Chapter 4 - Retransmission
Introduction
4.1 The retransmission provisions in the Broadcasting Services Amendment
Bill 1998 emerged as the key issue in this inquiry. During its consideration
of these provisions of the Bill, the Committee focussed predominantly
on the introduction of a "consent" regime in respect of the
use of free-to-air TV signals by the subscription television (PayTV) industry
and other non-self help retransmitters.
4.2 The Broadcasting Services Act 1992 (BSA) currently allows
retransmission of free-to-air television services, without permission
or compensation to either the originating broadcasters or holders of copyright
to the material retransmitted (referred to as the underlying rights holders).
The pay-TV industry consequently can freely retransmit the free-to-air
channels as part of the package provided to subscribers, a practice that
the free-to-air industry has sought to change for some time.
4.3 The proposed Broadcasting Services Amendment Bill will introduce
a requirement for the pay-TV operators to seek the consent of free-to-air
broadcasters before using their transmissions. However, the scope of the
bill does not extend to the issue of compensating underlying rights holders.
The scope of these changes caused some confusion during the inquiry.
4.4 The free-to-air TV industry largely supports the changes proposed
in the Bill. For this group, the central issue is restoring ownership
and control of their signal. However, elements of the free-to-air industry
considered that some aspects of the legislation, such as the remote area
provisions, require amendment.
4.5 Not surprisingly, the pay-TV industry is concerned at many of the
provisions, arguing that it is in a relatively weak position compared
to the free-to-air industry as a result of the regulatory method proposed
in the Bill. The pay-TV industry contended that the future of retransmission
may be threatened by the 'consent' regime. The free-to-air industry maintains,
however, that it does not intend to prevent retransmission.
4.6 Many pay-TV subscribers are also apparently concerned about their
future access to retransmitted free-to-air channels via cable, and the
Committee received a large number of submissions and letters on this issue.
A considerable proportion of this group is particularly concerned about
the poor quality of TV reception using conventional aerials.
4.7 The following sections of this chapter address the issues canvassed
in this introduction, examining in order:
- The current legislation and proposed changes;
- Scope of the legislation;
- Ownership and control;
- pay-TV industry views;
- Consumer and viewer interests;
- Future of retransmission;
- Compensation for underlying rights holders;
- Remote area exemptions;
- Enforcement remedies; and
- Definition of retransmission.
Current legislation and proposed changes
4.8 Section 212 of the BSA allows the retransmission of programs transmitted
by a national broadcasting service, commercial broadcasting licensee or
community-broadcasting licensee. While relatively broad in its scope,
this clause was originally included in the BSA to allow small communities
to use the retransmitted signals within the license area of the primary
broadcast to obtain a signal or rectify poor reception, without breaching
broadcasting and copyright law. [1]
4.9 When pay-TV licensees began operations in Australia in 1995, FOXTEL
took advantage of this provision to add free-to-air programs to its service,
thus offering subscribers a "one-stop-shop". The commercial
free-to-air broadcasters commenced proceedings in the Federal Court to
restrain FOXTEL from retransmitting their services. They argued that section
212 of the BSA must be given a strict interpretation and therefore did
not apply to FOXTEL's retransmission of their signals.
4.10 The Federal Court rejected this argument and held that simultaneous
and unaltered cable retransmissions of free-to-air television services
were permitted under the current provisions of the BSA and the Copyright
Act 1968. The commercial broadcasters appealed the decision but, in
April 1996, the Full Federal Court dismissed their appeal.
4.11 The practical outcome of the decision is that almost any person
can retransmit the programs of a free-to-air broadcaster, without restraint.
As a result, pay-TV operators continue to retransmit free-to-air television
without compensating copyright owners or seeking the permission of the
free-to-air broadcasters.
4.12 The Broadcasting Services Amendment Bill will change this situation,
requiring pay-TV operators to seek the consent of free-to-air broadcasters
before using their transmissions. This will effectively validate the proprietary
rights of the original broadcasters who will consequently be able to set
the terms and conditions under which their broadcasts may be retransmitted,
which may include the payment of fees.
4.13 The legislation contains a number of exemptions from the retransmission
"consent" requirements for self-help providers and persons in
declared remote areas. Under these exemptions, organisations such as community
groups, bodies corporate of blocks of units, hotels and remote communities
can legally retransmit the free-to-air signals without consent, as is
the current practice. These provisions are intended to assist people in
situations where signal quality is poor or non-existent.
Scope of the legislation
4.14 There are two distinct issues within the changes to the retransmission
regime. These are:
- the issues relating to the broadcast signal copyright; and
- the rights of the underlying copyright holders whose material is transmitted
and retransmitted. The existence of the two separate issues has the
potential to cause confusion.
4.15 The Broadcasting Services Amendment Bill 1998 addresses the first
issue only and covers broadcast signal copyright (referred to as a proprietal
right during the inquiry). Passage of the legislation will require pay-TV
operators to seek the consent of the holders of the broadcast signal copyright
and may give rise to payments by pay-TV operators to the networks for
the use of their signals. These payments will not include any portion
covering the rights of owners of the copyright material rebroadcasted
(referred to as the underlying rights holders).
4.16 Ms Jane Marquard of the Nine network explained the distinction between
the two copyright issues for the Committee's benefit:
…What we are dealing with here are two completely separate sets
of copyright. The set of copyright that we are interested in is the
copyright in the broadcast signal. The copyright in that broadcast signal
is not the copyright in individual programs which make up that signal.
…It is the creativity which has joined those programs together
into an interesting schedule. That is the creative process which is
being rewarded. …That is the broadcast copyright which we say we
should be recompensed for when it is retransmitted by pay. It is completely
and utterly separate to the copyright which underlying rights holders,
which are the script writers, producers and everybody else, are claiming
in each individual program which is being transmitted. [2]
4.17 The Government has indicated that it intends to introduce complementary
amendments to the Copyright Act. This future legislation will address
the issue of payments to underlying copyright holders.
4.18 The representatives of the Federation of Australian Commercial Television
Stations (FACTS) advised the Committee that they regarded the legislation
as flawed because of the absence of the copyright amendments:
…we think the bill as it stands is defective in that it presupposes
the existence of the copyright amendments to enforce some of the key
provisions of the broadcasting amendments. We believe that the bill
should be amended so that effectively the broadcasting retransmission
scheme is self-contained. Obviously, it is important that the copyright
amendments come on with reasonable speed, but we think that there is
a clear and urgent case for making the broadcasting amendments and there
are good grounds for approaching it in two stages. [3]
4.19 Mr Tom Mockridge of the Australian Subscription Television and Radio
Association (ASTRA), made similar comments:
While this bill opens up the possibility of negotiation with the broadcasters
for a further payment, there is a great deal of uncertainty as to how
that is to interact with the Copyright Amendment Bill .We believe that
the two issues should be handled at once. [4]
4.20 However, Mr Branigan made it clear to the Committee that while he
thought it would have been preferable for the changes to the Copyright
Act to be introduced simultaneously, FACTS regarded restoration of broadcasters'
control over their signals as urgent. Clearly, FACTS would not support
delaying the current legislation for the complementary copyright legislation.
The ABC and SBS supported the FACTS position, advising the Committee that
'we should not wait for passage of the copyright legislation for this
legislation to be put into effect'. [5]
Ownership and control
4.21 The central issue in retransmission is ownership of and control
over the free-to-air signal. The Federation of Australian Commercial Television
Stations (FACTS) submitted to the Committee that under the current arrangements,
the pay-TV industry is 'appropriating broadcasters' property with impunity'.
They argue that this practice is 'totally contrary to basic intellectual
property and broadcasting principles.' [6] FACTS
maintained that broadcasters' rights should be respected and properly
remunerated, as is the case with all other types of copyright. [7]
4.22 Mr Tony Branigan, General Manager of FACTS, advised the Committee
that his organisation's priority is to restore control over how their
signal is used:
…we are not, as a fundamental proposition, saying that retransmission
is a bad thing and should not be allowed to happen. Quite the contrary.
We are saying that there may well be cases and very general cases where
retransmission is in everyone's interests, including broadcasters.All
we are saying is that it should not be something that is totally outside
our control and involve a signal which is other than the signal which
we generate,whether it is because the quality is not maintained in some
way or because it is not the complete signal. We simply want a modicum
of control over the way in which our signal is retransmitted,more than
a modicum; we think we should have absolute control. [8]
4.23 FACTS maintains that the pay-TV industry is a serious competitor
to the commercial stations that exploits an anomaly in the Broadcasting
Act to enhance the commercial package it sells to consumers. FACTS is
clearly concerned about the future impact of pay-TV on its industry's
revenues:
There are already over half a million or more households which currently
receive free-to-air services via pay-TV. pay-TV competes for audiences,
programs and increasingly, for advertising. pay-TV penetration rates
are expected to increase to 30% in the next few years. [9]
4.24 FACTS also contended that it was essential that the networks control
their signals in order to guarantee 'quality for consumers'. They advised
the Committee that currently, they cannot control:
- the quality of the retransmitted signal;
- the channel number it is given;
- whether free-to-air closed captioning services for the hearing impaired
are carried; and
- whether teletext services are carried.
4.25 Mr Tony Branigan, General Manager of FACTS, illustrated FACTS' argument
about the implications for quality control by referring to levels of "outage"
(that is, loss of transmission) experienced by pay-TV viewers of the free-to-air
channels. He and other FACTS representatives also claimed that the pay-TV
signals were subject to excessive outages, well beyond those that would
be acceptable for the commercial industry. He contended that viewers did
not distinguish between the pay-TV and the free-to-air signal, and the
networks' reputation suffered accordingly:
…with free-to-air signals, it is very rare for the signal to disappear
for more than a few seconds at a time. With pay-TV it is not uncommon
for much longer breaks in the signal to occur. Unless there are proper
signal monitoring procedures in place, the pay-TV company may not pick
this up for some time. Naturally, viewers hold television stations responsible
for the signal they are receiving. We inevitably get the blame and we
suffer the damage, which is lost viewers and lost reputation.. [10]
4.26 FACTS therefore strongly supports the Government's initiative. Mr
Branigan indicated that the issue had been of concern to FACTS for some
time:
It is a commitment by the government that dates back to early 1996.
We were hopeful that the legislation would be introduced in the latter
part of 1996. The protracted negotiation with an amazing range of interests
has held it up until this year. We find ourselves extremely frustrated
that this situation of no applicable legislation,which has existed for
almost three years now,seems likely to continue even longer. We think
that the issue of broadcasters' control over their signal has to be
resolved very quickly, and that that is the basis for sensible long-term
arrangements with cable companies about retransmission. [11]
4.27 The two national broadcasters, the ABC and SBS, also largely support
the legislation. The ABC, the SBS and other organisations suggested, however,
that the Government amend a number of sections of the legislation relating
to:
- remote area retransmissions; and
- enforcement remedies.
4.28 These issues were outside of the main focus of the Committee's inquiry
but are discussed briefly at the end of this chapter.
pay-TV industry views
4.29 The pay-TV industry, represented during the inquiry by the Australian
Subscription Television and Radio Association (ASTRA), opposes the Government's
proposed changes. ASTRA favors continuing with the current legislative
arrangements or introducing a "must carry" requirement. "Must
carry" is an alternative regulatory option that requires pay-TV operators
to carry all free-to-air services in the license area. (This option is
described and discussed at the end of this section.)
4.30 ASTRA submitted to the Committee that cable TV is 'simply another
means of delivering free-to-air television to the home', maintaining that
viewers should be permitted to receive their free-to-air television any
way they choose. [12]
4.31 Similarly, FOXTEL, a pay-TV operator, submitted that retransmission
of free-to-air programs is 'a consumers service provided by FOXTEL to
its subscribers at no charge'. FOXTEL also pointed out that there is no
discernable difference for viewers when they receive the free-to-air service
via cable:
FOXTEL's retransmissions do not alter either the programming or the
advertising content of free-to-air broadcasts. Each broadcaster is carried
by FOXTEL in its usual channel position. For example, the ABC is carried
in the channel 2 position on FOXTEL, the Seven network occupies channel
7, the Nine network channel 9, the Ten network channel 10, and SBS channel
28. [13]
4.32 ASTRA argued that retransmission occurs at no cost to either broadcasters
or underlying rights holders [14]. ASTRA further
argued that retransmission benefits the free-to-air broadcasters and their
advertisers by increasing their reach.
4.33 ASTRA also contended that retransmission greatly benefits consumers,
in two regards:
- subscribers can conveniently switch from subscription services to
free-to-air (using a single remote); and
- reception quality of free-to-air services is improved. [15]
4.34 ASTRA expressed disquiet about the "consent" regime established
by the legislation. ASTRA's major concern is that the bill is heavily
weighted in favor of the commercial stations as it "provides the
free-to-airs with the absolute discretion to deny cable operators the
ability to retransmit". [16]
4.35 Mr Tom Mockridge of ASTRA emphasised that the pay-TV industry was
in a relatively weak bargaining position. He argued that consequently,
the free-to-air broadcasters would be in a position to demand substantial
fees from the fledgling pay-TV industry, which might mean that some operators
would not carry the signal:
…given the current relative strength of the pay-TV industry in
Australia as a start-up industry relative to the free-to-air broadcasters,
which are a protected industry, an incumbent industry, we do not have
much leverage against them. The outcome of that could very possibly
be that a significant fee is charged for this which will leave us with
the choice of either paying that and having to pass it on to our subscribers,
or attempting to pass it on, or not paying it and not carrying the service.
4.36 ASTRA maintained that if the Government introduces a "consent"
regime, it should also include a mechanism for arbitrating between the
parties where the parties have failed to finalise a retransmission consent
agreement. They considered that the legislation needs such a dispute resolution
mechanism to compensate for the pay-TV operators' lack of leverage against
the commercial broadcasters in any negotiations. They believed that the
Copyright Tribunal would be an appropriate arbitrator.
4.37 FACTS, however, opposed the concept of an arbitrator:
Such a proposition would fundamentally shift the right from the right
of a broadcaster to authorise carriage of its signal to a right of the
Pay TV operator to carry the signal subject to the payment of remuneration,
or equitable terms. Given the principle that the broadcaster should
be able to control its signal, such a rebalancing of "rights"
is not appropriate and gives pay-TV an unwarranted bargaining advantage.
And as a matter of practice, it would seem inappropriate that a third
party impose terms of carriage, particularly when those terms may relate
to a range of matters other than remuneration. [17]
4.38 The Committee sought information from officers of the Department
of Communications, Information Technology and the Arts as to whether it
was possible that the consent regime could lead to a discontinuation of
services. Dr Beverly Hart, Assistant Secretary, Licensed Broadcasting
Branch, confirmed that this was correct, and indeed implicit in the nature
of a "consent" regime, which would be ineffective without such
a power:
The idea is that, if you give somebody a consent with one hand, to
take it away with another has a certain illogicality to it. At the same
time, there are protections built into the legislation for particularly
vulnerable areas such as remote areas and so on. But, for the general
consent regime, that is true. [18]
4.39 The Committee considers that the prospect of any anti-competitive
practices drawing the attention of the Australian Competition and Consumer
Commission will help ensure that the parties concerned adopt a reasonable
and realistic approach when negotiating terms and conditions for retransmission
.
"Must carry"
4.40 "Must carry" is an alternative regulatory system to that
proposed by the Government in this legislation. The United States pay-TV
(or cable TV) industry operated under this regime from its inception until
recent years. Under a "must carry" regime, pay-TV operators
are obliged to retransmit the free-to-air signals, and must do so under
predefined conditions. The effect of a must carry regime is to guarantee
signal access for the cable operators, while preventing them from "switching
off" the free-to-air operators' signals if and when they consider
these signals are no longer required to attract market share. The Department
of Communications, Information Technology and the Arts evaluated this
option, as explained in the explanatory memorandum for the bill.
4.41 The Committee questioned industry representatives concerning their
attitudes to a possible "must carry" regime. Mr Branigan of
FACTS agreed that such a regime would be a 'huge improvement' on the current
unregulated situation. However, he questioned whether there was any need
for such a regulated arrangement when differences between the parties
could be solved as part of commercial negotiations:
I believe that the market will work to assure the sorts of retransmission
arrangements that we are arguing for. …All I am suggesting is that
a complicated regulatory scheme is not necessary if the market will
do the job, and I believe that the market will because both sides have
good negotiating positions. [19]
4.42 ASTRA, however, strongly favoured "must carry" over the
proposed "consent" regime.
4.43 Mr John Porter, Managing Director of Austar Entertainment (a satellite
based pay-TV provider) advised the Committee that "must carry"
had operated successfully in the United States for over thirty years:
In the larger areas it was quite a workable regime for the first 30
years of the cable industry. In fact, it served with great benefit to
the free-to-air television business, as it did not have to invest extensive
capital in translators and types of propagation technology because there
was good take-up of the cable service to get the signal. So it was quite
a simple regime which resulted in a standard copyright payment and was
of great benefit to both industries and consumers.
4.44 Representing FACTS, Mr Branigan contended however that when United
States legislators moved to re-introduce "must carry", the pay-TV
industry strongly opposed the initiative:
When `must carry' was reintroduced in 1992 as part of the new retransmission
regime in the United States, there was a unanimous chorus of protest
from the American cable industry to the effect that, if they had to
carry broadcasters, they would have to drop pay services wholesale and
that this would cost them dearly, disadvantage subscribers, et cetera.
4.45 The two national broadcasters, the ABC and SBS, presented different
opinions about "must carry". Representing the ABC, Ms Judith
Walker, General Manager, Legal and Copyright, advised the Committee that
it had always been the ABC's position that its primary support is for
"must carry". [20] It should be noted
however, that the ABC is nonetheless broadly supportive of the Government's
legislation.
4.46 The SBS, however, prefers the Government's "consent" model.
Ms Chris Sharp explained how the SBS had originally preferred "must
carry" but had come to prefer the consent option:
Originally our position was that we would prefer `must carry' for,
once again, the public interest reasons about being national broadcasters.
For many of the reasons that have already been outlined by FACTS this
morning, that turned out to be quite a difficult path to go down. We
are very supportive of the way in which the legislation is going at
the moment. [21]
Consumer and viewer interests
4.47 As noted above, the pay-TV industry maintains that retransmission
benefits consumers because this improves signal quality. The Committee
received a large number of submissions and letters from pay-TV subscribers
who complained that they were unable to receive a good quality signal
through conventional aerials. They contended that they receive an inadequate
signal because of unfavorable local terrain and buildings and other structures,
which caused interference and ghosting. These people expressed strong
concern that they might lose their access to the free-to-air services
via cable as a result of the legislation.
4.48 A NEWSPOLL survey commissioned by FOXTEL also reflects viewers'
concerns about signal quality, 44 per cent of subscribers stating that
reception of the free-to-air signal would be worse if it were necessary
for them to watch these channels vial aerial. [22]
4.49 The Committee received a submission from the State Government of
Western Australia that also expressed concern about the possible adverse
effects for consumers in WA if retransmission ceased. While it broadly
supported the legislation, the WA Government recognised the value of retransmission
as a method of overcoming poor signal quality. Accordingly it argued that
payments for retransmission in WA should be nominal in poor signal areas
because of the current unprofitability of the pay-TV industry in that
State:
However, considering profitability problems with the pay television
industry in Western Australia, the payment for retransmission should
be nominal. This would apply in areas where the Free-to-air (FTA) stations
are available, but viewers may experience problems with reception due
to hills and other interference. In particular, this would be useful
for SBS which has the poorest coverage…The Western Australian Government
has concerns that if agreement cannot be reached between FTA and subscriber
service operators, viewers must use two remote controls to receive all
channels and must retain VHF and UHF antennas, a situation which is
against consumer interests. [23]
4.50 FACTS, however, disputes the extent of transmission problems. Mr
John McAlpine of Network Ten advised the Committee that the vast majority
of viewers had no problems with reception:
There are areas, certainly in the Sydney market, where we have a problem.
But I would say that, out of our 98 per cent penetration, 97 per cent
of that penetration does not have a reception problem, that is, a problem
with the broadcaster. The individual may have a problem with his antenna
being 30 years old, but, with our penetration in those areas, I would
put it as close as 97 per cent would not have a problem with reception.
[24]
4.51 Clearly, there are significant differences of opinion between the
free-to-air operators and others about reception quality. FACTS agreed
to examine the many letters received by the Committee to see if there
was any discernable pattern to the complaints about poor reception, but
found no discernable geographic pattern.
4.52 The Committee received a very comprehensive submission from Mr Douglas
Kelso of the Centre for Research on Communication and Information Technologies
(CIRCIT) in which he explained that there are many and varied reasons
why viewers may experience problems with television reception, ranging
from faulty or badly adjusted aerials to local terrain.
4.53 Mr Kelso advised that free-to-air broadcasters are unable to and
do not guarantee the quality of reception of their signals at the viewers'
television receivers, whereas cable television operators are able to and
do offer such a guarantee. He considered that consumers should be allowed
to benefit from the inherent advantages of this technology. However, he
maintained that the proposed "consent" regime does not sufficiently
take into account the interests of the viewers, as end-users of the television
services.
4.54 Mr Kelso submitted that these viewer interests can be considered
to embrace the right to receive free-to-air commercial, national and community
broadcast signals:
- in a convenient manner;
- of at least reasonable or acceptable quality;
- at no or minimal additional cost;
- without having to also fully subscribe to a cable television service;
and
- along with all other broadcast channels normally available in the
locality.
4.55 Mr Kelso considered that regulatory regime should at the same time
protect the relevant rights of the original television broadcasters yet
recognise the commercial interests of the cable television operators.
He contended that this was not possible under the proposed regime.
4.56 Mr Kelso recommended that the "consent regime" (referred
to as option b in the explanatory memorandum of the bill) be modified
to require that the pay-TV operators re-transmit the free-to-air broadcast
signals such that:
- All local free-to-air signals should be carried without modification
or discrimination;
- Free-to-air signals should be able to be received unscrambled by non-subscribers,
so that viewers may receive them either without a Set Top Unit or otherwise
with a basic low cost Unit;
- The free-to-air channel numbers should be retained, unless the broadcaster
agrees otherwise. [25]
Future of retransmission
4.57 In its submission and throughout the hearing, FACTS discounted suggestions
that the consent regime would lead to pay-TV providers being forced to
discontinue retransmission. FACTS representatives emphasised that while
they sought absolute control over their signals, they did not intend to
deny the pay-TV providers' access:
There is a little rhetoric flying around between the two parties, but
reality suggests …that we are not denying their access to the signal.
We want fair and reasonable compensation for carrying that signal…We
believe that, if given a suitable and reasonable amount of time, sensible
negotiations will transpire. We are not saying, `We don't want to do
business.' [26]
4.58 FACTS also discounted the contention that a "consent"
regime would give the commercial stations an excessively strong negotiating
position in relation to that of the pay-TV industry. Mr Branigan claimed
that despite ASTRA claims to the contrary, the pay-TV operators held a
strong negotiating position, as there are now between 500 000 and 800
000 homes that receive the free-to-air signal via cable:
They are, if you like, hostages,our hostages,in the hands of cable.
We do not want to lose those people. Many of them no longer have outdoor
antennas. …I am saying that that gives pay-TV very considerable
bargaining power in negotiations with us. [27]
4.59 FACTS repeated its contention that the objective is to reach agreement
with the pay-TV industry:
If we were to inconvenience that fairly substantial number of subscribers,
that is not going to be a sensible decision for us to make. I think
everybody involved in the free-to-air industry understands that what
they want to do out of this process is reach agreement with pay television,
whatever that agreement may be, so this idea that there is a problem
with the balance is not quite accurate. [28]
Compensation for underlying rights holders
4.60 The Committee received representations from Screenrights, an organisation
representing holders of underlying copyright. Screenrights argued that
retransmission constitutes a third party use of copyright material, for
which rights holders are entitled to compensation. The logical extension
of Screenrights' proposition is that underlying rights holders will be
compensated by both the free-to-air networks and by the pay-TV companies
who retransmit the signal.
4.61 The Committee sought information from Screenrights about the justification
for making two payments to rights holders, given that the viewer will
receiving the material from only one of the two alternative distribution
systems - free-to-air or cable - and the overall audience would not increase.
4.62 Screenrights maintained that the Berne convention recognises retransmission
as an additional use. Mr David Brennan, a lawyer and consultant to Screenrights,
quoted the Berne convention for the Committee's information:
Article 11bis states:
(1) Authors of literary and artistic works shall enjoy the exclusive
right of authorising:
(ii) any communication to the public by wire or by rebroadcasting of
the broadcast of the work, when this communication is made by an organisation
other than the original one; [29]
4.63 Representing the pay-TV industry's views, Mr Bruce Meagher confirmed
that the industry accepts that underlying rights holders have a right
to payment under this principle.
4.64 While understanding and accepting the principles involved, the Committee
notes with some concern that consumers may be required to pay an additional
amount as part of their pay-TV subscriptions to meet this cost. This is
questionable if the retransmission is simultaneous with and identical
to the free-to-air signal, and the only difference is the infrastructure
through which the material is delivered.
4.65 As previously noted, the Government has announced its intention
to introduce complementary legislation to amend the Copyright Act in order
to provide for payments to underlying rights holders. However, the bill
currently before the Committee, the Broadcasting Services Amendment Bill,
does not contain any provision for compensating underlying rights holders.
The Committee therefore regards the representations made by Screenrights
to be premature, given that the detail of the prospective amendments to
the Copyright Act is as yet unknown.
Remote area exemptions
4.66 Section 205N(2) provides an exemption from the proposed regulatory
regime where retransmission occurs in a declared remote area. The ABC
and a number of other organisations advised the Committee that they considered
that subscription TV organisations and other 'non-self help' providers
should have to obtain consent before retransmitting in a remote area.
4.67 The ABC maintained that such a consent requirement would allow it
to set appropriate terms and conditions, and that this was necessary to
protect members of the public who may well have purchased specific receiving
equipment on the basis of such retransmission. Terms would include duration
of transmission, signal quality and the number of services. [30]
4.68 The ABC also pointed out that the legislation does not provide for
a process for determining "declared remote areas". The SBS and
the ABC considered that the ABA should be required to consult with the
relevant interested parties before making such declarations. [31]
4.69 The SBS, FACTS and the commercial remote broadcasters also expressed
concerns about remote area retransmission. Representing SBS, Ms Bridget
Godwin, Corporate Counsel, told the Committee that the SBS was concerned
about the implications of unfettered remote area retransmission for consumers:
…the reason we are asking for this amendment is that we also have
a concern for consumers, in the sense that if someone is able to just
take the services and offer them in declared remote areas without any
consultation with us, they may, for instance, be able to offer those
services at extremely high prices and we may wish to have some interest
in ensuring that that does not happen because that would, of course,
disadvantage people in declared remote areas more than people in other
areas who might get it very cheaply through a pay television operation,
for instance. So we think we should have some ability to discuss that.
[32]
4.70 Representing the commercial remote broadcasters, Mr Tim Mason, Chief
Engineer, Imparja Television, expressed concern about the possibility
of his organisation being unfairly undermined if retransmission without
consent occurred in remote areas:
Unlike our regional and metro cousins, we inherently have a large expenditure
in satellite capacity simply to deliver our signal. We are therefore
highly dependent on the competitive nature of the various carriers to
provide us with the best possible financial arrangements…If we
get to a situation where, having completed negotiations with, say, one
satellite operator, one satellite carrier, our arrangements can then
be undermined or spoiled by the other satellite operator broadcasting
our signal without our consent or our permission…then we are going
to find that the only competitive advantage we have from telecommunications
deregulation is taken away from us, because where is the incentive for
one satellite operator to deal with us and provide us with the best
possible deal, knowing full well that there is a very easy spoiling
tactic that can be used by its competitors. [33]
4.71 The Committee sought information from the Department of Communications,
Information Technology and the Arts about the reasons for the remote area
exemptions. Dr Beverly Hart, Assistant Secretary, Licensed Broadcasting
Branch, advised that the exemptions were considered necessary because
of public interest considerations:
There is an exception recognised in the bill for remote areas because
it is recognised that they are a special case. There are special public
interest considerations relating to remote areas which warrant the waiver
of that general consent by the broadcaster, a principle that runs through
the rest of the legislation, because it is the only way that regional
viewers can get a complete suite of services. [34]
…
All I am prepared to say, Senator, is that it is because of the intense
rivalry that there has been in Western Australia that it has been felt
necessary to retain what is an existing arrangement, where retransmission
can occur without the consent of the broadcaster, in order to ensure
that there is a full range of services available for viewers in regional
areas. [35]
Enforcement remedies
4.72 FACTS representatives noted that while the bill requires intending
retransmitters to seek the free-to-air broadcasters' consent, the bill
lacks any effective remedy if the retransmitter proceeds without obtaining
that consent. Mr Tony Branigan considered that the legislation had been
framed in this manner with the presupposition that the foreshadowed amendments
to the Copyright Act would be in place. He advised the Committee that
FACTS considers that an amendment is required to enforce the consent regime
in the absence of the copyright amendments:
We think that a relatively simple amendment, to take that particularly
important instance, would allow the broadcaster to enforce control over
its signal. It may well be that other relatively simple amendments would
deal pro tem with some of the other copyright related deficiencies of
the bill as it stands. That would allow separate proclamation before
this very uncertain date on which the copyright amendments are likely
to pass through both houses. This is set out in our submission. [36]
Definition of retransmission
4.73 The ABC, SBS and FACTS noted that there is no definition of "retransmission"
or "retransmit" in the Bill.
4.74 The ABC suggested that retransmission be defined as "the unaltered
and simultaneous retransmission of the signal of the free-to-air broadcaster".
[37] The SBS made a similar suggestion, submitting
that it is important that retransmitters not be permitted to alter the
retransmitted services for their own commercial purposes. [38]
FACTS advanced a similar definition, stating that the three essential
elements are that the retransmitted signal should be:
- unaltered;
- retransmitted simultaneously; and
- complete. [39]
4.75 The Australian Caption Centre also submitted to the Committee that
any retransmitted signal should be complete, that is, carry the entire
signal including any closed captions, of both programs and television
commercials. [40]
Committee's views
4.76 The Committee accepts the argument that the pay-TV industry derives
a commercial advantage by rebroadcasting the free-to-air stations' signals.
The availability of the free-to-air signal on pay-TV undoubtedly adds
to the attractiveness of pay-TV for potential subscribers. The logical
extension of this argument is that the pay-TV industry is appropriating
and benefiting from a property right without consent or compensation.
The Committee considers that this is unreasonable.
4.77 However, the Committee notes that the commercial free-to-air stations
are reluctant to acknowledge that they and their advertisers benefit from
having the pay-TV companies carry their services. While their audience
share may be diminished somewhat if pay-TV subscribers choose other channels,
the free-to-air stations retain access to a viewing audience that they
would otherwise lose if retransmission ceased. The pay-TV subscriber still
has the choice of watching the retransmitted free-to-air channels and
will still do so if programming is sufficiently attractive.
4.78 Further, retransmission benefits many viewers who, for various reasons,
are dissatisfied with the quality of the free-to-air signal they normally
receive via aerials. Viewers also appreciate the convenience of an integrated
pay-TV and free-to-air service. The Committee notes that there is a lack
of agreement about the extent of poor reception. FACTS considers that
the problem is minimal and almost all people receive a satisfactory signal.
However, the many submissions and letters received by the Committee from
members of the public indicates that a substantial group of viewers apparently
disagree with FACTS' assessment.
4.79 The Committee accepts that the Government's "consent"
regime theoretically allows the free-to-air operators to dictate terms
(for example, by demanding excessive fees) to the cable companies, to
the extent that they could prevent retransmission of their services.
4.80 However, FACTS representatives repeatedly emphasised throughout
the hearing that it is not their intention to prevent retransmission,
but rather to control the conditions under which the pay-TV operators
retransmit their signal. Similarly, it is clear that the national broadcasters
(SBS and ABC) also do not intend to prevent retransmission, but wish to
have the power to set the conditions under which retransmission takes
place. The Committee believes that these assurances are credible. While
the pay-TV industry may be damaged if retransmission ceases, the commercial
networks also stand to lose potential viewers permanently and would harm
themselves and their advertisers if they prevent retransmission.
4.81 The Committee notes that the Government has allowed a minimum six
month period between enactment of the legislation and proclamation by
the Governor General to enable the conduct of negotiations between the
interested parties. [41] If agreement cannot
be reached in that period, the Government retains the sanction of not
proclaiming the legislation, providing adequate incentive for all parties
to reach agreement without undue delay.
4.82 A further option available to the Government would be to introduce
an arbitration mechanism if the free-to-air and pay-TV industries are
unable to reach agreement.
4.83 In the first instance, however, the Committee considers that the
parties should be given the opportunity to resolve the issue without inteference
from a third party arbitrator. The Committee therefore supports the approach
the Government proposes in the legislation.
4.84 The Committee suggests that the Government review the situation
twelve months after proclamation and give consideration to introducing
an arbitration mechanism if the interests of consumers have been disadvantaged.
4.85 The Committee emphasises that it considers the negotiating parties
must take the interests of consumers into consideration. There should
be a seamless transition to the new regulatory regime and no interruption
to the services currently provided to pay-TV subscribers.
Footnotes
[1] Background paper provided to the Committee
by the Department of Communications and the Arts.
[2] Evidence, p. 226-7.
[3] Evidence, p. 208.
[4] Evidence, p. 208.
[5] Ms Chris Sharp, SBS, Evidence, p.
244.
[6] Submission, p. 9.
[7] Submission, p. 2.
[8] Evidence, p. 211.
[9] Submission, p. 10.
[10] Evidence, p. 209.
[11] Evidence, p. 209.
[12] Submission, p. 3.
[13] Submission, p. 3.
[14] Underlying rights holders - holders of
copyright to the programs transmitted.
[15] Submission, pp 2-3.
[16] Mr Mockridge, Evidence, p.213.
[17] Submission, p. 13.
[18] Evidence, p.228.
[19] Evidence, p.212.
[20] Evidence, p. 244.
[21] Evidence, p. 244.
[22] FOXTEL Submission, Attachment 1.
[23] Submission, p. 2-3.
[24] Evidence, p.231.
[25] Submission no. 74.
[26] Mr McAlpine, Evidence, p. 213.
[27] Evidence, p.212.
[28] Evidence, p.232.
[29] Evidence, p. 224.
[30] Submission, p. 4.
[31] Submission, p. 4.
[32] Evidence, p. 243.
[33] Evidence, p. 243.
[34] Evidence, p. 242.
[35] Evidence, p. 243.
[36] Evidence, p. 235.
[37] Submission, p. 6.
[38] Submission, p. 8.
[39] Submission, p. 19.
[40] Submission, p. 2.
[41] Explanatory memorandum, p. 21.
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