THE DIGITAL FUTURE AND PUBLIC BROADCASTING

Transcription

1 THE DIGITAL FUTURE AND PUBLIC BROADCASTING Paul Norris and Brian Pauling A research report prepared for NZ On Air November 2008 The Digital Future & Public Broadcasting November 2008.doc

2 Foreword NZ On Air is the primary source of government funding for public broadcasting and local content - television, radio, music, archiving and digital. We have been supporting quality public broadcasting in New Zealand since deregulation. NZ On Air turns twenty in While our environment continues to evolve rapidly our values are constant. They are: Diversity (in projects, people and platforms) - encouraging difference and competition so we support the best ideas Targeted audiences - making sure funded projects are enjoyed by significant numbers of relevant people Innovation and creativity - extending audience choices and opportunities for content creators Proven need for a subsidy - supporting projects that would not otherwise exist We have commissioned and produced wide-ranging research papers over the years, from short analyses of audience behaviour, to the annual Local Content Report, the only quantitative measure of national domestic television in the world, to in-depth work such as this new paper The Digital Future and Public Broadcasting. Such research is valuable to NZ On Air to help us develop informed policy and also, we hope, to wider readers interested in the drivers of the broadcasting environment. All countries are currently grappling with the complex questions being discussed here. The report provides a clear-eyed assessment and a framework for their consideration in the New Zealand environment. We congratulate authors Paul Norris and Brian Pauling for their comprehensive research and analysis. Of course we do not necessarily agree with all of the authors' contentions, but we greatly respect the scholarship and thought underpinning this research. As we released this report, a General Election saw New Zealand's government change. So then, in time, will various broadcasting policies. But what all governments have recognised during the two decades of NZ On Air's existence, and prior, is the incalculable benefit and contribution of broadcast local content both to the economy (its production) and to national identity (its screening). NZ On Air is proud to support local content and public broadcasting in the digital age. Jane Wrightson Chief Executive NZ On Air November 2008 The Digital Future & Public Broadcasting November 2008.doc

3 Contents List of Tables and Figures... 3 Authors Note on the Structure of this Report... 4 Glossary of Abbreviations Executive Summary Remit of this report Use of video on the internet Is video viewing over the internet at the expense of television viewing? The younger demographics are spending time on social networking sites Take-up of DVRs The movement to broadband The movement of adrev from broadcast television to online is a key indicator Is the commercial television model broken? The situation in New Zealand The issues for public broadcasting in New Zealand - TVNZ Opportunities for NZ On Air the oversight of public broadcasting Opportunities for NZ On Air broaden the outlets Archives Radio Conclusion Technologies and the Audience internationally emerging digital patterns Introduction Technologies Emerging Digital Patterns Audiences Conclusion Progress to Digital in New Zealand International comparisons High Definition Analogue switch-off Issues VOD but no IPTV Services to Mobile Broadband Impact on the commercial television model The fate of free-to-air Changing media use Conclusion Public broadcasting in the digital environment The principles of traditional public broadcasting Content Access/delivery Funding Conclusions on the principles of public broadcasting Do we need public broadcasting at all in the age of digitopia? The Digital Future & Public Broadcasting November 2008.doc 1

4 4.7 We may need public broadcasting content, but do we need public broadcasters? The erosion of the effectiveness of traditional public broadcasting Opportunities for public broadcasting Caveats on online public service content From public service broadcasting to public service content Performance measurement Public Broadcasting in New Zealand The situation before deregulation in The situation after deregulation The situation after the reforms of The fragmented funding arrangements Public broadcasting issues How well does the current system deliver the objectives of public broadcasting? Options for reform The Labour Government s Review Programme Archives Public Space Digitalisation The Long Tail Changes in the broadcasting environment What is happening elsewhere New Zealand Conclusion Digital Radio Introduction Technologies Internet Radio Country Updates Concerns The New Zealand response References The Digital Future & Public Broadcasting November 2008.doc 2

5 List of Tables and Figures Table 1: Comparison between 2004/5 and 2007/ Table 2: MySpace statistics as of April Table 3: Teen behaviour on social networking sites: Table 4: Predictions on bandwidth consumption: Table 5: Progress to digital Table 6: Comparison of broadband targets Table 7: Breakdown of public funding for broadcasting Figure 1: US IPTV Uptake: Figure 2: Mobile market changes: Figure 3: OECD Broadband subscribers, June Figure 4: Apple TV services Figure 5: TV Advertising: Figure 6: Influence of each medium on decisions in UK Figure 7: Online video advertising spend Figure 8: Share of time spent v adspend Figure 9: Time spent with media Figure 10: Age differential Figure 11: NZ Channel Share, all homes, Figure 12: NZ Channel Share, Sky Homes, Figure 13: NZ - time spent viewing television Figure 14: NZ - changing media use year olds Figure 15: The Ofcom public broadcasting quadrant Figure 16: UK channel share Figure 17: Projected decline of public broadcasting in the UK Figure 18: Allocation of direct Government funding by TVNZ Figure 19: Use of digital radio The Digital Future & Public Broadcasting November 2008.doc 3

6 Authors Note on the Structure of this Report There are many different aspects to the digital revolution, with changes in technology often moving at such a pace that observers find it difficult to keep up, let alone make sense of it all. We found it necessary to devote a sizeable chapter - Chapter 2 - to technology developments. It is a chapter rich in information and statistics on how people respond to the technology and its opportunities, even if the conclusions from the statistics are sometimes conflicting or unclear. The focus of Chapter 2 is on international developments. Readers looking for New Zealand data will find it in Chapter 3, which charts New Zealand s progress to digital, and Chapter 5, which examines public broadcasting in New Zealand, following discussion of the principles of public broadcasting in Chapter 4. Chapter 6 deals with the opportunities the digital revolution has opened up for the expansion of the archives both internationally and in New Zealand. Thus far the focus has been on television. But our final chapter turns to digital radio, an area where New Zealand has made little progress despite developments in other parts of the world. The authors wish to thank all those who have contributed to their understanding of matters digital and the workings of the broadcasting industry. But the errors and omissions in this report are entirely their own. It must be remembered too that much of what we have written will be outdated even before the publication of the report. Nevertheless our hope is that it will lead to an informed debate on matters that are vital to our culture and our society. Paul Norris and Brian Pauling New Zealand Broadcasting School, CPIT 12 November 2008 The Digital Future & Public Broadcasting November 2008.doc 4

7 Glossary of Abbreviations ACMA ADSL DAB DTT DVR FY HDTV IPTV IM NAB PSB PSC SDTV STB UGC VDSL VOD VOIP Australian Communications and Media Authority asymmetric digital subscriber line digital audio broadcasting digital terrestrial television digital video recorder financial year high definition television Internet protocol television Instant messaging National Association of Broadcasters public service broadcasting public service content Standard definition television Set-top-box User generated content Very high speed digital subscriber line Video on demand Voice over internet protocol The Digital Future & Public Broadcasting November 2008.doc 5

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9 1 Executive Summary 1.1 Remit of this report This is a sequel to the authors previous report published by NZ On Air in 2005, Public Broadcasting in the Digital Age: Issues for New Zealand. Much of that report has validity today, but some of the trends identified in that report have gathered speed in the intervening three years and wrought significant changes in the media landscape. This report has been commissioned by NZ On Air to update that previous report and in particular to examine where public broadcasting stands in the light of the changing circumstances in New Zealand. This chapter will provide a broad overview of key developments internationally and in New Zealand. Table 1 summarises these key developments. Table 1: Comparison between 2004/5 and 2007/8 International 2004/5 International 2007/8 Limited use of video on the Internet Video downloads commonplace Limited video on demand available Proliferation of VOD sites iplayer, Hulu DVR use - in 5% of US homes DVRs in 37% of US homes Social networking sites did not exist MySpace, Facebook, Bebo User Generated Content rare YouTube gets 13 hours of video each minute HDTV in 10m households worldwide HDTV in 47m households worldwide (4%) IPTV a technology in waiting IPTV has 20 m subscribers worldwide Mobile early stages of 3G networks Expansion of services for mobile devices New Zealand 2004/5 New Zealand 2007/8 No transition plan to digital TV Transition to digital TV underway No digital free-to-air TV Freeview Satellite and DTT new channels No HDTV HDTV on Freeview DTT No VOD services VOD from TVNZ, TV3 and newspaper sites DVRs no MySky until Dec 2005 MySky HDi Broadband penetration 3.6% Broadband penetration 20.4% Online ad spend not measured Online adspend 5.8% of total adrev 1.2 Use of video on the internet It is clear that one of the most significant developments over the period has been consumers accessing increasing amounts of video over the internet. The phenomenal success of YouTube, a user-generated site started in 2005 and owned by Google since 2006, is the most striking example. YouTube claims that hundreds of millions of videos on its site are watched each day, and that 13 hours of video are uploaded to the site every minute (Hurley, 2008). The BBC s iplayer, a software application enabling access to a rich source of programmes transmitted over the previous seven days, has been so successful that it has clogged the arteries of broadband in the UK. The BBC reported 21 million requests to view in the month of April 2008, describing the launch of the iplayer in December 2007 as a landmark event The Digital Future & Public Broadcasting November 2008.doc 7

10 with its popularity an important illustration of the public s appetite for on demand television (BBC, 2008: 8). Broadcasters have found it necessary to launch on demand services as the audiences for their traditional channels diminish. Aggregators and telcos see business opportunities provided they can deal with the thorny issues around rights to content. 1.3 Is video viewing over the internet at the expense of television viewing? Overall the amount of time viewers spend with television does not seem to have declined. In the USA, Nielsen report that the time spent viewing by the average American increased from 121 hours in May 2007 to 127 hours in May 2008 (Nielsen, 2008). The New Zealand figures show little movement over the past decade. But time spent on the internet has increased, for Americans from 24 hours in May 2007 to 26 hours in Such figures, suggesting as they do that people are using the internet more but not at the expense of television viewing, may be misleading. Broadband users in New Zealand watch an average of 14 hours TV per week, compared with 22 hours a week spent online (Hendery, 2008). It is the behaviour of the young that is the most important in Australia, among viewers aged 16-39, viewer numbers declined by 17% between 2001 and 2006 (Barrett 2008), and in New Zealand among those aged there has been a marked rise in internetheavy users and a decline in TV-heavy users (Nielsen, 2008). 1.4 The younger demographics are spending time on social networking sites These sites, notably Facebook, MySpace and Bebo, have all sprouted since 2005, and exploit the interactive technologies of Web 2.0. Their extraordinary growth has largely been in those under 25 who use one or more of the sites as a means of networking with friends, gaining new friends and sharing videos. More than half (55%) of all online American youths aged use social networking sites (Horrigan, 2008). Facebook and MySpace have more than 160 million users worldwide. Video use has escalated rapidly. Facebook launched a video-sharing feature in May 2007 within a year video use had reached 1.8 million users in the UK alone(kiss, 2008). 1.5 Take up of DVRs Our report in 2005 cited Forrester Research projecting that 41% of USA households would have DVRs by This looks remarkably prescient given that the figure for 2008 has been put at 37% (PVR Wire, 2006). Some commentators see reaching a take-up point of 50% of households as an important tipping point in the fate of traditional linear TV. If more than half the population have the ability to time-shift and avoid the ads, what might this mean for the basic business model of the commercial television industry? The success of DVRs can be attributed in part to their increasing sophistication and ease of use. Newer models are often combined with the set-top-box (Sky + in the UK, MySky HDi in New Zealand), thus reducing the need for one extra layer of equipment. The combined box makes programming to record easier than using the old VHS recorder. There is much debate about the impact of the increased use of time-shifting and ad avoidance on the commercial television networks. Time-shifting, either through use of the DVR or by accessing on demand services, will usually mean the viewer is able to skip or avoid the ads, The Digital Future & Public Broadcasting November 2008.doc 8

11 although TVNZ is among networks that have adopted an on demand model that requires viewers to watch an embedded ad before they are able to view a programme or extract. 1.6 The movement to broadband Viewers making increasing use of on demand sites to view what and when they choose rely on high speed internet access (broadband) for a satisfactory experience. Broadband penetration and speeds are improving in most developing countries (see Chap 2, p 32). As performance improves, more and more content is being made available. We are also seeing the growth of IPTV (internet protocol TV) services. Strictly defined, this is not just video delivered over the internet, in other words this is not video on demand delivered to the PC. IPTV entails television programmes or channels delivered to the TV sets of subscribers over a managed network, usually owned by a telecommunications company and often part of a triple play service offering voice, video and data. Although IPTV services are in their infancy with low numbers of subscribers, some observers see IPTV as the way of the future, ultimately superceding traditional broadcast delivery (see Chap 2, p 22). What is significant is that we are seeing an increasing number of ways by which addressable content, that is content specifically accessed by an individual viewer, is reaching the TV set. Content selected by the viewer (the basis of the concept of the me-channel) is no longer confined to the PC. Apple TV is a good example of the trend to services that deliver content over the internet to a variety of devices including the TV. Another instance of this trend is the arrangement between Netflix, a content provider with a catalogue of some 12,000 movies and television programmes, and TiVo, one of the leading DVR companies. The partnership between these two companies will enable viewers to access content over the internet direct to their television sets (Stone, 2008). These developments suggest that the dream of the me-channel, seen as the holy grail by many of the technology enthusiasts, may be attainable after all, although the rate of progress is very uncertain. 1.7 The movement of adrev from broadcast television to online is a key indicator If one seeks to see where the adrev is going, it is plainly moving at an increasing pace to online. In the UK spending on television managed a modest increase of 2.3% in 2007, compared with a rise of 39.5% for online ad spending. TV accounted for 24% of UK ad spend, still ahead of online at 16%, but the online market is forecast to overtake television advertising by 2012 (Wray, 2008). In the USA online ad spending increased by 26% in Like broadcasters, advertisers are following where consumers lead, and the figures suggest that there is some way to go before the online advertising share matches the amount of time spent on the internet (see Chap 2 p, 39). 1.8 Is the commercial television model broken? For many years there have been dour forecasts from the advertising industry that the cornerstone of commercial television, the 30 second ad, is failing. But while the mass audience for television appears to be holding up, no clear conclusion can be drawn. What can be said is that advertisers are pursuing multiple options, in much the same way as broadcasters are using multiple platforms to offset fragmenting audiences. Product placement, web-based interactive ads, and brief video ads on mobile phones are examples of The Digital Future & Public Broadcasting November 2008.doc 9

12 the response of the advertising industry to new media disruptions to traditional strategies. Many new media techniques are attractive to advertisers because particular audiences can be targeted and tracked. In the cacophony of voices on the future of television, the clearest division is between the enthusiasts, pushing technology and revolution, and the sceptics. One of the latter, British academic Patrick Barwise, dismissed the threat of the internet (web 2.0) to broadcasters as Bollocks 2.0, arguing that television adrev may be down, but it was not falling off a cliff. He said that digital television was a more efficient way of distributing content than broadband(finfacts, 2008). A seasoned observer in the UK, Dr William Cooper, believes it is important not to overstate the changes in viewing habits, noting that the volume of video on demand viewed is still small compared to the billions of hours of television watched worldwide. He pointed to Amara s law: we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run (Informitv, 2008). 1.9 The situation in New Zealand New Zealand has made significant progress in the transition to digital since our earlier report in Digital free-to-air television, Freeview, is now available on both satellite and terrestrial platforms. As at October 2008, total digital penetration (including Sky) stood at 55%, suggesting that it is likely that the target of 75% penetration by 2012 can be reached(freview, 2008a; Sky, 2008). With the support of government funding, TVNZ has launched two new non-commercial channels, although the amount of original content is limited. The terrestrial Freeview set-topbox is HD capable and some of the Freeview channels are broadcasting some programmes in HD, with TVNZ s coverage of the Beijing Olympics a major marketing opportunity for HD. In most aspects of the digital revolution, trends in New Zealand are similar to those in international markets, notably the increasing use of video on the internet, the increasing amounts of content available as video on demand and the growing take-up of DVRs. But in two key areas, New Zealand lags behind. Broadband penetration, although much improved since 2004, remains in the bottom half of the OECD. The movement of ad revenue from various media to online is also relatively slow in comparison to other countries such as the UK. If anything Sky has increased its dominance of the television landscape since This is partly through continuing to gain subscribers (45% of households in 2008 for its digital service, up from 34% in 2005), partly through increased profits, but most importantly through its purchase of the free-to-air network Prime in This has enabled Sky to purchase all television rights, pay and free-to-air, for major sports events such as the Olympics in 2012, eliminating the need to partner with the main free-to-air networks TVNZ or TV3. The awareness of the free-to-air broadcasters of the power of Sky can be seen in their submissions to the Government review of broadcasting regulation, in which the free-to-air broadcasters argue for various controls on the way Sky operates The issues for public broadcasting in New Zealand TVNZ A central and ongoing issue is the status of the state-owned television public broadcaster TVNZ. Through the period since 2005, TVNZ has been operating under the Charter introduced by the Labour-led government in Although designed to require TVNZ to act more like a public broadcaster than it had through the 90s, the way the Charter has worked in The Digital Future & Public Broadcasting November 2008.doc 10

13 practice has been less than successful. TVNZ failed to use the direct government funding for the Charter to create an impressive slate of programmes that would otherwise not have been screened, with the result that criticism of the Charter itself has been rife. Both Labour and National are seeking to change the administration of Charter funding. Labour has directed that Charter funding will continue but will be administered by NZ On Air as a separate ring-fenced fund. All of the fund will continue to go to TVNZ but the broadcaster will have to apply to NZ On Air programme by programme, a significant restriction on TVNZ s previous freedom to make spending decisions. National s policy, announced in July 2008, is to remove the Charter funding, and indeed the Charter itself, from TVNZ and add the money to NZ On Air s television fund, contestable by all eligible broadcasters. But the removal of the Charter would leave TVNZ operating as a fully commercial broadcaster, in which case there would be no particular reason for it to remain in public ownership. The National party policy opens the way to the ultimate sale of TVNZ. The sale of a public broadcaster would be unprecedented in the Western world and would surely be a body blow to the cause of public broadcasting in New Zealand Opportunities for NZ On Air the oversight of public broadcasting The policies of both major political parties mean an enhanced role for NZ On Air in the promotion of public broadcasting. NZ On Air has the opportunity to be seen as the leading protagonist, not merely for local content, but for the wider cause of public broadcasting. This may require an adjustment in mindset and policy, for example allocating some money from the TVNZ Charter fund to quality imported programming, perhaps in the arts, or requiring TVNZ to improve its overall news and current affairs programming with additional elements such as investigative content. There is an opportunity for NZ On Air to step up to a lead role in what could be described as the regulation of public broadcasting, the oversight of content, range, standards and quality. It may be argued that there is a tension, a conflict even, between the role of funder and that of oversight or monitoring, but there is certainly a need for an effective regulatory or monitoring role. National s policy will make this role more difficult. If all the broadcasters are fully commercial, there is no requirement that they even bid for the more difficult genres (comedy?) or for minority programmes. With no Charter, the experience of the late nineties would suggest that it may be very hard to persuade TVNZ to be interested in programming that does not maximise commercial potential. There may be more broadcasters for NZ On Air to turn to, but they will all be commercially focused Opportunities for NZ On Air broaden the outlets It will be clear from this report that the focus of much activity, by both producers and consumers, has moved to the internet. In response, NZ On Air should consider how it can gain a stronger public service presence on the web. In our earlier report we raised the question of whether NZ On Air should be a lead player in the putative project NZ On Line, a vehicle for creative multimedia non-broadcast content, and noted that reform of the Broadcasting Act was needed to allow this to happen. Given that the Broadcasting Act has been amended to enable NZ On Air to move into funding online projects, the opportunity to develop new media content for outlets such as NZ On Line is wide open. This would be one way to meet the needs of the younger audience, who are deserting traditional broadcasting in increasing numbers. Public service broadcasting must expand into public service content. The Digital Future & Public Broadcasting November 2008.doc 11

14 NZ On Air s digital strategy and the establishing of its Digital Content Partnership Fund is a proactive recognition of the demands and opportunities of the digital era. The Partnership Fund suggests that a project like NZ On Line requires a concerted approach across a number of different agencies (public libraries, art galleries, archives and museums) all concerned with the promotion and development of digital content. It could not be the responsibility of NZ On Air alone, although NZ On Air could play an important leadership and facilitative role. The broad policy to meet the challenge of fragmenting audiences must be the same as that for all public broadcasters a policy of dispersal. Content of public value must be distributed across all conceivable platforms. Follow the audience if significant numbers of children have moved to a pay channel like Nickelodeon, then the arguments for allocating funding to content destined for such channels become difficult to resist. The traditional principles of public broadcasting are susceptible to adjustment. In similar vein, there should be the widest possible dispersal for content which may have had one or two screenings on television, but which then sits in the archive, its further potential unexploited. An updated public service communication principle might be put this way: that in the digital age, all publicly-funded content should be addressable, reusable, and capable of being reversioned or even mashed. We should move on from the traditional approach where the principal or only beneficiary of exploitation beyond first use is the independent producer responsible for the original product. In our 2005 report we recommended that NZ On Air should consider ways to extract more public value from the programmes it has funded either in whole or in part, and we suggested an NZ on Air portal through which the public could access the public broadcasting archive. While NZ on Screen, launched in October 2008, holds out great promise in this regard, it is unclear just how much of the public broadcasting archive the public will be able to gain access to, and how quickly progress in clearing rights will be made. Taking a more radical approach, NZ On Air might consider establishing an NZ On Air channel on YouTube, on which all publicly-funded content could be displayed. If NZ On Air encourages producers who have received funding for music videos to send them to YouTube, it is surely a logical extension to do the same for television programmes. The next step, the creation of a channel on which all publicly funded content is placed, would certainly involve a wrangle with the independent production industry, but it would align with the policy in NZ On Air s Statement of Intent to coordinate and share publicly funded material Archives The digital environment affords considerable opportunities for archives, in respect of storage, cataloguing, and providing greater access to many different aspects of our cultural heritage. Because archives from all sources can be digitally stored and accessed in digital form, it is possible to think in terms of a common digital platform across all interest groups, a form of national information architecture providing a seamless access to the nation s history and culture. The use of the internet and high speed broadband are crucial elements in wide public access to all forms of archive. Broadcasters, who have traditionally been inclined to take a proprietary approach to their archives, are a key component of any such national architecture. Many are already offering access to audio and video on their web sites. The challenge is to continue the process of The Digital Future & Public Broadcasting November 2008.doc 12

15 unlocking the public value of their broadcast archives, and to confront the tension between the pressure for access and the intellectual property rights of programme makers. In New Zealand, there are increasing amounts of broadcast archive material available free to the general public, in particular from TVNZ (TVNZ on Demand) and from the recently launched (October 2008) NZ on Screen, a valuable initiative driven by NZ On Air. But much of the broadcasting archive remains locked, largely because of the slow progress in resolving rights issues. There is also considerable fragmentation of audio visual material, and it is desirable that moves towards rationalisation, and integration with other public content archives, are successful Radio As with television, digital radio has its advantages more services, better reception and sound quality and information on a small screen. But digital radio has been slow to develop, doing best in countries where the state has mandated change. A major issue is that there is no one agreed system or technology. Different countries have adopted different technologies. Symbolic of the difficulties is that one of the leading technologies, DAB, the platform for the UK, has been superseded by DAB+ which unfortunately does not work with the existing DAB receivers. Furthermore the business models are uncertain. In the UK some digital providers have stopped their broadcasts because they were losing money. Some observers see internet radio as a stronger platform. It is hardly surprising that in New Zealand, there has been little enthusiasm within the industry for digital radio. Some trials have taken place, but little discernible progress has been made towards the introduction of digital services. However some broadcasters have been making effective use of digital opportunities, through internet radio or their web sites. Radio New Zealand has been particularly innovative in its online activities, notably podcasting, making most of its programming available on its web site, and encouraging interaction with its listeners Conclusion Writing this report in mid-2008, we can see that most of the trends and patterns evident in our earlier report in 2005 have continued to develop. But there have been some surprises the flowering of user generated content and the mushrooming of social networking sites were not anticipated. For all the research available, there is no clear answer to the question: will television as we know it survive? The most likely response is that there will be some kind of balance between broadcast and broadband, between the traditional and the new. What can be reiterated is that those responsible for any dimension of public broadcasting, now better expanded and described as public service content, must be vigilant and proactive in ensuring it continues to deliver public value to its audiences in the digital age. The Digital Future & Public Broadcasting November 2008.doc 13

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17 2 Technologies and the Audience internationally emerging digital patterns 2.1 Introduction In a speech in March 2008 to the Northern Virginia Technology Council, Microsoft founder Bill Gates speculated that some of the most important advances will come in the ways people interact with computers: speech-recognition technology, tablets that will recognize handwriting and touch-screen surfaces that will integrate a wide variety of information. He said: TV will be based on the Internet; it will be an utterly different thing (Thibodeau, 2008). National Public Radio in the US broadcast a four-part series on the Future of Television (February 4-7, 2008). The series argued that while TV is still a pervasive and powerful medium it is in a period of major transition and faces challenges and threats from a range of technologies, some of which are reaching maturity, others still in development. The widely hyped merging of the PC and TV is finally taking shape in a way that only a few people imagined during the late 1990s Internet boom. From children in their bedrooms to independent producers to big media companies, everyone seems to be producing content these days and the Internet is becoming a sort of worldwide TV network for audiences seeking entertainment, both mainstream and offbeat. With global online video services such as Veoh, Netflix, Hulu, YouTube and Joost, social media networks like Facebook, MySpace and imeem, and place-shifting devices like Slingbox, free-to-air television networks may matter less and less in the television landscape (PBS, 2008). A conference in Los Angeles on the future of television (March 24-25, 2008) had a range of speakers from the television industry discussing what are perceived as the disruptive effects on and risks to free-to-air network television of new technologies such as digital television, high-definition television (HDTV), set-top boxes, digital video recorders (DVRs), video on demand (VOD), wireless devices, broadband video and Internet TV. There was much speculation as to how consumers are responding and will respond to the introduction of these new technologies. But there appeared to be a consensus that whatever the nature of that response there were both opportunities and challenges for broadcasters and some if not all these new technologies will impact on the future of television(the Future of Television, What next, 2008). The future of the 30 second television advertisement, the staple revenue earner for all commercial free-to-air networks looks uncertain. In 2007 the senior director for connected home solutions with Motorola said: The ad industry is changing [and] the 30-second mass spot is probably ten years from being extinct. Almost all advertising a decade from now will be addressable. Consumers may opt-in for certain commercials. (La Monica, 2007 :8) In the US the top broadcast networks generated $9 billion in ad spending for the TV season, down from $9.1 billion for the season. It is suggested that 2008 revenue could fall again. And the aforementioned television conference also addressed this issue suggesting that some advertisers claim that buying advertising time on the networks is expensive, inflexible and lacking effective ways of measuring outcomes. Advertisers are putting more and more money in media where they can be guaranteed a captive audience The Digital Future & Public Broadcasting November 2008.doc 15

18 with an intention to buy. Networks, in a few years, [could] find themselves the prime-time equivalent of Kodak s 35 mm film business. They need to find improved methods for targeted advertising and find the role for branded entertainment; new interactive technologies and online video in the future of the television business. Hollywood and content producers are faced with a Hobson's Choice: Make your content available to all for free online - and potentially see your core business cannibalized. Or hold onto copyrighted content tightly - and watch as an amoral generation of youngsters steals it (La Monica, 2007:8) Advertising and subscription services may ultimately be the answer for supporting online and mobile video, films, music and other forms of entertainment. But how do content owners survive until then? Does the answer lie in search, as Microsoft's bid for Yahoo! suggests? Or social networks, as Fox's MySpace acquisition implies? These four sources are indicative of the concern that the traditional broadcasters rightly feel for their future. These issues are being raised all around the world and the prominence of their media placement suggests that the one thing that is sure about technology s impact on broadcasting is that everything is unsure. The Australian Communications and Media Authority in a recent document (ACMA, 2008) identified six top trends that will impact over the next ten years. The trends, which have six overarching themes, are: 1. An accelerating pace of change driven by overlapping developments in technology, and connections between people, databases and objects. 2. Diversity in the development of physical infrastructure including broadband, digital broadcasting, smart radio systems, sensor networks, mesh networks, efficiency techniques in multimedia transmission, location sensing and context-aware technologies, intelligent transport systems and satellite services. 3. Continuing spread of distributed connectivity through the integration of information processing beyond the desktop into everyday objects and activities. 4. Enhanced content and network management capabilities driven by developments in deep packet inspection and content filtering technologies, coupled with the need to improve e- security, identity management, intellectual property protection and energy efficiency. 5. The emerging social web acting both as a platform and database, enabling innovation and creativity by users and service providers. 6. Continuing scientific and technological innovations which, in combination, are driving advances in computing power, display technologies, artificial intelligence and nanotechnology. This chapter will endeavour to address these trends. It does so in three parts. Part one reviews the technologies identified in the 2005 report and refreshes the data. The second part attempts to identify some emerging patterns of behaviour surrounding the use of these The Digital Future & Public Broadcasting November 2008.doc 16

19 technologies and the consequent emerging audience. The conclusion summarises the problems and attempts a brief look to the future. 2.2 Technologies This update addresses the following technologies and provides a recent snapshot of where they are at. Digital television Set-top boxes (STBs) Video on demand (VOD) Internet TV (IPTV) User-Generated Content Broadband High Definition TV (HDTV) Digital video recorders (DVRs) Wireless devices Mobile media Social networking sites Standard Digital television and the Analogue switch off The transition to digital television broadcasting is gathering pace around the world. In Germany terrestrial reception had lost most of its users by the late 1990s due to extensive cable and satellite coverage. Two states (Berlin and Brandenburg) have switched off analogue transmission and 90% of Germany has digital coverage. The public broadcasters (ARD and ZDF) transmit in digital throughout the country. Analogue television coverage is scheduled to be completely terminated by In the UK, the regulator Ofcom in 2005 announced a progressive analogue switch-off plan based on ITV regions, starting in 2008 in the Border Television region and ending in By December 2007, the main set in only 12.4% of homes remained analogue-only (Digital Spy, 2008). While digital terrestrial television commenced in Australia in 2001 there was little immediate uptake. This lack of interest has prompted the government to actively push for the change. Early in 2008 the Australian Communications Minister announced that the government would spend almost $40 million to enable 100% digital reception and an analogue switch-off by the end of 2013 (DBA, 2008). In Japan a huge countdown clock has been installed on the front of the Hankyu Department store in Ginza to countdown the number of days to the scheduled switch-off on July 24, All members of the European Union, South Africa and Slovenia have established analogue television switch-off dates from 2007 to Initially Canada did not set a specific switch-off date, opting to allow the market to dictate the introduction of DTT and development has been patchy. By late 2007 there were fewer than 20 digital television stations in Canada. However, on May 17, 2007, the Canadian Radio-Television and Telecommunications Commission (CRTC, Canada's broadcasting authority) ruled that television stations would indeed be forced to go digital by the end of August 2011, and that analogue NTSC channels must be dropped by then, except in remote and northern regions where analogue transmission may continue for an undetermined period(crtc, 2008). The Digital Future & Public Broadcasting November 2008.doc 17

20 In the US, federal law requires that in February 2009 all full-power television broadcast stations stop broadcasting in analogue format and broadcast only in digital format. Despite the looming switch-off date it is estimated that 34% of US homes have at least one TV set that could lose TV signals next year and 14% still rely on analogue free-to-air services. The latter will need to switch to a pay TV service or purchase a digital converter box if they are to continue to receive a service when the nation switches to Digital TV (Swanni, 2008). However, what happens to them and what happens as a result to free-to-air broadcasters in the US is a matter of debate. Industry executive Barry Goodstadt has suggested that one of the unintended consequences of the switch to digital may mean that the 5 million households change from off-air reception in favour of cable, satellite or IPTV. The nation s broadcasters have long dealt with shrinking OTA (over-the-air) audiences. For instance, the number of OTA households has fallen from 23.9 million in the first quarter of 2004 to 16.9 million in the first quarter of If there is a wholesale switch then over-the-air audience may erode to such an extent that it will affect the value of the free-to-air broadcasting infrastructure (towers, transmitters), impact on stock prices, retransmission agreements and advertiser revenue and perhaps cause government regulators to re-think rights to broadcast spectrum being used to reach just a tiny proportion of the audience. It was suggested that the salvation of free-to-air broadcasters may lie with mobile TV. This could happen with the attractive under 35 demographic (Goodstadt cited in Broadcast Engineering, 2008a) High Definition HDTV is a technology that most US networks are counting on to keep people watching the TV screen. The majority of programmes made in the US are in high definition and the takeup of HDTV by consumers is increasing rapidly. It appears that the drivers are the HD programmes and the consumer attraction to new slim-line LCD and plasma large format television sets most of which are HD ready. Demand for HD sets follows as more and more HD programming becomes available. More than three quarters of American television households can now receive HDTV programming from their local cable operator. The president and CEO of the National Cable & Telecommunications Association, Robert Sachs, said: The full-scale deployment of HD service and programming has been the most rapid rollout of any product launched by the cable industry. Cable companies are now offering packages that include a full mix of broadcast, basic and premium networks featuring HD content (Sachs cited in Welsh, 2004) By the end of 2008, Time Warner plans to offer 100 HD channels in New York City. Comcast currently offers 300 high-definition options, far more than most cable systems. DirecTV, a satellite service, offers about 100 HD channels. A report from Informa (Informa, 2008) expects HD uptake to rise on the back of more freeto-air HD services. It forecasts that 180 million households will be watching HD programming by 2012, representing around 16% of TV households around the world. However, the distribution of these sets will be uneven with North America expected to have 70% penetration by 2012, Japan 58%, Korea 39% with all other countries below 30%. The Digital Future & Public Broadcasting November 2008.doc 18

21 In the UK the BBC launched a trial high-definition television channel in December Sky has a subscription HD service on satellite with a range of sport, films, arts and entertainment channels. Virgin Media has a subscription HD service on cable. ITV has committed to launch an HD channel in Plans by Ofcom to get HDTV on Freeview have divided opinion. Ofcom is proposing a maximum of four HD services, earmarked as BBC HD, ITV HD, Channel 4 HD and a future Five HD, on Freeview by upgrading transmission technology. But others, including the Digital TV Group industry association believe this would fail. Instead they are calling for a chunk of spectrum to be reserved for five high density channels (Digital Spy Blog, 2008). Report after report shows the decline in TV viewing and take up of online content. If HD is so important then why has ITV ploughed money into their web services and not HD? To be honest apart from the BBC, Sky and C4 what other UK channel has invested in HD? Meanwhile, Freesat, a satellite free-to-air service similar to the terrestrial based Freeview launched in early This makes free high definition television available to 98% of the UK s population, compared with its terrestrial cousin which can serve just 73% of the population. With its ability to cover most of the UK, the Freesat satellite service is considered to be a key element in the success of the digital switchover (Harris, 2008). The service provides a mix of 80 TV and radio channels, including high definition programming. No subscription is required, but viewers will need to buy a Freesat set-top-box (STB) and will need to fix a satellite dish on their house. HD-enabled STBs will cost around 150 from high street retailers, while boxes without high-definition capabilities will cost around 50. Academic research is suggesting that once people experience HDTV they are captured by an increased experience of presence brought about by the improved image quality. This sensation of presence will become common and drive consumer acceptance of the technologies (Bracken, 2005). We are going from 39 million homes with HD TVs in Europe last year to 139 million by That is an enormous opportunity if we can convert those homes into buyers of high def DVDs (Sanders, 2008) So HDTV programming is inextricably moving beyond the toy status and special-event service and becoming an increasingly regular part of the line-up of many broadcast networks. In the US most prime-time shows are offered in the HDTV format as well as virtually all major sporting broadcasts. The leader, HBO, part of Time Warner, transmits about 70% of its programming in HDTV (New York Times, April 28, 2008). In 2004 ESPN opened a 120,000- square-foot digital production centre in the US. Claimed to be the world's largest HDTVcapable complex it is providing nearly 4,000 hours of high-definition programming annually. ESPN's president, George Bodenheimer said: The Digital Future & Public Broadcasting November 2008.doc 19

22 HDTV is the next great wave in technology, this will give our fans the best sports television experience yet (Taub, 2003:2) Next step Indicating the next step in screen-based television services, major R&D departments within the networks are developing Super Hi-Vision, an HDTV experience with four times the clarity of existing HD and, as one presentation at NAB 2008 put it, the killer application of 3D TV (Carron, 2008). Indeed, Hyundai s first 3D-capable HDTV set went on sale in 23 shops in Japan in It produces a 3D image using stereoscopics - the rapid display of two different images, one for the viewer s left eye, the other for the right eye. The set comes with two pairs of special spectacles which the viewer has to wear in order to see the broadcast in 3D. Japanese cable company BS11 Digital will transmit experimental 3D broadcasts which the set will be able to receive (Harris, 2008a). At the 2008 European broadcasting conference in Amsterdam an ultra high-definition widescreen system was demonstrated. It has 4000 scanning lines and combines 7680 x 4320-pixel screen image with 22.2-channel immersive audio Set-top boxes Set-top boxes (STBs) are becoming ubiquitous. They vary in function, sophistication and price. A basic set-top box will connect to a digital supplier and convert digital signals for reception on an analogue TV set. Sophisticated hybrid STBs will connect to cable sources, terrestrial transmission sources, satellite and high-speed internet. They will also act as personal video recorders. Virtually all digital services require some form of box to carry out the range of functions required of the service. These include; a network interface used to connect to a network, a tuner to source a signal, various decoding devices to handle compression technologies, a buffer to overcome latency and provide a steady stream, a range of open source or proprietary middleware and platforms to enable software to run, applications and a return path, usually via the phone line to interact with the service provider. As each service provider may have different platforms, exclusive middleware/software and use proprietary coding technologies there is a possibility that consumers may need multiple STBs to access all the services that may be required. The STB business is integral to all digital media development. It now generates substantial revenues as the uptake of digital media increases. According to Paxton (2008), digital cable STB sales topped 41 million units in 2007, up from 29.7 million units in Revenues of US$6 billion in 2007 were up nearly a third on Digital video recorders (DVRs) DVRs or personal video recorders (PVRs) are the digital equivalent of the VHS video recorder, domestic consumer electronic appliances that permit the recording of television programmes to a hard-drive. TiVo changed the face of home television viewing when it launched the digital personal video recorder in It became a word synonymous with time-shifted, commercialskipping television and antagonised the broadcasting networks. But it also spawned a new The Digital Future & Public Broadcasting November 2008.doc 20

23 industry and a range of generic DVRs competed with TiVo. By the end of 2007 TiVo accounted for around 20% of the more than 20 million personal video recorders in US homes. In an interesting about face, as seen by some in the television broadcasting industry, NBC Universal has partnered with TiVo and a media-buying agency Carat, to provide second-bysecond viewership data and demographic ratings information collected from a sample of 20,000 TiVo subscribers. This deal threatens traditional ratings provider Nielsen which polls just 3,000 DVRs. It is set to help networks and advertisers overcome time-shifting technology by offering interactive banner ads that make sponsors' names visible as their ads are being fast-forwarded. It will also keep second-by-second ratings on the commercials that, after all, some viewers do still watch! Deals with other networks are also under discussion. The company stated that as the television industry moved to more ''a la carte, on-demand,'' TiVo's strength would be its ''ability to deliver huge amounts of content on demand to people's television sets'' or to their PCs. The DVR is slated to become as ubiquitous by 2012 as the analogue VHS recorder was in the 1990s. DVR users will increase to 41 million, or 37% of US TV households, by 2008, and to 56 million, or 49%, by 2010, analyst firm Carmel Group says (PVR Wire, 2006). Some commentators at NAB 2008 considered that once DVRs reach 50% uptake this is the tipping point for the inpact on traditional broadcast television. Further, a survey in mid 2008 showed that 81% of Americans surveyed said the DVR was an essential technology and indispensable, only beaten by the mobile phone at 92% (Spangler, 2008a) Video on demand (VOD) So far, standard video-on-demand services on television have been slow to develop, primarily because of the limited number of titles on offer and the uncertainty surrounding the best delivery methods. There has been a patchwork of systems used to watch programmes at home, from driving to a store to rent a video, to mailing DVDs back and forth, to video-ondemand via cable systems and Internet downloads. However 2008 seems to be the year of VOD take-off. In the US a number of big players have launched significant and expensive services. Initially the Internet proved unreliable mainly because of copyright issues, long download times and other complications. However, it appears that in the US at least this is about to change. Comcast has set up a site called Fancast.com where viewers can watch more than 3,000 hours of television shows from NBC, Fox, CBS and MTV. Furthermore Fancast will permit subscribers to remotely programme digital video recorders in their homes. It also includes a system called wideband that significantly reduces the amount of time it takes to download a movie from the Internet. A two-and-a-half-hour film such as Batman Begins will download in less than four minutes, rather than the six hours it would take using a standard broadband connection. Comcast plans to introduce wideband to millions of homes in select markets in 2008 before making it available in all of its areas. BBC iplayer is the easy-to-use service that permits access to BBC television programmes via the PC. It offers seven-day catch-up television and also incorporates radio 'listen again' and live streaming. The TV programmes, free for UK licence fee payers, are streamed at high quality and with no advertising. Once viewers have downloaded a programme to their computer they have 30 days within which to start watching and seven days to finish watching it. The Digital Future & Public Broadcasting November 2008.doc 21

24 The iplayer was launched at the end of Its success has been such that internet service providers (ISPs) are finding it difficult to cope with the traffic. ISPs claim that the iplayer is putting the internet under severe strain and threatening to bring the network to a halt. Viewers of BBC programmes online each week account for up to 5% of all internet traffic in the UK. The first episode of The Apprentice was watched more than 100,000 times via a computer. The growth of iplayer has been quite spectacular with 21 million requests to watch programmes in April 2008 (Sabbagh, 2008). Nielsen research has revealed the unsurprising fact that children consumed more streams than those aged over 18, and spent more time watching online video from home. Children 2-11 viewed an average of 51 streams and 118 minutes of online video per person during the month, while teens viewed an average of 74 streams and 132 minutes of online video. Those over 18 viewed an average of 44 streams and 99 minutes of online video (Nielsen, 2008). Disney.com has announced in June 2008 that for the first time the site will stream full-length movies online, featuring selections from the Wonderful World of Disney. The films will first air on ABC as part of the network s weekly Wonderful World of Disney presentation on Saturday nights throughout summer The full-length films will then be available for free streaming on Disney.com for the week following the network presentation (Garrett, 2008). A major consumer study into VOD released in September 2008 suggests that existing VOD services are the tip of the iceberg. VOD in its broadest sense will have a seismic impact on TV viewing and argues that traditional broadcasters need to stop thinking Internet versus TV and start considering on-demand simply as a new way for consumers to choose what to watch. There will be winners and losers as audiences migrate to aggregated content portals. The audience will expect an integrated approach providing seamless delivery of linear, recorded and on-demand TV. For consumers, what I want to watch is about the content not the delivery mechanisms after all (Essential Research cited in AdvancedTVSept01, 2008a) IPTV Internet Protocol Television (IPTV) supplies content that is not delivered through traditional formats and cabling, rather it is received by the consumer using the same technologies as that used for computer networks. It is a digital television service that is delivered using the Internet Protocol over a network infrastructure, which may include delivery by a broadband connection (WGBH, 2008:16). IPTV is often provided in conjunction with Video on Demand and may be bundled with Internet services such as Web access and telephone (VoIP). This combination is sometimes referred to as a Triple Play. IPTV has been talked about for a number of years. In 2006 John Markoff wrote in the New York Times that potentially, IPTV could replace the 100- or 500-channel world of the cable and satellite companies with millions of hybrid combinations that increasingly blend video, text from the Web and even video game-style interactivity (Markoff, 2006:2). In our 2005 report we noted that IPTV or television over the Internet has been a technology in waiting for sometime. It was indicated then that some thought that IP based television signals would be the platform of choice in the future. Uptake was inhibited by lack of fast broadband infrastructure, compression and multicasting issues and speed limitations. The Digital Future & Public Broadcasting November 2008.doc 22

25 It would appear that some, if not all, of these barriers are being surmounted. By the end of 2008 subscribers to IPTV services worldwide will number around 20 million (Informitv, 2008) with forecasts (ABI Research) suggesting spectacular growth to reach 90 million by the end of The Chinese territory of Hong Kong appears to be the first place in the world where Internet Protocol TV services have overtaken more traditional cable delivery of pay TV. Now TV, a subsidiary of the region s major telco PCCW, claims nearly 900,000 subscribers - an increase of 16% on last year. Sport, especially English Premier League soccer, appears to be the driver. Further growth in the Asian region is indicated by heavy investment in South Korea, a leading broadband infrastructure country. KT, Korea s largest telecom company, is investing 710 billion won (E4.6 billion) in network enhancement to provide real time IPTV service. By the end of 2008, 70% of its networks will be replaced with fibre-to-the-home (FTTH) rising to 95% by the end of The telco is arguing that its IPTV service delivered by FTTH would contribute 12.9 trillion won to the national economy and create as many as 70,000 jobs. (AdvancedTVAug11, 2008). IPTV success factors appear to be bound up in the triple-play concept (voice, video, data) that has one service provider offering traditional television services coupled with video on demand, DVR pause and rewind functions, telephony integration and internet access into one product. One commentator called it the heightened quality of the experience of being able to obtain and retain desirable content (Multichannel News, 2008). IPTV was very prominent at NAB 2008, but what IPTV actually is and what it means for the broadcast industry is hotly debated within the industry. But as the following graph demonstrates, IPTV growth is predicted to match digital cable growth in the US over the next three years. Figure 1: US IPTV Uptake: Comparative uptake of IPTV in millions in US Satellite Dig.Cable Ana.cable IPTV (Source: NAB 2008) Though Europe and Asia are ahead of the US in terms of interactive or two-way television, NBC Universal broadcast the Summer Olympics using not only its traditional over-the-air and cable networks, but also over the Internet utilizing Microsoft s Silverlight application, a The Digital Future & Public Broadcasting November 2008.doc 23

26 programmable web browser plugin that enables multi-media features characteristic of interactive television applications. At NAB 2008 Microsoft demonstrated Connected TV a broadband and internet delivery of television content. The presenter claimed that IPTV was the ability for TV, through the magic of broadband networks and the magic of software, to reach the consumer in more ways and in ways that are richer. The demonstration included a prototype of Microsoft Mediaroom in which a TV viewer watching a Nascar race interacted with in-car audio and video of one specific driver in the corner of the screen, in much the same way that a computer user can access streaming video in a Web browser window. IPTV, claimed the presenter, could make the television experience closer to that of a computer. An Italian company TVBLOB, has launched what they termed the ultimate companion appliance for TV providing a host of user defined services including multiple-channel TV reception, video-on-demand, podcasts, Web-TV, peer-to-peer content sharing and local and community television services. They aim to create an open global TV communications platform that extends beyond geographic boundaries and allows everyone to use common television sets which they consider to be the most pervasive household appliance in the world to act like a PC and receive any content regardless of form on the TV ( In the US, Verizon launched its high-speed fibre-to-the-home FiOS TV (fios is an Irish word for knowledge) in This service competes directly with traditional cable services because it provides better picture quality and higher Internet speeds compared with the cable companies that use fibre only to the node and then coaxial cable into the home. The FiOS TV service offers on-demand TV for a range of movies, kids shows, sports programmes, high definition channels, a dual-tuner DVR to enable pausing and rewinding live TV and record one show while watching another, a full range of premium channels and a range of international channels such as RAI (Italian), TV5 (French), ART (Arabic), TV Japan (Japanese). As of April 2008, FiOS TV had 1.2 million television subscribers (ranked 11th nationally) (Spangler, 2008). U-Verse, a rival system offered by AT&T, is set to reach one million subscribers by the end of While U-Verse is a pure IPTV service because it only sends the consumer exactly what is wanted instead of taking up bandwidth with every single option and thus a lot more options can be offered at very high resolution, the FiosTV system is a hybrid using its fibre to deliver a traditional broadcast signal for scheduled programming and IP to deliver on-demand video and other interactive features ("FiOS TV review - Update", 2008). In the UK, BT Vision s broadband TV service more than doubled its customer base from the first quarter 2008 to the second quarter, with customer numbers reaching 214,000. At the same time the giant tele-communications company reported that what it calls its new wave revenue, that s revenue generated from other than fixed-line voice, accounted for nearly half of the company s revenue. And this appears to be a pattern. Time Warner Cable also announced that its business model had changed dramatically. A similar 50% of their business income is now derived from businesses beyond that of analogue video whereas less than twelve years ago 100% of revenue was from analogue services (Yao, 2008). The Digital Future & Public Broadcasting November 2008.doc 24

27 2.2.8 IPTV is being commoditised IPTV is increasingly being offered free by telcos across Europe to encourage people to choose their broadband services. According to research from Screen Digest, IPTV is rapidly becoming a commodity - bundled for no extra cost with a broadband and/or telephony package. The result is that nearly half (40%) of today s European IPTV households are currently enjoying the service for free. Given the capital expenditure needed to implement IPTV, it is not, says Screen Digest, justified as a churn buster but is there to attract broadband subscribers. Analyst Richard Broughton comments, "The primary intent behind most of the major IPTV services is to add new broadband subscribers not to drive profits or even to act as a churn reducer." This is confirmed by the number of IPTV operators reselling third party content packages rather than offering content of their own to attract viewers (Sat News, 2008). It should be noted that along with other technologies in search of a market (see Chapter 7 for comment on digital radio), IPTV has yet to produce a profit for any provider and some commentators (Informitv, 2008:11) argue that they may never repay their investment or make a profit even from the acquisition of premium sports rights. If this is the case IPTV would appear to have a very limited future Mobile Media Around the globe, mobile TV and video services have been product offerings for several years now. Wireless operators are moving out of the experimentation phase as trials wrap up, broadcasting technologies are chosen, and additional TV and video content is offered. But as these two of the largest industries mobile connectivity and entertainment come together there are still many decisions to be made. At the 2008 NAB convention Accenture claimed that in 2007 in the US three out of ten adults watched some media content on their mobile phones. They argued that consumer user preferences based on the device used look like this: Mobile PC 1. Public Service information 1. Full TV show episodes 2. Content user creation 2. Public Service information 3. Device specific content 3. Device specific content 4. Full TV show episodes 4. Content user creation 5. Programme highlights 5. Programme highlights 6. Shortened TV shows 6. Shortened TV shows With the two least preferred behaviours shared and the only significant difference being the higher preference for the PC for full TV shows, the evidence suggests that mobile devices are increasingly being used in a PC-like fashion and as a source for all media activity while on the move. The researcher also argued that 55% of US media executives believe that the mobile media market will be a mass market by The Digital Future & Public Broadcasting November 2008.doc 25

28 Figure 2: Mobile market changes: (Source: NAB, 2008) The graphic above illustrates the direction in which mobile media is moving. Mobile devices are already able to access web applications (Flickr, YouTube, Amazon etc). Voice recognition technology and movement sensitive screens are being used to interface with the device (Apple s iphone). One of the key changes indicated by developers will be the ability of the mobile device to instantaneously recognise a nearby appliance and be prepared to interact with it. This would include other nearby mobile devices, PCs, TVs, cameras, printers, projectors and even domestic appliances with interactive capability such as refrigerators. The device interacts completely wirelessly including re-charging. Subject to security and identity protocols the mobile device will connect and interact as instructed. As an example a camera could take a picture, say, of the Monument of the Peoples Heroes in Beijing. The camera recognises a wireless application located on the building that provides a GPS response enabling the camera to access a text description (historical, cultural etc) of the building. The following graphic illustrates this. Figure 3: GPS response: (Source: NAB, 2008) The Digital Future & Public Broadcasting November 2008.doc 26

29 The increased sophistication of mobile phones already able to access , the web and applications such as word processing and spreadsheets, with built in sophisticated camera technology and GPS, suggests that mobile media will be increasingly redefined with more powerful devices, more intuitive and aware devices and more personally programmed devices. The key element is the ability of the mobile device to sense or understand the world around it and respond to it providing seamless access to a range of devices, networks and services and with an intelligence that understands and anticipates what the user wants it to do. Mobile phones, digital cameras, ipods, walkmans, laptops, PDAs, mobile games consoles and so on consume much of our daily lives. These devices and their corresponding media technologies are playing an increasing role in the everyday lives of millions of people. To this end a number of media organisations in countries as diverse as Finland, Japan, Italy and South Korea are now providing discrete services to mobile devices which include TV and radio broadcasts, games, VOD and premium sports channels. In the UK T-Mobile offers a range of packages that include Our Mobile TV packages specifically made for mobile channels. Live channels have exactly the same programmes as on standard TV and aren't edited, while made for mobile channels include a mix of short episode highlights, full episodes and pre-recorded shows. Packages begin from 5 per month. Other countries with mobile TV experimental programmes include: France, Germany, China, Hong Kong, Sweden and the US. However, according to Gardner (2008), digital mobile TV broadcasting is likely to remain fragmented at least into the foreseeable future as the various standards vie for dominance. The report suggests that even then, just like terrestrial television transmission, there will be multiple standards around the world. Despite this it is still considered to be a significant emerging market with suggestions of $12 billion or above revenue by 2012 (TVNewsday, 2008). One key driver is China which deployed a wireless digital TV network for use in the Olympics (Gardner, 2008). In December 2007 the Pew Internet Project found that 62% of all Americans are part of a wireless, mobile population that participates in digital activities away from home or work. The data suggested that most of these have used a cell phone or personal digital assistant (PDA) to do at least one of ten mobile non-voice data activities, such as texting, ing, taking a picture, looking for maps or directions, or recording video (Madden, Fox, & Smith, 2007). Mobile technology usage by Americans continues to increase. 41% of adult Americans have logged onto the internet on the go, that is, away from home or work either with a wireless laptop connection or a handheld device. Usage of the mobile web data is gaining traction in the US at such a rate that it will shortly surpass the UK which currently leads in consumer mobile acces. The top five countries based on the percent of user visits to mobile websites in July 2008 were reported as: - UK 19.35% - US 18.88% - India 10.82% - South Africa 8.82% - Indonesia 4.08% (AdvancedTVAug25, 2008) In the US AT&T's LG Vu service provides for what they label television-to-go, real-time broadcasts delivered to specially-equipped phones. This mobile TV subscription service The Digital Future & Public Broadcasting November 2008.doc 27

30 provides 10 channels of current and canned broadcasts of news, sports and entertainment programming from CBS, NBC, CNN, Fox, ESPN, MTV, Nickelodeon, Comedy Central and movies from Sony's library (Himowitz, 2008). And, just in time for the US football season, CBS Sports Mobile has launched a new application called the CBS Sports Mobile Ultimate Sports Application. Aimed at sports fans on the go it will provide live scores, statistics, headlines, streaming videos, message boards, and an mobile online sports social network with personal profiles and the ability to talk with other sports fans and rivals. A major feature of the system is fantasy leagues, an online sports gaming application that creates fantasy players and the ability to engage in fantasy games including creating your own lineup, accept or deny trades and add or drop players. In 2008 the Mobile Ultimate Sports Application was available for a monthly fee of $ Wireless Wireless is a dynamic frontier changing at a rapid pace. Wireless, using the radio-frequency spectrum for transmitting and receiving voice, data and video signals for communications, had its origins in the early 20 th century when sound was transmitted from radio station studios to radio receivers. Over a short 20 year period the radio, wireless, became ubiquitous. Every home had one and the first electronic mass communication medium was formed. Wireless technology improved with receiving devices becoming more powerful, smaller and portable. Television followed using similar technology to transmit pictures and two-thirds through the 20 th century television also reached maturity and saturation. In 1987 MIT guru John Negroponte (1995) coined the Negroponte switch in which he said that television would become wired and phones would become wireless and this has been proved the case. Certain wireless technologies have changed the nature of society in a very short time. They include: The mobile phone using WAP (wireless application technology) to access the Internet, which has become the fastest spreading technology in history. SMS (Short Message Service), a feature that allows users to receive and transmit short text messages using their phone Bluetooth, a technology that enables multiple electronic devices to talk to each other and exchange data when in close proximity PDAs (personal digital assistants), portable computing devices capable of storing and transmitting data WiFi (wireless fidelity) which uses the unlicensed 2.4GHz band to transmit data across the radio spectrum normally occupied by cordless phones, garage door openers, at increasingly faster speeds. Many businesses and homes now have wireless networks to move data within the building. Outside the office and home WiFi can now be found in a number of places. In the US some towns and cities provide wireless connectivity to the whole community and in many towns and cities WiFi hotspots can be found in cafes, hotels, airports and other public outlets where laptop users can have wireless internet access while located in or close to the provider. Starbucks offer wireless connection in every one of their 2000 stores and it is estimated by Gartner (2008) that there are over 100 million laptop owners who access public WiFi access points around the world. A user needs to be within a limited range, around 100 metres, to reach the transmitter and the closer the user is to the transmitter the faster the data-rate. The Digital Future & Public Broadcasting November 2008.doc 28

31 The future of WiFi is not clear. It could evolve into a technology that is used by ISPs on subscription, it could be a free public service or it may be something provided by businesses as an added value when purchasing services (e.g. hotels, cafes, bookshops, etc) User Generated Content It is argued in some circles that the nature of the audience is changing from a passive laid back mode to a participatory lean forward mode where increasingly people are taking advantage of Web 2 technologies to create and interact with independent content. The ease with which computer-based simple and readily accessible programme applications can enable the creation and reproduction of sound, vision and various textual and graphic material has seen a massive increase in use by ordinary individuals. User generated content (UGC) has grown exponentially as sites have been provided by media groups for people to publish their self-created content and have people respond to it and comment on it. UGC is sometimes contrasted with engineered content which is content created by professionals and experts and subjected to considerable levels of oversight and control. UGC, which can come in many forms video posts on YouTube, discussion groups, blogs, wikis and personally created websites - is subject to much less oversight and can vary dramatically in both quality and accuracy. UGC is also characterised by the nature of the interaction which is often more intense than that seen on professionally constructed sites (see also page 41 People like to be on TV ). The increased prevalence of UGC has created strong interest within large media organisations looking for revenue opportunities. The result has been the purchase of some sites by large corporates. Research by In-Stat found that total worldwide User Generated Video (UGV) revenue is expected to eclipse $1.19 billion by One hundred and sixty billion UGVs are forecast for People are literally making their own TV with a massive 65,000 video clips uploaded every day in 2007 (CCP, 2007). In this regard China is a significant emerging user of UGC. According to the same research China is a prime example of UGV's global reach and appeal, capturing a significant portion of the world market, making it second only to the US. With significant growth in the Chinese market, the forecasts for UGV use and revenue have shifted upward since last year, reports In-Stat. With expectations of higher quality content (e.g. HD video) and increasing file sizes, the demands on bandwidth will likely continue to grow at a faster rate than the number of files/videos served (Paxton, 2007) Social networking sites Social networking sites are a recent phenomenon made possible by the technologies of Web 2. People use these sites to create a personal profile and build a network that connects the user to others. The two dominant sites, Facebook and My Space, have more that 160 million active users worldwide. MySpace is one of the fasted growing websites of all time as the data in the following table demonstrates: The Digital Future & Public Broadcasting November 2008.doc 29

32 Table 2: MySpace statistics as of April 2008 Rows of data Comments on the site Mails on the site total Mails per day (more than Yahoo, Hotmail, or Google) Friend relationships Images Images being uploaded per day New videos being uploaded to MySpaceTV each day 100 Billion 14 Billion 20 Billion 50 Million 10 Billion 1.5 Billion 8 Million 60,000 (Source: Data collated from Further, according to Pew, in the past five years such sites have rocketed from a niche activity into a phenomenon that engages tens of millions of internet users. It is a particular activity of young people. More than half (55%) of all online American youths ages use online social networking sites. This graph is indicative of teenage behaviour on networking sites. Table 3: Teen behaviour on social networking sites: Social networking is occurring worldwide, with much access from mobile devices. In the UK for example, more than 10% of UK mobile phone users accessed social networking websites such as Facebook, Bebo and MySpace via their handsets at least once a month in the first quarter of Nielsen Mobile, part of research group Nielsen, found that 21 million UK The Digital Future & Public Broadcasting November 2008.doc 30

33 mobile phone subscribers - of a total of almost 48 million - belong to a social networking website (Sweney, 2008). Indicative of the importance of these sites is the fact the MySpace is owned by News Corporation. YouTube is controlled by Google and Facebook is being courted by media giants Yahoo and Microsoft. Bebo has been purchased by Time Warner s AOL, with the intention of targeting the year old demographic (Chester, 2008:8) Broadband The Internet is media s golden age (Rupert Murdoch, cited in Cherryflava, 2006) Broadband is a topic continually under discussion. Fast and universal connectivity is heralded by most as the key to the digital economy. Bandwidth is defined in terms of bits per second. It consists of three elements: bits, time and the combination of time and bits i.e. sustained rate. It is generally recognised that the bandwidth of the so-called last-mile, the distance from the last network node to the home, is the defining factor in the user experience. Fast broadband is necessary for many of the new digital services including IPTV and HD delivery via the Internet. The significant increase in demand by users for higher broadband capacity is forcing Internet Service Providers and telecommunications companies to review network capacity. While the initial emphasis was on the infrastructure backbones, attention is now turning to bringing fibre ever closer to the end-user in order to be able to deliver the desired bandwidth. It is argued that to meet the demand for a range of parallel services to the home and the expectations of end-users speeds of up to 50 Mbit/s downstream and 10 Mbps upstream will be required within the next 10 years. Indeed, Europe already has over 100 million broadband subscribers with super broadband connection speeds above 10Mbits/sec, and this is driving the uptake of high-tech services (AdvancedTVSept01, 2008b). And in the UK BT has confirmed it plans to spend 1.5 billion (E1.83bn) building a super-fast broadband network across the UK over the next four years. The plan would connect 10 million homes, around 40% of the UK, to a new fibre-optic based network by The upgrade will provide speeds up to 100 MB (AdvancedTVJul14, 2008). These speeds are significantly higher than the current OECD definition of broadband at 256kbps. (Working Party on Communications Infrastructures and Services Policy, 2008). Table 4: Predictions on bandwidth consumption: (Source OECD) The Digital Future & Public Broadcasting November 2008.doc 31

34 Broadband speed is determined by many factors included among them are: The percentage of fibre optic in the network The nature of that fibre (passive or active) The capacity of the fibre e.g. backhaul networks, from switches to the network core, and international connections (Southern Cross Cable) The status of the so-called last-mile, the point from the last node in the network to the house Contention issues the more people seeking access at the same time the greater the pressure on the network. While various non-fibre broadband services are being pursued (Wireless, hybrid, 3G mobile) fibre is still considered essential for maximum capacity and growth. Countries with high broadband penetration (UK, US and many European and Asian countries) are leading the drive for new entertainment and information services. The latest OECD statistics for Broadband subscribers are reflected in this graph. Figure 3: OECD Broadband subscribers, June 2008 However, it is always difficult predicting how technologies will develop. While it s mentioned above that fibre is considered essential for the sort of broadband speeds required there is at least some suggestion that last-mile technology to deliver high-speed broadband can still occur on existing infrastructure (copper wire) using a technology called Dynamic Spectrum Management (see To quote Computerworld: By using technologies such as dynamic spectrum management and by cancelling line noise and crosstalk, DSL could deliver speeds of 100Mbit/s over 500 metre single-pair lengths of copper cable. [Some] researchers see the current maximum throughput of DSL as being one to two gigabits per second, which is right up there with fibre-optic. (Saarinen, 2008:9) The Digital Future & Public Broadcasting November 2008.doc 32

35 Furthermore, DSL does have the distinct advantage of being deployable over an existing telephone network. 2.3 Emerging Digital Patterns If we don t put our content on these new platforms, which the consumer has obviously embraced, other entities will create content and fill that void (Michael Eisner, Walt Disney Company, 2008) Since 2005 a number of patterns are emerging which indicate directions that digital media may take. They include: Content distribution networks Increased use of broadband and the internet for all media services, especially web 2.0 The development of hybrid services New advertising and marketing strategies, Provision of access to archives, especially by public broadcasters, and The development of merged digital strategies for government services across all media and information platforms libraries, museums, galleries, archives, film, television and radio Content Distribution Networks Over the last few years a major development in the distribution of media has been the development of content distribution networks (CDNs). CDNs are created as a way of delivering content to users on behalf of origin Web sites. An increasingly large number of individuals and groups are producing content and the Internet, especially for young people, is becoming a sort of worldwide TV network for audiences seeking entertainment. With global online video services (e.g. Jumpcut, OurMedia, Vimeo, YouTube), social media networks (e.g. MySpace, Facebook), and place-shifting devices (e.g. Slingbox, Sage TV Placeshifter) national borders matter less and less in the television landscape. Examples in the US include: Tilzy.TV, an aggregator of web-based TV which sifts, scrounges, and searches through the countless hours of web video to bring.the best programming available on the internet ( Hulu, an NBC Universal and News Corporation online video joint venture. This website focuses exclusively on the backlog of popular television programmes and movies, using their own embeddable branded player. In its short life it has rocketed to being one of the top video destinations on the internet. Hulu delivered 63 million total streams during April 2008, its first full month of operation, making it the No. 10 online video-streaming site, according to Nielsen Online (S. Collins, 2008). The service is advertising supported and is free to the viewer. In exchange for watching relatively brief ads, access is gained to complete highresolution episodes of current and previous top US TV series ( The Digital Future & Public Broadcasting November 2008.doc 33

36 AppleTV is a web-based service that provides movies, TV shows and a range of other material to a proprietary set-top-box for storage and replay over a defined period. It is platform agnostic in the sense that the downloaded material can be played on a wide-screen TV set, a computer, an ipod or ipod phone. Apple TV is available wherever I-Tunes is an accessible service. Figure 4: Apple TV services (Source: NAB, 2008) As previously mentioned, Comcast has set up a site called Fancast.com where viewers can watch more than 3,000 hours of television shows from NBC, Fox, CBS and MTV. Furthermore it is a system that will permit subscribers to remotely program digital video recorders in their homes. (See Video-on-Demand, page 15). In the UK: Viewmy.tv is an aggregator that offers thousands of free television channels, such as terrestrial channels and those provided by producers, independent studios and broadcasters. It categorises by genre and by geography (region and country). It is also a social networking site permitting users to create their own profiles, personalise channel selection and engage with other users. Kangaroo is a new broadband TV whose launch in the UK has been delayed by legal action. It is a commercial joint venture backed by BBC Worldwide, ITV and Channel 4. This ondemand service is intended to attract more customers away from DVRs and towards online streaming options. Ashley Highfield, formerly BBC director of future media and technology and the organisation s most senior technology executive, is Kangaroo s CEO. Virgin Media offers on-demand TV programmes, a free television catch-up service for UK channels, a large range of films and music videos Increased use of broadband and the internet for all media services, especially web 2 The growing adoption of broadband combined with a dramatic push by content providers to promote online video has helped to pave the way for mainstream audiences to embrace online video viewing. In the UK BBC1 began transmitting live on the internet in mid-2008, making it the first of the corporation's analogue TV channels to be simulcast on the web. For the first time in the flagship channel's 44-year history, viewers will not need a television to watch BBC1 live. The channel is available as a live video stream via bbc.co.uk, which has been relaunched with improved listings and programme information (Conlan, 2008). Although The Digital Future & Public Broadcasting November 2008.doc 34

37 BBC3 and the BBC News Channel are already simulcast online, they have always been digital services, whereas BBC1 is the first of the corporation's mainstream analogue networks to take the internet plunge and could indicate the future direction for other traditional free-toair channels. The Pew Internet & American Life Project's first major report on online video also shows how many video viewers have contributed to the viral and social nature of online video. Fifty-seven percent of online adults have used the internet to watch or download video, and 19% do so on a typical day. Three-quarters of broadband users (74%) who enjoy high-speed connections at both home and work watch or download video online. Most users of online video share what they find and what they use with others (Horrigan, 2008). As an indication of trends worldwide, research indicates that most Americans who have access to broadband view online shopping as a way to save time and a convenient way to buy products. American internet users have embraced online shopping because they say it is convenient and a time-saver. Two-thirds (66%) of online Americans say they have purchased a product online, such as a book, toy, music, or clothing. The majority (73%) agree with the proposition that shopping online is convenient for them and nearly the same majority (68%) agree with the notion that online shopping saves them time. One negative element came through in the research and that was that there is still a discomfort about one aspect of using the web to shop and that is sending personal or credit card information over the internet (Horrigan, 2008). At NAB 2008 content distribution and interactivity were frequently mentioned. Much of the technology on display highlighted the increasing need for content providers to be able to send content both to the consumers and also back to broadcasters and advertisers. Interactivity not only benefits advertisers by allowing advertising to reflect what viewers are watching thus enabling much more targeted advertising but it also permits a whole new social element, that of chat and the sharing of TV clips making sitting alone in your living room as social as spending the afternoon with your nearest and dearest pals. Enrique Rodriguez, head of Microsoft TV Business argued that media companies should love the idea of consumers sharing TV clips with friends because when friends make recommendations people simply consume more content, and it makes whatever service or platform they're consuming content on, that much more sticky. Layering IM-style chat on top of TV watching is slated to become another common way to communicate, just as and IM are now. As an example of advertising and content benefits the Motorola interactive TV system currently offered through cable and telecom carriers in Europe was demonstrated at NAB. It allows sports fans to not only be alerted when their home team scores a goal, it also allows them to purchase merchandise with their teams' logo in the heat of the moment. Of the many phenomena of Web 2, one of the most significant and spectacular has been Second Life, a three dimensional virtual world that is created and developed by its residents. Its origins were an experiment by Linden Research Inc which was made public in It has grown explosively and today is inhabited by over 13 million residents globally. Anyone can enter Second Life, become a resident and interact with all other residents by creating an avatar (a virtual representation created by the real-life participant). Residents can explore, socialize and participate in a whole range of social activities, including business, using virtual money and virtual property to trade and provide services. One source calculated that in January 2008, residents spent a total of over 28 million hours in Second Life The Digital Future & Public Broadcasting November 2008.doc 35

38 suggesting that at any one moment just under 40,000 residents were logged on. ( Another Pew Internet survey indicated that the audience for video-sharing sites like YouTube had risen sharply through Nearly half of online adults now say they have visited such sites. The research suggested that by the end of 2007, the number of internet users going to video sites was nearly twice as large as it had been twelve months earlier. A late 2006 research report showed that 8% of users had visited a video sharing site yesterday. The same question elucidated a 15% response in December The development of hybrid services A further development goes broadly under the title of hybrid. A hybrid environment is one in which digital TV, radio, the web, set-top boxes and personal video recorders all combine to offer interactive services allowing users to view digital television programming as well as videos from the Internet or local IP network and voice and data services. The hybrid nature of the network can be at the receiving end in the set-top-box, or at the transmission end where a provider sends product out on multiple platforms. An example of the latter is Verizon s FiOS, mentioned previously, which offers RF video sent over a coax connection and IPTV sent over fibre. An example of the former is the Sky+ box which can take high definition video input from satellite, and at the same time take standard definition Internet video over broadband and display both of them on the same television screen. The box also has a DVR permitting recording and multiple replays of both satellite content and IP content. A further addition is a wireless capability in the box that permits access to all content over the home network (other television sets, computers and wireless capable mobile devices). Hybrid services are expanding. In Europe, Multimedia Polska, a Polish provider of tripleplay, combines hybrid cable/iptv television, broadband internet and fixed-line telephony into a single package using hybrid technology to power its entire on-demand (VOD) services to over 600,000 customers. The service offers a wide range of programming including HDTV, time-shifting and catch-up services and an experimental mobile TV service (Business Wire, 2008). In the UK BT Vision uses hybrid services to combine Freeview's 40 digital terrestrial channels with thousands of hours of on-demand content, delivered via broadband. The BT set-top box, known as the 'V-box', also contains a digital TV recorder able to store up to 80 hours of programming and integrates voice and data to provide the classic triple-play service. BT's library of on-demand programming can be purchased on a pay-per-view or unlimited monthly subscription basis, with no minimum monthly period. It also offers a catch-up TV service offering broadcast TV programmes they may have missed in the previous week. In the US cable operator AT&T offers a similar service as part of their satellite triple play package. Their hybrid TV-IP box can contain hard-drive capacity of up to one terabyte New advertising and marketing strategies With all the technology changes, the fragmentation of media platforms and the increasing variety of channels and sources, the staple of free-to-air commercial television the 30 second ad is under threat. There are also moves towards new forms of media advertising that are web-based rather than broadcast-based. The Digital Future & Public Broadcasting November 2008.doc 36

39 One of the significant shifts has been the move to online shopping (see 3.2). It was originally thought that internet commerce (e-commerce) would reach a natural ceiling at 15% of the [retail sales] market, but it has already exceeded that reaching an 18% share in 2007 (Wood, 2007). It is considered that a further 20% of purchases made elsewhere are informed by the internet. This indicates that 40% of the market is influenced by e-commerce. This provides challenges for both advertisers and the platforms for traditional advertising (radio, television, newspapers and magazines). In the US, Disney is establishing a laboratory in which it will use the biometric reactions to advertising of a pool of up to 4,000 people to test for advertising efficiency in both the traditional technologies and new ones. Examples to be tested include the three-second video ads on mobile phones, the impact of high definition television commercials, the sports ticker crawl and other sophisticated electronic marketing techniques (Nakashima, 2008). Some of these techniques are demonstrated in the following figure: Figure 5: TV Advertising: The techniques highlighted here include: Source: NAB, 2008 Product placement, increasingly being used in advertising. Companies pay to have their goods prominently positioned and displayed in programming. Product placement can now account for up to 20% of revenue earned by made for television movies (Epstein, 2005). Telescopic ads, that enable a viewer to respond to a request and using the red button on the remote be taken to an advertisement that provides more detail on the product, on product promotions and offers and establishes an interactive relationship with the prospective consumer. A technology being trialled in the US enables telescoping from a product placed on the screen by passing a cursor over the item it automatically stores an advertisement for play at the conclusion of the programme. The Digital Future & Public Broadcasting November 2008.doc 37

40 In-navigation ads, messages that appear whenever the viewer changes channels or programmes. Its placement is such that it cannot be avoided or skipped. Targeted ads, that provide the opportunity for the advertiser to speak directly to an individual or household because the market research has told them of the particular interests and purchasing habits of the target. Ads with transaction capability, enabling the completion of the purchase directly from the ad itself using secure payment options. Backchannelmedia is an example of a company trialling these marketing techniques. With a Backchannelmedia software-enabled TV or set-top box viewers are able to interact through their existing TV remote control when prompted by an icon. It provides a click-through service to internet websites for more detailed and sophisticated pitches. (See Advertiser concern is further demonstrated by the research efforts going into new media advertising services and attempts to discover whether consumers are more engaged by new and interactive ads and ultimately if more can be charged more for them. US broadcaster NBC has released research that suggests ads in its programmes streamed online are better liked and more recalled than advertising on TV. According to a 2008 survey conducted on 5000 users of NBC s online service NBC Rewind, viewers said ads streamed online with full-length episodes were less disruptive than on television and that they had a strong desire to interact with advertising. The research further suggested that ads with interactive elements were more likely to elicit higher brand recall as well as high agreement that the ads were entertaining and relevant (IBM, 2007). The influence of the internet is significant. In the UK the internet has almost double the influence of television in consumer decision-making as the following graph demonstrates. Figure 6: Influence of each medium on decisions in UK (Source: There is significant evidence that advertisers are moving towards new media platforms. In the UK online ad spend was higher than that spent on national newspaper advertising for the first time in Online ad spend increased by a dramatic 39.5% from 2006 to 2007, while television managed only a modest 2.3% gain (Sweney, 2008). Google now makes more money from UK advertising than does Channel 4, prompting the Channel s chief executive to state that this is not just a cyclical issue. There is deep structural change taking place (Deans, 2006). The Digital Future & Public Broadcasting November 2008.doc 38

41 US data indicates an increase in online ad spending of 26% in 2007 over 2006, reaching US$21.2 billion. Nearly half of this came from search advertising which explains Google s dominant position and its continued financial success (Stelter, 2008). But a substantial $4.3 billion is predicted to come from the online video market by 2011 as this chart presented at NAB 2008 shows. Figure 7: Online video advertising spend Online video ad spending Millions $ Year (Source: NAB, 2008) Furthermore, there is a clear imbalance between what consumers now do and where advertisers spend, as the following graph shows. Advertisers have not followed consumers to the internet to the same degree. Figure 8: Share of time spent v adspend Share of time spent on platform compared with ad spend on each platform Magazines Newspapers Radio % of Ad spend % of time Internet TV (Source, NAB, 2008) This same research shows a significant reduction in television viewing time by Internet users in the US. However this conflicts with data from Nielsen (see 2.5.9, page 43) leaving the question, as Internet use increases will television use decline, still up for debate. The Digital Future & Public Broadcasting November 2008.doc 39

42 Figure 9: Time spent with media Time spent with media in Internet user households Reading newspapers and magazines Watching TV Internet Hours per week (Source: NAB, 2008) Provision of access to archives, especially by public broadcasters One of the significant developments since 2005 has been the number of public broadcasters digitising and providing access to their archives. In Europe public broadcasters are providing online access to increasing amounts of archive material. Collectively the broadcasters hold one million hours of film, 1.6 million hours of video and two million hours of audio (see graph) and the broadcasters are making available more and more of this material for downloadable public access. Two examples: France's National Institute for Audiovisual Archives (INA) put 100,000 audiovisual documents online in April This represents 10,000 hours of television and radio archives to be viewed by the public (Screen Digest, 2006). In the UK the BBC has begun opening up its vast archive of audio and video for an online trial with the goal of eventually offering more than a million hours of TV and radio. Currently the BBC through the BBC Motion Gallery offers more than 30,000 clips, spanning 70 years, which are ready for download for educational use by staff and students of subscribed institutions to use in presentations, lectures, coursework and media The development of merged digital strategies For hundreds of years the role of libraries was to acquire, arrange, and make accessible the creative work of humankind usually, but not always, in printed form. There was a stability and predictability about them. Other sectors such as museums, galleries and archives had similar characteristics. However, the digital age is transforming the intellectual function of the GLAMS sector (galleries, libraries. archives, museums) enabling a explosion in the production and dissemination of information in digital form, locally, nationally and globally. Any stability and predictability that these institutions once had has been well and truly compromised by the opportunities and threats of the digital revolution. The sector has been very innovative in using digital to promote access, to distribute, and to interact with a growing audience. For the first time other public institutions are entering the preserve of the The Digital Future & Public Broadcasting November 2008.doc 40

43 public broadcaster and offering programmes and services that are attractive to an inquisitive audience. A consequence of this is that countries are starting to develop whole of government digital strategies to maintain, expand and improve on public service access to a vast range of information. New Zealand has launched a second iteration of a national digital strategy that visions an online public space that embraces all public arts, culture and information entities. Many of them are developing online presences that offer sophisticated information and services and compete for attention with other providers. The integration of print with video, audio, photographs, works of art, graphics and animation into one digital bit-stream presents both opportunities and challenges. On the one hand public institutions online could provide a cornucopia of content to support citizenship and the democratic processes while, on the other hand, new integrators and organizers of knowledge may emerge, perhaps from the commercial sector, using the same technologies more effectively, thus bypassing the public institutions and perhaps commercialising much of the content. Some might also argue that there is a substantial danger to the integrity of print in the general rush to exploit the possibilities of the Internet. As well as New Zealand, other nations are developing forms of national digital strategies. In the United States, the National Digital Information Infrastructure and Preservation Programme is a national strategic programme led by the Library of Congress. Canada has its Digital Information Strategy. The UK has established a new Cabinet committee on IT and information security with the aim of publishing a national digital strategy for government by the end of Traditional public broadcasters may see these emerging services as a threat to their dominance of the public information dissemination role. On the other hand they may see them as possible collaborators in, together, providing societies with an enhanced experience of public space. 2.4 Audiences One of the major problems with broadcasting is the way it relates to the audience. Broadcasting has an inherent weakness because of the indirect relationship between broadcaster and audience. It is the only medium where it s not been possible to engage with the listeners and viewers in a direct way to make individual members of the audience pay for the services they actually watch or listen to. So broadcasting is based upon a business model which forces viewers to pay indirectly either through taxes or licence fees (public broadcasting) or through the extra amount added to products and services purchased that advertise on the broadcast media (commercial broadcasting). No other communications service has such a tenuous relationship with its customer base. In 1990 George Gilder published Life After Television in which he argued that in the US the information revolution would impact on many of the areas where the country traditionally enjoyed international dominance such as telecommunications and broadcasting. He suggested the need for government and business to move away from what he called separate, limited, and hierarchical forms of communication such as television, telephones and move towards what he called the multifunctional, interactive, and democratic telecomputer. Gilder's visionary study of fiber-optic technology described a future in which the television was supplanted by the internet-serviced computer (Gilder, 1990). The Digital Future & Public Broadcasting November 2008.doc 41

44 There is evidence to support Gilder s ideas. For over twenty years there has been an annually small but steady decline in the audience for free-to-air television. (Gross, Forthcoming). What has caused this decline is debated but it would appear to have been driven largely by the advent of alternative forms of entertainment with the development of the ubiquitous VCR, the home PC and the Internet and the plethora of alternative pay-tv channels that came online in most Western countries during the period. This decline has already impacted on the bottom lines of commercial TV networks translating directly into lower revenue from advertisers. Some would argue that the decline seen so far is small compared to what may happen in the immediate future. Another writer, Ian Allen of the ABC in Australia, likens the situation to the introduction of television which decimated cinema audiences: In one stroke television took away the mass cinema audience, not only devastating the revenue stream from the box office but at the same time dramatically increasing the cost of producing films that would attract people back to the cinema (wide-screen epics, colour, even social-marketing efforts such as drive-in theatres). It took decades for the cinema industry to recover and it will never again enjoy the dominance it had prior to television. He argues that something similar will happen to the television market in the near future. While free-to-air television will survive, it will do so by learning to concentrate on the things it does better than any other distribution medium, just as radio and the cinema have done (Allen, 2007:22). The golden years of television should be thought of as what they were - a product of the best available technology at a particular time in history. Overseas studies and broadcasting network data indicates that audiences are moving away from viewing traditional free-to-air broadcasting. There has been a steady decline in the audiences of all US free-to-air networks, accelerated by the screenwriters strike in IBM research found that in the US by 2007 personal internet time was rivalling TV time. Their report showed 19% of respondents spending six hours or more per day on personal internet usage, versus 9% of respondents who reported the same levels of TV viewing. While 66% reported viewing between one to four hours of TV per day, nearly the same number (60%) reported the same levels of personal Internet usage (IBM, 2007). In the UK the slow but steady decline of terrestrial free-to-air television continued through Channel 4 has seen its all-day audience share fall by more than 11% compared with BBC1, the nation s most popular channel declined 3.5% (Holmwood, 2007) (See also Chapter 4, page 59). In Australia, while television remains the dominant medium, people are spending less time watching it. In 2001, the average punter watched 163 minutes of television a day. In 2006, it was just 144 minutes. The average Australian now spends 22.1 minutes online every day, logs on 6.5 times a week and views 41 pages a session. Another significant figure is the just under 40% of Australians who watch either no television at all, or less than two hours per day. If the behaviour of the younger audience is indicative of the future then the longer term The Digital Future & Public Broadcasting November 2008.doc 42

45 trends are even more alarming for free-to- air television in Australia. Among people aged 16-39, viewer numbers have declined by 17% between 2001 and 2006 (Barrett, 2008). There is some indication that one of the major causes of a decline in television audiences is that there is a lot of time-shifting in prime time. In the UK, industry sponsored research measuring the popularity of on-demand TV and delayed viewing indicated that well over half of those surveyed watched up to 10 hours or more of on-demand TV or recorded TV each week. This is TV that either supplements or replaces broadcast TV viewing. The same survey also found that women watched more on-demand or recorded TV than men (58% vs. 55%). Seniors (55+) and young adults (18-24) watched the most on-demand or recorded TV (60%); year-olds watched the least (51%).The most common methods for recording programmes in the UK were Sky+ (22%), personal video recorders, and VHS machines (27%). On demand services were also used for later recorded viewing. 11% used on demand TV services, whilst 16% used internet catch up services, such as the BBC iplayer (AdvancedTVMay19, 2008). Brian Stelter (2008) points to the missing six million viewers who were watching prime time television in the US in May 2007 and who have disappeared this year, according to the overnight Nielsen ratings. Stelter argued that the loss cannot be blamed solely on the screenwriters strike but on a sharp increase in time-shifting. So some of the lost six million are still watching, but on their own terms, thanks to TiVo and other digital video recorders, streaming video on the Internet, and cable video-on-demand offerings. He argues that while broadcast television remains the dominant medium for advertising with its prime time audience gradually shrinking because of the on-demand options increasingly available, networks have no choice but to adapt. And they are doing so by placing many of their programmes online for catch-up viewing and providing on-demand services, as with NBC and Hulu. He suggests that: Many of the top-rated broadcast shows have 20 percent to 25 percent ratings gains when DVR viewing is calculated. In urban areas, the gains are even greater. In Los Angeles, fully half the 18 to 49-year-old viewership for some shows, including "The Office" and another NBC sitcom, "30 Rock," happens on a time-shifted basis. But along with this change comes problems for the revenue stream. Stelter quotes a senior advertising executive: Part of the reason why advertisers buy television is because of its immediacy. As more consumers time-shift their viewing, there becomes less of a difference between ads in magazines and ads on television. At NAB in the US in 2008 a panel of young people presented some very clear ideas. They stated how important it was for them to access and control how and what they used to connect with our friends. They claimed high motivation for their study and work and a busyness that demanded convenience regarding when, where and how they accessed the media. The Digital Future & Public Broadcasting November 2008.doc 43

46 That is why we and countless other users are to thank for the success and influence some social networking sites such as Facebook, Myspace, YouTube, Twitter, Nexus, and Hulu have on the broadcasting industry. Our cell phones are our constant companions because all it takes is a push of a button to check our or text a friend. They said that they were all consumers of information and that they enjoyed talking about the next generation of products and how they will use them to upgrade their social profiles and devices. They expressed sympathy for the industry admitting that it was difficult for programmers and advertisers to reach our demographics. As the broadcasting industry continues to mature it is important to realize that the information gap between older and younger adults is huge; which may prove the biggest obstacle as the older industry creators attempt to wow us younger crowds; while simultaneously gaining information that translates into dollar signs. Not every novel idea will be as big and successful as YouTube or facebook but whoever is willing to create a product or application that allows us to be socially active on the Internet will be able to find ways to sell and reach this target market. Social networking is extremely important to our generation and as long as companies continue to acknowledge this, it will pay off for them in a big way. They also argued that the services and products may not be the flashiest but they will be won over by: the people who create sites that attach to our daily activities and satisfy our wants, needs and desires. Our advice for companies seeking our generation s attention is this; create something that makes it easier for us to express who we are and what we like to become. These types of sites aren t going out of style anytime soon, so improve upon them and personalize them to each demographic of users. It s basic advertising; knowing your target market. (NAB, 2008) The following data from a US survey in 2008 shows the marked difference between the age demographs and willingness to adapt to new services. The Digital Future & Public Broadcasting November 2008.doc 44

47 Figure 10: Age differential Media preferences by age Per cent Would enjoy watching content on PC Would enjoy watching content on mobile device Happy with current TV < age (Source: IBM, 2007) 2.5 Conclusion The problem facing television The previous material could suggest that traditional television broadcasting is being challenged from every perspective - epistemologically, sociologically, economically, politically and technologically. The overall international perspective is that television faces a number of problems as a result of changing technologies, globalisation and, not to be forgotten, ownership issues. Some of them are: People like to communicate and share One of the features of the digital native generation is their interactive engagement with the screen whether it is that of the digital television, the cell phone, computer or gaming consoles. Rushkoff (1996) calls them screenagers. They are so very comfortable with multimedia, sharing vast quantities of data with each other, linking images and sound, designing graphics. It is common to find teenage users of the more sophisticated cellular phones creating their own small multi media productions and sharing them. They are engaging with digital media in unprecedented amounts. 87% of teenagers in the US use the internet, 81% play games online and 76% get news online (Pew, 2005). Half of US teenagers use cell phones daily but in Europe 88% of early teenagers (12-14) own a mobile phone (Woods, 2005). Over the last five years the television viewing of British year olds has reduced from 22 hours to less than sixteen hours a week (Highfield, 2005). According to the Pew survey that age group is also engaging with messaging (SMS or IMS) for six hours a week. spend 15 hours a week on digital gaming and nine hours a week on the Internet (Pew, 2005a). Perhaps the most significant change in young people s behaviour as a result of digital technologies is gaming. A vast new industry has been created to cater for the demands of the gaming market. Research indicates that revenue from online gaming, worth US$4 billion in 2006 is predicted to treble this by 2011 (Strategic Analytics, 2007). Even more significant is the role that will be played in the gaming market by emerging wireless technologies, such as The Digital Future & Public Broadcasting November 2008.doc 45

48 3 rd Generation cell phones. Sophisticated handsets, colour screens, and dynamic sound, allow for the development of a portable gaming environment. Games on mobile phones and PDA s are already proving popular in Asia. Games are becoming an increasing part of cultural experience in the West. The online segment of the population is continuing to grow and the demographic getting broader. Once the major preoccupation of young males, more and more women are now engaging with gaming and in 2005 there was almost a balance of 49% women vs. 51% men (Nielsen, 2008). What was once considered the domain of teen boys, has evolved into a medium that is now capable of reaching expanding demographics of gamers, including females and older players,. it's quite possible playing video games will assume a significant role as a common cultural experience, in the way that movies and television do today." According to another source, among teens, 71.5% of all males and 47.7% of all females played video games either on consoles or online in one week with males spending an average of one hour and 54 minutes daily and females an average of 36 minutes daily (Myers, 2005). As of 2008 there are 30 million active users on Facebook, and there appears to be little slowing down. With more than 40 billion page views every month, Facebook is the sixth most trafficked site in the U.S., and the top photo-sharing site. Facebook is just one of the social networking sites permitting people to communicate and share in ways that television positively cannot People like to be on TV People seek out opportunities to be on the screen, because people like to be on TV (Greenfield, 2002:25). Market research shows that when ordinary people are sought out to answer a question or make a comment that will appear on the screen for a very short time, the response is instantaneous and generous (Florin, 2007:12). There are never shortages of participants for TV entertainment shows, reality shows or television on screen audiences. The arrival of online social networking sites has increased the opportunities for people to be on screen exponentially. Online services such as YouTube have turned social networking users into fanatics. Users upload their own clips (with many being snatched from TV and other media), and the site allows others to post comments and rate the clips, as well as embed the videos on their own blogs. The site has created YouTube celebrities, like lonelygirl15, and allowed buzzed-about TV clips to spread like wildfire. Like other popular Web 2.0 services, it's intuitive and easy to use. It has become the fastest growing website in Internet history with over 100 million videos streamed per day and 65,000 new video clips are uploaded every day. It has more than 13 million unique visitors per month. An average user spends 30 minutes on YouTube and most uploaders are repeat visitors themselves. YouTube has a wide range of user demographics, however the largest segment of users are in the 18 to 35 year-old range. 58% of the total number of videos on the internet are watched on YouTube (Thomas & Buch, 2007). Traditional TV cannot interact with its audience to this level People expect to pay for television but expect things to be free on the PC The development of the internet and the World Wide Web was so rapid and it involved individuals rather than organisations in such a way that the economics of its operation caught everyone by surprise. People were willing to put up so much material on the web with free access and in a way that was both user friendly and cost friendly there are both time The Digital Future & Public Broadcasting November 2008.doc 46

49 and travel costs to go to a library to view a catalogue, to access and view online is immediate and free. The founder of the Internet, Vint Cerf, argues that it s not as if television will completely disappear. You re still going to need live television for certain things like news, sporting events, and emergencies, but increasingly it is going to be almost like the ipod, where you download content to look at later. In Japan you can already download an hour s worthy of video in 16 seconds. And we re starting to see ways of mixing information together imagine if you could pause a television program and use your mouse to click on different items on the screen and find out more about them. (Cerf, cited in Johnson, 2007) Television executives, like most in traditional media, are reluctant to let go of the status quo and embrace the tumultuous change of the internet, but some broadcasters inch ever closer. Lisa Campbell, editor of Broadcast magazine (as cited in Walker, 2008) says that the BBC, while finding it hard to make money on the Web is getting into it because they feel they have to in order not to be left behind. Likewise with NBC and Hulu, but it's proving difficult to find the right commercial model to generate revenue. People expect things to be free online, so they want to get sponsorship and advertisers on board to make it free. All this challenges current notions not only of intellectual property but also the notion of the television schedule. Langendorf (2007) argues that dinosaurs once ruled the Earth and then, poof, they were gone. He wonders if television has become a dinosaur People are accessing more on the PC because they can t on the TV It is possible to access a far greater range of video data on the PC than is possible via a television, even one connected to a subscriber service with hundreds of channels. YouTube alone has millions of videos. A PC TV card which can be installed into a PC or plugged in via a USB port and connected to a broadband service can stream hundreds of live television streams. Satellite TV for PC software enables access to thousand of live satellite television channels (Hayden, 2008). Clearly, the extremely wide variety coupled with the low or no cost access is one of the key drivers of Web 2.0 and a key attraction for the youth demograph Television technology has little or limited interaction The screenager generation is an interactive one. Interactive services such as social networking, bit torrent file sharing, online auctions and the capturing of content to mash-up and re-release as newly created content in its new form are attractive to this age group. There has been a demonstrated decline in television viewing by this cohort and it has yet to be proven whether this group will return to more passive laid-back television programming as they age (See Audiences above) There is a lack of compelling TV services (same stuff, different execution) The argument that there are one hundred channels but nothing to watch has been a criticism of television for sometime. While much of it is anecdotal, the following quotes are not atypical: The Digital Future & Public Broadcasting November 2008.doc 47

50 Why is there never anything good on TV? More specifically, why is there not a movie channel that shows 3, 4, and 5 star movies 24-7? I have HBO, Showtime, Starz, etc. etc. and most of the time all of the movies are shite. ( My kid doesn't even try to watch because "There's never anything on!" And from New Zealand a most telling quote: ( There is a certain irony in as much as I have been making quite a lot of TV in the industry.when I wanted to watch it took me a long time to figure out which one of my friends actually had a TV. So I think things are changing and TV is starting to come to the end of its lifespan as a dominant form of entertainment (James Solomon, cited in Sumner, 2008:24) Television has lost the target audience In the US recent studies have shown that viewers of the broadcast television networks have grown older. It s becoming clear that younger people are not watching as much TV anymore, shifting their attention to other media. The median age of free-to-air televison viewers in 2007 was 50. That s the oldest ever, according to the studies. In fact, it s the oldest median age since this form of data has been collected and it s the first time the median age of free-toair viewers has fallen outside of the desired demographic. The median ages of the broadcast networks keep rising, as traditional television is no longer necessarily the first screen for younger people (Broadcast Engineering, 2008). While broadcasters inch ever in to the online arena, some big online players are edging towards television. Bebo, the social networking site used by ITV in the UK to virally market Gossip Girl, generated the first web-to-tv leap with Sofia's Diary. Fiver, the new teen channel from Five, bought the online soap on the basis of its 500,000 Bebo views per episode a ready-made audience that few broadcasters would turn down. Bebo's second televisual success is KateModern, another online soap, in which viewers can suggest where the action should lead next Where is the future? However it is not all bad news. A Nielsen report from the US shows that while there is a move toward accessing more video via the Internet, television viewing overall is not declining, to the contrary, it is increasing. According to the report the average American spent 127 hours of time with TV in a month in May 2008, up from 121 hours in May 2007; and 26 hours on the Internet, up from 24 hours last year. More than 282 million people watch television in a given month and nearly 162 million use the Internet. Two-thirds of Internet users in the United States, 119 million people, watched online video in May (Nielsen, 2008). The Digital Future & Public Broadcasting November 2008.doc 48

51 The amount of online video viewing is low compared with TV 2 hours and 19 minutes a month on average in 2008 and Nielsen does not have a comparable estimate for the previous year. But given video s popularity, it has attracted much interest from media companies and advertisers. Online viewing accounted for 7.5 billion streams and 16.4 billion minutes in total in 2008 and this amounts to a new platform providing new advertising opportunities. The report also suggests that mobile video viewing is becoming significant. The Nielsen survey of about 2,000 Americans suggests that 4.4 million of them subscribe to mobile video on their phones. With 217 million people carrying mobile phones in the United States, wireless video is still far from the mainstream. But the survey found that the average user watches 3 hours and 15 minutes a month, a significant amount of time to be watching such a comparatively small screen. In July 2008 a UK media academic argued that ideas about the threat to traditional media from new innovations like Web 2.0 were Bollocks 2.0! Television is not a market going into catastrophic decline, Patrick Barwise from the London Business School claimed. He said people were obsessed with the threat posed by the Internet and that television revenue is not falling off a cliff. Broadband was an inefficient way of distributing content, Barwise said, while digital broadcasting on satellite, the airwaves or cable met the same needs at "much, much greater efficiency levels" (Finfacts, 2008). The arguments continue. The Digital Future & Public Broadcasting November 2008.doc 49

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53 3 Progress to Digital in New Zealand 3.1 International comparisons New Zealand began the full transition to digital relatively late by comparison with other developed countries. The pay TV operator Sky has been offering its digital service since 1998 but attempts by the public broadcaster TVNZ to launch a digital service in 2000 and 2003 were thwarted by government or the problems of prospective partners. It was not until 2006 that a clear framework was put in place by the Government, enabling and encouraging the free-to-air broadcasters to introduce a digital platform. Key elements in this framework were the allocation of spectrum for DTT, funding to assist the platform for the first five years, and funding to TVNZ for two new digital, commercial-free channels. Under this framework, the Freeview consortium of free-to-air broadcasters was established, consisting of all the free-to-air broadcasters, with the exception of Prime, which had been bought by Sky in Freeview launched its first digital platform, delivered by satellite, in May With no significant new content, this platform was primarily aimed at viewers with analogue reception problems, for whom digital by satellite promised crystal clear pictures and sound. Within a year Freeview was reporting that there were 100,000 homes with set-top-boxes able to access this new digital service (Freeview, 2008a). In April 2008, Freeview launched its digital terrestrial service. The transmission network had been built by Kordia, the state-owned enterprise separated from TVNZ under the reforms of 2003, and aimed to cover 75% of households in the main urban areas. By the time of the launch of the Freeview DTT service, new digital channels were available. TVNZ introduced TVNZ 6 in September 2007, a multi-service channel aimed at children in the daytime, families in the early evening, and adults in the late evening. In March 2008 TVNZ 7 was launched, a factual channel with news on the hour and offering a broad range of news, current affairs and documentary material. As at October 2008, overall digital penetration was below that in the UK and the USA but comparable with Australia, as the following table shows: Table 5: Progress to digital UK USA Australia NZ Pay TV 45% 52% 12% 45% Free-to-air 41.5% 9% 42% 10% Total digital penetration 87% % households (2007) Sources: Ofcom, ACMA, Freeview (NZ), Sky 61% (2006) 54% (2007) 55% (2008) Although it is not surprising that penetration levels in the USA and the UK are ahead of those in New Zealand, given that these countries started the transition much earlier, progress in Australia in recent years is noteworthy. Our last report (2005) cited 2004 figures for Australia as around 17% penetration. The most striking growth has been in free-to-air digital, now at around 42%. The main reasons given by consumers for adoption of digital were better or clearer picture or improved reception. The Digital Future & Public Broadcasting November 2008.doc 51

54 3.2 High Definition But New Zealand has managed to turn its late entry into digital free-to-air to advantage. Freeview took a bold strategic decision that its terrestrial platform would be High Definition capable. It mandated that its terrestrial set-top-boxes would be MPEG-4, rather than the MPEG-2 boxes used for its satellite platform, in the belief that moving to the HD standard would be worth the initial extra cost. The Freeview terrestrial boxes came into the market in April 2008 priced at around $400, compared to the satellite boxes retailing at that time at around $200. The three most-watched channels, TVOne, TV2 and TV3, will be broadcasting on Freeview in HD format. Although in the early stages there will be very little programming originating in HD, the above channels will up-convert all their non-hd programming, thus obviating the need to simulcast in both standard definition (SD) and HD. The effect of Freeview terrestrial moving directly to the HD format means that New Zealand has moved ahead of many other countries in broadcasting free-to-air services in HD. Take-up of HD in the United States has taken off in recent years, but in the UK there was no Freeview HD in early 2008, apart from a BBC channel in trial. The UK regulator Ofcom has announced that there will be three HD channels available on Freeview from Australia began HD transmissions in It is worth noting that the two Freeview services in New Zealand offer a slightly different range of channels. There are more channels on Freeview satellite Stratos and the second Maori channel are only available on the satellite system. Freeview DTT offers HD, but on a suite of fewer channels. 3.3 Analogue switch off Largely as a consequence of the relatively late move to digital free-to-air, New Zealand will not be among the first group of countries to achieve the switching off of the analogue services. The analogue terrestrial signals have already been switched off in the Netherlands and Sweden and parts of Germany and the UK. Switch off date for the USA is Feb 2009 and for the UK is For Australia it is For New Zealand, the Government s policy is that a date will be announced when digital penetration reaches 75% of households, or in 2012, whichever is the sooner. A target date is to be set once penetration reaches around 60%. There are expected to be considerable economic benefits resulting from switch off a study by Spectrum Strategy Consultants in June 2006 estimated a net benefit of some $230 million, provided that switch off occurs by 2015 (Spectrum, 2006). It is worth noting that a number of assumptions in the Spectrum report were not borne out it assumed the launch of IPTV services in 2007, and it did not believe that the free-to-air broadcasters would see value in an early move to HD and thus the MPEG-4 box. Its base case projection, assuming a set-top-box price cheaper than the Freeview DTT MPEG-4 box, was that total digital penetration would reach only 74% by On this basis switch off would be several years after As explained below, this may be unduly pessimistic. The Digital Future & Public Broadcasting November 2008.doc 52

55 3.4 Issues Digital penetration (take-up) The key unknown is how fast the viewing public will respond to these new digital offerings. Will consumers see enough value in new channels together with the lure of HD to persuade them to invest in the costs of a set-top-box, plus perhaps a new UHF aerial and possibly an HD TV set to take advantage of the enhanced quality? Freeview s official forecast is for 50,000 households on Freeview HD (DTT) by June 2009 after just over a year in operation. It should be remembered that total digital penetration also includes Sky. If Sky s growth was projected conservatively (say 35,000 new digital subscribers per year), and Freeview did no more than its cautious estimate of 50,000 per year, 85,000 new digital households per year would equate to 5.4% of households. This would mean that the 75% target would be reached by the end of Tension between the free-to-air broadcasters and Sky At the time of the launch of its new digital channels, TVNZ 6 and TVNZ 7, TVNZ took a policy decision that it would not make these channels available on the Sky platform. This decision was made despite the fact that the Government had made $79 million available for the funding of these channels over the first six years, and in the face of TVNZ s proclaimed mission to be inspiring New Zealanders on every screen. The majority of digital households (the 45% who subscribe to Sky) were to be denied access to these commercialfree publicly funded channels, unless they were to commit to a second set-top-box. TVNZ s reasoning appeared to be that they believe these channels have a value to Sky, a value that Sky is not prepared to pay. This may be a questionable assumption on TVNZ s part, in that it seems that no meaningful negotiation has taken place between the two parties. TVNZ may also believe that Freeview will sell more boxes if the new channels are only available on Freeview. The fact remains that viewers of these new channels will remain a tiny minority for many years as long as the Sky households, who continue to watch the free-to-air channels more than their subscriber channels, are excluded. It is open to the Government to ensure that its publicly funded channels reach as wide an audience as possible, by the use of must offer and must carry legislation, requiring that Sky broadcast these channels. It is worth noting that the Spectrum report assumed that any new digital channels would be carried on Sky. Spectrum believed that TVNZ s charter effectively required it to offer its services up for carriage on all available platforms and that a commercial agreement was likely. From the consumer point of view, the need to have both a Sky box and a Freeview box has become academic for some with the launch of idtv sets (integrated digital sets) in New Zealand in June These sets have a Freeview HD tuner built in and can access Sky with the addition of a Sky box. This is only a solution for those upgrading their television sets Retransmission rights Sky v the free-to-air broadcasters During the process of reform of the Copyright Act in 2007, Sky sought to exploit and expand Section 88, whereby cable operators were entitled to retransmit free-to-air broadcast channels without charge unless a licensing scheme was in place. Sky wanted this section expanded to include satellite operators, while the free-to-air broadcasters wanted the whole section The Digital Future & Public Broadcasting November 2008.doc 53

56 repealed. At the end of the day neither of these positions prevailed section 88 was retained without amendment The UK experience is relevant In the UK all the channels available on the Freeview terrestrial platform are available on BSkyB, the dominant pay TV provider. Indeed the FreeSat from Sky service offers more than 120 free TV channels and 80 radio stations. There is a one-off installation cost but no subscription. If you are a BSkyB subscriber, you can purchase a Freeview viewing card for 20 pounds. European regulation requires that BSkyB offer fair and non-discriminatory access to other broadcasters who seek carriage, access to BSkyB s conditional access system and the EPG. The fact that the Freeview channels are available on BSkyB does not seem to have been any impediment to the growth of Freeview which by 2008 was reported to be in 10.6m homes, having overtaken BSkyB, with some 8.3m subscribers. It could be argued that the remarkable success of Freeview in the UK is in part due to the range and quality of the channels available, but also to the fact that Freeview is so widely known from its channels being available on all platforms. There is also considerable collaboration between the main players in the free-to-air and pay TV markets, specifically the BBC and BSkyB. BSkyB is a member of the Freeview consortium and there are several Sky channels (free) on the Freeview terrestrial platform Aspects of the future TVNZ may be taking a strategic position, in the expectation that Sky will offer an acceptable price for the new digital channels as they become more established and more desirable. TVNZ is faced with having to fund these channels once Government funding runs out in Some advertising may be possible as viewer numbers grow, but a satisfactory price from Sky would be a significant step forward. This should be seen as something of a test case as to the future of public broadcasting. It is one of the cardinal principles of public broadcasting that services should be freely accessible to all, or at least to as large a constituency as possible. This is clearly not happening in the case of TVNZ s two new digital channels that are made up of content which can largely be described as public broadcasting, and that are commercial-free and substantially public funded. MediaWorks (TV3 and C4) is also required to introduce two new digital channels by April It remains to be seen whether they will contain any content which could be described as public broadcasting, and whether they will be available on Sky. One possibility is a channel for the Pacific Island community, a concept that MediaWorks has been developing and for which the Government announced support in October MediaWorks is not adopting a policy of keeping its digital channels off Sky. TV3 HD is available on Sky, with MediaWorks successfully arguing that it be part of Sky s basic package rather than a premium service. Sky is also moving into HD. Its new version of the MySky recorder, MySky HDi, launched in July 2008, is also an HD decoder. Sky s HD services began with two sports channels, two movie channels and TV3 HD. The sophisticated box, the same as the one developed for Foxtel in Australia, will feature four tuners three for watching or recording and the fourth for a new-look EPG. The Digital Future & Public Broadcasting November 2008.doc 54

57 3.5 VOD but no IPTV Video delivered over the internet has been a significant factor in all discussions on the future of broadcasting. But there is an important distinction to be drawn, between services which are open to all via the internet (most VOD services) and services which are for subscribers, usually delivered to the television set over a closed network operated by a cable company or a telco (often streamed and usually known as IPTV). In New Zealand there are several local VOD services available. The most prominent is TVNZ on Demand, offering a variety of recent TVNZ programmes over the internet, together with some older archive video. TVNZ began this service by charging for some content, but quickly found that viewers preferred the presence of ads to having to pay. TVNZ has since moved to an advertiser-funded model, with ads unavoidably attached at the front of clips or programmes. MediaWorks also offers a range of its programme content, available for seven days after transmission, free to access with no embedded advertising. NZ On Screen, launched in October 2008, provides access to a range of film and television programmes from the archive. Some 250 titles were available at launch, many viewable as complete programmes, although they cannot be downloaded. More programmes will become available as rights issues are dealt with. Sky is also moving into this market, with its Sky Online service launched in June 2008, offering viewers movies and programming that has screened on Sky. Initially Sky is offering some 500 hours of content, including movies currently being screened, delayed sports broadcasts and content from its basic tier of channels. Sky intends to make its online service open to non-subscribers, on a pay-per-view basis, at some time in the future. There are as yet no true IPTV services in New Zealand although Sky appears to recognise the potential. Sky s MySky HDi is a hybrid digital recorder able to receive both broadcast transmissions and content delivered by broadband. Sky has been engaged in discussions with a number of telcos regarding the delivery of IPTV services, notably Telecom, but in early 2008 Telecom decided to pull out of all IPTV development. Sky s publicity for the MySky HDi box suggests that Sky intends to offer its own IPTV service. 3.6 Services to Mobile Sky launched a mobile television service on Vodafone in February Eight channels are available including CNN, Sky News, Sky Sport Highlights and MTV. Subscription cost is $2.50 per week. Subscribers can also buy live sports and special events on a pay-per-view basis. There are some 11,000 subscribers to this service. Telecom offers a video clips service, streaming clips of up to eight minutes long for between 50c and $1.50. During the 2008 Olympics Telecom, in partnership with TVNZ, delivered video clips of games coverage, up to three minutes long, free to Telecom customers with video-enabled mobiles. 3.7 Broadband Progress since 2005 A broadband service that is fast, affordable and available to most of the country is seen as an essential element in the digital transition, and indeed is a key plank in the Government s Digital Strategy 2.0. Some progress has been made since our last report. In June 2004 uptake The Digital Future & Public Broadcasting November 2008.doc 55

58 was 3.6 lines per 100 inhabitants. By June 2008 uptake had moved to 20.4 lines per 100 inhabitants, and New Zealand had moved from 22 nd to 19 th place in the OECD table of 30 countries (see graph in Chap 2, p 32). Note that the OECD statistics are based on broadband defined as a speed of 256kbps (kilobits per second), so it is not a useful guide to uptake at speeds more relevant to the delivery of video and other sophisticated services, which require speeds of at least 6mbps (megabits per second). An indication of where New Zealand sits in respect of fast (or high) broadband connections can be seen in a report in June 2008 from Akamai, an international network caching company (O Neill, 2008). It found that New Zealand ranked 44 th in the world for the percentage of high broadband connections (speeds of 5mbps or more). South Korea led the rankings, with 64% of its connections being high broadband, compared with an average figure of 16% and the New Zealand figure of just 2.2%. On a measure of simple broadband (speeds of 2mbps or more), New Zealand was slightly better placed, ranking at 38 th in the world, with a figure of 50% of connections compared to the global average of 55%. Another finding, from Epitiro, a global broadband benchmarking specialist, was that New Zealand s average broadband network speed was 3mbps, and its download speeds comparable to the UK, but behind Australia (Kiong, 2008) Targets The Government s original Digital Strategy document (2005) set an ambitious target of 85% of homes being connected to a fast internet service delivering speeds of 50mbps (download) by This was always going to be unachievable and has been modified in all respects in the later document Digital Strategy 2.0 (2008). Telecom, the main network provider, has pledged to invest $1.4bn over the four years 2008 to 2012, and has set its own target, notable for being half the speed required by the Government. Table 6: Comparison of broadband targets Target: % homes connected Target: Speed Target: By when Digital Strategy % 50 mbps 2010 Digital Strategy % 20 mbps 2012 Telecom % 10 mbps Actual 42% (estimate) 3 mbps (average) Telecom is committed to rolling out fibre to towns of more than 500 lines, thus reaching 80% of the population. This commitment follows the telecommunications reforms of 2006, which included a three-way operational separation of Telecom (network, wholesale and retail), and the unbundling of the local loop. Telecom s plan is not fibre to the home, but fibre to the node (cabinets) and the use of ADSL for the last stage to the home. The Digital Future & Public Broadcasting November 2008.doc 56

59 Other players are working on exploiting the opportunities created by unbundling. Vector and Vodafone have partnered to expand Vector s fibre network in Auckland. Kordia have plans for a second undersea cable across the Tasman. Vodafone and Orcon plan to roll out VDSL (Very High Speed DSL) enabling speeds of 50mbps. Telstra is also planning to offer VDSL2, at speeds of 30mbps at more than 130 sites aimed at businesses in Auckland and the main centres Political moves In May 2008, the National Party announced a policy of investing $1.5bn on fibre infrastructure over the next 6 years, although little detail was available. It is intended that fibre to the home would reach 75% of households within 5 years, but critics see this target as extremely ambitious and unlikely. The policy relies on the private sector matching National s investment of $1.5m. Labour, for its part, announced a much more moderate plan in Budget It has committed some $500m over the next five years, but this is largely for project-based applications to a new Broadband Investment Fund. Labour s strategy is to build on the Telecom plan and provide funding as a catalyst for more private sector investment Broadband summary The Government s long-standing target has been to advance New Zealand s broadband performance into the top quartile of OECD countries. This would require getting to 7 th place or higher. Countries at this level of ranking include Korea, Sweden and Switzerland, with uptake levels of more than 30 lines per 100 inhabitants. While this may be seen as a challenging stretch target, it seems most unlikely that it can be achieved. It would seem more sensible to focus on the target of achieving 80% of homes with speeds of 10 mbps or more. This would be a significant improvement on the situation in 2008, and would provide users in those homes with a service that enabled them to access without difficulty the increasing amounts of available video. It is also true that the more access is improved, the more content providers will be willing to offer new products and services. 3.8 Impact on the commercial television model Advertisers are committing increasing amounts to online advertising. In the first full year for which figures are available, online ad spend increased from $25.8 m in Q1 2007, to $45.8 m in Q a rise year on year of 67%, heralded as follows by the CEO of the Interactive Advertising Bureau, Mark Evans: Clearly advertising dollars are following audiences online. There are signs here that New Zealand is finally starting to play catch-up with international advertising trends, which have fuelled the spectacular growth of interactive advertising globally. (IAB, 2008) Online adrev amounted to 5.8% of the total adspend in New Zealand in While this is only a fifth of the adspend on television, this proportion is likely to increase rapidly in the coming years on the basis of international trends. The Digital Future & Public Broadcasting November 2008.doc 57

60 3.9 The fate of free to air Since our 2005 report the decline of the share of audience of the free-to-air broadcasters in favour of Sky has continued. Note that most of Sky s gain since 2004 in all homes has been at the expense of TV One, with TV2 and TV3 suffering only slight decline. Figure 11: NZ Channel Share, all homes, Television Channel Share All Day (2am to 2am) All People 5+ % TVOne TV2 TV3 C4 PRIME SKY Network Other TV Channels Source: AGB Nielsen Media Research Figure 12: NZ Channel Share, Sky Homes, Television Channel Share All Day (2am to 2am) All People 5+ With SKY % TVOne TV2 TV3 C4 PRIME SKY Network Other TV Channels Source: AGB Nielsen Media Research The comparison between Sky and the free-to-air channels in the above two graphs needs careful interpretation. The Sky figure is not for one channel, but is the total across all the channels offered by Sky. Even the most successful of the pay channels hovers around a share The Digital Future & Public Broadcasting November 2008.doc 58

61 of 2% or 3%. So for advertisers, the free-to-air channels still represent the most effective mass market, a situation likely to remain the case for many years to come. Note too that TVOne and to a lesser extent TV2 continue their downward trend in both all homes and Sky homes, but TV3 and Prime have made modest gains if anything. The wider question is whether the free-to-air channels, in New Zealand and elsewhere, can plateau at around existing levels of audience and thus remain sustainable. As we have seen, the challenge of fragmentation is not only from pay channels, it is also from the internet and video on demand Changing media use The free-to-air channels may be losing share to the pay channels, but overall the amount of time spent viewing television has remained stable over the past decade. The pattern across the demographics is not significantly different. Figure 13: NZ - time spent viewing television Average Time Spent Viewing (mins) per day All People 05+ All Television Base: Average Daily TSV per Day of the Average Audience Period: 1 January to 31 December 02:00-01:59 The pattern of overall stable time spent viewing is also the case in other countries such as the USA. But this overall picture may disguise what is happening within specific groups of consumers. For some, notably those with a broadband connection, the move to the internet is reflected in New Zealand as elsewhere. A Cisco survey found that those with broadband spent more time online than watching TV, 22 hours a week online compared to 14 hours watching TV. Of an international sample, more New Zealanders used the internet to watch video than any other group 61% (NZ) compared to 47% (Europe), 46% (Australia) and 34% (USA). New Zealanders were also the highest in using the internet to download video (27%) (Hendery, 2008). There is limited data available in New Zealand, but we can see that among the younger demographics, there is a move from spending time watching television to spending time on the internet. The Digital Future & Public Broadcasting November 2008.doc 59

62 Figure 14: NZ - changing media use year olds Changing Media Use year olds % Internet heavy users TV heavy users Source: data from Nielsen Media Research Conclusion The transition to digital in New Zealand is now well under way, and it would not be unreasonable to assume that the target for setting the date for analogue switch-off attaining 75% digital penetration by 2012 can be met. Launching Freeview DDT in HD has put New Zealand ahead of many other countries in moving into HD. A key issue for public broadcasting is that TVNZ s new digital channels, commercial-free and largely publicly funded, are not available on the Sky platform. If the parties are unable to reach a commercial agreement, is this a case for regulation? Access to high speed broadband continues to lag behind other countries, a situation that not only inhibits New Zealanders from enjoying the full fruits of the digital revolution, but threatens the achievement of the Government s digital strategy. Patterns of media use are similar to the general trends worldwide stable time spent viewing television overall but declining shares for the main free-to-air channels, and increasing use of the internet by the younger demographics at the expense of watching television. The Digital Future & Public Broadcasting November 2008.doc 60

63 4 Public broadcasting in the digital environment The key question that this chapter will seek to address is how far the concept of public broadcasting has changed with the advent of digital, and how it may need to change further. It will be argued that while the concept of public service content endures, the ways such content reaches citizens or consumers has changed and must change further. 4.1 The principles of traditional public broadcasting The essence of public broadcasting is that its purposes are different from commercial broadcasting. Commercial broadcasters exist to make profits and satisfy their shareholders. Public broadcasters are owned by the State and required by law or by Charter to serve public ends and to operate in the public interest. Public broadcasting can be seen as a major intervention by the state for the public good. This simple distinction between public and commercial must then be qualified. Some public broadcasters are also commercial, in that they rely on commercial ads for part of their revenue. Some commercial broadcasters have public service obligations laid on them as a condition of their licences. While the concept of public broadcasting may be under review in the light of the changes in the media landscape, most observers could agree on what it has meant traditionally. The following is a summary of objectives from a European perspective. 1. To aid informed citizenship through impartial and independent news, information and comment 2. To support democratic values through the encouragement of public debate that involves and respects the human rights of all groups in society 3. To offer a wide range of quality programmes in all genres 4. To promote social cohesion and the vitality of national cultures (Hargreaves-Heap, 2005:116) For some academics, usually those from the discipline of political science, it is public broadcasting s role in the democratic process that is all-important. As Murdock puts it: the core rationale for public service broadcasting lies in its commitment to providing the cultural resources for full citizenship. (Murdock, 2004:2). Murdock sees a citizen s core cultural rights as access to information, knowledge, deliberation, representation, and participation. In his view public broadcasting must provide these rights. Deliberative rights require a citizen to have access to deliberative spaces where contesting arguments can be challenged and tested, a concept similar to the public sphere envisaged by Habermas (Habermas, Crossley, & Roberts, 2004). It may be helpful to distinguish three separate elements within the concept of public broadcasting: content, access/delivery and funding. 4.2 Content Content that could be said to fit under the public broadcasting banner, or the public service banner, has traditionally been that which has a discernible public benefit or value, a public value as distinct from any commercial value examples include classic high-end costume drama, historical or political documentary, programmes exploring scientific or philosophical The Digital Future & Public Broadcasting November 2008.doc 61

64 issues, arts and music programmes, or educative children s programming. Most such programmes would be unlikely to be found in the schedules of fully commercial free-to-air broadcasters, either radio or television. In some countries there was also a sense of endorsing the values of high culture as opposed to popular culture. In the UK, the Communications Act 2003 attempted a statutory definition of public broadcasting that the British regulator Ofcom, charged with conducting regular reviews of public broadcasting in the UK, then illustrated by means of the following quadrant. It is an effective representation of the core dimensions of public broadcasting. Figure 15: The Ofcom public broadcasting quadrant The four basic objectives that the Act identifies for PSB can be summarised as: social values: education, cultural identity, informing the democratic process, supporting a tolerant and inclusive society; quality: production values, standards, innovation; range and balance: treatment of a range of subject matters across different genres, subgenres and formats at all times; diversity: catering for different/minority audiences and communities. (Ofcom, 2004:26) Four years later, in a further review, these purposes have been subtly redefined. The four purposes are now seen as: Informing our understanding of the world - To inform ourselves and others and to increase our understanding of the world through news, information and analysis of current events and ideas Stimulating knowledge and learning -To stimulate our interest in and knowledge of arts, science, history and other topics, through content that is accessible and can encourage informal learning The Digital Future & Public Broadcasting November 2008.doc 62

65 Reflecting UK cultural identity - To reflect and strengthen our cultural identity through original programming at UK, national and regional level, on occasion bringing audiences together for shared experiences Representing diversity and alternative viewpoints - To make us aware of different cultures and alternative viewpoints, through programmes that reflect the lives of other people and other communities, both within the UK and elsewhere (Ofcom, 2008:19) In the pre-digital age in the UK, there would have been little need to stress reflecting UK cultural identity as a key purpose. It would have been taken for granted, as the few broadcasters all made their own programming or commissioned their programming from UK producers. In the digital era of multi-channels and pay TV, most countries, including the UK, are seeing many more imported programmes. In the English-language world, that means made in America, hence Ofcom s new-found emphasis on reflecting the UK s cultural identity. 4.3 Access/delivery Traditionally it was a basic precept of public broadcasting that it was available to all and free at the point of reception. This was not a problem while there were a small number of mainstream broadcasters and all that was required was a television or radio receiver and a decent aerial. With the proliferation both of broadcasters and delivery mechanisms, the simplicities of the analogue world have been replaced by complex delivery arrangements that usually involve consumers in additional equipment and expense. At the very least digital consumers require a set-top-box, or converter, or a modern TV set with a built-in digital tuner. Such sets will become increasingly common. But increasing amounts of public service content will be available online and on demand, to those who have high speed broadband. Some will be free, some pay per view. This threatens to undermine, even overtake, free-to-air linear delivery. 4.4 Funding Public broadcasters, those owned by the State, may be almost entirely funded from public funds - either a licence fee or government grant - or a mix of public and commercial funding. But there have been attempts to fund public broadcasting content, as opposed to public broadcasters, or content outside the public broadcasters. New Zealand s contestable funding system for television is the most notable example of this concept. Singapore has a similar system but the most interesting recent development of this kind was the proposal by Ofcom in the UK for a public service publisher (PSP) in addition to the BBC and Channel 4 (Ofcom, 2004). The PSP was to be primarily concerned with funding new media programming for delivery by internet and broadband. This particular proposal has since been abandoned, for reasons that are not wholly clear, although the projected cost (300m pounds a year originally, later whittled back to 100m) is likely to have been a factor. But the concept of contestable funding for content outside the mainstream public broadcasters remains very much alive. 4.5 Conclusions on the principles of public broadcasting Several conclusions may be drawn from the above. The first is that the basic arguments for public broadcasting are so fundamental to the workings of society that they should remain The Digital Future & Public Broadcasting November 2008.doc 63

66 valid despite the upheaval in the communications environment resulting from the transition from analogue to digital. The role of public broadcasting in contributing to the effective functioning of a democracy, and in promoting social and cultural values, underlies all such arguments. But this is not to say that there may not be changes in the way the role is interpreted or implemented, changes in the emphasis placed on certain purposes or characteristics at different times or in different locations, as we have seen with Ofcom in the UK. Public broadcasting cannot be seen as a static concept, it must evolve and adjust to the requirements of the digital age, and it must do so in ways appropriate to particular environments. What follows are a number of questions around aspects of public service content in the digital age. 4.6 Do we need public broadcasting at all in the age of digitopia? It is sometimes said that with the abundance of channels and other sources of information and entertainment available to consumers, there is little further need for public broadcasting - the ever expanding market will provide. This argument could only be sustained if it could be shown that all the content currently supporting the purposes of public broadcasting could be found, freely available, in places outside those provided by the public broadcasters or funders of public broadcasting content. This is clearly not the case. In the first place, some public service content is seldom found outside the public broadcasters examples include classic high-end drama illustrating a country s literary heritage, or some high-culture programmes in music and the arts. In the second place, and more importantly, many other traditional public service programmes may be found in the schedules of commercial broadcasters, but only on pay TV services examples include a wide range of documentary and arts programmes, many information programmes (natural history), and much children s programming. The digital transition has been driven by an explosion of pay channels. If we continue to accept that it is a cardinal principle of public broadcasting that content is available to all and free at the point of reception, it will not be sufficient to argue that much traditional public service content can be found in the multi-channel subscription universe. There are two key areas where public service content is unlikely to be found on the pay channels. The first is content aimed at promoting a country s heritage and culture. Most pay channels, at least in the English-speaking world, are global in the sense that they are aimed at the international market, with appropriate programming. Examples outside movies and sport are the Discovery Channel, the History Channel or Arts and Education. It is true that some channels such as Nickelodeon version for particular markets to include some local content, but such practices are the exception and the local content is limited. But perhaps the most important area where the multi-channel world fails is in the requirements for democracy posited by Murdock, specifically national and local news and information, together with current affairs analysis and discussion programmes. 24 hour global news channels cannot be said to meet national or local needs. The digital world is global and is driven by pay TV. Given this environment, it is not surprising that Ofcom has chosen to emphasise the importance of reflecting UK cultural identity. The Digital Future & Public Broadcasting November 2008.doc 64

67 4.7 We may need public broadcasting content, but do we need public broadcasters? It should not be concluded from this emphasis on content that there is no longer any need for the public broadcasters. The argument here is that a public broadcaster can contribute to the objectives of public broadcasting in ways that go beyond the provision of individual programmes. Even a liberal scattering of public service content around broadcasters and schedules is not enough. A broadcaster s overall schedule is seen as all-important by some proponents of public broadcasting, as in this statement dismissive of the contestable funding model. It also follows that the public character is reflected in the overall schedule and is not something which inheres in individual programmes which are then distributed across a schedule, somewhat like sultanas in a fruitcake. (B. Collins, 2003) The power and influence of the public broadcaster as an institution inspired to pursue the public interest may be considered a vital component of a true democracy. The question is whether a powerful public corporation can better promote the public interest in broadcasting than subsidies scattered across a predominantly commercial industry. Does the public interest need a face, a history and the coherence that a single institution represents? (Prowse, 2003) Many observers would answer an unqualified yes to that question, adducing in support the undoubted social and cultural influence that institutions like the BBC and the ABC in Australia have wielded over many decades. There are other arguments that can be made in support of public broadcasters that relate to capacity to innovate, to bear risks, to allow a programme to grow an audience from a low base, to undertake sustained investment in local programming and to act as champions for the concept of public broadcasting. There is a further point on the weakness of the content model (funding programmes) compared to the institutional model. Delivery of public service content may not have to be through a broadcaster, but at this stage of the digital transition, broadcast delivery is likely to most effective in reaching an audience. The problem with broadcast delivery is that it is the broadcaster who remains the gatekeeper, not the funder. Some public service content, however desirable, may simply not get through the gate. This is one of the problems with the system in New Zealand, as we shall see in Chap The erosion of the effectiveness of traditional public broadcasting There can be little doubt that the digital, multi-channel world has made it much harder for public broadcasters to deliver on their objectives. Most public broadcasters would accept that they are not driven by ratings as their commercial counterparts are. But they have to be confident that they are reaching an audience, and for this purpose they are usually concerned with issues of reach and impact. The Digital Future & Public Broadcasting November 2008.doc 65

68 An indication of the problem can be seen in the decline in audience share of the four main free-to-air broadcasters in the UK since While the BBC and Channel 4 are public broadcasters, ITV and Five continue to broadcast some public service content as required by their licences. Figure 16: UK channel share Viewing of the four free-to-air networks has fallen by 17% over the years , all at the expense of other, the pay channels, predominantly BSkyB. The decline has been most marked among children, those aged and members of minority groups. The BBC (both BBC One and BBC Two), now drawing only 31% of the audience, affords an extreme contrast with the early days of public broadcasting, when the audience could be seen as captive to the only channel available. In those days it made sense to hammock high-end public service programming between two entertainment programmes of more popular appeal. Today such an approach is quite unrealistic the audience has a proliferation of choice and will readily change channel, timeshift, or opt for the computer and the internet. The challenge for public broadcasters is to find the audiences for public service content, audiences that may be becoming more like niche audiences than the mass audience of old. It seems very probable that the public broadcasters audience share is likely to continue to decline, driven partly by consumers moving from a handful of channels on analogue to the multi-channel digital world, and partly by the move to content delivered online. If public service broadcasting linear share is seen as a proportion of total viewing, both linear and web, the decline could be quite dramatic, as in this projection for the UK under four different scenarios. The most extreme scenario has the proportion of linear (broadcast) viewing diminishing by almost half in the next twelve years. The Digital Future & Public Broadcasting November 2008.doc 66

69 Figure 17: Projected decline of public broadcasting in the UK Viewing of PSB channels, by scenario (quoted in Ofcom 2008a: 64) 4.9 Opportunities for public broadcasting Some observers, such as Murdock, see the digital world opening up great opportunities, expanding out from the traditional realm of public broadcasters, taking full advantage of the interactive and participatory nature of the internet. He sees a new public space, that he calls the digital commons. We have to stop thinking of public broadcasting as a stand-alone organisation and see it as the principal node in an emerging network of public and civil initiatives that taken together, provide the basis for new shared cultural space, a digital commons, that can help forge new communal connections and stand against the continual pressure for enclosure coming from commercial interests on the one hand and the new moral essentialism on the other. (Murdock, 2004:14) This digital commons is not confined to broadcasters exploiting online opportunities. It extends to other public cultural institutions. Murdock cites public libraries and archives digitising their holdings, and galleries and museums making their collections available on line. Some public broadcasters have been most active in the digital space. The BBC may be an extreme example but it does exemplify what can be done. By 2003 it had created a suite of six new digital channels, including two for children. It has used BBC Three in particular to target young adults and to launch somewhat risky programmes, some of which created a cult following before transferring to the mainstream (eg Little Britain). It has also invested heavily in its online presence in 2007 it spent 116 million pounds on its site which was generating a unique monthly audience of 14.3 million. In 2007 it launched the BBC iplayer, an application which enables viewers to download a range of programmes broadcast over the past seven days. Furthermore it has stated its intention to open up its The Digital Future & Public Broadcasting November 2008.doc 67

70 archive a treasure chest of radio and television programmes and to allow people to use extracts for non-commercial purposes. The more creative broadcasters are doing more than using the net as an additional outlet for broadcast programmes. Many are providing new material, adding value to the broadcast programme, and often inviting participation from the audience. For example the ABC in Australia makes key interviewees from its Four Corners current affairs programme available to answer questions from viewers online after the programme. TVNZ created a digital extension to its local series The Amazing Extraordinary Friends that enabled fans to interact with the show, through games, competitions, behind the scenes information and additional video. The BBC has a stock exchange game called Celebdaq, where punters can buy, sell and trade celebrities it won a Bafta award for the best online entertainment. Broadcasters may even choose to use the internet rather than television for certain forms of output. Ofcom notes that in 2007 Channel 4 opted to move its budget of 6m pounds for schools programmes away from television in favour of interactive media. A further indication of the ascendancy of the internet was the decision of the Open University in the UK to cease broadcasting on BBC Television and to move to DVDs and podcasting (Brabazon, 2007). Ofcom commissioned research to assess the extent and nature of what could be described as public service content online. The research concluded that there was a substantial volume of public service content online, much of it provided by the public and voluntary sector. Examples of the range of providers and their sites included the Tate Gallery, the Science Museum, the British Library, the National Trust and a number of government sites (Ofcom, 2008:59) Caveats on online public service content But again, as with content on pay services, these new iterations of public service content do not extend to the whole population. They are not universally available. As Murdock and others have pointed out, access to the net remains stratified by income, age and education, with substantial numbers of poorer households, elderly people and educational drop-outs facing the prospect of permanent exclusion (Murdock, 2004:13). Access to high-speed broadband, increasingly necessary to participate in the more sophisticated delights of Web 2 video on demand or video sharing is even more limited and likely to remain so for some years. There is also the problem described by Paul Saffo as tribal isolation (Saffo, 2005). This refers to the tendency for individuals to focus only on their narrow sphere of interest or entertainment, thus reinforcing existing opinions and prejudices. The world of the mechannel could be very blinkered, not remotely conforming to any ideal of a wider public space where differences could be explored and negotiated. In other words, the reality of how consumers use the world of abundance and choice may be very different from idealistic or utopian theories From public service broadcasting to public service content Even taking the above caveats into account, there is considerable merit in moving our thinking more in terms of public service content (PSC) than in terms of public broadcasting in the traditional sense. PSC may emanate from broadcasters other than public broadcasters, The Digital Future & Public Broadcasting November 2008.doc 68

71 and indeed may not be broadcasting at all in the traditional sense. PSC could be seen as all forms of content, from wherever it comes and however it is delivered, that fulfil the key purposes of public broadcasting. In respect of public policy for this changing environment, it will be necessary to review all mechanisms aimed at the support of public broadcasting and rethink them to embrace the wider concept of public service content. Funding structures should be similarly reviewed Performance measurement One of the major difficulties with public broadcasting has been isolating its key purposes and then establishing monitoring measures to assess the performance of broadcasters and funding agencies. A group of public broadcasters in western democracies struggled for some years to come up with a set of measures and benchmark standards by which delivery of public broadcasting could be assessed. Details of genre hours, schedule placements and ratings do not really address the more subjective aspects of quality impact or innovation. This attempt to establish benchmark standards by which the performance of all public broadcasters could be assessed was not successful. The BBC pulled out of the group, leaving the ABC to carry on the leadership and to try to build on the earlier work. Meanwhile Ofcom has published two reports on PSB, which purport to summarise the performance of public broadcasters in the UK against the purposes and characteristics of public broadcasting as drawn from the Communications Act. But these reports are largely data on schedules and ratings, and audience opinions as taken from surveys. There is little qualitative analysis. The Digital Future & Public Broadcasting November 2008.doc 69

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73 5 Public Broadcasting in New Zealand This chapter will offer a broad overview of New Zealand s approach to public broadcasting, with a specific focus on television. New Zealand s position is distinctive in that for television non-commercial public broadcasting was not properly available until the advent of Maori Television in 2004 (very few commercials commercial lite) 1, and in that for television a contestable funding system for programmes, unique in the world, has been in operation since The chapter will detail New Zealand s fragmented approach to the public funding of broadcasting and discuss options for reform. 5.1 The situation before deregulation in 1989 For some years before 1989, public broadcasting was run by one corporation administering the publicly-owned broadcasters for both radio and television. This was the Broadcasting Corporation of New Zealand (BCNZ), the umbrella management over TVNZ and Radio New Zealand (RNZ). TVNZ s two channels were both commercial, whereas RNZ ran two noncommercial networks as well as several networks of commercial stations. Effectively this was a particular form of hybrid model, with the BCNZ trying to balance commercial operations with serving traditional public service objectives. It did not have a charter and there were few programming requirements laid down in its governing legislation, the Broadcasting Act of 1976, beyond the Reithian dictum that programming should inform, educate and entertain. A high proportion of the BCNZ s revenue was commercial around 80% by Public funding came through the licence fee, never strongly supported by governments and allowed to languish as inflation eroded its value. 5.2 The situation after deregulation The measures introduced by the Labour Government in 1989, known as deregulation, dismembered the BCNZ and created two State-Owned Enterprises (SOEs) TVNZ and RNZ. The primary purpose of an SOE was to act as a commercial business and return a profit, most of which would go to the Treasury. Any public broadcasting objectives, social or cultural, were secondary. They were to be provided by a new agency, the Broadcasting Commission, to become known as New Zealand On Air, whose income would come from the redirected licence fee. The SOE structure for broadcasting effectively reduced the public broadcasters ability to act like traditional public broadcasters, in that the primary operating considerations were commercial. Under the SOE model, SOE status was an interim stage in the preparation of an entity for sale at some point. Much of the history of TVNZ in the latter stages of the period 1989 to 1999 reflects the intention of the National Government to sell the company, and thus to place a high priority on improving commercial performance at the expense of any residual public service objectives. Radio, having a foundation of two commercial-free networks, was treated differently. Unable to reconcile the commercial-free and the commercial networks under the one roof, the National Government sold off the commercial networks in 1995 and converted the public service rump of RNZ from an SOE to a Crown Entity with its own Act and a Charter specifying its public service objectives. However it proved too late to achieve the sale of TVNZ. Under the first MMP election in 1996, National was obliged to rely on New Zealand First as a coalition partner. Winston 1 It is acknowledged that in the period 1960 to 1989, public service broadcasting was very much part of the television ethos, but it came increasingly under pressure from commercial imperatives. Ad-free days gradually disappeared. The Digital Future & Public Broadcasting November 2008.doc 71

74 Peters, leader of New Zealand First, refused to countenance the sale of TVNZ and sought to portray himself as the saviour of public broadcasting. TVNZ remained in limbo, a public broadcaster largely in name only. Meanwhile NZ On Air vigorously addressed its task of delivering the social and cultural objectives of broadcasting. The new Broadcasting Act 1989, specified these requirements: To reflect and develop New Zealand identity and culture; To promote programmes about New Zealand and New Zealand interests; To promote Maori language and culture; To ensure a range of broadcasts is available to provide for the interests of women, children, the disabled and minorities, including ethnic minorities (youth and spirituality were added in 2001). In its funding of television programmes, NZ On Air was required to: Promote a sustained commitment by broadcasters to programmes reflecting New Zealand identity and culture; Ensure that reasonable provision is made for the funding of television drama and documentaries. There were also criteria for assessing proposals to fund programmes. Among them NZ On Air had to have regard to: The level of contribution (funding or resources) from the applicant; The potential size of the audience. From the outset, it was clear that NZ On Air was going to interpret its remit as not being confined to the funding only of non-commercial programmes. To the consternation of senior executives in TVNZ, it was going to fund programmes for the mainstream in prime time. As NZ On Air s first executive director put it: The challenge is not only to make programmes about New Zealanders and for New Zealanders, but to make programmes that they want to listen to or watch; programmes that appeal to a majority of our stakeholders. (Harley, 1989) By stakeholders Ruth Harley meant all licence payers, those who funded NZ On Air through payment of the Broadcasting Fee. NZ On Air s strategy was to pursue a dual track, to achieve a balance between funding the minority or special interests as prescribed in the Broadcasting Act, and the funding of what it saw as the mainstream threatened genres drama, documentaries and children s. Drama and documentaries were to be targeted in prime time. An important development in this period was the establishment of Te Mangai Paho (TMP), charged with the funding of Maori broadcasting. It was set up in 1993, largely as a response to challenges in the courts by Maori concerned that the Government was not fulfilling its obligations to preserving the Maori language, obligations they believed could be fulfilled by broadcasting to some extent. It allocated its limited amount of public funds to iwi radio, and The Digital Future & Public Broadcasting November 2008.doc 72

75 to programmes in the Maori language on the mainstream radio stations and television channels. 5.3 The situation after the reforms of 1999 Labour, in its election campaign for 1999, was clear that the situation with TVNZ was not satisfactory. It proposed to refocus TVNZ so that it would behave more like a traditional public broadcaster. It proposed that like RNZ, it should have a Charter outlining the programming content required to fulfil public service objectives, and that the Government would provide a limited amount of government funding to assist the company to achieve this. It would also remove TVNZ s status as an SOE, instead turning it into a Crown owned Company (CroC). Negotiations over the precise terms of the Charter took several years to complete, so it was not until the second term of the Labour-led government that the TVNZ Act was passed in 2003, and money began to flow directly from the Government to TVNZ, via the Ministry for Culture and Heritage (MCH). Effectively TVNZ was still a hybrid, but a more balanced hybrid, with a dual mandate. On the one hand it was still required to maintain its commercial performance; on the other hand it was required to deliver on the Charter objectives. One TVNZ chief executive described the task as deliver the Charter, but don t screw the business. This balancing act was to prove no easy task, particularly once it became apparent that contrary to some expectations, the Treasury was still requiring a dividend from the reformed TVNZ. The same chief executive later acknowledged that he could not serve both God and Mammon. After a long and difficult period of gestation, a separate television channel for Maori, the Maori Television Service, was born in This is arguably the purest form of public television in New Zealand, in that almost all its income is public funding, and it is not required to pursue commercial objectives. Maori TV has gained both audience and critical acclaim, notably for its coverage of such iconic events as Anzac Day. After four years in operation it remains a minority channel with small but appreciative audiences, and the majority of its audience is non-maori. 5.4 The fragmented funding arrangements The total amount of public funding committed to broadcasting in FY2007 was just over $201m, but the methods by which these funds produced outputs that reached listeners and viewers were decidedly varied, as the table below indicates. Two government departments are involved, with most of the funding being allocated through the Ministry for Culture and Heritage, and the remainder through Te Puni Kokiri. The Digital Future & Public Broadcasting November 2008.doc 73

76 Table 7: Breakdown of public funding for broadcasting PUBLIC FUNDING FOR DELIVERY OF BROADCASTING 2006/07 Vote Arts, Culture & Heritage $ NZ On Air 106,671,000 NZoA Budget 2006/2007 Television funding 69,664,000 Radio funding (including $27,932,000 for RNZ) 31,183,000 NZ Music 5,046,000 Archives 1,264,000 Transmission 90,000 Operating Expenditure 2,910,000 Total 110,157,000 TVNZ (Charter/Pacific Service/transmission) 22,051,000 National Pacific Radio Trust (NiuFM) 3,390,000 Radio New Zealand International 1,900,000 Broadcasting Standards Authority 609,000 Freeview 1,743,000 Total from Vote Arts, Culture & Heritage 136,364,000 Vote Maori Affairs Te Mangai Paho: Maori Television Broadcasting (programming) Maori Radio Broadcasting Administration of Maori Broadcasting 40,332,000 11,169,000 1,608,000 Maori Television Service (operational funding) 11,538,000 Te Putahi Paoho (Maori Television Electoral College) 131,000 Total from Vote Maori Affairs 64,778,000 Total Appropriation for delivery of broadcasting 201,142,000 It is worth noting the several lines of funding for radio, a significant amount in total, most non-commercial. But the focus of this chapter is on television. 5.5 Public broadcasting issues Public broadcasting and local content For New Zealand, the importance of reflecting our national and cultural identity has become central to public broadcasting. The objective has been enshrined in our Broadcasting Act since deregulation in 1989, when for television the primary responsibility for public broadcasting was moved from the public broadcaster TVNZ to NZ On Air. For two decades public broadcasting content has essentially meant local content, produced in New Zealand, with an emphasis on the so-called threatened genres of drama, documentary and children s programmes. But, as media academics have pointed out, local content is merely one component of public service, not a substitute for it (Thompson, 2008). Among the consequences of the New Zealand system has been the lack of focus on other aspects of public broadcasting, such as the provision of quality news and information for the effective functioning of democracy. The Digital Future & Public Broadcasting November 2008.doc 74

77 News and Current Affairs has never been funded by NZ On Air, but rather seen as the responsibility of the broadcasters. A responsibility for which TVNZ was not easily held to account in the years before the Charter was introduced in Another neglected area was that concerning intellectually challenging programmes designed to stimulate knowledge and learning. While a limited number of documentaries could be said to fall under this heading, again there was no requirement on the broadcaster TVNZ to commission or screen such programmes until the Charter. It might also be asked whether the system provided sufficient opportunity for New Zealanders to view the best of interesting and relevant programmes from other international public broadcasting organisations. While TVNZ has included some such programming in its schedules (programmes fronted by Sir David Attenborough or Professor Robert Winston), this has been at the discretion of commissioners and programmers and not subject to any requirements until the Charter. TVNZ CEO Rick Ellis has stated that delivering the Charter includes the best of international programming (Ellis, 2007). A key question is to what extent the Charter has remedied these gaps in public service provision and what may need to be done in the coming years to ensure these dimensions of public service content can be adequately delivered Funding arrangements While the approach of funding through several doors may appeal to the independent production community, it must be questioned whether this system is the most effective way to fulfil public broadcasting, or even a contestable system for public broadcasting content. The greatest area of concern has been TVNZ s access to dual funding streams since the Charter came into operation in On the one hand TVNZ has had continued access to the contestable funding for television administered through NZ On Air, and has continued to gain the largest slice of this pie. On the other hand, TVNZ has also been receiving some $15m annually of direct government funding, administered through the Ministry of Culture and Heritage. Accountability for the NZ On Air funding has not been a problem, because it is NZ On Air that makes the funding decisions, that are transparent from the moment of decision, with long-established procedures to ensure that the money is spent on the programme as agreed. However accountability for the direct funding has been an issue from the start. TVNZ was free to make the decisions on what programmes would be funded from Charter funding, as it was known at the outset, guided by a memorandum of understanding (MOU) drawn up by MCH, a memorandum that neither party saw fit to publish as a public document 2. TVNZ then reported retrospectively, in its Annual and Interim Reports, on what programmes had been funded and the sums involved. In the first full year of Charter funding (FY 2004), TVNZ used most of the funding to pay its contribution to programmes already receiving funding from NZ On Air. Critics were not slow to point out that this was not achieving the assumed objective of funding new programmes, in addition to those funded by NZ On Air. From FY 2005, TVNZ changed its policy, stating that Charter funding would no longer be used for programmes funded by NZ On Air. The two most recent MOUs (FY 2007 and FY 2008) contain clauses stating that Charter funding will 2 The MOUs for each year have since been released to the authors under the Official Information Act. The Digital Future & Public Broadcasting November 2008.doc 75

78 not be applied to programmes funded by NZ On Air, unless otherwise agreed by TVNZ and NZ On Air. These clauses were problematic in that NZ on Air was not a party to the MOU. Such agreement apparently took place for a number of programmes listed in the TVNZ Annual Report for FY Fourteen programmes are described as receiving Charter funding and NZ On Air or Te Mangai Paho funding (TVNZ, 2008:82). This practice will cease under the new arrangements for 2009 (see below 5.5.4). By 2008 the system had become somewhat ad hoc, even random. There was no body effectively overseeing the totality of TVNZ programmes receiving public money. To what extent was there any sort of alignment, or complementarity, between programmes selected for NZ On Air funding and those chosen for Charter funding? By what criteria were decisions made on which programmes would receive Charter funding there are no public statements or documents to shed light on this question. An analysis of the programmes TVNZ chose to fund from Charter funding for the four years gives an indication of how TVNZ was operating. As the table below shows, most was spent on documentaries. What is perhaps surprising is that the next highest genre was youth. Youth included 220 hours of Flipside in 2003/4 and almost $4m on The Lost Children in Total spend for the four years was almost $59m. Figure 18: Allocation of direct Government funding by TVNZ TVNZ relabels Charter funding In the years TVNZ, in reporting its spending of government funding in its annual reports, labelled this money Charter funding or Charter specific government funding. By 2006, this label had changed to Direct Government Funding, although it was acknowledged that it was intended to assist TVNZ to give effect to the Charter. But the subtle change in the labelling should be seen in conjunction with TVNZ s attempt to suggest that everything it did in some way connected to the Charter, that the Charter was TVNZ s DNA. As TVNZ s CEO Rick Ellis put it in the Annual Report for 2006: The Digital Future & Public Broadcasting November 2008.doc 76

79 We do not erect rigid boundaries between Charter programmes and commercial programmes. In a commercial competitive media market, TVNZ operates a mixed funding model. Our commercial success plays a significant part in funding our charter delivery (TVNZ, 2006) TVNZ loses control of direct government funding to NZ On Air In a surprise development in May 2008, the Minister of Broadcasting, Trevor Mallard, signalled that he was taking a paper to Cabinet changing the funding arrangements for TVNZ. The direct government funding was to be administered by NZ On Air the level of funding would remain the same and effectively be ring-fenced, but TVNZ would have to apply to NZ On Air on a programme by programme basis to gain access to the funding. More than this, there was a suggestion that NZ On Air might impose scheduling requirements on programmes made from this fund. The background to this move was increasing irritation in government circles at several funding decisions made by TVNZ. The first was the allocation of $2.77m of direct funding to the Sunday current affairs programme, going against the conventional wisdom that news and current affairs programmes were expected to be funded from commercial revenues. Both the Finance Minister and the Broadcasting Minister queried this decision. Then came TVNZ s intent to use $5m of direct funding almost a third of the annual total to subsidise the production costs of the Beijing Olympics to be screened in August In response, the Minister of Broadcasting brought forward his plan, to begin in July 2008, with a trial period for the first year. It is expected that details of the new arrangements will be worked through in the trial year, with a new memorandum of understanding agreed between three parties MCH, NZ On Air and TVNZ. There are several issues arising from this arrangement. The first is that it will strengthen the existing conflation of public broadcasting with local content. As stated earlier in 5.5.1, NZ On Air s responsibility in respect of television is the promotion of New Zealand identity and culture, through the funding of local content. Its mandate does not extend to the delivery of the full range of public broadcasting content. It must be reiterated that local content is only one component of public broadcasting there are others that the direct funding to TVNZ is intended to deliver. But the arrangement puts NZ On Air in a very strong position in deciding what public broadcasting means in practice in New Zealand. Secondly, and as a consequence of the above issue, it has the potential to merge the functions of funder and regulator. If NZ On Air is charged with exercising choices over what programming the direct funding is to be spent on, is it not at one and the same time also asking itself whether funding is being spent appropriately in pursuit of public broadcasting? Thirdly, there are likely to be implications for TVNZ s commercial remit. While it can be argued that giving the ultimate decision on spending the direct funding to NZ On Air will ensure that TVNZ s public broadcasting role will be strengthened, it is likely that such decisions will reduce TVNZ s commercial performance, particularly if NZ On Air is successful in pushing for scheduling programmes in prime time that do not maximise the audience. This will be seen by some as a necessary rebalancing of the components of the dual The Digital Future & Public Broadcasting November 2008.doc 77

80 mandate, but it will surely expose the underlying tensions between the Minister of Broadcasting and his Treasury counterpart How far do TVNZ s digital channels contribute to public broadcasting? The launch of TVNZ s two digital-only channels on Freeview in 2007 and 2008 was hailed by TVNZ as marking a most significant development in TVNZ s capacity as a public broadcaster (TVNZ, 2008:3). TVNZ 6, launched in September 2007, is a multi-service channel aimed at children in the daytime, families in the early evening, and adults in the late evening. TVNZ 7, launched in March 2008, is a factual channel with news on the hour and offering a broad range of news, current affairs and documentary material (see Chap 3 p 44). There are three senses in which these channels can be seen as falling within the context of public broadcasting. First, the majority of their funding is public money the Government agreed to contribute $79m over six years. TVNZ has committed around $32m plus staffing and infrastructure costs from its commercial revenues over the same period (Ellis, 2007). Secondly, they are commercial-free, which should be noted as a historic development, the first time there has been a mainstream commercial-free television channel in New Zealand s broadcasting history. Thirdly the content of much of both channels can be seen as contributing to the Charter or to public broadcasting objectives. On the content front, TVNZ drew attention to the fact that it was working with other public service organisations to create programmes for TVNZ 6, organisations such as the Department of Conservation, Plunket and the Families Commission. But there are a number of limitations or restraints on the effectiveness of these channels in delivering public broadcasting. Much of the content is repeats of programming already screened on TVNZ s mainstream channels only 34% of TVNZ 7 is programming made specifically for that channel, with TVNZ 6 showing some 16% of original content (TVNZ, 2008:90). This could be seen as a positive for public broadcasting as repeats of minority programmes may be screened at more hospitable times. TVNZ 6 contains many repeats of NZ On Air funded programmes, a valuable opportunity for these programmes to gain a wider audience. Both channels are predominantly local content, but by no means all around 70% of TVNZ 7 is locally produced, and for TVNZ 6 the figure varies from 50% to 75% depending on the section of the channel children s, family or adult. Even if these channels can be regarded as exemplary examples of public broadcasting, the biggest problem is the size of the audience. As stated earlier, the numbers of viewers for programmes on these new channels is likely to remain tiny for many years, unless arrangements are made for access by Sky subscribers. This could be a classic case of public broadcasting in search of an audience. TVNZ has been careful to stress that delivering public broadcasting objectives on TVNZ 6 and TVNZ 7 does not dilute the commitment to public broadcasting on the mainstream channels TV One and TV2 (Kearley, 2008). There is to be no move of Charter content away from the mainstream channels to the digital channels. Charter funding cannot be used to fund original programming for the digital channels. The Digital Future & Public Broadcasting November 2008.doc 78

81 5.5.6 TVNZ inspiring New Zealanders on every screen? TVNZ has made much of delivering its content, public broadcasting or otherwise, on multiple platforms, so that viewers may access programming when and how they wish to. To this end TVNZ on Demand offers a range of recent programmes for catch-up and also some archival material for which it has been able to clear the rights. The range of programmes has been limited in that rights issues restrict programme availability, particularly for imported programming. But in an important deal announced in September 2008, Disney agreed that its programmes could be made available on TVNZ on Demand, free, for 28 days after transmission. The Disney catalogue includes such popular shows as Lost and Desperate Housewives Assessing TVNZ s performance on delivery of the Charter Measuring the performance of public broadcasters, or their delivery against Charter or legislative requirements, has been exercising the minds of professionals for many years. An international working party of public broadcasters made little progress. But TVNZ, after working with government officials, has devised what it calls a Charter Performance Measurement framework to help give greater transparency to its delivery on the Charter (TVNZ, 2007). The Charter has been broken down into seven themes which will then be reported on through four measures reach, output, impact and quality. The first full year of the Performance Measurement Framework was reported on in TVNZ s Annual Report for FY The most interesting aspect was an attempt to gauge quality through the use of an appreciation/importance survey. This survey asked viewers to rate programmes not simply on whether they wanted to watch them, but also on whether it was important for the public broadcaster to broadcast them an attempt to assess public value. Programmes like TVNZ s Anzac Day coverage rated particularly well in terms of public importance compared with personal interest, as did many programmes aimed at minorities. Two areas where gaps were identified were quality family viewing and sport. Viewers wanted more programmes balancing entertainment and education for the whole family. They also wanted a wider range of sports coverage, including rugby on free-to-air, even if delayed. Overall the survey has provided TVNZ with a significant amount of quality viewer feedback. Over 80% of respondents felt it was important that New Zealand had a nationally-owned television network (TVNZ, 2008:32) TVNZ takes advantage of digital opportunities It must be said that TVNZ has not been slow to see the challenges and opportunities arising from the digital environment. Recognising the media habits of the digital native generation, it formed an alliance with the social networking site Bebo, and set up a channel on YouTube. It also used YouTube as a conduit for questions from viewers to be put to the party leaders in the 2008 election campaign. As a sign of the online times, in November 2008 TVNZ launched a minidrama delivered only over the internet on TVNZ on Demand. Through an agreement with distributors Warner Bros, the shortform series Sorority Forever was made available in 40 episodes of two to three minutes each, with a fresh episode each weekday. Recognising too the complexity of the media landscape and the need to diversify revenue streams, TVNZ also has business partnerships with Telecom, Fairfax Digital, and Yahoo!Xtra. The Digital Future & Public Broadcasting November 2008.doc 79

82 To try to take advantage of all digital platforms, TVNZ are pursuing a policy of 360 degree commissioning, looking for all the content opportunities of all production ideas. TVNZ s collaboration with NZ On Air and the production company Greenstone Pictures for digital extensions to the programme The Amazing Extraordinary Friends (see above p 61?) may be seen as a model for future online development Should NZ On Air fund programmes on pay channels? NZ On Air has established clear principles on which television funding decisions are based. For many years it rebuffed applications from Prime, on the basis that its coverage was inadequate, a situation that was in part responsible for Prime investing in extending its coverage. Similarly NZ On Air resisted demands from local or regional broadcasters such as Auckland s Triangle or Christchurch s CTV, on the basis that these were not national broadcasters and that funding invested in them was not an efficient use of resources. For the local broadcasters this situation was only remedied by a Government decision in 2000 to make a limited amount of funding available for them. But the growth of the multi-channel universe and the fragmentation of audience poses another significant question: in certain circumstances, should NZ On Air grant funding for programmes on pay services? On the one hand, it is a key principle of public broadcasting that it is available to all, and free at the point of reception. Services for which the consumer has to pay a subscription, or which are available on a pay per view basis, are clearly ruled out. On the other hand, it is another key principle that public broadcasting must serve the audience. To be worthy but ignored does not achieve the objectives of public broadcasting. As multi-channel audiences build, some genres within the public broadcasting canon have become exposed. One such genre is childrens. Audiences have been leaving the traditional viewing grounds on the free-to-air channels and moving to seemingly more attractive fields on the pay channels, notably Disney, Nickelodeon and the Cartoon Network. So the question is: at what point does NZ On Air bow to the realities of audience movement and agree to fund programming for Nickelodeon, for example? Would this not be justified as a valid return on investment? If such a funding decision were made, it should not be seen as an ill-considered abandonment of the principles of public broadcasting. Rather it can be argued as a necessary adaptation of such principles to the realities of the digital environment. As audiences fragment and take advantage of the burgeoning choices available, funders and content providers must disperse their offerings more widely, to serve the needs of their audiences NZ On Screen As we have seen in Chapter 2, the fragmentation of audience is not simply from free-to-air to pay channels, it is also to the internet and online activities. Dispersal requires that providers of public service content use the online space to serve their audiences. In recognition of the need to keep pace with the demands and opportunities of the digital environment, NZ On Air published its Digital Strategy in December A key element of the strategy is the development of a new website under the banner NZ On Screen. This is essentially a resource for those interested in the screen industry, and in our film and television history. The Digital Future & Public Broadcasting November 2008.doc 80

83 The site launched in October 2008 with some 250 titles, a mix of film and television programmes across a number of genres, many available to view in their entirety. No video may be downloaded. But the site is about more than video. Each entry has much useful information about the programme synopsis, context, talent biographies and links to the production company. There is also an area for video blogging. While the emphasis is on programmes that have received NZ On Air funding, other New Zealand programmes, films and music videos are also featured. NZ On Air has committed $1.2m to the development and launch of the site. It is not clear how it intends to fund the site on a sustainable basis. It has a small team of dedicated staff. More titles are to be added as rights issues are dealt with NZ On Line Following concern that NZ On Air s remit had not kept up with the changing times, especially the growth of online activities, amendments were made to the Broadcasting Act in March The change enables NZ On Air to fund productions that go beyond the original definition of broadcasting in the old Act. Specifically NZ On Air is no longer barred from investing in production or activities that may be destined only for the online audience. Plans for a NZ On Line site, flowing on from NZ On Air and NZ On Screen, have not reached fruition. Discussion around the concept blended a number of ideas, chiefly a web portal/gateway for all things 'New Zealand', and a contestable fund similar to NZ On Air for the creation of new online material specifically for New Zealanders, by New Zealanders and about New Zealanders. There was also the notion of an IP framework that linked all New Zealand citizens through a national creative commons. The concept required the collaboration of a number of agencies or organisations it was not something that could be achieved by NZ On Air alone, or indeed by any one body. 5.6 How well does the current system deliver the objectives of public broadcasting? The creation of NZ On Air, and the way it has implemented its remit over its twenty years existence, can be regarded as one of the successes of deregulation. The contestable funding regime has inspired competition between the broadcasters in the so-called threatened genres, and resulted in many programmes being screened, often in prime-time, which would not have been made in a fully commercial environment. NZ On Air has also been diligent in ensuring that the needs of the minorities specified in section 36c of the Broadcasting Act have been met. But in terms of the range and quality of programmes available to New Zealand audiences, we cannot be said to compare favourably with countries like Australia, Canada or Ireland, let alone the UK. Some of the reasons are clear enough New Zealand is a small country, we have no mainstream channel dedicated to public broadcasting, we do not have any form of quota system and we do not have the luxury of supplementary public broadcasters like SBS in Australia or Channel 4 in the UK. Our system has its merits, but also its flaws. It was not designed to deliver the full range of public broadcasting content. NZ On Air has interpreted its remit as the furtherance of local content, programmes made in New Zealand, and its decisions have done much to consolidate the independent production sector. But quality imported programmes in any genre are no part of its business. There may be imported programmes in areas that might complement NZ On The Digital Future & Public Broadcasting November 2008.doc 81

84 Air s funded programmes, for example, music and arts performances by international orchestras or artists, historical costume dramas, or political dramas on international themes. Access by audiences in New Zealand to these sorts of programmes is rather haphazard, dependent on whether TVNZ chooses to see such programmes as falling under the remit of the TVNZ Charter. A similar argument applies to international programmes of value to ethnic minorities, for example imported programmes for Asian audiences. These fall outside NZ On Air s remit and their screening would again be down to decisions by TVNZ. A further issue, mentioned briefly above, is the delivery of the information and discussion programmes required for the effective functioning of an informed democracy a key principle of public broadcasting. NZ On Air has chosen not to be involved in this area its policy has been not to fund News and Current Affairs programmes. If there are deficiencies in this area, for example little investigative journalism on public policy matters or inadequate spaces for discussion of significant issues, this is a matter for the public broadcaster TVNZ under the Charter requirements. The evidence of the period since the Charter was introduced in 2003, for example the axing of Assignment or the confinement of Agenda to an inhospitable time-slot, suggests that shortcomings are not easily monitored or rectified. In our 2005 report, we drew attention to the fact that there are unexploited opportunities to harvest synergies across New Zealand s cultural assets. The state funds various organisations in the performing arts sector the New Zealand Symphony Orchestra, the Royal New Zealand Ballet and Opera New Zealand yet there is little or no exposure on publicly owned television. The Government, or NZ On Air, could consider taking the initiative in promoting such synergies in line with the Charter for TVNZ, thus ensuring that the public has greater access to performance from our leading cultural organisations. 5.7 Options for reform Before any analysis of future options, it must be acknowledged that broadcasting in New Zealand continues to operate in an environment of minimum regulation, and that achieving outcomes through regulation will continue to be difficult. New Zealand has long since given away any possibility of imposing content quotas. Requirements on particular broadcasters, for example seeking a certain amount of local content on some Sky channels, are equally unlikely. Those who believe that a traditional public broadcaster is inherently a better system than a contestable system for programmes, will no doubt continue to argue for a fully-funded noncommercial channel akin to Radio New Zealand. It must be said that in the light of the evolution of broadcasting in New Zealand, such a move is most unlikely, given that there is no obvious political support for investing public money in this way. Any plan for TV One to be made non-commercial on the basis of subsidy from TV2 is equally unlikely TV2 is not nearly profitable enough for this to be realistic. A better approach is to consider ways in which the activities of the principal public broadcasting agency, NZ On Air, might be extended. Given the trends in audience behaviour outlined in this report, it is clear that online presents a most important opportunity. Ideally all NZ On Air funded content should be available online in various forms, be it through NZ On Screen or links to producer web-sites. Furthermore specially created interactive content, The Digital Future & Public Broadcasting November 2008.doc 82

85 associated with programmes, could be made available on sites such as the emergent NZ On Line or on broadcaster sites. NZ On Air might consider a funding strategy which envisages and requires progression of content through a variety of platforms, eg from free-to-air broadcast, to digital and/or pay channels, to mobile, to NZ On Screen and broadcast on demand sites, to NZ On Line or similar sites. This approach would have two distinct benefits. It would increase the dispersal of local public broadcasting content, notably following audience movements. It would also encourage the take-up of broadband, thus contributing to a key government policy, the Digital Strategy 2.0. The effective overview of public broadcasting is another area of opportunity. We have argued above that there is no agency or body performing this important function adequately in practice. The fact that the Charter funding has been removed from TVNZ and given to NZ On Air to administer suggests that the Ministry of Culture and Heritage had found it difficult to exercise adequate monitoring of TVNZ decisions. A memorandum from the Director of Broadcasting at the Ministry to the Broadcasting Minister in April 2008 acknowledged that the Charter was not working as it should have been. NZ On Air could make proposals to the Minister that its responsibilities could be extended to cover the wider domain of public broadcasting, even if this were to require a further amendment to the Broadcasting Act. A body charged with the preservation and development of public broadcasting in New Zealand could be a significant addition to the intervention measures currently in place. Graham Murdock, the prominent academic advocate of public broadcasting, has argued persuasively that public broadcasters should seize the opportunities afforded by digital, and collaborate with other public institutions libraries, museums and art galleries for example in creating a new public space to combat the forces of commercialism and corporatism. He sees public broadcasters as the central node in a network of public institutions, which he labels the digital commons (Murdock, 2004). Should not NZ On Air respond to this challenge? One final area for consideration could be the facilitation of access to overseas public broadcasting channels, such as those of our nearest neighbour Australia. Would it not make the Freeview offer more attractive if ABC and SBS were added to the channels available? There are obvious difficulties to overcome in achieving this, but access to such channnels would certainly offer an enhanced range of stimulating programming to New Zealand viewers. A distant vision perhaps, but surely a relevant idea when thinking about the big picture of public broadcasting. 5.8 The Labour Government s Review Programme Some of the issues raised above are likely to be traversed in the Government s regulatory review of digital broadcasting, established in May Following the first round of public submissions in early 2008, the Government resolved to set up a work programme covering three main areas: The development of options for enhanced public service broadcasting including diversity of and access to local content, and content standards. Key issues here are the funding of public broadcasting content and whether all free-to-air channels should be available on both free-to-air and pay digital platforms. The Digital Future & Public Broadcasting November 2008.doc 83

86 A competition study to consider potential risks to access to premium content and to platforms. The dominance of the Sky-Prime alliance and its access to major sports events will be under the spotlight here. A review of the current institutional arrangements for regulation of broadcasting and telecommunications. The key issue here is seen to be the choice between one converged regulator or two one for network matters and one for content regulation. A 54 page Cabinet paper refers to this work programme. It is clear that the Government and officials in the Ministry of Culture and Heritage and in the Ministry of Economic Development see this as an opportunity to grapple in a considered way with many of the issues raised in this report and covered in the submissions to their review. They are working to a reasonable time-frame a report is due back to Cabinet by 31 August 2009, with further consultation on any changes to the current arrangements. It might be observed that the questions being dealt with in this review are too much concerned with structures and institutional arrangements, and not enough with content, with the quality of programmes. To what extent can regulation ensure a wide range of quality public service content? That could be one of the key questions for the review team. The Digital Future & Public Broadcasting November 2008.doc 84

87 6 Archives This chapter briefly addresses issues to do with broadcasting archives 3. It does so from four perspectives: the idea of public space, the opportunities and problems of digitalisation, the specific issues for broadcasting and the concept of the Long Tail. 6.1 Public Space As has been pointed out previously (Horrocks & Pauling, 2003), archiving is about cultural, social, political and economic history and thus represents a vitally important and irreplaceable legacy. Most jurisdictions accept the need to archive; what is mostly debated is what should be archived. The technologies of the digital age have had a significant impact on not only the archiving process itself but also on the ways archives are used and accessed. The idea of public space is intrinsic to archives. The previous report quoted Charles Smith (Assistant Keeper at the Victoria and Albert Museum): The original intention behind the establishment of museums was that they should remove artefacts from their current context of ownership and use, from their circulation in the world of private property [so that] the collections should be open and accessible to the public, who were expected to obtain some form of educational benefit from the experience (Vergo, 1989:6) Horrocks & Pauling argued that an archive is similar in many respects to a museum or a public library and is, in effect, part of public space. Public space can be defined as physical (public gardens, town squares), institutional (public libraries, public schools) or virtual (mass media). It is a place where people meet, where ideas are exchanged and debated, where citizens in a democracy are challenged, perhaps made uncomfortable as they learn about each other s cultures, values and beliefs. It is where we inform, educate, create change, promote tolerance and seek understanding pursuits necessary to sustain a healthy democracy. Most countries that strive for democratic freedom have come to see their culture as important and worthy of public support in terms of both production and preservation. There has been a surge of public interest in history and heritage in many countries over the past decade. And with that has come increased demand for access to public archives in support of this interest. Heritage collections can give us not only the bare facts of history but the flavour of life. They challenge us to analyse and interpret our culture and our history. They allow us to appreciate human creativity. Radio and television are particularly valuable in these respects as they provide such a vivid record, not just facts but texture and experience. There have been and always will be debates around what should be archived. Internationally, the sense of what is cultural has expanded to include a broad range of what is labelled popular culture. It is now widely (though not universally) accepted that national identity is defined as much by popular as by classical forms of music, for example, and as much by 3 Where appropriate, and with acknowledgement, this chapter draws on matters previously addressed in the NZ On Air Archives Report by Roger Horrocks and Brian Pauling published by NZ On Air in 2003 The Digital Future & Public Broadcasting November 2008.doc 85

88 television drama as by literature. A further expansion has been towards embracing everyday culture where items such as amateur home movies, television commercials, and objects of the everyday lifestyle that New Zealanders describe as kiwiana are targeted for preservation There is also currently much interest in oral culture, visual culture, and sound environments (Horrocks & Pauling, 2003). However, the conventional thoughts surrounding archiving have tended to give precedence to what can be called high culture. So even although the idea that cultural archiving should include popular and everyday culture has been accepted in theory, in practice there is still a tendency to give priority to funding the archiving of the more traditional forms of high culture and this is no more clearly illustrated that with the dominance of Radio New Zealand programming in the Sound Archives/Nga Taonga Korero schedule. One of the consequences of an increased emphasis on popular culture has been the idea that collections should be made easily and widely accessible, less daunting, less elitist, and made to be entertaining as well as educational. Contradicting this is the tendency to see everything in economic terms and restrict access, protect from the public and seek to privatise as much data as possible emphasising intellectual property rights, the need for the user to pay and the private value that lies within possession of content. To date the public service conception has survived and public space, while under threat, remains a significant element of democracy and citizenship. 6.2 Digitalisation Digital technologies that have become prevalent, even dominant, in most of the institutions within the creative industries and this creates both threats and opportunities. Digital has great potential to enhance the whole process of archiving, to make material available on line, to provide search engines, to permit remote access by putting material on line, perhaps even the holy grail of being a vehicle for preserving virtually everything in perpetuity. Yet there are also worries. Horrock & Pauling (2003) quoted Terry Kuny of the National Library of Canada: As we move into the electronic era of digital objects it is important to know that there are new barbarians at the gate and that we are moving into an era where much of what we know today, much of what is coded and written electronically, will be lost forever. We are, to my mind, living in the midst of digital Dark Ages; consequently, much as monks of times past, it falls to librarians and archivists to hold to the tradition which reveres history and the published heritage of our times. (Kuny, 1998) Kuny was arguing that while cultural archiving is well embedded in the analogue world it has yet to become so in the world of digital. While progress has been made with producers of websites, podcasts, video clips, multimedia productions becoming increasingly, it is still not second nature as it is to analogue producers. Also archivists trained in the analogue traditions and skills need to become more aware of the importance of the digital. In this regard the vastly increased opportunities to collect and preserve raise a major question concerning costs - costs of equipment, paying for replacement equipment in the quickly obsolescent digital world, the vast increases in cataloguing activity and the development of new skills. There is also the danger of competition between these new needs and the existing The Digital Future & Public Broadcasting November 2008.doc 86

89 gaps in analogue archiving. Horrocks & Pauling (2003) said that it is important to understand that: the cost of change has always been a challenge for a small country like New Zealand. (The increased cost of sound virtually wiped out our existing film industry in 1929; the arrival of television in the 1960s placed severe limitations on radio and delayed regional expansion and FM broadcasting for many years and further changes in television, such as the arrival of colour in 1973, tended to mean a cutback in local production.) The introduction of a new technology involves complex tradeoffs. The rate of technology change also confronts archives with the costly problem that earlier types of equipment (both analogue and early digital) need to be kept operational, or else the collection needs to migrate to a new medium. The coming of digital has not brought an end to this problem; indeed, changes of format have been particularly rapid. In the field of digital archiving, current concerns include the fragility of the data, the ease of corruption or alteration of data without recognition, and the reliance of data on current forms of branded software and hardware with a limited shelf-life. Horrocks and Pauling (2003) were adamant that the transfer from one medium to another poses a dilemma for cultural archiving because of the historical and creative significance of particular formats. So far as its resources permit, an archive needs to be a kind of museum of technology. But some transfers are necessary, and in most archives the process is going on continuously. Making copies on more than one format is, in one sense, a way of spreading the risk. But archivists understandably take a cautious attitude to new formats, and hang on to older formats that have proved their ability to stand the test of time. Examples of these include the longevity and security of celluloid and the stability of Betacam videotape. Digital technology increases storage capacity immensely, some say to infinity. Increasingly sophisticated disc storage, improved compression capabilities and network connectability enable the capture and storage of vast volumes of video and audio data It is now possible to store in one stack of gigabyte drives a whole year s worth of continuous television broadcast. The space taken up by the required stacks is less that 50 square centimetres of floor space, and supposedly the storage is permanent (i.e. the life of the hard drive). A further issue that digitalisation challenges us with is the fact that all archives from all sources can now be digitally stored and accessed in digital form. It is therefore possible to develop a common digital platform across all interest groups, a form of national information architecture, permitting all the various collections (both public and private) to link up and provide seamless access to the nation s history. In this regard there is a challenge for broadcasters, who have been independent to date, to develop an appropriate relationship with other archive sources to provide converged access whilst at the same time protecting their own priorities and specialisations. Whilst digitalisation provides the opportunity for standardisation of platforms and the metadata systems across archives there is also the need for special interest archives to add additional layers of data according to their particular catchment. For example, what a The Digital Future & Public Broadcasting November 2008.doc 87

90 producer needs to know (such as the breakdown of particular shots) is very different from what a social historian, or a secondary school student, needs to know. Again, digitalisation opens up new possibilities of access using the web to provide not just cataloguing data and search facilities but also complete and universal access to much of what is actually in the collection, as copyright issues permit. Some archives are using network technology to set a geographically diverse in situ public access points (in libraries, schools and civic authority buildings) giving the public the opportunity to access a wide range of material either embedded in local servers or provided from a central server over broadband telecommunications networks. Digital also permits archives to use portable and hardwearing digital formats such as CDs and DVDs to provide services. Such digital technology platforms are relatively cheap and have much greater capacity than their analogue forebears (audio-cassettes and videotape). Technical protection can also be embedded in these discs allowing for better control over usage. Increasingly there is the belief that these storage systems are transitional. Storage and access to data will eventually move to the Internet using broadband connectivity to large capacity digital servers which use sophisticated compression technologies, and interactive protocols that permit access to data in real time from any point on the web. Responding to this many archives are now developing their own websites upon which they are providing not only access to catalogues and search facilities but also to an increasing amount of audio and video product. These are offered, sometimes openly for public access, or restricted to approved access. Two issues remain for archives. They are the restrictions required by intellectual property rights and the management of micro-payments that may be the way through IP barriers. Prototypes of micro-payments can already be seen on some commercial research sites where some data is available free but to drill deeper a fee is required, either a one-off payment or a subscription. 6.3 The Long Tail In Wired Magazine, October 2004, Chris Anderson's introduction of the concept of The Long Tail created something of a sensation in the media industries. Its suggestions, if applicable and fully implemented, suggest a revolution in the electronic media industries. It would also change the way in which archives behave. Anderson argued that products that have passed their traditional use-by date and thus have low demand and consequent low sales volume can collectively make up a market share that rivals or exceeds the sales of the product when initial demand was at its height. Using Amazon.com as an example he argues that a significant portion of Amazon.com's sales come from books that are no longer generally available in retail stores. The Long Tail is a potential market that is tailor-made for the Internet which is a distribution channel that can tap the long tail market successfully. The Long Tail is the realization that the sum of many small markets is worth as much, if not more, than a few large markets (Jason Foster, cited in Anderson, 2005). There are a range of businesses, not just Amazon, that are emerging on the Internet based on the Long Tail theory. Rhapsody is an on-line music store whose traditional retail outlet was the giant US chain Wal-Mart. Wal-Mart only stocked a limited physical range of Rhapsody s titles whereas the on-line store holds a vast number of other special interest or less popular The Digital Future & Public Broadcasting November 2008.doc 88

91 titles. This online special interest market now accounts for a quarter of Rhapsody s total sales. Traditionally, media broadcasting has focused on one-to-many services and one-off services. However, digital technologies are creating new opportunities to exploit the concept of Anderson s Long Tail by providing one-to-a-few services, through supplying lots of niche markets and communities of interest instead of mass media markets through traditional broadcasting. Early developments include narrowcasting to closed user groups and thematic or special interest broadcast channels. Later models include opening up archives (BBC Archives) and providing catch-up services and back title access to series via an Internet portal (Hulu). There are challenges for broadcasters here. 6.4 Changes in the broadcasting environment The greatest promise of the Internet is the delivery of a public knowledge portal and repository which provides seamless access for anyone and from anywhere, to all knowledge and cultural products ever produced by mankind. While this may be a dream and not achievable in a property-owning and privacy-supporting democracy there has been a dramatic increase in websites offering audio and video material on the web. This has been principally enabled by the rapidly increasing bandwidth delivered by broadband technology. These sites, such as YouTube, MySpace, Hulu and others, have reached maturity in a short space of time (less than four years) and become extremely popular. They have shown that the making and manipulating of images (once mostly the preserve of broadcasting and other professionals) has become something that anyone can do, a way of broadcasting who we are to anyone prepared to watch. Online video and audio content is multiplying exponentially and it now dominates Internet traffic with some suggesting that it accounts for between 49% and 83% of all Internet activity (Ipoque, 2007). Perhaps spurred on by this, the demand for access to television archive content online has been growing, and this demand has been driven by a number of distinct sectors: education, the general public and the heritage sector. All of the above suggests that there are a number of difficulties facing archives before they can provide meaningful online services. Included among these are: managing intellectual property rights; technological issues concerning digitisation and metadata standardisation; and issues related to the way the sources are presented to users. Perhaps this final point is the most challenging if the aim is to present material in a compelling and relevant form. 6.5 What is happening elsewhere Broadcasting archives are changing their behaviour and moving from being in-house production libraries or repositories with restricted access to more public and freely accessible services. In 2007 the BBC began a public trial of the BBC Archive project, offering 20,000 people the opportunity to access 1,000 hours of content drawn from a variety of genres. A more limited 50-hour library of programmes will also be available to internet users. The project aimed to exploit the corporation's "long tail", the ability to capitalise on its vast store of entertainment, informational and educational content, seen as a key strategy to maintain the BBC's relevance in the digital age. Triallists will also be able to access material from the BBC's written archive, which dates back to 1922 (Gibson, 2007). The Digital Future & Public Broadcasting November 2008.doc 89

92 In the same year the BBC's archive of moving images, consisting of over 50,000 hours of programming and spanning 70 years, was made available, on a fee paying basis, for educational use. The BBC Motion Gallery is an online service that allows staff and students to search, download, edit and use footage for a variety of uses including student assignments and projects, showreels, resumes, competition entries, presentations and course packs (Jisc, 2008). The BBC appears committed to making much of its archives available to the public. This commitment is currently embodied in a framework agreement between the BBC and the Department of Culture, Media and Sport (DCMS). It states that the BBC must give the public reasonable opportunities to visit the archives and view or listen to material kept there, with or without charge (BBC, 2008). In 2008 the newly appointed director of archive content for the BBC, Roly Keating, said that unlocking the value of broadcast archives is one of the great opportunities opened up by digital media and the BBC has the greatest archive of them all, with untold potential public value (Journalism.co.uk., 2008). He has been tasked with realising the ambitious objective of digitising the archive and maximising public access online and on-demand. The BBC has the largest audio-visual archive in the world and we want to make sure there is greater public access to this archive, whilst also ensuring it is fully exploited for the benefit of licence payers, BBC director-general Mark Thompson said (Schreiber, 2008). The BBC is also a partner in the Video Active Consortium, a project to develop Europe s television history online. The objective is to provide access to broadcast heritage material from archives across the European Union. The project is working to solve the problems that inhibit access such as managing intellectual property rights, technological issues concerning digitisation and metadata standardisation, semantic and linguistic interoperability and the design of a user interface that provides a meaningful experience for the user. It aims to offer an enormous resource for exploring both the representation of cultural and historical events within and across nations and the development of the [television] medium itself at a cross-cultural level. The consortium consists of broadcasters (currently, BBC-UK, DR-Denmark, DW-Germany, ORF-Austria, RTBF-Belgium, TVC-Spain) as well as the broader-based National Archives (currently, SLBA-Sweden, SV-Netherlands, NAVA-Hungary, NTUA-Greece, IL-Italy). These bodies collectively have over five million hours of audio and video material from 1890 to now and represent a major part of Europe s audiovisual heritage. The beta version of Video Active launched in July 2008 ( The European Commission's i2010 Digital Libraries initiative is striving to produce integrated access to the digital items and collections held in Europe's cultural heritage institutions via a single online access point - The European Digital Library (Oomen & Tzouvaras, 2007). In the US, the Archive of American Television is a project of the Academy of Television Arts and Sciences. The Archive, in association with Google, has put online hundreds of in-depth interviews with television luminaries. They claim to have many hours of conversations recorded with legends and pioneers of the medium. The archive states that their ultimate goal [is] to be the world s largest and most advanced oral history collection on the history of television. Further, they see themselves as developing an online interactive encyclopaedia of The Digital Future & Public Broadcasting November 2008.doc 90

93 television, accessible worldwide by students, historians, and the public. There is also the recognition that archives can generate revenue and this is demonstrated by the 2008 launch of Hulu (See Chapter 2). A well advanced and award winning broadcasting archive is the Canadian Broadcasting Corporation Digital Archive. It provides a high standard example of how public broadcasters can harness digital archiving to educate and entertain the public. The CBC Archives website provides a simple and user friendly interface to access thousands of audio and video clips from CBC s large archival collection depicting all aspects of Canadian life. The site also provides a large number of programmes and services to education with a dedicated site for teachers and students. Content is organised into interest sections but the site s search engine can also be used to search using metadata and key words. The site has won numerous awards. The latest, in 2008, was the EPpy Award for best news web sites created by newspapers, television, magazine and radio companies. The Digital Archives won the award for its use of video. One Canadian project of interest is the Radio Archives Digital Interactive On Line Audio (RADIOLA), a system for automatically and manually capturing radio programmes for archival preservation, remote preview and rapid retrieval for further use. It permits the searching of the catalogue to audition and download programmes and clips from programmes directly to the computer. While the system is not open to the public at present, issues of security, rights and revenue management have yet to be addressed. The structure is in place for this to happen and already the system is permitting greater re-use of data and more commercial re-sale of data (Holden, 2001). In Australia, the recently established National Film and Sound Archive provides online access to its database through Australian Screen Online. The resource covers film and television material from feature films and documentaries, to advertisements and TV programmes drawn from a range of archives, with curators notes and other information about each title. In 2008 there were more than 2,000 moving clips from more than 1,000 works available with material being added continuously. It includes an education section where text relevant to the school curriculum is provided to accompany film clips. The ABC has extensive archive collections of programming accessible online including a range of programmes in the categories of arts, factual, indigenous, natural history News & Current affairs, religion, rural, science and the programme Media Watch. The ABC has also launched its version of an online playback and catch-up service called i-view. This service, like the BBC s iplayer and NBC s Hulu, is only available to domestic consumers within each country. 6.6 New Zealand The archiving of New Zealand audio-visual material is fragmented. A number of organisations have collections and are actively accessing. They include the National Library, the Alexander Turnbull Library, Te Papa, Archives New Zealand, Television New Zealand, The New Zealand Film and Television Archive (NZFTA), Sounds Archive/Nga Taonga Korero (SA/NTK) and, perhaps, New Zealand on Screen. NZ On Air has oversight of the last three. The Digital Future & Public Broadcasting November 2008.doc 91

94 Arguments exist for some rationalisation of national audio-visual collection systems and processes and the Ministry of Culture and Heritage has expressed an interest in such. SA/NTK and NZFTA have issues that include the scale of preservation and conservation of older archives, the digitisation of existing collections, meta-data creation, the provision of appropriate public access, how to handle new and vast born digital material and the challenge of a rapidly increasing number of sources (not just television channels and radio stations but web-based sources as well). Copyright and other intellectual property issues are also a challenge, particularly to public archives. There are arguments that the substantial volume of historical programming on radio and television paid for from public funds should be available for New Zealanders to access as part of their cultural heritage. Public broadcasting organisations in other jurisdictions are also addressing this with many, like the BBC, making large amounts of historical material publicly accessible. Weaving broadcast archival material into the large tapestry of digital resources now available to New Zealanders from other public organisations (libraries, museums, galleries and archives) is a challenge but one to be engaged with. The increasing interest in nostalgia coupled with the long tail phenomenon also needs to be recognised and valued not just culturally but also economically. In 2008 the National Library of New Zealand engaged in a web harvest. Recognising the central role of the Internet in all areas of (New Zealand) life (National Library Media Release) the Library captured the entire.nz domain and an additional 500 websites outside the domain but with New Zealand content (.com,.net, etc). Just what the Library will do with this data is still unclear. Collection is one matter, preservation, protection and access are others (National Library, 2008). 6.7 Conclusion Worldwide, there is a steady increase in the volume of material being broadcast over an increasing variety of platforms from traditional terrestrial broadcasts through to the Internet and fibre optic networks such as FiOS (Chapter 2), and this is happening in New Zealand also. Along with this the behaviours of the audiences are changing and the cultural patterns of what is being watched and who s watching are also changing. All of this complicates the archiving processes and complicates the task of attempting to capture an historical record of New Zealand s radio and television culture in our time. Perhaps progress in New Zealand has been slower than elsewhere. Our broadband connectivity is low by OECD standards and our broadcasters have been slow to add value to their programmes by providing catch-up services, video-on-demand and access to historical programming. But this may also be an advantage providing an opportunity for preparing and providing a 21 st century archiving service that meets audience expectations While New Zealand television broadcasters have a range of national and international programmes and their developing digital services should reflect that, NZ On Air places particular emphasis on local content. But as Horrocks and Pauling (2003) pointed out, even here there are some significant gaps in archiving and they include: - Pay television has an increasing and significant amount of sports-related local content. The Digital Future & Public Broadcasting November 2008.doc 92

95 - There are nine channels in New Zealand currently broadcasting local and regional television programmes - covering news, sport, entertainment, arts, community issues, local lifestyles, etc. This material is currently not being systematically archived. - If the activities of the TVNZ Archive are considered along with those of the NZFTA, two of the main free-to-air networks (TV One/TV2) are being archived much more thoroughly than the others (TV3/TV4). Also, TVNZ s in-house production tends to be more thoroughly archived than independently-made programming. It is appreciated that in the archiving world selectivity is a fact of life and this is increasingly so in the digital environment. Even if the technology allows us to record and store everything, the problems of cataloguing and access have still to be solved. Nevertheless, with the development of NZ On Screen there are challenges and opportunities that need to be addressed. The range of material archived needs to be broadened. Technology needs to be used to improve access for educational, cultural heritage, and personal use. And, most importantly, ways need to be found to vastly improve the access to broadcasting archives whilst at the same time honouring the copyright interests of those involved. As the Horrocks and Pauling report argued in 2003, it again appears to be a good time to engage in robust debate over archiving choices and priorities, both between NZOA and the archives it funds, and - on a national basis - between archives, producers, other groups and individuals concerned with cultural heritage. It should be noted that while this chapter has concentrated on television, many of the arguments apply to radio as well. The Digital Future & Public Broadcasting November 2008.doc 93

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97 7 Digital Radio 7.1 Introduction Television has been dramatically changed by the application of digital technologies. While the impact of digital on radio has not been so apparent and dramatic it too cannot avoid the changes and radio is slowly (much more slowly than TV, see later) moving towards the next generation of digital radio. Digital radio development has been strongest in jurisdictions where the state has mandated change (the UK, parts of Europe, Asia and the US). Closer to home, in Australia, digital radio trials are being conducted in Sydney and Melbourne to assist the Federal Government and radio broadcasters to decide on the right digital system for the country s particular population and geographic needs. In New Zealand trials in Auckland off the Sky Tower and from the Waiatarua transmission tower have occurred As with television the changes to digital in radio have clear appeal. Digital radio has the capacity to provide listeners with more services, clearer reception and sound quality and a range of other features, including tuning by station name, record and rewind capability and the provision of supplementary text information, graphics, pictures and web pages via a small screen on the radio set. In the case of DAB (see below) it also provides governments with advantage by freeing up spectrum (FM and AM) for other uses. The Australian DAB organisation lists the benefits as: Better Sound and Reception - digital radio delivers better sound quality than traditional AM and FM radio. AM transmission improves to FM quality and FM transmission to CD quality. Interference, something often present in one form or another on existing analogue AM/FM radio will go. Digital radio receivers lock on to the strongest signal they can find and ignore everything else. More Choice - existing spectrum is less efficient when used for analogue transmission. Just like television more stations can be broadcast using the same amount of spectrum. This means it has the potential to provide additional radio streams that offer new or expanded services to listeners. Thus the variety of radio available in a particular market can be substantially increased. Ease of operation Digital receivers recognise a station by name so there is no need to remember the frequencies of stations. Nor does a traveller have to change frequencies when travelling. Receivers recognise the signal regardless of transmission source. Rewind and Record - Like television set-top-boxes and digital recorders, digital radio receivers are a form of computer that receives digital information and decodes the signal into a format that can be heard (and for visual data seen on the small screen). Most have a memory card that permits the storing of information. They can therefore pause, re-wind and replay and store audio for later listening. The small screen - Digital radio receivers also have small screens for supplementary text and graphic information related to the programmes on air. For example, the screen could contain details of the song and artist being played, where to purchase or download the The Digital Future & Public Broadcasting November 2008.doc 95

98 song, other songs similar in style and structure that might appeal to the listener enjoying the current play. But it can also extend to other useful data such as maintaining a constant news and weather update, sports results, forward programme details and station contact information. As digital radio develops, receivers will also be able to present graphics, pictures and web pages, further enhancing your listening experience. 7.2 Technologies There are five predominant technologies for digital radio, Digital Audio Broadcasting (DAB, DAB+), Digital Media Broadcasting (DMB), Digital Radio Mondiale (DRM), Satellite radio (XM/Sirius) and In-Band-On-Channel (IBOC), the latter commonly known as HD DAB is the platform of choice for the UK, much of Europe, Asia and Australia. HD is the determined technology for digital terrestrial radio in the US and Satellite radio is principally available in North America. However, there are emerging technical issues. A newer standard DAB+, also known as High-Efficiency Advanced Audio Coding (HE-AAC), while backwardly compatible to DAB, does not work with existing DAB receivers. DAB+ has been mandated in Australia and a further standard DMB, which permits video as well as audio distribution and has value for mobile reception has been adopted by France as its audio broadcast platform. DAB+ and DMB are similar and seem to be attractive options to markets where digital radio is still developing (France, Australia. China, India, Italy, Sweden and, perhaps, New Zealand) HD radio, using the proprietary system of IBOC, is the only mandated terrestrial broadcast digital radio platform in the US. (See US below) RM is a digital transmission system favoured by short-wave radio broadcasters (BBC World Service, Vatican Radio and Deutsche Welle, Radio Netherlands and Radio New Zealand International all use this system). It delivers FM quality sound on low frequency bandwidths which enables long-distance transmission. The system has value for developing countries because already existing AM transmitter set-ups can be utilised for broadcast. It is also compatible with computers. A standard desk-top (or lap-top) computer with standard add-ons (transmitter and receiver cards) can receive a DRM signal, process it and re-transmit in analogue. DRM also mitigates the fading and static that has long been a feature of shortwave broadcasting Satellite radio offers an alternative to ground-based radio services in some countries, notably the United States. Mobile services, such as Sirius, XM, and Worldspace, allow listeners to roam across an entire continent, listening to the same audio programming anywhere they go. These radio services are usually provided by commercial ventures and are subscription-based. The various services are proprietary signals, requiring specialized hardware for decoding and playback. Satellite services of wide programme choices usually carry a variety of news, weather, sports, and music channels, with the music channels generally being commercialfree. In the US in February 2008 the two major players XM and Sirius reported having close The Digital Future & Public Broadcasting November 2008.doc 96

99 to 17 million subscribers. A major factor in the success of satellite radio is the deployment of motor vehicle receivers. Both Sirius and XM have arrangements with a number of US and Japanese car manufacturers to equip vehicles with their receiver. It was announced in July 2008 that Sirius and XM will merge to provide one major satellite radio service for the US In Canada a national company, Canadian Satellite Radio Holdings Inc. was awarded a licence to provide satellite radio services to Canada in Under the brand XM Radio Canada, the service had around half a million subscribers in early They are currently providing a service to around 350,000 subscribers WorldSpace originally planned to offer low-cost satellite radio services to rural Africa. This well-publicised venture failed due, in most part, to the cost of receivers and batteries, which led to the service being accessible only to expatriates and to the wealthier members of urban African society. WorldSpace now provides a subscription service using the original satellite targeted at Africa to Western Europeans. 7.3 Internet Radio This chapter is mainly concerned with the change from analogue to digital of traditional radio signals. It should be noted that one aspect of digital that radio has embraced with some enthusiasm is the internet. Internet radio comes in two forms. The first consists of radio stations that have been set up as internet-only webcasters. There are thousands of these around the world, some well established others that come and go. The second form comprises traditional radio broadcasters who stream their signal on the web creating an alternative way of listening to the current programme. Streaming the signal is just one radio use of the Internet. Many stations take advantage of the digital platform to add value to their services. This can include caching programmes for ondemand or catch-up listening, providing listeners with podcasting services where programmes can be downloaded to MP3 players, and offering a range of extra services. Such services can include, for commercial radio stations, competitions, promotions, backgrounders on station personalities and extended advertising. For non-commercial and public broadcasting the Internet provides opportunities to supplement programmes with backgrounders, more information and extended coverage of broadcast issues. Many radio stations in New Zealand, commercial and non-commercial, have sophisticated online presences. Radio New Zealand has developed a distinctive online service that has been well accepted by listeners. One aspect of Internet radio particularly suited to RNZ is the fact that the online data can be accessed from anywhere in the world where there is an Internet connection. Thousands of New Zealanders living overseas can keep in touch with things back home this way and RNZ has developed a large number of new listeners by providing their broadcasts and other services on the Internet. 7.4 Country Updates Australia A limited digital radio trial was mounted in Sydney in 1999, involving the ABC and just a few commercial stations. Since 2003, there have been more extensive trials in both Sydney The Digital Future & Public Broadcasting November 2008.doc 97

100 and Melbourne. The trials have been testing technical matters, such as coverage and interference issues, performance of transmission systems and receiver capabilities. They have also been experimenting with delivering graphics and pictures to receivers, as well as text information. Consumer panels have also been set up and supplied with imported digital radio receivers to enable them to evaluate the medium. In October 2005, the Minister for Communications, Information Technology and the Arts announced a framework for the introduction of digital radio in Australia. And in 2007, it was confirmed that the mandated platform would be DAB+. This may mean, however, that the current generation of digital radio receivers used in the trials may not be compatible with the finally adopted DAB+ platform. The services are to be initially established in the six state capital cities (Adelaide, Brisbane, Hobart, Melbourne, Perth and Sydney) by 1 January All national (ABC/SBS), commercial and wide-area community broadcasters in those cities will be able to broadcast their existing analogue services in digital or broadcast new services if they wish. As a sweetener existing broadcasting are also being offered a share of a further digital frequency and a moratorium on any new broadcaster entering the market for five years The UK The UK digital radio environment is the most highly developed and has been looked upon as the model. By early 2008 over 7 million digital radio receivers had been sold representing around 25% of the total UK households. The success of digital radio in the UK was initially put down to the fact that unlike other jurisdictions a range of new entrants providing new content was able to enter the market. Previously analogue radio in the UK was regulated and there were, comparatively, only a few commercial services competing with the BBC. For example in London there were only five commercial radio services for a population of 9 million, compared with 12 services in Sydney (4 million) and over 30 services in Auckland (1.3 million). However, by 2008 problems became apparent with some digital providers ceasing broadcast because they were losing money. A number of broadcasters closed their newer digital-only services and retrenched to digitally simulcasting their analogue programmes. Another indicator of problems is the fact that there is a considerable amount of spare capacity on digital radio multiplexes across the country. UK broadcast regulator Ofcom criticised the commercial radio operators saying that they had struggled to make money out of DAB because they had missed a trick by inventing new brands on digital radio but not investing in them (Plunkett 2008). The regulator suggested that the problem was that the digital platform needed stronger national brands, improved coverage and more products, in particular in-car receivers. Some criticism was more direct. Mark Flanagan, a media and political consultant and former private broadcaster was quoted as saying: The early licensing of DAB let rip a land grab in which companies rushed to fill multiplexes with services of dubious quality. Unfortunately for the major radio operators, these pretend stations were launched at a time when greater competition arrived in the form of broadband and new devices. The result was akin to launching a massive array of silent movies just when talkies took off. (Plunkett, 2008a) The Digital Future & Public Broadcasting November 2008.doc 98

101 There have also been some concerns expressed about the role of multiplex owners as being in the middle of the chain, clicking the ticket but also making a profit from radio broadcasters who have no control over where they site their transmitters and who controls them thus adding to the broadcasters financial stress (unlike New Zealand where a broadcaster can directly negotiate with competing tower providers or even erect their own). A further concern seems to be the role of the BBC which have their own multiplexes and can compete with the commercial operators in local markets sometimes providing similar, but commercial-free, content, something the commercial broadcasters consider unfair. A further problem lies with emerging digital technologies. All the receivers in the UK are DAB platform specific. The UK, like Australia, will introduce DAB+ sometime in the near future. DAB+ services will not be accessible with DAB receivers. Legacy issues such as this create major marketing problems and could explain the reluctance for both the consumer and the broadcaster to further invest in current technologies. The UK DAB industry wants everybody to believe that DAB+ will mean "nothing in this country", because they're paranoid that people will stop buying DAB radios if they know that DAB+ is on the horizon (Digitalradiotech, 2007) Ofcom now argues that digital audio broadcasting (DAB) radio needs a Freeview-style relaunch if it is to capture the audience's imagination (Plunkett, 2008). Simon Cole, chief executive, UBC Media was reported in 2008 as saying that In the US they can't believe how the British are beating themselves up over digital - 23% of homes have DAB digital radio and 30% of homes are listening to radio on a digital platform. The only certainty is there won't be a single digital radio platform. Will it be only DAB? No. Will it be only internet? No. There will always be an enormous number of places where you can't receive a broadband signal. (Plunkett, 2008a) Even although DAB radio has been in existence for over six years the fact that only seven million receivers have been sold in the UK has been put down to more than just investment costs and transmission problems. The receiver as a physical product is being criticised. Ashley Highfield, divisional director, BBC future media and technology was reported as saying My biggest beef with DAB is that, for some reason I still can't fathom, a new technology has been clad in old boxes. A bit of retro I don't mind, but old fuddy duddy looking leather clad wirelesses, and Dualit Toaster-like DAB receivers is in my opinion not going to take DAB mainstream. (Plunkett, 2008a) A major setback to DAB broadcasting in the UK, and perhaps with world-wide impact, is the decision in late 2008 of UK s Channel 4 to abandon its entire radio project as it seeks to recover from investment loses (AdvancedTVOct13, 2008). The broadcaster was to launch a series of radio stations, including a competitor to BBC Radio 4, and youth music channel E4 The Digital Future & Public Broadcasting November 2008.doc 99

102 Radio, as part of a second digital radio platform that would carry a host of other new channels. Overall, there appears to be disappointment in the UK that the audio revolution initially promised by DAB has stalled somewhat The USA HD radio technology developed and licensed by technology developer ibiquity Digital Corporation was mandated by the Federal Communications Commission in 2002 as the only system for digital AM and FM broadcasting in the U.S. The radio industry lobbied strongly for HD radio because of at least three perceived benefits at the time. Because the digital signal came from existing allocated frequencies there was no need to either bid for or purchase new bandwidth. There was room on the frequency for one, or at the most two, services thus limiting, even preventing, new entrants into the markets. The signal came from the same frequency (location on the dial) as the broadcaster s current AM or FM signal so fitted with current station frequency branding. However, further technology improvements mean that it is now possible to squeeze more channels into the band this providing more opportunities for new services. The promotion for HD argues that your favourite station remains in the same place on the radio dial, but when you have a new digital HD radio receiver, your AM sound like FM and FM sounds like CDs. Like other digital platforms HD also permits a wireless data feature that enables text information titles, artists, weather and traffic alerts to be broadcast directly to a receiver s display screen. As of May 2008, more than 1600 AM and FM stations are broadcasting with HD Radio technology, with more than 700 FM stations offering more than one digital channel per FM frequency, thus doubling or tripling the number of programming channels available to listeners (ibiquity, 2008). Most of the stations that have adopted the technology are FMs, while AM stations have been slower to upgrade (Tucker, 2007). However, while the industry has tooled up significantly providing digital services to over 100 markets there has not been a corresponding enthusiasm from consumers (HD Digital Radio Alliance, 2008). It is suggested that as few as 500,000 Americans have purchased an HD radio receiver since HD broadcasting began two years ago. Industry research firm Bridge Ratings argues that Another broadcaster said most listeners have heard of (HD), but there is a very tough row to hoe here in terms of interest. The economy is now affecting the growth of it [and] most people just don't see the need. The industry has to show people why they need it (Snider, 2008) Right now, there aren't many receivers out there. If you want to be in the game, you have to invest in this today. (Boyd, 2008) South Korea The most advanced use of DMB services is found in South Korea. They began transmissions there in 2005 and the latest data (April 2007) indicates that there are 15 TV channels, 19 radio channels and 3 data channels providing services to Seoul and other major centres. The Digital Future & Public Broadcasting November 2008.doc 100

103 More that a one million receivers were sold by the end of 2006, mainly for portable media use in car navigation systems, mobile phones, portable media players, laptop computers and digital cameras. Many of the services are provided on a subscription basis. 7.5 Concerns There are major issues surrounding the way audio technologies may develop. The speed with which DAB has been superseded and the implications for the UK market coupled with countries choosing to move to competing or incompatible platforms (USA with HD, France with DMB, Australia with DAB+) present problems for all operators both commercial and non-commercial. Investment in the digital platforms, whichever one is chosen, is expensive and there is much reluctance to invest until a return can be assured Some predictions see internet radio as being the dominant audio platform in the future. The aforementioned Bridge Ratings provided research in 2006 that pointed to an increase in audio digital media use overall on all platforms but unevenly. The graph which follows, although US centric, provides some evidence to support Cole s assertion, above, that there will be multiple platforms. It also suggests that the internet, both wireless and wired will play a significant role in audio distribution. Figure 19: Use of digital radio The Digital Future & Public Broadcasting November 2008.doc 101