended Bill so that the benefits of new services, new investment, innovation, increased jobs and economic growth – as well as the release of valuable spectrum tied up in analogue broadcasting – are obtained as quickly as possible. 2. Program Genres and Scope of Datacasting Services What distinguishes datacasting from broadcasting is interactivity. Television broadcasting is a passive, linear, synchronous point-to-multipoint activity. The interactive use of a broadcast signal should be defined as datacasting. We accept the Government’s decision that broadcasting must be distinguished from datacasting, but the distinction should not be on the type of content, but the nature of datacasting’s interactivity. Nevertheless, the Government has adopted a content-based approach which has led to the difficult delineation of program type in the legislation. We have serious concerns that the lack of clarity in genre definition imposes unjustified risks on new entrants, and unnecessarily creates opportunities for regulatory and litigious gaming. We outline our key concerns below: (a) News and Current Affairs Distinction Some of the distinctions between genre are difficult and inappropriate – such as the distinction, and disparate treatment, of news and current affairs. (b) Foreign Language News Foreign-language news appears to prevent English subtitles. This is unduly restrictive and could prevent cross-lingual services where one of the languages is English. This could disadvantage Australians of non-English speaking backgrounds. (c) Datacasting Must Be Boring Under the Bill, anything that is deemed entertaining is curtailed. Generally, programs with emphasis on entertainment fall into Category A (most restricted), while permitted "information-only" programs must have "little or no emphasis on dramatic impact or entertainment value." This severely handicaps datacasting services. If we are to get viewers, they have to be engaged and entertained, to some degree, by the services. These limits invite confusion and litigation and should be removed. (see also Fact, Opinion and Advice, below) (d) Category Overlap We are also concerned over the amount of overlap between types of programs, and that the whole scheme will work to capture – and therefore restrict – more and more potential datacasting programs. The legislation should also be amended so that a "bulletin" which is expressly permitted within the Category B program exceptions, for example, is not subsequently "caught" and restricted by the rules for Category A programs. (e) Fact, Opinion and Advice A useful information service very often is a combination of fact and opinion and advice, e.g. product reviews, as presently available on CitySearch and other f2 websites. Our proposed business model is premised on taking much of the content we have today on our f2 websites, adapting it for television (or other devices reachable over-the-air) to provide datacasting services. The current definition of "information-only programming" is too rigid. The definition of information-only programming should be amended to include – factual and consumer-oriented information about a wide range of products, services and community activities; and/or facilitating or enabling people to carry out transactions, but whose sole or dominant purpose is not entertainment or dramatic impact.
(f) Category A and Category B Programming Limitations Changes to some of these provisions are essential to provide viable datacasting services:
(g) Education and Children
The definition of education services is too narrow. By requiring such programming to be linked to a course of study, it works to ensures that there is certainly unlikely to be any education services for children under 12. This is particularly inappropriate considering that there are no restrictions on the offering of computer games.
(h) Constraints on Content Acquisition The Bill provides that a datacaster cannot acquire half or more of its content from a broadcaster. How this is measured is difficult to determine and is important. Video and audio files are very "weighty" in comparison with text and still pictures. This should be clarified.
3. Enhanced Programming and Electronic Program Guides Electronic program guides (or EPGs) were not referred to in last year’s policy statement. The ability to use the EPG as a launch pad to other services means the EPG can become a "portal" for TV channels, datacasting services, e-commerce, and any Internet services that are available. The Bill therefore gives the free-to-airs (FTAs) the inside running on the EPG for existing FTA services – at no charge – and potentially conferring on them a first mover advantage in this area. We believe that any EPG provided by FTAs should be on the following conditions: (a) The FTA pays a spectrum use charge. EPGs are clearly a datacasting service. (b) If an FTA provides an EPG that contains programming information about any service outside of its own offering, the information should be inclusive of all other television and datacasting services. If, for example, Channel 10 wants to restrict its EPG to information about its own services, it should be permitted to do so. But if it offers information on Channels 7 as well, it must also be required to carry information on all other FTA and datacasting programming. (c) All FTAs and datacasters should make available their service information for carriage by any other FTA or datacaster who wishes to offer an EPG. This should be a licence condition. In addition, we believe that the spectrum use charge should apply to everything other than traditional broadcasting (i.e., enhancements, multichannelling, and EPGs), as well as datacasting.
4. High Definition and Spectrum Use Issues The Bill provides for a formal review of high definition quotas in 2004. This legislation should set out the parameters of the review and relevant issues. If the uptake of HD is low, and HD quotas are lowered accordingly, the review should expressly take into account the policy assumptions behind the grant of 7 MHz of spectrum to commercial broadcasters (being directly linked to HD program services), maximum efficiency in the deployment and usage of broadcasting spectrum, and equal opportunity for datacasters to acquire and use spectrum on equal terms. The Bill also provides for a greater ABA role in planning digital channels at the end of the digital/analogue simulcast period. In our view, the current arrangements for digital channel planning appear not to provide any particular agency with the role and resources for these functions. For example, while the ABA technologists have been examining SFN issues, no adequate cost-benefit analysis has been conducted. Public-interest driven planning requires this to be rectified.
5. Internet Access and Services We are concerned that the provisions, as drafted, effectively mandate an inefficient delivery mode and do little to practically enable the provision of Internet access. There is simply insufficient spectrum to provide unfettered interactive access to the whole of the world wide web for large numbers of users. Moreover, while a datacaster can become an ISP, there is the problem that, as soon as the datacaster selects content from the web that would be available to the end user, the genre rules apply, making the service unattractive (and, we believe, unworkable), costly, and different from all other Internet access services. The objective in the Bill is good, but another means to achieve it is needed for it to succeed. We are prepared to work with the Committee on this issue. ISP issues aside, Fairfax, as a content provider on the net, does not support any restrictions on the Internet content that we wish to provide. The proposed arrangements – whereby (1) datacasters have to conform the Internet services they provide to the genre rules, while (2) consumers can generally click through unfettered to any website – are cumbersome and may prove unworkable. To resolve this, the definition of "Internet carriage service" in Clause 2 of Schedule 6 should be amended to remove the words after "Schedule 5". 7. Audio Services This is an entirely new addition to the genre rules, and appears to require that the audio component of a datacasting service be judged independently for compliance with the genre rules. Given the constraints on datacasting programming, it is critical that attractive sounds can accompany text, still pictures and the limited video that is permitted. These provisions should be relaxed or removed. 8. License Terms and Treatment The proposed Section 109A of the Radiocommunications Act provides that, from January 1, 2007, a datacasting licensee may, on obtaining the requisite license from the ABA, provide any service authorised under the Broadcasting Services Act. Other sections of the Bill (new subsection 103(5), 130(2B) and 131(2)), provide that the datacasting licenses, when issued, are for a period of 10 years, with one renewal for 5 years, and are unrenewable after that period of 15 years. There are several issues of concern to us. First, these provisions effectively reaffirm that the moratorium on new commercial television stations will in fact end, as scheduled, on December 31, 2006. This is pro-competitive, if overdue, as this moratorium entrenches the incumbent television licensees to the detriment of competition and the provision of new television and broadband services to the Australian people. Second, we welcome the potential to transform datacasting licenses into broadcasting licenses. As we indicated earlier, we do not know whether we can succeed as datacasters, given the impediments the policy has created. We want to try. It may well be that the more viable economic model emerges when the artificial constraints imposed by the Bill are lifted. However, as the legislation now stands, what will be offered for auction may be something more than a pure datacasting license and less than a full television licence, and the terms of conversion are as yet undecided. In economic terms, this structure does not optimise the value of the spectrum for those who own it, the taxpayers. An unrenewable 15 years is not a lot on which to stake the major capital investment required for a broadcasting service – which is what datacasting is. All these factors regarding the length and conditions of the license will significantly diminish the bid prices from what they otherwise would have been. Third, there are not – particularly since this digital television policy is unlikely to result in sufficient migration from analogue to digital – a limitless number of 7 Mhz blocs of spectrum that will be available, particularly in the capital cities, for new commercial television licensees. Our proposed amendments take care of that issue by permitting the evolution of datacasting licenses into broadcasting licenses. Fourth, the Bill provides that when adatacasting transmission license expires at the end of the 15 year license period, the spectrum is to be handed back for rebid. This applies if the datacaster remains a datacaster or converts and becomes a broadcaster. But these rules do not apply for the existing commercial television licensees. They retain their spectrum effectively in perpetuity. They did not bid for the analogue they hold today, or the digital spectrum that they were given, for free, by the Government. So this Bill therefore establishes two classes of broadcasters – one that rewards entrenched incumbents, and another that punishes new entrants. A fundamental principle of sound, responsible regulatory policy is like-for-like treatment of the same classes of regulated entity. New entrants should be treated no worse than the incumbent. Any deviation from this principle is arbitrary and leads to distortions in policy and economic outcomes. Either grant the (former datacaster) broadcaster renewal in perpetuity, or terminate the existing television licenses upon their normal expiration, and put their spectrum out for tender as well. Any other approach is inequitable, unjustified and unfair.
9. ABA Role and Enforcement Issues The proposed new Clause 57 of the Broadcasting Services Act potentially prevents enforcement action taken by the ABA in relation to datacasting licenses from being temporarily suspended or stayed by a court or tribunal. This means that if, upon complaint, the ABA acts to remove a datacasting service from the air, because in the ABA’s judgment it crosses the line between datacasting and broadcasting, no court or tribunal can stop it. In short, imposition of the sentence before the trial is complete. It should be anticipated that the commercial television networks, as is their absolute right, will seek zealous enforcement of the genre restrictions. Removal of a service from the air is effectively a death sentence on that service. Elemental principles of justice and due process require that irreparable enforcement action should only be imposed after all legal remedies are exhausted. The legislation should be so amended to eliminate this potential. * * * The Migration From Analogue to Digital While the Bill does not address it, there is a larger issue, reaching to the success of the entire policy for digital television, that has been of concern to Fairfax: the migration from analogue to digital. One of the major challenges of the entire digital television initiative is to ensure the prompt takeup of digital by the Australian people. There are almost no benefits to the nation from this digital television policy if few choose to bring it into their homes. It is our conviction that the country needs a market-based mechanism – rather than the regulatory exhortations implicit in the Government’s policy – to ensure that digital television is deployed. In our judgment, the Government’s policy and this legislation will fail to ensure sufficient takeup of digital television by the year 2008 so as to permit the handback of the spectrum used today for analogue broadcasting, leaving Australia with the worst of both worlds: a digital television system that is unpopular, and incumbent broadcasters sitting indefinitely on the most valuable real estate in the country, without paying a cent to occupy it. We explored these issues with the Productivity Commission in its review of broadcasting policy, which was completed in March. As the Commission’s hearings and deliberations proceeded, we noted with interest the idea that a mechanism might be established to expedite conversion to digital television, and thereby secure earlier release of the spectrum presently used for analogue transmission. The advantages of an early handback of the analogue spectrum are clear and compelling:
We proposed such a mechanism to the Productivity Commission, and these issues received extensive consideration by the Commission in its recently-concluded inquiry report, Broadcasting, released in March. The Commission made several recommendations, including the firm establishment of January 1, 2009 for the end of the simulcast period; the expedited clearance and sale of spectrum; and other measures (Productivity Commission Report at pp 233-244). We believe the legislation should be amended to direct the appropriate Departments of the Government to report by January 1, 2002, on a proposed program to ensure the universal migration of Australian television households to digital by the statutory conversion deadline of 2008. We commend this approach to the Committee. Without something like it, you should not be at all surprised if, five years from now, the Department informs you that the migration from analogue to digital has failed, and that the existing analogue television system will have to be sustained indefinitely, at an immense opportunity cost to the Nation. This can be clearly seen today. This Committee should act to avert the failure of digital television in Australia. * * * Conclusion Fairfax wants to be in a position to offer greater support for this legislation. Notwithstanding our overriding policy concerns, we believe that relatively small changes to the draft legislation will mean the difference between a workable model and one which is so narrowly constrained as to run the risk of no viable datacasting services emerging. We would be pleased to elaborate on this submission and our recommendations. We therefore want to work with the Committee to fashion additional amendments, consistent with the structure of the policy and the legislation, that will enable us to offer datacasting services, and to bring into reality the aspirations articulated by all involved in this policy initiative. |
|
Fairfax > Corporate Affairs & Media Releases > Announcements > DATACASTING
|
|
