This week Foxtel CEO Kim Williams used his NPC address to urge Government action on broadcasting legislation reform, timely release of digital dividend spectrum and the future development of Australia’s digital economy. Williams points to the delaying tactics of the broadcasting sector in seeking to protect their over-mature business model from the relentless onset of the digital age. Williams also highlights a role for the Productivity Commission as part of an acceleration of the reform agenda.

From AMTA’s perspective timing of access to new spectrum and the quantity of spectrum released via the digital dividend are critical factors in plans to meet surging demand for advanced mobile services particularly mobile broadband. Latest research shows that releasing 120MHz of usable spectrum from the digital dividend to mobile telecommunications would generate between $7 – 10 billion for the Australian economy. Our aim is to capitalize on the productivity, connectivity and mobility potential of mobile broadband in partnership with the Government’s NBN project as key elements of Australia’s digital economy AMTA CEO said.

The Business Spectator reports this week:

Those choking sounds heard around Sydney just after lunchtime came from the private equity owners of two of the three commercial television networks and the lenders to the parent of the third. At least, that is what one would expect their reaction to be, as news of Kim Williams’ address to the National Press Club in Canberra filtered through.

The Foxtel chief executive called for an urgent inquiry into the Broadcasting Services Act, an auctioning of the analogue spectrum the free-to-air networks has so fiercely protected well ahead of the scheduled "switch off" date in 2013 and, horror of all horrors, not only the removal of the prohibition on a fourth commercial network, but an opportunity for Foxtel to own and operate a new network.

 The debt-laden networks, two of which (Nine and Seven) are controlled by private equity and a third (Ten) whose parent, Canwest, is in the hands of its bankers, have successfully fought off the digital future for more than a decade. By convincing the Howard government, which "started" the digital conversion process in 1998, to defer the analogue switch off until 2013 (it was originally supposed to be 2008) on the false premise that they would be the drivers of digital penetration of households, the free-to-air networks have been able to hoard both forms of spectrum, staving off the threat of competition and protecting a lucrative oligopoly.

Their "success" in convincing that government to deregulate ownership while retaining their protection racket enabled James Packer to find his Alan Bond in CVC Asia Pacific, while Kerry Stokes quickly off-loaded Seven Network into a leveraged joint venture with KKR. Last week, the US switched off its analogue signals. In the UK the government will release its Digital Broadcasting Report overnight.

The Carter Report is focused on upgrading all the UK’s digital networks, encouraging investment in the digital economy, providing access for all citizens to digital technologies and ensuring local content. Here, while committed to a $43 billion new fibre-to-the-premises network, the government plans to review the Broadcasting Services Act in 2011 and decide what to do with the analogue spectrum in 2013 – which means it will be years beyond that date before that spectrum has been allocated and new services and service providers are operating.

Williams wants the government to bring forward the review of the act and he wants the Productivity Commission (PC) to conduct it. That, too, will unsettle the free-to-airs. In 2000 the commission handed down one of its most widely-lauded reports.

It advocated the switching off of analogue on 1 January 2009, creating incentives for the networks to convert to digital by charging them for the use of the analogue spectrum and advocating the sale of the returning spectrum two years before switch-off. It didn’t want spectrum-hungry high-definition transmission mandated and wanted minimal restraints on new services.

Oh, and it argued that restrictions on media ownership should only be relaxed after the barriers to entry to broadcasting had been removed. The Howard government ignored all the recommendations that would have liberalised the broadcasting sector and brought forward new digital services and de-regulated foreign and cross-media ownership in the opposite sequence to that advocated by the commission.

It did proudly announce it would make available two bundles of spectrum, but defined the potential usage of the new licences so narrowly that no-one put in a bid for them. They still lie dormant. Williams makes the telling point that the networks, the supposed drivers of digital take-up and innovation, are only now timidly entering the multi-channel environment.

The pay-TV sector, having spent more than $1 billion (about $600 million of it Foxtel’s) started its digital roll-out in 2004. By focusing their efforts on protecting what they have (Kerry Stokes deserves an honourable exception) the networks should have foregone the protected and privileged position they were afforded in exchange for "leading" the country into the digital age.

Williams describes them as "participants, but not leaders.’ As the PC said so long ago, the digital revolution promised new and better services within an environment where broadcasting, telecommunications and the internet were converging. It argued that policies should be technology and competitor neutral to encourage dynamism and innovation.

Between the unwanted spectrum that’s already available and the analogue capacity being squatted on by the networks there is probably sufficient spectrum to support a dozen standard definition services, or a potential host of other new digital applications. The mobile phone companies are eying off that spectrum as they consider the next generation of wireless technologies and applications – high-speed mobile broadband is clearly going to be a major element of the future of broadcasting. By auctioning off that spectrum well before 2013, as Williams advocates, it would be possible for the new licence holders to develop their infrastructure, content and business plans in time for a 2013 launch rather than somewhere closer to 2020 than 2010.

Williams’ push for a fourth (or fifth or sixth) free-to-air network will particularly annoy the existing networks. Their audiences are already fragmenting and their revenue bases eroding.

The notion of Foxtel being allowed to operate a free-to-air channel or channels would be acutely disturbing – it would remove another layer of their protection, the anti-siphoning list for sporting events, and allow Foxtel to bid for major events and competition in its own right rather than waiting to see what the commercial networks will offer it after they’ve picked the eyes out of the deals that only they are allowed to negotiate.

If the government is prepared to bet up to – or more, if required – $43 billion of taxpayer funds on a particular broadband technology because of the importance it places on high-speed broadband and the digital economy, why would it wait until 2011 to review the Broadcasting Services Act and until some years after 2013 for the new services to emerge?

It doesn’t actually need to ask the Productivity Commission to conduct another review. Just pull out the 2000 report, ignore the recommendations on ownership (because the Howard government did), change a few start dates and implement the rest immediately to end the protection racket and (belatedly) properly kick-start the digital revolution.