Sunday, October 21, 2012

Stay tuned for the red underpants theory of bad TV

Occasionally, usually by accident (sometimes if they think nobody is listening) politicians say what they really believe.

''I have unfettered legal power,'' Communications Minister Stephen Conroy told an obscure conference in New York in September.  ''If I say to everyone in this room, 'If you want to bid in our spectrum auction you'd better wear red underpants on your head', I've got some news for you.  You'll be wearing them on your head.''

Conroy was clearly having a bit of fun.  But he's right.  He has complete, arbitrary and absolute control over who broadcasts on the airwaves and the circumstances in which they broadcast, and that control has been disastrous for television consumers.

Let's call this the ''red underpants'' theory of why Australian TV is so bad.  Australia seems to have completely missed the great television renaissance.  In the US and Britain, audiences are being treated to some of the most brilliant high-quality television the world has ever seen — think of everything from Mad Men to Breaking Bad to The Thick of It.

But Australian commercial TV is languishing.  The networks are producing nothing comparable to what's being made overseas.  Their biggest problem is how quickly they can show foreign programs before everybody downloads them.  This week Channel Ten announced both a full-year loss and voluntary redundancies.  Channel Nine is buried in debt and flirting with receivership.

It's easy to feel sympathy for those whose livelihoods are threatened.  It's hard to feel sympathy for the networks.  The television broadcasting industry is probably Australia's last, greatest vestige of crony capitalism.

Mr Conroy's unfettered red underpants power — and that of the communications ministers who've gone before him — has been used to protect broadcasters from competition, lock out new technologies and entrench tired business models.

Basic economics tells us that when you deliberately limit competition you lower quality.  Basic politics tells us when governments and corporations get into bed, consumers lose.

Broadcasting was a protected industry from day one.  In 1905 the Commonwealth government took absolute control over the airwaves with the Wireless Telegraphy Act.  The government had delayed passing the legislation for a few years.  It was worried that the new wireless technology would be a competitive threat to the existing telegraph cable companies.

From then on, anybody who wanted to broadcast had to apply to the government for permission.

Throughout the 20th century, politicians forged close relationships with media moguls.  Each scratched the other's back.  Politicians who played ball were treated kindly by the broadcasters.  In return, governments kept away competition and protected advertising revenue.  As one broadcasting regulator said in the 1970s, all decisions about the airwaves were ''very substantially influenced by political considerations''.

The number of radio and television stations has been strictly limited.  It is extraordinary that in 2012 we still do not have a fourth television network.

New technologies were deliberately held back.  The US had FM radio in the 1940s.  There were experiments with FM transmission in Australia in 1947.  But AM broadcasters didn't want the competition.  The government only licensed FM stations in 1974.

The delayed introduction of pay television was just as scandalous.  There were several proposals to offer Australians pay TV services in the 1970s, but it wasn't until the early 1990s the government relented.  Even then it banned pay-TV advertising for the first few years — just to keep existing free-to-air broadcasters happy.  Free-to-air television is still protected by laws that give it first dibs on the best sporting content.  Don't imagine this is done for the public's benefit.

When the government finally got around to introducing digital television — a technology that allows the broadcast of dozens more channels on the same limited spectrum — the spectrum was offered exclusively to the three existing commercial networks.  This is effectively a gift of hundreds of millions of dollars to a broadcasting cartel.

In 1959, Nobel Prize winning economist Ronald Coase proposed a way to get politics out of the airwaves.  Treat radio spectrum like property, he argued, and let broadcasters use and trade their property as they see fit.

Because a government with unfettered power to force people to wear underpants on their head also has unfettered power to make deals with its media mates against the interests of the public.

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