Part I: The terms defined
What is spectrum?
The electromagnetic spectrum is the entire available range of signal frequencies which people have learnt to encode, transmit electronically at the speed of light, and decode. Spectrum can be likened to a corridor of radio communications frequencies. Only specified frequencies within the corridor are capable of carrying radio and television signals. The corridor is thereby divided up so that each broadcaster has its own sub-corridor or bandwidth within the spectrum. The width of the spectrum is limited and can only carry a finite number of bandwidths. Spectrum is therefore a limited public resource.
Spectrum is a vital public resource because it is the major way modern long distance communications function. In order for different parts of the spectrum to be exploited in the most beneficial way for the public use, it must be carefully allocated because successful communication depends on each broadcaster using an unoccupied frequency within a geographical area.
As a limited public resource, spectrum and its allocation is subject to government bureaucracy and international regulation by multilateral organisations such as the European Commission and the World Trade Organisation. Access to, and availability of, appropriate bands of frequencies within the spectrum have become key criteria for manufacturers and operators to provide radio products and services nationally and overseas.
What is spectrum space?
Spectrum space is fundamental to the Australian Communication Authority’s (ACA) approach to spectrum licensing. Spectrum space is a three dimensional space. If thought of as a cube, it covers a geographic area (represented by the floor of the cube) and has a radio frequency bandwidth (represented by the height of the cube). Spectrum space is divided into finite three-dimensional units known as standard trading units (STUs) which, when aggregated with their immediate neighbours vertically and/or horizontally, form larger configurations which can be applied to a particular use.
What are spectrum licences?
Spectrum licenses are issued under the Radiocommunications Act 1992 (Cth) which is administered by the ACA. They are a tradeable, technology neutral (ie not related to any particular technology, system or service) spectrum access right for a fixed non-renewable term of up to fifteen years.
Instead of authorising the use of a specific device, spectrum licences authorise the use of spectrum space and give licencees the freedom to deploy any device from any site within their spectrum space, provided that the device is compatible with the licence conditions and the technical framework for the frequency bands. Licencees are largely free to operate whatever type of communications equipment they choose, and are able to change the service in response to technical improvements or changes in consumer demand.
Spectrum licencees can negotiate with others to buy and sell spectrum space in the open market or authorise others to use their spectrum space. A spectrum licence can be aggregated or subdivided to form new licences.
What are apparatus/broadcasting licences?
Apparatus licences are also issued under the Radiocommunications Act. A transmitter licence is one of the two types of apparatus licence; the other type is a receiver licence (only required if the receiver is afforded interference protection).
A transmitter licence authorises the licensee to operate specified radio communications transmitters. A transmitter licence is subject to conditions additional to the general conditions of an apparatus licence. The conditions include a requirement that the licensee not operate the transmitter for a purpose inconsistent with a purpose specified in the appropriate frequency band plan.
To provide broadcast services to the public using MF (AM radio) and VHF (FM radio) and VHF and UHF (television) frequencies, an applicant must first obtain a broadcasting services licence under the Broadcasting Services Act 1992 (Cth). That Act sets out the ownership and programming conditions for such licences and is administered by the Australian Broadcasting Authority (ABA). As a delegate of the ACA, the ABA must issue an apparatus licence if a broadcasting licence has been issued.
An apparatus licence remains in force while the related service licence is in force. Service licences are issued for five years and are then renewable for five year terms.
What is digital television?
The current free-to-air television services are terrestrial analog broadcasts: the signal is transmitted from towers to home receivers in the form of a continuous wave. With Digital Terrestrial Television Broadcasting (DTTB), the signal is in the form of discrete bits of information. The advantage of the DTTB signal is that the digital data stream can be compressed, thus using the available spectrum more efficiently. Background noise and interference can also be more readily removed to improve video and audio reception.
DTTB systems have been designed to operate using the same channel bandwidth as analog systems so that they can be more easily integrated with the current usage of the spectrum. A single DTTB transmitter provides the capacity to send 20 million bits per second of data to the home. This is sufficient for one high definition television (HDTV) picture of a live sporting event or, possibly, two high definition movie channels. The same "data pipe" is capable of carrying 3-4 live sports programs of conventional television quality, or 6-8 "talking heads" programs at videocassette quality.
What is digital radio?
Digital radio broadcasting (DRB), sometimes referred to as digital audio broadcasting (DAB) or digital sound broadcasting (DSB), is a new method of assembling, broadcasting and receiving radio communication services using advanced digital techniques to convert an audio signal to a digital signal which is then compressed, along with other signals, before being broadcast from a transmitter. The receiver converts the digital transmissions back to sound (or text, graphics etc).
A fundamental difference between analog and digital broadcasting is that the latter involves the delivery of digital bit streams that can also be used for multimedia services. DRB can:
Part II: Digital TV
It is very likely that digital television will become the new television standard in Australia. This is especially so because a substantial proportion of the programs shown are from the USA and UK - countries that have already announced their implementation of digital TV.
Digital transmission is the next step in the technical evolution of television: comparable with the evolution from black-and-white to colour transmission. Thus, planning for digital TV means planning for television broadcasting in general. We should therefore review the operation of the current Australian system to determine what should be preserved and what should be improved. Such a review will also provide an indication of how spectrum should be allocated.
The current situation
· Australia is well served by the current commercial television arrangements. The range of programming available on free-to-air television is substantial and of a good quality. It also has significant level of Australian content. More than half the programs on the ABC and the three commercial stations are Australian produced and account for 80% of the Australian television production industry’s revenue.
· Once you have bought a television set, and in some areas a satellite receiving dish, broadcast television is free unlike other information or entertainment sources such as the Internet, newspapers, magazines, cinema and pay-TV. Television is the most popular recreational activity and also a crucial part of social and cultural life. The ability to choose to participate in television, regardless of income, geography or special needs is something which must be offered to all Australians, even if it be the case that free-to-air television is not as economically efficient as pay-TV. Free-to-air television maximizes social welfare because some people are able to receive television services who would otherwise not be able to pay for them.
· Australia’s free-to-air television is controlled by different people in contrast with other information services which are often dominated by one or two major players (eg in the telecommunications industry, Telstra is still the dominant player).
· Australian television broadcasters already pay annual licence fees: $180 million in 1997/98. It is estimated that auctioning the spectrum would raise a one-off $2 billion. for public purposes, the licence fee system seems to be much more attractive.
· The Australian broadcasting industry has a unique diversity of sectors: namely the commercial (profit-making), national (public) and community (non-profit) sectors. This diversity, and the public interest which it serves, could not be emulated by simply having a number of different players in the digital future if they were all institutionally similar (eg private, profit-making corporations).
What should be maintained in the digital future?
There are several things, which should be maintained in the digital future of television:
Proposals for allocating the spectrum
Restrictions for the provider of digital television on using the allocated spectrum will be unavoidable to achieve these aims. Of course, restrictions of this kind would contradict the idea of auctioning spectrum on a competitive basis, where the owner of a certain part of the spectrum could use it as he wants. The argument that auctions would be the best way to allocate spectrum, because industry players with different ideas would find the most profitable way to use the spectrum, overlooks the different public interests. Auctioning spectrum or the "policy-without-a-policy" approach would endanger all the described important features of the current television industry.
So how can spectrum for digital TV be allocated? As auctioning the spectrum seems to be inappropriate, allocating the spectrum through licences seems to be the only way left. But who should get a licence? What requirements should an applicant meet?
If the diversity of the sectors is to be maintained, the public broadcasters need some spectrum. This would mean that the two existing public broadcasters, ABC and SBS, would get spectrum to transmit digital TV. The rest of the existing spectrum could be given away to commercial broadcasters, but with the condition that they use it to transmit freely accessible programs. As in the current system, broadcasters would have to pay a licence fee.
To ensure that there is no dominant player, the transmitted programs should meet a certain standard and be universally accessible. The licences could be allocated in a non-price bidding process. The current commercial broadcasters would stand a good chance in this process because they can refer to a long tradition of broadcasting. In addition, there would be a chance for new players to enter the digital television industry. To achieve even better competition than in the current system, and to ensure that some new competitors enter the industry, more than three licences (the existing number of commercial free-to-air broadcasters) should be made available.
Another important consideration is to ensure the continued operation of community television in the digital environment. Community broadcasters should be given spectrum for digital transmission in the same way as they were for analog transmission. Further, there should be some financial aid to fund their transition to digital transmission. This aid could be financed from the licence fees which are paid by the commercial broadcasters.
In conclusion, the best way to manage the digital television spectrum would seem to be the existing way in which analog television is currently managed. Choosing another system is an unacceptable gamble which would endanger the best features of the current system.
Part III: Digital Radio
There has been far less public discussion about digital radio, than there has been about digital television. This is probably because of differences in the planned introduction of digital television and digital radio broadcasting (DRB), the fact that DRB is not as economically promising as digital television, and the fact that digital radio does not threaten existing players in the same way as digital television threatens existing pay-TV services.
While digital television is supposed to become the most important medium of the future, in the same way analogue television is now, digital radio will be less important. Nevertheless, the introduction of digital radio broadcasting is likely to have great impact on Australian radio services.
In comparison to the existing AM or FM services, DRB is touted as providing more services, better reception, higher quality, ancillary services and the ability to reconfigure services. Higher quality, in particular, is used to promote the introduction of digital radio broadcasting. Digital radio is supposed to deliver CD quality sound, although this is little better than the quality offered by good FM reception. Nevertheless, DRB could provide consumers with more local relevant information and would therefore provide an enhanced and highly diverse communication service.
All these advantages seem to be more an evolution of the existing radio services than a revolution. On the other hand, DRB requires new receivers for listeners, as well as new transmitters and other infrastructure for broadcasters.
The current situation
There are far more competitors in analogue radio broadcasting than in free-to-air television. While there are only five players in television there are over 170 players in radio. The existing radio services can be divided into five categories: the national radio broadcasting services (ABC and SBS), the commercial services, community radio broadcasting, subscription radio broadcasting, open and subscription radio narrowcasting services.
This large number of radio stations promotes a wide diversity of services. This diversity should be protected when introducing digital radio broadcasting. It is, therefore, not only important that there is a competitive environment for DRB, but that there is also a diversity in the content which is on offer.
As far as licensing is concerned, analogue broadcasters operate under different kind of licences. While the national radio broadcasting services do not require any licences, commercial and community broadcasters operate under broadcasting licences (allocated by the ABA), subscription broadcasters and subscription and open narrowcasters operate under class licences. An individual apparatus licence must also be allocated under the Radiocommunications Act to authorise the operation of the necessary transmitters and relay devices.
Allocating the spectrum
In allocating the spectrum for digital radio broadcasting two different objectives should be borne in mind.
The first, and most important objective is to ensure the continued diversity of services and content. This means that there should be spectrum available for the national services as well as for community radio and other narrowcasting services and not just for commercial radio broadcasters. Second, as the introduction of DRB will require consumers as well as radio stations to spend a significant amount of money on new transmitters and receivers, the other objective is to ensure that DRB is going to be successful. In my view these objectives could not be achieved by spectrum licensing.
The main argument for spectrum licensing is that it ensures the most economically efficient use of spectrum. A result of this is that a smaller competitor, who may be providing a valuable service to a minority of the public, but who is therefore not making a large profit, will be disadvantaged. In telecommunications, for example, it is not important who the competitors are, as long as there is a competitive market. The situation in broadcasting, and especially in radio broadcasting, is very different. In broadcasting there is not only economic competition, but also content competition.
If spectrum was allocated to those stations willing to pay the most for it, they would target their content to that part of the population with high disposable incomes and therefore of most interest to the advertising industry. The smaller less successful players would have little chance to establish a digital radio broadcasting service, although their presence is very important to ensure the continued diversity of content. The touted advantage of DRB - to encourage a wider range of services - would be contradicted, as the new digital services would be very much alike. Thus, the allocation of spectrum has to take account of content diversity and not simply the most economically efficient use of spectrum.
Nor can the second objective, described above, be achieved by spectrum licensing. If a spectrum licence is allocated, the owner has the right to use the spectrum as he likes. To ensure the success of DRB it is necessary to ensure that the available spectrum is used not just to broadcast radio, but to maintain the broadcast of existing radio services.
To receive DRB listeners will have to buy new receivers; they will only do this if there is some advantage in doing so. The opportunity to receive existing radio services with better quality sound and with enhanced services is likely to encourage listeners to buy new receivers. Secondly, if there is not at least the same number of digital radio stations as existing analogue ones, people are unlikely to buy new receivers as simulcasting is planned to go along with the introduction of digital radio.
As DRB is an evolutionary progression in the development of radio services, the existing radio stations should have automatic access to the digital radio spectrum. Only spectrum allocation for new service providers, which will be essential for the success of DRB, need be regulated. This allocation should be done on the condition that the spectrum must be used for radio broadcasting and be available to as many players as possible to ensure the continued diversity of services and content. These restrictions are incompatible with the idea of spectrum licensing.
To conclude, it appears that the best approach is to use a similar licensing regime for digital radio broadcasting as is currently used for analogue radio broadcasting. The question of which new players should be allowed to enter the market can be decided by a non-bidding process.