Senator the Hon Helen Coonan

Minister for Communications, Information Technology and the Arts

Opening Address ACMA Broadcasting Conference

Canberra

9 November 2005

 

Good morning. It is my pleasure to be here for the first ever Australian Communications and Media Authority Broadcasting Conference.

I regard the creation of ACMA as one of the first legislative achievements I have had in this portfolio.

The passage of the ACMA Bill, pre-Senate majority, is also an indicator that there is broad recognition – and bi-partisan support – of the need to meet the challenges of convergence head-on.

I would like to thank everyone from the former ABA and ACA for their hard work, flexibility and patience over the past few months.

It is your commitment to the merger process that has ensured its success. I also thank the ACMA Board and its Acting Chairman Lyn Maddock for their hard work and commitment.

I understand the speculation surrounding the appointment of a permanent Chairman/CEO for ACMA. Ideally the appointment would have been finalised before ACMA’s creation.

For a range of reasons this has not been possible and I hope to make an announcement shortly. In the interim, I can again applaud Lyn for taking on the role during the agency’s formation, for the excellent job she is doing and her continued commitment.

Convergence

It is a particularly exciting and challenging time to be responsible for media policy.

There are both challenges and opportunities from the emergence and convergence of digital technologies for the media sector.

Traditional television and radio services are being challenged -almost on a daily basis - by broadband and mobile technologies, providing consumers with new sources of information and entertainment.

The lines between the telecommunications, broadcasting, print and IT sectors are blurred with an I-POD offering more news and opinion than your local newsagent.

There are technical, regulatory, economic and social challenges arising from the relentless march of digital technologies and Governments across the world are grappling with the need to convert to digital.

Convergence means we need to move away from controlling market structures in the way we have to date and move towards a new framework that allows some efficiencies of scale and scope while encouraging new players, new investment and new services.

ACMA broadcasting regulation

Part of the Government’s initial response to the challenges of convergence has of course been the creation of ACMA. ACMA will be much better placed to respond to convergence than the ABA and ACA would have been as separate agencies.

Now that the combined agency has had time to merge, adjust and begin to operate as a single entity, we have the opportunity to look at whether ACMA has the right tools to deal with the regulatory challenges it faces.

It would have been both hasty and burdensome to thrust new powers on a fledgling organisation at the time of the ACMA merger in July.

At a time when Governments are under increasing scrutiny for the levels of regulation they impose, it is prudent to consult with industry, the community and other stakeholders and then only regulate to the extent necessary.

A report commissioned by the former-ABA on its enforcement powers, found that ACMA would benefit from a more appropriate gradation of powers.

Enforcement powers of regulators ideally comprise a hierarchy of integrated sanctions that start from light touch and escalate in severity for more serious contraventions of the law.

ACMA’s broadcasting regulatory powers are generally concentrated at the higher end and the imposition of a criminal penalty, or the draconian punishment of licence cancellation, is rarely appropriate.

The constraints of the ABA’s broadcasting powers were apparent in some high profile cases such as the Commercial Radio Inquiry in 2000 and led to criticisms of the regulator for being too heavy handed.

As a consequence, the ABA’s ability to ensure compliance with the Act and maintain the confidence of the public were called into question.

Any change to ACMA’s powers would be to enable a more responsive regulatory approach , particularly in the area of broadcaster codes of practice and licence conditions, and to encourage better industry compliance.

So today I am releasing a discussion paper outlining potential reforms to the Broadcasting Services Act to provide ACMA with a more appropriate suite of powers.

The options include the introduction of civil penalties for a range of breaches that currently attract criminal sanctions.

This would give ACMA greater flexibility to address non-compliance and avoid the need to pursue more draconian responses in all but the most serious of cases.

The paper also canvasses giving ACMA the power to obtain injunctions where commercial broadcasting services are being provided without an appropriate licence and a power to accept enforceable undertakings from industry.

And the Government is considering whether ACMA should have the capacity to order on-air statements of investigation findings and the power to issue infringement notices for breaches of various notification, reporting and licence fee payment requirements.

Any changes would enable ACMA to set better compliance strategies, negotiate outcomes and accept voluntary solutions. This can benefit the regulatory process and industry alike.

I look forward to seeing the response of industry and other stakeholders on these reforms.

Submissions close on 9 December and the Government will formulate a response early next year.

The Digital challenge

Another area of reform where ACMA will make a significant contribution is in Australia’s transition to digital television.

I note with great interest that ACMA will release a report at this conference – Digital media in Australian homes – which looks at the rate of adoption of digital TV in Australia, community perceptions of digital TV and the drivers and inhibitors of adoption of digital TV.

I also note Lyn Maddock’s assessment in the report that ‘the performance of converged regulators such as ACMA will be judged on their contribution to the digital transformation sweeping the media and communications industries around the world’.

I agree wholeheartedly with Lyn and hasten to add that, similarly, Governments will be judged on how they meet the digital challenge and how effectively we preside over the introduction of innovative new services for Australian consumers.

One of the major issues I am considering as part of a far-reaching plan to reform the media sector in Australia is how the Government can better facilitate the take-up of digital television, and energetically strive for analogue switch-off.

How we can do this is something I will turn to a little later but just briefly I would like to outline the digital story we have to tell in Australia.

Digital TV transmissions in mainland state capital cities commenced on 1 January 2001 and have now also begun in all regional television licence areas.

Around 85 per cent of the Australian population now has access to digital services from all their local free-to-air broadcasters and around 96 per cent of the population has access to at least one digital service.

And progress is being made on establishing the framework for digital conversion of remote area television services.

Industry figures show we have passed the one million mark in terms of receiver sales and there are now more than 90 models of digital television receivers.

Standard definition set top boxes now retail from $99 and integrated digital TVs from around $1,099.

So you can see, we have made quite a bit of progress in implementing digital television – large amounts of the infrastructure are in place. However, we still face big challenges in driving take-up to achieve analogue switch-off in a reasonable timeframe.

ACMA’s own survey reports that 13 per cent of households receive free-to-air digital television and 22 per cent of households have either free-to-air digital or digital subscription television services.

Not surprisingly, a high proportion (just over half) of respondents cited better quality picture and reception as a key reason why they would switch to digital.

New services and content also rated highly. But around 70 per cent of respondents said they liked their current analogue free-to-air TV.

I think this is further evidence that Australians value their free-to-air television and that there is no single silver bullet that will ultimately encourage all Australians to shift to digital.

But if Australia does not accept that digital is our destiny then we will certainly be left behind. Other countries are moving forward rapidly in their digital conversion.

Overseas experience

In Germany the world’s first complete digital switchover occurred in the German region of Berlin-Brandenburg in August 2003.

Each region is undertaking digital conversion independently and Germany has set 2010 as a goal for the national analogue switch-off.

The UK Government has recently confirmed that analogue switch-off will occur between 2008 and 2012 on a commercial television market by market basis.

The US is now in the process of moving towards a firm date for analogue switchover. Two dates, 31 December 2008 and 7 April 2009, are proposed in separate bills currently being debated.

France aims to complete analogue switch-off by 2010 or 2011. Austria, Germany, Spain, Finland, Italy, Malta and Sweden have announced an intention to complete analogue switch-off by 2010. Belgium, Greece, Slovenia, Slovakia and Hungary have declared 2012 as a target for switchover.

Japan has set 2011 as a target for completing analogue switch-off and the European Commissioner for Information Society and Media has called for all member states to set 2012 as a deadline for switchover.

Australian switch-off

This clearly demonstrates that now is the time to energetically and proactively drive digital take-up in this country.

As you know, the Government has been conducting a series of reviews into aspects of the digital television regime including whether 2008 is a realistic timeframe for analogue switch-off in this country.

My aim in broadening the scope of this review to formulate a Digital Action Plan for Australia is simple.

To drive digital take-up we must have a consortium of committed stakeholders – from manufacturers and retailers to broadcasters, consumers and government – that recognise the financial and technical benefits in reaching switch-off for the ultimate benefit of all Australians.

This will not be easy and will require effort, commitment and continued investment from both industry and Government.

I have indicated my doubts that we will be able to switch off analogue television by the end of 2008. I am certain that if it is left solely to the market, we might not see switch-off for another decade or so.

The Government therefore needs to consider whether a new date should be set – and, if so, what that date should be. Alternatively, a set of milestones or benchmarks could be set to mandate switch-off.

I want to make it clear that in looking at a new date for analogue switch-off I do not want to push the date back too far. As in the UK and Europe we may be able to take a region by region approach. This could feasibly mean, for instance, switch-off in Sydney by 2010 with other areas to follow.

We cannot turn back the clock to the old analogue world – digital is the future for the industry. And the longer we have a simulcast requirement, the longer we continue to tie up valuable spectrum.

This spectrum could be used for new services, as well as being used to solve some technical congestion and coverage problems associated with the services already in operation, especially in the Sydney and Melbourne markets.

The simulcast review paper has canvassed a range of ideas and I expect that submitters will have made suggestions on how we can work together to fully convert to digital television.

Options could include a requirement that digital tuners be built-in to television sets or at least that digital set top boxes must be packaged with TV sets.

More detailed labelling on television reception equipment, or more contact points for the provision of digital services information, to build on the consumer information already available through the activities of Digital Broadcast Australia are other possibilities.

There may also be additional marketing opportunities for digital equipment and services which have not yet been explored or which could be expanded.

Subsidies for ‘vulnerable’ groups have been proposed in both the US and UK.

Consideration of the merits of a subsidy in Australia would need to take into account the different market environment, the price and affordability of Australian receivers, the comparative cost of continued analogue transmission simulcasting and the impact on other (non-free-to-air) service providers.

In the UK, the BBC has played an important role in the development of digital terrestrial television.

Although the BBC’s role and funding sources are different from our national broadcasters, the ABC and SBS are playing a vital and innovative role in promoting digital take-up, and may be able to play a stronger role that will also assist the local production sector.

We will also need to address some technical barriers to take-up. For example, there is scope to address a range of potential reception difficulties that may hinder digital conversion in some areas.

Of course, while we are considering all these problems, digital technology is evolving. Measures such as testing new equipment and services could reduce any adverse impact of these changes.

As digital receiver technology improves, these developments could also allow for cheaper, easier upgrades.

We will need careful planning to prepare for and manage analogue switch-off. It will be a challenging and substantial task that will require contributions from, and coordination of, all stakeholders.

But the Government is firmly committed to achieving it sooner rather than later.

Measures to increase digital take-up and overcome barriers to digitisation, such as those I have already canvassed, would be early steps in the process. Beyond that, it will be necessary to develop a plan and timetable for managing the switch‑off process itself.

A similar staged process as that of the UK, firstly involving planning and preparation for switch-off, and secondly implementing switch-off, may be appropriate for Australia.

The Government has provided the broad regulatory framework for digital conversion. But achieving the final outcome of conversion will need to be substantially driven by industry players.

Everyone stands to benefit from the conversion and our future depends on its success. We are committed to working with industry to develop a Digital Action Plan to energetically promote and encourage take up of digital television.

Driving take-up

I make no bones about the fact that in considering the digital challenges for the media industry I see the interests of consumers as the end-game. Ultimately this translates into new services and diversity.

But every new broadcasting or similar digital service is spectrum hungry, and spectrum is both finite and already heavily congested, particularly in major metro markets.

This raises questions about how many new services can be provided in the current climate and creates yet another imperative for us to seriously drive analogue switch-off in Australia.

For example, spectrum limitations and current compression technologies may prevent broadcasters from offering multi-channels as well as the highest resolution form of HDTV – 1080i.

This raises the legitimate issue of whether it is feasible to allow multi-channelling while at the same time mandating HDTV quotas.

This is a question I put to a group of industry and ACMA engineers recently and which the Government is considering in the context of digital media reform.

But as technology presents a challenge, so it often presents a solution.

Improved broadcast compression technologies such as MPEG-4 offer hope of significantly more efficient use of spectrum, although I acknowledge the legacy issues that would need to be addressed in adopting a more advanced compression standard.

Ultimately, the sooner we reach analogue switch-off in Australia and free up more spectrum, the sooner we can consider the full range of possibilities for new, innovative services for television, radio and potentially other platforms.

This is why I am interested in a proactive proposal to drive digital take-up in the short term coupled with a comprehensive plan to switch-off analogue in the medium term.

However, the good news is, we don’t have to stand still and we don’t have to wait for the Digital Action Plan. There are already a number of self-executing provisions in the Broadcasting Services Act that have the potential to deliver some exciting, new services now.

Datacasting

One matter I have under consideration is the allocation of datacasting transmitter licences using the two channels currently set aside in all markets for such services.

From 1 January 2007, datacasting transmitter licences will be able to be used to provide any type of content service licensed under the Broadcasting Services Act other than a full, free-to-air, commercial, terrestrial channel.

In practical terms, this means that a user of this spectrum from 2007 could provide a range of different services including text, picture and short video information such as that being provided in the datacasting trial underway in Sydney, a narrowcast or niche free-to-air television service, or a subscription service, perhaps via DVB-H – television over a mobile device.

The Bridge Networks, a subsidiary of Broadcast Australia, is currently conducting a trial of DVB-H in Sydney with content supplied by many operators including Foxtel, the Nine Network, ABC, SBS and Sky Racing.

The Sydney-based, 12 month trial was launched in July with 15 channels but this is expected to grow to 30 channels by the end of the 12 month period.

Also, Broadcast Australia’s datacasting trial in Sydney is providing a useful indication of potential services that could be deployed for this spectrum.

Trial participants include free-to-air networks that have a combined video program guide including all current programs shown on free-to-air digital channels; the ABC is showing news, sport and weather; the NSW Government has real time traffic reports, coastwatch reports, employment information and community alerts.

There is the EXPO home shopping channel; betting odds on SportsTAB; a Christian channel; a financial information channel from Macquarie Bank and, everyone’s favourite, audio broadcasts of Federal Parliament.

The use of the datacasting spectrum provides the opportunity for some interesting new services for consumers and, in my view, it is a key element of any media reform package.

Whatever decision the Government makes about how the spectrum should be allocated and used, there are a range of technical issues that will need to be resolved.

To assist the Government to make decisions about the potential use and allocation of the spectrum, I have asked ACMA to commence work on technical and planning matters related to the allocation of this spectrum.

This may involve ACMA formally consulting with industry on possible uses for this spectrum and how it should be sold or packaged; undertaking preliminary technical planning of the available datacasting channels; and examining what conditions could or should be placed on the issue of licences.

I must emphasise that this work does not bind the Government to a particular position but will significantly assist the Government by providing timely advice to guide more detailed spectrum allocation going forward.

Broader Media Reform

So, quite clearly, the extent to which we are able to drive digital take-up and to enable digital broadcasting to provide additional sources of content for audiences, will be a key issue in how we approach media ownership reform.

The Government committed at the last election to reform our outdated media ownership laws, while protecting the diversity of our media industry. As you know, this is a long-standing commitment.

But as I have said on many occasions this cannot be sensibly achieved in isolation from the digital revolution that has overtaken it.

I recently announced the framework for the introduction of digital radio in Australia that demonstrated the media industry can respond positively to the challenges it faces.

We need to strike a balance between removing obstacles to structural changes in the industry and allowing Australians to have access to and to enjoy new and innovative services made possible by the revolution in digital services.

We are currently considering how best to achieve that balance.

As is obvious from my comments today, issues surrounding digital broadcasting are at the heart of the challenge facing the media sector in Australia.

When we are dealing with television – a service which people know and love – and looking at the conversion to digital, along with new innovations and services, public consultation is critical.

This is what I have said all along, and it is what I intend to do.

Therefore, following my informal consultations with industry, today I can state my intention to release a discussion paper outlining proposals for digital and media reform in Australia.

The paper, which will be released at the beginning of next year, will include a discussion on the early and best use of the datacasting spectrum, the steps needed to develop a Digital Action Plan to achieve analogue switch-off and how the objectives of relaxation of foreign and cross ownership media rules can be best achieved in the context of greater choice and diversity offered by digital broadcasting.

Responses to this paper will be an important input into what will probably be the most important set of media reforms in a generation – and certainly our best chance to ensure that Australians continue to fully benefit from a robust and free media and the emerging opportunities and challenges of digital.

Conclusion

I expect that over the next two days there will be detailed, and doubtless animated, discussion of all the issues I have mentioned today.

Bringing together industry, regulators and consumers in a forum such as this provides a wonderful opportunity for us all to gain new perspectives on how communications is shaping the future for all Australians. Thank you.