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Tuesday, 28 April 1987
Page: 1886

Senator LEWIS(3.55) —The Senate is now about to commence debating two Bills-the Broadcasting Amendment Bill 1986 and the Television Licence Fees Amendment Bill 1986-which back in December last year the Senate referred to a select committee. The Broadcasting Amendment Bill 1986 purports to give country viewers in eastern Australia a better deal, but it does not. Some of those viewers will be worse off as they will lose services that they are currently able to obtain through the use of special or very high aerials. Once the schemes are implemented, they will lose those services, so some viewers will be worse off. Admittedly, under this legislation others will receive two additional services in due course-`in due course' ranging from some time in 1989 for those in southern New South Wales to periods up to 1996 if the multi-channel service path is adopted. I shall come to what that means in due course. Between 1989 and 1996 some viewers will obtain two additional services but will have lost out on much better opportunities that could have been made available to them, in particular by introducing some element of free market forces into the system.

The Broadcasting Amendment Bill 1986 deals only with the broadcast of commercial television programs-not the Australian Broadcasting Corporation or the Special Broadcasting Service-to regional areas of eastern Australia, not South Australia, not the Northern Territory and not Western Australia. Nor does it deal with the broadcast of commercial television programs to metropolitan or remote areas. Currently, regional areas in eastern Australia are serviced commercially by one monopoly licence holder. For example, in the area of the Australian Capital Territory we have CTC7 as the monopoly commercial television service.

The Bill implements the Government's equalisation objective, by which it means the provision of three commercial television channel services to eastern regional Australia, so that regional services obtain what the Government calls equal-and I would put that word in quotation marks-services to the metropolitan areas. The method adopted is to create service areas called approved markets, those being aggregations of existing monopoly areas, and allowing three of the monopoly licensees in the approved market to service it. In other words, we get an oligopoly of the existing licensees serving a larger approved market instead of their existing areas.

The Government purports to allow two paths to that so-called equalisation. The first is the direct aggregation path, which sets a timetable for aggregation starting in 1989 in southern New South Wales and moving through other areas of eastern Australia. The second is what is called the multi-channel service path, whereby each of the three licensees in the approved market would provide one or two additional services to their current area until 1996, when they would be required to aggregate. I do not know whether people are able to follow what that means. There is a lot of jargon in this area. It is not simple. In effect, the multi-channel service path means that, taking the example of the Australian Capital Territory, CTC7 would be given a permit to supply a second service to the area and, perhaps before 1996, to supply a third service to the area. But it would be servicing only the area it currently services with three different viewing channels. The majority of the regional television services said: `That would be a much better system because we would be able to determine what service we would be providing. We might have sport on one of our channels, a movie on a second channel and ballet or opera on a third channel'. That is all a bit airy-fairy. The services might end up running movies on their two channels and a network program on their major channel. But that is what they were putting.

This option, which the Government claims it is providing, is an illusion because the legislation includes the one-in, all-in rule whereby if any one of the licensees in the approved market opts for aggregation the others must accept. In Queensland there are five commercial television channels, but let us take Victoria because it is easy, Victoria having three channels in the approved market. If any one of those three channels opts for aggregation the other two channels are obligated to go along with that decision. The one-in, all-in rule was severely criticised by all the regional television services as being in effect the minority determining what the majority has to do. It was severely criticised by all members of the Senate Select Committee on Television Equalisation-Government senators as well as the other senators on the Committee-nevertheless, the Government has decided to go ahead with the procedure. I might also add that the Acting Deputy Secretary to the Department of Communications admitted in evidence that in an approved market there was one trigger licensee, one company which had much to gain by opting immediately for aggregation. So the one-in, all-in rule, in effect, means that aggregation will become compulsory, although the Government claims that an option is given. In fact, as I said, the option is an illusion.

The Minister for Communications (Mr Duffy) claimed that because of the one-in, all-in rule the move to equalisation would be `market- driven', but the evidence made it clear that the Department expected that all licensees would have no choice but to move directly to aggregation, so it is nonsense for the Minister to be talking about this decision being market-driven. Under aggregation some licensees will gain windfalls at the expense of licensees whose reach will be economically marginal in their traditional outlets. The majority will be forced to adopt a course which is dictated by a minority. Clearly, there will be winners and losers in the aggregation process. The multi-channel service path would, in my view, have provided alternative commercial programs to most regional viewers much earlier than by direct aggregation, but that would have entrenched the monopoly licensees in their areas. In addition, it would have involved them in substantial further expense.

The MCS path to aggregation which, as I have mentioned, was sought by most of the regional television stations, also included some penalties which the Government put in again to try to get them to go to direct aggregation just in case the Acting Deputy Secretary to the Department had made a mistake when he said that there was a trigger in each approved market. The penalties were that anyone who adopted the MCS path to aggregation would be limited to the two-station ownership rule and the MCS permits would be granted only annually with strict conditions over their operation. There was no suggestion that after 1996, when stations moved to aggregation under that path, the two-station ownership rule would then be lifted for them. I do not know whether that was the Government's intention or not. In any event, as I have said, I do not think there is any doubt that if this legislation is passed regional stations will be required to move to aggregation without delay and in accordance with the timetable which the Government has set. The Government senators on the Committee recommended that the Government abandon the one-in, all-in rule and simply set down a timetable, but again the Government refused to accept the recommendation.

As to the question of equalisation, on the surface it might appear that regional television viewers would gain in some way by ultimately getting two additional services in their area. The Government has certainly been out in the market-place trying to sell that idea to regional areas, talking about equalisation so that regional areas get the same television services as are provided in the metropolitan areas. I point out that no surveys have been conducted as to what regional viewers want. I have no doubt that they want a better service. Everyone wants a better service, whether he is in a regional, metropolitan or remote television area, but this may not mean that he wishes services to be networked, which will be the ultimate result of the passage of this legislation. For regional services to be networked with the metropolitan stations it would mean in effect that they would be locked into showing practically the same program on their commercial networks throughout Australia as is being shown in metropolitan areas at the same time.

One might ask: What is wrong with that? But at present regional television stations have the opportunity to cherry pick, as it is called. There are three networks available. Each regional station can, therefore, look at any one of the network programs and offer to purchase one of them. Because they are able to cherry pick they are also able, through their own business association, to purchase directly overseas. In general they are able to provide what certainly should be and probably usually is a better service to country viewers than is provided by any one metropolitan station.

Regional stations gave evidence to the Committee in effect that, if they could continue to cherry pick, two commercial stations in any regional area would be able to provide practically the whole of the service currently provided by the networks. They pointed out that in metropolitan areas there are many replays and reruns of former programs and films and that all in all, if they had the opportunity to continue to cherry pick, two stations servicing a regional area would probably be able to provide a service which was equivalent to the whole of the programs being shown on commercial metropolitan television. The people of regional Australia have not been given that information by the Government. They have simply been told that they will be given an equalisation service.

I appreciate that the regional television stations may not always choose according to quality. They may choose according to price and may not always choose what the majority of viewers want to see. We know that because of cost regional stations do not always show sporting programs which the majority of viewers in a particular area wish to see. So the provision of two regional stations would not necessarily provide the sort of service that everyone in the region would want. I might say that neither would the provision of three services provide all the services that regional viewers want. Any time that we listen to a talkback program we can hear metropolitan viewers ringing up and complaining about the sort of service they are receiving on metropolitan television. So, even if the whole of Australia were networked to the three networks currently serving Sydney and Melbourne viewers, the viewers of Australia would still want a better service and they would not necessarily be satisfied with the commercial service.

On the question of networking I might just mention what Senator Grimes admitted during the debate in the Senate in December when these Bills were about to be referred to the Senate Select Committee on Television Equalisation. I recall an interjection from Senator Vigor, to which Senator Grimes replied along the lines: `What do you want? Do you want a number of Mickey Mouse stations providing services for the whole of Australia or do you want three decent networks servicing the whole of Australia?'. So there is not the slightest doubt that within Cabinet and the Ministry there is a clear understanding that the result of this legislation would be to network Australia. I point out that networking would substantially reduce localism, although I hasten to add that programs of local news, weather and events are top rating and therefore are not likely to be completely eliminated.

One might ask why it is that the Government is keen on having three networks servicing the whole of Australia. Has the legislation been introduced simply at the behest of the major network operators who, as the major Australian content producers and the major Australian importers of programs, need to expand their markets in order better to amortise their costs, the costs which they have been unable fully to apportion to regional operators because the regional operators cherry pick? Is that one of the reasons why we have this legislation? Another question we might ask is whether the objective is to ensure the financial viability of Aussat Pty Ltd by ensuring that network operators will fully utilise it. If one could conject about the discussions which might have taken place in the confidence of certain offices in this building, one might imagine that the network operators were asked to give some assurance that they would fully utilise Aussat and they said: `We will do that if you lock the regional television stations into networking with us. Then we will be able fully to utilise Aussat and, because we will be able fully to sell our programs to the regional networks, they will have no alternative'.

I come to what I believe to be a major criticism of the proposal, perhaps the most important criticism of the proposal, and that is that there are no plans or arrangements whereby there is any opportunity for any new players to enter the field. All that happens under this legislation is that existing monopolies are converted into an oligopoly of the existing monopoly players servicing a larger market. Those players are then entrenched firmly into their approved markets and there is no opportunity for a new player to get into this field, except by way of a takeover. Of course, not all the shares are listed on the stock exchange and there may not even be opportunities for new players to get in by way of a takeover. Certain companies have been touched by the Australian Broadcasting Tribunal. They have been told by the Tribunal that their owners will become millionaires. Those companies will become wealthier. They became wealthy under the previous system and they will become stronger and more entrenched under this system and the opportunities for any form of reasonable business competition are being eliminated. Further, the legislation in effect locks out regional viewers from the benefits of future technology for at least the next decade. The decision to lock out direct broadcasting services, except in remote regions, and cable television is purely political. It is quite clear that that is a political decision made by the Government because of the current arrangements which it has for certain services to be provided in hotels and clubs. The other services will not be allowed to be provided around Australia.

Once this legislation has been passed it will be impossible to untangle. The licensees who are first on the timetable, those in southern New South Wales, are concerned that it may prove to be a very expensive folly which will lock them into huge capital outlays-we are talking about hundreds of millions of dollars overall, not necessarily for any particular company-for a plan that may be rendered obsolete by rapid technological change. I am not necessarily referring to satellites. Developments are taking place in fibre optics. The evidence clearly demonstrated that there are major problems with regard to the band 2 clearance. The Committee unanimously reported that there ought to be some re-examination of that. I also add that the transfer of all new television transmissions to the ultra-high frequency range was not necessarily good management of scarce spectrum resources. Both direct broadcasting services and cable television have advantages in the use of these scarce resources.

On careful examination, in my view the Broadcasting Amendment Bill has turned out to be a real bucket of worms. It heaps more regulation on top of the bureaucratic control which already surrounds this industry and provides no opportunity for new entrants. When the Australian economy is in the condition it is currently in, how does the Government justify the huge costs to the taxpayers, including the massive overseas expenditure, and the huge costs to the shareholders, all being incurred not because of market forces but at Government direction, especially when the equipment will not be manufactured locally? We were advised that tooling-up under licence would not be a viable option due to the short runs involved. Japan is so far in front in this field that the sources of other nations have withdrawn from the field and are awaiting newer technological developments. Regional licensees are being forced into an expanded service area whether they wish to do so or not. In Queensland they are being forced to sell or consolidate licences with their competitors who have been chosen by the Minister for Communications because the legislation restricts ownership to one station in any one approved market. The plan simply ignores those players who do not readily fit into it. I am referring here to Mildura and Griffith which are being left to stand alone.

Tasmania, with one licensee owning stations at both Hobart and Launceston, creates a special case under the one station one market rule so that the existing licensee must either sell off one station with windfall profits or, alternatively, the existing licensee's licence must be consolidated and tenders called for a second licence with the money going to the existing licensee.

There was an overwhelming case made for Geelong to have its own regional station, but the Government is not prepared to do anything for Geelong, not even to adopt the proposal recommended by the Government members of the Committee. In my view, the whole equalisation plan is flawed. It is a highly regulatory plan which appears to support the major networks at the expense of regional stations and to prop up the underutilised Aussat satellite. It will lead to greater networking and reduction in localism and, in some cases, diminished services or no services at all to some of our country viewers. Here we see bureaucratic judgments being imposed, not the commercial judgments of licensees whose perceptions of audience size, area and community of interest are essential to their success.

The Opposition parties strongly endorse the need for better and more services to regional viewers, but we believe that the Broadcasting Amendment Bill underestimates the benefits which could have been achieved by greater competition in a freer market. A more flexible approach which permitted a greater freedom with respect to entrance into the market and geographical limits on approved markets could achieve the aims of the present legislation without the high degree of regulation proposed by this Bill. The Opposition parties have no objection to the passage of the Television Licence Fees Amendment Bill 1986, but we will be voting against the Broadcasting Amendment Bill 1986.