Project Timeline 2005–2010

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Proof of Concept Phase – Interview G

Categories: Interviews, Proof of Concept Interviews, Support Material
Date: 16 April 2005
Contributors:

Andy Lloyd James: About content as much as anything else, because that’s really… I mean the ACA as you know has done that big vision of 2020 thing in technology in whatever strengths and weaknesses that may have, but my real interest is content. Can I just kick off from the start?

Interviewee: Yes.

Question number 1, the key issues that are going to shape television by the time we get to 2015?

Yes, well I’d hate to sort of bring it back a bit to technology but I think it will…

No that’s fine, I’m just trying to make it easier…

Because I think it will have a huge impact on content.

Terrific, yeah, yeah.

I would have to say well this industry structure thing, so they’re going to have a big impact on television and there are technology developments that are going to have a big impact on television. So I guess, really right now one of the key issues is obviously what’s going to happen with cross and foreign because I think that’s going to have a massive impact or content and just, I mean especially news and current affairs, that kind of thing, I mean all the obvious things of concentration of ownership and diversity and sources of information and all those sorts of things, so that’s one area. Another area is an issue that’s very close to Seven’s heart, which is what’s going to happen about whether we can start doing multi channelling.

Yes.

And how is that going to impact all the various aspects of the industry. We’re big supporters of multi channelling, both Free and Subscription, and we think that that’s going to do good things for the industry because, well… I have something that… the argument against it goes, well you’re going to fragment the market, therefore for commercial advertisers there will be less advertising revenue, for public broadcasters there will be less eyeballs. And therefore there will be more justification to either cut public funding or for us we will be less able to fund quality programming. The contrary argument, which we run, is – Well, it’s happening anyway!

Yes.

The market is fragmenting, we’ve got Pay TV now going to 200 channels, we’ve got the Internet, we’ve got Broadband, you know there are may other sources of entertainment of audio / visual content, and how the traditional broadcasters address that, you know do we just sit back and go, well we’re still the only mass market medium in town, and that’s where we’re going to stick to, we’re going to stick to our [xxxxx] and to a certain extent that is still going to be a big part of the strategy, because we will still be the only…

Sure.

And that will become more important in a fragmenting market that’s increasingly more important, but at the same time, you’ve got to say, well let’s look at Pay TV not having a massive impact right at the moment, but 10% of prime time viewing is of Pay TV Channels. Now they’re spread across 200 channels and ours is spread across 5, but that’s going to increase. So how do we try to sure ourselves up against that leeching of our audience out to other mediums, well our view is that we should be doing that by offering more strength of content.

[xxxxx] a bit.

That’s right, and we’ll have a primary channel and that will still be where everyone goes, but we’ll be able to address some of that need for niche content and perception that there should be more and all that kind of stuff. And also hopefully whilst we may be spreading our advertising dollar across more content at least it won’t be going elsewhere.

Sure.

So, the trick is to try and make sure that you’re not sort of spending so much on the new content, that you end up with more money going out than coming in, but I just don’t think that we can sort of sit back and go, look it will be fine. We should just stick to our knitting. That’s not our view anyway, anyway.

Yeah. Yeah.

And certainly it’s not my personal view either. What we’re seeing overseas is advertising revenues continue to rise, despite declining audience share and audience numbers on…

That’s interesting.

On the major networks. And our view…

Is [xxxxx] in years?

Yeah, the value

You know [xxxxx] medium left.

That’s right, that’s right, so in fact in some ways the value of it increases, while its reach decreases.

Yeah.

I’ve got… I’ll give you a copy of our submission on Multi Channelling Review, because it does touch on quite a few of these issues and why we argue about those things. And it also talks about in general terms, what kind of content would we expect to see on multi channels, how is that going to affect other industry sectors? Is it good for the production industry, not good for the production industry, you know, whatever. And it does draw a bit on some of overseas experiences, so that might…

That’s something I’d like to see.

That might be interesting for you. But I mean for the production sectors, we don’t see, certainly in the short term a really immediate benefit from multi channels, because I just don’t think that it’s realistic for people to be calling for, yes, every one can do multi channelling, but you should all have to have the same 55% Australian content programs otherwise it’s just not sustainable. Either you want these things to happen and to grow, and then maybe one day they will be able to sustain a certain regulatory burden, or you just kill them at the start because no one is going to do something that has those rules attached because it’s just too expensive.

Under the Free Trade Agreement, can they regulate that anyway?

They can, they can put a maximum content rule on multi channels of up to 20% I think.

Oh, right.

And but it’s not mandatory. So it’s a question of when it would be introduced or if…

Because it would kill it at the start.

Yes, and I mean the other thing I’ve tried to, when I’ve talked to the AFC and people about these kind of things, but I have sort of said, look the other thing that you’ve got to recognise is that it actually has some value even without these content rules because it creates an important secondary market for your work and we have very limited secondary markets for Australian product. I mean we… overseas sales the bottom has fallen out of not long ago, so there is some limited sales opportunities there, there is some sales opportunities in Pay TV and this is just another avenue for sure, you are only doing the work once but you may be getting increasing residuals and all that kind of stuff, so there has got to be some benefit there, even if it’s a small one to begin with.

Well there’s also secondary benefit that if by having them the multi channelling, I mean you’re holding in place the revenues for in large part for the free-to-airs, the free-to-air’s fundamentally where they’re going to get their work from for along time anyway.

Yes, well it’s a terrible sort of love hate relationship commercial television has with the production sector and…

Inaudible

And well I you know, you know it was funny and you would understand this, you know when you come from public broadcasting into a commercial area, I mean it’s an interesting journey because you come from a land where you sort of think we’re doing the right thinking people, we’re doing all the good things and you kind of tend to think of commercial television as slightly evil, but once you get here and they start paying your bills, you start thinking in a very different way! But you know, when you start looking at the figures, I mean exactly what you just said, 70% of production is underwritten by the commercial television sector and you know so and at Channel 7 where we’ve got lots off in-house production and that kind of stuff, it’s a bit like the ABC in the sense that it’s a really important training ground for people. You can come here and work on the shows that have been running for 13 years and that kind of thing, and it gives people an opportunity to get into the industry sometimes it sustains people who want to go off and do independent work between shows, but they come back and they know they’re doing their… it might be very run-of-the-mill work but they’ve got something to come back to and those are all really important contributions, and important to sustain and we’ve always had a really difficult time with SPAR for example who just seems to race out there, arguing for full on new network competition, which we see as very different to.

Multi channelling, yes.

Multi channelling, in their impact and that kind of thing and this sort of deluded belief that if there’s more people out there, there will be more people to sell to, well that would be true for about 3 or 4 years, and after that it would be very ugly.

I should think it would. Are they still looking for independent quotas?

Yeah, yeah, well they certainly were in the last Australian content round and they succeeded to some extent with that, but by… there’s increased points in the drama quota now for independently produced programming that where you pay a certain amount, stipulated licence fee or above per hour.

Yep, and you get brownie points.

You can basically produce less content for more points if you buy it expensively from the independent sector, that’s the result of that thing and now when you look at Channel 9’s drama hours and it might be interesting to go into the AVA website and look at the compliance figures for the last few years. We can see, they’re very detailed what they publish, they haven’t come out from last year yet but they’ve got 2003, but Channel 9 who argued very strongly for this independent production quota produces the least number of hours than any of the commercial networks by stacking their product into the supposedly high-end kind of stuff which gets more points and therefore allows them to do less quantity. And everyone sort of sneers at Home and Away and All Saints and take those productions like that, but you know these are the people’s bread and butter.

Yeah.

You know, and actually they’re no worse quality that a lot of other stuff.

What’s that saying, if Channel 9 is doing that, what’s that actually, what are they trying to avoid, are they trying to avoid having the bulk of Australian content on air or are they just happier to work with more certain material?

I think they are trying to do it in the most cost effective way, so they are prepared to pay a little bit more, because ultimately they can spread it across less hours and I think the cost per hour for them you’d probably find is lower.

Yes, that’s true.

But you know you might want to talk to them about that.

I will, I will.

But they‘ve done a lot of work with sort of… I think they had Egon Zender or McKenzie’s or someone through looking at all of this stuff before they put their submissions in on that point. So, anyway… sorry, so.

So cross and foreign, multi channelling…

Cross and foreign, multi channelling, PDR’s – big issue. Can’t really say where it’s heading right at the moment, you know there is very early research from places, Australia is different because we’re 80% Free-to-air, and 20% Pay. So lots of the experience from the U.S where everyone is cabled and the U.K where Sky’s got quite a significant penetration, are may be not going to be directly transferable. But what you can say is it does challenge the broadcasting, the commercial broadcasting models.

What’s the history on VCR’s?

Well you know they’re sort of like 87% penetration and most of people can’t see the clock, so they haven’t …

I know PDRs are easier, but …

Well the reason they’re easier and this is the key issue for PDR’s, and this is where the difference in the industry makeup will become important, a PDR is only a glorified VCR, as you’re eluding to, unless you’ve got the functionality that make it easier to use and that functionality depends on them having an EPG.

[xxxxx] EPG yes.

And one that links to their functionality and unless you’ve got that, their appeal is going to be limited, although the extra storage and all of that, the live pores and those kinds of things I think will be interesting to people, and you know if your mother in law rings in the middle of your favourite program you know, you don’t have to miss the end of it and…

It’s not an absolute [xxxxx]…

All that kind of stuff. Is there a driver? I think Sky Plus recently released some numbers, their PDRs now are at about 80% of their… you know out of 7 million, they’ve got 640 odd thousands. But their latest quarter figures I think shows that about 20 or 30% of people that subscribe to Sky Plus, in the last quarter were actually new Sky subscribers.

Yes.

So that was an interesting figure, and it will reduce the churn hugely, so.

[xxxxx] about to.

They’re about to bring theirs out, and I‘m hoping to go along and have a look at it next week sometime and see how it works. So, you know, but some of the figures you would have seen probably from your own research, people are saying 60% of viewing is recorded and 40% is live. In the recorded viewing you know some people are skipping up to 90% of ads. Now it’s different in the U.K and in the States. In the U.K the Sky Plus box doesn’t have an ad skip function, you can’t see where the ads start and finish in just…

I don’t think Foxtel does either.

No they won’t be but it will be like fast-forwarding your DVD. So it’s much faster than normal so it’s not going to be, you won’t miss…. See a lot of VCRs, if you fast-forward your ads you’re still basically getting the message, because you can see it and all of that sort of stuff.

Yes.

There’ll be a bit of that with PDRs, but you know… so that does challenge advertisers and that’s going to impact content, you’re going to see different advertising models.

Yeah.

Probably a lot of people have said this to you.

But what a lot of people have said is that it’s… that’s what’s worrying them. Where the advertisers will be and what that means for Australian content, but nobody has actually sort of focussed on what it might actually do.

Well, and that’s because everyone is still experimenting, and you know James Murdoch just gave an interview a couple of weeks ago on PDRs saying, oh you know they’re very terrific and all that kind of stuff, and yes we are thinking about what all that means for advertising and advertisers are very important to us and then immediately says, well but they’re only 8% of our revenue. So that’s how important they are, you know, whereas for us they’re 100% of our revenue and so it’s a much bigger problem. But it’s also one of the reasons why they will have more trouble penetrating in Australia because there isn’t free-to-air EPG, you don’t have that kind of close system where you can have the ease of use, and whilst I see it as an inevitability that that will happen, it will take awhile.

I remember when I was still at the ABC; there was a huge ding-dong going on about who would have ownership of the EPG.

Yeah, well I think everyone has moved on from ownership of the EPG and is working out whether there will be an EPG.

Yeah.

So, the ABC has done a lot of work on a common EPG and in fact they’ve designed something that could go out. It wouldn’t function with the PDR at the moment because it’s in a separate data stream, it would use MHP. You might want to talk to, do you know Chris Winter?

Yes, god yes.

Well he would love to show you all their EPG work and all that kind of stuff.

I’ll give him a nudge, it may not surprise you to know that the one group that has been thoroughly wary of any approach from me is the ABC, it took them about 6 weeks to reply.

Oh.

And know… they’ve put me onto somebody called David Sutton, who you might know.

Oh I know David, yeah, no, you don’t want to talk to him.

No, I don’t.

I mean, well you do, you do, you do want to talk to talk to him but…

I do want to start but …

Phone him, I mean Chris will just have you in and at least give you a demo and show you what they’re up to, because they’ve got their whole election thing and whatever and I’ll give him a call, probably when you come back might be best because they’re launching their multi channels.

Yes, I know.

And he is in charge of that.

In charge of that, okay.

But you know you really want to be talking to him or Lyndy Marshall or you know someone like that.

Yeah, I know what’s going on… Russell will have the willies.

Yeah, but Chris will…

Is this a Trojan horse?

Chris will have a coffee with you on the weekend and tell you what he thinks about it, but you know I don’t agree with everything Chris say’s but you know…

Yeah.

But he’s a good thinker and he’s got a good mind and he’s certainly in the forefront of what they’re doing there. So, he said…

But an EPG has to come.

An EPG will come.

Yes.

And you know, Channel 10 is cooperating with the ABC as one, and SBS is giving it data and we’re looking at it, so but we’re looking at it on the basis at the moment that we’re still very cautious about PDRs. And so if we participate, it will be on the basis that we feel satisfied that that data is not going to be used in any other way. One of the other reasons why we feel cautious about PDRs is not just advertising, is Digital Rights Management, which is going to be a big issue.

That’s a huge issue.

And until we feel… we’ve got studios saying to us, what are you doing about digital rights management, you know and once you‘ve got those mega gigabytes, hard drives to copy everything and potentially the ability for people to disseminate from everywhere, that’s a really big problem, so until that gets sorted out, that’s another reason why broadcasters are going to… in a Pay environment, you’ve got conditional access.

Yes, sure.

You’ve got control over all of that. In a free environment you don’t. And those are issues that are really going to need to be worked through very carefully, before I think we’ll see PDRs take off very much in Australia.

That’s interesting. There is the potential for an explosion in power assuming they come.

Yeah.

Yeah.

And also just the potential for our suppliers to be saying, hello – we’re not giving you that. But they’re already saying that.

Yeah.

They’re already saying that when they give us HD stuff, they’re already trying, you know they’ve been on about digital rights management for 3 years and then they’re serious about it, so those are going to be big issues. To be honest with you…

What does it mean in terms… just out, sorry it’s slightly brutal but, that whole question of digital rights management, what does it actually mean in terms of the value to a commercial network now in particular now of having multiple runs.

What do you mean?

Is it a problem? I mean what is the value of one, two, three and four actually being reduced by the arrival of something like PDR? I know it’s very effective to sew how you scheduled Desperate Housewives in its first week; I don’t whether you’ve gone on with that, or whether it was just the first week.

Yeah, we’re still doing a repeat.

Which I thought was a fascinating piece of scheduling.

Yes. It’s amazing and the number of new viewers and repeat viewers was also very interesting.

Yes…

Because I think…

I don’t know the figures, I’m not surprised by the new viewers, I’m surprised by the repeat viewers, although I think it’s very funny.

Oh no, it’s terrific. But I think across in the first week, we had 2.5 or so million watching the first night.

Yeah.

Then we had another 1.1 on the Thursday and then I think we had another at least ½ a million on the Saturday, we’re not doing that many repeats now.

And the Saturday was late, wasn’t it?

Saturday was late, and we did the same with [xxxxx] just one repeat with Lost, but there was something like 700,000 people that watched it twice. So… and maybe that was because there was nothing else on but it was very interesting.

Or their partner had come in or…

Yeah, yeah it was quite intriguing.

I just I mean… it wasn’t specifically your scheduling that raised this question, but when I thinking about it I was just wondering in fact, what the value of those secondary, you know ones, two, three and four, is anymore in a world where people may be recording much more through PDRs.

Yeah look I haven’t thought a lot about that but I guess what I’d say is that even the best PDR probably might only have, I don’t know 50 hours of storage,

Yeah sure.

So, I guess at some point, well I guess people could burn them onto a disc.

Yeah.

I’m not sure and that’s where you’ll need to talk to someone that knows more about that technology than I.

There’s [xxxxx] out there and I want to do it twice.

You want to make a library or something like that, but I mean a lot of people I think with VCRs, even the people that do time shift say so, if they don’t watch it in the first week, they tend not to watch it, so we would already amortise or divide up the value of our program rights depending you know, most of it gets expended in the first month…

In the first month, yeah sure.

But it’s going to create a challenge if we do get multi channelling for us to change some of our contract [xxxxx] too because we’re still based on you know free run for 5 years, but a run’s a run, whereas in Pay TV a run is anytime in 24 hours, time shifting would be one of the things that I think we will see on multi channelling.

I bet.

Yeah so, for similar reasons desperate to work in that way.

Simultaneous transmission on a multi channel, would that be still a single run or is it that…?

Well yeah, well that‘s how everyone’s treating it here so, because we’re required to do it legislatively anyway. So yes, when… I mean at the moment it’s say we run something on analogue, SD and HD, that’s not three runs, that’s just one run. And all the studios seem to have accepted that.

So cross and foreign, multi channelling, PDR’s and digital right management.

Yes, and there was one other thing that was floating around in the back of my head, and I’ll have to come back to it because…

Regulation?

Well… I kind of… I just… I think we’ve… you mean like censorship regulation or…?

No, I was thinking rather more of Australian content regulation, only if those business models start to change that you were talking about earlier on, if the business models start to change for whatever set of reasons, I assume that the AVA would pretty quickly lose its leverage for regulation for Australian content.

Yeah.

I mean if your revenues for whatever set of reasons start to reduce from their current level, because of massive – and I don’t just mean 7, I mean free-to-air generally – because of competition from other platforms, the leverage left to the AVA to say that we want x amount of Australian hours per annum in [xxxxx] or reduces I would imagine pretty rapidly.

Oh absolutely, there’s two…. Yeah because I think we’ve reached the zenith of where we’re going to get to with Australian content and in fact the Free Trade Regulations have very much ensured that, but what they’ve also ensured is with government caving in on the Australian content debate last year, that to change that 55% quota that’s going to need to be legislated too now, whereas previously that would have been an AVA thing to just have a look at.

Oh is that right?

Yes. So that 50… but not the sub-quota.

They’ve reviewed it all to change the balance.

Yes, well no the balance is still discretionary, so children, content, drama quota, doco quota, they’re all still just AVA standards.

Right.

But the Australian content 55% requirement is now legislative requirement.

That’s fascinating, so if they wanted to reduce it from there, they would actually have to pass a law.

Yeah, so… but yes, and that has reminded me of the other thing that I thought of as one of the key issues which is whether we get a new licence.

Oh, really?

Yeah, whether there is a new commercial licence.

Oh I beg your pardon!

No. No. Not us.

I thought you were getting yours renewed.

Oh, no, no, well we basically have a licence in perpetuity, because of the way the legislation works, unless we did something very unlawful, there is a requirement that our licence is renewed every 5 years, but…

The fourth channel.

With the fourth channel, that will very much alter the dynamics of the industry and I don’t just say this because it happens to suit Channel 7’s purposes, but I actually do believe that it would be very bad news for the industry.

Tell me about that.

Well I think you know, in the short term which we touched on before, you would see an increase in demand for Australian content, if everybody has the same rules. It’s equally likely that they would say, just as they did with Pay TV, well since you’re coming in behind the 8th ball, you can have a content holiday. There will still be some increase in demand for content, but not as much in those circumstances. In any event there is going to be, with more players looking for the central demographics, because despite John Singleton’s protestations to the contrary – and Kath might have something to say about this – but we’ve done a lot of financial modelling on how a network would have to work, even if you did it at the very lowest cost you possibly could. You really need to go for, if you are an advertiser funded model, you need to get enough audience to attract enough dollars to make it worth your while and that means you need to go for the same audience that everyone is going for. So the idea that we are going to have a channel that spends a lot of time out at NIDA, taking those interminably boring student productions, and people are going to watch that and pay to advertise on it, I mean you know yourself from SBS, how hard it is to even generate 5 minutes of advertising time, on a niche channel and niche audiences don’t deliver niche revenues, you know!

I just couldn’t understand… my assumption is and I am afraid I probably shouldn’t be saying this on tape, but my assumption on it was that there was a second plan down the track somewhere.

Well, the plan is everyone… the plan is the oldest plan in the books, which is just get half of what you want, then tell everyone how much money you’ve spent and how much commitment there is and you know whatever else, à la Pay TV and then spend the rest of the time whingeing about all the rules that you agreed to just to get in the door and gradually try to get rid of them and eventually you are off and running.

Eventually you put on the horse racing.

Terrific, yes. So that’s… I mean we’ve used that tactic ourselves, yes, absolutely you know and [xxxxx], this is a line that should be off the record, I mean that would be Seven’s position in a relationship to free multi channelling. We’re always been openly about commercial… subscription multi channelling because you do need another revenue strength because you can’t necessarily support very many free multi channels with advertised funding, and you can even see that in Britain all the freebies stuff is funded by BBC.

Yeah, absolutely.

And they’re hugely wealthy and all that kind of stuff, and that’s a market three times as big as ours. We’ve got a very small market, there is a limit to what we could support with an advertised funded model, so you’re going to need another revenue stream, but if someone says to you, would you rather have free multi channelling than none at all, we will say absolutely, because in a few years time we will say, you can see we’ve done all these things, we’ve made good.

We’re good people and it doesn’t work!

Well we’ll say it’s driven penetration which it will, and all those kinds of things, look at how much money we’ve spent, we need some way, this is not sustainable, and at that point you’re in a much better position to argue for the next thing. I mean we’d love to get it all at once and that might happen too, but and with the increase in consolidation, this is the structural issue that is probably equally important and that’s the emergence of the monopoly in Pay TV in Australia and I think that has a bit implication for the way people are thinking about issues like fourth license and other things because they can see that Pay TV is a much better position to be exerting pressure on other media sectors and you know the whole debate over anti-cycling and the ashes cricket at the moment is just a part of that, that’s about Pay TV going in there and flexing their muscles buying up rights around the you know, using the letter of the law as opposed to the spirits of law and getting in there, you know but that all about them trying to get bigger and better and good on them but, I think there is a general acceptance now that well I mean Optus is all but out of Pay TV, Most people are saying that they are subscribers numbers are dropping well below 150 now,.

Optus?

Yes.

Yes.

And that has all sorts of financial implications for them and at that point and also for exactly the same reason that the whole Foxtel thing about we have to get you to approve this deal, so we will digitise, we’re going to spend all this money on digitising if you… but only if you let us do this deal, I mean that was all a load of hokum, because their analogue boxes are only supposed to last 5 years.

I see.

And you know, have a probably a life of about 7 or 8, but they were amortised, and out of the 5 there are no more manufacturers of analogue boxes.

Ah, so they had a huge turnover [xxxxx]…

So, they would have had to digitise anyway, because digitising just means swapping out the boxes. And so, you know, so this whole idea that all these other concessions had to be given so they would digitise, and Optus at the same time saying, you have to give us these concessions so that we won’t exit the market. I mean you know, it was all a load of hooey – I can’t remember why I’ve charged down that path, but anyway Optus is facing that very problem now though, because their boxes which are analogue are coming to the end of their natural life.

Yeah.

They actually have to make a decision, do they swap those boxes out or don’t they? And it’s not worth it for them, why wouldn’t they just resell Foxtel. So those sort of… that kind of big structural issue, which is coming to a head now and you’ll see Foxtel probably buy out Austar…

Yes, that’s what you’d expect.

Or some variation of that deal.

What about Telstra, it raises the issue of the Telcos.

Well it’s one of the reason I don’t think we’ll see cross media happen before T-3 because I think that despite the fact that Telstra can play in all the media worlds now, one of the impediments has been 52% government ownership, and I just don’t think that realistically – and I could be really wrong about this and we’ll all know within the next 12 to 18 months – but I always thought the maximum value of sale of Telstra would be realised by holding off media ownership laws until after the Telstra sale went through, and allowing that to be bedded down so that whoever owns Telstra is in a position to take advantage of whatever flurry of deals occur once those laws change.

Yes.

Not because they’re legally restricted now, because they’re now subject to any cross media laws but because…

No well, [xxxxx] legal position, yes.

Yeah I just don’t think they can and even though we know that they seriously did consider buying Nine, and seriously did consider doing the Fairfax deal, I mean the government’s position in all of that would have been quite untenable.

Well untenable, yes it would be.

Yeah. So you know I think… that’s why I don’t think there is any hope for cross media, I mean I would be surprised if that didn’t happen till well into next year.

Yeah.

But…

Do they still will for it, in government do you think, or… I mean Howard keeps saying he’s not going to die in the digital, which it has always struck me as being a remarkable statement because it suggests, in one sense it suggests a lack of understanding of the massive importance of the whole audio visual industry.

Well but on the other hand, he probably thinks, no I think he does think like this, everyone seems to be doing okay, there are really important things like I think Howard has a very good understanding of how much people value their television, for example. Their free television.

Oh, absolutely yes.

And you would have to be mad to mess with that.

Yes.

Are people casting their votes on whether these laws happen? All right they’re not, so why would he care, he’s got… his legacy is all about other things so he doesn’t…. I don’t think he cares much. And at the same time people like Packer and Murdoch are doing pretty well without the changes and buying up lots of other media and getting involved in other ways right around the side of the rules.

Yeah true.

Which is one of the reasons that we’ve argued that the… I mean we support changes across media rules, but for a completely different reasons to lot of other people, because we say, well the current rules are outdated because they just look at three media types and they… you know we don’t think Internet media and stuff is so advanced that that’s necessarily a candidate for any form of regulation but, you would have to look at Pay TV now and say, Pay TV is pulling in you know more than a billion dollars of revenue every year, that’s more than any commercial network, you know they’re in 25% of homes, they’re Australia wide, they’re a monopoly, I mean you’d have to be… they are owned by the three biggest media companies in Australia. And they’re completely outside any set of rules and it’s very unbalanced and so people like us are constrained and other people are sort of building empires around the outside. Good luck to them but you know that’s… it’s something that we are going to have to grapple with.

Yes.

So, Telstra, I think offers an opportunity to maybe be a new… well they’re an existing power in media already with broadband and buying up some of the AFL rights and all of the things that Graham Tanner was going on about. But they potentially offer a bit of a counter point to the Packer / Murdoch dichotomy, you know, we’ve carved up Australia although we’ll deny it till our dying day but, you know, most people do believe that there was an agreement in London to basically share things out in a fairly equitable fashion and Telstra offers the only opportunity in Australia I think for someone to come in and turn themselves into maybe some kind of challenge to that status quo.

So who becomes the Managing Director then actually become a very key issue.

Yeah, yeah and whether they ultimately sell off elements of their business too.

Yes. No, all I meant by that was that to date there, whatever their strengths and weaknesses have been or not been in content.

No, and there is a huge debate about is… is it really the right role for Telstra, you know.

Sure!

Should they stick to their knitting and just stick to being a carrier. And we would have argued that very strongly a few years ago.

Yeah, that’s very interesting.

Because their forage into content through Foxtel was actually very damaging to what we see as being the development of Pay TV in Australia because of Telstra’s inability to pick between being the content monopoly of the…

Or the carrier!

… carrier monopoly meant that they just couldn’t get…

Toppled the whole thing.

Well in the end they did neither. You know a normal carrier would maximise the value of their asset, like the cable by getting as many people to use it as possible. What Channel Seven found was when it went to use the cable it was told that there wasn’t any space, which was a lie. Because they subsequently found 10 extra channels to get the content sharing deal through, and that was driven by the fact that rather than acting in what should have been a natural way, they were diverted by the fact that they also thought they wanted to block everyone out.

Inaudible

So that was done…

That’s in court now?

July.

For some reason I thought it was started.

Well they’ve got like directions hearings and discovery, and this and that. But the real hearing has just been set down for July 12th I think and it will probably run into next year.

Yeah, I was going to say that.

Yeah well at least 6 months, of hearing dates.

Are you doing that?

No I’m keeping right out of that because it’s basically a full time job on its own.

You’re too young!

And I hate litigation and I’m really bad at it ever since I cried in front of that Judge, I’ve never done that… so!

END TRANSCRIPTION

CD 2

Interviewee: That’s that… Now, we’re still on question one.

Lloyd James: No, we don’t have to be still on question 1 because you‘ve sort of [xxxxx] those issues. Out of them, questions 2 and 3, finding resolutions to those issues and this is entirely, this is you personally, this doesn’t have to be Channel Seven or whatever but what is the best most realistic outcome that you could… that you would wish for with these issues being resolved, partially resolved, unresolved or so basically [xxxxx]?

Well I actually really do believe that getting some kind of subscription multi channelling on the DTT Platform is really critically important because of the effect that… the growing affect that Pay TV is having on other media sectors, but particularly free-to-air, and you can see it very easily in something like sports nights, where you go to buy a particular sport, you want to be able to offer, that’s the sort of key for driving your business and all that kind of stuff, if you don’t have some kind of ability to offer some kind of Pay rights.

Got you.

You’re really out of the game because… and sure you can buy them and say well we’ll just pay you what they were going to pay but we won’t use them but of course that changes the whole economics of purchasing. So I think it is important to get some competition back into that sector because I think it’s going to be a growing sector, I think they will reach 40% penetration at some point.

Even without anti-syphoning, I mean even with anti-syphoning…

Well I think, I think they’re getting around that, well firstly I don’t think anti syphoning is the big impediment that they say it is. What the big impediment to me is, although it would help but I’ll come back to why I don’t think it’s so important, the real thing for them is original content and first run content and when they start getting that, which they will, and they’ve already started moving into that area with things like your Claudia Carvan’s series over summer.

You mean first run Australian content?

Both. Both, I mean you look at Sky 1 and all of that kind of stuff, they’re all running first run 24, the first run Desperate Housewives, you know…

The HBO stuff.

Yeah, a lot of good series that are available here for free, and one of the reasons why we say you shouldn’t have a new licence because all these things that we get to see here all the time, a good 50% of them you would have to pay for somewhere else in the world, but once they start getting that kind of stuff, I think that will help them with their penetration and you know they’re creeping in there, bit by bit and Australian stuff will play a part but it won’t be the only part. There will be things like output deals come up where you know, I mean but be realistic, everyone knows Seven has an output deal with Fox, it’s going to come up at some point or other and you have to be mad to think that some of that or may be all of that might not go elsewhere. So, these kinds of things are going to change the balance and it’s going to be important for the diversity of media outlets in Australia for other businesses like ours…

Inaudible

To be… yeah, to be able to put another string to their bow, and to diversify their business. And I think that’s going to important to the ABC next year because I just don’t think that the…

That’s the synopsis on the subscription basis…

I think they should have the subscription, I know that it was a very hot and fought issue and in when [xxxxx] was happening and all of that kind of stuff, but I do ultimately think that public funding is going to be under threat and you can see it happening and they’ve got to find a way to get some money in the door.

That’s interesting.

So I think those are really important things and they’re important structurally as well to… unless everybody wanted to accept in Australia that we will continue to just have completely mobile driven communications policies.

Yes, that’s an attractive [xxxxx].

Yeah well, you know it hasn’t got us very far so far but anyway, so that’s one of the most important things I think structurally that should happen.

Do you think it will happen? Leave aside the public broadcasters, when is it locked away, how long was HDA locked in place?

Well it’s sort of locked in place forever unless it gets changed.

Unless it gets unlocked.

Yeah. So there was a review into HD in the first half of this year. And there’s a review of the simulcast period by the end of this year as well.

And it’s data casting?

Data casting.

2007 [xxxxx].

Yeah but those… again those [xxxxx]ralls don’t automatically fall away, so the reviews that were… people put submissions in on last year, and who knows when we’ll actually see a report from government, are looking at what should be those post 2007 arrangements, including new licences and all those kind of things, but I mean data casting is just a bogus kind of a made up thing that…

Absolutely.

We were very successful in blocking out anything that was vaguely interesting and… if you’ve watched the… if you’ve watched the broadcast Australia Trial Data Cast Service?

No.

Oh, it’s fascinating actually, I‘ll show you it before you go.

Oh great. Because somebody was offering me a tape the other day.

Yeah, no it’s a… if you can have a look at it for 5 minutes, you’ll get a very good idea of what it’s like. But you know they’re being seriously very sensible, they’re retransmitting the Parliament channels and all that kind of stuff, so that’s all very good. So I don’t know what’s going to happen with data casting, what I think they are… that does raise issues about what is going to happen with all the spectrum, there is not that much unused spectrum sitting around, but there are 2 channels in every capital city. We see that as being a good use for subscription multi channelling, but we’ll see how we go. The other thing that is on the horizon and a lot of people are very excited about is DVDH. Which is this…. Oh who’s obsessed with it?

Is it mobile?

Yeah basically TV on mobile hand held devices, and it’s very early days, Giles unfortunately went to IBC last year so came away as everyone does from IBC, where there is always one thing that is the next big thing at IBC. And I actually thing DVDH will be a really big thing.

Yes.

Don’t know where it is going to head though, could be… it could be a really good secondary market because most of us don’t want to watch the whole program on something that big.

I’m sure.

But they might want to watch the news on the train on the way home at 4 o’clock instead of at 6 o’clock when they get home. Or they might want to see the best goals of the game while they’re out or… you know there is a whole lot of good stuff that can happen with DVDH.

I would think huge promotional possibilities for it and a lot of really interesting stuff as well.

Yeah, and maybe even a different kind of content you know, your sort of 5 minutes kind of thing rather than your ½ hour or 1 hour kind of thing. So there‘s maybe some new types of content you’ll see coming out that way. Don’t… honestly I mean it’s so new, I’ve seen demonstrations but there is no real businesses running DVDH [xxxxx] so, it’s all trials.

One of the big things must be going to be some kind of interactive gaming, I don’t mean gambling, I mean games.

Yeah, yeah, well that’s right I mean I’ve forgotten the numbers where the interactive revenues are for B Sky B which is probably the best measure but a lot of those are gambling, so.

No I didn’t actually mean, well gambling is on as well but actually I just meant people again with that commuter time or whatever, just having fun with a game for 10 minutes.

Yeah and even some of… like I think you’re right, I mean at the moment there is things like your online Who Wants to be a Millionaire, and that kind of thing or Deal or No Deal, I think we’re starting one.

Are you?

Yeah, and people really get into those things and that’s just sitting at home on the computer so, I guess if you could do it while you were out and bored and it’s another way to connect with other people, particularly if you can play along with others, I think group trivia games and that kind of stuff.

[xxxxx] music trade, I mean actually you’ve got half a carriage.

It would be like giving a mobile trivia night!

Or [xxxxx] game against each other, that’s right.

Yeah it would be like sort of [xxxxx] being on the train doing trivia or whatever, so yes and they were big successes I think with the Optus trial when they did that… they did do that digital trial for a little while and I think people like that kind of thing.

Did you know…? Is DVDH in place anywhere or is it still an uncertified…?

I don’t think it’s commercially good. They’re definitely doing a trial in Berlin.

Are they?

Yes, because you know they’ve already switched off their analogue service in Berlin, in that very German way.

I didn’t, somebody had said Hamburg, which didn’t…

Think they might be… yeah, they’re doing it city by city but Berlin was the first one to actually switch off analogue and they did it in that very German way of going, well, we’re switching it off, so get a television, or don’t. But you know, we will be switching it off, you will buy a television!

A customer [xxxxx] war!

Yeah all that sort of stuff, but of course it is a lot easier in a country like Germany where they are very highly cabled, so the percentage of people relying on over –the-air transmission is much lower, and they subsidise people’s sets and stuff like that, somewhere like Australia where 80% of the population are still dependent on over-the-air, it’s a much bigger undertaking, and the same in the U.K where I mean they’ve at least got a certain amount of cable and there is a lot more take up with the satellite, so.

Yeah, have we got a rigid date for analogue switch off at this stage?

No, the legislation was not for 2008 and there is a review of the analogue switch off date this year but I think it has to be conducted by the end of the year.

Presumably the analogue switch off date will be an entirely political issue, but no, sorry no, not entirely but will be a largely political decision.

Well any government that switched everybody’s television sets on that would have to be concerned about the ramifications for that at the next elections.

Even 5% of them.

You’d have to say until who you got to 95% penetration, it’s not going to be switched off. And that means, I don’t think I mean may be 2015 but that’s just a guess, who knows, because don’t forget it’s not just a question of people say, oh well we sold 700,000 boxes and so you know there are 7 million households in Australian and therefore we are getting up towards the 10% mark, well that’s just hooey because there are up to about 15 million sets in Australia and a good 10 million VCRs and all this kind of all depended on analogue technology, so until everyone buys a set top box for all their second and third and television sets, over 70% of homes have two TV sets now. And Ozchange’s a good website to get a good idea of what the universal plug.

Inaudible

Yes. Say dual technology for instance, and that kind of stuff but I mean the numbers of DVDs are going like that and it’s just phenomenal.

I was reading in the papers this morning and I mean and I think it was the Herald, that’s was talking bout the [xxxxx] the enormous sales of all television sets.

Yes, well exactly because they’re cheap. The average person spends about $520 on their TV set so, although we’re seeing lots of wide screen sales and all that kind of stuff, basically people still want to buy a cheap TV, and they’re still buying second and third TVs for whatever reasons, and until there is a way of swapping all of those over to digital, it won’t be being turned off. So there has to be… one of the things is price, I mean in the U.K the freebie boxes are now down around £40 and I think boxes here, you can sometimes find them for about 150 and of course if you buy an expensive set, they’ll give you a digital set top box, but until they sort of stop at 100, I think it’s going to be very hard.

That’s a bloody big price.

Yeah the $99 mark… it’s priced on so…

Just to go back for one second to the subscription multi channels, do you have the impression then that more and more people will be happy to pay for content?

Yes. I think people will have an increasing understanding of paying for content.

Because they’ve got used to paying for video stores and then DVDs and then…

And broadband.

Yeah, I was going to say that… more and more

Yeah, and all that kind of stuff, I think that’s true.

So that change has happened?

I think it’s starting to happen, I mean I still think people value their free television.

Understood.

But there’s… the younger people I think understand, you know they pay for mobile phones, I mean we all thought that untimed local calls were like be all and end all, and I don’t think people think that way anymore. And …

They don’t, even sitting in their own homes.

Well apart from anything because voice, actually there is no money in voice either so that kind of stuff is all basically free. And the other stuff you pay for but, yes, so I think people will. I don’t think it’s… I don’t think everyone is desperate to do it, but there is a growing acceptance.

Yes.

I think price is a big issue, unlike what Foxtel was saying in public statements, I think the price of Foxtel which is… I think the average subscriber pays $70 to $80, and I mean the basic package is $48.95 but hardly anyone takes that.

I know, yes.

And the maximum number of channels, we’re up to about $100 a month. Well that’s a lot of money. I think your more, your top up TV kind of models in the U.K where people are being charged £7.99 up front so, you don’t…

Which is pretty near, well on top of what they’re already getting.

Yes, so they are going out, they’re buying, they have to buy a new box. But they are very cheap. The box takes a smart card and it’s like a pre-paid mobile phone, so you go and you buy your TV card, and you pay for 3 months of top up TV and you can get, you know I think they do 10 extra channels. And that’s now they’ve just within a year, they’ve I think got 160,000 subscribers, their break-even point is 250.

Really?

Yeah.

Does the 7, or whatever it is, but say 7 quid, does the 7 quid Smart Card give you a certain amount of access for that, or does it give you 3 months of access. Because your…

You pay for per month up front, so…

That’s 7 quid or whatever it is…

Yeah, so if you haven’t paid, I guess you can pay as many months as you like.

It doesn’t run out if you, when you pay your 7 quid, you have got it 24 hours a day for the month?

Yes…. and then…

Because it’s not slowly grinding down as you watch [xxxxx] 7 quid?

No, no! So I think those kinds of model… you know there is a big debate in the U.S at the moment about what they call A-La-Carte cable channels which is people being able to say, I want this channel, this channel and this channel and not the 50 other channels that come in basic. And basic is often seen as the [xxxxx] anti competitive hurdle, because if you’re not in basic then you must be on the tier like World Movies was, if you’re on a tier then you’re really fighting for the 51st dollar or the 71st dollar or people’s discretionary income and that’s a lot harder than being in there on the ground floor. So you’re really only ever going to get 20% of the overall subscribers, who might be interested in paying a little bit more for your service.

Yes. Just the other way around on that subscriber thing for 2 secs, the notion – as you know on the Internet, wall gardens are sort of slowly growing up and they feel secure in the environment, and they can profile themselves for a particular kind of wall garden. Is that a pathway in the future for subscription television, and for subscription television to actually provide a kind of secure home including Internet access, normal online purchasing of the stuff, you know, do you see that as a future at all? I mean subscription television in other words using… delivering internet as well, delivering all kinds of services, actually becoming my safe place where the brand is my security. You see where I’m getting at?

Yeah!

So that you have my card and nobody else gets my credit card, nobody else gets that. If I want to buy a DVD, you go out and do the buying for me.

I haven’t actually really thought about it I have to say, I’d have to give it a bit more thought.

The only reason I ask is because if… there’s obviously a significant shift from being a mass market to having a relationship with subscribers, and the power of the free-to-airs with all of the weight of their brands already, the power for them was becoming if you like a secure home. I mean I’d love to know whether this is what underpins some of Nine’s thinking about ninemsm.

Yeah, look I don’t know, I think brand is a huge issue and I think that… well people do talk about people wanting, you know… I have a real question about how much people want to find all their own information and…

Well that’s it and that’s really what I’m coming to, yeah.

And that’s were I think brands will become a huge thing.

Yeah.

And trust is a huge thing. And so yes, do I sort of go to the Channel Seven Service and I know that they’ll offer me the best of, you know, three way television and some other channels that are very compatible with the Channel Seven service and it will all be very family oriented and safe and…

And I get my Internet access through them as well and that means that this, that and the other is already locked out, I know they’re are doing that.

Yeah I mean, there might be, I mean I suppose that’s where bundling comes in doesn’t it, I mean may be you’re not getting your Internet access from Channel Seven, but Channel Seven has got a partnership with someone that will say, well this person will do it for you.

Yeah.

I think there comes a point where maybe, when it’s sort of more your carriage rather than your content, that may be that sort of falls off a bit, because I think people are familiar with the fact that they can go out there and negotiate a price for those kind of services and they’re not necessarily going to trust that just because I get my internet access through Channel Seven, I’m going to get the best deal on all the other things. I think, as you say, subscriptions that’s a very powerful thing that they can bring in a telephone provider and a this and a that and…. But I don’t know if that’s about trust in the content, I don’t know if they… I think people still think differently about many of those things, it’s a price thing. It’s a I’m buying these services, they cost money and this is the best package for me. I don’t know if they necessarily will go, oh, Channel Seven, got to love it! I guess if they’re recommending that internet person, that might be the best person for me. But I do think people are naturally lazy and don’t always want to see… you know, I know young people are out there downloading pirate videos and all that kind of stuff, but at some point, who has time? I mean eventually all those young people get jobs and you work 8 to 10 hours a day, and you get home and you want to relax and be entertained and there will come a point, you know people say, oh young people are different, well they are because they’re young!

That’s right!

And they may continue to take some different habits into their adult life but one thing isn’t going to change. I just, you know, the whole idea, when we’re all in Kindergarten, everyone said, one day there will be this world where you are on holidays more than you are at work. Well it was a tremendous idea but it’s not going to happen, and I don’t think it’s ever going to happen. And the reality of life is that people have two or three hours of leisure time a day.

Right, I mean as a reality of life is that between the ages of 0 and 25, [xxxxx] what you are largely into, well in large part, what you’re into is pleasure.

Well that’s right, you’re still living at home…

But I mean, you start school and all of that.

Yeah, all that kind…

I remember when I was a kid we bought millions of records.

Exactly and you would spend hours in your bedroom listening to them and you would try to work out what the lyrics said.

That’s right. Or one which your parents would be happy about…

What’s that Pink Floyd song? All that kind of thing.

I’m still asking that question.

Trying to sneak the drugs in and all that sort of stuff.

Which leads us nicely to the worst outcome.

Gosh, well I think the worst outcome would be that we have… I think there’s sort of… the time is coming where if decisions aren’t made soon, we will have missed the opportunity, because there will come a point where the market is so locked up, it will be very hard for people to break in. So I think inertia in government decision-making would be a really bad outcome. And I think… well I mean the worst outcome would be the reversal of the things I have said would happen, so we’d get a new licence, we’d get no or very limited multi channelling, we wouldn’t see anyone else kind of enter the market in any powerful way, and we’d see basically things kind of reasonably… well finalised by Packer and Murdoch. I know I sound like I’m a obsessed by them but in fact, I do think they’ve played a very clever visual game and they really have been very good at locking up lots of the key content and lots of the key inputs, and exercising power in a way that means, sure they’ll let a few people get it, but if you are really irritating, they’ll squash you.

But this is… then it comes back to, and it always seems to come back to government decision-making. Because unless I’m wrong, I mean my impression has been for a long time that government has a… in one sense, it has larger roll in this country than it’s had in many other countries in defining very absolutely what’s available and what isn’t available. They’ve been… you yourself refer to the conservatism when you talk about any politician playing around with the status quo and they do so with great care. I have always had the sense that for whatever set of reasons and there might be a million of them, the British have been much more prepared at least to play around with their structures, and the Americans have been, although there’s an enormous amount of control of what takes place, it seems to me that it’s rather more local control than it is federally mandated control.

I think the bigger market in America makes a lot of difference.

Yeah absolutely, and it will in the U.K too.

A lot more sort of ability to keep building things up. In the U.K one of the main things that has made a difference… the two things I think are different in the U.K. One is I think there is just as much government control in the U.K, or at least that’s how they started out, possibly more than in Australia. I mean if you look at how their industry developed, it took them a much longer time to develop a vibrant commercial sector, and one of the big things that happened to challenge that, and maybe it was a good thing in a lot of ways was the ability of Sky to set up outside the regulatory structures, by going to Luxemburg I think it was and up-linking to Astra from there and providing basically an unlicensed service in…

Part of the service, yeah, following what radio had done.

Correct. And it really shook the government and you know, eventually they bought in and became a part of the establishment and all of that sort of stuff, but I think that loss of control, there was a complete loss of control, has meant that there’s been more, I don’t know why but I think it’s meant that there’s been more fundamental thinking about industry structures in the U.K, than we have enjoyed here in Australia. I mean we have these hooky reviews that are supposed to be looking at good policy and all that kind of stuff, but we all know, when it comes time for that report to be delivered to government, that it will be delivered in a fashion that’s been thoroughly discussed with the Minister of the Day and which will reflect the recommendation that doesn’t upset too many of the people that you don’t want to upset. And I mean some of the recommendations that have happened in the U.K, you know haven’t gone Murdoch’s way and he’s probably the biggest player there, I mean they just don’t have as much of a mobile focused industry as we do here, and I include Seven in that whilst they’re sort of a much more minor player, I mean obviously you see an opportunity to exercise power and you do, and it’s that power commercial television works in the long term.

It looks better and that’s…

Well, why wouldn’t you, but…

That’s right.

You know, for just the non Seven kind of person in this therefore, why haven’t we had white papers looking at what’s going, where the industry’s heading, and just a free ranging discussion about these things. I mean the U.K made a heaps better fist of doing what they did with digital television even though ITV digital fell down and all that kind of stuff. They basically reworked it into something else that’s become wildly successful, and they have really driven penetration.

Yeah, Absolutely.

You know, they’re up over 5 million boxes and there’s got to be something wrong with what we’ve done here.

I’m sure that part of it is about, which I think is a fundamental issue in this country for Murdoch and I’m sure that part of it is about two elements to do with public broadcasting; the first that the system started with public broadcasting and had a public service remit right through to commercial systems as well. Whether that’s good or bad is not the issue, it was there, and it was public and publicly debated. And I think the other thing is just one of the things that continues to drive public debate is the sheer size and weight of the BBC.

Oh yeah, well it’s a completely lopsided market in a completely different way over there.

Yeah, but it draws the debate and it means the debate has to keep happening because then the other owners have to keep bashing… I mean bashing the argument, I mean I don’t mean bashing people’s head in.

Yeah, no, no, no, it’s a very good point.

Here increasingly, and even though – I mean in all the time that I was involved with public broadcasting, you could see it’s power diminishing year by year by year by year by year. Not with the audience but its vocal power to the point where now I think and I’m not conscious of having seen either positives or negatives coming from the ABC publicly in the last 2 to 3 years.]

No, because they’re all too busy trying to pussyfoot around, not upsetting the government, which is an appalling state of affairs.

And that’s why I don’t think we have, that’s why, well sorry it’s not why, it’s one of the two main reasons. I think you gave [xxxxx] that debate doesn’t exist.

No I think that’s a really good point.

So how, then the question for how does on get that to happen? I mean in part, I’m hoping that the outcome of this research was still [xxxxx] in a public sense.

Yeah I mean it’s interesting that you’re conducting this research because it’s actually the kind of thing that one would hope should be generated by our communications department, about a really in-depth consideration of all the issues in a very non-partisan way, but you know it’s just so good that you’re doing it. I mean I do think the whole digital television parameter does need to be rethought, you know, I mean that sort of patched on things to try and keep everyone happy, it’s not working and it’s a huge public resource as well, I mean all that spectrum. It’s so… you know, given what I’ve said before as being, I do see some kind of competition for Pay TV as being very intrinsic to you know getting things or getting a more dynamic market I suppose.

Yes, that really interesting.

Yeah so I still come back to that as being one of the key changes. Gosh, yeah I just… I mean I suppose some change to cross media is necessary, because you can’t lock some people in and you know leave… I mean out industry, you know the U.K industry is distorted because of the size and power of the BBC, well we have a similar problem but it’s just the two big players that are equally, sort of outweigh everybody else on the other side so I think there’s got to be some kind of opportunity for people to form alliances, in a sensible way so that maybe we can try and even up that weight.

Get some value back into it, yes.

Yeah, how you do those is difficult. I mean we’ve had, I think the… I think there is also competition problems in telecommunications and I know Chris will probably talk to you about that. I mean just having the experience that he’s having in getting Unwired off the ground, and just taking on Telstra and Optus in that kind of environment, so effective competition, regulation, I think is really important.

Because am I right, it’s a bit of a muddle at the moment as to who is in charge…

So slow…

Well yes, but also is it the ABA, well sorry at this point whatever its new iteration is to be, the ABA? Is it ACCC? Is it who?

Yeah, well I don’t really care who it is but they are just so, as the moment it’s the ACCC and they don‘t understand the industry. They don’t understand broadcasting and broadcasting is not that complex. And they certainly don’t understand telecommunications and neither do I, but somebody ought to be understanding and effectively playing a role in getting some of those, you know getting competition off the ground in some of these sectors like broadband and so forth, and our broadband penetration is not very high in Australia, it should be much higher. There is lots of opportunity to do that, it can’t all be through cables. Obviously there has got to be other ways of delivering those kind of services, but if we let things unfold the way that we’ve let them unfold either in the TV sector or traditionally in telecommunications, they will wither because nobody can sustain an onslaught from, you know a billion and multi billion dollar company like Telstra expending all its energy on just stopping somebody else rather than looking at how they can compete in that sector.

That’s right. Have you come across anybody – this is off the record as being [xxxxx] but have you come across anybody in the Telecom… in the Telco industry who is genuinely visionary about how telecommunications will interact with television?

I’m probably not the best to ask because I don‘t know a lot of people in Telco but, let me think a bit more about it and if I can come up with someone, I’ll let you know.

I will be talking to various people in Telstra but I’m actually, I have real trouble getting my head around what the issues are for them in this?

Yeah.

I get my… because of my own background, like you I don’t have much trouble looking the other way.

There is the big issue in where broadband delivery of audio visual content is going to fit in this whole area…

And that’s the bit I can’t get my head around.

… and [xxxxx] challenge our established models. I think it’s going to be quite a lot, in 5 to 10 years, because that tends to be one of the main reasons that people’s kids are asking to get broadband.

Absolutely.

So, but I can’t give you any more insights into that but I will sort of see if I can punch out anyone.

Just if a name springs to mind. If you could control what actually happens, beyond what you’ve said so far is there anything that – and this is, if you like, a wish list – but is there something that you think that would absolutely crack the difference between where we are now and where we could be successfully in 2015?

No, I can’t identify anything we haven’t spoke about, I think everybody says this, all the industries are so inter-related and all the decisions are so inter-related that, you know, I can’t… There isn‘t one amazing thing that is going to change everything I think that’s, we just need incremental good policy decision and these are very important in the next 3 years I think.

Well that’s it, yeah in reality that’s probably it [xxxxx], because to some extent that is a wish list because it actually requires… somehow it requires sufficient voice arriving at Canberra or wherever for the thing to become, for the whole set of issues to become am much bigger, broader public debate.

Yes.

Rather than the sort of finally focussed politically oriented.

Well It’s commercially oriented usually.

Well on one side, it’s commercially oriented, on the other side it’s politically oriented.

Yeah, absolutely. Yeah, no so I can’t really add anything, I think it would just be nice to see more considered and future thinking decisions on this range of issues and there isn’t.

That’s great.

And that’s not… you know there are good people in this department.

I know, I know, I wasn’t being, it wasn’t meant as a personal problem.

Are you going to, are you talking to any bureaucrats?

Yeah, but it won’t… I think…

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