Sky's the limit for TV

By CHRIS BARTON

This is an update on the story of Chicken Licken - you know, the silly fowl who had an acorn fall on its head and thought the sky was falling. In this version the barmy bird has been staring at the sun too long and is convinced the sky is full ... of television. Problem is, in this case, the chicken is right.

At this juncture reader discretion is advised. This is a tale of greed, of a TVNZ chief executive behaving badly, of bizarre property rights in the ether, and of imprisoned tino rangatiratanga.

It is David Beatson who is rushing around with his friends at Mai TV saying "the sky is full". Actually, what they're saying is that TVNZ (the cunning Fox-lox who in the original story ate them all) is being beastly. Beastly because TVNZ has a rare commodity - a piece of virgin sky - which it won't let Mai Media lease or buy for its Auckland TV channel.

"We are really bloody annoyed with them," said Mai Media managing director Graham Pryor after two years of negotiations broke down. TVNZ's chief executive Ian Fraser reportedly responded with a considered: "I don't give a bugger ... Who cares?"

Contemplating the vastness of the sky, it's hard to believe there's no place in the heavens for Mai. But Brian Miller, who is the chief carver of the sky as manager of the Radio Spectrum Policy and Planning division of the Ministry of Economic Development, says there are no air waves left to slice.

"UHF [ultra high frequency] allocated to date has all been purchased and we certainly do not have any spares in Auckland."

UHF is the signal one gets with those spiky aerials for free-to-air channels such as Prime, Triangle, Juice, Maori TV and some Sky TV channels. About 800,000 of the estimated 1.36 million television homes have UHF aerials which are different from the old-fashioned aerials that receive the very high frequencies (VHF) transmitted by the major networks.

Regardless of who can receive what, unless Mai can find some clear air, its transmissions are going nowhere - meaning Aucklanders miss out on having their own regional channel.

But don't we already have a regional channel in Triangle? Not according to David Beatson, who with television veterans Robert Boyd-Bell, and Murray Roberts are partners in the Auckland-only channel.

"Triangle is not what would I would call Auckland local TV. It is access TV in which people pay to have local programmes played."

Mai TV is part of the Mai Media group of companies, owned by Runanga Ngati Whatua, and which, in 1996, launched the wildly successful Mai FM radio station. Its proposal is for a commercial channel as opposed to the not-for-profit Triangle, which uses UHF frequencies given to it by the Ministry for Culture and Heritage.

But while Mai TV would appear to meet some of the Government's broadcasting objectives, Beatson says the company never needed New Zealand on Air or other Government money.

"We predicated our case simply on being a self-sufficient commercial channel that would finance its production out of its advertising revenue."

Which is probably why TVNZ suddenly got out of bed with Mai - it was worried Mai would plunder its advertising market.

TVNZ chief executive Ian Fraser refused to discuss the matter, saying through a PR woman he was "not predisposed" to talk to the Herald because it has been "having a real go at TVNZ lately".

We tried to talk to Minister of Broadcasting Steve Maharey, but he, too, ducked for cover, saying through a PR adviser it was a matter for TVNZ. Sigh.

TVNZ's antics raise political questions. Is its thwarting of Mai's TV plans anticompetitive behaviour under the Commerce Act or just hard-nosed business acumen? The stoush also shows up failings in the competitive market allocation scheme for broadcasting spectrum. And TVNZ's stance flies in the face of broadcasting policy that promotes Maori language and community TV.

Fraser has given some dubious reasons for hoarding the Auckland channel once used to broadcast Max TV, such as needing it for testing digital terrestrial TV. He is also running a smokescreen - plans for a "New Zealand content channel" involving a mix of re-runs of current affairs, local shows, minority programmes and live broadcasts from Parliament.

But that scheme, referred to as a charter burial ground, and a way to head off Sky's proposal for a Parliament channel, has nothing to do with the frequency Mai wants. The "New Zealand channel" will employ another set of frequencies that TVNZ is also sitting on, those used by the defunct Horizon Pacific TV.

In a letter to the editor, Fraser said Mai's "business propositions had quite properly not been welcomed by TVNZ".

Elsewhere he was reported as saying the original Mai proposal was for an Auckland regional channel, but that changed mid-negotiation into a youth channel which would be in direct competition with Maori Television. "It didn't make sense from TVNZ's perspective."

It doesn't make sense to Mai's Graham Pryor either, who says the Mai brand and going after a similar youth demographic was always in the plan, which is why TVNZ wanted the joint venture.

"If Mai TV ends up looking anything like Maori TV it wouldn't work commercially. We would be much closer competition to Juice and C4 than anybody else. What I've gleaned from this whole episode is that maybe we underestimated what sort of threat we were to TVNZ ."

Beatson agrees the joint venture always had hurdles. "It was difficult for them [TVNZ] to get their head around what kind of cost structure a local TV station could run at compared to a network, and it was equally difficult for them to see how local television can recruit advertising the networks cannot access."

He says Mai TV has backers lined up with the $12 million it needs to launch and has shown its funding model to TVNZ.

"We can see it breaking even in about 18 months, and having covered its capital and operating in positive profits from about three years out."

Beatson says Auckland is missing out on TV news of importance to Aucklanders - stories that don't make the cut on nationwide news. Mai TV would also feature local music, be "very event-focused" and go large on weather - because it has a big effect on what "outdoor-focused" Aucklanders do.

Club and high-school sport, game shows and "spontaneous, ad lib, theatre sports" drama add to the mix. The channel also wants to tap the talent pool in college, university and polytech media classes.

Triangle's head, Jim Blackman, is sceptical: "The road to regional and niche television is strewn with skeletons along the way - Horizon Pacific, the Telecom cable trial, Max TV, Aotearoa TV. It's not the easiest row to hoe in the best of situations and I suspect Mai TV, no matter how successful they've been in radio, will find the same."

Whether or not the business plan is convincing, Mai may as well be floating in outer space if it doesn't have a broadcast frequency. The ministry says Mai should negotiate with other spectrum owners, but as most of the air waves are already in use and the unused bits are stashed away by TVNZ, there's no one to negotiate with.

Perhaps Maori - reserved UHF frequencies by the government since 1989 - could help. Unfortunately no, because even though Maori gained ownership under law of nationwide UHF frequencies, it isn't using them. What's more - against the ministry's advice - Maori TV signed a deal with Sky which ensures the frequencies will remain unused for 10 years. As one radio frequency engineer put it, "what a waste".

Why would Maori lock up such hard-won sovereignty - tino rangatiratanga - of spectrum so easily? When the Herald calls, Hone Harawira, chairman of Te Putahi Paoho the Maori Television Electoral College, is too focused on another tino rangatiratanga battle - for the foreshore and seabed - to explain.

The answer however seems to be expediency - to get Maori TV to air quickly. And to sideline the interference problem of Sky set top boxes and video recorders squatting on assigned Maori UHF channels. Interference that could have been removed by retuning Sky boxes and VCRs in the way they talk to TVs, or by using audio/video (Scart) leads to connect box and TV.

"We came up with a nationwide plan that caused minimum interference to Sky and Maori," says John Gibbs, strategic technologies general manager of state-owned transmission company BCL.

But the plan involved considerable expense for Sky in sending out staff to retune its boxes, not to mention the customer dissatisfaction that would have ensued. Hence the deal to transmit Maori TV on a Sky UHF frequency previously used for CNN news, and to send Maori spectrum into limbo.

Sky's director of communications, Tony O'Brien, describes the deal as a win-win. "It gave Maori a fully operational network with no capital required, with more than 100,000 homes pre-tuned. Sky was happy, and it was a quick way to come to market."

So yet another piece of scarce resource lies dormant. Is this a sign the Ministry of Economic Development's spectrum policy isn't working? Associate minister of communications David Cunliffe thinks not.

"The Government has been comfortable with spectrum allocation in general." But he acknowledges "if there are problems emerging then it would be natural for policy to be reviewed in the light of new issues".

There is, however, no acknowledgement the regime is what is really responsible for the shortage. That carving up the immense sky as though it was farm paddocks is the epitome of chicken licken logic. In truth spectrum isn't a scarce resource - or even anything at all.

Radio and TV waves don't collide in mid-air. And interference only happens at the receiver end - generally because receivers are rather retarded pieces of technology. Yes, there is an alternative. But as Stanford University professor of law Lawrence Lessig points out, it will make your brain hurt.

Lessig and others advocate a revolutionary "open spectrum" - a public space or "wireless commons" where anyone can send signals across any frequencies without permission as long as they obey a few rules of the road. In this wireless nirvana, smart receivers decide which signals to accept and which to ignore.

Meanwhile spectrum continues to be divided up as property, as 20-year rights sold to the highest bidder and relying on free market incentives to provide innovation and the best deal for consumers. But the ministry is scratching its head to find ways to stop hoarding.

Under consideration are "use it or lose it" ownership clauses and "spectrum caps" to limit how much one can own. Unused UHF frequencies could also be "designated services" that dominant players like TVNZ would be required to lease to competitors on commercial terms.

But none of this is likely to happen any time soon. Neither is the move to digital television, which would also make the spectrum shortage disappear.

The ministry has a huge holding pen of unused UHF frequencies set aside for future digital terrestrial and satellite TV purposes. The advantage is that such transmissions squeeze more channels through the air.

The ministry's digital terrestrial holding pen allows at least 40 new channels in addition to the existing analogue channels. Add to that the digital satellite channels of Sky TV, the largely unused satellite channels of TVNZ, plus the ministry's satellite holding pen, and the sky is indeed the limit for TV channels.

But the brave new world of digital channels to burn comes with an enormous price tag - and so far, little enthusiasm from broadcasters.

To receive digital channels, consumers need new set top boxes, and if it's a satellite feed, a box and a dish. Estimates vary, but the cost across TV households is anywhere between $100 million and $500 million.

Then there is the cost of new transmission equipment which for digital terrestrial TV is between $50 and $90 million.

Add to that the sum broadcasters have to pay to renew their existing licences which expire in 2010, plus buying new digital frequencies at auction, and one can understand broadcaster reluctance.

A consultant's study of the value of existing VHF spectrum, for example, shows TVNZ's frequencies are worth between $111 and $158 million and TV3's $29-$42 million.

But just when it looks hopeless for Mai, the wizards at BCL are working on an innovative solution - combining some old audio channels and turning them into a UHF TV channel. Which goes to show, that depending on how one looks at it, the sky is not full after all.

* Email Chris Barton