Mr HATTON (11:30 AM) —Bless their little hearts! The government try so hard in this area of communications. The Minister for Communications, Information Technology and the Arts really works as hard as he can, but what he has provided here today is mutton dressed up as lamb.

Mr Pyne —It takes one to know one!

Mr HATTON —We have an interjection from the chair of the communications committee. The chair and I have just been cooperatively working with the Games Association of Australia and the gaming industry and looking at ways in which we can expand the scale of a nascent industry association so that we can end up with a games industry in Australia as significant as our film industry. The committee has been extremely good, and I have just popped in here after hearing evidence in that committee.

Mr Pyne —Thank you very much.

Mr HATTON —That is all right, Mr Chair. As the chair would know, when we are dealing with the question of digital television, you say, `What have we got here?' On the face of it, the Communications Legislation Amendment Bill (No. 3) 2003 is just a series of minor changes made because things have moved on a bit, we need a little more flexibility, a few things were overlooked previously and there are minor problems within regional areas. One of the key factors here is what you do with solus television markets. Before this bill I did not know what a solus television market was, but I am reliably informed by the explanatory memorandum and the Bills Digest that country areas which have just one or two commercial operators are regarded as solus areas. They do not have the diversity that we have in the rest of Australia. Specific provisions in the preceding bills allow, where you have one operator, for them to run a second analog service. With the move to digital TV services, in running that second analog service, they are allowed to transmit that into two digital services. But there is a question of timing in how that is to be the case.

If I am correct, all of them, except for the solus provider in the Griffith area, have come within the compass of the new arrangements where they were given a different way of going about things. In relation to the provider at Griffith, they were quick off the mark. Because they were quick off the mark—they got in prior to 2001 to make their arrangements—they have not been allowed the flexibility that has been provided to other solus providers in regional Australia. So a proper, necessary and sensible correction to that in this bill will allow this one commercial operator to be brought up to speed and to be allowed access to the same kind of flexibility that others have in regional Australia.

In looking at these providers, you have to look at the way the regime was originally put into place. In fact, the word `regime' would be going a bit too far when looking at something as organised, as credible and as entrenched as the word `regime' presents, because this has been a hodgepodge of adhoceries within a larger design that failed to understand the central core impetus within the area of change to digital TV.

That runs alongside the desire of the major players in the cities to make the big jump to high-definition television, or HDTV, paid for in large part by the Commonwealth. The free-to-air providers want to step up to high-definition television but they want that step up to be tax deductible and to have a range of measures available, because of the costs to them. High-definition television was demanded by good Mr Packer and PBL, and by Mr Murdoch as an outrider—both people have an enormous vested interest in this area. The decision to go to HDTV, as laudable as that may seem for those who want the crispest possible vision, has enormous costs. In regional areas with single or dual operators and only one commercial provider, they now have SBS and the ABC. A lot of places did not have that. There are now new satellite services. Yesterday I was briefed by Austar and other members of the subscription pay TV service. A new satellite has gone up which has a footprint covering all of Australia. That solves two key problems. Areas to which it was not possible to deliver the ABC and SBS before can now be covered. The fundamental problems of ghosting and lack of television reception even in areas close to the major cities can be solved because of this new footprint.

The fundamental design in regional Australia is not based on HDTV. That may not be filled for a very long period of time because the market has not yet attached itself to it. Regional Australia has standard definition television. It is a matter of providing them with what they do not have at the moment. They have an analog service. They used to have an analog phone service until the former Labor government said, `The best evidence placed before us by the industry and the experts is that we need to close down the analog system and move to a digital system. That is the way of the future.' That took a lot longer than was expected, probably because the efficiency of the analog system was underrated. There was also the issue of how long it would take to get a new system. We finally had the roll-out of CDMA, but there were significant problems because it needed much more investment and entrenching than was previously thought.

That long period of time is going to be mirrored, but far more dramatically, when we come to the question of how we change over to digital. If it was not instructive enough, it should have been. This particular minister for communications and those in cahoots with him flailed us whilst we were in government on the issue of removing the analog telephone service and putting in a digital service Australia wide. The flailing can come back the other way now because of the way this whole package has been put together and progressed. This is not a spring lamb; this is mutton dressed up as lamb. It has all of the characteristics of a policy that is not new, fresh and alive. It is not open to the problems that could have been foreseen and the demands of people not only in regional Australia but elsewhere. They are not just going to buy a product because they are told to do it. There is strong resistance.

In the second reading speech, Minister McGauran, speaking on behalf of the Minister for Communications, Information Technology and the Arts, made the point that there has been resistance but, through the series of mechanisms proposed here, we will wander along the path towards the change to digital television. As we wander towards 2008 and expect to turn off the analog systems Australia wide, I can only agree with Paul Budde, one of Australia's pre-eminent broadcasting experts and someone who lives in regional Australia. We saw him at a committee hearing in the Newcastle area. This is really drawing a long bow. If you expect to turn off the analog service in country Australia—and in the country at large—by 2008, you have to be kidding yourself.

This government are still operating on the basis of their forward projections. They have already made changes. Late last year we had a series of changes to accommodate the fact that what was prospective did not turn out. Paul Budde argues that we should be looking at another decade on—2018 or so rather than 2008—when the market will be ready to make the fundamental change.

What we have seen already—the minister refers to this—is that the take-up of DVD has been so strong that the expectation is that it will provide the floor for the launch of HDTV. The take-up of DVD has been remarkable but it has been driven by the fact that the cost of a DVD is so great and its usefulness and its clarity at a particular level are so great that people have just gone in droves to adopt the new technology. We have seen it across a range of technologies before but there has been a fundamental within the core of people taking up this technology. If the price is right, people will go for it if the quality and the capacity are there.

Now that Chinese manufacturers have entered the market, you can buy a DVD that is fully spec'ed at $150, whereas just six or eight months previously—it is probably a bit longer—you were looking at a Japanese machine for $500 with less ability; it could not incorporate MP3 or MP4, certainly, because that is a new standard, but it is coming to us. New compression standards that are not yet incorporated will be coming and will allow digital television to operate more effectively. Better compression technologies will allow online digitised services to operate more effectively because you can pump more down the existing tubes.

What is not appreciated is this: people have made the jump to DVD and its greater sense of immersiveness, I suppose, because of its clarity—it looks more real, even when you are watching things that are not real. Part of that jump has been due to the fact that they have gone down to the corner video store and hired cassette tapes. The cassette tapes that have been available have been appallingly bad because they have been used so many times, they have been stretched, they have lost vision, they have not been of good quality and they have involved a very high replacement cost. People in video stores are very happy, thank you very much, to have DVD because, except for problems with scratching and so on, they can provide a product that is of exceptionally high quality and that people have taken to greatly.

I doubt that there are very many consumers in Australia who understand that the move from the picture quality of DVD to the picture quality of high definition television is enormous. The reason there is a current entry cost for high definition integrated televisions is that the picture quality is just so much better. That has not been explained by this government or by most commentators. It is hard to believe that you can have a much larger image with much greater quality embedded within it but it is one of the reasons that people have not made the jump to pay the extra cost.

The other thing, if you look at the point and purpose of going to the digitisation of material and going to digital television, is what we have argued from the outset: instead of agreeing to help foot the bill for the Packer and Murdoch organisations to make their transition to high definition television, it would have been better to mandate standard definition television, as has been mandated in other countries, and to stick with the world standards in this regard. If you talk to any of the people running the changeover to digital TV or you talk to those people who are the providers of content to those television stations, you will find that there are a whole series of embedded new standards in what is supposed to be the one high definition television standard, which provides a series of problems for content providers here, because we do not have one straight, strict standard, based largely, as was the genius in the period of the Menzies government, on determining that we would go with the European power system—the best. It has been said by the secretary of the communications committee—he has heard of it but is not sure of it—that former Prime Minister Menzies actually talked to the then Telecom technicians and asked the people in the research labs how we should go about it and what was best, because he did not have that facility.

The decision making process at the basis of the original bills was flawed. We see before us today that these attempts to get greater flexibility are simple catch-ups. They are trying to provide stopgaps so that the problems that are there can be patched over. As I said in another context recently, it is a bit like AstroBoy. When AstroBoy got into a punch-up, he would immediately emerge with a whole stack of sticky tape all over his face to indicate that he had had a bit of a fight. This was the bandaid approach that AstroBoy had. It is the same thing as the government trying to patch up what they have put together.

The fundamental flaws go to this: if you want to use the capacity of digital TV to really expand choice within Australia, there are two ways in which you are best able to do that. The first is to now put the emphasis on standard definition television and the ability to break the seven megahertz spectrum into much smaller slices and deliver a series of channels to people so that they can have greater choice, whereas now they only have a small number of choices of what they can look at. The choice is greater, of course, for subscription TV but, in the free-to-air digital area, if you had a greater series of choices of content delivered digitally—it is standard definition television—it would be quite possible, as the Bills Digest and Brendan Bailey point out. At the end of the Bills Digest, he quotes a lady who argues that, if you did that, one of the things you might achieve is what has been achieved overseas. The diversity of content and the wide range of channels that have been available overseas have been behind the much better take-up of digital TV than what we have comparatively in Australia.

We know that we suffer in terms of take-up of not just digital TV but also broadband. I would hazard a guess that, rather than what is involved effectively in these amendments to the original bills, the thing that may drive a move towards HDTV will have nothing at all to do with what the government have proposed already or will propose in the future. What will probably drive it is what is happening out in the market in terms of people accessing new technologies, as they have accessed DVDs.

The other thing that really is becoming cost effective is digital projectors. You can get the latest for around $3,000. Digital projectors which can project an HDTV image of a very large size—wall size—are available. You can have it smaller but, certainly, with a large size allied with the quality of sound that is now available, an in-home cinema experience is possible without having to go to the $10,000 plasma TV that the Prime Minister and the Minister for Communications, Information Technology and the Arts had been given, because of the largesse of Telstra, for such a long period of time to assess what HDTV was about. With digital projectors, they do not have to pay the initial costs of that and they do not, after about five years, have to pay $1,000 to $2,000 to re-gas a plasma television screen. They do not have to pay the high cost of entry by buying the newest technology that will probably override plasma—that is, LCD—which has been increased in size and capacity from originally computer screens to screens equivalent to plasma. They will not have to do that.

In terms of entry, what used to cost $20,000 and then $15,000 has dropped to $10,000. For $3,000—and that will decrease—you can buy a room sized TV projection system linked into a very good sound system that can provide you with an immersive cinema experience, an immersive digital TV experience or an immersive Internet experience—an experience that could well bind the family together in the same way that the original television sets lobbing into Australia in 1956 supplied a new experience for everyone in this country. Entirely due to something totally outside the government's control—and that is probably why it will succeed—digital television may succeed in Australia. It will not succeed because of this series of changes to try to patch up a regime which was ill-designed in the first place.

The other fundamental failing we have—and it is not addressed here either, except tangentially—is the question of providing choice through getting the datacasting act together. We have seen datacasting knocked on the head because the minister does not want to play in that area. We have seen $6 million, I think, worth of commitment to ABC digital television such as Fly TV and ABC Kids discontinued because there is not enough support for digital TV programming from the government to our main broadcasting entity. I support the bill, but it is really mutton dressed up as lamb.