This week the Government hopelessly undersold yet another public asset. It virtually gave away very valuable chunks of broadcast spectrum which it could have sold for perhaps several billion dollars. The extent of the loss was drowned out in the Hanson and Wik static.
The legislation passed this week.
For 40 years Australian television has been delivered by an analogue signal. Each analogue requires seven MHz of spectrum. This includes a bit of blank space either side of the signal to prevent interference. These have been referred to as channels. One TV signal per channel. Given the total bandwidth and the need to accommodate other signals like two-radio etc, there is limited room; enough for five TV stations.
The analogue signal is not perfect. It yields ghosting and picture noise.
Enter digital. Digital needs only a small amount of bandwidth. In the old 7 MHz channel you can fit half a dozen signals of equivalent clarity as the analogue signal but without the ghosting or picture noise.
In any event (and this is important), you can fit a couple of digital signals in those bits of blank space between the existing analogue signals without interfering with the analogue signal.
Immediately, the existing bandwidth is capable of accommodating six times the number of signals as the purely analogue system. And even continuing with the analogue system, there is room for new digital signals between them.
This new capacity created by digital technology by is a public asset.
It is just like the Telstra infrastructure and just like the spectrum used for mobile phones.
With Telstra, the Government flogged off and third of the asset at less than half its value. (We know this because shares at the float went for $1.95 are now selling at $4.40.)
With the mobile phone spectrum, the Government was a bit smarter. With both the initial analogue-occupied bandwidth and with the widened capacity brought by digital technology, the Government sold the bandwidth in an open competitive tender in April and May to the highest bidder and got a good return for the public asset — $350 million to be precise.
If it was good enough for the phones why wasn’t it good enough for television? Because the Government wanted to go easy on media proprietors, perhaps.
If you could get $350 million for the phone bandwidth that was opened up by digital technology, you could get a lot more (10 times more, maybe) for the television bandwidth which was created in the same way. But, instead the Government gave it away to the existing players. Precisely the opposite of the phone arrangement where existing players were specifically excluded so as to encourage new players. It’s called encouraging competition and consumer choice, like a genuinely Liberal Government should.
The only thing that has gone wrong with the phones is the foolish decision to close down the analogue network to boost the price expected for the auction of bandwidth for digital, instead of allowing analogue to continue in flat areas inland and from the coastline out to sea. But that’s another story.
On TV, the Government gave the existing networks uncontested access to the digital spectrum for eight years for which they pay nothing. They have to continue broadcasting analogue. They have to start digital services by 2001 in the cities and 2004 in the bush. They have to phase in high-definition television according to a schedule.
A digital signal, which eliminates ghosting and picture noise can be picked up on your existing set with a $100 converter box. High definition television requires a new 16 x 9 format new television. It give much finer definition, but is only of practical value if you use a large television. It chews up more bandwidth than ordinary digital. So with seven MHz a television network could either pump out one high-definition signal and one or two different digital signals, or it could pump out six different digital signals.
So what does the Government do? It bans the existing networks (which have an eight-year monopoly on this new spectrum) from putting out multiple signals. In other words, it prevents consumers from getting new services beyond the existing three commercial networks, the ABA and SBS. As a big concession the Government might allow the ABC to broadcast some university of the air programs.
So despite this wonderful new technology opening the hitherto restrictive bandwidth to the possibility of 30 channels or so, the Government ties it up so consumers get the same old crap from the commercials and denies the ABC and SBS to widen their horizons.
The rationale? It will cost a lot of money for the existing networks to convert to digital so they need the triopoly to continue otherwise they would be able to afford to convert digital and Australia would be left in the analogue dark ages.
What hogwash. If the Government had put this spectrum out to competitive tender there would have been an orderly queue of bidders, including the existing networks.
Let the market decide. It is hypocrisy. What is good for the phone system, the CES, Public Service IT, DAS fleet etc etc etc, should apply to TV.
Investing in technology that gets out-moded is a risk every business has to take. Why should the media owners get special government protection.
The saddest thing is that by restricting the new bandwidth to the same old tripe (without the ghosts) the Government has indeed left Australia in the dark ages of passive receivers. It has precluded the development of interactive television and diversity of programs for eight years. Unless, of course, the focus changes from television delivery to delivery down the phone line to the computer. I hope so. Technology so often defeats monopoly regulation.