Politicians put regulatory genie back in the bottle

Sky Television Chief Executive John Fellet. Photo / Kenny Rodger

In April, National decided to scrap the first major review of broadcasting regulation in decades.

Cabinet ministers Jonathan Coleman and Steven Joyce pointed to reports from the ministries of Economic Development and Culture and Heritage which found no need for such a review right now.

There is an argument that with broadcasting and telecommunications undergoing a period of rapid change, there is no point in second-guessing the media revolution and reining in one sector.

Twenty years ago, for example, few people would have guessed that the internet would become so pervasive.

The politicians who put the regulatory genie back in its bottle say that since deregulation in 1988, New Zealand has been served well. But as Sky gets near to signing up 50 per cent of New Zealand households, free-to-air television is at a tipping point.

Advocates for regulation - from restrictions on Sky holding key sports rights to creating a joint regulator for broadcasting and communications - say that doing nothing is dangerous.

Killing the review inevitably conjures up memories of National's approach to regulating Telecom during the 1990s.

In both cases National tips its hat to a philosophical commitment to property rights and to the unfairness of changing the rules after corporates have made big capital investments.

But the market dominance issues for Telecom and Sky are quite different.

Telecom was a privatised state-owned monopoly and used anti-competitive practices that hurt competitors and consumers - and arguably damaged the economy.

Sky was born from the actions of plucky entrepreneurs who risked their capital to challenge Telecom and the dominant state-owned Television New Zealand. Submissions from TVNZ and TV3 in the early part of the review have not shown Sky using anti-competitive practices.

Sky's dominance is not so much in its infrastructure - though with 46 per cent of the potential market it has largely shut out any pay-TV competitor.

Its dominance is more in content rights across a growing array of media platforms such as mobile phones, and selling that content on to other media.

TVNZ and TV3 complain that as Sky gets bigger - and because of its investment in free channel Prime - it will have the power to shut them out of obtaining rights to the Hollywood shows.

For local programme makers, the concern is that if the free channels' market share and advertising revenue fall, they will spend less on local shows - and that will put the programme makers out of business.

REGULATION DERAILED

* Sky aims to increase pay TV penetration from the current 46 per cent of households to 95 per cent.

* The Labour Government belatedly introduced a review of broadcasting regulation in 2008.

* TVNZ and MediaWorks issued dire warnings about Sky and called for new rules.

* The new National Government was sceptical and called for a summary of the issues.

* In February the officials' preliminary report concluded there is no need for new regulations.

* In April, Broadcasting Minister Jonathan Coleman and Communications and IT Minister Steven Joyce announced the broadcasting review had been scrapped.

SKY'S VIEW

* Questioned the need for a review in the first place, and the analysis of the department that launched it - the Ministry for Culture and Heritage.

* Said TV industry had developed well, with no need to change the broadcasting regulatory framework.

* Digital technology would mean greater diversity - which would be stifled by regulation.

* Wants the right to access free-to-air channels, and taxpayer funds for local shows on its pay channels.

* Dismisses criticism that it has little local content; points to the big impact of its pay sports channels.

* Opposed restrictions on its sports rights and says its exclusive rights are a big boost for local sports.

* Dismisses claims that it can outbid TVNZ and Mediaworks/TV3.

* Best approach is to leave things to the invisible hand of the market.