Digital broadcasting review highlights converged disputes

Submissions to the governments review of digital broadcasting were released online yesterday, highlighting a series of issues which will keep government and regulators busy over the next few years.

Digital platform Freeview in its submission, among nearly 100 received, highlights the threats of audience fragmentation, writing that "the rise of new digital distribution mechanisms such as peer-to-peer file sharing (e.g. You Tube and Joost) threaten to fragment audiences further, eroding local advertising revenues."

This, along with the ability of Sky TV to sew up premium offshore content, reduce the free-to-air broadcasters' abilities to gain audiences and fund attractive content, Freeview argues.

"For the past two decades, New Zealand has had little broadcasting regulation. Whilst this eases the regulatory burden, in a small price-taking market such as New Zealand, this approach can lead to natural monopolies and a lack of diversity in content and services to New Zealand citizens," the Freeview submission says.

The Commerce Commission emphasized convergence, which it says will make broadcasting, telecommunications, information technology and media indistinguishable. Its submission says there are risks both that legacy regulation will inhibit convergence and will not deal adequately with new risks that arise as a result of convergence.

The regulator recommends regulation that is consistent, independent and simple for industry participants. It also say regulation should remain focused on economic regulation to promote competition. Spectrum allocation, it says, will become increasingly important.

State owned enterprise Kordia argues that the Ministry of Culture and Heritage's discussion paper, which outlines the issues to be addressed in the consultation, notes arguments that New Zealand's lighted-handed approach to regulation "is viewed positively in international markets", and that a number of countries are moving towards less sector-specific regulation and more reliance on general competition policies.

"We are not aware of a general trend in this direction, or of general international approval of New Zealand's light-handed approach. Many would take a different view, so we agree with the Paper when it confirms the research report and stakeholder comments that there is the prospect of serious adverse outcomes if there is no regulatory change," Kordia's submission says.

"Reliance on general competition law alone will only be appropriate where the market is sufficiently competitive to produce adequate economic and social outcomes. At that point, regulation can be relaxed or removed. However, even in Australia and the U.K., which are both larger and more competitive markets, and where scale provides greater incentive to invest, there has been substantial regulatory change due to convergence. This includes establishment of strong crosssector regulators in each country."

Kordia argues New Zealand is too small to leave such matters to general competition law and requires a communications regulator based on the U.K.'s Ofcom model.

Internet trader Trade Me, a division of Computerworld's publisher Fairfax, argues that online and offline regulation should be consistent and argues against the creation of an overarching regulator. Trade Me says the current system works well, with sector experts, such as the Commerce Commission, the Ministry of Economic Development's National Enforcement Unit and the Police, applying sector specific knowledge to the internet.

However, it notes that the scope of the term "content" and of the review's application to the internet are unclear.

"This is of some concern to us, because, while the review demonstrates a good understanding of the issues and challenges facing broadcasting, the analysis and proposals reflect a less thorough understanding of the internet," Trade Me's submission says.

"We respectfully suggest that significant parts of the research about the internet are both inaccurate and poorly referenced, in particular the depiction, measurement and units of analysis pertaining to digital media players in volume one. We'd suggest reference to industry standards, such as the measurements by Nielson//Netratings, making clear the unit of measurement, the timeframe and the definitions."

Trade Me argues that the review appears to be happening on the assumption "that there is a problem that needs fixing".

"The documents list a number of broadly defined threats, but an analysis of whether those threats are current or potential, real or perceived, appears to be missing."

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