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Broadcasting Legislation Amendment Bill (No. 1) 2002

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2002

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

SENATE

 

 

 

 

 

 

BROADCASTING LEGISLATION AMENDMENT BILL (NO. 1) 2002

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the

Minister for Communications, Information Technology and the Arts,

Senator the Honourable Richard Alston)

 



BROADCASTING LEGISLATION AMENDMENT BILL (NO. 1) 2002

 

OUTLINE

 

The Broadcasting Legislation Amendment Bill (No. 1) 2002 (the Bill) amends the Broadcasting Services Act 1992 (the BSA) to delay the start date of the high definition television (HDTV) obligations on broadcasters.

 

The proposed changes would have the effect of requiring the amendment of regulations to delay the introduction of high definition television (HDTV) requirements on commercial television broadcasting licensees and national broadcasters in mainland State capitals for six months, ie until 1 July 2003.  The amendments do not change the commencement of the HDTV obligations in areas outside mainland State capitals, because the simulcast periods in these areas have not yet commenced.

 

The Bill is to commence on Royal Assent.

 

The Bill will amend the commencement date of the obligations on broadcasters to commence transmitting HDTV programming and to provide 20 hours per week of HDTV programming.  The BSA requires that regulations be made that require broadcasters to simulcast an amount of HDTV programming during the simulcast period.  These regulations have been made and broadcasters are required to commence transmission of HDTV, and to transmit at least 20 hours per week of HDTV, from two years after the start of the simulcast period in their licence area.

 

For broadcasters in Australia’s mainland State capitals the requirement to commence transmission of HDTV and to transmit at least 20 hours per week is to commence from 1 January 2003.  Areas outside the mainland State capitals will commence their simulcast period at a range of dates before 1 January 2004 and will become subject to the HDTV obligations two years after the relevant simulcast commencement date. 

 

The Government’s 2001 election policy stated it would consider legislative amendments to annualise the HDTV quotas (ie. 1040 hours per year) and to include advertisement time in the quota (in line with Australian content programming standards).

 

The Government is considering the possibility of broader changes to the digital television regulatory regime to encourage consumer take-up of digital equipment.

It is unlikely that any legislative amendments to provide some flexibility in the calculation of the HDTV quota as outlined in the election policy could be put in place before the HDTV obligations come into effect for broadcasters in mainland State capitals on 1 January 2003.  Therefore a short delay of six months to the HDTV commencement date is proposed for these areas. 

 

FINANCIAL IMPACT STATEMENT

 

The Bill will not have a significant financial impact.



REGULATION IMPACT STATEMENT

 

Background

 

The Broadcasting Services Act 1992 requires that regulations be made that require broadcasters to simulcast an amount of high definition television (HDTV) programming during the simulcast period.  These regulations have been made.  In particular, broadcasters are required to transmit at least 20 hours per week of HDTV from two years after the start of the simulcast period in their licence area.

 

For broadcasters in Australia’s mainland State capitals the requirement to transmit at least 20 hours per week is scheduled to commence from 1 January 2003.  Areas outside the mainland State capitals will commence their simulcast period at a range of dates before 1 January 2004 and will become subject to the HDTV quotas obligations two years after the relevant simulcast commencement date. 

 

The Government’s 2001 election policy stated it would consider legislative amendments to enable broadcasters to meet their 20 hours per week HDTV requirement on an annualised basis (ie. 1040 hours per year) including advertisement time (in line with Australian content programming standards).

 

The Government is considering the possibility of broader changes to the digital television regulatory regime to encourage consumer take-up of digital equipment.

It is unlikely that any legislative amendments to provide some flexibility in the calculation of the HDTV quota as out lined in the election policy could be put in place before the HDTV obligation comes into effect for broadcasters in mainland State capitals on 1 January 2003.  As a result, the Minister for Communications, Information Technology and the Arts announced on 27 August 2002 that a short delay to the HDTV commencement date is necessary and that the Government will seek to amend the HDTV quota obligations so they commence from 1 July 2003 in mainland State capitals. 

 

Legislative Provisions

 

Clause 37E and 37F and related provisions in Schedule 4 of the BSA require the making of regulations to determine standards which, among other things, must be directed towards ensuring that after the end of the 2-year period (beginning when the broadcaster is require to commence transmitting in standard definition (SDTV) mode) broadcasters are required to transmit at least 20 hours per week of HDTV.  These regulations have been made, namely the Broadcasting Services (Digital Television Standards) Regulations 2000.

 

ISSUE

 

The Government is considering possible changes to the digital television regulatory regime to provide additional flexibility to the HDTV obligations and to encourage digital take-up by consumers.  As it is likely that there will be insufficient time for introduction and passage of broader legislative changes to the regime before 1 January 2003, regulatory certainty in the short term is required to avoid issues relating to broadcaster compliance with the HDTV quota in mainland State capitals.

 

OBJECTIVES

 

To provide regulatory certainty in the short term, pending Government and Parliamentary consideration of the broader digital television regulatory framework.

 

Options

 

There are four main options:

 

1.       Continue current legislative requirements for commencement of the HDTV weekly quotas.

2.       Amend the legislation to change the commencement date to require commencement of HDTV quotas by no earlier than 1 July 2003.

3.       Amend the legislation to reduce the nature of the current quota requirements (eg. to fewer hours, or to allow up-conversion for a limited period).

4.       Provide power to the Australian Broadcasting Authority (ABA) to permit exceptions by broadcasters from their HDTV obligations in certain circumstances.

 

Impact Analysis

 

Those groups potentially affected by these options are the FTA broadcasters, pay TV operators, content producers, the advertising industry, consumers/viewers, equipment manufacturers, regulators.

 

The impacts of any of the options are likely to be minimal on:

·         pay TV operators.  Pay TV operators do not provide HDTV programming and a six month delay in FTA obligations is unlikely of itself to have an adverse impact on pay TV operators.

·         advertisers.  There is likely to be little direct effect on advertisers.  Any effect is likely to reflect the impact on commercial broadcasters.

 

The effect of these options on the equipment manufacturing industry is unclear.  Some equipment manufacturers have indicated that the digital television market is not showing signs of the necessary stability to identify trends that are sufficiently clear to permit them to develop business plans for the market.  Others have indicated they have firm business plans in place based on the current framework.

 

1.       Retain current legislative requirements

 

The current requirements in effect mean that broadcasters in mainland capital cities will be required to commence providing at least 20 hours per week of HDTV programming from 1 January 2003.  Broadcasters in other areas will have to commence providing at least 20 hours per week from two years from the simulcast commencement date in their areas.  These dates have in most cases been determined by the ABA.  For example, the HDTV quota requirements would commence in most regional licence areas with effect from 31 March 2005.

 

Retention of the current HDTV quota commencement dates would require broadcasters in mainland State capitals to commence providing a strict 20 hours per week of HDTV when it is likely that these requirements will change.  The Government has foreshadowed allowing greater flexibility in administration of quotas.  They may need to make investment to meet the current quota requirement which may prove in a very short time to be unnecessary under more flexible arrangements or otherwise risk being in contravention of the legislation. 

 

The impact of retention of the quota arrangements will be greatest for metropolitan commercial broadcasters required to provide “true” HDTV.  The impact is likely to be less on national broadcasters which are able to provide up-converted HDTV.  Regional broadcasters whose quota obligations take effect at a later date will not be affected.

 

It is likely that, in the light of the Government’s election commitments to consider providing greater flexibility in HDTV quota arrangements, commercial broadcasters in mainland State capitals have made their investment plans accordingly and may need to make further investments to implement the 20 hours per week quota arrangements. 

 

Retention of the current commencement date would, provided broadcasters were able to meet these requirements, mean that for the period until the election commitment is implemented in relation to HDTV quota arrangements, consumers who have purchased HDTV receivers would be able to receive a greater amount of HDTV programming than would otherwise have been the case. 

 

However, while the legislative framework for the HDTV quota arrangements was established in 2000, retention of the current commencement date at this time will not greatly add to the certainty provided to the local content production, advertising or equipment industries or affect digital television take-up given that the Government committed in its 2001 election policy to consider providing broadcasters with additional flexibility in meeting the 20 hour per week HDTV obligation on an annualised basis (ie. 1040 hours per year).  It is also publicly known that the Government is considering possible changes to the broader digital framework.  Retention of the current commencement date, in these circumstances, is unlikely to increase regulatory certainty in the intervening period.

 

Retention of the commencement date may create administrative difficulties for regulatory authorities, if they are faced with situations where broadcasters breach the law in circumstances where the Government (and perhaps Parliament) has signalled consideration of changes to those requirements.

 

2.       Delay commencement of quotas to 1 July 2003

 

Delaying commencement of the HDTV quotas for broadcasters in mainland State capitals would allow broadcasters to postpone some investment in HDTV equipment and programming until the regulatory requirements are clarified.   HDTV programming is still in its infancy internationally with major US broadcasters providing from zero to 26 hours per week of HDTV programming.  However, this level of programming is expected to increase. 

 

The amount of HD content being broadcast by the Australian commercial networks in mainland capitals has varied from 10 hours per week to one hour per week.  In addition, there has been a demonstration loop of HD content being repeated in mainland capitals.  The demonstration loop is broadcast during retail hours, allowing retailers to showcase HD content to prospective purchasers.

 

In addition to providing a measure of regulatory certainty in the short term, a delay of the commencement date may also allow Australian broadcasters to have access to increased international HDTV programming when their quotas commence.  If the quota commencement date was delayed, in the intervening period, individual broadcasters could choose to supply more HDTV programming than is being currently offered.

 

Delaying commencement of the HDTV quota may reduce for a short time the initial demand for local production of HDTV programming but is unlikely to have any medium to long term adverse effect on the industry.  However, this would depend on the degree to which individual broadcasters were intending to fill their quotas using local content production.  While some current HDTV programming is produced by local independent content houses, it appears the majority of HD content being broadcast is either purchased from international sources or produced by the commercial networks. There are no specific requirements relating to the filling of HDTV quotas by local content - the local content requirements are more general in nature.  Content production and post production organisations have expressed concern about changes to the HDTV quota arrangements, given the investment companies in this sector have made in HDTV technology.  It is not clear how much investment over and above what would be required to produce material for SD transmission is required for HD production or the degree to which investment could also be used to produce material for SD transmission.

 

Delaying commencement of HDTV quotas may delay for a short time the introduction of increased hours of HDTV programming for consumers.  During this time, it would be expected that broadcasters would continue around the same level of HDTV programming.  This may, to the extent that HDTV is already a driver of consumer take-up, affect digital take-up rates.  However, while consumer take-up rates may not increase dramatically, on current indications, they are unlikely to decline.

 

Consumers who have already purchased HDTV set top boxes and/or HD display devices will be able to use these devices as they do now ie. for SDTV reception as well as reception of the current range of HDTV programming, and in some cases for viewing DVDs.  The cost of  HDTV set top boxes (STBs) ranges between $800 and $900 retail compared to SD STBs which cost between $500 and $700.  Around 16,000 HDTV STBs have been sold.

 

Delaying the commencement date would reduce potential administration difficulties faced by regulators.

 

3.       Amendment of the nature of the requirement for a limited period

 

Reducing the HDTV quota requirement for a specified period may reduce the amount of investment required by broadcasters pending decisions on the regulatory framework. 

 

However, such amendments may not be in keeping with the framework ultimately decided upon by the Parliament and would therefore create greater regulatory uncertainty.

 

Reducing the HDTV quota requirement would not provide consumers with significantly greater HDTV viewing than under Option 2.  In addition, because such an option would create greater uncertainty, it is unlikely that it would benefit consumers greatly or stimulate consumer take-up of digital television. 

 

It is also unlikely to result in significant changes to the demand for local content production in HDTV.  Some production organisations have expressed concerns at any changes to HDTV quota arrangements - interim reduced quota obligations are unlikely to stimulate local production of HDTV material over and above that being undertaken anyway. 

 

4.       Provide powers for the ABA to permit exemptions from the HDTV quota

 

Providing for a legislative scheme whereby the ABA could, in effect, permit exemptions for broadcasters from their HDTV obligations.  Such a scheme may involve allowing the ABA to, for example, permit broadcasters to show less than 20 hours per week of HDTV in certain circumstances.  Such a scheme could reduce the problems for broadcasters faced with uncertainty about the regulatory requirements.

 

However, this option would require the development of a detailed scheme (setting out the circumstances in which departures from the standard obligations would be permitted) which may not be able to be implemented before 1 January 2003 and would only be necessary for a limited period of time.

 

A scheme allowing flexibility to broadcasters in reaching their quotas is likely to have a similar effect to delaying the introduction of the quota in relation to production content.  Broadcasters are likely to opt to seek exemptions pending the announcement and implementation of any long term decision in relation to HDTV quota arrangements.  Therefore this option is likely to have a similar effect on content providers to the option of delaying quota implementation.

 

This option is unlikely to create consumer certainty and stimulate demand for digital take-up.  Such an approach may provide more viewing hours of HDTV than Option 2, but this would depend on the degree of flexibility the scheme allows broadcasters.

This option would impose additional costs on broadcasters and the regulator in the preparation of applications for exemption and consideration of those applications.

 

Consultation

 

The Government has received a range of comments on the issue of HDTV quota arrangements.

 

Some individual broadcasters have expressed concern about undertaking HDTV related investment in a climate of regulatory uncertainty.  In addition, representations have been received from consumers, content production companies and some major equipment manufacturers supporting continued commitment to the HDTV quota arrangements. 

 

CONCLUSION AND RECOMMENDED OPTION

 

Option 1 could result in greater availability for consumers of HDTV programming in the short term and therefore, possibly greater digital television take-up.  It may, depending on how broadcasters choose to source their HDTV programming, also result in greater demand for HDTV program content from local production companies.  However, Option 1 would have adverse impacts on broadcasters and may create compliance difficulties or require additional investment to be made that is unnecessary at this time.

 

However, these impacts will only be short term and will be affected by any subsequent decisions the Government may take on the wider range of issues associated with the digital television regulatory framework. 

 

Given that the main objective of these measure is to provide some degree of regulatory certainty in the short term, pending the outcome of the Government's wider considerations, Option 2 offers the most direct and effective way of achieving this.  Options 3 and 4 would offer a degree of comfort to broadcasters not wishing to undertaken investment in these circumstances.  However, these Options are not as certain as Option 2 and are likely to involve increased compliance costs on broadcasters and the regulator.

 

IMPLEMENTATION AND REVIEW

 

The delayed commencement date provided for in this Bill will be administered by the ABA.

 

The amendment provides that the obligations to transmit at least 20 hours per week of high definition television programs in HDTV digital mode commences:

·         after the end of the 2-year period beginning when the licensee (or national broadcaster) in the area is required to commence transmitting the commercial television broadcasting service (or national television broadcasting service) concerned in SDTV mode in that area; or

·         from 1 July 2003;

whichever is the later.

 

A review is currently scheduled to take place before 1 January 2004 of whether Division 2 of Part 4 of Schedule 4 to the BSA (dealing with HDTV quotas) should be amended.



NOTES ON CLAUSES

 

 

Clause 1 - Short title

 

Clause 1 provides for the citation of the Broadcasting Legislation Amendment Act (No. 1) 2002 (the Act).

 

Clause 2 - Commencement

 

Clause 2 of the Bill provides that the Act will commence on Royal Assent. 

 

Clause 3 - Schedule(s)

 

By virtue of this clause, provisions of the BSA are amended as set out in the Schedule to the Bill.

 

Schedule 1 - HDTV quota standards

 

Broadcasting Services Act 1992

 

Clauses 37E and 37F in Schedule 4 of the BSA require the making of regulations to determine standards which are directed towards ensuring that commercial television broadcasting licensees and national broadcasters:

·         commence transmission of HDTV programming as soon as practicable after the they commence SDTV transmission, and in any event within two years of the start of the simulcast period; and

·         transmit at least 20 hours per week of HDTV programming from two years after the start of the simulcast period. 

 

The amendments made by the Bill will have the effect of delaying the commencement of the HDTV obligations in mainland State capitals until 1 July 2003. 

 

Item 1 - Subparagraph 37E(2)(a)(ii) of Schedule 4

Item 2 - Paragraph 37E(2)(b) of Schedule 4

Item 3 - After subclause 37E(2) of Schedule 4

 

The effect of the amendments made by Items 1, 2 and 3 is to delay the commencement of the HDTV transmission and quota obligations on commercial television broadcasting licensees in mainland State capitals from 1 January 2003 to 1 July 2003.  The amendments do not change the commencement of the HDTV obligations in areas outside mainland State capitals, because the simulcast periods in these areas have not yet commenced. 

 

Item 1 amends paragraph 37E(2)(a) of Schedule 4.  That provision requires regulations to be directed towards the objective that the transmission of HDTV programming is to commence as soon as possible after the licensee commences transmission in SDTV digital mode, and in any event, within 2 years after the start of the simulcast period.  (The simulcast period for mainland State capitals commenced on 1 January 2001.) 

 

Item 1 replaces the reference in paragraph 37E(2)(a) to the 2 year period following the start of the simulcast period with a reference to “the phase-in period”, which is defined in new subclause 37E(2A) of Schedule 4 (inserted by Item 3 below).

 

Item 2 amends p aragraph 37E(2)(b) of Schedule 4.  That provision requires regulations to be directed towards the policy objective that commercial television broadcasting licensees must, from 2 years after the start of the simulcast period, transmit at least 20 hours of HDTV programming per week.

 

Item 2 replaces the reference in paragraph 37E(2)(b) to the 2-year period with a reference to “the phase-in period”, which is defined in new subclause 37E(2A) of Schedule 4 (inserted by Item 3 below). 

 

Item 3 inserts new subclause 37E(2A), which defines the “phase-in period” as the period ending on 30 June 2003, or the end of the relevant simulcast period (whichever is the later). 

 

Item 4 - Subclause 37EA(7) of Schedule 4

 

Item 4 amends subclause 37EA(7) as a consequence of the amendments made by Items 1, 2 and 3 above.

 

Item 5 - Subparagraph 37F(2)(a)(ii) of Schedule 4

Item 6 - Paragraph 37F(2)(b) of Schedule 4

Item 7 - After subclause 37F(2) of Schedule 4

Item 8 - Subclause 37FA(7) of Schedule 4

 

Items 5, 6, 7 and 8 amend the HDTV provisions for national broadcasters in a corresponding way to the amendments made by Items 1, 2, 3 and 4 to the provisions for commercial television broadcasting licensees.