Chapter 1
Introduction
1.1 On 24 March 1998, the Minister for Communications, the Information
Economy and the Arts, Senator the Hon. Richard Alston, announced that
the government had adopted a policy of requiring the television Free-to-Air
broadcasters (FTAs) in Australia (both commercial and national) to commence
digital terrestrial television broadcasting (DTTB) in metropolitan areas
by 1 January 2001.
1.2 Digital transmission allows the broadcast of widescreen, cinema quality
programs with surround sound (High Definition Television (HDTV) into the
home. It provides clearer, sharper pictures without the interference and
ghosting common in analog transmission in many built-up or hilly areas.
In addition, it allows for more efficient use of spectrum than the current
analog transmission. This enables DTTB to allow for the provision of multiple
standard television services within the same spectrum channel and/or for
the provision of multiple information streams (datacasting) to be received
by digital television reception equipment. [1]
1.3 The Minister's announcement stressed that the provision of HDTV services
to Australian consumers would be a major element of the introduction of
DTTB in Australia but that a simulcast period of at least 8 years (to
2008) would ensure that `Australians who retain their analog television
sets will not be disadvantaged.' [2] A review,
before the end of 2005 would determine whether that simulcast period of
eight years should be extended.
1.4 The Minister also announced that, with the introduction of DDTB,
broadcasting spectrum not required by the FTAs for digital conversion
will be made available for the introduction of datacasting services. This
`extra' spectrum would be allocated on a competitive basis.
1.5 Since an obligation was being imposed on the national and commercial
FTA broadcasters to broadcast both in analog and digital for a period
of at least eight years, the government would `loan' those players the
7 Megahertz (MHz) of spectrum required for broadcasting digital High Definition
Television (HDTV) free of charge. [3] At the
end of the simulcast period each of those broadcasters (who would have
used two 7 MHz channels to transmit in both analog and digital over a
number of years) would be required to return 7 MHz of spectrum to the
government.
1.6 The government introduced the Television Broadcasting Services (Digital
Conversion) Bill 1998 and the Datacasting Charge (Imposition) Bill 1998
into the House of Representatives on 8 April 1998. The Television Broadcasting
Services (Digital Conversion) Bill 1998 amends the Broadcasting Services
Act 1992 and the Radiocommunications Act 1992 to provide a
basic framework for the conversion from analog to digital television transmissions.
The Datacasting Charge (Imposition) Bill 1998 provides for the imposition
of a charge (by the Australian Communications Authority) in relation to
the provision of datacasting services.
1.7 On 13 May 1998, the Senate Selection of Bills Committee reported
to the Senate that it had agreed that the bills should be referred to
a Senate Committee for inquiry. It did not, however, reach a decision
on the appropriate Committee or the reporting date. The Selection of Bills
Committee raised a number of issues for consideration and this Committee
has sought to address those in this report.
1.8 The Committee notes that the Senate Standing Committee for the Scrutiny
of Bills, in a report tabled in the Senate on 13 May 1998, commented on
the Datacasting Charge (Imposition) Bill 1998. The Scrutiny of Bills Committee
raised a concern relating to the imposition of a levy by regulation. The
datacasting charge imposed by the bill is to be determined by the Australian
Communications Authority. The Scrutiny of Bills Committee sought the advice
of the Minister for Communications, the Information Economy and the Arts
on why the legislation places no upper limit on the power to set a rate
of levy by regulation, as previously recommended by that Committee in
relation to such levies. [4]
1.9 On 14 May 1998 the Senate referred the bills to the Environment,
Recreation, Communications and the Arts Legislation Committee for inquiry
and report by 22 June 1998.
1.10 The Committee wrote to organisations with an interest in the television
industry inviting them to make submissions to the inquiry. The inquiry
was also advertised in The Weekend Australian on 16 May 1998, The
Australian Financial Review on 18 May 1998 and on the Internet. The
Committee received 32 submissions (18 of which had supplementary submissions
added to them) and these are listed at Appendix 1.
1.11 In recognition of the rapidly changing technological environment
that is at the core of this legislation, the Committee held a private
briefing on technical issues for all Senators and staff at Parliament
House in Canberra on 27 May 1998.
1.12 At three public hearings held in Canberra on 1 June, 5 June and
12 June 1998, the Committee heard evidence from 57 witnesses. Details
of witnesses who appeared at the public hearings are in Appendix 2. A
list of tabled documents and of Additional Information provided to the
Committee is at Appendices 3 and 4 respectively.
1.13 The Committee expresses its appreciation to all those who briefed
the Committee, and to those who made submissions, provided additional
material and information as requested and gave oral evidence to the inquiry.
1.14 Of the 32 submissions received by the Committee, 11 addressed a
range of issues central to the bills. Issues raised by that group of submissions,
many of whom came from major players in the television and media industries,
included concern about spectrum allocation, about possible unfair competition
from the freetoair broadcasters and about the powers to make regulations
given to the Australian Broadcasting Authority (ABA) under the legislation.
1.15 Those submissions also expressed various positions regarding the
benefits of multi-channelling and the timing of the introduction of widespread
multi-channelling and datacasting services. The importance of reaching
early agreement on which standards would apply from the start of the conversion
process was also raised.
1.16 Five submissions were concerned exclusively with the introduction
of enhancements to assist people with disabilities (three submissions,
Nos. 6, 7 and 11, dealt with closed captioning for the hearing impaired
and two, Nos. 31 and 32, with audio description for the blind). Another
two submissions addressed exclusively the issue of Australian content
(Nos. 1 and 25).
1.17 Of the submissions that addressed a range of issues covered in the
legislation, two submissions came from regional television stations, one
being a submission from a group of regional broadcasters in aggregated
markets (No. 8) and one from several solus market operators (No. 9). Two
came from the Internet and online industry associations and focussed on
the datacasting implications of the bills (Nos. 24 and 26).
1.18 The Community Broadcasting Association of Australia supported the
inclusion of community broadcasting in the planned migration to digital
television transmission (No. 12). The Australian Consumers Association
(No. 30) called for due consideration to be given to the interests of
consumers. One submission (No. 22) from the University of Southern Queensland
staked the claims of educational services, particularly university distance
education, to access to digital terrestrial television. Seven submissions
(Nos. 16, 17, 18, 23, 27, 28 and 29) came from individuals and small organisations
concerned with various aspects of the proposed conversion to a digital
environment.
1.19 In the following chapters, the Committee deals with the various
issues raised during its inquiry in terms of the perceived effects of
the bill on the multiplicity of players in the broadcasting, media and
information industries and on the target of those industries, the Australian
consumer.
Adequate preparation
1.20 In considering how adequately the Australian television broadcasting
industry will be prepared for the commencement of digital broadcasting
in metropolitan areas, by 1 January 2001, the date set in the Television
Broadcasting Services (Digital Conversion) Bill 1998, the Committee was
faced with a dilemma that often arises in connection with the introduction
of new and everchanging technology: where to begin such an assessment?
1.21 The Federation of Australian Commercial Television Stations (FACTS),
the Department of Communications and the Arts and the Australian Broadcasting
Authority all suggested to the Committee that adequate preparation could
only begin after the enabling legislation (the bills subject to this inquiry)
was in place:
The timetable for achieving the starting date of 1 January 2001 is so
tight that early passage of the legislation is absolutely essential. Stations
need the certainty provided by legislation to commit the multi-million
dollar sums required for capital equipment and other digital implementation
costs. [5]
1.22 The SBS provided evidence to the Committee that:
Really, we have to decide what we are going to do from a programming
point of view, before we can finalise the costings for digital.
…We will be making a call on the government for some part of additional
costs…But if I can put it to you this way: until the legislation
is agreed, until the NTA sale arrangements are finalised… We do not
know what standard is going to be accepted by the Australian government
at the moment because there are two competing systems. So there are a
lot of variables at the moment. [6]
1.23 The national broadcasters, the Australian Broadcasting Corporation
(ABC) and the Special Broadcasting Service (SBS), are dependent on government
funding before they can embark on an enterprise of the magnitude required
by the migration from analog to digital television.
Cost to broadcasters
1.24 The Committee was told that the total cost of conversion to the
ABC over five years would be $150 million, part of which the ABC would
be able to raise itself through property sales. [7]
The Committee notes that the ABC has the most extensive regional network
in Australia and that as a result its conversion costs are likely to exceed
that of other networks.
1.25 The Committee notes also that the government has provided $20.8
m over five years in the 1998-99 Budget to assist the ABC to upgrade its
equipment from analog to digital. The government's announcement stressed:
…that the Budget funding announced today is only the first step
in meeting the ABC's funding requirement. Today's funding will give the
ABC the certainty and flexibility it needs to continue the digital upgrade,
while at the same time encouraging it to maximise revenue from other sources,
particularly property rationalisation. [8]
In regard to additional funding for transmission costs, the ABC gave
evidence to the Committee that:
Our own view is that, when fully implemented, we would expect the accrued
sum of money that we would require from the government in order to transmit
across Australia in digital format would be in excess of $30 million per
annum. [9]
1.26 The Committee notes also that the SBS received $17.7 million over
five years in the 1998-99 Budget to assist with the upgrade of its equipment
and facilities to digital.
1.27 The Federation of Australian Commercial Television Stations (FACTS)
argued that over the first five years of the simulcast period, its 46
stations would have to spend between $500 and $750 million in capital
expenditure which it described as `the compression of 10-15 years' expenditure
into five years'. [10] This amount was challenged
by other witnesses to the Committee. [11]
1.28 Regardless of the exact amount of capital expenditure required,
the Committee recognises that substantial sums are involved for both national
and commercial free-to-air broadcasters and it accepts the argument put
before it that legislative certainty would facilitate the preparation
of the television networks for the conversion to digital transmission.
1.29 There was general agreement in all the submissions that referred
to the capital expenditure involved that regional television stations
face even higher costs than the metropolitan networks in preparing for
conversion to digital terrestrial television broadcasts. That issue is
considered in Chapter 5 of this report.
Cost to consumers
1.30 The Committee was told that it would have to rely on estimates in
relation to the availability of digital television sets and of set top
boxes overseas because both the United States and the United Kingdom were
yet to start digital broadcasts. [12] Similarly,
the Committee had to rely on overseas prices for the probable cost of
digital television sets capable of receiving HDTV.
1.31 Estimates of cost to the Australian consumer ranged from A$ 500
at first for a set top box, which would enable viewers to receive a digital
signal through their current analog set. (This is expected to come down
to about A$ 100 as demand increases). [13]
Set top boxes enable the user to receive a digital signal in standard
definition (but with `ghosting' eliminated), to select multiple channels
once they become available, and to receive other data that is transmitted
digitally. A digital television set to receive High Definition TV was
estimated to range from A$ 6,000 to A$8,000 initially with further price
decreases taking it down to about A$ 3,000 as take-up rates increased.
[14]
1.32 The Australian Consumer Association pointed out that in Japan, `prices
continue to be in the order of $7,000 to $8,000' [15].
A Price Waterhouse document earlier this year put the price of Japanese
analog HDTV sets at A$ 6,000. [16] The Committee
recognises that these prices relate to sets that deliver HDTV through
an analog, satellite system and that there are limited digital terrestrial
receivers currently in production from which an accurate indication of
prices can be sourced.
Consumer education
1.33 The Committee is aware that the free-to-air commercial television
broadcasters have run a series of advertisements which began in March
1998 to draw the attention of the viewing public to the advent of high
definition television. Given the pervasiveness of television as an information
and entertainment medium, the Committee believes that much remains to
be done in the area of educating the Australian public about the possibilities
offered by digital transmission and its likely implications for consumers.
1.34 In the Committee's view, the ABA has a role to play in educating
the public and in ensuring that consumers have adequate information on
which to make purchasing decisions.
Recommendation 1
The Committee recommends that the Australian Broadcasting Authority
(ABA) conduct an education campaign to make consumers aware of the planned
changes, of what they mean to consumers and of the possibilities of digital
terrestrial television broadcasts.
Footnotes
[1] Senator the Hon Richard Alston, Minister
for Communications, the Information Economy and the Arts, Digital:
a new era in television broadcasting, Media Release, 24 March
1998, 21 pp. Also at
[2] As above
[3] A diagram of the frequency spectrum can
be found at page ix at the end of the Glossary.
[4] Senate Standing Committee for the Scrutiny
of Bills, Alert Digest No 6 of 1998, 13 May 1998, pp. 13-14. The
Minister's response had not yet been received at the time of writing.
[5] Submission No. 2 (Federation of Australian
Commercial Television Stations), p. 17.
[6] Transcript of evidence, p. 117 (Mr Milan)
[7] Senate Environment, Recreation, Communications
and the Arts Legislation Committee, Consideration of Budget Estimates,
11 June 1998, p. 282 (Mr Johns)
[8] Senator the Hon Richard Alston, Minister
for Communications, the Information Economy and the Arts, New Digital
Era for the ABC and the SBS, Media Release, 12 May 1998. Also at
[9] Transcript of evidence, p. 29 (Mr McGarrity)
[10] Submission No. 2 (Federation of Australian
Commercial Television Stations), p. 8-9.
[11] Submission No. 14a (Australian Subscription
Television and Radio Association), p. 3.
[12] Transcript of Evidence, p. 164 (Mr Crothers)
[13] Submission No. 2 (Federation of Australian
Commercial Television Stations), p. 7.
[14] Submission No. 2 (Federation of Australian
Commercial Television Stations), p. 6.
[15] Transcript of Evidence, p. 165 (Ms Bun)
[16] EMC Technology Forecast 1998, Price Waterhouse,
p. 50