Submission by Free TV Australia Media Reform Green Paper May 2021 Table of contents 1. EXECUTIVE SUMMARY .......................................................................................................... 3 2. INTRODUCTION ..................................................................................................................... 9 2.1 ABOUT FREE TV ...................................................................................................................... 9 2.2 STRUCTURE OF OUR SUBMISSION............................................................................................... 10 3. TV A VITAL LOCAL SERVICE PROVIDING ONGOING VALUE TO AUSTRALIANS ......................... 11 3.1 SUPPORTING OUR DEMOCRATIC INSTITUTIONS .............................................................................. 12 3.2 SUPPORTING AUSTRALIAN CULTURAL IDENTITY ............................................................................. 13 3.3 LOCAL CONTENT SUPPORTING A STRONG LOCAL PRODUCTION SECTOR ................................................ 14 3.4 UBIQUITOUS AND FREE ACCESS ................................................................................................. 15 3.5 DIRECT AND INDIRECT ECONOMIC CONTRIBUTIONS ........................................................................ 16 4. ENSURING A SUSTAINABLE LOCAL BROADCAST SECTOR ....................................................... 17 4.1 IMMEDIATE REGULATORY REFORMS NEEDED ................................................................................ 18 4.2 BROADCAST INDUSTRY ALREADY INVESTING TO MEET THESE CHALLENGES ............................................ 28 4.3 COMMERCIAL LICENCE CATEGORIES ALSO FACING DISTINCT PRESSURES................................................ 32 5. THE FUTURE ROADMAP OF FREE-TO-AIR: AN ALTERNATIVE PATH FORWARD ....................... 36 5.1 LONG TERM PLANNING FOR FUTURE OF THE BROADCAST PLATFORM ................................................... 36 5.2 THE FUTURE OF THE TERRESTRIAL PLATFORM ................................................................................ 39 5.3 RESTACKING TV TO YIELD ANY 600 MHZ DIVIDEND: ISSUES AND CHALLENGES ...................................... 43 5.4 THE ROLES OF OTHER TECHNOLOGIES IN BROADCASTING TV ............................................................. 60 6. INDUSTRY RESPONSE TO THE GREEN PAPER PROPOSALS ..................................................... 66 6.1 RESPONSE TO TERRESTRIAL PROPOSALS: UNWORKABLE AND UNATTRACTIVE ........................................ 66 6.2 RESPONSE TO OTHER REGULATORY PROPOSALS: BEWARE UNINTENDED CONSEQUENCES .......................... 74 6.3 FEEDBACK ON THE PROPOSED TIMELINE: LATE 2020S MORE REALISTIC ................................................ 77 7. APPENDIX ........................................................................................................................... 84 7.1 RESPONSES TO GREEN PAPER CONSULTATION QUESTIONS ............................................................... 84 7.2 KEY COST ASSUMPTIONS ......................................................................................................... 88 7.3 SUPPORTING TECHNICAL ANALYSIS ............................................................................................. 89 7.4 GLOSSARY OF KEY TERMS ........................................................................................................ 94 ATTACHMENTS 1 COMPETITION ECONOMISTS GROUP (CEG) REPORT, VALUE OF THE 600 MHZ SPECTRUM BAND 2 OLIVER & OHLBAUM, SUPPORTING LOCAL CONTENT INVESTMENT: INTERNATIONAL POLICY APPROACHES TO VOD SERVICES 2 1. Executive Summary A strong Australian media industry is in the national interest • The growth of global media platforms has important implications for Australia’s national and cultural identity, and for our access to local information. A strong local media sector is central to our ability to maintain public participation and trust in democracy and a shared sense of national identity. • This is the lens through which all aspects of the discussion opened by the Media Reform Green Paper must be viewed. The rapidly changing media sector means that Australia needs a new framework to secure a strong future for free television broadcasting. • It is critical that policy settings for future delivery of television services are set in such a way as to ensure that as a country we can continue to enjoy the benefits delivered by a viable and thriving local broadcast industry. Without this, we risk losing our access to local news, local stories and free sport. A comprehensive approach to a future state for free broadcast television is needed • The commercial free-to-air TV industry welcomes a conversation with Government about a roadmap for the future evolution of the free-to-air TV platform. The industry is willing to engage in the technical and wider policy aspects of this discussion, including whether it is possible to deliver an eventual reduction in broadcaster UHF spectrum. However, the overriding consideration must be on maintaining a sustainable, free, universally available and competitive TV industry in metropolitan, regional and remote licence areas. • Securing a vibrant media industry, rightly considered in the Green Paper as ‘essential for the economic and cultural health of the nation’, requires a more comprehensive approach. Spectrum allocation and future transmission technology are two issues that warrant careful analysis as part of this process, but the discussion should be driven by the broader regulatory and commercial settings necessary to ensure a strong commercial television industry into the future. • In particular there is a pressing need for early regulatory and other actions in a number of key areas, including: o Measures to safeguard the prominence and therefore accessibility of terrestrial broadcast channels and BVOD services1, on connected TVs and other devices; o Ensuring internet providers cannot discriminate against different users on their networks based on the financial relationship between them (enshrining principles of net neutrality); o Ensuring Australians continue to have access to iconic sporting events for free by extending anti-siphoning regulations to apply to online video platforms; o Proceeding with the 2017 commitment to review the commercial broadcast tax (CBT) and the regional support package as stipulated under current legislation; o Addressing the financial pressures affecting the sustainability of free-to-air television broadcasting in regional and remote areas. 1 “BVOD services” refers to both linear streaming and on-demand services provided by broadcaster video-on- demand (BVOD) applications. See the glossary at the end of this submission for further details. 3 Commercial television is an essential service with a vital long-term role supporting Australian culture and civic life • Commercial free-to-air broadcasting is an essential service that remains the centrepiece for the universal and free delivery of socially inclusive and culturally relevant programming, including live sport, local news and entertainment programming. The industry’s unique contribution to Australia’s shared culture and civic life cannot and should not be understated. • 6.5 million Australians tune into commercial television news and current affairs every day and more than 17 million people watch something on commercial television every week. Likewise, BVOD services continue to grow, with total viewing minutes growing by 40% over 2019-20.2 • Free-to-air TV delivers a wide range of public benefits and is highly valued by the overwhelming majority of Australians. 95% of Australians think that losing commercial free-to-air TV would have a detrimental impact on society.3 • These benefits include: o Providing one of the biggest sources of Australian stories and sport; o Being a highly trusted source of local news; o Contributing to a shared sense of Australian identity and underpinning our vibrant democracy; o Providing the above benefits at no cost to viewers, ensuring free and fair access for all; 4 o Contributing over $2.3 billion per year to the economy and supporting 16,300 jobs; o Investing $1.6 billion per year in the Australian content production sector, sitting at the heart of our screen content sector and making content for local not global audiences.5 • The industry is investing heavily to meet the demands of modern audiences by providing them the quality of content they demand and delivery through the platform of their choice. o Given the medium-term criticality and dominance of the terrestrial platform, Free TV broadcasters are already leveraging the full efficiency benefits of MPEG-4 to convert all services to high definition. A transition to MPEG-4 through the progressive rollout of MPEG-4 channels has been underway across the broadcast sector since 2013. This will enable broadcasters to improve the quality of the services they deliver to meet consumer demand, which is driven by improvements in consumer electronic equipment screen resolution. o Metropolitan broadcasters have also responded to the demand for internet-delivered as well as terrestrial broadcast services, investing over $550m in technology and innovation to build world-class BVOD services. o Regional broadcasters have maintained localised news and local advertising in segmented sub-markets to regional viewers. 2 Oz TAM VPM. H2 2019 to H2 2020. Numbers rounded to nearest 1000. 3 Deloitte Access Economics, ‘Everybody Gets It: The Economic and Social