The imminent demise of pay-TV company Australis is the legacy of a decade of appalling government handling of broadcasting in Australia.
The Australian Competition and Consumer Commission has blocked a merger with Foxtel, which is jointly owned by Rupert Murdoch’s News Corp and Telstra, on grounds that it would lessen competition. The ironic result is that Murdoch and Packer between them will control both the delivery of pay TV in Australia and its content. The only mitigating factor is how much ordinary TV purchasers are willing to pay for a pay TV service at all.
The essential problem with pay TV in Australia has been a governmental one. Both Labor and Coalition governments have failed to differentiate between the business of pay TV infrastructure and pay TV content. And they have both allowed the distant nirvana of coupling pay TV with the provision of cheap telephonic services to muddy the waters.
Alas, poor consumer, the connection between pay TV via cable or satellite, and the provision of telephonic services has been a technological fantasy. Voice and data (both internet and data) will go more cheaply over the existing copper wire network with its optic fibre trunks than over some mega-network that would also deliver pay TV to the home. And that is likely to be the case for some considerable time to come.
On the pay TV side, we are about to see the demise of Australis. It is trite to blame the ACC. It would be easy to say that the ACC should allow the merger with Foxtel to keep Australis afloat. But the ACC has to apply the law as it is to the market as it is. In those circumstances the merger, in the short term would be anti-competitive, even if it surrenders the whole of the Australian pay-TV market to the domination in both content and delivery to the Murdoch-Packer duopoly.
The trouble stem further back than this week’s ACC decision on Australis. It goes back to the Hawke-Keating period when ministers a regulators of both pay-TV and telephony failed to comprehend the importance of dividing the infrastructure and content side of the industries. In both case the government should have set up monopoly infrastructure providers. They could have been privately owned or publicly owned, or ideally a mix. The infrastructure provider would have controlled the network of cable and satellite. The infrastructure owner would have then opened the network to a very competitive regime of content providers, both publicly and privately owned.
On the telephony side, the vertical monopoly of Telstra owning the network and having a business selling access to its line would not be allowed. Instead, one company would own and maintain the network and a myriad of competitive phone company would have sold time on it.
On the pay TV side, one company would own the cable and satellite networks and a myriad of competitive content providers would have bid for the hearts and eyes of viewers.
When one looks around the world, many countries have vigorously competing pay TV companies. Pay TV is deliverable to virtually every home in the country. In Australia it is different. Australia has one of the most vigorous take-up rates of new technology in the world. Yet we languish in the provision of pay TV. A few lucky people in a few capital cities get pay TV. On the telephony side, Optus has to compete with one hand tied behind its back against Telstra which has the advantage of owning the network.
Another constructive comparison is with video. Without any government regulation because of the happenstance of a constitutional obstruction to the federal parliament regulating in the area, the result was magnificent. It was a result every disinterested commentator has called for and every government minister has hypocritically mouthed. The video industry is now at more than $600 million a year. It is highly competitive. And it creates a huge amount of employment. It delivers unlimited choice, from the mass creations to the idiosyncratic. And it consumes a greater percentage of watching time than pay TV could hope for.
How could this have happened — such an excellent result for consumers! It happened without any government interference. It happened because no government was juggling sycophancies among the big players. It happened because government was not trying to second guess technological change.
There is a cause for government to regulate pay television and telephony. That cause, however, is limited. It is because there is a finite amount of spectrum in the airwaves and the satellite waves and there is a public interest in ensuring that there is no unnecessary duplication of infrastructure in the cable ways.
At present, however, it seems that we are getting the worst of both worlds. We are getting unnecessary competition in the provision of infrastructure with the attendant costs of unnecessary duplication of cableway and we are getting the worst elements of monopolistic, or dupopolistic, provision of pay TV content.
The pay TV sage is one element of a sorry history of Australian governments pandering to big media interests in the pathetic hope that they will be good to the hand that feeds them. Former Queensland Premier Joh Bjelke-Petersen used to refer to feeding the media chooks. In the past two decades it seems that the various ministers for communications have been the chooks and the media proprietors have been the ones doing to feeding.
While other countries have the boon of relatively cheap and competitive pay TV regimes and while Australia has a competitive, job-creating, profitable video industry, successive communications ministers are damned by the comparison.