FOXTEL Response to the Australian Communications and Media

FOXTEL response to

The Australian Communications and Media Authority’s Discussion paper, ‘Spectrum reallocation in the 700 MHz Digital Dividend band’

Monday, December 6, 2010

This document is Foxtel Management Pty Ltd’s (FOXTEL) response to the Australian Communication and Media Authority’s (ACMA) discussion paper, ‘Spectrum reallocation in the 700 MHz Digital Dividend band’.

FOXTEL Contact Details:

Peter Smart Chief Technology Officer FOXTEL Email: [email protected] Ph: 02 9813 6666

Adam Suckling Director Policy & Corporate Affairs Email: [email protected] Ph: 02 9813 7593

EXECUTIVE SUMMARY FOXTEL welcomes the opportunity to respond to the ACMA’s discussion paper ‘Spectrum allocation in the 700 MHz Digital Dividend band’ (the Paper) and commends the ACMA on its consultative approach.

As a finite public asset, spectrum allocated for commercial purposes should be managed in a way that enhances Australia’s prosperity through supporting new industries, products and jobs of the future. To this end, FOXTEL supports the Government on its decisions to:

. Release 126 MHz of Broadcast Spectrum as the Digital Dividend . Auction off the Digital Dividend spectrum prior to analogue switch-off in the second half of 2012 . Auction the spectrum via a priced based allocation of spectrum licenses to the highest bidder.

In relation to the configuration of the Digital Dividend spectrum FOXTEL supports:

. The 700 MHz Digital Dividend band being reallocated for Long Term Evoluation (LTE) mobile telecommunications services

. International harmonisation of Australia’s Digital Dividend spectrum on the basis Australia is a ‘technology taker’

. Harmonisation of Australia’s LTE spectrum within the ITU Regional 3 band (Asia Pacific and part of the Middle East).

However, FOXTEL has concerns about possible interference with its Hybrid Fibre-Coaxial (HFC) network with the proposed ‘Site Sense’ of the FDD band configuration. FOXTEL is conducting technical assessments on the likelihood and impact of this interference and will share the findings of this trial with the ACMA once complete. In light of these concerns, FOXTEL wishes to participate in the Technical Liaison Group (TLG) to work with the ACMA to develop the technical framework.

Finally, while FOXTEL is not opposed to auctioning the 2.5 GHz band together with the 700 MHz Digital Dividend band, it should not unduly affect the timetable for the incumbent users to vacate the 2.5GHz band.

ABOUT FOXTEL FOXTEL is Australia's leading subscription television provider and is connected to over 1.63 million subscribing households on cable and satellite through retail and wholesale distribution. FOXTEL strives to ensure our six million viewers find TV they want to watch every time they switch on their television through delivery of more than 200 channels covering news, sport, general entertainment, movies, documentaries, music and children’s programming.

FOXTEL commenced distributing its services on cable with 20 channels in 1995, expanding to 31 channels and satellite distribution in 1999 and increased its offering to 45 channels in 2002 following the completion of the FOXTEL-Optus Content Supply Agreement. The FOXTEL Digital service was launched in 2004, and FOXTEL is now giving Australian viewers the choice of more than 200 Digital channels. Since its launch, FOXTEL has extended its Digital innovations by adding a raft of new channels and interactive features including additional news, sports and weather applications, as well as FOXTEL iQ, a fully integrated Personal Digital Recorder, launched in 2005. FOXTEL launched its mobile service – Telstra Mobile FOXTEL in 2006 which now carries 33 channels and is one of the world’s most substantial mobile offerings. The live broadcast service FOXTEL Live2Air on Virgin Blue was launched in August 2006 and is now available across Australia on the Virgin Blue jet fleet providing 24 channels of live FOXTEL. FOXTEL launched its High Definition service in June 2008 with five dedicated 24-hour HD channels- BBC HD, Discovery HD, National Geographic Channel HD, FOX SPORTS HD and ESPN HD plus Australian television premiere blockbuster movies available immediately when you want them through the FOXTEL Box Office HD On Demand service. The new generation FOXTEL iQ2 combines HD programming with a huge disk drive and intuitive and easy to use electronic programming guide making it even easier for subscribers to watch what they want and when they want. FOXTEL launched FOXTEL Next Generation in November 2009 which provides customers with: the increased choice of 30 new channels; new navigation features such as iSuggest – which enhances navigation with 200 fresh movie and program suggestions for iQ recording every week – and Record Me – which allows you to record shows directly from an on-air program promotion; the most comprehensive HD offering in Australia with 15 HD channels; and Sky News Local which provides a dedicated local news service for each major Australian capital city. In late 2010 FOXTEL launched 30 FOXTEL channels over the internet direct to our customers’ television sets via Microsoft’s Xbox 360 product. FOXTEL offers FOXTEL by Xbox 360with various packaging and prices and under flexible agreements. FOXTEL also launched in late 2010 FOXTEL services over the internet direct to FOXTEL customers’ television sets via around 8--0,000 deployed internet enabled iQ boxes.. The service offers customers even more choice and control over their television viewing, liberating a video store of choice with hundreds of On Demand movies and television programs. FOXTEL was the first Australian broadcaster to broadcast in 3D in conjunction with FOX SPORTS when the Socceroos played New Zealand on 24 May, 2010. In addition, FOXTEL now offers the first dedicated 3D channel – FOXTEL 3D.. Also from November, FOXTEL’s comprehensive HD offering expanded to 20 HD channels, including FOXTEL 3D. FOXTEL directly employs around 2100 people and a further 1700 workers are indirectly engaged by FOXTEL in sales and installation services nationally. The FOXTEL Television Centre at North Ryde in Sydney is the headquarters of FOXTEL's national subscription television operations and houses FOXTEL’s television studios, broadcast operations and cable and satellite transmission facilities. FOXTEL also operates a national Customer Solutions Centre based at Moonee Ponds in Melbourne, a purpose built state of the art call centre. FOXTEL is owned by Telstra Corporation Ltd (50%), The News Corporation Ltd (25%), and Consolidated Media Holdings Limited (25%). 4

SPECTRUM EFFICIENCY

Policy Context As a finite public asset, spectrum allocated for commercial purposes should be managed in a way that enhances Australia’s prosperity through supporting new industries, products and jobs of the future. Regrettably successive governments have not managed spectrum optimally and in the case of Broadcast Spectrum, the principle beneficiaries have been commercial broadcasters and their commercial interests, not the Australian public. For this reason FOXTEL supports the broad approach to reallocation of the Digital Dividend spectrum proposed in the Paper because it aims to better manage Australia’s spectrum. In particular FOXTEL supports the Government’s decision to: . Release 126 MHz of Broadcast Spectrum as the Digital Dividend . Auction off the Digital Dividend spectrum prior to the analogue switch-off in the second half of 2012 . Auction the spectrum via a priced based allocation of spectrum licences to the highest bidder.

However FOXTEL believes there is more to be done to manage Australia’s scarce spectrum asset more efficiently and to optimise Australia’s prosperity in the digital economy.

Optimising the Digital Dividend Digital Dividend spectrum in the 700 MHz band holds substantial value for Australia. A compelling economic case has been made for redeploying the Digital Dividend spectrum for LTE mobile telecommunications services. FOXTEL supports this proposal on the basis it will optimise Australia’s economic benefit. It has been argued by commercial broadcasters that part of the Digital Dividend should be set aside for transitioning to new technology and formats such as MPEG 4, DVB-T2 and 3DTV. FOXTEL strongly opposes provision of any Digital Dividend spectrum free or on a subsidised basis for this purpose. If these commercial operators wish to secure additional spectrum to transition to new technology, access should purchased on an open market. Moreover, the new approach to spectrum leaves the broadcasters with 224 MHz of spectrum. This is more spectrum than they would need if they ran an efficient system. If Australian broadcasters adopted the efficient broadcasting approach being implemented in the UK they would be able to increase the capacity of their remaining spectrum substantially providing room to transition to new technologies. Because FOXTEL pays a market rate for spectrum it is motivated to optimise its bandwidth to support new channels, products and HD services that are launching every year. Through digital multiplexes and advanced compression technologies such as MPEG 4/DVB-S2 up to six HD services are supported on each of FOXTEL’s satellite transponders.

DIGITAL DIVIDEND CONFIGURATION

International Harmonisation On the basis Australia is a ‘technology taker’ FOXTEL supports international harmonisation of Australia’s Digital Dividend spectrum. Given the compelling economic case for redeploying the spectrum for LTE mobile telecommunications services, FOXTEL agrees with harmonisation of Australia’s LTE spectrum within the ITU Regional 3 band (Asia Pacific and part of the Middle East). FOXTEL understands, based on a recent outcome from an Asia Pacific meeting AWF-9, 698 to 806 MHz will be proposed for LTE use in the Asia Pacific, where the Digital Dividend released in Australia is 694 to 820 MHz. However FOXTEL has concerns about possible interference with its Hybrid Fibre-Coaxial (HFC) network with the proposed ‘Site Sense’ of the FDD band configuration.

Interference Concerns The likely format for 4G LTE devices is to operate in a ‘duplex’ style, similar to existing mobile devices, where separate parts of the band are used for transmission (TX) and receiver (RX) for the Base Station and mobile device. A centre band gap isolates the TX and RX (Figure 1). Whether the TX and RX are positioned either low or high within the band is known as the ‘Site Sense’. The convention for mobile devices has been to implement with the TX Site Sense High for the Base Station. The LTE spectrum currently extends up to 750 MHz, which corresponds with the top of FOXTEL’s HFC network spectrum, where seven of FOXTEL’s multiplexes are carried. There is a risk of interference from 4G LTE devices by RFI ingress into either the HFC network or consumer equipment (STB or household wiring) to FOXTEL’s services carried on these multiplexes. While the Network and Consumer Premises Equipment (CPD) such as Set Top Boxes (STBs) are screened to tolerate a certain level of interference it is likely the TX levels from the 4G devices will be sufficient to break through the screening. Studies done in Europe and the US support this view. International studies have indicated possible interference to Set Top Boxes at close range and up to six metres away where the Site Sense is normal (is Base TX high and mobile devices TX low). International studies have shown that the reverse Site Sense is less likely to cause interference because the environment (Base TX into HFC Network) is more controllable and can be engineered to cope. FOXTEL has commissioned a spectrum expert to assess the likelihood and impact of potential interference with the proposed harmonised LTE configuration for region 3.

Technical Liaison Group The Paper refers to consultation with a Technical Liaison Group (TLG) that has worked with the ACMA to develop the technical framework. In light of interference concerns in particular, FOXTEL wishes to participate in future TLG forums.

ALLOCATING THE DIGITAL DIVIDEND FOXTEL supports the Digital Dividend being auctioned via a price based allocation of spectrum licences to the highest bidder in late 2012, with clearance as soon as possible after December 31, 2013. This was the approach adopted in the United States. The benefits of this approach are threefold: 1. It provides an incentive to switch off analgoue television signals at the the switch off date as the rights to the spectrum used for analgue television had been auctioned for new services 2. It means that LTE services could be rolled-out faster than they otherwise would have been (and Australia is already falling behind comparable countries) 3. The Government receives monies from the auction of the spectrum earlier than it otherwise would have (in case of the US this amounted to almost US$20 billion). While FOXTEL is not opposed to auctioning the 2.5 GHz band together with the 700 MHz Digital Dividend band, it should not unduly affect the timetable for incumbent users to vacate the 2.5GHz band.

Figure 1: Proposed Harmonised FDD Arrangement of 698-806 MHz band for region 3