KEY POINTS:
Our television landscape is changing. The digital free-to-air service Freeview is up and running. New channels are in the offing. TVNZ has programmes available as video on demand. Sky continues to grow and will offer High Definition TV (HDTV) next year, as will TV3.
No doubt the Government will argue, at its conference on the Future of Broadcasting this week, that the transition to digital is on track. Certainly the first figures on the take-up of Freeview look healthy enough - some 20,000 set-top boxes (and presumably satellite dishes) have been sold since the Freeview satellite went live in May.
This is remarkable given that there is no new content available (apart from TVNZ's Sports Extra, coverage of the few sports that TVNZ still has rights to.) The only reason to buy a Freeview box at the moment is to get better reception.
But all this will change on September 30 with TVNZ6, a multi-service channel for children in the daytime, families in the early evening and adults in the late evening. It will have new programming as well as repeats of programmes broadcast on TVNZ, but will be commercial-free.
This new content may be attractive enough to persuade some viewers to spend $249 on an official Freeview box. But if you are a Sky subscriber, you may expect to be able to receive this new channel with all the other free-to-air channels that are part of the Sky package.
If so, you are likely to be disappointed. There appears to be a split within the Freeview consortium of broadcasters as to whether the new Freeview channels should be exclusive to Freeview or made available to Sky subscribers.
There are those who want to keep the channels exclusive, partly to sell more Freeview boxes, against those who want the biggest possible audience for the new channels and therefore want them available on Sky. At this stage TVNZ is not seeking to have its new channel available to Sky viewers. But although Sky is willing to discuss terms, it seems that TVNZ is in no hurry to negotiate.
There is the potential here for a public relations disaster. Sky is now in more than 45 per cent of homes and Sky viewers spend almost as much time watching the free-to-air channels as those they pay for. They are likely to be frustrated, if not angry, that a new free-to-air channel is denied them.
Furthermore, Freeview would gain widespread recognition if it could be seen on Sky. Surely the Government, which has invested $79 million in TVNZ's new channels, would want them to reach as wide an audience as possible.
This issue is simply another round in the long-running tussle between Sky and TVNZ as the dominant free-to-air broadcaster. It will come into stronger focus when the Freeview terrestrial platform begins early next year and when more new channels such as TVNZ's promised factual channel TVNZ7 are introduced.
By this time, the advance of technology will have raised the stakes. The Freeview box will be able to receive HDTV, a more sophisticated box than those now being sold for the Freeview satellite platform and probably more expensive.
Sky, and its free-to-air partner Prime, will be offering some programmes in high definition TV, as will TV3.
Sky viewers who want HDTV will have to upgrade to a new decoder or will have their digital recorders upgraded by Sky to be able to receive the HDTV programmes.
They are unlikely to be willing to pay for an additional Freeview box to access the new Freeview channels. Again, the opportunity to expand the Freeview audience may be lost.
In Britain, all nine of the BBC channels are available on the Sky satellite. The BBC believes that a key principle of public broadcasting is that its content should be available everywhere.
The could take a similar view in support of our public broadcaster. It could require pay TV providers to carry all free-to-air services, in what is known as "must-carry" legislation common in many countries.
For its part, TVNZ is certainly responding to the digital challenge. Its TVNZ On Demand service enables viewers to catch up on missed programmes, to view what they want when they want.
The site is ahead of TV3 in its range of content and its archival material is a tasty hors d'oeuvre for the rich menu that as yet lies unsampled.
But the outlook for TVNZ's core business is far from rosy. Advertising revenue, some 80 per cent of its income, is down on last year and prospects are flat.
These are tough and changing times for the public broadcaster.
From now the likely trend is that the Government will need to increase its annual investment in the public broadcaster to enable it to fulfil its public service mandate as required by the Charter.
TVNZ says its new Freeview channels will help it to deliver on the Charter. For this to be true, the new channels need to be seen by as large an audience as possible, or in the words of TVNZ's vision document "inspiring on every screen". They need to be seen on Sky.
* Paul Norris is the Head of the Broadcasting School at Christchurch Polytechnic Institute of Technology.
