Pundit

View Original

Goodnight Kiwi – it’s the digital divide

New Zealand is heading for a digital divide that will see a substantial portion of the population disadvantaged by the change. The rot starts with our free-to-air television broadcasting system and expands with the introduction of the ultrafast broadband internet.

Last week, I was one of the usual suspects rounded up for a talk-fest on the Future of Public Television in New Zealand at Victoria University. Working up my own presentation on “Sustaining Local Content”, I became more and more depressed. I might as well share my misery.

We have one of the most de-regulated television media markets in the world. If you have all the technical bells and whistles on your home receiver and purchase the top-line SKY payview package you can have access to around 158 television channels. When you sign on to purchase your monthly access to the ultra-fast broadband internet system, you will have a whole world of options at your fingertips. You just need the ability to pay for it.

The unfortunate truth is that, on current Government policy settings, you are going to see less and less New Zealand content in your media diet.

Up till now, the driver of New Zealand television and film production has been the New Zealand-based free-to-air television networks - and the main Government intervention to secure a diverse range of New Zealand content on our home screens has been NZ On Air. Unfortunately, both the growth engines are sputtering under the strain.

Last year, our six major free-to-air networks delivered first-run local content for just 21% of hours they broadcast between 6:00am and midnight - about the lowest level of TV local content for any nation in the developed world.

NZ On Air funding – public funding – supports just 28% of that local content. The rest is funded by the broadcasters from their advertising revenue. Over the last two years, the total amount of first-run local content on our networks has declined by 8% to just 8,223 of the 39,420 hours of programming they transmitted in 2010.

It isn’t just the economic recession that is depressing the local content output.This is the beginning of a trend that will continue, unless policy settings change. The free-to-air TV networks’ share of the advertising spend has been planking over the last decade. A growing proportion of the spend is being diverted to lower cost, more targeted and inter-active advertising opportunities on the internet. Internet advertising revenue has grown steadily through the recession. So have subscriptions to the SKY pay-to-view service.

No wonder our TV networks are scrambling onto both digital platforms to “monetize” more of their programme content. You can charge viewers to see your product on SKY. You can’t on its free-to-air rival Freeview. SKY provides to 110 channel options. Freeview offers 18. Sky reaches 48 percent of TV viewers compared to just 31 percent tuned to Freeview.

SKY now offers all the local content that’s screened by the free-to-air networks on Freeview, and much more besides, including two channels created exclusively for SKY by TVNZ. SKY is poised to become the most powerful player in the New Zealand television market.

New Zealand also has a frail set of 15 free-to-air regional television channels, scattered from one end of the country to the other. More than half of the population does not even know they exist, according to a survey conducted for the Ministry of Culture and Heritage. With just 2% of the television funding distributed by NZ On Air, they will generate more than 1,000 hours of local content this year. They also relay a diverse range of international content that does not see daylight on our advertising-driven networks or the SKY payview platform , but is highly valued by many of the ethnic minorities who now form a growing proportion of our population.

The regional channels need to use the Freeview-Kordia digital terrestrial transmission system to survive beyond the digital switch-on that starts next year. Satellite transmission is beyond their financial reach and their regional needs. A significant number of them will not make it through the change. The terrestrial transmission system will only cover 86% of the population. Some regional channels and their audiences live outside its coverage area. Others will simply not be able to afford the increase in their on-going transmission costs. Ultra-fast broadband does not offer them a distribution option: its coverage will only reach 75% of the population by 2019. On top of that, the internet does not offer free-to-air viewing that can be provided by broadcast transmission.

These issues have largely been ignored in Government decision-making from the time planning started for the digital switch-on. The current focus is on finding ways to save New Zealand’s first nationwide, advertising-free public service channel ,TVNZ 7, when its current public funding runs out at the end of June next year.

A recently released Cabinet paper on options for sustaining a public service channel saw only three solutions – continuing dependence on the contestable funding intervention through NZ On Air, continuing direct funding to TVNZ to sustain TVNZ 7, or seeking tenders for a funded public service channel from interested providers.

Two of them are obvious non-starters. NZ On Air is struggling to maintain adequate local content generation and distribution via the advertising-focused free-to-air networks. TVNZ has already failed to produce a plan that would sustain an advertising-free public service channel without additional funding, despite its substantial recycling of programme material already screened on its networks and the leveraging of the extensive production resources at its disposal to produce TVNZ 7.

The third option – contestable open tendering for the opportunity to operate the public service channel - is a perfect opportunity for another step towards market dominance by SKY, and its free-to-air broadcast subsidiary Prime, currently the smallest generators of local content in our television market. With its monopoly hold on live coverage of the international sports of most interest to New Zealanders, superior bidding power, and a vast inventory of programmes to call on, SKY has all the leveraging power in the world.

So, SKY rules – OK? Well, there has to be a better way to grow the local content in our free-to-air broadcast television diet, where it’s universally accessible. And there is, but that will have to be the subject of another column.

Declaration of interest: David Beatson hosts The Beatson Interview on Triangle & Stratos television and is a former chair of NZ On Air.