Digital TV's jungle of bungles needs sorting

New Zealand’s switch to digital TV is running smoothly on the home-front – but TV broadcasters are having a rough ride through a jungle of bungles by state agencies.

More than 90 per cent of home viewers are now ready for the final switch to all-digital TV at the end of this year – but many of the country’s free-to-air broadcasters are having a tough time shifting to the new digital world.

Four digital channels have come and gone so far. Non-commercial TVNZ 6 and TVNZ 7 and Stratos, the nationwide multicultural and community-focused commercial channel, are history. The short-lived, all-commercial Shopping Channel has laid off its presentation team.Television Hawkes Bay ran into major transmission trouble when its analogue transmissions were switched off as its home region led the way to all-digital TV last September.

The problems for TV Hawkes Bay were so big, they went off the air at Christmas for a month-long , major technical upgrade. A number of other larger and smaller TV broadcasters throughout the country have still to exercise their digital options, and some can’t see an affordable pathway into the digital era,

Behind the scenes, officials at the Ministries of Business, Innovation and Employment and Culture and Heritage have been scurrying to find a way through a jungle of bungles by both the Clark-led Labour government that initiated the digital switch-over, and the Key-led National government that will see it to completion.

The roots of today’s problems run back to 2006, when Labour authorized the issue of the first set of digital TV licences to enable simulcasting by nationwide and near-nationwide channels during the transition to digital TV. The issue was restricted to TVNZ, Canwest (nowMediaWorks), and the state-owned transmission service enterprise BCL (now Kordia).

In setting up the transition to digital TV, Labour loaded the digital dice in favour of the state-owned broadcaster .TVNZ received exclusive access to special Charter programme funding and a five-year deal to support the creation of the non-commercial digital channels TVNZ 6 and TVNZ 7. MediaWorks wasn’t told about the deal until after it signed up to the Freeview platform created to usher us into digital free-to-air TV broadcasting.

What’s not so well known is that the digital dice were also loaded in favour of the state-owned transmission service provider, BCL(now know as Kordia). Documents released recently under the Official Information Act reveal that Kordia was given preference as the supplier of digital TV spectrum access and transmission services.

TVNZ and Canwest (now MediaWorks) - were contractually barred from offering surplus capacity from their digital transition licences to other broadcasters - unless those broadcasters had already attempted to secure capacity from Kordia. Effectively, this reinforced Kordia’s established monopoly on terrestrial transmission service to most parts of the country.

National changed the game on TVNZ by converting its exclusive Charter funding into the contestable Platinum Fund operated by NZ On Air, shutting down the Digital Broadcasting Review  of Regulations that Labour hoped would produce a way of funding TVNZ’s  non-commercial channels on a sustainable basis, and requiring  the now totally commercialized TVNZ to find its own funding for the non-commercial channels if it wanted them. We all know the outcome.

What National did not do was to review the 2006 Crown Agreement with Kordia - an omission that is now coming back to bite them on the bottom. Kordia has been exploiting its advantage, sewing up digital spectrum access and transmission business at rates that are substantially higher than it charged for analogue transmission and, curiously, the charges made by its only significant rival, Johnston Dick & Associates. That’s particularly strange, since JD&A only operates in areas of the country that Kordia left outside its own big, heavy digital footprint, declaring them to be “uncommercial”.

However, the 2006 Agreement did not give Kordia unfettered advantage. Once Kordia met the simulcasting needs of existing nationwide and near-nationwide broadcasters – its most profitable customers –it was required by clause 6.5 of the Agreement to call for expressions of interest in any surplus capacity from other broadcasters. It was also required by clause 6.7 to establish a formal process for allocating its surplus capacity, in consultation with the Crown Agent (the Ministry of Culture and Heritage) and according to a stated order of priority.

 The 2006 Agreement states the Crown agent “may require BCL (Kordia) to give priority to non-commercial regional/local free-to-air broadcasters.” Second priority was to be given to commercial free-to-air broadcasts that did not have their own DTT licences. Third came other commercial free-to-air broadcasters, and last came “any other broadcasters”.

In response to an Official Information Act request, Kordia admits that neither of these requirements have been met. It says:“Kordia did not issue any formal Expression of Interest document into, or call for expressions of interest from, the market. Kordia did however extensively canvas current and prospective broadcasters to sell them capacity on Kordia’s mux “ (Mux means digital multiplex spectrum package)

Kordia also claims :“to date, we have not had any situation of contest between commercial and non-commercial free-to-air broadcasters for unused capacity. Therefore we have not developed a formal process document under clause 6.7.”

This all comes as a surprise to New Zealand’s largest non-commercial regional TV broadcaster, Triangle Television in Auckland. Triangle says it was not advised by Kordia that it was making regional DTT capacity available, until it learnt that Kordia had sold its only Auckland regional capacity to a new, commercial regional broadcaster, the  Chinese-backed and focused TV33.

Until that moment, Triangle thought its only free-to-air pathway to its Auckland audience would be via the nationwide, commercial digital capacity obtained from Kordia by Stratos, a nationwide commercial broadcast operation established separately by Triangle’s founding directors Jim Blackman and Alan Clark. When Stratos folded at Christmas 2011, that pathway closed.

According to Kordia, its “sales process” was agreed to be sufficient for the purposes of clause 6.5 of the Agreement through a process of discussions and email exchanges with the Crown Agent, the Ministry of Culture & Heritage.

The Ministry declines to release information on this matter, on the grounds that negotiations are currently in progress with Kordia over the provision of digital television spectrum in Auckland and it is necessary to protect information to enable the Ministry to carry on the negotiations without prejudice or disadvantage. The Ministry says it is “hopeful these negotiations can be concluded and an announcement made on the outcome shortly.”

That’s a bit rich, a bit late – and another bolt out of the blue for Triangle Television, which hasn’t been involved in these negotiations. More than six years since the digital TV transition started, Auckland’s 14-year-old  non-commercial regional TV broadcaster is still waiting for a free-to-air digital pathway to its audience. It has fielded criticism for taking up an offer from the Pay-TV platform operator SKY that saw its rebranded FACE channel go to air last week on a platform that reaches than 50% of its target audience  - and without the free-to-air credentials it needs to secure access to NZ On Air regional programme funding after Triangle’s analogue transmitters are switched off at the end of next November.

 It’s Question Time, folks.

Declaration of Interest: David Beatson is host of a weekly interview programme on Triangle Television, and convenor of the Public Media Project ,a group lobbying for the provision of a digital public broadcasting service television channel.