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Broadcasting Services Amendment (Digital Television and Datacasting) Bill 2000

CHAIR —Welcome. The committee has before it submission No. 20, which it has authorised to be published. Do you wish to make any alterations or additions to your submission?

Mr Shier —No.

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

Mr Shier —Yes. I was going to comment on one additional item, but it is not an amendment to the submission. It is just one item that came up yesterday, and the ABC have a view on it. I made it clear last week, when I appeared before the Senate committee, that I am very concerned that the ABC have the opportunity to multichannel in the new digital environment. We see it as a real opportunity for the ABC to offer additional choice to the people of Australia, and I mean by that the opportunity to have real additional choice by having programming which is consistent with our charter and which would enrich the offering available to the people of Australia.

We also think the arguments that have sometimes been expressed as to why the ABC should not have that right are not valid. We do not believe the ABC, which carries no advertising or sponsorship, would in any way affect the commercial television structure, and we do not believe the pay television business would be affected by two additional multichannels operated by the ABC. In fact, we think the two channels operated by the ABC could improve the digital offering and, assuming agreement could be reached for carriage, would make a more attractive proposition in the market for the customer to want to take up digital. We also expressed our concern that the definitions of datacasting were too restrictive in terms of children's programming and education and information programming, which we think go to the very heart of the ABC's offering. We believe programming should be engaging, and we do not want to have a debate about whether it is also by definition perhaps entertaining.

We think it is incredibly important for the ABC that we have an opportunity to carry our national radio services in digital. We have services, such as NewsRadio, which currently are limited by the number of Australians who can receive them. We believe digital provides an opportunity for Australians to receive services that are put out nationally by the ABC but are not receivable by some of our potential audience. Finally, in light of what was said yesterday, the ABC are concerned that, in any environment that encompasses electronic program guides, the ABC have sufficient prominence to ensure that the ABC's offering is known by the people who are able to view those guides. With those introductory comments, I am glad to be here.

Senator MARK BISHOP —I want to discuss a number of issues with your organisation, Mr Shier: the definition of datacasting, the datacasting proposed charges for licensing fees, multichannelling and the series of reviews in the bill that are going to go forth over the next two years. They are the four issues that I want to explore in detail with the ABC. In your submission and in some press reports I have seen, you have expressed concerns at the restrictiveness of the definition of datacasting in the bill. Yesterday, we had extensive discussion on, and quite considerable criticism of, that exact point. Are the ABC looking to offer datacasting services?

Mr Shier —Yes, we are.

Senator MARK BISHOP —Could you give us a broad description of where you think the ABC might want to go in the next few years in that area?

Mr Shier —The first issue is the question of funding and what we have available. If we are lucky enough to have multichannelling, that will use up most of the spectrum which is left after the obligations that we have to triplecast. To the extent that we would like to provide information after a program has finished, we would like to be able to do that. To the extent that we can do it in multichannelling, we would not need that opportunity.

Senator MARK BISHOP —You would need that opportunity?

Mr Shier —We would not need that opportunity in the datacasting provision, in the sense that we could do it in multichannelling.

Senator MARK BISHOP —Yes. You could do it a different way.

Mr Shier —But, in the legislation relating to datacasting, if we were not to have multichannelling, that would be a great concern to us—that people would not have to leave the original program to get additional information. We think the natural point where people would wish to get additional information is after the program has finished.

Senator MARK BISHOP —Let us assume for the moment that the bill goes through unamended on the issue of multichannelling and the ABC is denied the opportunity to go down that path. Would that then mean that the issue of datacasting would become critical to the future of your organisation?

Mr Shier —Any of the ways that have been suggested as to how datacasting could be amended would, I think, still impose considerable restraints on the corporation. I would not want anyone to think for a moment that we would regard datacasting as an acceptable replacement for multichannelling. It would be very much a second-best opportunity as far as we are concerned. We think what we do best is video. We want to make that interactive and we want to provide additional information.

Senator MARK BISHOP —So video and interactivity are the two critical areas in terms of the datacasting?

Mr Shier —Yes.

Senator MARK BISHOP —If I said to you that you have the opportunity to redraft the definition of datacasting, that you were to ignore the provisions in the bill at the moment and that you have a clean sheet of paper, what would be the critical elements in that datacasting definition from the perspective of the ABC?

Mr Shier —I think the expression is: you would not start here. I obviously did not know the expression `datacasting' until I came to Australia.

Senator MARK BISHOP —But I presume you know about it. It is in the act. We all understand that it is a creation of the legislature, but it is there.

Mr Shier —I am not trying to avoid the question. It is very important for the ABC to have the opportunity to multichannel. To the extent that I would be forced to define datacasting in a way which might be unacceptable for other political reasons—policy reasons—that would in any way hinder the ABC, I do not want to get into that debate. My view is that the ABC are in a special position and to give them multichannelling should not be difficult, in my view, for the parliament. I do not think I should open up a whole other discussion in relation to a whole lot of other policy issues by trying to define datacasting in a way which would be acceptable to my organisation but, in the process, raise a lot of policy issues which, quite frankly, are not related to my organisation.

Senator MARK BISHOP —That is a very modest offering, with respect, Mr Shier. You have not opened up the debate on the meaning of datacasting and it does not apply only to your organisation. The framework was established in 1998 when the differential definitions were put into the act. The government's bill now is a continuum of that in respect of the distinction between broadcasting and datacasting. Yesterday we heard from a significant range of interests their complaints about restrictions on datacasting. If you look at today's agenda you will see that a range of commercial interests will also be offering, if I read their submissions correctly, significant criticism as well. I understand your point: that the ABC has a very strong, if not absolute, preference to be able to go down the path of multichannelling. We do not know if that can come to pass. We will know in two or three weeks when the bill is before the Senate. If not, the datacasting provisions, according to the advice we have received, are quite restrictive and damage, it appears to us, the future of a major public corporation. Having said that, all I can do is invite you to offer a further comment on the need to—

Mr Shier —I think if you do alter the datacasting definition—and let us assume for a moment you made a very wide definition of datacasting—that would without question raise the whole issue of the balance that the government is trying to establish at the moment between existing free-to-air operators and those who, in the broadest possible sense, might wish to be de facto broadcasters. Judgments are being made as to where on that continuum the decision should be made. What I am extremely concerned about is that the ABC does not suffer in the fallout. Whilst personally I can see a lot of merit in a more liberal view of datacasting, because I do think it will help digital take-up, I also think it is very important for the ABC that it have an opportunity to multichannel.

Senator MARK BISHOP —Let us shift the discussion a bit, then. Your submission opposes the reliance on the ABC for determinations on the scope of the datacasting definition.

Mr Shier —It is the ABA, Senator.

Senator MARK BISHOP —Yes. In your introductory remarks I think you referred to programs being `engaging' and that you wanted to avoid that distinction between education and entertainment. Why do you oppose the ABA being, essentially, the arbiter in these areas?

Mr Shier —There are two aspects to my response. The first aspect is that, of course, if we got multichannelling, the debate about the datacasting definition in relation to children's programming would not be applicable, so we would get around that problem. If we are under the datacasting regime and, as the bill proposes, the ABA is the arbiter of what is acceptable and what is not, I have an immediate concern, of course, that the ABC's charter is being—shall I say that somebody is encroaching on the turf that I believe is the province of the board of the ABC, as governed by the ABC Act. As you know, there are situations at the moment in relation to complaints where there is a relationship with the ABA, but I think that is not a trend that one would want to encourage.

Senator MARK BISHOP —So it would be fair to say that you are not comfortable with the ABA being invited into this area of defining what you may or may not program.

Mr Shier —I think that is well said, Senator.

Senator MARK BISHOP —What is your funding for digital, multichannelling, datacasting and the like? Do you have any particular complaints or criticisms, or are you more than comfortable with the government's plans in this area?

Mr Shier —I think the nub of the answer is that we have no funds for multichannelling content. That was part of our submission, and I would like to think that it would be part of our resubmission.

Senator MARK BISHOP —What sort of funds do you need over the triennium to be serious about multichannelling?

Mr Shier —We were talking about a figure towards $200 million over the period of the triennium, but that document was put together prior to my arrival. I think I have the luxury of looking at how the bill passes, hopefully, and then deciding to review that and, in the context that I then see it, making judgments as to what we can do, cannot do or should do.

Senator MARK BISHOP —When we had earlier discussions, I think it was last week on your first visit up here, you made the point that you thought there was a legitimate role for engaging and having access to commercial funding in certain parts of the ABC. We did not explore that in great detail. Would multichannelling be an area where you would like to explore options?

Mr Shier —One would always look, but my gut feeling is that we must just take stock of the size of the audiences that we are talking about for the service. If you assume that a second channel going through a decoder probably would get something like 10 per cent of the viewing share of the prime channel, then, if you say two channels, we are talking about channels that are going to get less than one per cent of viewing. So we are certainly not talking about advertising based channels.

Senator MARK BISHOP —No.

Mr Shier —To the extent that we might consider subscription channels, I would have to be satisfied, quite frankly, that the first merit of providing the service as widely as possible had been addressed. My gut reaction is that that is where we would start from.

Senator MARK BISHOP —The ABC is going to be required by this bill to pay fees for the datacasting licence.

Mr Shier —It looks like we will. There is an opportunity for us not to.

Senator MARK BISHOP —What sort of quantum will you be charged?

Mr Shier —We are not trying to encourage anyone.

Senator MARK BISHOP —I understand that you are not trying to encourage that.

Mr Shier —I think we would start at nought, with a strong case for that.

Senator MARK BISHOP —Are you pursuing further discussions with the minister on that issue?

Mr Shier —Not at all. Should it come to pass that I have to, I of course will.

Senator MARK BISHOP —Going back to the multichannelling, the ABC has got a very wide coverage, both on radio and TV, all around Australia. It is particularly valued in my state in the remoter parts of the country. Does the multichannelling offer any particular advantage or special advantage to rural and regional Australia?

Mr Shier —Let me put it in context first. I think it offers a huge opportunity to Australia as a whole. For example, at the moment we have a situation where we have children's programming put out. My colleague Ian can tell me, but I think that of the top 20 programs 18 are ABC at the moment in children's programs.

Mr Carroll —Younger children.

Mr Shier —In that context, we would like to be able to show children's programming when perhaps the main channel is showing a completely different genre of program. So we would like to think that our audiences were higher than they are but, with our audiences as they are, still a large percentage of the Australian people do not see our programming the first time it is shown. We certainly think there is an opportunity to show more of that on the second channel. But we have also indicated that we believe we want to produce additional programming specifically for the channel, including interactive. One opportunity is also to produce programming which has appeal in a particular region, which will be a possibility with rural or regional programming. The only caveat I would put on that is that it is not inexpensive, and therefore, in the submission we would put at whatever time we can put it for more funding to the multichannelling, we would want to indicate the type of program offering we would make for the amount of money that we were seeking.

Senator MARK BISHOP —Understood. Turning to the issue of the reviews, the bill proposes a number of reviews. At the moment it is our understanding that the reviews are going to be either ministerial or departmental. A number of organisations yesterday argued that it would be better to have statutory reviews done in the full public gaze and answerable and responsible to the parliament. In terms of those four reviews set out in the bill, does the ABC have a view that the reviews should be statutory reviews, or would you prefer departmental?

Mr Shier —We start from the premise that the ABC reports to parliament, so we will be always more comfortable in any review that assumed that that was the process we go through. I think that would be our position.

Senator MARK BISHOP —In relation to the issue of streaming video and audio and whether this constitutes a broadcasting service or a datacasting service, the minister has indicated, I think in his second reading speech, that the matter is going to be referred to the ABA for investigation, I think was his phrase. What is your opinion on this issue? Is that the appropriate body to do it? Secondly, should that review be done sooner rather than later?

Mr Shier —In relation to ourselves, I would like the matter to be one for the ABC board and not for the ABA, following on from your last comment. If it was to be done by the ABA, much as I would prefer that not to be the position, I think the review should be done earlier rather than later.

Senator MARK BISHOP —There is a slightly different timetable for the HDTV arrangements for the ABC as opposed to the free-to-airs. Would you consider it advisable that the review in the bill take place prior to the commencement of the mandated 20 hours of HDTV, which I think it is on 1 January 2003? Should the take-up rates of the HDTV technology be considered prior to the new arrangements sooner rather than later?

Mr Shier —We know that the take-up in the early stages with be low, so there is a question of how robust the data will be if you do the review too early. Mr Knowles might like to comment.

Mr Knowles —Doing the review too early is basically asking people to tell you whether they are going to buy digital television before they can see it. Part of the difficulty with this whole process is that very few people in this country have ever seen HDTV. Some of the demonstrations which have been run have been fine, but other demonstrations have been nothing like HDTV. In terms of the way the whole issue of HDTV evolved in this country, it was not a reflection that HDTV is something you would not wish to rule out given that the change to the system is probably the first opportunity for the next 30 years. To proceed down a path of actually denying the public the opportunity is not sensible. In fact, the US approach, despite the rhetoric about the multiple formats, allowed for that to happen and said, `Let's give the consumer the choice. They can purchase whatever type of receiver they like, but every single one of those receivers will receive pictures, whether they are transmitted in HDTV or SDTV.' That really does provide a tremendous amount of choice and flexibility for the consumer to buy the $500 television set or the $15,000 television set, depending on what their needs are.

As I said, to start a review prematurely in the process would simply not achieve anything. We all know we are going to have difficulty getting content. In fact, the special rules for the ABC relate to the fact that much of our content comes from Europe, where it is not possible to source fully originated HDTV material in the volumes that are necessary to deliver the 20 hours per week of original material. We would have to create some material to do it. What is evident is that the production industry will probably move into HDTV as a means of production perhaps earlier than it might be transmitted to the public. For the very same reason, the production industry currently uses film as its base material because it allows it to market the product to the world without degrading its performance. If we, for example, shoot material in the 625 format, PAL, we have difficulty selling that material to the US market because it needs conversion and there are implications for quality. From the HDTV starting point, you can go into any of those markets in terms of product. The starting point is probably HDTV in the production environment for all sorts of good marketing type reasons, then progressively, if the consumers want it, moving into the domain of taking it to their living rooms.

Senator MARK BISHOP —Does that mean the ABC will shift a significant degree of its production straightaway to the new, higher standard?

Mr Knowles —We are planning to have production capacity in place in around 2003. The reason is that it is very difficult—almost impossible—to get production equipment at this moment. Tape machines have just become available. Cameras are not yet available for the Australian 50 hertz standard. Most of the other technical production equipment you need for HDTV is not yet available with the sorts of features we have become used to in the existing television system. There are probably another couple of years of development before we get to the same sort of performance level for HDTV production equipment that we are used to in the existing standard definition production environment. For that reason, the ABC has chosen, right through its strategy, not to look at HDTV production in a major sense until after 2003, which fits very nicely with our building program.

Senator MARK BISHOP —I understand what you are saying there. In relation to the review of regulatory and revenue arrangements for datacasting licences, and acknowledging your earlier comments that you do not want to pay, Mr Shier—but if you do—would you consider it appropriate that this review be completed prior to the end of the moratorium on commercial television broadcasting in 2007, or does the ABC not have a view on that?

Mr Shier — I think the ABC would like to think about that, to comment on that.

Senator BOURNE —Mr Shier, you mentioned electronic program guides. Are you familiar with the principles set out in the British legislation about fairness in providing EPGs?

Mr Shier —I can't go through clause by clause; I am very comfortable that they provide a framework—not that we should just import those provisions, but I think that any provisions we have in relation to EPGs should be at least as robust as those in the UK.

Senator BOURNE —You would be in favour of basing rules within this legislation for the Australian scene on those principles?

Mr Shier —However the parliament decides to do it, I certainly think it is desirable that I can be confident about the ABC's visibility, and to make sure that they are not marginalised in the way that they are presented in any EPG.

Senator BOURNE —I think those rules include: if you provide one channel other than your own, you have to provide all of them; you have to provide them in an even manner, so none are highlighted over others; if you are going to provide programming information for one, you have to do it for all; and everybody has to provide standardised and free information to everybody else about the programming. So that sort of thing you would be in favour of?

Mr Shier —Yes. I know the BBC was a lot more comfortable in their discussions with BSkyB knowing that those regulations were in place.

Senator BOURNE —That is interesting. Yesterday we had Open TV—I hope I am not misquoting them—agreeing with you that those regulations are something they would like to see in Australia as well. You must be aware of the little interactive example the ABC was showing?

Mr Shier —Yes. I would say that the gentleman on my right produced it. I will take criticism and he certainly should take praise.

Senator BOURNE —I don't know; maybe it should go the other way! Would being able to do that with that interactivity be allowable under the rules as they stand now, under either multichannelling or datacasting?

Mr Carroll —Under the datacasting rules, quite a bit of that material would be restricted.

Senator BOURNE —But under multichannelling you could virtually do what you like—if you had multichannelling, of course?

Mr Shier —We could act responsibly under multichannelling in the lines of our charter!

Mr Carroll —With the combination of the two, yes.

Senator BOURNE —How would you achieve the interactivity? It was achieved by caching in that sample, wasn't it?

Mr Carroll —In that particular demonstration it said we would be neutral about equipment and so on and just look at the range of possibilities under the technology.

Senator BOURNE —Fair enough. You could do it by caching, you could do it by back channel—

Mr Carroll —Some of it depended on caching and some of it on a carousel.

Senator BOURNE —Do you have a view, Mr Shier, on whether directions to the ABC should be made under the BSA or the ABC act itself?

Mr Shier —Wherever possible, under the act.

Senator BOURNE —You have mentioned in your submission the different datacasting rules for the ABC on education, information and children's programming, which you have also mentioned this morning. Can you tell us why those three in particular you think are important and where in particular you think the ABC's rules should differ from others?

Mr Shier —I think they go to the very heart of what the ABC does. We like to think we do a lot of things, but one thing we certainly think we like to do is inform and educate and certainly we like to think we provide a service in relation to children which is second to none. To the extent that education has been restricted to being associated with an institution, that clearly does work very well for children and younger adults.

We also think that there is an opportunity for the ABC to provide a service in relation to lifetime learning, which we believe is crucial today. People are less concerned today about getting certificates and are more concerned about actually understanding. I will not say survival—that is probably too hard a point—but people are suffering from all types of job changes and stress. They are concerned about how they are living in this new environment. They are concerned about parenting. They are concerned about a number of issues about which, quite frankly, they do not want certificates; they just want good advice. Therefore, it is not appropriate that that type of important learning for life is associated with an institution. In relation to children, I think we could debate forever whether Sesame Street is entertaining or educational. I think it is educational because it is entertaining. Then people say to me, `Is it also engaging?' and I say, `It's certainly engaging. If you are more comfortable with engaging than entertaining, can we call it engaging?' Given the fact that we started from a mission from which others perhaps do not start, we should be encouraged to do that—to satisfy the mission—and we should wherever possible ask the parliament to encourage us to do that and make it more possible for us to do it.

Senator TCHEN —Mr Shier, you have already answered one of the questions I had meant to ask you when you answered Senator Bourne's questions on which acts you believe you should be operating under. Firstly, I would like to check a few things with you about the operational differences between multichannelling and datacasting. As far as you are concerned, are they interchangeable?

Mr Shier —I will ask Mr Knowles to take the question.

Senator TCHEN —I do not mean the technical side; I mean in terms of disseminating information.

Mr Shier —You could have a definition of datacasting which would be indistinguishable from the definition of multichannelling, but that was not the wish when this legislation was drafted. There has been a desire to build a distinction. Therefore, the debate has revolved around where that distinction should sit. If you push me, I could say to you that I see multichannelling as an opportunity for the ABC to do datacasting with less restraints.

Senator TCHEN —But you also recommend that you not be restricted to the acts in terms of datacasting.

Mr Shier —I would like to be clear that the parliament was going to give us multichannelling—and Senator Bishop raised this earlier, and I think it goes to the nub of it—but I am confronted with a bill that says that I am not going to have multichannelling. Therefore, understandably, my colleagues have put a lot of effort into establishing what would be the best that the ABC could make out of the datacasting legislation if they did not have multichannelling. I would ask you to rescue me from that exercise and allow the ABC to multichannel.

Senator TCHEN —I am not actually sure whether you specifically say it, but you imply that, as far as possible, the ABC should operate under the ABC act rather than the BSA.

Mr Shier —I might have answered incorrectly on an earlier question. I heard `ABA'.

Senator TCHEN —I think Senator Bourne meant the BSA.

Senator BOURNE —They are two different issues. You are thinking about the last suggestion, are you not?

Senator TCHEN —Yes. Is that what you were talking about?

Senator BOURNE —No, I was talking about whether the ABC would rather be regulated, even if it is exactly the same regulation, under its own act or under the Broadcasting Services Act.

Senator TCHEN —I am sorry—the Broadcasting Services Act. That is what I meant.

Mr Shier —And my answer to that was yes. To the extent that I would like to be able to multichannel under our act, that is my first preference.

Senator TCHEN —Or datacast.

Mr Knowles —I think there is another point to made about the difference between datacasting and multichannelling which is really important as far as the consumer is concerned. As Senator Bourne has sort of intimated, some of the datacasting delivery of things that look like multichannel do depend on caching in the box. In other words, you have to have a more expensive box that can store your program. Those boxes are only just starting to appear and currently add $500 to $600 to the price of the box. Multichannelling requires no additions to the box. It can deliver programs like the existing television system and therefore is more a continuous flow of programs. Until such time as that box has that local storage, you cannot actually look at multichannelling and datacasting in the same way. So, from the public benefit point of view, in getting programs out to consumers to make it attractive for them to switch to digital television, multichannelling offers at the moment far more advantage than what is a bit like your PC-Internet service.

Senator TCHEN —I think there would be confusion not only amongst the public but also amongst the retail professionals. Yesterday we were told that one of those set-top boxes could cost anything between $250 to over $1,000, so presumably they have different capabilities.

Mr Shier —I think the figure is close to $1,000. But Mr Knowles will know the latest figure, I am sure.

Mr Knowles —Philips quoted a figure of $1,000 yesterday.

Senator TCHEN —That is for datacasting.

Mr Knowles —If you look around the world, the typical figure for set-top boxes varies depending on how they are sold. Philips were talking about a set-top box that was going to be sold retail. The price of a digital set-top box sold as a part of a subscription, for example, is probably about $400 or $500, and that figure was mentioned yesterday as well. Traditionally, set-top boxes have been items sold as part of a package rather than as a retail item, and there has to be a much greater mark-up when you sell the things retail because the shop keeper has to keep them and so forth and so on. There is confusion both in the way the box is sold and then extending that out in terms of capability of the box. The whole question of pricing always gets tangled up in that set of arguments.

Mr Shier —I am sure you will know, Senator, that in the UK the box has been basically sold as a giveaway. The argument is that the box costs nothing. Of course it does not, but it is being sold within a package by BSkyB. I think the unsubsidised box value is regarded as about [pound ]400 which, with the current exchange rate, is about $1,000.

Senator TCHEN —That comes out to be a fairly expensive giveaway.

Mr Shier —You would be surprised how attractive audio material can be to people.

Senator TCHEN —Of course, always an attractive giveaway. Mr Knowles, what is the likelihood of an interoperable box, a box which is suitable not just for SDTV and HDTV but also for pay TV and for datacasting interactive services? Are they being manufactured at the moment or do you know of any plan that they might be manufactured?

Mr Knowles —All of the boxes currently sold in the US are in fact multistandard compatible. There are no boxes sold in Europe that are HD and SD because nobody is broadcasting in HD.

Senator TCHEN —So it is technically possible?

Mr Knowles —It is technically possible. In fact, the chip designs are already done to do that. Likewise, the same argument applies to the audio standard. The chip that can decode AC-3 and MPEG is already in place in almost every DVD player that is sold.

Senator TCHEN —Should the parliament be looking at certain standards for the box capability and also audio standards?

Mr Knowles —When you come back to pay TV standards, there is always a different set of arguments that apply to pay TV while one tries to achieve the highest degree of commonality. Pay TV operators often wish to make sure that other people do not access their material without paying for it. Therefore, there is another layer of encryption and other things which go into that box. If you are a pay TV operator, yes, you would love to get rid of having to sell the boxes for free and have someone connect their television set up to the receiver. But, by and large, there has always been, if you look around the world, a tendency for pay TV operators to like some degree of proprietary standard, which makes it much more difficult for the consumer to swap from one provider to the other.

Senator TCHEN —Of course. That is not a technical problem, that is a marketing problem. Yesterday we heard from a witness who was rather scathing about the idea of interactive channels. His argument was not technical difficulties but that nobody would take it up. I think you expressed some opportunity for interactive broadcasting or datacasting for your service. Have you done any studies on whether this activity is likely to be taken up?

Mr Shier —Suffice to say, first of all, that we believe that is one of the real attractions of multichannelling and one of the real attractions of datacasting. The question is whether there is functionality in the box to do it in a given time frame. Colin might like to comment on the functionality.

Senator TCHEN —No, we can accept that part.

Mr Shier —Mr Carroll might like to comment on the desirability.

Senator TCHEN —I am more concerned about whether you would get a market response, whether the user would use it as an interactive tool.

Mr Knowles —A few years back you would have said that people would have been sceptical about the interactivity on the Internet and suggested that nobody would want to use it. I think it has proved itself.

Mr Carroll —And the take-up in the UK and in parts of Europe, particularly France, is already considerable. The latest projections based on the research on the existing market is that interactive TV will overtake the PC within a couple of years. That is probably very optimistic. I think someone else said yesterday, in terms of research in this market, that it is extremely difficult to research what people do not know and cannot feel. So the best research at the moment is coming out of Europe where there is an actual consumer experience.

Senator TCHEN —I see you have a fair degree of confidence in proposing that you should be able to provide digital services through multichannelling and datacasting and so on, Mr Shier. The question is: can you afford to do it?

Mr Shier —I think there are two issues. When I say I have a lot of confidence, I want to do it. I would not want to give any indication that I am not concerned about the success of datacasting. The idea that the ABC will just battle on and do this on its own is not real. I am concerned that, quite frankly, the new media arena, both pay TV and datacasting, is robust. I just want to make sure that the ABC has an active part in that and I want to make sure that the ABC is not marginalised in that—for example, in the environment of electronic program guides. To the extent that that means I need money by different means than those who have their own cash, I have to put proposals and I have to convince people that the Australian people would benefit from that extra money. It has not been forthcoming at the moment. I take some small comfort from the fact that I have a five-year contract. I would like to think that during that period I will be able to win, on behalf of my colleagues and the people of Australia, some of those arguments and get more money to the ABC.

Senator TCHEN —How much more?

Mr Shier —I feel like I am about to have a very enjoyable negotiation.

Senator TCHEN —This is for information only.

Mr Shier —Put it this way: at a rough cut we were saying we wanted about $180 million in triennial funding, over three years. So I would probably want a bit more than that. If we are in a position to take those numbers into a period at some point in the future, that is the ballpark I would want to be in. I think the evidence will be that people will want to see our programs and will want to relate to our programs, and I think that it is very much what Mr Carroll said. Until people appreciate what they are missing they do not know what they want. If you will give me a little latitude for one minute, I remember when I once produced a program for children on a vegetarian vampire. I thought: how do I actually research this? Somebody said, `You have to research every program we make.' I said that it is a bit hard to research vegetarian vampires with four-year-olds. They said, `No, you definitely have to research it.' Of course you do not. You have to do it and have faith in it and put your energy behind it and see if it works. Sometimes it does not. My gut feeling is that—

Senator MARK BISHOP —Did it work?

Mr Shier —It did work. It became a classic. I think the parliament should take comfort from the fact that the ABC will do this to the best of its ability and they should also take comfort from the fact that, with some of the best engineers in the country and certainly people who have given a lot of time to working out the type of content we should have on this service, there is a grave risk we could have a success.

Senator TCHEN —The figure you just suggested, $180 million over three years, is more modest than what Rupert Murdoch suggested. In a speech he gave in America in April 1996, he claimed that converting his network facility to high definition would cost at least $US100 million plus—

Mr Shier —I was talking about content. How much more money I needed for the content.

Senator TCHEN —For content only.

Mr Shier —What about the technical side?

Senator TCHEN —Can you do it without cost? I know that in your last application for triennial funding the ABC said that it anticipated that it will be possible to deliver a range of new digital television services at a marginal cost. Firstly, what range of new digital television are you referring to? Secondly, what are you talking about in terms of marginal cost?

Mr Shier —I will ask Mr Knowles to comment on the marginal cost. Of course we have to be transmitting in digital anyway. Just to make it clear: I was responding in relation to the content of the material and how much more it would be to put content on the multichannel.

Mr Knowles —From the ABC's point of view, the government has funded us for the technical conversion and arrangements are in place to fund the transmission of digital television across Australia. So that is not a point of question. The triennial funding was not about the technical conversion; it was about the money we needed to create content, to create new programs for the digital system.

Senator TCHEN —That is assuming you get your wish for multichannelling and datacasting.

Mr Knowles —Yes.

Senator MARK BISHOP —I did not understand the triennial submission that ABC put to the government to be a public document, Mr Shier. Is it a public document? I have tried to get access to it and it has been denied.

Mr Shier —I have to seek guidance on that. I am being advised the summary was released.

Senator MARK BISHOP —Do you have a copy of the submission?

Senator TCHEN —No, only two pages. That is the summary. Sorry, Senator Bishop, I cannot share the submission with you. That submission is still confidential to me.

Senator MARK BISHOP —Do you have a copy of the submission, Senator Tchen?

Senator TCHEN —No, I said it is still confidential to me, not to you. The reference in your submission to triennial funding actually refers to the technical side, that you are technically capable of providing digital services but you will need additional funding to make those services substantive. Is that right?

Mr Shier —Clearly the ABC will not wish to put a service to air until they are satisfied that it is the quality it should be.

Senator TCHEN —Yes, I understand. I am playing devil's advocate here. In your written submission, in your summary and recommendation you describe the ABC as not being in competition with the commercial stations because it does not compete for advertising revenue and so on. Then you say that the ABC serves a different purpose and does not compete for mass audience. Should I take that to mean that ABC sees itself as serving a niche audience, a specialised audience, rather than a mass audience?

Mr Shier —I would criticise the person who said that except you are saying that it is me.

Senator TCHEN —This is the written submission. There is no signature.

Mr Shier —I hope—and I do not have my quote in front of me—that it related to the commercial environment. The correct statement would have been that we do not compete for commercial mass audiences. I think that is very important because we do not affect the livelihoods of the commercial stations. In terms of viewing, the multichannel would not actually appreciably affect the amount of commercial viewing across the whole spectrum of all channels. I think I went so far as to suggest that they could order their affairs in such a way that they would not notice the difference financially.

Senator TCHEN —Because it does not cut into their audience?

Mr Shier —No, because I think at the end of the day television is a very powerful medium and it is sought by advertising agencies and I think, to the extent that there will be a marginal viewing shift into non-commercial viewing on ABC, the cost per thousands of the commercial audience would simply rise to compensate for that.

Senator TCHEN —I want to take the argument a step further. This is not anti-ABC as such. I am just testing it out. In that case, wouldn't it be equally well argued that the market you are seeking to serve can be equally or better served by specialised providers like regional services, such as SBS and community televisions?

Mr Shier —I do not know that I can elaborate on the word no.

Senator TCHEN —Why not?

Mr Shier —First of all, the mission of the ABC is well set out in our charter. The commitment of the people is there to do the job, and I would be disappointed if people felt that embryonic community television networks or even SBS—I think they might be gracious enough to say this—would not take us on in multichannelling. I would think they would like to think they are complementary.

Senator TCHEN —Is that because they cannot compete in terms of your resources?

Mr Shier —No, I do think there is a wish to. I think there would be a feeling that we are both committed to improving the offering to the Australian people and adding something over and above that which is offered by the commercial channels. I think the real question would be: is the offering from the commercial channels so attractive that there is not a market for the ABC multichannelling? I would be more relaxed if that were the case.

Senator TCHEN —How would you defend the government against an argument that, by allowing the ABC all these liberties, in the interests of free competition all providers should be allowed the same freedoms?

Mr Shier —I am not in the business of defending the government, first of all. The ABC competes in a very open marketplace at the moment and it does not fear competition and it is prepared to face competition. If you are asking me my view about having all the commercial channels having a right to multichannel, then I have to tell you of course it is more competition for me. Already we have enough and already what we are trying to do is offer something. I am concerned about the number of Australians who are not exposed to the ABC. There are a lot of people over the 23 years I have been out of the country who, quite frankly, have been weaned off it. My job is to wean them back on it and I want to do that with another channel as well and perhaps another two channels. To the extent that others will help me with funding, that would be appreciated.

Senator TCHEN —Thank you. Senator Bishop, if you are interested in the ABC submission summary, I will get it off the web for you.

Senator MARK BISHOP —No, I was interested in the submission that had been leaked to you by the minister's office that has not been made available to the committee, Senator Tchen, not the ABC submission.

Senator TCHEN —No, I will get it off the web for you.

Senator MARK BISHOP —The one you were reading from, not the submission. The one given to you by the minister's office—the full submission by the ABC is what I was interested in. The ABC recommends the bill be amended to allow for the ABC's radio networks to simulcast their output via datacasting. We already have simulcast on ABC FM with the broadcast on TV on Saturday nights for operas and things of that nature. You will not be able to simulcast by datacasting the way the bill is structured at the moment?

Mr Shier —The way that it is structured at the moment we cannot. We can understand why there might be a desire not to allow non-national channels to get national coverage. But we cannot see why we should not be able to let our non-commercial national channels get national coverage by another distribution vehicle.

Senator MARK BISHOP —Why should your non-commercial national radio also have the ability to simulcast? What makes them different or special?

Mr Shier —What we mean in that context of simulcast is that they will of course be going out across a part of Australia by the normal distribution vehicle. But if you take News Radio, for example, I think the coverage —I would have to check—is around 58 per cent of the country. To enable all the people of Australia to get News Radio I think would be an added benefit. If we were to distribute it through a decoder in digital, they could receive that.

Senator MARK BISHOP —So it is news networks. Does the same comment apply to your other radio networks?

Mr Shier —To varying degrees. Mr Knowles might want to comment on exact transmission coverage, but they vary from positions where we have 98 per cent and 99 per cent coverage down to our News Radio, which is also the parliamentary channel, at about 58 per cent.

Senator MARK BISHOP —Mr Knowles, do you know the figures off the top of your head?

Mr Knowles —Radio National is almost universal coverage insofar as where people really live. Local radio is of course local, but that covers a large part of Australia. Classic FM is probably the next ranking service. Triple J is not yet extended across the whole country. There have been a number of proposals in the past to extend that and some have gone ahead to a certain degree. And we are probably around to population groups of 15,000 in relation to Triple J. As far as parliamentary radio is concerned, it is only available in the capital cities. All those programs are actually available on the satellite for people who receive the remote area satellite service. This is not the most convenient way to get it to all of those people who may ultimately wish to receive it. What we are saying is that by using the vehicle of digital television transmission, we could very quickly make available to anybody who chose to buy a digital television decoder the capacity to receive those programs which they cannot currently get. To extend those by the traditional terrestrial means will require a very large injection of money.

Senator MARK BISHOP —So there are two legs to your argument. One is to provide a fuller radio service to remote and regional Australia and the second is that it would be significantly cheaper just to provide it through the decoder, as you say. Thank you.

CHAIR —That would mean that people all over Australia could listen to the parliamentary broadcast, which of course would be of great social benefit. Seriously, I come from the north-west of Western Australia where people are spending a lot of time and effort to get those additional radio services into towns. This would provide an easy and quick way, I suppose, of bringing Classic FM, Triple J and also, most importantly, the parliamentary news network.

Mr Shier —Certainly Triple J has an audience of a lot of young people who feel they are disconnected. I feel that all those services ought to be made available to all Australians where the parliament has the chance to do it.

CHAIR —I accept that point. In towns like Broome and Karratha they have committees getting together to fund the introduction of Triple J and Classic FM, but Triple J particularly. Thank you very much. I thank the ABC for appearing.

Mr Shier —Just for the record, I did not produce the Big Friendly Giant; I was the deputy manager of the company that did. I do not want anyone to think I am claiming credit for doing the vegetarian vampire. But it was interesting that discussion about researching some of these matters. Thank you for your time, Chairman.

[10.29 a.m.]