Australian Broadcasting Corporation Submission Review of High Definition Television Quota Arrangements (Department of Communications, Information and the Arts) June 2005 Australian Broadcasting Corporation submission to the DCITA Review of High Definition Television Quota Arrangements Introduction The ABC welcomes this opportunity to comment on the high definition television (HDTV) quota arrangements set out in the Broadcasting Services 1992 (“BSA”) and supporting regulations. Since 1 July 2003, the ABC has transmitted an HDTV version of a proportion of its programming on digital logical channel 20. In each reporting period since that date, it has met or exceeded the requirement set out in clause 4 of Schedule 2 of the Broadcasting Services (Digital Television Standards) Regulations 2000 that it transmit 1,040 hours of HDTV content each year. Evidence to date indicates that HDTV will not be a major driver in the uptake of digital television in Australia in the near or medium term. Currently, more than 70% of Australian digital terrestrial households are unable to receive HDTV signals. However, the Corporation acknowledges that in the longer term consumer interest in the format is likely to grow, as is the saleability of rights to high definition (HD) content on international markets. Accordingly, the ABC is in the process of developing the capacity for HDTV production. The ABC believes that the development of digital television in Australia would be better served by allowing broadcasters to make their own judgements about the uses of their spectrum allocation that will be most attractive to Australian audiences. However, if the existing quota-based approach is to be retained, the Government should revisit the standards for digital receivers to require that all boxes be able to decode both standard definition (SD) and HD signals to free up bandwidth by eliminating the need for wasteful HD-SD “simulcasting” in the longer term. HDTV format As the ABC believes that offering audiences a greater diversity of services is the key to encouraging digital television take-up in the short-to-medium term, it has launched a standard definition television (SDTV) multichannel service, ABC2. To accommodate ABC2 within available spectrum, the Corporation has adopted 576p as its play-out HDTV standard. Nonetheless, the ABC recognises that 1920x1080 is the worldwide HD production and international program exchange standard, and expects that future international content sales are most likely to be in that format. Accordingly, the Corporation has adopted 1080i for its internal processes and is in the process of developing production facilities capable of generating HDTV content at that resolution. 1 ABC Submission: Review of High Definition Television Quota Arrangements 2 The discussion paper canvasses the question of modifying the existing HDTV standards, including ceasing to regard transmissions in 576p format as HDTV. Any significant modification of the standards would necessitate a revision of the entire digital television regime, as broadcasters’ approaches to the various options presented by digital television are predicated on the formats set out in the existing standard. The ABC has based its digital television broadcasting strategy on the use of 576p to meet its statutory HDTV obligations. In particular, the Corporation is only able to offer its multichannel service, ABC2, by providing HD simulcasts of its analog television service in 576p; given current compression techniques adopted in Australia, 576p is the only HDTV format that is sufficiently compact that it can be carried in a 7MHz broadcast channel alongside two SD signals. If 576p was to cease to be an acceptable HDTV format, the ABC would be unlikely to have the necessary spectrum capacity to continue to offer ABC2 to Australian audiences in parallel with HDTV. This would be detrimental to the take up of digital television in Australia, as audience reaction to ABC2 has been extremely positive. The HDTV mandate The ABC has long maintained that the key driver of digital television take-up in Australia will be increased viewer choice through additional and enhanced services. Nonetheless, the Corporation acknowledges that the adoption of HDTV in Australia is likely to eventually become more widespread as the various elements of the HDTV value chain decline in price. Currently, integrated digital television sets capable of receiving HDTV signals and television sets of sufficient resolution to display HDTV content are expensive, luxury consumer items. Similarly, while the prices of digital television set-top boxes have fallen, HD boxes have remained relatively expensive. Until HD equipment declines in price, the penetration of HDTV into Australian households is likely to be limited. The ABC notes that anecdotal evidence from retailers suggests that a significant number of the digital set-top box purchases to date have been the last link in a causal chain where consumers purchase wide-screen television sets to make better use of the wide-screen capabilities of DVD players, and then purchase digital television receivers to extend those capabilities to free-to-air television viewing. This suggests that interest in HDTV equipment may increase once the format for HD DVDs has settled and consumer hardware becomes available. Similarly, it is likely the cost of acquiring HD content is expected to decrease in line with increases in the supply of HDTV content from the Australian independent production sector and from overseas sources. The cost and supply of HD content is likely to be affected by the costs of equipment capable of supporting HD production. ABC Submission: Review of High Definition Television Quota Arrangements 3 What is unclear, however, is when such decreases are likely to occur. The ABC is not in a position to estimate likely timeframes for the various changes. HDTV rules for regional broadcasters The ABC currently provides a national television service with some State-specific programming. All areas of Australia that fall within the Corporation’s digital television broadcast footprint, including most regional areas, receive the same suite of services, which include standard and high definition versions of the ABC’s primary channel for their State, its multichannel television service ABC2 and the two dig digital radio services. Currently, the Corporation’s digital television signals are broadcast to 95.6% of the Australian population using 131 transmitters across the country; coverage is expected to reach 98% of the population by 2012. The ABC intends to continue to provide the full range of its digital services to all Australians, whether in regional or metropolitan areas. Relevance of current HDTV quota rules The Issues Paper seeks comments on whether the HDTV quota should remain at 1,040 hours per annum and whether more specific HDTV quotas, such as hours broadcast in prime time or in particular genres, should be introduced. As indicated above, available evidence suggests that choice and enhanced content are the keys to driving digital television uptake in Australia in the short-to-medium term. As HDTV transmission occupies a significant proportion of each broadcasters’ 7MHz spectrum allocation, it reduces the bandwidth available for new, enhanced and interactive services. Accordingly, the ABC believes that broadcasters should be allowed to choose whether to use their spectrum for HDTV or for additional services. Thus, if a broadcaster forms the view that HDTV is a driver of digital television uptake, it will use its spectrum for that. Alternatively, if the broadcaster is of the view that audiences will be better served by the provision of additional channels or enhancements, it will be able to use its spectrum in that way instead. Specific Quotas If the existing quota-based approach is to be retained, the ABC would be opposed to the introduction of more specific HDTV quotas. The introduction of prime time quotas will effectively oblige broadcasters to make decisions about the programs they make, acquire or convert into HD format on the basis of the programs’ likely placement in the schedule, rather than on the basis of whether the content will benefit from the higher-resolution format. Given the diversity of the ABC’s schedule, programming best suited to HD presentation will not necessarily fall within peak audience evening viewing periods. ABC Submission: Review of High Definition Television Quota Arrangements 4 Similarly, imposing genre-based HDTV quotas on broadcasters is likely to distort their production, acquisition and conversion strategies by requiring them to consider programs at least in part on the basis of their capacity to fulfil particular quota obligations, rather than their programming merits. The ABC also notes that, consistent with its Charter obligations in relation to both diversity and comprehensiveness, the spread of genres on ABC Television is significantly different from the spread on commercial television channels; any proposal to introduce genre-based quotas must allow for these differences. Up-conversion of content Under subclause 37L(2) of Schedule 4 of the BSA, the ABC is permitted to include up- converted analog and standard definition programs when meetings its HDTV quota obligations. The Issues Paper raises the question of whether the Corporation should be instead required to meet some or all of its HDTV quota obligations by providing material originally produced in a high definition format. Assuming that the HDTV quota is maintained,