Network Insight Institute

Creina Chapman

Creina Chapman, Director, Regulatory & Corporate Affairs, PBL Media

I think it's very timely that we are having this discussion. There are many issues in front of us.

The first one is this interesting issue about capacity in the digital spectrum.  At Channel Nine, we are actually running at 23 megabytes capacity. We decided to set this level quite a while ago and we are sticking to it because we are not prepared to compromise the quality of our HD TV signal when we run it.  We are determined that we will HDTV in its true 1080i form.  Hence, we have a situation where we are not able to carry the standard definition signal, the high definition signal and enhancements all at the same time.  We are limited in our capacity.  At the moment that's probably not a major issue for us because we are not broadcasting any of our sporting coverage in high definition.  But when we do move into that scenario where you need a reasonable amount of spectrum to transmit sport given the high level of movement we will have a problem.

This will be raised in the first review when we deal with the situation about the, the triplecast/simulcast, etc..  I would be very tempted in response to the review to suggest that we should abandon the triple cast, but I think that's an unrealistic option given the proportion of the digital equipment in the market now that is only standard definition capable.

That debate occurred in 2000 and a decision was made at the time that there would be a simulcast of the high definition and standard definition signals.  So it is too late to change that decision now.  But it does raise the issue about how we are going to go forward if the high definition signal si going to be transmitted in its true 1080i form and not compromised.

The second issue I would like to raise is in response to Mark Armstrong's comment this morning that, "it's seems everything is covered with these reviews so what's missing?". 

I would like to suggest that one major area that's missing from the reviews is the issue of equipment. From Ian McGarrity's demonstration, we can see the large number of types and models of equipment available in the market at the moment.  It's becoming apparent that we have equipment standards in place but maybe we should the review should be looking at how we handle those standards; whether they are met and whether additional standards should be set. 

Some of the issues that may need to be addressed are whether the Government should mandate that certain percentages of equipment coming into the Australian market by a certain date should be digital capable.  I note the US regulator has gone down this route recently. 

The industry is increasingly coming across issues which are issues for viewers experience when they take a piece of digital equipment home - eg how boxes scan.  Come boxes scan numerically, some in multiplex order and there can be some viewer confusion.  This will become more and more of an issue as more equipment comes into the market.  There are many questions to answer - should further standards be made?  Should Government be more involved? 

The next issue I would like to discuss is the breadth of the existing reviews - in particular, the issue of new commercial networks after 2007.  I've been looking at this issue for a number of years and I find it extremely confusing as to how the previous legislation operated, how the new legislation works, and how we are going forward.

As we have discussed, at the moment, the power to make a decision about whether there will be additional networks is sitting with the regulator - with the ABA or the new merged body. I think it is important to remember that the ABA has this power in the context of the objects of the Act.  Part III of the Act which contains the planning powers specifically states that the ABA will undertake planning (ie allocation of licences)  in the context of the objects.  The objects include issues such as: promoting the role of broadcasting services in developing and reflecting a sense of Australian identity, character and cultural diversity; and promoting the provision of high quality and innovative programming.

Now that the Government has announced that it will taking over the role of allocating licences the question arises as to how they will perform this function.  One of the methods would be to return to the pre-1998 model by re-instating the previous section 215 review. I think there were two or three section 215 reviews the last of which occurred in 1997.

This would mean that the issue of whether or not there should be additional licences would be looked at in a comprehensive manner prior to the ABA going down the track of the planning process.  But as discussed this morning, this review seems to be the case of "putting the horse before the cart" in the sense that it will be about what will the licence look like once it's been issued without first addressing whether there should or there shouldn't be additional licences.  I think the reality of that review will be that once you answer the questions: what a new network would look like and considered issues of Australian content, the effect on classification issues, etc, etc, then that may well answer the question about whether there should or shouldn't be another network.  It may solve itself.

And further on this issue of reviews, I would like to reinforce that these are supposedly digital television reviews but they're really reviews about the future of television regulation.

If you work in any part of the television business you realise that you are not working in a digital television business or an analogue television business - it is all one business - the television business.  So everything that occurs in relation to your digital service impacts upon the whole of your business.  This is a very important point to appreciate when it comes to issues of whether networks should or should not undertake free to air multi-channelling.

As soon as we start talking about the issues which are covered by these digital reviews, we raise questions about the effect on many aspects of television policy and regulation.    Anti-siphoning is one of the areas raised earlier today.

And clearly, one of the most important issues is the impact of further networks and multi-channelling on Australian content rules.  Are they affected, how would they change or do they stay the same?

Two other regulatory areas that have not been mentioned today and I think are worth mentioning are:

One, what happens in relation to levels of captioning particularly in a multi-channelling environment?

At Nine we spend more than $2 million a year on captioning for our primary channel.  So, from a business point of view, it raises a number of issues about what would happen if we were broadcasting 3 or 4 extra channels.  Would they all be captioned to the same extent or not?

And secondly, the other area that has not been discussed  is the issue of classification policy.  The concept of classification is very different on the free to air channels than it is on subscription television.  If we were to move into a multi-channelling environment, what would happen to these rules?  Will you continue to have the same classification rules on your additional channels that you do on your primary channel? And then, over time, which is your primary channel and which are your additional channels?

Realistically, if are broadcasting additional channels that are niche channels, the current classification rules just won't work.  It's very difficult to see how you could operate for example a movie channel when you are required to run only PG programs during the day and on weekends.

Which takes us to the issue of multi-channelling. The views of Nine to multi-channelling have been well documented and we prepared a response to the ACCC last year, which sets those views out in detail.

We are not opposed to the concept of additional channels and additional choice for viewers.  However we do caution whether additional free-to-air channels would further and in fact maintain the current policy objectives required of free-to-air television.

The problem that I keep coming back to is that, if we are going to have more free-to-air channels, they need to be paid for from somewhere.  They will incur some capital expenditure and programming costs.  On the other hand there seems to be very little evidence that there is going to be an  extra pool of money to support those extra channels. In its report the ACCC commented that the UK and US experience shows that even if you have additional channels on which to advertise the total amount of advertising tends to stay the same.  And that's the product of television being a mature market.

We are concerned that without attracting additional sources of revenue, money spent on the new channels would be taken from the existing main channel, reducing its quality, particularly the quality of the local content.

So the question remains what you would we program on these additional channels?  In an ideal world more choice for free is a lovely idea it would be great but is it realistic?

So we've questioned what we could actually do with these channels.  We started off with the idea of time shifting our programs because this limits the amount of additional programming needed.  But his raises difficulties; firstly although some of the programming will not cost an additional amount in relation to large amounts of the programming we would have to purchase additional runs.  So we would be paying additional amounts each time the program is run.

The second problem is that you are splitting the audience every time you replay the program.  So, whereas for example you attracted, let's say 1.7 million viewers for Friends at 7.30 on a Monday, if you played it at say 10pm as well, then you would only attract say 1.4 million at 7.30 and the in theory the balance at the later time at which time you would be taking viewers away from the program originally scheduled at 10pm.  Viewer numbers will shift around but the most important issue is that you are splitting the audience and you are eroding you're primary  objective - the most important strength of the free-to-air business - the ability to sell advertising space to a mass audience.  The mass number of viewers is the advantage we are able to sell to advertisers.  Splitting it, we're moving into a totally different regime where we are unable to charge that premium.

Nonetheless, time shifting is a possibility and probably one of the cheaper options.

Another option would be to run repeat Australian programming.  We have the rights to some of this programming but would need to purchase some additional rights.

Another option is to purchase additional overseas material.   Contrary to popular belief there is not large amounts of programming available.  The majority of what we purchase now we run at some stage in our main schedule.  Further programs we would need to purchase.  We could purchase sitcoms from the 60s, 70s and 80s but in many cases we would need to compete with pay TV to get the rights which would probably lead to an escalation of costs.

We do have the rights to a number of movies that we could pull out of our stock.  We did a rough calculation and we worked out that we could run an extremely average movie channel, and I mean really average for about 6 months, for 12 hours a day. 

Essentially, I wanted to raise some of those issues to indicate that it is a complex issue.  In a sense it's easy for people to stand up and say, "oh, well, let's have more!"  but it's a difficult issue that's need to be looked at closely.  I understand why the Department has gone down the track of looking at the economic issues related to multi-channels.

«  Back

^  Top of page

Network Insight sponsors include: