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ENVIRONMENT, COMMUNICATION, INFORMATION TECHNOLOGY AND THE ARTS
01/06/2000
Broadcasting Services Amendment (Digital Television and Datacasting) Bill 2000

CHAIR —Welcome. The committee has before it submission No. 7, which it has authorised to be published. Could you please advise the committee whether you wish to make any alterations or additions to your submission?

Mr Melville —No. The submission stands.

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

Mr Melville —Yes—four minutes, if I may.

CHAIR —Please proceed. We will not mind if you are a little bit over.

Mr Melville —I must apologise for standing the committee up. I was a victim of the fog and spent almost an hour circling Canberra. The past three years have been particularly uncertain for community television, with the government and the ABA putting decisions about permanent licensing of such services on hold while the big decisions about digital television and datacasting were made. Nonetheless, in 1998 the government held out the promise of a Must Carry regime for community television. The idea was that digital datacasters would provide access to spectrum and free carriage for a standard definition digital channel. Two years down the track, having already amended the BSA in a major way in 1998, now is the last opportunity to make significant amendments. Yet, at this stage, parliament has been provided with a bill that makes no provision for community TV.

For our sector, a lot has hung on the government's promise. It has been held up as the one solid plank in a raft of otherwise uncertain prospects. The CBAA has worked alongside all industry players within Standards Australia to produce the necessary technical transmission and reception standards for digital television and datacasting. These standards are determined by industry consensus and, to date, all stakeholders have anticipated that the government would make good on its promise of community television carriage using a datacast multiplex. Also, all have assumed that the first datacaster in each market would meet this obligation.

Community television services have been operating since 1994 on a trial basis and under an unsuitable and inherently unstable regulatory regime cobbled together under the open narrowcasting class licence and facilitated by a succession of short-term transmitter licences. The spare analog UHF channel known as `the sixth channel'—or, to most people, `channel 31'—has been under ministerial reservation while the government continues its moratorium on a fourth commercial network. This opportunity has allowed a handful of tenacious, unfunded community groups to establish and maintain community access services. But, with no licence tenure, their ability to develop appropriate business models and to plan for growth has been severely limited. Add to this high overheads, an inappropriate regulatory framework, a reluctant regulator and a lack of tangible government support. We have had a situation which has left some groups vulnerable to commercial exploitation by third parties.

Nonetheless, there are clear social and cultural benefits for the Australian community in having such television services. Briefly, these include media training opportunities, support for localism—particularly post equalisation, where we have seen a huge increase in network television—and encouragement of innovation and program development, higher education delivery and, last but not least, culturally diverse content—and, particularly, culturally diverse content at the local level. We have only just begun to see some of the real potential of these innovations, and some very valuable work has been done within very tight cost structures.

Our medium-term hopes for a national spread of services were dashed last May when the minister revoked his national reservation of the sixth channel and, instead, reissued a selective reservation for community and educational purposes only in areas where there is currently a licence. The ABA followed up last year with digital channel plans that indicate an interim commitment to our sector's analog presence and a recognition of the datacasters' carriage requirement. But still, to date, there are no indications from the government or the regulator about if or when permanent licences will be available to analog or digital services.

My organisation, the CBAA, is committed to calling for a permanent place in our broadcasting system for community television, and we seek some guarantee of a migration path from analog to digital. The preferred model is one of simulcasting using the existing analog channel and freely provided digital bandwidth. Just on four months ago, the president of the CBAA, David Melzer, wrote to the Minister for Communications, Information Technology and the Arts mentioning just this, asking for a permanent place within the broadcasting system, but to date there has been no answer. The CBAA finds it unsatisfactory that, although all the other clause 59 digital reviews have concluded and have reported to parliament, the one that was meant to deal with regulatory arrangements for datacasting and community television has been deferred, supposedly until later in the year. Our chief concerns here are that there has been no government delivery on promise, no transparency of public process in making decisions about the fine regulatory detail of datacasting and community television and no legislative provision within anything like an effective time frame.

In conclusion, we have said in our submission to this committee that the CBAA has no dispute with the government on the need for more time to firm up further regulatory details and to undertake further spectrum planning. However, we are resolutely of the view that the time is now for an appropriate legislative commitment to providing for community television services or the opportunity could be lost.

CHAIR —Thank you very much.

Senator BOURNE —Mr Melville, if you were excluded from licences, as you fear at the moment, and licences were allocated according to auction or something, and then there was a big review in 2003, which we are expecting, and it was decided in that review that you could have some spectrum, do you hold out any hope that you would be able to get spectrum from anywhere in that case?

Mr Melville —It is a question that at the end of the day the planning people from the ABA can respond to, but on current publicly available information we do not hold a lot of hope in that sort of time frame, because of the inability at this stage of finding sufficient spare digital channels in all markets. The last thing I saw published by the ABA indicated that, aside from allocating five digital channels for co-channelling arrangements for the existing television networks, in Adelaide they could find two extra UHF channels; Brisbane, one extra channel; Melbourne, two extra channels; Perth, three; and Sydney, one. Looking at the lowest common denominator, you are stuck with the problem of Brisbane and Sydney only having one spare digital channel to be taken up by a datacaster, independent of television operations, and that would be our host under current government policy. We would be multiplexed into their signal. We presumably would not actually be a discrete part of the spectrum but would be multiplexed in. If you were to put datacasting licences to market via auction next year and then come along in three years time, after a sale price has been established in a free market, and try to post facto impose a licence condition that does not apply some opportunity cost to that datacast licensee, it would be unfair on them and I think it would be stridently resisted. In other words, I do not really like our chances.

Senator BOURNE —Fair enough. Have you had a look at the Productivity Commission report on broadcasting?

Mr Melville —Yes, I have.

Senator BOURNE —They suggested a few things there about community broadcasters. Do you have a view on that?

Mr Melville —I do not want to comprehensively review their recommendations, but the reference is on page 280 in the Productivity Commission's final report. We are gratified that they recognise a place for local, community access television. Where in another environment we would agree with them that there would seem to be opportunities in carriage for community television being provided by people who are already providing multiple channels in the television market, I guess our submission and our thinking to date is predicated on the fact that there is a legislative block on any multichannelling, even for the national broadcasters. Where we do part company with the Productivity Commission is that we do not believe that there should be a delay. We believe we should be in from the outset. The second thing is that we do not fully concur with their view about it, of necessity, having to be funded directly from Commonwealth revenue. We believe that carriage could be provided at technical marginal costs and, yes, indeed, some opportunity costs to a datacaster or a television platform provider. But that should be built into considerations at market entry price.

Senator BOURNE —But the bottom line that you see at the moment is that there needs to be some Must Carry before the spectrum is allocated?

Mr Melville —If the government is at all serious about its policy commitment to date—and I guess I am not here to criticise the government per se but there has been a standing promise. There have been two bills now, one in 1998 and the one that we are now looking at, and no legislative delivery. There might be some other means to ensure that carriage opportunities occur within a reasonable time frame and that there is some sort of guaranteed migration path to digital, but we have seen no evidence of it. At the risk of sounding carping, we cannot even get a decent response from the minister. We have actually written to other cabinet ministers, too.

Senator BOURNE —You are not alone there.

Mr Melville —Exactly. There is a big incipient datacasting industry waiting for some answers as well.

Senator BOURNE —You would be looking at standard digital not HD, so you would need only 2 megahertz. Would that be right?

Mr Melville —We would definitely be looking at standard definition television in the short term, and if more bandwidth became available after the simulcast period later in the decade then, yes, we would be looking at other channels. But at this stage we have resigned ourselves to the fact that at least we would have a single digital channel to match analog coverage that already exists. Depending upon which engineer you talk to, the bandwidth requirements are fairly modest.

Senator BOURNE —If you could start from scratch and say, `This is what I would like to see in the legislation for CBAA to be able to do what it wants to do,' what would it be?

Mr Melville —It depends very much on the extent to which Labor and the Democrats push for a multichannel environment for the national broadcasters. But at this stage, assuming that we are stuck with roughly the legislative framework that we have, I would simply refer you to the recommendations on pages 4 and 5 of submission No. 7, our submission.

Senator BOURNE —And assuming that the ABC did get multichannelling, what then?

Mr Melville —I think there would have to be some sort of review. We would have to go back and consult and we would have to enter into a much more serious dialogue with national broadcasters than we have had to date. But we would certainly be looking towards opportunities for synergies in terms of the fact that there is a television transmission network operated by NTL already across the country, which will evolve towards multiplex capability that could, potentially, provide multichannel television. The possibilities would range from a hybrid system where you had, perhaps, datacaster carriage in markets where there were multiple channels available to regional areas and where datacasting in the business case might push back to 2004 or beyond. We might be able to gain some capacity on multiplexes that are otherwise occupied by national television broadcasters. It would really have to be mapped out fairly strategically and fairly carefully, given another set of legislative preconditions and other policy and regulatory frameworks.

Senator BOURNE —I am sure the national broadcasters would have something to say about it too.

Mr Melville —Yes, I am sure they would.

Senator BOURNE —Thank you, Mr Melville.

Senator MARK BISHOP —Mr Melville, I have a press release from Senator Richard Alston, which was released on 24 March 1998. That press release has the heading `Digital—A New Era in Television Broadcasting'. If we go over to page 2, towards the bottom of that lengthy press release, it says:

The digital environment opens up new localised programming opportunities for all broadcasters, including the community television sector which will be guaranteed free access to the spectrum needed to broadcast one standard definition digital channel.

That press release was put out by Senator Alston in March 1998. It is unequivocal in its commitment to guarantee additional spectrum to the community television sector for one standard definition digital channel. I am hearing from you—if I have heard you correctly—that that commitment has not been honoured. Is that correct?

Mr Melville —I do not think you are specifically hearing from me that the commitment has not been honoured. It has not been revoked. We have simply faced a wall of silence in terms of any indication of how that commitment shall be delivered. What I am saying is that there has certainly been no delivery through these two legislative opportunities.

Senator MARK BISHOP —The commitment was made more than two years ago, but there has been no progress in implementation of the promise. Is that correct?

Mr Melville —Yes. From all indications that we have had, that is correct.

Senator MARK BISHOP —When was the last formal communication that you had from the minister or the minister's office on this issue?

Mr Melville —Off the top of my head, it was a good while ago—certainly over a year ago. As I said, we have had some communication with the Department of Communications, Information Technology and the Arts, and from time to time we have a good relationship with the bureaucrats there in terms of information flows. But in terms of communication from the minister's office, I would say off the top of my head that it has been over 18 months. In other words, there has not been a lot of discussion about that promise since 1998, since the last time around.

Senator MARK BISHOP —That is 18 months. So that is roughly since the end of 1998, circa the election.

Mr Melville —Yes, that would ring true.

Senator MARK BISHOP —So you were given this promise; you have had some information flow from the department, but you have had no contact from the minister's office in the last 18 months. How is this uncertainty affecting community broadcasters?

Mr Melville —It is part of a wider uncertainty. Digital is one thing, and it is ultimately going to become important as there is a marked transition and a consumer uptake of digital equipment. The most pressing problem is that, while decisions about digital are being made and while issues about whether or not the existing spare analog channel is going to continue to be available, the Broadcasting Authority is left in the possession of only ever being able to issue, at best, one-year transmitter licences. So you have these small, struggling companies—not-for-profit, community owned companies—in this case in the five capital cities, who are attempting to stitch together business plans, to run their own transmission equipment, to invite community programmers through the doors and to maintain their services but are unable to look beyond, at best, a one-year horizon. The situation is particularly marked at the moment in that the current transmitter licences held for analog services expire in one month's time, and what is a very small investment in infrastructure operations for the television industry in relative terms is a considerable investment for community, not-for-profit organisations. And there is still no formal word back from government or the bureaucracy about our prospects of continuation.

About three weeks ago we had an informal briefing via telephone from the department—no contact from the minister's office—that yes, in fact, cabinet had apparently made decisions about community television in April, with still no advice on what those decisions were, but it was looking likely that there would be an extension of analog community television for a further year into the middle of next year whilst questions about permanent licensing and digital transition were further considered. Our concern is that this takes us past the commencement date for digital of 1 January and, as Senator Bourne has indicated, a review in 2003 does not improve our chances any. So it is part of a wider policy vacuum and regulatory uncertainty.

Senator MARK BISHOP —Thank you, Mr Melville.

CHAIR —You talk about the introduction date of 1 January for digital television, but the reality is that most people will still be using analog and the simulcast period goes for another eight years. So there is quite a lot time in which you can maintain your service in an analog frame, don't you think?

Mr Melville —That is true. I guess that is why our recommendations in submission 7 are fairly measured under the circumstances. We are certainly not insisting on an instantaneous switch over to digital, but we are calling for some positive legislative commitment to government promises.

CHAIR —Some clarity about your future.

Mr Melville —And some clarity in the shorter term.

CHAIR —But there is quite a big time frame there.

Mr Melville —Yes, there is, but there is the question of giving spectrum over, assigning spectrum for other uses, be it network television or datacasting, and then at a later date trying to claw back some of the carriage capacity. That is going to be a difficulty within the statutory simulcast period. If there is a very small analog consumer base left at the end of the decade, that is going to leave us in a bit of a ghetto. It is important at some stage in the shorter to medium-term future for community television to move into digital. If the parliament at all values the cultural and social benefit of the services, there has to be some flexibility, some provision. Costs are an issue. For a standard definition television service, certainly at the production end of the equation, there is now in the marketplace very good quality cross-over equipment between consumer and professional quality digital video—it is commonplace. It is just a question of getting us carriage on infrastructure that is funded by another sector of the industry.

CHAIR —I understand that point.

Senator HUTCHINS —Mr Melville, in your opening statement you said that some groups have been left open for exploitation by third parties. Would you like to elaborate on what you meant by that? `Exploitation' is a fairly emotive term.

Mr Melville —It need not be. In 1997, the Australian Broadcasting Authority produced an inquiry report into the future use of the sixth channel, which was commissioned by the minister. It has largely sat on the shelf whilst the whole digital juggernaut has moved by. It made the recommendation that, if the sixth channel, the spare analog television channel, was to be used for any purpose at all, the maximum social benefit—I am paraphrasing wildly here—would attain from assigning it for community access television. Obviously, from our perspective that has been a highly supported recommendation which has not gone very far.

In the detail of their report, they also suggested a hybrid model in order to solve the problem of high start-up costs and high overheads. Presumably, they are predominantly speaking within an analog context, but the principles remain the same. They had suggested that licences be issued on a permanent basis for community television, but that some time within the broadcast schedule be quarantined off and sold to a third party for commercial exploitation—the non-emotive use of the term.

We were qualified in our support of this. That has never been implemented, but the impetus to raise money and to continue to support services has resulted in some of these open narrowcasting licensees that are operating in the interests of community and educational services being led into various deals and the consideration of trading air time for equipment or air time for access—not all of them bad, not all of them good, I might say. I do not want to go into the detail unless it is required. At times it has been a precarious situation and various less than optimum deals have been considered, I would suggest.

Senator TCHEN —The CBAA is made up of the six capital city Channel 31s?

Mr Melville —Five mainland capital cities, Channel 31s. No, of those five, Adelaide and Melbourne are not currently members. In the past they have been members of the CBAA. They currently are not.

Senator TCHEN —Are you still speaking for them in your submission?

Mr Melville —No, I do not particularly speak for non-members of the CBAA, but I do speak for community broadcasting and I do speak for a range of policy positions that we have come up with over the years at various times including those two stations. Eight licences were issued for community television in 1994, by the way—five mainland capital cities, plus Hobart, plus Bendigo and Lismore. At various times we have represented all of those interests. Melbourne and Adelaide have been through a period of financial crisis and for whatever reason they are no longer maintaining their membership.

Senator TCHEN —But any legislative action or provision arising from the argument you put up would apply for all community stations right across the country?

Mr Melville —That is correct, yes.

Senator TCHEN —Or only to members?

Mr Melville —No. I think the nature of legislation is that it applies to industry sectors. We make no special discrimination there.

Senator TCHEN —It is not discrimination I am concerned about. I am saying that, if you are seeking a particular regime, whether you seek it to apply for everybody or only just the people you are interested in at the moment. I just want a clarification: you said your position would depend on whether the ABC, the national broadcaster, gets multi-channelling?

Mr Melville —Yes.

Senator TCHEN —What do you mean by that?

Mr Melville —I mean the regulatory detail, and the delivery system that might be possible depends on that in the sense that I am not sure about capital city areas—it depends on how much spectrum is available—but in regional areas with delivery via a multiplex that is used by a multichannel system that is used for the delivery of a multiple of national broadcasting channels there could quite easily be spare channel capacity there for localised community services.

Senator TCHEN —But the national broadcaster will operate within their own seven-megahertz band anyway, won't they? They don't get extra band if they get multichannelling; it will still be within their own designated seven megahertz.

Mr Melville —Yes. There are others here with engineering backgrounds and there are others here representing the national broadcasters, but what is now considered a single seven-megahertz channel, as has already been demonstrated by current legislation, channel can be split into one high definition channel and at least one standard definition channel. There is some degree of argument about, if you took away high definition television from within that bandwidth, how many standard definition channels could be provided. But as a rough guess I would say three, possibly four. I defer to engineering opinion on that in terms of digital compression ratios. I am certainly not necessarily considering that we make inroads into the seven megahertz assigned to either the ABC or SBS either because there are other channels available under ABA digital planning. It is a question of sharing infrastructure and reaching audiences.

Senator TCHEN —No, I understand. You are just assuming that if the national broadcaster gets multichannelling, then there might be a rearrangement of the spectrum. Is that what you are talking about?

Mr Melville —Yes.

Senator TCHEN —The 1996 ABA report, which you complained had not been made public and so on—

Mr Melville —No, it has been made public. It was a published report.

Senator TCHEN —All right, but you said it had not been adopted. You said that it makes a very positive statement about the place of community television. Do you think that the ABA report has something to do with the minister's statement in 1998 guaranteeing a place for community television? Or do you think the minister plucked his statement out of the air?

Mr Melville —It was a very resource intensive inquiry. It proceeded over about 18 months. It went through hundreds of submissions. It travelled to all of the capital cities and regional areas. It was a major inquiry. I would imagine that the minister placed considerable weight on its recommendations in the broad. When you say I am complaining about delivery, I understand entirely why you might want to reserve decisions about precisely how you implement and deliver community television until the whole landscape is mapped out. But there would be a pretty strong correlation between the fact that the ABA made such a strong recommendation and the minister made such a firm promise.

Senator TCHEN —So it is not true to say that the government has ignored the ABA report?

Mr Melville —Possibly not, but it has been sitting on a shelf for quite a long time now.

Senator TCHEN —Nevertheless, you can see that the minister two years later made a statement which is very sympathetic towards community television.

Mr Melville —Indeed, yes.

Senator TCHEN —You would also agree that that particular statement has not been revoked?

Mr Melville —If you are referring to the one that Senator Bishop read onto the record, it has never been revoked in any private communication between us and the minister's office and certainly not in terms of any public statement.

Senator TCHEN —I put it to you that in the television broadcasting environment we have some very large players. Their resources are not only in the hundreds of millions but in the billion dollar range. We also have new players like datacasters, apart from the pay television and free-to-air television, a national broadcaster and so on. Then we have community television, which comprises the people you represent. Your resources, human and material, are nowhere near matching those.

Mr Melville —That is correct.

Senator TCHEN —The minister, in making any decision on a national level in terms of the entire electronic spectrum, has to take into account people's ability to make use of what is assigned to them. You made some comment about the business plans of your member organisations not all being at the same stage yet. Do your member organisations—apart from those two which dropped out but which, presumably, if the legislation allows them to operate, will be players again in their own right—have business plans of a commercial standard accepted and operating? Have they all demonstrated community focus in their operations and community support for their operations? Can they all demonstrate financial and management accountability? Can they all demonstrate organisational uniformity to, for example, an accepted commercial standard? Can they all demonstrate financial viability in terms of production, transmission and servicing? Can they all demonstrate that they can maintain quality of programs? Can they all demonstrate audience penetration to demonstrate that they can actually serve a particular community?

Mr Melville —I might need a bit of prompting to find my way through them, but I think I get the general gist of it. These are precisely the sorts of questions that the regulator, the Australian Broadcasting Authority, would look to in inviting licence applications, should that opportunity be presented, in terms of the suitability requirements of the applicant, in terms of their capacity to provide a service, in terms of their business plan, and in terms of their competence. All of those things would be subject to a licence grant. All of those things are immune to scrutiny under open narrowcasting—not all of those things—but only at the most basic level under the open narrowcasting class licence can those things be scrutinised. They were scrutinised back in 1994 when the opportunity first arose, but all that they have been operating on, the only permit they have been operating on, really has been a transmitter licence under the Radiocommunications Act, which the ABA has the power to grant or revoke but does not have the power to review or to look closely at or to add additional licence conditions to, so it is a regulatory blunt instrument. The ABA has been sitting back unable—perhaps unwilling, I don't know—to look closely at the operations and the continuing suitability.

I do not want to talk down my very constituency because I am happy to say that, despite that, in terms of the initial thrust of your question, we have some excellent corporate citizens out there. Perth is a very shining example of a station—and they only commenced last June. They spent a lot of time getting their corporate governance organised, building their community support, developing a very comprehensive business plan and enlisting the capital support of four tertiary institutions. Perhaps it is closest to the model the parliament envisaged in the early nineties when it considered future uses of the sixth channel and expressed a preference towards community and educational. There has been a coalition formed in Perth that have managed to build an impressive station. They have managed to attract audiences in the 10 or 11 months, and they are building their way up towards a viable business model based on sponsorship and sale of air time to local community groups. Similarly, Briz 31 in Brisbane has been trading in the black for four or five years, has plenty of community access, lots of support from the local business community via sponsorship and access to air time, and lots of enthusiastic support from volunteers.

Then we have other examples of community television operations that have been struggling. Sydney has been under voluntary administration for several years. Melbourne had liquidity problems last year but, I am reliably informed, is struggling back. So it has been difficult, and at all times there have always been options to consider in terms of how they might go forward. But they have always been hogtied by the fact that they have to stand, hand on heart, and say, `Our licence only goes for another year; we don't know what will be happening after that but let's build the best business plan we can in that time.'

Senator TCHEN —My question was not intended to embarrass you, Mr Melville.

Mr Melville —I am not embarrassed.

Senator TCHEN —Perhaps there are a range of other issues to be considered as well.

Mr Melville —I think we fully concur as an industry association that has certainly been supportive of the co-regulatory or self-regulatory project that the 1992 legislation has brought into play; we are right in there. Yes, if the ABA is given the opportunity and legislation is appropriate and licences are invited, we think that level of regulatory scrutiny is necessary and required and would be welcomed.

Senator TCHEN —I draw your attention to the fact that a third party like the Productivity Commission would have a slightly different view, but I should also tell you that in my previous life I was a board member of Melbourne's Channel 31 consortium, so I know what I am talking about.

Mr Melville —Yes, I was advised of that yesterday, Senator Tchen.

Proceedings suspended from 11.10 a.m. to 11.30 a.m.

[11.30 a.m.]