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Broadcasting Services Amendment (Digital Television and Datacasting) Bill 2000

CHAIR —Thank you for being here, Mr Carr. We have submission No. 17 before us, which the Senate has authorised to be published. Do you have any alterations or additions to your submission?

Mr Carr —There is one minor amendment to the submission. Prime would like to add to its submission. The addition is in the area of multichannelling. We do not have a written addition, but could I read the amendment into Hansard?

CHAIR —You could do that or you could make that part of your opening statement.

Mr Carr —I can do that.

CHAIR —Do you have an opening statement as well?

Mr Carr —I will make it part of the opening statement.

CHAIR —Please proceed. It will all go into the Hansard anyway.

Mr Carr —Prime submits that regional and remote commercial television broadcasters should be allowed, at least in the formative stages of digital television, to a limited form of multichannelling as a means of reducing the costs of establishing digital television in smaller regional and remote locations. The principle of shared facilities was one of the factors that enabled the rapid rollout of news services to regional areas under the aggregation process in the late 1980s and 1990s. There the three broadcasters shared such common facilities as transmission towers and antennas. This significantly reduced the cost to broadcasters. Without the cost benefits from sharing facilities, the establishment of the news services would have been delayed for a considerable period of time.

The advent of digital television offers additional opportunities to share facilities. This time, however, it is not only the hardware that can be shared but also the transmission system and the spectrum used to deliver the service to the viewers. An example of where this relaxation of the multichannelling prohibition would benefit viewers is the city of Cobar in western New South Wales. Cobar has a population of about 6,000 people. It is presently served by three commercial television services, each with a separate transmitter but combining through a common transmission tower and antenna. Replication of that system in digital would be costly. However, if the three commercial broadcasters and maybe even the ABC were permitted to multichannel on the same digital channel, there is more likelihood of the people of Cobar receiving digital television at an earlier date than otherwise would be the case. Prime therefore recommends that the legislation be amended to make this scenario possible. There are two other matters covered in Prime's submission. The first is the issue of captioning local news programs.

Senator HUTCHINS —Mr Carr, could you please repeat what your amendment is?

CHAIR —His amendment is that there be, in effect, one channel and that it be multichannelled. Is that not right?

Mr Carr —That is right; in smaller regional and remote areas.

CHAIR —And all the stations would combine to bear the cost of setting up the digital service in that regional area.

Senator MARK BISHOP —But the bill has that.

Mr Carr —No; it has that only in relation to section 38A licences.

CHAIR —We will come back to that. As I understood it, that was the essence of what you were saying.

Mr Carr —That is correct.

CHAIR —Would you now like to go on with your opening statement?

Mr Carr —Certainly. There are two other matters covered in Prime's submission. The first is the issue of captioning local news programs. Prime recognises the problems faced by people with hearing disabilities and the feeling of isolation caused by an inability to access news, information and entertainment in the manner that most of us take for granted. In recognition, Prime, through its affiliation with the Seven Network, is the leader in the provision of caption programming throughout regional and remote Australia. Prime also recognises that benefits would flow from captioning all local news bulletins. However, there are practical problems in achieving that. Prime is examining developing technology, including the electronic newsroom mentioned by WIN Television yesterday. Prime requests that the requirement for captioning of local news by regional and remote broadcasters be relaxed until such time as affordable technology is available to facilitate the process in a cost efficient and practical manner.

The second element of Prime's submission concerns the provision of additional services to areas identified as underserved by commercial television. I was present during yesterday's hearings when Mr Rushton from WIN Television addressed this issue. WIN's response to the threat of additional competitive services in its markets was predictable—no different from the response that has been given by every incumbent licensee when threatened with competition. Indeed, Prime has often uttered similar responses in the past. However, Prime has also experienced competition from both angles. Not only has it established new stations in other competitive markets; it has also adapted to competition in markets it previously held as the sole operator.

In defending the retention of the monopolies for the solus markets, WIN argues that those markets cannot support two competitive services, simply because of their population base. However, that was not what the ABA found when it prepared the licence area plans for the solus markets. To the contrary, it found that two competing services, not three, could exist without there being any significant reduction in service quality—in particular, the continuing provision of local news services. The reason for not allocating an additional service at the time of the determination of the licence area plan was that nobody, not even the incumbent licensee, expressed any interest in providing that second service. The incumbent operators did not lodge their request for an additional section 38A licence until after Prime had lodged its submission to the department stating that it was willing to provide a second, competing licence.

Another fallacy in WIN's argument is that each of these markets is too small to support competition. WIN bases that proposition on population alone. However, that argument must fail, since Mount Gambier, with one licence, has a population of 66,000 people, while Mildura, with two licences, has a population of only 55,000 people. Spencer Gulf, with a population of 110,000 people, has only one licence, while Darwin, with only 100,000 people, has two licences. Broken Hill, with 21,000 people, has one licence, while Mount Isa, with the same population, has two.

WIN's proposition also ignores the reality of commercial regional television—that is, that most of these solus markets are in fact part of larger affiliated networks. Mount Gambier and Riverland are both part of the WIN Television network. This ownership brings with it operating economies not previously available. Each of the solus markets can support two competing services; the ABA has already determined that. By retaining the multichannelling option for digital conversion—which is already contained in the bill for section 38 markets—and allocating another service by the price based mechanism, viewers in regional and remote areas and advertisers will be far better served.

WIN also argued that Tasmania should be left alone as a two-station market. WIN acknowledged that the licence area plan for Tasmania has not been developed by the ABA. However, they argued that the population of Tasmania was the same as Western Australia, where the licence area plan recommended only two services and that, therefore, we should accept this as a guide. That suggestion fails to recognise the multitude of factors that go into developing a licence area plan. Prime believes an ABA determined licence area plan for Tasmania, which would be based on all the statutory criteria, would conclude that three services were viable. Prime recommends that the ABA be directed to complete the task given to it in 1992 and to determine the licence area plan for Tasmania. If that plan results in an additional service being offered, Prime will be a bidder at that auction. I am happy to answer any questions.

Senator BOURNE —I have one question on captioning. Did I understand you to say that you are still looking at the electronic newsroom but that that is the way you would like to go in the near future?

Mr Carr —That is one form of captioning that is being examined. It is not ideal and there are other systems available. Until the outcome of this legislation is determined, Prime is deferring a decision as to which system to apply. But it would be a system that enables partial captioning—again, of introductions and voice-overs but not of the footage that comes in from the field at the last minute.

Senator BOURNE —Do you have a lot of footage that comes in at the last minute, or would most of it come in with a fair bit of time to spare?

Mr Carr —It varies. In the multistation markets there tends to be a lot of last-minute compiling of news late in the afternoon in preparation for the transmission of the multiple bulletins.

Senator BOURNE —You are aware of the way that Seven does remote captioning from Perth for most of their stuff.

Mr Carr —Yes.

Senator BOURNE —Do you think that remote captioning is a viable alternative for regional news?

Mr Carr —No. For two reasons: one, it is impractical because of the last-minute nature of the multiple news bulletins that are put together by regional services. Prime puts together 10 news bulletins every afternoon. The major factor is cost. In order to remotely caption, the news would have to be delivered to Perth by a microwave or satellite system, which is quite expensive, and then returned to the broadcast location for retransmission. It would be a very costly exercise.

Senator BOURNE —And you are saying that all the regional news services have a very substantial component of their own local news in there.

Mr Carr —The local news bulletins are just that—local stories. There are no national stories inserted in them.

Senator BOURNE —How long does a local news bulletin go for?

Mr Carr —It goes for 30 minutes.

Senator MARK BISHOP —Following the line of questioning of Senator Bourne, all of the major channels in the big cities do live broadcasts during their peak news half-hour or news hour for car accidents, a whole range of emergencies and sporting events. It is a feature of the way they present the news. So how are their problems in captioning different from your country reporters reporting similar road accidents, emergencies or local sporting events remote from the TV station?

Mr Carr —It is the same problem: it is the availability of trained personnel. As you may have heard yesterday, you require a court or Hansard style stenographer. They just are not in the regional areas. The cost of obtaining a stenographer for a 30-minute slot at Wagga, another one at Orange and another at Tamworth, Coffs Harbour and the Gold Coast becomes prohibitive, whereas the metropolitan service is able to capture because the facilities are available there. The situation in relation to captioned live reads is that the remote captioning is all done because they actually have the satellite and reverse satellite links in place. They are already using them for other facilities so there is no additional cost to them. For the regional broadcasters to link that program across to a remote location and back would be a virtually cost-prohibitive exercise.

Senator MARK BISHOP —Thank you for explaining that. Taking you back to your opening comments and the first point you addressed, could you summarise that for me again? I missed it.

Mr Carr —The suggestion is that, in the initial phase of digital rollout, regional broadcasters and remote broadcasters be able to share a frequency, or share the spectrum allocation, and multichannel. So that, in a two-station market or a three-station market in a town like Cobar, there would be one frequency allocated, which would be utilised by all broadcasters on a multichannel basis. So there would be one transmitter, one transmitter tower, one antenna and one frequency. That would reduce the costs to the broadcasters and there would be more likelihood of them establishing digital services in the remoter outposts sooner under the digital rollout than there would be if they were required to individually set up individual transmitters in those locations.

Senator MARK BISHOP —How is that different from the proposition in the bill for the one- and two-station markets?

Mr Carr —As I understand it, in the bill the only multichannelling permitted is in a one-station market where a section 38A licence is permitted.

Senator MARK BISHOP —And they are going to be allowed to multichannel?

Mr Carr —They are going to be allowed to multichannel to achieve those cost efficiencies.

Senator MARK BISHOP —Isn't there a division for two-station markets as well in the bill?

Mr Carr —Not to my knowledge.

Senator MARK BISHOP —On the cost of digitisation, will the government's regional equalisation plan ensure that Prime is adequately resourced for digital conversion and transmission?

Mr Carr —It will go a long way to ensuring that. If there can be further cost savings by implementing schemes such as sharing facilities, then it will certainly see the system established sooner than is presently proposed.

Senator MARK BISHOP —The plan that was announced in the budget is going to cover a significant amount of the digitisation cost, is it?

Mr Carr —It will cover a significant amount but it basically covers the main transmission locations, not the smaller, fill-in translators that exist. There will still be problems in those areas.

Senator MARK BISHOP —Is the time frame for the commencement of broadcasting in 2004 realistic and achievable for your company?

Mr Carr —It is realistic and achievable.

CHAIR —Mr Carr, would you like to tell us about the other options, if you have any more information than what you gave Senator Bourne, for captioning? Do you have any more detail on them? At the moment we have heard about ENR.

Mr Carr —ENR is the proprietary system that, in effect, takes the autocue and any other scripted material and converts it to a captioned service. The other systems that are being examined do very much the same thing but by different mechanisms. They are simply different software programs. It is really a situation of determining which program provides the solution in the most efficient and best manner.

CHAIR —You said that, but what sort of differentiating factors are there? What would lead you to choose one above the other? Is it speed?

Mr Carr —It is cost, ease of handling, technical back-up in Australia because these systems are all sourced from overseas, compatibility with existing operating equipment and training programs that are available. There is a range of factors to make sure that, once you purchase the product, it can be utilised and maintained within the country, particularly in remote locations where it is difficult to get experts to maintain systems of this nature.

Senator CALVERT —Mr Carr, being a Tasmanian I was interested in your comments about Tasmania. Do you have any information about the ABA? Do they plan to revisit the licence area plan? If they do, and there were spectrum available, would Prime be interested in having a go at it down there? We are very well served by Southern Cross and WIN, but I suppose there is always room for another competitor in the area.

Mr Carr —It is not a matter of revisiting the licence area plan for Tasmania; they have not visited it yet. I am not aware of whether they plan to.

Senator CALVERT —We are used to being left off the map when the Commonwealth Games are on. When it comes to licensing, I guess it is a bit like that as well.

Mr Carr —Prime lodged an expression of interest with the ABA some two years back in relation to Tasmania because Tasmania was scheduled to be dealt with in the latter part of 1998 or in early 1999. We regularly speak to the ABA. There is no timetable for Tasmania at this stage. Prime has lodged an expression of interest and it is interested in providing a third service on a competitive basis within Tasmania.

Senator CALVERT —With multichannelling, that would be a lot easier and more cost effective than it would be if you had to set up your own facilities, I presume.

Mr Carr —I am not certain that the multichannelling option would apply in Tasmania because of the size of the market. Certainly the common use of facilities would be something that already happens in Tasmania, and Prime would seek to share those facilities. Broadcasters typically cooperate in the use of the technical hardware for transmission, so that option would be available for a relatively fast start-up should the licence be granted.

Proceedings suspended from 3.30 p.m. to 4.00 p.m.