News Ltd submission to the senate inquiry

News Limited

ACN 007 871 178

A submission to the Senate Committee on Environment, Communications, Information Technology and the Arts inquiry into the Broadcasting Services Amendment (digital television and datacasting) bill.

May 2000.

News Limited’s position on media competition policy and emerging technologies is well documented. We have consistently urged successive governments to permit competition in the media industry, by removing media specific regulation. This would leave operators subject to the application of generic competition and foreign investment law. At the same time we have acknowledged the role of government mandated Australian content requirements.

These issues, among others, were considered by the recent inquiry of the Productivity Commission into broadcasting. A copy of our submission to the Productivity Commission is attached for ease of reference.

Our response to the Broadcasting Services Amendment Bill (Digital Television and Datacasting) Bill 2000 (the Bill) is no different. If the Bill is passed it will have significant irreparable adverse consequences for Australia.

The Bill expands what the free-to-air operators can do with their spectrum, and severely limits what datacasters can do. In combination, this will have the effect of:

• putting the free-to-air operators beyond competition; and
• retarding the social benefits to Australia of datacasting.

In relation to competition, some claim that the regime in the Bill can be reviewed over the next five years. This argument is wrong headed. By the time any change is made which might allow new participants into the industry, the free to air operators will have entrenched their position to a point where the barriers to entry are insurmountable. Only in a competitive environment can multi-channelling lead to diversity of opinion and content. More dynamic and varied programming will be a direct result of the pressure on market share which new entrants will inevitably exert on the incumbent broadcasters. Multi-channelling in a protected environment will simply lead to a digital transition of the same tired linear programming format that exists today.

With this Bill, the face of broadcasting in 5 or 10 years time will be the same as the face of broadcasting today. There will be no technical and commercial innovation. There will be no fresh new voices. There will be no more diversity than there is today.

It is also suggested by some that the handback of analogue spectrum will create future opportunities to raise revenue and open the competitive environment. This too is wrong. Inefficient spectrum planning ensures that there will be very little, if any, additional spectrum available in the broadcasting services bands in years to come. The Bill does not provide an assured return of analogue spectrum. With no real incentive for the incumbent players to drive the uptake of digital technology by consumers, the analogue spectrum will be held by the free to air broadcasters beyond the foreseeable future.

On the loss of social benefits, digital datacasting could have been used to educate, to advise, to entertain with culturally relevant and significant content and to minimise the effects of isolation. Instead these opportunities are being smothered. There will be no tailoring of broadcasting services to satisfy specific needs of particular interest groups. The information poor will still exist. If this Bill is passed, indigenous communities, ethnic communities, geographically isolated communities, and educational entities will lose the benefits that datacasting could have brought.

The limitations on datacast content represent a considerable impingement on freedom of communication and freedom of speech. This breaches basic human rights and the implied constitutional guarantee of freedom of speech in Australia. We would not be surprised if the Bill was found to be invalid under Australia’s constitution.

What is more, the devaluation of datacasting will greatly reduce the revenue that the Government and Australian taxpayers would otherwise have received for the sale of datacasting spectrum. This is indisputable in light of the fact that the auction earlier this year of 1.8GHz spectrum for mobile telephony raised $1.327 billion to be added to consolidated revenue. On this basis, the recent Australian budget surplus relies on an estimate of future revenue from the auction of 3G mobile phone spectrum of $2.6 billion.

The same result should be sought for the sale of digital broadcasting spectrum. This can only be achieved if bidders are able to compete at an auction for broadcasting spectrum with the knowledge that the uses to which they can put that spectrum are only limited by their own innovation, existing and future technology and the continued availability of capital. This Bill ensures that the opposite will be the case.

Technology has brought us the converged global market. To participate in that market, Australia needs to acknowledge it and regulate within the parameters set by it. There is no international precedent which supports the regime proposed by the Bill. Australia needs to be realistic. We are a small nation with limited resources. The telecommunications and media industry is highly skilled and very expensive. For the Australian industry to thrive, participants must be able to access international resources, both people and finances, and seduce those resources to this economy. International resources, however, will only come to Australia if the Australian environment fosters development.

The Government has chosen not to foster these highly skilled and lucrative industries. Rather, it prefers to protect the incumbents and frustrate what new players might try to do.

The Bill does not provide a coherent framework in which Australian industry is fostered. How such an anti competitive position can be proposed without regard to broader social policy objectives is beyond comprehension. While it is apparently in the national interest that farmers, manufacturers, newspaper publishers, internet, cable and satellite television companies, and telecommunications companies and so on all should be exposed to competition, Australia is expected to believe that limiting datacasting is beneficial. The policy and proposed legislation display an intellectual “double standard”. The Bill should be rejected in its entirety.