Bills Digest No. 178  1997-98 Television Broadcasting Services (Digital Conversion) Bill 1998

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This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.


Passage History
Main Provisions
Contact Officer and Copyright Details

Passage History

Television Broadcasting Services (Digital Conversion) Bill 1998

Date Introduced: 8 April 1998

House: House of Representatives

Portfolio: Communications, the Information Economy and the Arts

Commencement: Royal Assent


To amend the Broadcasting Services Act 1992 and the Radiocommunications Act 1992 to provide for the introduction of digital television.


Digital Television Systems

The free-to-air television services currently received by Australians are terrestrial analog broadcasts: the signal is transmitted from towers to home receivers in the form of a continuous wave. With Digital Terrestrial Television Broadcasting (DTTB), the signal is in the form of discrete bits of information. The advantage of the DTTB signal is that it can be manipulated: the digital data stream can be compressed, thus using the available spectrum more efficiently. Background noise and interference can be more readily removed to improve video and audio reception. The move to DTTB requires the upgrading of both the transmitting infrastructure and the televisions that receive the signal.

DTTB systems have been designed to operate using the same channel bandwidth as analog systems so that they can be more easily integrated with the current usage of the spectrum. A single DTTB transmitter provides the capacity to send around 20 million bits per second of data to the home. This data rate is sufficient for one high definition television picture of a live sporting event or, possibly, two high definition movie channels. The same 'data pipe' is capable of carrying around 3-4 live sports programs of conventional television quality, or 6-8 'talking heads' programs at about videocassette quality. This capacity to replace a single analog channel with a number of digital programs is sometimes referred to as "multi-channelling" or "multiplexing". The spare capacity created by digital transmission can also be used to provide captioning, news and market information and other services to receivers. The services that can be broadcast digitally (whether in the form of data, text, sound or images) are sometimes referred to as 'datacasting' services.

Different DTTB systems are being developed in both the US and Europe and Australia will eventually have to choose which one to adopt. The European system may have the advantage of being more compatible with the PAL system currently used in Australia, although the US system may be better geared to high definition television (HDTV). Other factors to consider will be the availability of consumer equipment and the capability of the system to achieve Australian spectrum objectives.

Cost of the Transition

It is estimated that infrastructure upgrading will cost the three commercial TV networks about $500 million in capital investments in the first three to four years as well as adding $30-50 million to their annual operating costs. For the ABC and SBS, the combined cost could be around $200 to $250 million.

To receive digital television consumers will require either a new digital television set or a set-top box to convert the signal for their current analog receivers. The use of a converter or a standard digital set will not improve the actual image quality, but it will eliminate ghosting and interference and provide CD quality sound. To receive HDTV directly, a special wide screen high definition digital television will be required. These are said to provide a picture quality around seven times better than that of analog sets.

As well as unscrambling terrestrial digital TV signals, the set top boxes (or converters) could also be capable of receiving digital cable and satellite TV and of connecting via modem to the telephone network, thus creating a path for the convergence of telecommunications, television and computing services.

Estimates of the cost of this new equipment to the consumer have varied considerably. In the document 'Digital Broadcasting - Q & A' released on 24 March 1998, the Department of Communications, the Information Economy and the Arts stated that:

It is difficult to predict how much sets will cost, and the price could fall rapidly once the market is established. Large widescreen digital sets capable of displaying high definition video will probably cost several thousand dollars, while conventionally sized sets are likely to approach the prices of current sets. The price of set top boxes will depend upon their functionality, but will probably be a few hundred dollars.

Recent media reports have quoted much higher initial costs: set top boxes at $1000 (falling to $500 after a few years), digital TVs at three times the cost of comparable analog sets, and HDTV sets at around $7500-$10000 ('Digital TV free soon but keep the old set', The Weekend Australian, 18-19 April 1998, p.3).

The economic impact of the transition, in terms of household expenditure, should not be that significant. Current household expenditure on television equipment is around $150 p.a. Average household expenditure on new digital television equipment would thus have to be greater than $1200 over the eight year transition period before it exceeded current expenditure levels.

The Australian Broadcasting Authority (ABA)

The ABA has monitored developments in digital television since 1993, when it established a specialist group comprising industry and government experts to examine options for DTTB systems suitable for Australian conditions. A discussion paper, Issues and Options for Digital Terrestrial Television was released in December 1993 and in January 1997 the final report of the specialist group, Digital Terrestrial Broadcasting in Australia was presented to the Authority. The report recommended that:

  • Australia should adopt a single system standard for DTTB after completion of detailed technical evaluation trials in Australia of candidate systems;
  • DTTB should be implemented in Australia with digital high definition television (HDTV) capabilities available from the outset;
  • all existing licensed commercial and national television services should be given access to a full 7 MHz bandwidth DTTB channel and be given full control over the use of the delivery capacity of that channel;
  • the year 2000 could be a useful target date for commencement of permanent DTTB broadcasting in Australia (and the commencement of the development phase). The period between now and the commencement in 2000 might be regarded as an experimental phase; and
  • the eventual termination of PAL services after the commencement of DTTB services in Australia should be driven by market factors and subject to regular review. The decision should be made in the light of findings and in consultation with both government and industry organisations.

In July 1997 the ABA responded to the Specialist Group's report with its Paper, Digital Terrestrial Television Broadcasting, which recommended to the Government that it support the early introduction of DTTB into Australia. It considered that DTTB should be a free-to-air service rather than a form of pay TV and it endorsed the loan of a 7MHz channel to each of the ABC, SBS and the three commercial networks, as this would enable the introduction of HDTV from the outset.

Views of Interested Parties

There has been a broad range of views on the appropriate policy for Australia:

  • the Federation of Australian Commercial Networks (FACTS) has argued that free-to-air broadcasters (FTAs) should be allocated 7 MHz of spectrum free of charge, with a 15 year period of exclusive use. This would enable the introduction of HDTV, the simulcast of existing analog channels, and the absorption of the cost of the conversion. FACTS would also like its members to have the freedom to offer multi-channel services. The Australian Association of National Advertisers has supported the FACTS position;
  • the Australian Subscription Television and Radio Association (ASTRA) has questioned the commercial viability of HDTV and has argued for a system that is based on the competitive pricing of spectrum and which provides an opportunity for the entry of new players. ASTRA is particularly opposed to the free-to-air television broadcasters being permitted to offer multi-channel services using spectrum they have been given free of charge;
  • the Australian Broadcasting Corporation has asked for access to sufficient spectrum to allow it to either broadcast HDTV or to multi-channel. The Managing Director, Mr Brian Johns, has stated that the ABC hopes to be able to run up to four channels at different times of the day. The ABC has also claimed that it would cost over $100m over the next 3-5 years to prepare for digital broadcasting and that the ABC could only cover about half these costs. It has been reported ('ABC closer to victory in war on outsourcing', The Australian, 7 April 1998) that a funding review of the Corporation by consultant Arthur Andersen has concluded that it will have a deficit for the digital transfer of $30-$50 million over five years, given projected costs of $190-$220 million;
  • Telstra has argued against the allocation of free spectrum to the FTAs as it would threaten its investments in data and online services, the broadband network and pay TV. It believes that if the FTAs wish to enter these areas then they should be subject to a competitive bidding process;
  • regional television broadcasters have supported the FACTS position and have also argued for a prohibition on new entrants in regional television markets until the end of the transition period, a licence fee rebate and tax relief on infrastructure inputs. They believe that special arrangements are necessary to achieve digital television in regional areas within a reasonable timeframe;
  • internet service provider, OzEmail, has argued for the setting aside of spectrum earmarked for digital TV for the introduction of interactive data services. Other independent online content providers have expressed concern that the FTAs might eventually control future web TV services, where users can access the internet through a television set, as well as digital television.

Developments in the UK and US

The Broadcasting Act 1996 (UK) provided for the introduction of DTTB in the UK. Digital services will be simulcast with the current five analog services: BBC1, BBC2, Channels 3 (ITV), 4 and 5. Licences were awarded by the Independent Television Commission (ITC) initially for a twelve year period, but renewable for a further twelve years. The selection was a "beauty contest" with no cash bids or revenue requirements for the first twelve years. Although the selection criteria emphasised plans to roll out the digital transmission infrastructure, there is no formal timetable for the conversion to digital broadcasting. HDTV will not initially be part of the system. Digital services are expected to begin later this year. In five years the BBC and ITC will report to the Government on the progress of conversion.

The British have adopted a multi-chanelling approach to DTTB. The digital transmitters, or "multiplexes", are licensed separately from the program services they carry. There are six multiplexes available, each capable of carrying five channels. One will go the BBC to broadcast its current two services, together with a new free-to-air 24 hours news service and other BBC services. One multiplex will be shared by the commercial broadcasters, ITV and Channel 4. They will be able to offer both free-to-air and pay TV services. One half of a multiplex will go to both Channel 5 and the Welsh service (Wales only). The remaining 3.5 multiplexes will go to a consortium comprising existing broadcasters Carlton Communications and Granada. They will transmit pay TV services. BSkyB, the current major satellite pay TV operator, was prevented from being part of the consortium, although its programs can be carried by the multiplexes.

Ownership and control rules limit the number of multiplex licences any one person can hold to three. Holders of digital program licences are limited to an aggregate audience share of 15 per cent of total UK television time.

In the US existing free-to-air broadcasters have each been allocated a channel for digital transmission for no additional fees. They will be required to broadcast a free digital program for the same hours as their current analog programming. They may broadcast HDTV, but are not required to do so. If they wish to use their spare capacity for datacasting services, then they must pay additional charges.

It is planned that about half of the US population will be receiving DTTB by the end of 1999. The analog spectrum is to be surrendered by 2006, although there may be extensions in special circumstances.

The Government's Decisions

On the 24 March 1998 the Minister for Communications, the Information Economy and the Arts, Senator the Hon. Richard Alston, announced the Government's decisions on the introduction of digital television. The main elements were as follows:

  • the commercial and national free-to-air television broadcasters (FTAs) will be loaned 7 MHz of spectrum free of upfront charge. In return they will be required to simulcast their existing service in analog and digital format for 8 years, after which they will have to return the equivalent of their loaned spectrum to the Commonwealth;
  • the FTAs will be required to commence DTTB in metropolitan areas by 1 January 2001 and in regional areas from that date onwards so that all areas have DTTB by 1 January 2004.
  • Following the start-up of DTTB, the FTAs will be required to broadcast minimum levels of HDTV, with these levels increasing over time. If the FTAs do not comply with these requirements they will forfeit their loaned digital spectrum.
  • FTAs will be able to use that part of their loaned spectrum not utilised for DTTB to provide datacasting services, but will have to pay fees to ensure that they do not have an advantage over non-FTA datacasting providers. Available broadcasting spectrum not required by the FTAs for digital conversion will be allocated on a competitive basis for the transmission of datacasting services, which will commence at the same time as the transmission of DTTB. Existing FTAs will not be permitted to bid for this spectrum.
  • FTAs will not be permitted to use their digital spectrum for multichannelling or subscription television services, although they will be allowed to provide enhancements directly linked to programs simulcast on their analog channel.
  • The prohibition on new commercial FTA entrants will be extended until December 2008.
  • The current local content requirements will continue to apply in the digital environment. In addition, the FTAs will be required to provide closed captioning for all prime time programming as well as for news and current affairs broadcast outside prime time.
  • The Government is still considering the funding requirements for the ABC and SBS for digital conversion, as well as whether the national broadcasters will be permitted to broadcast non-commercial multi-channel programming in line with their charter obligations.
  • A number of committees comprising representatives of the Department of Communications, the Information Economy and the Arts, the ABA and the Australian Communications Authority (ACA) will be established to advise on regulatory and technical matters relating to the conversion.

The Government has thus broadly followed the US approach, but with mandatory requirements for the introduction of HDTV (although the timetable for HDTV has not yet been resolved). One measure of the success of this policy will be the number of households that opt for the more expensive HDTV sets.

Regulatory Approach

The conversion to digital broadcasting requires amendments to both the Broadcasting Services Act 1992 and the Radiocommunications Act 1992. The former sets out the ownership and programming conditions for broadcasting licences and is administered by the ABA. The latter regulates the usage of the spectrum, including the licensing of transmitting apparatus, and is administered by the ACA.

The legislation instructs the ABA to formulate digital conversion schemes for commercial and national (ABC and SBS) broadcasters in accordance with the announced policy decisions. In formulating these schemes the ABA is required to comply with published Ministerial directions. The regulations giving effect to the schemes will be disallowable instruments. The scheme for the ABC and SBS is subject to Ministerial approval.

The ABA is also required to make disallowable determinations with regard to datacasting charges. The ACA is required to report to the Minister on the competitive neutrality principles it considers in developing its proposals for datacasting charges. This report must be tabled. Datacasting charges are the subject of related revenue legislation, the Datacasting Charge (Imposition) Bill 1998.

The Bill also provides for the introduction of a transmitter access regime to ensure that broadcasters and datacasters have access to transmitting facilities. Access will be in accordance with a Code to be written by the Australian Competition and Consumer Commission. Regulations enforcing the Code will be disallowable instruments.

Main Provisions

Schedule 1

Schedule 1 contains amendments to the Broadcasting Services Act 1992. Item 10 inserts new conditions for commercial broadcasting licencees. They are to comply with the conversion scheme devised by the ABA [new section 7(1)(k)]. During the simulcast period licencees are prohibited from broadcasting a digital program unless: (1) they also broadcast the same program simultaneously in analog mode, or (2) the program is permitted under the regulations because it is incidental and directly related to the simulcast program [new section 7(1)(m)].

Item 12 adds a new Schedule 4, "Digital television broadcasting" to the Act.

Part 2 of new schedule 4 provides for the ABA to formulate a scheme for the conversion of commercial television broadcasting services to digital mode [new section 5(1)]. New section 5(2) sets out the policy objectives for this scheme. New section 7 requires the scheme to provide for the return of spectrum if digital transmission does not take place, or if HDTV standards are contravened. New section 8 requires the commercial television broadcasters to submit implementation plans to the ABA.

Part 3 of new schedule 4 provides for the ABA to formulate a digital conversion scheme for the ABC and SBS [new section 17(1)]. New section 17(2) sets out the policy objectives for this scheme. New section 18 requires to ABC and SBS to give implementation plans to the Minister for approval. New section 21 requires the scheme to provide for the return of spectrum if digital transmission does not take place, or if HDTV standards are contravened. New section 32 prohibits the ABC and SBS from broadcasting a digital program unless: (1) they also broadcast the same program simultaneously in analog mode or, (2) the program is permitted under the regulations because it is incidental and directly related to the simulcast program or (3) the program is permitted under the regulations.

Part 4 of new Schedule 4 requires that the regulations must specify targets and standards for HDTV programming (new section 34), the captioning of programs for the deaf and hearing impaired (new section 35) and datacasting (new section 37).

Part 5 of new Schedule 4 implements a transmitter access regime. New section 42 requires owners of transmission towers to provide access for digital broadcasting to the ABC, SBS, commercial television broadcasters and datacasters. New section 45 provides that the Australian Competition and Consumer Commission may write a Code setting out conditions relating to access.

Part 6 of new Schedule 4 provides for the collection of the charge to be imposed by the Datacasting Charge (Imposition) Bill 1998.

Part 7 of new Schedule 4 enables the ABA to apply to the Federal Court for restraining and performance injunctions to ensure that commercial broadcasters adhere to their implementation plans [new section 51(1) and (3)] and that transmitter owners follow the access regime [new section 51(2) and (4)].

Part 8 of new schedule 4 requires the Minister to order a review by 1 January 2001. Particular matters for the review to consider include: the restrictions on new programming services in the simulcast period; the re-transmission of digital FTA services by pay TV operators; commercial television services in regional areas; a community television service; the allocation of spectrum for datacasting services. A further review is to be ordered by the Minister before 31 December 2005. This will deal with the simulcast requirements and duration and the general efficiency of the system.

Schedule 2

Schedule 2 amends the Radiocommunications Act 1992. Item 6 inserts new section 100B to require the ACA to issue transmitter licences for digital broadcasting to the ABC and SBS. Item 8 inserts a new section 102A to make a similar requirement for the commercial broadcasters.


Contact Officer and Copyright Details

Kim Jackson
20 April 1998
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
Commonwealth of Australia 1998

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Published by the Department of the Parliamentary Library, 1998.

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