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Broadcasting Services Amendment (Digital Television and Datacasting) Bill 2000

CHAIR —Welcome. The committee has before it submission No. 10, which it has authorised to be published and which has been distributed. Mr Britton, would you like to make any alterations or additions to your submission?

Mr Britton —No, not specifically.

CHAIR —Would you like to make an opening statement?

Mr Britton —Yes, I have a few words to say. Thank you very much for the opportunity to talk to you tonight. As we stated in our submission, we feel digital television is an important technology but not a critical one. However, once launched, it will have an immense impact on consumers' lives. Television has a huge reach, and it is especially important to low income consumers. The digital transition is often compared with the colour transition. But, with the transition to colour, the old equipment worked without expenditure, and it was a discretionary consumer upgrade. But, with the withdrawal of analog spectrum at some point, the digital transition will become compulsory. It is perhaps better compared with the analog to digital switch for mobile phones, and we had a few problems there with the CDMA. We perhaps have ongoing problems. We had a million people as late-changers, which gives us some idea of how people might take up digital television. In terms of scale, it is like changing every telephone in Australia to a mobile phone and then pulling out all the copper cable.

Digital television, in our opinion, should set the pattern for dealing with the digital challenge that is coming towards Australia. We do have major reservations, as we stated in our submission, about the genre approach. We are alarmed by the notion that is implied in the second reading speech about the uncertainties about streamed audio and video over the Internet, the question of them being broadcasting services and the referral of that matter to the Australian Broadcasting Authority. We feel there is possibly a logical conclusion that may be to apply the datacasting provisions to all entertaining broadband services—in other words, to make broadband broadcast. Another consequence of that would be that we would have to build a great Internet firewall, or perhaps an electronic picket fence, right around Australia. While we might safely protect the country from the perils of the digital 21st century, it was interesting reading this morning an article by Ross Gittins in the Sydney Morning Herald quoting a recent book by a fellow called Alan Oxley, Seize the Future. This was an optimistic piece about Australia's future, citing as one of our natural advantages our ready embrace of information technology. It says:

Information technology has released Australia from the prison which geography created.

It seems to us that perhaps we are throwing away our `get out of jail free' card with this approach to digital datacasting. Datacasting provisions set the pattern, and now is the time to say no. Digital television is about the future. The future—economic, social and cultural—is in many ways dependent on how we embrace convergent digital technology.

I touched on the inversion theme in our submission—on the fact that the bill is heavy touch and technologically specific as opposed to the contemporary light touch, technologically neutral approach to regulation in Australia. One of the reasons I am here late this evening is because I was at a digital subscriber line bandwidth seminar in Sydney from the ACIF, the Australian Communications Industry Forum. There is a very interesting comparison between the telecommunications environment and the broadcast environment. We were there all day. We heard about competition, maximising services to consumers, access regimes and moving towards global standards from national standards and to world's best practice in technology. I think there is a contrast.

Television is essentially a mature market with mature pricing. People buy a television and expect it to last for 10 years. They expect to be able to get one for under $400 these days—perhaps not a top of the range one, but they certainly expect to be able to buy one. We have to get digital television right, otherwise—as we have stated—we are likely to stifle potential technological opportunities for consumers. We also risk upsetting them greatly. While we support some aspects of the bill in the context of the way the debate has developed, particularly the standard definition simulcast with high definition, we do not really feel this bill gets digital television right at all. It looks after incumbent interests and does not lay the groundwork for the successful embrace of convergent digital technology in Australia—in fact, it does the reverse. As we stated in our submission, it might be better to go back to the drawing board than to rush this legislation through. I am happy to answer any questions.

Senator MARK BISHOP —In the ACA's opinion, how is the mandating of HDTV likely to impact upon consumers?

Mr Britton —Since the introduction of the standard definition Must Carry simulcast, somewhat less than it might have been when there were our initial fears with the proposed approach. The question, from our point of view, is: how will it benefit them? It will make high definition available but, on the other hand, if that were a commercially viable approach, one would think it would be made available to them anyway. I do not know that there is any great advantage in mandating it, although there is nothing inherently wrong with it as long as it has an economic basis.

Senator MARK BISHOP —Turning to the datacasting definition, you have expressed concern at the restrictiveness of the definition in the bill. What do you perceive to be the predominant disadvantages of the definition as currently drafted?

Mr Britton —We think it is complex. We think it is probably uncertain. We think there will be a lot of dispute about some of the boundaries. I think I expressed particular concerns about the educational side and the impact on children in the thing.

Senator MARK BISHOP —Dull but worthy.

Mr Britton —There is that about it. I am very concerned, as I said in our introductory statement, that it is setting a pattern that could be ongoing and merge into the treatment of broadband generally. Basically, I think the genre approach is wrong. As we set out, essentially we feel that a technology that does not even exist yet is being defined into the ground. We have no idea what a datacaster looks like because there is not one. As we suggested, we thought perhaps the better approach was to work from the known—that is, broadcast—rather than trying to find the unknown, and then deal with the problems of success. If datacasting thrives and flourishes, maybe a regulatory response is required then.

Senator MARK BISHOP —If you were able to go back to scratch and define datacasting ab initio, from your perspective what would be the critical elements to have in that definition?

Mr Britton —Ab initio, we would not probably want to define datacasting necessarily as a subject separate thing, because that is part of the passage of this process. Nevertheless, given that we came in at that point, I think distinguishing it from broadcasting is reasonable. We have no particular problem with not wanting datacast to be a backdoor to broadcast or we would not mind seeing small broadcasters through the front door, but we do not necessarily want a backdoor route, because that is not very transparent, so distinguish it from broadcasting by all means. But defining what broadcasting is and then organising the policy outcome so that datacasting could not be broadcast has no real problem to my mind. Then there would be only a few aspirant datacast broadcasters and they could be dealt with quite effectively.

Senator MARK BISHOP —If you were going down that path and you were not happy with the genre approach, what approach would you pursue?

Mr Britton —We would specify broadcasting as being the linear, passive, scheduled production of television programs on a repeatable or ongoing basis—providing a television station. At some point in there it talks about the commonsense of the word, and in some respects people know what broadcasting is. One of the problems we have with datacasting is that we do not know what it is at all. But we have some pretty good tests, I would think, to say what broadcasting is and to recognise it when it happens and to control it in that way.

Senator MARK BISHOP —Why does the ACA oppose the legislative scheme's reliance on the ABA for determinations on the scope of datacasting definition?

Mr Britton —I guess it is registration of concern perhaps rather than violent opposition.

Senator MARK BISHOP —Because it is a government agency involving itself in a place properly regulated by the market?

Mr Britton —It goes back to the genre approach and the ABA getting involved in making content assessments. It dovetails with some of the other things the ABA is being asked to take on; it is an ongoing evolution of that role. It is inter-content regulation, which is coming quite close to cultural regulation, and it is taking it away from the regulation of the operation of the industry, if you like, and into what it is that the industry does. Essentially that is fraught with a number of difficulties. It is also to do with the very minute granularity of what the ABA is being asked to address, that is, down to the individual program level potentially. As we said in our statement, the workload in that is potentially quite large, and there are quite a lot of other things that probably need regulating before we get to that.

Senator MARK BISHOP —Did you hear the discussion earlier today with FACTS?

Mr Britton —No. Sadly, I did not.

Senator MARK BISHOP —We had a lengthy discussion on the problem of educational entertainment in the area of children's programs. We had a discussion on a number of the descriptions of those children's programs. FACTS's view was that nearly every children's program, of the ones discussed, that is broadcast on free to air was appropriately broadcast material and not datacast material, and hence that the issue of ABA regulation of particular programs in the context of datacast was almost a non-issue.

Mr Britton —I guess that is their call until such point as a datacaster bucks that system or decides they want to do children's education, when it will become a point of contention.

Senator MARK BISHOP —The point they were making was that children's programs have to be entertaining to attract and retain the market of the kids. I think that is a given. On that basis, entertainment is broadcast work, if you like, not datacast work. Hence, this is a bit of a furphy and a non-issue.

Mr Britton —If people are happy to rule interactive datacast style services out of children's lives, that is true. But from our point of view it would seem that one of the potentially very useful and innovative applications of datacasting may well be in interactive educational processes for children and other people.

Senator MARK BISHOP —Interactive educational processes and the category B classifications allow that through educational institutions but not educational processes.

Mr Britton —That is right. As we said, that means basically that preschoolers or whatever are out, and school-age children as well. Whether it is produced under the aegis of that or not I do not know.

Senator MARK BISHOP —Turning to the various submissions and reviews that are built into the bill, you recommend a 12-month pause in the process of digitisation to allow for further technological and commercial assessment of the change. In the absence of a 12-month moratorium, do you think that the proposed reviews will allow appropriate amendment of the digital scheme to account for areas in which the scheme fails?

Mr Britton —Potentially, but we feel that the framework is not right anyway. The pause idea is to do with trying to get the framework right. One of the issues is that the convergence aspect of this is not being considered sufficiently well. The Productivity Commission have put out a major report dealing with this whole issue. They have some very interesting thinking in there. It does not necessarily get a 100 per cent tick but there is definitely some interesting thinking. We have had the convergence review from the department of communications published last week. It seems to me that that stuff is the horse and this stuff is the cart. A sensible or holistic framework based approach to the convergence challenge of fitting digital television into that would be a useful thing to do. So the reviews will review this particular piece of legislation as it creaks along but will not necessarily address those framework issues, and the world is continuing to charge ahead.

Senator MARK BISHOP —Do you have any recommendations relating to the time frame for reviews and how they should be undertaken? Firstly, the ABA streaming review. The issue here is: should it be a departmental review or perhaps a statutory review accountable to the parliament, and sooner rather than later?

Mr Britton —I am not sure what the agenda behind that review is. I guess I would like to see it in a parliamentary sort of environment to get the maximum oversight of it.

Senator MARK BISHOP —And time frame?

Mr Britton —I do not have a particular view on it. I do not know that there is urgency to review that. I do not know what the urgency would be to do it, decoupled from the urgency of actually reviewing the environment. Again, it is another brick in the wall, if you like, but it is not looking at the wall.

Senator MARK BISHOP —You would argue that there is a need to pause and do an overarching and more general review to consider all of these issues relating to where digital TV is going and where it slots in with the convergence and all the associated issues.

Mr Britton —A lot of that work has been done. It just does not seem to be being applied. I am loath to recommend more reviews, but I think an integration of the reviews that have occurred into a framework is the sort of work that needs to be done now. While digital television is an important technology, it is not a critical technology. It is critical to get it right; it is not critical to put it in. So from that point of view, there would not be, in my mind, any particular loss in pausing to get the framework right. But there would be no point in just repeating all the reviews that have occurred. Integrate those into a framework which spells out and looks at things like high definition mandating in terms of the bandwidth, in terms of how bandwidth fits into the convergence issues, the question of the ABA review that is proposed and what broadcast looks like and how it fits into the digital environment. There are some very enormous questions in there that are not going to go away.

Senator MARK BISHOP —Thank you, Mr Britton.

Senator BOURNE —Do you feel that about 12 months would be a reasonable time frame to try to get it all together and get it right?

Mr Britton —It is a figure out of the air more than anything else. What I am trying to say is that it is not a pause that would actually delay things enormously. At the same time, given that the work would be, in effect, integrating existing work, not starting again, I do not think it would be an impossible time frame.

Senator BOURNE —Do you think that if we put this in now and had a big review in 2003, which is where it is heading, it would be much more difficult to take things away from people in 2003 who have bought 15-year licences or make them change than to get it right now?

Mr Britton —Certainly the more that gets committed, the more difficult it gets to pause. People seriously said to me while this whole thing was under consideration—it was while I was in committees with these things—`Just get it through and we will fix it all up in 2003 and 2005.' I think that is an impossible approach for two reasons: one is the point you raised about things getting stuck and the other is the pace of the technology. The change is such that we do not necessarily have the luxury of waiting three or four years to fix it. I think we can pause for a year. That is another reason for not saying stop for a very long time, but I think it is really worth an earnest endeavour to get the framework right. I really feel we do not have the framework right.

Senator BOURNE —On something completely different, from your submission you do not seem to think that HDTV—the very nice picture and the enhanced sound—is going to drive people to pick up the new technology; it is going to be something else that drives them into the digital world. What do you think will be the key to people picking it up en masse?

Mr Britton —HDTV in the United States does not seem to be doing it. There is a whole host of other things going on in that environment, so it is not just that. But it is certainly not a killer application, as they say. I am not sure that digital television at all is a killer application. So, in that sense, I think it is possibly going to be a hard sell in the end, particularly with the prices that are out there. As I said, television is a mature technology and people expect to pay mature prices and get mature performance. What is going to happen is that this mature product is going to turn into something like a PC. I know it is not a PC, but it is going into the digital world where it is going to be needed to be upgraded all the time and it is probably going to crash from time to time. It is going to cost the sort of premium prices and, yes, by 2008 the price may be better, but I still think it will not be down to the level analog televisions are at now. So people are potentially going to see it as an impost. A lot of people were not too happy about having to trade in a perfectly good analog phone for a digital phone and that had only been around for 10 years or something. Television has been around for a lot longer than that, and they are in every lounge room and practically every spare bedroom in Australia, if you like. It is not just one television per house—houses have lots of televisions. A lot of people would be touched in a lot of ways by it. So take the mobile phone situation and multiply it out. I think it is difficult to underestimate how big it is in terms of its impact.

Senator BOURNE —From a consumer point of view, as you said before, turning it off is going to be a very difficult thing to do to stay equitable for the consumer. Do you see any sort of time frame where you think that would be a reasonable thing to do? Or do you see other circumstances that could come into play there to make it reasonable?

Mr Britton —It will be a very challenging policy question to say what level of digital television take-up is sufficient to withdraw the spectrum. If five, 10 or 15 per cent of people have not taken it up, is that an acceptable point at which to turn it off? Picking the turn-off point could be very challenging. This goes back to the point about this whole thing: to my mind it is technology driven, not consumer pulled. It is push, not pull. Unless there is some pull factor that makes people want to go across, then it could be a long time before we see that spectrum being relinquished. Then you have to think about whether it is in the national interest to make people an offer in some fashion or another to move them across.

The equity thing comes in two ways in that regard: (a) you have to move low income people across, who probably only have one television; and (b) then you have other people who will be very annoyed because they have two or three televisions that have to be moved across. It would obviously be inequitable to pay them extra because they are rich enough to have lots of televisions. At the same time, they may not be that rich that they are not going to be annoyed about having to buy three set-top boxes in order for those digital televisions to go on working. There is not necessarily a big advantage to incumbent players in having swathes of bandwidths relinquished, so it is quite useful having it locked up in analog spectrum simulcasting.

Senator BOURNE —Yes, if you are not a new player. It is a good point. Thank you.

CHAIR —I thank the witness for appearing.

Committee adjourned at 8.17 p.m.