Foxtel boss: Government’s protection of Free TV networks is killing innovation

Foxtel boss Kim Williams has called on the government to stop favouring Australia’s free to air players and shake up the regulatory framework.  

Addressing the National Press Club in Canberra, he called on the Government to allow another free to air TV network if the market supports it, and to loosen the sports anti-siphoning rules. At present there are many events that are reserved for the free to air networks yet never shown.

He said:

“Much of our media regulation has as its fundamental underpinning a pre-digital, analogue view of the world. Clearly the terrestrial television networks in Australia both government owned and privately owned – are uniquely protected and insulated businesses.

“In fairness some good public benefits have been derived from that in content outcomes. However, public interest losses have also inevitably followed from the stultification and lack of innovation inherent in all protected industries.

“It is imperative that we break from past approaches to media reform. These have been described by the Productivity Commission as having been characterised by “a legacy of quid pro quos” which has created a policy framework that is ‘inward looking, anti competitive and restrictive.’

“It’s time we put the consumer at the centre of media regulation review and outlook. The purpose of any new rules should not be to protect some media companies or help others. The purpose should be to bring about the best quality innovation, most personal services and widest choice possible for Australian consumers. It is high time that the settings reward investment and risk taking rather than incumbency. Protecting players because of their seniority and incumbent occupation of established oligopolies is hardly the basis for policy development and future directions.

“The Government should remove the prohibition on a fourth terrestrial network prior to the digital switch off. It should issue licenses to new players to provide new networks either terrestrially or via satellite – that will help to drive digital television take up. Why shouldn’t a company like Foxtel or others have the opportunity to offer a fourth free-to-air network or a fifth over satellite if we can make a business case work? Why shouldn’t any other reputable and well financed company be able to offer a fourth network terrestrially if it can make the business case work? What is so precious about an existing set of incumbent operators that they should be insulated and isolated from the natural market forces of invention and competition?

“Industry protection must be removed as all economic evidence historically and the recent evidence in the digital switchover to date shows that protection doesn’t just suppress innovation and investment but actively discourages it. Consumers are the primary losers.” 

He also called for the government to push ahead with auctioning off the current analogue spectrum, in readiness for the planned 2013 switchoff date following the transition to digital TV.

The analogue spectrum is the strongest card that the free to air networks hold. Until there is sufficient digital penetration, it will be politically very difficult for the government of the day to switch off analogue transmitters and black out many voters’ TV viewing. So the Government needs the existing Free TV players to drive digital takeup by offering new services.

Spectrum is hugely valuable, particularly with the race towards full mobile connectivity. When the UK government auctioned spare spectrum in 2000 ahead of the rollout of 3G phone services, it raised nearly $50bn.

There has been speculation that the reason why Seven and Nine have been holding back from launching digital offerings is that they have been holding out for a deal that guarantees there will be no fourth network competing with them for viewers and for advertising revenue.

On the question of the anti-siphoning sports legislation, Williams renewed his call for the principle of ‘use it or lose it’. He said:

“The sports rules review is critical to getting some fair competitive settings and some real operational change and balance into the media landscape generally. Let’s remember over 75% of the sport on the list is never transmitted on terrestrial television live, delayed or in excerpted form but it remains under their control.

“We accept that in the complex range of issues confronted by government in dealing with sport on television that the sport that is broadcast on free to air TV today will stay on free to air TV.

“‘Use it or Lose it’ means that all the sports currently shown on terrestrial, or free to air television, should continue there for the next review.

“But the hundreds of sports events not broadcast by the terrestrial networks should come off the list – both FTA and subscription TV can then compete openly to acquire that sport for multi-channels equally. No preferment just a fair contest.”


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