5.3.3 Additional transition licences

There are currently three transition digital licence sets which are owned by TVNZ, MediaWorks, and Kordia. These are used to support the Freeview terrestrial platform. The licensees are required to accommodate additional programmes provided by other parties if capacity is available, and the Kordia licence is to be used in the first instance. There are currently five programmes using (or contracted to use) the Kordia licence set and there may be some residual capacity on the MediaWorks licence. The TVNZ licence is planned for two HD programmes and three SD programmes.

In the initial digital planning a fourth licence set was considered and, where practicable without additional cost, was allowed for. In some areas the fourth set was not available without added costs, and therefore was not provided. It can be, however, provided with modest cost if required after 2010.

Assuming that Kordia has contracts for five programmes, a further four programmes could be accommodated on their licence set (assuming an eventual capacity of nine SD programmes). There does not therefore appear to be a requirement for additional licences to be allocated in the foreseeable future. There is one near nationwide analogue programme, NZRB’s Trackside, which is not yet contracted to operate on a digital terrestrial platform, but the NZRB has the potential to operate its own set of digital licences if they so choose, and appropriate licences for NZRB are included in the basic plan of up to 22 licences. There are also a further five licence sets in the plan that SKY can convert to digital use, and although the timing of any such conversion is not known. If the NZRB and/or SKY do operate digital licences in the future, there may be capacity available within such licences for other parties to use on a commercial basis.

In the longer term there appears to be adequate capacity for new services after DSO across a range of digital licences. In the more immediate future there is a risk that the existing transition digital transition capacity could be exhausted if a significant number of new programmes decide to use a high definition format. This seems unlikely, if only because of the significant transmission cost involved.

The basic frequency plan has also allowed for one unallocated licence pair in the overall total of 22 RF channels. This could be allocated if required, either on a purely commercial basis, or with underlying obligations to ensure capacity is available for particular services (for example MTS and/or a regional programme). Any such obligation would relate to spectrum capacity, but would not extend to the actual cost of providing transmission infrastructure which would remain a commercial matter between the parties. In addition, the basic plan allows for commercial digital licences to be operated by SKY and Trackside who may wish to accommodate other programming on their licences, even if only to defray the initial costs of operating a set of licences.

The Ministry is seeking feedback about the potential programme requirements and preferred timing of any further allocation of digital licences during the transition period.

Question 13

What additional services might require further digital licences to be allocated in the transition to full digital broadcasting?

The normal method of allocating licences would be through a contestable auction. However the demand for a further digital licence is likely to be generated by the sum of the needs of several individual programme owners, none of whom are likely to wish to acquire a licence themselves. There may also be needs that government has to ensure that particular programmes are not excluded from transmission by a lack of spectrum, but each of which individually would not warrant provision of dedicated licences. In such circumstances it may be attractive for the Crown to exert a greater influence over the end use of a further licence, irrespective of how it might be allocated.

Question 14

Is it desirable for the Crown to retain influence in the end use of any further digital licence set, and should this in turn influence the method of allocation. What method of allocation is preferred? Why?