Christopher Purnell Florey ACT 2615
SUBMISSION TO THE “DRIVING DIGITAL” REVIEW Introduction Digital television (DTV) is a powerful new technology for delivering broadcast services to the Australian public, and its commencement almost five years ago was a major milestone in the history of television in this country. DTV has a range of features that put it a quantum leap ahead of current analogue-based transmission systems and makes possible a greater quality and quantity of services. Like many new technologies, though, it has taken time to establish itself. Terrestrial penetration is around 13% of households (though an unknown number of others receive some digital free-toair (FTA) channels via pay TV boxes) and only a small number of consumers have access to DTV’s most-touted feature, high definition (HD) programs, which require expensive new sets to display properly. This is in contrast to the United Kingdom, where digital television has been an enormous success and can be found in over 60% of households1. So there is a perception that Australian DTV uptake is less than ideal. This is in large part a regulatory problem rather than a failure of the technology. In introducing digital the Government chose a model based on the replication of existing services and the promotion of HD, tightly controlling any additional content. There were sound reasons for doing this, but the result has been to limit DTV’s commercial appeal. The Government has also relied heavily on market forces to drive demand and produce a speedy transition to the new system, which would allow analogue transmissions to cease (the primary aim of the policy, from Government’s perspective). This approach will eventually succeed, but it will probably take longer than anticipated – perhaps another 7 to10 years. While it is quite possible that DTV will gain popular appeal and achieve ubiquity sooner than that, I submit that consumers will need a more compelling reason than currently exists to make this happen. If the Government wants to substantially increase DTV uptake, it must take a lead role in the process. The Government is better placed to provide incentives for the conversion to DTV than any other media stakeholder. An assertive approach would require a detailed, three-pillar strategy to ‘drive digital’: 1. The introduction of appealing new digital-only content via a fourth commercial network and/or an increase in multi-channeling; 2. Mandatory digital tuners in new TV receivers; and 3. A phased analogue switch-off timetable, commencing in late 2010.
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It should be pointed out that the UK experience is exceptional; most other countries currently converting to DTV have not experienced such dramatic rates of uptake.
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Supporting this (or any other) strategy should be a coordination body to handle promotional efforts, similar to the UK’s SwitchCo, and a testing and conformance centre which would enforce and upgrade digital standards over time. I would like to examine each of these ‘pillars’ and the problems involved in implementing them. 1. New content The benefits of DTV include greater spectrum efficiency, interference-free images, widescreen pictures, surround sound and embedded data services. Digital broadcasting also facilitates the use of PVR (Personal Video Recorder) technology, which may turn out to be the ‘killer app’ for DTV; PVRs allow viewers far greater control of their consumption of television. DTV is based on MPEG-2 coding, which permits either multiple standard definition (SD) channels or a single high-definition channel to be transmitted in a 7MHz channel-width at any one time. So far interest in these innovations has been muted; however, the element which is currently most restricted – the availability of extra content – is likely to have the most appeal amongst viewers. In Europe, the introduction of digital FTA technology has been largely based on the provision of additional content via multi-channels, emulating the pay TV model of enhanced program choice. Britain’s Freeview platform carries five times the number of FTA TV services available on analogue at little or no cost to the viewer. The immense popularity of Freeview has made it an attractive model for a swift transition from analogue to digital (although so far other countries adopting the multi-channel format have had mixed results). So is this the way to get new content into the system? The ABC and SBS already offer a limited amount of digital-only content, but a lack of funds combined with severe genre restrictions has stifled development and made for less-than compelling viewing. The lifting of these restrictions by the Government is long overdue, and would be a useful step towards increasing digital content for viewers. Allowing commercial networks to multi-channel, however, raises many questions. Funding for extra channels would have to come from advertising, and the market here is considerably smaller than the UK; sources of quality programming are also less abundant. Furthermore, if Australia did adopt unrestricted multi-channeling it could affect the amount and quality of local content being produced. Currently our commercial broadcasters must ensure that 55% of prime-time programs are Australian in origin. Could this requirement be maintained in a multi-channel environment? Television has a significant cultural dimension, and allowing commercial multi-channels to be filled either by more foreign content or a raft of cheap local programs (possibly both) could undermine existing policies designed to support uniquely Australian content. This issue has not attracted much comment so far, but it could become a focus for public criticism if multichanneling dilutes local programming on FTA. Another little-discussed consequence of multi-channeling is the knock-on effect to regional broadcasters. Many of them are already tightly stretched having to simulcast digital and analogue services and meet regional news quotas. Companies such as WIN and PRIME could have great
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difficulty adding extra channels. They have already spent millions upgrading their transmission facilities for high definition, having to acquire and operate new channels would impose an even greater burden on them – and their markets have less elastic advertising revenues than the capital cities. If they decided that providing new content was too expensive, it would impede digital uptake in the regions. I believe the notion that free-to-air broadcasters should seek to emulate the pay TV model of multiple niche channels is problematic, and puts the cart before the horse. The networks’ expertise lies in providing a variety of new programs that appeal to a wide audience via a single popular TV channel, and this is primarily what they should focus on. The FTA environment should be dedicated to servicing a broad constituency, with niche programming a secondary concern, perhaps better left to other platforms such as pay TV and internet narrowcasting. Australian networks should be encouraged to develop innovative high-quality content, and this is likely to be made more difficult if resources are spread thin across an array of segmented multichannels. High definition: In the United States, where most markets are already saturated with pay TV services, broadcasters chose to pursue higher technical quality programming instead of multichanneling. While digital uptake has been modest so far, evidence exists that audiences are responding positively to high definition TV. Most mainstream American TV shows are now produced in HD, and high definition TVs are one of the fastest-growing areas of consumer electronics. Interest has now reached a point where Europe has belatedly recognized the potential offered by HD, and both Sky TV and the BBC want to commence HD services via satellite. Having chosen the SD multi-channel road, Freeview is too crowded to allow the introduction of HD on the terrestrial platform (at least until analogue switch-off frees up more spectrum). Australia has not made this mistake, and it too is enjoying healthy growth in HDTV sales. Increasingly HD is seen as the international standard for television production. It is hard to see the wisdom in throwing this advantage away in favour of a commercial multi-channel model that may not suit our market anyway. The current HD quota should remain in place, and perhaps even be increased. Options: So how do we get more content into the system and drive consumers to DTV? I think there are three possibilities, none mutually exclusive given the available spectrum: i. The existing market could be expanded by licensing a fourth commercial broadcaster. A new, digital-only network with identical license conditions to the present networks would stimulate public interest, enhance competition in the industry and increase Australian television production. HD and local content quotas would be upheld, and a new entrant would have greater incentive to introduce extra digital services such as an Electronic Program Guide (EPG) and supplementary data streams (which the current broadcasters have yet to consistently implement). ii. A new datacasting license with less restrictive conditions than the initial regime could also provide valuable content for consumers, much of it innovative. This deserves some consideration as a way of capitalizing on digital convergence. But in my view such second-
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tier services are unlikely to excite public interest to the degree that a new full-service broadcaster would. iii. A digital multiplex could be created, either publicly-owned or awarded to an independent operator. The multiplex would have room for three or four SD-quality TV channels, and each commercial network would be offered a leased slot with which to provide a secondary channel to their main service. Any spare capacity could be leased to prospective datacasters or community-based channels. This would be an imperfect option due to the number of parties it would involve, the possible consequences if networks refused to participate, and the difficulty of applying it in regional areas – but it could provide a limited amount of extra content without compromising the existing system. I believe the first option would provide the best quality of content and would motivate more viewers to switch to DTV. The high take-up rate in Hobart and Launceston noted in the Review discussion paper, where a digital-only commercial channel is already available, would seem to support this view. It could also be argued that a new commercial network is overdue to be introduced, given the natural growth of the FTA market in recent years. However the incumbent networks would resist such a move and would need to be convinced that a new competitor is preferable to alternative methods of increasing content. Options ii and iii are problematic because they represent new models of broadcasting for Australia and are therefore untested in the market. It might also prove difficult to prevent a datacaster becoming a de facto 4th commercial broadcaster without severely limiting its competitiveness. Despite these difficulties, getting substantive extra content onto DTV would undoubtedly be the most effective driver of consumer interest. 2. Digital Tuner Mandate Mandating digital tuners in televisions is controversial because it would represent a significant intervention in the market by Government. The United States is one of the few countries to mandate such tuners as part of its digital transition plan, and it is not yet clear how consumers will respond to such a measure. Other countries have preferred to rely on market forces to gradually implement the technical conversion, based on previous examples of successful technology phase-ins such as the introduction of colour TV and FM radio. However this case is somewhat different. In those examples the old technology could easily coexist with the new, whereas digital broadcasting is slated to replace analogue transmissions altogether. DTV is therefore a major market intervention by authorities and it should be treated as such, rather than just as an optional add-on service for consumers. As with the introduction of TV transmissions on the UHF band, eventually all new receivers will have to be digital-capable, and a tuner mandate will help hasten this outcome2.
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As a side note, a more apt example would be the Band 1 & 2 clearances undertaken in regional areas beginning in the 1980s. Television services on VHF channels 0 – 5A were transferred to UHF frequencies to improve reception and make room for new FM services. No tuner mandate was needed because UHF receivers were already ubiquitous
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Imposing a progressive digital tuner mandate on new model TVs would assist in raising the public profile of DTV and allow manufacturers to properly plan the supply of compliant equipment. To lessen the initial impact, the first mandate might only apply to widescreen TVs over a certain size (eg 75cm and above by 2008), since these sets will benefit most from being digital-enabled and their higher price will help conceal the extra cost of digital circuitry. But eventually all equipment sold with a tuner will have to go digital, including DVD-Recorders. The sooner the conversion to digital starts the sooner it can be completed. Technology: A side issue of such a tuner mandate is whether it is wise to lock in a specific technology such as MPEG-2 when standards may change in future. This is a minor concern for two (slightly contradictory) reasons. One is that broadcasting traditionally maintains its basic reception standards over very long periods (eg current TV sets comply with standards set more than 30 years ago) so MPEG-2 is likely to be with us for quite a while. At the same time it appears that consumers are increasingly treating televisions the way they treat personal computers and cars: with a high expectation of turnover in the medium term. Equipment bought today is likely to be replaced in under ten years. This should produce faster technology upgrades in future. This brings up the matter of DTV standards, and the role of a testing and conformance centre. Consumer confidence would be raised by having the current standard applied consistently in all digital receivers, and a central testing and approval body can provide this. Having an official ‘seal of approval’ would also help promote digital TV and assist consumers in understanding the technology. Proper labeling could be used to distinguish basic set-top-boxes (STBs) and integrated TVs from more advanced units. In addition, such a body could analyze new broadcast technologies and over time extend the DTV standard. For example, the testing centre could publish a basic ‘DTV compliant’ standard, and an additional set of desirable features as ‘DTV Plus’ which might include support for the Multimedia Home Platform (MHP), over-the-air downloads and HD decoding. After a few years these ‘Plus’ features would be added to the basic standard and new ones introduced (perhaps as ‘Plus 2’). This evolving standard would upgrade new digital receivers and help to reduce the problem of legacy equipment. In particular, making all receivers HD-capable would ameliorate the need for the wasteful duplicate SD channel all networks must currently carry, and it may even be possible to introduce more advanced MPEG-4 decoding in this fashion. 3. Analogue switch-off Setting a definite date for the switch-off of analogue transmissions would signal that the Government is serious about completing the transition to digital. Either the new system is worth moving to, or it was a mistake to introduce it. It is Government’s responsibility to determine how
in new TVs and VCRs. Regional viewers were given incentive to switch to UHF via the provision of new ‘aggregated’ television services and the promise of new FM radio stations. Simulcasting periods were kept short, there was a definite switch-off date and the Government assisted viewers with telephone help-lines and field staff. It was accomplished remarkably smoothly.
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the broadcast spectrum can best be used to serve the public and to ensure that, once a new regime is decided upon, it is implemented with a minimum of disruption. So a timetable of phased analogue switch-offs should be announced and it should be made clear to the public that analogue TV receivers are now outdated technology. I suggest that a simulcast period of ten years from the commencement of digital transmissions in each region would be an appropriate time span for conversion. This would mean that the switch-off date in capital cities would fall at the end of 2010, with other regions to follow over the next four years. This would be similar to overseas expectations: the US is set to switch-off analogue in 2009 and the UK expects to finish conversion to digital by 2012. Five years from now is not long to achieve thorough DTV penetration in the capital cities, but setting an ambitious target in itself creates urgency and incentive to action. A recent ACMA survey of DTV uptake suggested that most of the households interested in converting to digital planned on buying an STB or integrated TV in two years or more3; it should be a priority of Government to encourage such consumers to buy into digital sooner rather than later. Introducing additional content, whether via a new commercial network or other means, will be a key motivator in meeting any switch-off target. In fact, without new content, setting a firm date for switch-off is probably not advisable. I think the Government should also consider a further incentive: at least one new broadcasting service should be promised to follow analogue shutdown, either another commercial operator or a multiplex of channels. Community and indigenous content could also be offered. This would strengthen the case for conversion by promising tangible post-switch-off benefits. Trials: I also propose that at least one trial analogue switch-off should be conducted within the next three years, to determine the practical realities of conversion. Given the reported high penetration of DTV in Hobart and Launceston, perhaps one or both of them could be considered for such a trial. Regions may elect to switch-off analogue before ten years are up if they can prove that penetration has reached a sufficient level. An oversight body to promote DTV and run trials will be needed, and its establishment would be a further sign of the Government’s intention to proceed with the switch-off. The UK’s SwitchCo offers a ready-made model for such a body. Delays: While the aim of setting a hard-target for switch-off is to encourage consumers to transition to digital quickly, it is inevitable that some regions will progress faster than others. Provision should be made to adjust the timetable as the deadline approaches. For instance: if, a year prior to switch-off, digital uptake in a region has not reached a pre-determined milestone (eg 80%) the Government would have the option of delaying switch-off in that region by six months, and extra resources could be directed to address the issue. This might include a subsidy scheme for STBs focused on disadvantaged and retiree households. Such a scheme could be funded in
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See http://www.aph.gov.au/house/committee/cita/digitaltv/subs/sub86.pdf , page 21.
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part by imposing a levy on broadcasters for continued use of their analogue spectrum during the extension period. It would also be prudent to stagger the initial round of switch-offs in capital cities over several months, so that resources aren’t overstretched dealing with a multiplicity of inquiries from lastminute converters. Such options for stringing out the transition ought to be used sensibly, as the process should not be dragged out any longer than necessary. Spectrum: In terms of post-switch-off usage of the vacant spectrum, in my opinion it would be better to retain most of it for future broadcasting needs in preference to non-broadcasting uses. But this is a matter that can be decided at a later date. The main drawbacks to having a definite switch-off timetable are that, once announced, it could become difficult to alter it if events do not proceed according to plan and the public may feel they are being forced to change with undue haste. If take-up stalled for some reason the Government could be faced with the choice of carrying on regardless, delaying the plan or having to resort to more interventionist measures, such as a widespread subsidy program. However, with careful planning an analogue switch-off timetable would provide clear goals for all parties to work toward and would support other measures to speed the conversion to digital. Conclusion DTV is a revolutionary new technology which has many advantages over analogue and provides an excellent platform to capitalize on future developments in broadcasting. The Government has adopted a conversion model which emphasizes quality over quantity in offerings and no new market entrants, and this has so far produced a modest uptake rate. Inasmuch as it may string out the process of conversion, this is less than ideal. The three remedies discussed in this paper to stimulate uptake – additional content, a tuner mandate and a definite analogue switch-off timetable – are all strategies being implemented in other counties undergoing conversion, and their complete absence from current Australian DTV policy is notable. The Government has relied on market forces to increase digital penetration, and while this approach may yet produce a smooth transition such an outcome would be more quickly achieved by taking direct action. The very title of this review, ‘Driving digital’, implies a pressing need to act. Other participants in the industry such as broadcasters and equipment manufacturers have important roles to play in making DTV attractive to consumers, but they are constrained by commercial interests and legislative restrictions. Only Government has the perspective to weigh the possibilities properly and the responsibility to ensure a beneficial outcome for the public. An aggressive digital strategy would require elements of all three pillars detailed above, and while some aspects will undoubtedly prove challenging to implement, it is up to the Government to set the pace and provide much-needed leadership. Britain and the United States know where they are going with DTV – it’s time Australia had the same degree of conviction.
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Christopher Purnell 7 November 2005
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Attachment 1 Comments on the issues raised in the Review’s discussion paper
1. Timetable for switch-off The present simulcast should be continued beyond 2008, as penetration is not likely to be sufficient to cease analogue transmissions by then. A simulcast period of approximately 10 years in each region would be appropriate. Penetration rates should be closely monitored and the Government should review progress in each area 12 months prior to the switch-off date; if uptake has not exceeded 80%, switch-off may be delayed by 6 months and additional measures devised to increase penetration. Regions may be allowed to switch-off early, if they can prove that uptake has been exceptional. At least half of the vacant analogue spectrum should be retained for future broadcasting needs.
2. Measures to enhance the transition to digital Current DTV uptake is viewed as being slow, although it is no slower than most countries now converting to digital; to enhance uptake Government should adopt more interventionist policies, such as allowing additional content via a 4th commercial channel, mandating digital tuners in TVs and setting a firm timetable for analogue switch-off. A Government-funded body should be set up to oversee the transition to digital. A testing and approval centre should be created, possibly as part of the oversight body; it should deploy advisory labeling to better assist consumers. Barriers to uptake include a lack of new services to entice people to go digital and confusion about what digital TV is, particularly among the underprivileged and the elderly. DTV must be better promoted as the successor to analogue TV and a natural complement to other technologies such as DVD and widescreen TV.
3. Preparing for and managing switchover The Government should take a lead role in promoting the transition to digital via policies that create incentives for people to make the switch and the implementation of mandates to phase out analogue-only receivers. Broadcasters must maintain local program-making standards, increase their use of HD and explore ways of enhancing their digital offerings (eg EPGs, additional program data, etc). Manufacturers and retailers should adhere to published standards in their equipment and work with Digital Broadcasting Australia (DBA) to better promote DTV. As switch-off approaches teams of qualified installers should be assembled to handle conversion complaints.
4. Conversion of other types of free to air broadcasters and services
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Community broadcasters should not convert to digital until the process is well advanced; simulcast should be short or not occur at all, to minimize the financial burden on local groups. If a digital multiplex is mooted, a channel might be reserved for a community station in each region. The possibility of transmission via satellite or cable for such services should also be explored.
5. Issues for examination closer to the end of the simulcast period Whether to allow further television or data services to commence post-switch-off. Whether MPEG-4 coding can be introduced on free-to-air digital.