Chris Barton: Do not adjust your set

News is a joke, public service broadcasting is dead, the future is pay TV and anything goes as long as TVNZ makes mountains of profit. Pictured: TVNZ's Mark Sainsbury with his lookalike Mark Muppet. Photo / Richard Robinson

Mark Sainsbury as a Muppet, tax payer funded Heartland and Kidzone programming locked up on Sky, TVNZ 7 as a shopping channel and now Sky and TVNZ in bed together in "Igloo" to create more pay TV.

Do not adjust your set. This is as clear a picture as you're ever going to get of the National Government's vision for television in New Zealand.

News is a joke, public service broadcasting is dead, the future is pay TV and anything goes as long as TVNZ makes mountains of profit. Crass commercialism rules. All that remains for TVNZ to complete its journey from public service state broadcaster to the dark side is for the complete Foxification of its news. Some would say that's not a very big step.

Competition is a casualty, too, with the Sky/TVNZ Igloo deal making Sky more dominant that ever and making the future of free to air television, especially TV3 and 4, very bleak.

It also raises questions that will have to be addressed in the Commerce Commission's "High speed broadband services demand side study" with a report due early next year. The broad aim is to ensure there is enough content, and enough household take-up, for the government to get something back for its $1.5 billion ultra fast broadband (UFB) investment.

Among the study's aims are: "To identify the factors that may affect the uptake of high speed broadband services in New Zealand - including home wiring, network neutrality, peering, IP interconnection, data caps and content - and to assess whether any of those factors are likely to amount to a barrier to entry or expansion into telecommunications markets." There is a simple answer. Sky's monopoly.

Not surprisingly, in its submission Sky argues that "content arrangements relating to broadcasting" should be excluded from the terms of reference because broadcasting is excluded under the Telecommunications Act. Which is odd because, among other things, the new Sky/TVNZ Igloo set top box will have a plug designed to connect directly to the UFB.

In an increasingly converged world where all media is accessible across a range of computer, mobile and TV platforms how will the Commerce Commission ensure that UFB does not become castrated by exclusive carriage deals with one content provider?

The worry would be Sky and/or TVNZ already have exclusive deals in place with telcos which means if TV3 or any other rival service wanted to deliver a video on demand service, they'd be out of luck. Anywhere else in the world, such deals would be deemed anti-completive and would result in both parties facing serious penalties.

As TV3 and 4's owners Mediaworks pointed out in its submission: "Such exclusive arrangements narrow consumer choice for variety of content and homogenises internet service providers, reducing competition and potentially increasing the price to consumers as well as the return on investment for investors in UFB." Mediaworks goes on to point out one of the drivers for consumer enthusiasm and demand for UFB will be the opportunity to receive video services that are not currently available on existing platforms.

And that it will be important to ensure no one content provider can require "exclusive marketing arrangements" with major telco companies, as this would inevitably limit new content options.

It raises concerns too that "a cartel style pricing model" could emerge through a lack of competition of content. And that "SOEs and /or monopolies allowed to exist in the present environment such as TVNZ and/or Sky cannot be allowed to use their state-owned/funded or monopolist position to exploit an uncompetitive advantage on UFB (whether it be in isolation or in collaboration with each other)." Too late Mediaworks - with Igloo it's already happened.

Contrast the cosy Igloo deal with the fact that all New Zealand Freeview HD TVs and set top boxes with an ethernet port now include the mheg interaction channel. That's licence-free, public standard interactive TV middleware that gives the set top box the ability to easily access content delivered via broadband. It's currently used in the UK on the Freesat and Freeview HD platforms to deliver the BBC and iTV players direct to your TV. That's vast content online from the BBC and iTV archives for free.

Yet here, under the Igloo deal, TVNZ is planning to extract money from contemporary and legacy publicly funded content held in its archive. This is legacy content already paid for through the funding its producers received when it was made and by advertising revenue received by the broadcasters when it was first shown. Instead of making it available to all for free as it should be, TVNZ is re-selling New Zealand's cultural heritage with absolutely no mandate to do so. If it's worried about rebroadcast costs there are internet-based TV stations like Ziln more than ready to step in.

As director Paul Brennan puts it: "We at Ziln don't expect the New Zealand Government, in the form of TVNZ with an exclusive taxpayer funded dowry of content to be our competitors in the TV business. They don't belong there and the sooner they are sold the better, of course leaving taxpayer funded contemporary and legacy content in public ownership for any legitimate New Zealand platform to carry for free."

It doesn't have to be this way. Instead of capitulating to Machiavellian lobbying by Sky, the government could decide to govern and bring in some rules to make broadcasting a fairer market. It could start with must-offer-must-pay legislation that would require Sky to pay for TVNZ, Mediaworks and other free to air channels on its platform.

Under such a scheme, Sky wouldn't be obliged to carry the channels, but if it did it would have to pay instead of getting the free benefit it enjoys. Fact - 50 per cent of television viewing on Sky is free to air channels. Why, in the absence of any government regulation, TVNZ never held out for its fair share of the mutual benefit both enjoy is a mystery. As one insider told me: "It's because TVNZ is thick."