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Letter to all members and senators: Digital television



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27 May 1998

Letter to all Members and Senators

Dear

Digital Television _

You may have seen articles or editorials in several newspapers in recent weeks alleging that the Government had “given away spectrum” to the television industry for digital television, contrary to the advice o f officials.

FACTS has responded in detail to these publications, but so far our responses have not been published. Enclosed is a copy o f FACTS’ unpublished letter o f 11 May to the Australian Financial Review which corrects the main factual errors and mistaken inferences in that paper’s editorial of the same date.

Yours sincerely,

TONY BRANIGAN General Manager

F E D E R A T I O N OF A U S T R A L I A N C O M M E R C I A L T E L E V I S I O N S T A T I O N S

44 Avenue Road Mosman NSW 2088 Australia Telephone (02) 9 9 6 0 2622 Facsimile (02) 9969 3 5 2 0

11 May 1998

The Editor Australian Financial Review 235 Jones Street ULTIMO NSW 2007 Facsimile No. 9282 3137

Dear Sir

Your editorial on the Government’s decisions on the transition to digital television (AFR, 11 May) is an impressive mishmash o f factual errors and incorrect inferences.

Your favoured approach o f leaving digital technology to private enterprise wouldn’t produce the best outcome for the Australian public (whether measured in terms of dollars for consolidated revenue, the spread of digital platforms or overall economic efficiency) for several reasons.

First, there is no “digital spectrum” as such. The spectrum to be used for digital television is sandwiched between current analogue services. If massive mutual interference is to be avoided, the use o f the spectrum has to be limited in ways that make applications like another national mobile phone network out o f the question.

A further fundamental problem with an auction approach is that broadcasters cannot transfer to digital television overnight. Because it is a different technology, which requires new receivers or converter boxes, a longish simulcasting period is needed. This increases broadcasters’ need for spectrum for that limited period.

However, when the simulcast period ends, the picture changes radically. Instead o f the present “swiss cheese” broadcast bands, television channels could be relocated in a contiguous band. This could free the top part o f the broadcast bands for other uses, such as cellular telephony.

Any economic analysis o f the potential value of the spectrum to consolidated revenue would have to weight the value o f the current available broadcast spectrum (very limited in quantity, scattered, and usable only for purposes which do not interfere with broadcast services) with that o f a “greenfields” band ten or so years from now. If the Office o f Asset Sales believes that the

spectrum should be sold now for the greatest public benefit, it clearly hasn’t received decent technical advice (leaving aside any question of benefit to 18 million Australians from the vastly improved television service contingent on the current policy approach).

F E D E R A T I O N O F A U S T R A L I A N C O M M E R C I A L T E L E V I S I O N S T A T I O N S

44 Avenue Road Mosman NSW 2088 Australia Telephone (02) 9 9 6 0 2622 Facsimile (02) 9 9 6 9 3 5 2 0

F A C T S

The Editor, Australian Financial Review

27 May 1998

Page 2

spectrum should be sold now for the greatest public benefit, it clearly hasn’t received decent technical advice (leaving aside any question of benefit to 18 million Australians from the vastly improved television service contingent on the current policy approach).

As far as “getting additional spectrum free of charge”, commercial television will pay its standard licence fee (9% o f gross revenue for large stations) on every dollar earned on either the digital or analogue service. This is likely to total several billion dollars by 2008.

The notion that the Government’s decision will lead to “bottling up a critical gateway to the 21st century information age” is a curious one. Australians are likely to be attracted to digital television mainly by clearer pictures, better sound and other program-linked enhancements. By 2008, most Australians will have acquired a new entertainment box which will, almost

incidentally, contain a high-capacity data pipeline. The digital television standard will ensure that this data pipeline is accessible by a wide range of services, not just television broadcasters. Without the efforts of broadcasters, it is unlikely that other data service providers would achieve remotely comparable penetration in Australian homes.

Be that as it may, it is not a question o f broadcasters or datacasters. The Government’s decision provides for any television channels not required for the digital television transmission to be made available for datacasting from 2001.

In short, by contrast to the selected views o f the bureaucracy quoted in your editorial, the Government’s decisions on this complex and difficult matter must seem to many an admirable attempt to balance the economic, social, cultural and technological issues involved.

Yours sincerely

TONY BRANIGAN General Manager