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Broadcasting Services Amendment (Digital Television and Datacasting) Bill 2000

CHAIR —Welcome. The committee has before it submission No. 24, which it has authorised to be published. Mr Herd, do you wish to make any alterations or additions to your submission?

Mr Herd —No, I do not.

CHAIR —Would you like to make a brief opening statement?

Mr Herd —Yes, I would. I thank the committee for inviting us to appear today, and I would like to make a brief opening statement in support of our submission, essentially to tell you who SPAA are. We represent production companies that are engaged in making film and television programs for a variety of distribution mechanisms, including television. We also represent companies that are engaged in the supplying of equipment for production and services such as editing, sound and visual effects and other aspects of post production. In making our submission, our concern has been to ensure that the creation of content for digital television does not get forgotten in the focus on the delivery mechanisms. We believe the driver for the take-up of digital television, whether it is standard definition or high definition television, will be content. That is what the consumers are after. We are also keen to see recognised that costs are involved for the independent production sector, particularly in post production in preparing for and producing high definition television.

We are particularly concerned that the requirement to broadcast 20 hours a week of high definition television programming contains no incentive in it to broadcast Australian programming. While we recognise the broadcasters, particularly the commercial broadcasters, have Australian content requirements to meet, we are concerned that if the majority of high definition television material that is available is coming from overseas—and particularly America—then there will be pressure on local content. That is why we argue that there needs to be a recognition that there will be increased costs involved in producing for HDTV in Australia. There also needs to be more certainty about the formats that are acceptable for HDTV. Specifically, we would like to see clarity as to whether 35-millimetre and super 16-millimetre film are considered as capable of up conversion to high definition television. We are concerned that the provisions in the legislation that deal with this question lack this certainty and leave too much discretion to the broadcasters to determine what is acceptable transmission quality.

We are also concerned that the introduction of datacasting services should provide the opportunity to produce new forms of content. We do not support datacasting becoming another version of existing broadcasting television services and therefore undermining the existing structure of free-to-air and subscription television, but at the same time we do not want to see definitions that are so restrictive that it does not deliver services that are compelling to consumers. We are also concerned to see that, as this new form of communication develops, there are opportunities for Australian creators and Australian voices to be heard. The bill presently is silent on the Australian nature of these services and the incentives to use Australian creative inputs.

In relation to multichannelling by the national broadcasters, we are not clear why the government does not want to proceed with its original proposition to allow limited multichannelling, particularly of the kind, such as educational services, that seems to complement the charters of both national broadcasters.

Senator BOURNE —You mentioned the up-conversion of 35 millimetre and 16 super. Do you think it would be less of a signal if you were putting those up-converted in HDTV? What is your problem with doing that?

Mr Herd —Essentially the issue is that, in order to produce for high definition television, you have either got to use special high definition television cameras and associated equipment or to produce it in a format that is compatible with high definition television. If you take the example of drama, presently very little drama is produced on 35 millimetre, aside from feature films and some miniseries. The majority of television drama is either produced on super 16 or on videotape. Our concern is that either there will be the cost to the producers of having to move to new formats that are compatible or, if they are required to produce on a format that requires them to use high definition cameras, there will be additional costs. We are arguing, and I think there is a fairly broad acceptance, that film would be an acceptable medium to up-convert.

Senator BOURNE —I think I got you wrong in the first place, then. You are not worried that film could be used; you think it is a good thing that film could be used.

Mr Herd —Yes. It is simply that the legislation as presently framed is unclear about whether or not that will be a suitable format. The words in the act we think are unclear.

Senator BOURNE —Okay. Movies would, I guess, be a prime example of where you could put out prime time if you have to in HDTV as long as up-conversion is okay.

Mr Herd —Yes.

Senator BOURNE —Although Star Wars II I understand is being filmed in HD anyway because of the special effects, and it would make it easier.

Mr HerdStar Wars II is going to be the first feature film that is shot digitally. The impetus there is not so much for television use but because there are plans afoot, particularly in North America, to deliver digitally to cinemas.

Senator BOURNE —I have one more question. You recommended that the fee charged to commercial free-to-airs be raised, partly because of the cost of the spectrum and also partly to support Australian production. You mentioned the Australian content rules. Can you tell us a bit more about what the needs are of the production industry that you think are not being met and could be met with this bill, and how you think an increased fee could be used? How would you use it to support the Australian production industry?

Mr Herd —For example, if I can take the area of post production, my members have already made significant investment in equipment to keep pace with the changes in digital technology. Digital technology in production has been around for a considerable period of time. These are substantial investments. I guess what we are saying is that there has been some recognition on the part of the government of the cost to the broadcasters in preparing for digital television, but there are also costs involved for the independent production sector, both in post production and in the cost of inputs such as tape and film, in order to produce material for digital television.

As to the other part of your question, we are also saying that there needs to be some recognition in the fact that the broadcasters are getting access to the spectrum. Admittedly they are paying licence fees, but there is no proposal for any movement in those licence fees or any recognition of the costs that the producers face. We are dealing in our terms of trade with broadcasters over many years, and the fees that they pay producers for the programs have not moved very far. If we are faced with increased production costs, there will be further pressure and a further squeeze on the ability of our members to produce high quality Australian programming.

Senator BOURNE —Would you see any of the increase in licence fees going towards Australian programming? Would that be the general idea?

Mr Herd —We have argued consistently that there needs to be, through the various mechanisms the government provides to support the production industry, a greater focus on underwriting the cost of television production, particularly for miniseries and telemovies. We were very disappointed in the close of the commercial television production fund. We argued in the context of this past budget that there needed to be increases to the Film Finance Corporation to help it fund higher levels of Australian drama production.

Senator BOURNE —There is not much available from the ABC either, at the moment, unfortunately.

Mr Herd —Yes. Unfortunately, the ABC is also under cost pressures.

Senator BOURNE —Extreme, yes.

Senator MARK BISHOP —Mr Herd, does your organisation have any comment or view on the relative narrowness of the definition of datacasters and the product they may transmit?

Mr Herd —We said in our submission that we can see what is trying to be achieved—to not see datacasters become another form of broadcast television. But we have a new form of communication, a new form of information and entertainment, that is being delivered to the public, and we are concerned not to see it constrained to the extent that it does not allow for innovation in new forms of content, which our members would like to participate in supplying to those new service providers.

Senator MARK BISHOP —Do you approve of the path the government has chosen to go down of genre classifications into category A and category B product that might be transmitted by the commercial TVs and then by the free-to-airs and the remainder for the datacasters? Or would you prefer to have an alternate system of classification of product?

Mr Herd —I think that the approach that has been taken is to look at what are the genres that are currently broadcast on free-to-air television and then to identify those that you do not want to have leak across to datacasting. In other words, what you are trying to do is define datacasting by reference to existing television services rather than looking at what you want to achieve with datacasting in the longer term—where you think it is going to lead in terms of introducing new services and new players into the communication marketplace and what potential there is for it to grow into a new form of communication.

Senator MARK BISHOP —The Australian Consumers Association was quite critical of the path of genre classification, describing what was left for the datacasters as `worthy but dull'. There were teletext stock reports, weather reports and education programs but no entertainment. There seems to be a driver in the bill to prevent datacasters from expanding and to prevent entertainment becoming a dominant feature of the product they transmit. Is your organisation comfortable with that outcome?

Mr Herd —We have concerns that the outcome, as is laid out in the bill, will lead to a contracting of the potential of these new services and the use of this spectrum to provide services that are compelling to Australian consumers. I think you made reference to teletext. I do not know what the current take-up of it is, but it has been around for a long while. It is not providing content that any of my members supply.

Senator MARK BISHOP —Some organisations appearing later on are putting a very strong argument that this genre classification path the government is choosing to go down is killing off the datacasting industry before it is even born simply by limiting it to category B type programs. Your organisation does not share that view?

Mr Herd —The inherent danger in establishing a system that is based on genres of existing free-to-air television is that, as has been demonstrated by the history of television, it changes all the time. Genres do not remain fixed, so you are fixing datacasting at a point in time of development of broadcast television that may hamper the future development of datacasting services.

Senator MARK BISHOP —Both the ABC and SBS are going to be denied the opportunity to go down the path of multichannelling. In the case of the ABC, I think they particularly wanted to go down the path of education/entertainment and children's programming, as well as extensive regional news and current affairs type programs on their additional channels. Does your organisation have a view on restricting the ABC and SBS from going down the path of additional channels?

Mr Herd —As I said in my opening statement, we do have concerns about the unrestricted entry of new commercial television services. But we were quite comfortable with the proposition that was originally put by the government that the national broadcasters should be allowed to multichannel, because what they were proposing to do seemed to be an extension of the charter that they had and would provide opportunities for our members to produce content for those channels, as we presently do for both SBS and the ABC. It is unclear to us why the government changed its mind on that proposal.

Senator MARK BISHOP —You have made a big plea in your submission that the 20 hours of mandated HDTV should be original, first-run, Australian content. Without being too presumptuous, I presume that is somewhat of an ambit claim. In the datacasting area, if the product that is delivered is, as the Australian Consumers Association characterised it, `worthy but dull' and limited to those category B programs, isn't most of the product—news services, stock reports, weather reports and educational delivery—by definition going to be of Australian content? Have you given any thought to that angle?

Mr Herd —I can see where, particularly in the news area, there would be a large amount of Australian content. But I suppose we are coming back to what we were arguing before. If the way that you approach datacasting allowed a much more innovative approach to creating content, then there would be opportunities for Australian creators to make content for datacasting services in the way that, amongst my membership, we are looking at other forms of new media such as creation of content for the Internet.

Senator MARK BISHOP —But the system proposed by the government of category A and category B—with essentially category A being reserved to the broadcasters and being almost everything we know of traditional TV—really does prevent any development of a significant datacasting production industry, does it not? You are arguing here that it should be 20 hours Australian content and you are saying that you are comfortable with the free-to-airs retaining their significant monopoly position. Then you say you want innovation and change and development of the communications industry but you are coy about arguing for expansion of the datacasting industry. You appear to be comfortable with the proposal of the government. It strikes me as being an essential conflict in your organisation's position.

Mr Herd —I did not think we were saying we were comfortable. Our criticism of the genre classification indicates that we are not comfortable with the current classification of datacasting services and would like to see it opened up in order to provide those opportunities. As you suggest, if it is restricted to a limited form of news and information then the opportunities for production outside of that are going to be very limited and will possibly be the recycling of existing news services, whether they are sourced from free-to-air or other subscription services.

Senator MARK BISHOP —Thank you for clearing that up.

Senator CALVERT —I was interested in the actual process of super 16-millimetre and 35-millimetre film being up-converted. Is that a difficult process or an expensive process?

Mr Herd —It requires the use of what is called a telecine machine to convert the film to tape for broadcast. My understanding, or the information we have, is that there is only one such machine in the country at the moment. I am not clear on what plans broadcasters have to import those machines in order to do that. But I do know that the cost of such machines is quite high.

Senator CALVERT —So the end product would of course be of very high quality?

Mr Herd —Yes, that is right. We would argue that film itself is already high quality in terms of the resolution of the images. Film rather than tape as a medium continues to be the majority choice for high quality feature film production and for high quality television drama production. In our view it will continue to be so for the foreseeable future despite the potential introduction of digital cinemas. A lot of material will still continue to be produced on film because of the quality of the images it provides.

Senator TCHEN —Is `up-converting' your terminology or someone else's terminology?

Mr Herd —`Up-conversion' is generally accepted terminology in the industry.

Senator TCHEN —To use film in television broadcasting, whether it is analog or digital or high definition digital, you have to convert the film into tape anyway, do you not?

Mr Herd —That is right. That is what I was referring to before about the telecine machine which does that conversion from film to tape.

Senator TCHEN —Even today?

Mr Herd —Even today, with—

Senator TCHEN —Only one machine?

Mr Herd —Even with analog television, telecine machines are used to convert film to tape.

Senator TCHEN —Yes, but is the analog converter common? Does every station have one?

Mr Herd —I believe that most broadcasters would have them.

Senator TCHEN —So when you are talking about a converting machine being the only one in Australia, that is to convert to high definition?

CHAIR —I presume that in Europe, where they have standard definition television now, those sorts of machines are commonly available.

Mr Herd —I believe they would be.

CHAIR —There being no further questions, I thank Mr Herd for appearing this morning. We take note of your interesting submission, with its emphasis on Australian content.

Proceedings suspended from 12.40 p.m. to 1.40 p.m.