Dialogue: Sky's not the limit on the set-top box

Television New Zealand's latest digital initiative will
establish a system of open access that benefits all viewers, writes JAMES MUNRO*.

Tom Frewen, in a Dialogue article, observed that a broadcast transmission system was a piece of infrastructure, like a railway but with 1.3 million branch lines. They all had to be the same gauge to allow competing firms free access to all consumers and vice versa.

It is this principle that Television New Zealand argued before the ministerial inquiry into telecommunications and which was accepted in that inquiry's report in October. The principle is that there should be open access to all digital set-top boxes on fair, reasonable and non-discriminatory commercial terms. Sky resisted this intensely.

Mr Frewen also stated that if a signal could not be translated into pictures on a screen then it was not, by definition, free-to-air. This statement draws a line in the sand around existing technology and systems, ignoring how those systems came to be in the first place.

A viewer cannot interpret the analogue VHF or UHF signals into video and audio without the appropriate receiving equipment - a television set and an aerial. The signals cannot be accessed otherwise. Reception is, and always has been, a cost to the viewer in buying the appropriate equipment.

In a digital environment the appropriate equipment includes a digital decoder, or set-top box, irrespective of whether a signal is encrypted.

TVNZ will encrypt its digital signal. This has nothing whatsoever to do with the signals being free-to-air, but it has everything to do with protecting the integrity of the broadcast system itself and preventing the misappropriation of TVNZ's signals by commercial organisations that do not support open access to the set-top box.

Open access is not about carriage of free-to-air signals. It is about allowing organisations such as TVNZ to introduce other services without first requesting permission from competing organisations such as Sky.

Open access is also a two-way street. It offers Sky, or any other network provider, the same open access to our networks as we require from them.

In effect, Mr Frewen was arguing that the Sky digital set-top box, installed in about 15 per cent of homes, should become the default standard for digital broadcast receiving equipment. This is a set-top box provided and owned by Sky, not the viewer.

To follow Mr Frewen's logic and using his railway analogy, that is the equivalent of not only ensuring we all run on the same tracks but that we are able to use only the coaches that Sky provides, unless we have open access.

The TVNZ-Telstra Saturn deal promises more than the emergence of Telstra Saturn as a national competitor to Sky in pay television.

It offers the establishment of a free-to-air platform in digital broadcast that will serve those viewers who wish to move into the digital environment but who do not wish to become a subscribers to a pay-television business.

TVNZ will ensure that free-to-air set-top boxes are available to viewers who wish to buy them. This box will provide the viewer with crystal-clear reception of TV One and TV2, plus any other free-to-air channels that decide to take up carriage on the system. The free-to-air box will be capable of e-mail and will later be able to be used for internet browsing. Internet browse access will require an ISP subscription, as does a personal computer.

TVNZ and Telstra Saturn are taking all care to ensure that we use compatible broadcast standards to Sky. This has little to do with encryption systems and rather a lot to do with more arcane and tedious detail regarding megasymbol rates, forward error correction and so on.

Sky's encryption system provider and the short-listed TVNZ-Telstra Saturn system providers are signatories to what is known as the DVB simulcrypt protocol. This means that it is possible to broadcast two streams in simultaneous encryption under different systems to be received freely by enabled set-top boxes.

It is the absence of a commercial agreement between Sky and other broadcasters for open access to the set-top box that will perpetuate a two-box system. The technology is not an issue. In isolation of such an agreement between Sky and TVNZ, Sky pay-subscribers can, in the foreseeable future, continue to enjoy TV One and TV2 on our analogue VHF transmission, which reaches 99.98 per cent of people.

In the past decade TVNZ has not cost the taxpayers of this country a cent and has returned hundreds of millions of dollars to the Government and it seems apparent that the Government will require TVNZ to remain at least self-funding in the future.

As a commercially funded broadcaster, like others all around the world, TVNZ faces the fragmentation of its revenue streams through the increase in channels, changing lifestyles and alternative sources of entertainment.

This is why moving to future digital opportunities is a survival strategy. TVNZ's launch of its nzoom.com portal represents one small way in which it is attempting to mitigate the risks of the fragmenting media world.

Mr Frewen's claim that the TVNZ-Telstra Saturn deal is a partial privatisation of TVNZ is laughable. TVNZ was a founding shareholder in Sky, Clear Communications, CNBC Asia and Fiji Television. None of these ventures led in any way to a partial privatisation of the core of TVNZ. They all helped to establish successful businesses.

The TVNZ-Telstra Saturn deal allows TVNZ to leverage its strengths to provide for new revenue lines, thereby contributing to the maintenance of our self-funding status over the long term. The deal also establishes a system of open access in the digital environment which, in our small market, must be a good thing for all New Zealanders.

*James Munro is Television New Zealand's general manager of strategy.