Chapter 3 - Key issues


Chapter 3 - Key issues

3.1        Submitters to this inquiry generally supported the high-level policy intention underlying the bill. That is, to help realise the digital dividend and achieve the digital television switchover—in particular by enabling the roll-out and improving the operation of digital television services provided by satellite.[1]

3.2        During the course of the inquiry, the committee was made aware of three key issues in relation to the bill. These issues are:

  • the current policy and regulatory settings governing the use of the VAST platform, as reflected in the provisions of Schedule 2. In particular, whether these settings:
  • promote the most cost-effective use of the VAST platform;
  • promote an appropriate balance between the provision of digital television services via terrestrial and satellite transmissions;
  • have been informed by adequate consultation, particularly with regional and remote communities—and whether these stakeholders have been afforded an adequate opportunity to make informed decisions about their options to access digital television services;
  • various policy issues in respect of the restacking and reallocation of the digital dividend spectrum, broadly relevant to Schedule 1; and
  • the creation of Television Licence Area Plans (TLAPs) in Schedule 1.

3.3        As was acknowledged by a number of witnesses, some of the issues within the first and second points noted above do not relate to specific provisions in the proposed legislation. Rather, they arise from the underlying policy approach to the digital switchover and the realisation of the digital dividend, which is reflected in the bill.[2]

VAST—the policy and regulatory settings

3.4        While many submitters strongly supported the availability of the VAST platform,[3] some expressed concerns about the policy and regulatory settings governing its use. Major submitters raising concerns were Broadcast Australia (BA), the Local Government Association of Queensland (LGAQ) and the Remote Area Planning and Development Board of Queensland (RAPAD).[4] Several other local governments—located primarily in Queensland—made submissions in similar terms.[5]

3.5        BA—with whom LGAQ and RAPAD agreed—summarised its key concerns in the following terms:

Our basic position in relation to the digital switchover measures contained in the bill is that the public policy intent and impact appears to be based on the view that whether a home converts to digital TV direct-to-home via satellite or through digital terrestrial reception is of little consequence to the viewer—that is, the viewer is agnostic. We submit that there is a big difference ...

We believe that, because it is both more costly and less convenient to receive digital TV channels via satellite than via terrestrial reception means, public policy should be directed at achieving a more appropriate balance between terrestrial and satellite delivery of digital TV services ...

We are concerned that this bill provides significant scope for the contraction of digital terrestrial coverage and the expansion of VAST coverage.[6]

Cost effectiveness

3.6        In broad terms, BA, LGAQ and RAPAD argued that, as VAST access imposes significantly higher costs upon consumers, digital terrestrial solutions should be favoured where possible. They submitted that digital terrestrial solutions should include the digital conversion of community operated analog self-help retransmission facilities. While supporting the availability of the VAST service and acknowledging its benefits, these submitters identified several cost and convenience issues associated with the service. They argued that these issues—which are summarised below—must be taken into consideration in the development of policy and regulatory settings governing the use of the VAST service.[7]

Consumer costs

3.7        BA, LGAQ and RAPAD submitted that the VAST service involves significantly higher consumer costs compared to digital terrestrial transmissions. Additional VAST costs include the purchase and installation of hardware—including a satellite dish, set-top box with a smart card and wall sockets and cabling.[8] BA estimated that, as the government Satellite Subsidy Scheme (SSS) provides assistance[9] for the conversion of one device only, households with two television sets and two recorder devices are likely to pay between $1,000 and $1,500 in total up-front conversion costs, after the subsidy.[10] RAPAD further commented that, as the SSS is directed to homeowners personally rather than dwellings, new homebuyers and tenants will be required to pay for a new VAST connection whenever they enter into a new purchase or lease.[11]

Costs to small businesses and community organisations

3.8        LGAQ and RAPAD submitted that, as the SSS applies only to individuals, VAST conversion costs may adversely affect small businesses, community organisations and service providers—for example, accommodation providers, tourism operators, pubs and clubs, schools, libraries and health clinics. These organisations must self-fund conversion. LGAQ and RAPAD expressed concern that this may be detrimental to local economies in regional and rural areas which are heavily reliant on tourism.

3.9        LGAQ and RAPAD commented further that the SSS does not enable individuals to ‘pool’ their entitlements to fund alternative, community based digital solutions—for example, the upgrading of existing analog self-help transmission facilities.[12]

Viewer convenience issues

3.10      BA, LGAQ and RAPAD also identified issues of viewer convenience in respect of VAST services and equipment. They noted that, as VAST requires a hard‑wired connection, it may reduce the portability of television sets within dwellings.[13] They commented that the equipment required for direct-to-home (DTH) satellite television access may create more individual failure points. BA and RAPAD commented that the identification and repair of failures on an individual household basis may be inefficient compared to the maintenance of digital terrestrial transmission systems.[14]

Government and broadcast industry responses

3.11      In their oral evidence, witnesses from DBCDE, the ACMA, Free TV Australia and RBA responded to the issues identified above.

3.12      In respect of the financial costs associated with the purchase and installation of DTH equipment, Free TV Australia and RBA commented that the current costs do not appear to be a barrier to take-up rates.[15] RBA stated that approximately 10,000 set top boxes have been enabled for the VAST service since 15 December 2010. RBA anticipated that this figure will increase to around 30,000 to 40,000 set-top boxes.[16]

3.13         It appears that the primary reason for this significant level of uptake is the expanded 16 digital channels available on the VAST network compared to the existing satellite service on the Aurora platform which offers only 4 channels. For example, the Mayor of Barcoo Shire Council, Councillor Bruce Scott, who upgraded from Aurora to the VAST network at his own expense, was effusive in his praise for the service:

CHAIR—How would you rate the new service?

Councillor Scott—It is excellent. There are a few teething problems but they are slowly being sorted out with downloads from the broadcaster and the satellite.

CHAIR—So do you feel you get a better choice now?

Councillor Scott—Absolutely. There are the digital high-definition channels and there are the ABC and SBS extra channels, so there is certainly a vast improvement in viewing content.[17]

3.14      RBA submitted further that the conversion costs for local businesses—in particular hotels and other businesses using multi-unit dwellings such as caravan parks—should bear more analysis to verify claims of significant cost differences.[18] DBCDE noted the potential availability of technical solutions in these situations.[19] The committee was informed by BA that DBCDE has recently issued a fact sheet as to how businesses could utilise the VAST service to convert their analog services to digital.[20]

3.15      DBCDE gave evidence that the costs associated with VAST access are one-off expenses. Its analysis indicated that, in terms of ongoing maintenance, VAST is the most cost-effective solution in remote areas where digital terrestrial signals are not available. It noted the demonstrated reliability and cost effectiveness of satellite technology in Australia over many years. It supported RBA’s evidence of efficiency gains in the maintenance of satellite services—for example, the automatic downloading of service fixes when viewers turn on their set-top boxes.[21] DBCDE stated further that it had not seen any costings of alternative solutions which satisfied it of their rigour.[22] The committee considers the issue of alternative solutions below.

3.16      DBCDE explained that the SSS is directed to households because, in its assessment, this sector will incur the most substantial conversion costs. It stated that a ‘pooling’ approach to the subsidy would require tailored funding arrangements specific to individual communities. It further noted the availability of the Household Assistance Scheme (HAS), developed in consultation with Centrelink and a consumer expert group convened by DBCDE.[23] The HAS provides full-cost conversions to a range of Centrelink customers—for example recipients of the Age Pension, Disability Support Pension and Carer Payment. In relation to the submission of the Queensland councils seeking the pooling of subsidies, DBCDE and ACMA commented that—in the absence of a demonstrated technical solution and costings—there may be insufficient time to deliver such arrangements before the digital switchover date in Queensland, scheduled for the second half of 2011.[24]

3.17      DBCDE further clarified the application of the SSS to rental accommodation. It noted that the landlord and tenant of an eligible dwelling are entitled to apply for a subsidy. Where both the landlord and tenant apply, only the landlord's application will be registered. Where the landlord does not opt-in in a timely manner, however, the SSS can revert to the tenant. DBCDE stated that, if councils are concerned about the costs of re‑installing satellite equipment each time a rental property is leased to a new tenant, the Department can work with councils to advise all landlords to opt-in themselves where feasible, and make the co-payment.[25]

The appropriate balance between terrestrial and satellite services

3.18      Given their concerns over cost and convenience issues, BA, LGAQ and RAPAD submitted that the bill should reflect a public policy intention to favour, where possible, digital terrestrial transmission. They submitted that the bill in its current form may operate to favour, unduly, the use of VAST—including in circumstances where a digital terrestrial solution may be preferable in terms of cost effectiveness and consumer preferences.[26]

3.19      BA, LGAQ and RAPAD identified three provisions in Schedule 2 which may have this effect. These provisions pertain to:

  • eligibility to access VAST services (referred to as 'conditional access');
  • the availability of exemptions from broadcasters' general digital terrestrial conversion obligations under Digital Conversion Plans (DCPs); and
  • allowing remote commercial television licensees to elect to transmit their high-definition (HD) channels in standard definition (SD) only.[27]
Conditional access to VAST

3.20      Item 37 of Schedule 2 allows the ACMA to declare an area to be 'service deficient'—and thus eligible to access VAST services—where a greater number of commercial channels are available from VAST than in digital terrestrial form.

3.21      BA submitted that the provision ‘appears to be a regulatory attempt to encourage free-to-air commercial broadcasters to terrestrially roll out available channels ... in particular to do so at least six months before the analog switch-off date in that area’. It submitted that a preferable approach would be for broadcasters to roll out digital terrestrial facilities in accordance with their existing regulatory conversion obligations pursuant to DCPs administered by the ACMA under the BSA. It submitted that additional government support should be provided, where necessary, to assist regional, remote and national broadcasters to roll-out additional digital terrestrial facilities in areas where services are currently provided only by self-help services.[28]

Exemptions from broadcasters' digital terrestrial conversion obligations

3.22      BA, LGAQ and RAPAD expressed concern about items 47, 50, 51 and 52 of Schedule 2, which enable the minister to exempt broadcasters, on their application, from converting broadcaster-owned analog transmission sites in two key circumstances.[29]

3.23      First, broadcasters may seek exemptions from rolling out digital terrestrial facilities under conversion plans where the service area has a population of less than 500.

3.24      Secondly, broadcasters may seek exemptions from rolling out digital terrestrial services where the community, regardless of size, is not currently served in analog by all local commercial and ABC or SBS channels (excluding those services provided by self-help retransmission facilities). In exercising his or her discretion, the minister must be satisfied that the services are available by satellite, or by another way which allows viewers to access an adequate and comprehensive range of commercial and national digital services.

3.25      BA, LGAQ and RAPAD submitted that the availability of exemptions may reduce the number of digital transmission facilities likely to be rolled out by broadcasters, and could force communities to turn to VAST. In respect of the second exemption noted above, these submitters commented that adopting a 'one-out, all-out' approach could result in some communities missing out on digital terrestrial facilities.[30] BA submitted that this may occur, for example, where the ABC and all local commercial stations are available in analog, but the SBS is available only via self-help retransmission or is not available at all.[31]

3.26      While generally supporting the bill, the SBS expressed concern that the ministerial discretion to grant exemptions could be used to undermine universality of access. For example, should the minister decide to grant an exemption because he or she is satisfied that services are available through VAST—or, in future, the National Broadband Network—accessibility could depend upon a person’s capacity to pay for access to these services.[32]

Standard Definition-only transmission of High Definition channels

3.27      BA, with whom RAPAD agreed, opposed items 6, 38, 39, 41 and 45 in Schedule 2 to the bill, which enable remote commercial television licensees to elect to transmit their services in SD-only form.[33]

3.28      BA argued that these provisions are technical inclusions to match the statutory choice to transmit in SD-only given to regional commercial broadcasters in South Australia and Broken Hill at the time of their switchover in 2010 to transmit in SD‑only. BA submitted that this provision is not suitable for replication on a broader scale because it has been superseded by the government’s November 2010 funding commitment of $34 million over four years to enable the roll out of digital terrestrial services in regional and remote areas.[34]

3.29      BA submitted further that the proposed provisions are contrary to the minister’s announcement at that time that SD-only was an interim measure pending the roll-out of additional HD transmitters. It argued that the bill should repeal, rather than extend, the provisions permitting remote licensees to elect to transmit in SD‑only.[35]

Government and industry responses

3.30      In their oral evidence to the committee, witnesses from DBCDE, the ACMA, Free TV Australia and RBA responded to the issues identified above.

Exemptions from broadcasters' digital terrestrial conversion obligations

3.31      DBCDE stated that the measures in the bill are not intended to ‘force viewers to receive the VAST service’, but rather to fulfil the government’s switchover objective, ‘to ensure that all Australians can access the full suite of digital television services wherever they live and that, wherever possible, they avoid the need to purchase both satellite and digital television reception equipment’.[36] It noted that the exemption provisions are intended to avoid the situation where only a national broadcasting service is provided through a digital terrestrial signal, and the remaining channels are accessible through the VAST platform—meaning that a viewer would need to connect to VAST in any event.[37] DBCDE further stated that it envisaged that the minister would consult with the relevant broadcaster before determining an application for exemption.[38]

Conditional access to VAST

3.32      In respect of the 'service deficient' provision in item 37 of Schedule 2, DBCDE stated that the provision would likely ‘serve as an incentive for terrestrial broadcasters to roll out their infrastructure in a timely manner’, given that communities may be offered access to the VAST service if they do not.[39]

3.33      Similarly, Free TV Australia stated that:

There is no incentive for commercial free-to-air broadcasters to have people go to a satellite service ... we are licensed in local areas and we survive on advertising revenue. That advertising revenue is delivered in a digital terrestrial way. You do not get advertising revenue out of a satellite broadcasting service ... Our total incentive on a commercial basis is to ensure that digital terrestrial coverage is as widespread as it can be.[40]

3.34      RBA explained further that broadcasters are investing significantly in digital terrestrial coverage, with a view to reducing the use of DTH:

Broadcasters have committed currently to spending $20 million to increase the total terrestrial coverage in regional and remote areas of Australia, and that will add about 250,000 people to the net terrestrial coverage of commercial services in Australia. The mix that we are targeting in that project is to get down to between two and three per cent of Australians looking at a digital direct-to-home satellite service. We are targeting to deliver terrestrial local services to the rest of Australia.[41]

3.35      RBA also sought to distinguish between two discrete issues, which it considered had been conflated in some submissions to the inquiry. These issues are, first, the delivery of television into remote parts of Australia (primarily via satellite) and, secondly, the delivery of digital terrestrial services, primarily in metropolitan areas. It provided the following explanation for this distinction:

Remote area television is primarily satellite delivered, and you have an opportunity to access that via direct-to-home or some form of transmission. The other issue ... is that of terrestrial broadcasting, where, as a terrestrial broadcaster, we transmit to a community but there will inevitably be pockets in that community the signal does not reach. There are a separate set of issues that relate to how those pockets get filled and how those people get television. In the past, some councils have taken analog [self‑help] retransmission into those areas. There is a separate set of policy discussions now going on about whether councils should retransmit those local terrestrial services in those areas, or whether they should be filled in by the VAST satellite service. There are two distinct issues. One is a gap-filler for terrestrial television services. The other one is, what is the best way to deliver what is primarily a satellite service to a primary satellite market?[42]

3.36      The evidence of BA, Free TV Australia, RBA and DBCDE is that a mixed digital delivery model is necessary, in that it is not feasible to roll out 100 per cent digital terrestrial coverage across Australia. Accordingly, the intention is that some viewers will receive digital terrestrial services and others will receive satellite services, via the VAST platform, as a ‘safety net’ where terrestrial transmission is unavailable.[43]

Standard Definition-only transmission of High Definition channels

3.37      In respect of SD-only transmissions in remote areas, Free TV Australia submitted that the provisions would ‘significantly reduce the technical and cost burden of conversion for broadcasters in thinly populated areas’, while enabling these areas to receive, for the first time, the full range of digital channels without having to turn to DTH satellite.[44]

3.38      RBA explained this point in its oral evidence to the committee:

The capacity of a transmission chain is limited by the number of channels it can carry ... the difference between standard definition and high definition is referred to as a bit rate. It is the amount of data that can be carried in the stream. In remote areas of Western Australia and South Australia, where currently there are limited services, if we are able to run at standard definition bit rates we can carry the nine commercial channels on two transmitters. If we ran HD services we would have to have three transmitters at each location. So, essentially, it reduces the capital cost. In areas where the population density is small, that renders it uneconomic to try to install additional transmitters.[45]

3.39      However, the RBA subsequently informed the committee that, 'on present planning, broadcasters in all regional areas of South Australia and regional and remote areas of Western Australia intend to deliver both SD and HD services to all communities served by terrestrial digital transmitters'.[46]

3.40      DBCDE further informed the committee of financial incentives for remote area licensees to roll out HD services. It stated that that remote licensees will be eligible for greater funding under the government's $34 million funding program if they 'choose to establish a mix of SD and HD multichannels as opposed to only SD multichannels'.[47]

Alternative solutions to the VAST service

Consultation and communication with local governments in the development of VAST

3.41      LGAQ and RAPAD submitted that there has been limited government engagement with, and support provided to, local governments in the digital switchover process. They submitted that there has been inadequate consultation of, and communication with, local government licensees of self-help analog retransmission sites, in respect of switchover timeframes and regulatory frameworks and processes.[48] According to LGAQ and RAPAD local governments were not consulted in the decision to design and roll-out the VAST platform.[49]

Assistance provided to local governments in assessing alternative solutions to VAST

3.42      LGAQ and RAPAD submitted further that local government licensees had received insufficient support from government to critically assess, and make informed decisions about, digital conversion options available to them. LGAQ and RAPAD submitted that a key decision for such licensees is whether to:

  • convert their analog sites to digital—and if so, the best way of going about this task; or
  • recommend to ratepayers that they obtain VAST access.[50]

3.43      LGAQ and RAPAD submitted that their member councils have been required to advise DBCDE by the end of March 2011 of their intention to opt-into VAST or upgrade their self-help facilities. This date was twice extended, from 31 January and 28 February 2011 respectively.[51]

3.44      LGAQ and RAPAD gave evidence of technical solutions currently under investigation, including the terrestrial re-transmission of VAST services.[52] LGAQ stated that, since the relevant technology became available in January 2011, it has been working with independent technical advisors to undertake trials of potential solutions. It anticipated that the results would be available by the end of March, but was not in a position to provide a firm assurance that this would occur.[53]

3.45      LGAQ and RAPAD identified a need for further government assistance in understanding the regulatory framework.[54] LGAQ commented that the ACMA declined the applications of three remote Queensland councils for the spectrum required to establish digital self-help retransmission facilities.[55]

VAST 'opt-in' timeframes

3.46      LGAQ and RAPAD submitted that further time is required for Queensland local government licensees to conduct the necessary cost-benefit analysis, consult further with ratepayers and decide whether they will convert their sites or utilise VAST platforms.[56] RAPAD submitted that an extension of time would not disturb any of the scheduled analog switch-off dates for any region in Queensland. It suggested that 'all that would be required is for the remote areas of Queensland to either not be included in the regional Queensland SSS contract and deadlines ... or DBCDE could stick to its original closing date for remote Queensland SSS of March 2012 and delay its opening from 20 April to, say, August 2011'.[57]

3.47      LGAQ and RAPAD expressed concern that the narrow 'opt-in' timeframes may reflect a preference, on the part of government, for the phasing out of self-help facilities in favour of the VAST platform.[58]

Government responses

3.48      DBCDE and the ACMA addressed these issues in their oral evidence to the committee. DBCDE stated that 'nothing in the bill prevents the conversion of self-help retransmission facilities to digital at any time, now or in the future, by local councils or by other parties should those parties wish to do so. The government does not oppose the digital conversion of those facilities, subject to licensing from the ACMA'.[59]

3.49      DBCDE acknowledged, however, a 'mismatching of information' between itself and local government self-help licensees, in respect of alternative technical solutions to the VAST service. It stated that it was initially uncertain of the types of alternative solutions under investigation by local government self-help licensees. DBCDE expressed concern over certain alternative solutions which, it understands, are being considered by self-help operators. These alternative solutions are the terrestrial retransmission of the VAST service, and the use of different technical standards—known as MPEG4—to those currently used in terrestrial broadcasting.[60]

3.50      In relation to the terrestrial retransmission of VAST, DBCDE cautioned:

Retransmitting VAST will be very technically complex ... While broadcasters are currently looking at how this retransmission of VAST can be achieved, a working on-the-ground solution will still need a period of development and testing, and therefore the costs and timing for such an approach are not known at this stage.[61]

3.51      In relation to the use of the MPEG4 technical standard, DBCDE commented:

This standard has not been rolled out anywhere in Australia at this stage for terrestrial broadcasting. While we acknowledge MPEG4 has efficiencies for transmission, there are a number of reasons why it is not desirable to roll it out in a piecemeal fashion starting in small regional communities.

Critically, we understand that the receivers with MPEG4 capability only became available relatively recently and a minority of sets and set-top boxes currently in people’s homes are MPEG4 compatible. This would mean that householders would have to make sure that they purchase the correct type of equipment.

It also would mean that many householders who have already invested in digital receivers—for example, those who have bought LCD or plasma high-definition screens to gain picture quality benefits through DVD—would need to purchase new equipment all over again. Anyone travelling into these areas or moving to them would have no guarantee of receiving television, as they may not have the right equipment.

The government’s view is that the introduction of MPEG4 would need to be considered in the broader context of migration options for the television industry as a whole, not an isolated solution to a specific issue with limited application.[62]

3.52     DBCDE commented that the digital switchover requires the cooperation of industry, government and local communities. It noted the commitment of the Digital Switchover Taskforce to working with all stakeholders, and welcomed 'continuing discussions with submitters to the committee, particularly those with affected councils, to assist them in their important decision making'.[63]

3.53      The ACMA provided the following oral evidence on its decision to refuse the three licence applications of Queensland local governments referred to by LGAQ:

We are generally great friends of self-help and local government retransmission but we only supply the channels. When you are setting up a retransmission facility you also need to have a source of programming, and ... that is typically either going to come from an off-air feed, which is more often the case in regional areas, or off a satellite, which is the case in remote areas.

In the case of the three local government areas ... they applied for a suite of channels and, as far as we were able to determine, their intention was to transmit in digital the signal they were taking off the Aurora satellite, which is the current satellite which we know closes in 2013. Our response was to say, ‘Look, that isn’t viable because it is going to close in 2013. We are not satisfied that you have a way of retransmitting the only extant alternative you are going to have that we are aware of after that date, which is VAST.’ ‘But,’ we added, ‘if you can satisfy us that you have a way of doing that and wish to proceed, we will reconsider your application.’ So we certainly left the door open.

But at this stage we are not just handing out spectrum 'on spec' in the absence of any indication that the councils actually knew what they were doing in terms of sourcing programming and transmitting it for the long term.[64]

Committee view

3.54         While recognising the concerns raised by BA, LGAQ, RAPAD and other local government submitters, the committee is of the view that the policy and regulatory settings supporting the VAST platform are appropriate. The committee now provides its views on the specific issues noted above.

Cost effectiveness

3.55         In the committee's view, the VAST network provides a cost effective means of supplying a quality digital television service to those living in remote areas of the country. The committee acknowledges that it would not be economically viable to supply terrestrial digital television across the entire country and that there will always be remote 'blackspot' areas where a satellite solution is preferred. The committee is also of the view that the SSS is appropriately structured to cover a significant proportion of the cost (and for the HAS, the entire cost) of the installation of VAST satellite equipment to one household device.

3.56         The committee acknowledges the concerns expressed by BA, LGAQ, RAPAD and other local government submitters about the current lack of financial assistance for non-residential dwellings to convert to the VAST service, and the potential additional maintenance costs associated with VAST equipment. However, the committee is encouraged by the evidence of DBCDE and RBA, outlining:

  • the potential availability of technical solutions for multi-unit dwellings to convert to the VAST service; and
  • the demonstrated reliability of satellite technology, and cost efficiency of maintaining equipment.

3.57      The committee encourages the government and broadcasting industry to continue, as appropriate:

  • providing information and assistance to the community about technical solutions for delivering, where necessary, the VAST service to non-residential dwellings in the most cost effective way possible; and
  • monitoring, over time, maintenance issues associated with the VAST service and assisting in the continuous improvement of network resilience.
The appropriate balance between terrestrial and satellite services

3.58      The committee supports the provisions in Schedule 2 covering conditional access to the VAST service, exceptions to broadcasters' digital conversion obligations pursuant to DCPs made under the BSA, and the election available to remote commercial licensees to transmit digital services in SD-only. In taking this position, the committee is guided by the following factors:

  • VAST is not intended to replace digital terrestrial transmission. Rather, as stated by RBA and supported by DBCDE, VAST is primarily concerned with the delivery of satellite services to a primary satellite market; and
  • commercial broadcasters have significant financial incentives—in the form of advertising revenue—to roll out digital terrestrial transmission, rather than avoid or shift their conversion expenses by encouraging the take-up of VAST through relying on exemptions in the bill. Indeed, the committee notes the speculative nature of the opinion evidence given in support of submitters' arguments on cost‑avoidance.[65]

3.59     The committee is satisfied that these factors justify the conditional access provisions (item 37) and the exemptions from conversion obligations contained in DCPs made under the BSA (items 47, 50, 51 and 52) in Schedule 2.

3.60      The committee is also satisfied of the appropriateness of the provisions in items 6, 38, 39, 41 and 45 of Schedule 2, which enable commercial licensees to elect to provide services in SD format only. In addition to the general reasons identified above, the committee notes the evidence provided by Free TV Australia, DBCDE and RBA that these provisions will promote the terrestrial roll-out of the full suite of digital channels in those remote areas in which these channels would not otherwise have been available. That is, the provision is intended to cover the situation where, notwithstanding the provision of additional government funding to support the roll-out of digital transmission facilities, the technical and financial burden of rolling out these facilities in HD would have been prohibitive.

3.61      Accordingly, rather than offering a 'perverse incentive' to remote commercial licensees to avoid rolling out HD transmission, these provisions offer a safety net for viewers who would otherwise have been wholly dependent on the VAST service. The committee notes the evidence of RBA that, notwithstanding the provisions in the bill, broadcasters in regional areas of South Australia and regional and remote areas of Western Australia intend to deliver both SD and HD services to all communities served by digital terrestrial transmitters. The committee further notes the evidence of DBCDE in relation to the increased financial incentives, by way of access to the government's $34 million funding program, available to remote area licensees to roll-out HD services.

Alternative solutions to VAST—support to local government self-help licensees

3.62      The committee is of the firm view that the digital switchover requires cooperation, on a national level, of all stakeholders. It is encouraged by the stated commitment of the Digital Switchover Taskforce to working with all interested parties—in particular local government self-help licensees—to assist them to make an informed decision about their digital conversion options. The committee notes DBCDE's assurance that the government does not oppose the digital conversion of analog self-help retransmission facilities, subject to licensing from the ACMA.[66]

3.63      The committee is concerned, however, by evidence suggesting that previous communications between DBCDE and local governments have been insufficient or otherwise unsatisfactory.[67] While the committee welcomes evidence of recent improvements,[68] it strongly encourages DBCDE to regularly review and continuously improve its consultation and engagement strategies and processes in relation to local governments.

3.64      As a matter of priority, the committee encourages DBCDE to consult broadly with local governments and their peak bodies—including, but not limited to, the submitters to this inquiry—in respect of the issues raised in this inquiry. In particular, the committee encourages consultation on the following matters:

  • the feasibility of VAST 'opt-in' timeframes, in terms of enabling local government self-help licensees to undertake cost-benefit analyses and ratepayer consultations on alternative solutions;
  • the possibility of further extending these timeframes—including in accordance with proposals of RAPAD in respect of Queensland councils—to enable self‑help licensees to undertake the decision-making processes outlined above; and
  • the sharing of technical and regulatory information on alternative digital transmission solutions being considered by local governments.

Restacking and reallocation policy issues

3.65      Three issues emerged in submissions addressing broader matters of restacking and reallocation policy. These matters exceed the scope of the bill. However, some submitters argued that the bill should be expanded to address these additional matters, because they consider that it is the final opportunity for them to receive parliamentary scrutiny.[69]

3.66      First, some submitters argued that the digital dividend policy objectives—as contained in the 2010 ministerial direction to the ACMA—should:

  • be contained in primary legislation to enable parliamentary oversight;
  • address digital radio frequencies in regional areas; and
  • address the planning and release of a sixth digital television frequency.[70]

3.67     Secondly, one submitter addressed reallocation issues. The Police Federation of Australia argued that part of the digital dividend spectrum should be reserved for emergency services and national security communications.[71]

3.68      Thirdly, the Australian Mobile Telecommunications Association argued that the proposed restacking and reallocation timeframe is too long. It argued that the timeframe will create significant opportunity costs by delaying the availability of the digital dividend spectrum for new uses. For these reasons, it did not support the provisions in Item 6 of Schedule 1, which define the 'designated restack day' as 31 December 2014, or a later date as specified by the Minister.[72] However, the SBS supported the proposed restacking timeframe because it would allow flexibility in completing the switchover.[73]

Committee view

3.69      The committee supports the scope of the bill as it is drafted. While acknowledging the importance of the broader issues raised by submitters, the committee is conscious of the urgent nature of the proposed amendments. Accordingly, it makes no comment on these broader matters, other than to encourage government to give them further consideration and to consult relevant stakeholders. The committee notes that several of the issues identified in submissions to this inquiry were also raised in submissions to DBCDE on the Digital Dividend Green Paper.

Television Licence Area Plans

3.70      Few submissions addressed the provisions of Schedule 1. However, two submitters—Free TV Australia and RBA—expressed strong support for the creation of TLAPs in accordance with Schedule 1 of the bill. They considered that these streamlined arrangements will promote efficiency and flexibility in the restacking process.[74]

Committee view

3.71      The committee notes the significant support of these major industry bodies for TLAPs. These plans will be a valuable tool for the ACMA to manage its significant regulatory workload in planning and implementing the restack process.

Conclusion

3.72      The committee is satisfied that the urgent passage of the legislation is necessary to ensure the timely commencement and completion of restack planning and the digital switchover.

3.73      In light of the issues raised in this inquiry, the committee encourages the government to regularly review and continuously improve its stakeholder engagement strategies throughout the process of realising the digital dividend. The committee draws particular attention to the importance of frequent and constructive communication and consultation with regional and remote communities. It encourages DBCDE and the ACMA to continue their recent efforts in this regard.

Recommendation

3.74      The committee recommends that the Senate pass the Bill.

Senator Doug Cameron
Chair

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