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Deloitte Access Economics Report

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Deloitte Access Economics Report Submission to the Convergence Review Draft Report ASTRA 31 October 2011 Submission to the Convergence Review Contents Glossary ...........................................................................................................................................i Executive Summary .........................................................................................................................i 1 Introduction ........................................................................................................................ 5 2 Overview of government support and obligations imposed on broadcasters ................... 6 2.1 Forms of government support to FTA broadcasters .............................................................. 6 2.2 Obligations imposed on broadcasters ................................................................................... 7 3 Government support for FTA broadcasters ........................................................................ 9 3.1 Assistance with the digital switchover ................................................................................... 9 3.2 Access to Spectrum .............................................................................................................. 12 3.3 Licence fees and rebates ...................................................................................................... 27 3.4 Barriers to new FTA broadcasters ........................................................................................ 29 3.5 The anti-siphoning scheme .................................................................................................. 30 3.6 Funding of national and community broadcasters .............................................................. 32 4 Obligations imposed on broadcasters .............................................................................. 36 5 The economic contribution of the sector ......................................................................... 38 5.1 Introduction ......................................................................................................................... 38 5.2 Traditional measures of contribution .................................................................................. 39 5.3 Investment ........................................................................................................................... 45 5.4 Consumer choice.................................................................................................................. 46 5.5 Broader benefits .................................................................................................................. 48 5.6 Conclusion on economic contribution ................................................................................. 49 6 Australian content ............................................................................................................ 51 6.1 Introduction ......................................................................................................................... 51 6.2 The policy objectives of the Australian content regulations ............................................... 52 6.3 The current regulatory regime ............................................................................................. 53 6.4 Future market environment ................................................................................................ 55 6.5 Policy options ....................................................................................................................... 57 6.6 Constraints imposed by the AUSFTA ................................................................................... 63 6.7 The role of the ABC .............................................................................................................. 65 6.8 Implications for STV ............................................................................................................. 66 6.9 Conclusion on Australian content ........................................................................................ 67 References ................................................................................................................................... 69 Appendix A .................................................................................................................................. 73 Appendix B .................................................................................................................................. 74 Limitation of our work..................................................................................................................... 77 Liability limited by a scheme approved under Professional Standards Legislation. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. © 2011 Deloitte Access Economics Pty Ltd Charts Chart 3.1 : Total nominal funding of the national broadcasters over time ................................ 33 Chart 3.2 : Total real funding of the national broadcasters over time ....................................... 33 Chart 3.3 : Nominal government funding of community broadcasters over time ..................... 34 Chart 3.4 : Real government funding of community broadcasters over time ............................ 35 Chart 5.1 : Direct economic contribution by STV, 2009-10 ......................................................... 43 Tables Table 3.1 : Estimated government support for the digital switchover ($2011 million) .............. 12 Table 3.2 : Broadcasting spectrum available for FTA broadcasters ............................................ 16 Table 3.3 : Prices paid for spectrum in the 800 MHz band ......................................................... 20 Table 3.4 : Valuation of broadcasting spectrum prior to the digital switchover ........................ 23 Table 3.5 : Annualised value of Australia's broadcasting spectrum ($2011 million) .................. 26 Table 3.6 : Value of access to spectrum ($2011 million) ............................................................ 27 Table 3.7 : Projected cost of television licence fees rebate ($2011 million) .............................. 28 Table 3.8 : Budget estimates of future television licence fees revenue ($ million) .................... 28 Table 3.9 : Net television and apparatus licence fees paid by broadcasters ($2011 million) ..... 28 Table 3.10 : Major proposed changes to the anti-siphoning scheme ......................................... 31 Table 3.11 : Effect of moving to a ‘use it or lose it’ model for the ASL on industry revenue ..... 32 Table 3.12 : Funding for national and community broadcasters ($2011 million) ....................... 35 Table 5.1 : STV sector indicators ................................................................................................. 41 Table 5.2 : Economic contribution of the STV sector, 2009-10 ................................................... 42 Table 5.3 : Production activity of the STV sector, 2009 .............................................................. 42 Table 5.4 : Direct economic contribution of the STV production sector, 2009 .......................... 43 Table 5.5 : STV compared to sectors defined by the ABS ........................................................... 44 Table 5.6 : Employment in the STV sector, 2009-10 (Access Economics) ................................... 45 Table 5.7 : Employment in the STV sector, 2010 (ASTRA member survey) ................................ 45 Table A.1 : Inputs and assumptions for Table 3.5 ....................................................................... 73 Deloitte Access Economics Commercial-in-confidence Submission to the Convergence Review Glossary ABC Australian Broadcasting Corporation ABS Australian Bureau of Statistics ACMA Australian Communications and Media Authority ASL Anti-Siphoning List and associated legislative scheme ASTRA The Australian Subscription Television and Radio Association AUSFTA Australia-United States Free Trade Agreement DBCDE Department of Broadband, Communications and the Digital Economy ENG Electronic Newsgathering FTA Free-to-air HAS Household Assistance Scheme NITV National Indigenous Television SBS Special Broadcasting Service STV Subscription Television UHF Ultra High Frequency VAST Viewer Access Satellite Transmission VHF Very High Frequency Liability limited by a scheme approved under Professional Standards Legislation. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. © 2011 Deloitte Access Economics Pty Ltd Executive Summary The Australian Government’s Convergence Review has been established to investigate the implications of changing information and communication technologies for current regulatory frameworks. This report focuses, in particular, on the regulatory frameworks applying to the television broadcasting sector. The report is composed of three sections: The first section provides a stocktake
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