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According to the NZ Television Broadcasters Council (NZTBC), for the six months period to June 2004, television advertising revenues increase 9% ($24 million) against the same period in 2003 for national broadcasters. It also claimed that national broadcasters spending for the three months to June 2004 was $153 million, a 17% increase on the previous three months to March 2004.

In contrast, figures collected by Nielson Media Research actually showed a downturn in advertising revenue.

Table 2 – Television viewing patterns – 2004

Demographic Time spent viewing per day (minutes) Potential audience size

All people 5+ 173 3,737,000

05 to 14 year olds 131 616,000

15 to 24 year olds 109 516,000

25 to 39 year olds 181 896,000

40 to 54 year olds 179 860,000

55 to 69 year olds 197 507,000

70+ year olds 270 343,000

(Source: Paul Budde Communication based on AC Nielsen New Zealand)

In 2004 New Zealanders spent 173 minutes on average per day, viewing live Television from 2am to 2am. By comparison, in 1992 New Zealanders spent 161 minutes viewing, according to AC Nielsen New Zealand.

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Regional stations include:

• Channel 7 Taranaki – UHF Channel 41in the Taranaki region;

• CTV – Christchurch Television – Christchurch’s UHF 44;

• CH50 – Dunedin’s Channel 9 – UHF Channel 50;

• FTN – Family Television Network;

• GTV – Geyser Television – UHF (Rotorua);

• HBTV – Hawke’s Bay Television;

• CH7 – Mainland Television;

• Shine TV – Channel 56 UHF Canterbury and SKY Digital – Channel 99;

• Southland TV – VHF – Invercargill & Nationwide on SKY Digital – Channel 90;

• TRI-TV – Triangle Television – a non-commercial, community TV station serving the Auckland area on UHF Channel 41;

• UHF Channel 61 – Taupo.

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1. INDUSTRY OVERVIEW

New Zealand is well served by radio broadcasting, and the industry remains profitable. There are several national stations, as well as numerous regional and city-based operations vying for market share.

Table 1 – Radio broadcasting statistics – 2005

Service Statistics

Radio broadcast stations 418

Radio receivers 3,750,000

(Source: Paul Budde Communication based on industry sources)

Of the 418 radio stations the breakdown is: AM 124, FM 290, and shortwave 4.

The current radio broadcasting sector consists of:

• Radio New Zealand, the public radio service;

• two major private owners of radio networks;

• other private stations;

• a publicly-funded pilot Pacific radio service;

• Niu FM;

• a series of non-profit community stations;

• Sky Digital Music: 12 digital music channels.

• a network of 25 Kiwi radio stations throughout the country.

2. RADIO BROADCASTING PARENT COMPANIES

• Gisborne Media Ltd (GML) – Owners and operators of two local Gisborne stations;

• Port FM Music Network – 98 Port FM Timaru, MacKenzie 94FM MacKenzie Country, Whitestone 100FM Oamaru & Mid Canterbury’s 95 & 99 Fox FM Ashburton;

• Radio Bay Of Plenty Ltd – owners and operators of: 1XX – 90.5FM, 1242AM (Bay of Plenty), 93.0FM (Ohope Beach) & 92.9FM (Te Puke) and Bayrock 97-7FM & 99-3FM;

• Radio New Zealand – broadcasts over three nationwide networks: National Radio, Concert FM and the AM network;

• Rhema Broadcasting Group Inc (RBG) – Radio Rhema, Life FM and Southern Star;

• The Radio Network (TRN) – owners and operators of: Newstalk ZB, Classic Hits, ZM, Radio Sport, Radio Hauraki, Easy Listening i; local stations Cool Blue FM and JO 1530; and IRN News network news service;

• The RadioWorks New Zealand Ltd (TRW) – owners and operators of Radio Pacific, Solid Gold FM, The Rock and The Edge and several provincial and local radio stations.

3. OTHER NATIONAL RADIO STATIONS

• AM Network – broadcasts the New Zealand Parliament on the air live;

• b.NET – a collective group of stations broadcast by students from the Universities or Polytechnics around New Zealand, including 95bFM, The Generator 89FM, The Most 92.3FM, Active 89FM, RDU 98.3FM, Radio 1 91FM;

• Classic Hits – Radio Northland – Whangarei, Kaitaia, Kaikohe, 97FM Auckland, 98.6 ZHFM Hamilton, 95 BOP FM Tauranga, 97FM Geyserland Rotorua, 89FM Bay City Radio – Hawke’s Bay, 90FM Taranaki, 97.8 ZAFM Palmerston North, 90FM Wellington, 90FM Nelson, 98FM Christchurch, 89FM Dunedin 98.8ZAFM Invercargill;

• Easy Listening I – Easy listening adult contemporary; Auckland 98.2FM, Tauranga 99.0FM, Hawke’s Bay 90.3FM, 1593AM Christchurch;

• Life FM – Christian rock format, available throughout New Zealand;

• More FM – format is adult contemporary, middle of the road;

• New Zealand’s Rhema Network – a 30+ frequency network (AM/FM) focusing on Christian music and programming;

• Newstalk ZB – nationwide and local/regional talkback plus some live sports commentary;

• Radio Hauraki – classic rock; 99.0FM Auckland, 96.0FM Hamilton, 89.0FM Tauranga, 94.3FM Rotorua, 98.9FM Gisborne, 91.9FM Taupo, 99.9FM Hawke’s Bay, 97.2FM Taranaki, 1017AM Christchurch, 1125AM Dunedin, 93.2FM Invercargill;

• Radio Pacific – format includes news, information, nationwide talkback and racing commentary;

• Radio Sport – sports commentary and sports talkback;

• Southern Star Network – Christian music;

• The Edge – contemporary hit radio, based in Auckland and available throughout New Zealand;

• The Rock – Album Rock, owned by The RadioWorks;

• Tourist Information FM.

4. RADIO NEW ZEALAND

Radio New Zealand [www.radionz.co.nz] is a Crown entity established under the Radio New Zealand Act 1995.

Radio New Zealand broadcasts over three nationwide networks;

• National Radio;

• Concert FM;

• The AM network which relays Parliamentary proceedings.

Radio New Zealand International (RNZI) is an overseas shortwave service, broadcasting to the South Pacific and beyond, while Radio New Zealand News and Current Affairs provides news and current affairs information.

In September 2005 Radio New Zealand was progressing with public tests of its audio streaming service. The streams include National Radio, Concert FM, and Radio NZ International and are run at speeds of 16,48 and 64Kb/s.

5. CANWEST RADIOWORKS NZ

RadioWorks has a network of over 100 stations, broadcasting throughout New Zealand, with different networks targeting different audiences. Total weekly audience in 2005 was over 1.21 million listeners. RadioWorks also has New Zealand’s number one Radio Station – The Edge – with over 421,700 listeners tuning in each week in 2005.

5.1 NETWORK BRANDS

RadioWorks’ six Network Brands – The Edge, Kiwi, The Rock, Solid Gold, Radio Live and Radio Pacific – operate centrally from premises in Auckland. Network programs are distributed from Auckland, with each geographic operation inserting local commercials into pre-defined time slots. These brands rely upon RadioWorks’ Network Centre in Auckland for group management, content production, technical engineering, national marketing and promotions and news production.

Advertising agency campaigns are sold by The Radio Bureau (TRB). National direct advertising is sold by the RadioWorks’ National Sales Team. Local time slots are sold by the RadioWorks’ local sales teams around the country.

5.2 LOCAL RADIO STATIONS

RadioWorks’ local radio product, More FM, broadcasts in 21 areas throughout the country with live, local announcers and a strong promotional presence in each market. The Breeze broadcasts in Waikato, The Coromandel, Manawatu, Wellington, Kapiti Coast, Christchurch and Dunedin and are also local stations within their respective RadioWorks operations.

5.3 COMPANY HISTORY

The CanWest Global Group commenced its New Zealand radio operations with the acquisition of the More FM Group in 1997. The Group increased its radio presence in 2000 when it acquired a 72% stake in the then NZSX-listed RadioWorks New Zealand Ltd, with the remaining 28% of RadioWorks New Zealand Ltd acquired in 2001.

By 2005 the operations of the More FM Group and RadioWorks New Zealand Ltd were integrated, with the RadioWorks name being adopted as the umbrella brand.

CanWest MediaWorks acquired the radio and television businesses of the CanWest Global Group – RadioWorks and TVWorks in July 2004. In 2005 RadioWorks acquired a further two independent media companies in Gisborne and The Coromandel, and was operating out of 22 markets around the country.

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Telco and utility industry calls for government leadership to save energy and our environment.

At an industry roundtable in Sydney Australia 40 representatives from the telco and utilities industry discussed the latest developments in Broadband Power Line (BPL) developments. They concluded that there is clearly far more to BPL than an alternative broadband offering.

For example with projects underway across the globe the smart electricity meter reader market is rapidly developing.

However, it would be a grave mistake if we fail to consider the use of a telecommunications network beyond that of meter reading. We do need to take into account that this market and our society have changed since smart meters, based on narrow band technologies) were introduced some 25 years ago (as a matter of fact that technology dates back to the 1890s). While the electricity regulators are looking at current environmental, energy saving and global warming issues they appear to have their blinkers on and risk spending millions of dollars on narrowband technology, which could read meters but could exclude the full benefits that broadband would deliver going forward.

The decision makers in Government and in the utilities industry need to understand that there are big risks involved in spending so much money on a narrowly technology. In our rapidly changing environment with issues such as global warming, water shortages and electricity outages due to extreme hot or old cold temperatures, we clearly do need to think forwards and not as is currently is the case in most countries backwards.

The industry needs to make a stand now, before it is too late and this old technology gets installed, they need to speak up to politicians and other decision makers in this field to build a case that will see smart meters integrate features that allow utilities and their customers to address these critical issues in our society.

BPL can most certainly be used to create far greater energy use awareness and can empower users, by making information about individual domestic (or business) consumption directly available to the user’s PC, TV or mobile phone. There is also potential for new energy devices that people can use to better manage their own energy use. There is large pent-up consumer and small business demand for energy consumption information that allows them to better mange their own energy usage. It was estimated that by simply providing this information to customers you could create a national 10-15% saving in energy, basically saving the nation a few power stations. Smart water meters could also be linked into this system, with similar saving results.

Wouldn’t be an enormous waste if we overhaul all these meters and uses old technologies that are not taking these future energy saving and management issues into account, yet several Governments and utilities around the world have recently decided to go for old technology.

The information obtained from these smart meters also allows utilities to manage energy use in their networks at peak times (managing hot water systems, street lighting, etc). With another hot summer or cold winter looming it should be very obvious to all involved that we do need to address this issue – BPL can play a key role as long as our energy decision makers are willing to show vision on this matter. It is estimated that investing in broadband-based smart meter solutions could save our society and our environment literally hundreds of millions of dollars.

At the Roundtable the vendors invited utilities around the globe to let them know what they want from smart meters, how much they are prepared to spend and how many meters are needed. This could see the cost gap between the obsolete narrowband technology and the new BPL technology, bridged to an acceptable level. Representative at the Roundtable believe that they as an industry owe this to our society and to our environment. We need to ensure that we deploy the latest technology that not simply makes meter reading cheaper but more importantly also contributes to the implementation of solutions that immediately benefit energy savings and contribute to safeguarding our environment.

Paul Budde

See also: Australia – Broadband Power Line – Smart Meters

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The Packer deal took everybody by surprise. It coincided perfectly with the media reform announcements, but in fact had more to do with maximising shareholders value than with media reforms.

The media reforms had already been pretty well demolished by the Prime Minister in late 2005, and what was left over was just enough for the media moguls to grab some last-minute dollars out of a rapidly declining old media industry. They wouldn’t have been able to do this if the Minister had offered a true reform package – one that increased diversity by allowing for a fourth channel and by having a far more proactive policy regarding the new media.

By limiting the effect of the reform package to the existing media and existing players, the Minister increased the value of the old media, since, under her new rules, very few others are able to enter that space. The media barons were very grateful for this, as they all saw a significant increase in the value of their old media empires.

While the Minister keep, like a broken record, repeating the benefits of digital media, let’s not fool ourselves – the current events have nothing to do with true reforms benefiting the developments of new media.

Let’s go back to mid-2005 …..

At that time the Minister for Communications had some excellent plans for media reforms, but she was outmanoeuvred by the Prime Minister. The Prime Minister was not the least bit interested in supporting the Minister and her package was thrown to the media pack, which very quickly tore it apart.

Being a true politician she battled on as though nothing had happened and continued delivering her reform message. But it was words only – the package was empty.

Minister is embarrassing the new media industry
It’s rather embarrassing to hear the Minister continue to go on about mobile TV. I am sure she knows better, but this is apparently the only part of the new media package that has survived. She simply doesn’t have anything else to offer.

Her problem is that nobody is interested in mobile TV services – not in Australia, and not anywhere else in the world. And, just to make sure that she protects the old media in this business also, she is even allowing them to bid for new government-owned spectrum around such services.

Doesn’t she remember what happened with digital TV spectrum? It was quickly gobbled up by the old media to prevent anybody else from entering the market.

As I reported last year, there was absolutely no sense of unity or national interest in the media reforms. It was simply a very selfish individual battle – each mogul fighting for himself and, in the absence of any political support, the Minister did nothing but go along with the moguls.

Packer’s unique business sense
It became very obvious that there was no way the government could retain control of the media reforms – hence the cheery smiles from James Packer in the weeks running up to the final version of the reforms.

He arguably could have split the company beforehand, but, ever the astute businessman, he jumped at precisely the right time. With media ownership changes in the air this was the ideal opportunity to make money, and he struck at just the right moment.

We can all remember his father declaring that they heyday of commercial TV was over, and that it was time for the Packers to move out. Slowly but surely media monopolies are disappearing – more due to technological developments than to policy changes. But businesses like the Packer empire thrive in a regulated environment. Policy changes occur frequently in regulated environments and this creates great opportunities to make money. I truly respect and admire Packer’s business acumen.

He even got Rupert Murdoch to join the game and take a share in Fairfax.

Prime Minister and not Minister should have end up with egg on his face
However, it has certainly left the Minister looking like the legendary unclothed emperor. She is putting on a brave face but she must be feeling rather miserable and ill-treated. I believe she will find it impossible to convince the Australian public that these media reforms are in the national interest. Rightly or wrongly she will be labelled as the person who handed over a swag of money to the already wealthy media moguls, while at the same time failing to deliver anything that operated in the interests of the consumers and the voters. I am afraid that she will face a serious political issue with this one. The Prime Minister cleverly manoeuvred himself onto the political sideline of this issue, but it is important to remember that it was his lack of leadership that caused it all.

The Minister certainly started off with the right vision and policy mindset, but she had no prime ministerial support for true reforms. I actually suggested she forget the whole idea of reform, as it no longer had anything to do with the national interest.

It is interesting to note that, on this issue, Rupert Murdoch showed a greater sensitivity to the national interest than our Prime Minister. He at least suggested a true set of reforms, notwithstanding the fact that some of these would damage his business short-term. The overall consequences of Murdoch’s plan would have been much better for Australia, and, in the longer term, for Australian media companies as well.

New Packer media company
But what does the Packer deal actually do for media reform? Very little. It has far more to do with freeing up money to invest in another regulated business that will undergo massive changes – the gambling arena.

However, the Packer shake-up may trigger some other developments. The new media company could move in two directions.

The first option is that it could buy up other ‘old’ media, or parts of it, such as Fairfax, mainly for their valuable content. Short-term there is plenty of life left in the -thanks to the government – heavily shielded, declining market old media, and that’s where the money will be for the next few years. So I expect them to concentrate more on the opportunities in this part of the market (as a result of ownership rules). However, this now needs to be based on a utility model, as the old media need to be run at much lower costs during the impending period of decline.

Because these media are at the end of their lifecycle I stand by my prediction that the level of activity, in relation to new media developments, will remain limited.

The second option would be to turn it into more of a new media company, creating on the one hand a new media utility arm and, on the other, a media-independent content arm that can distribute its products and services in various ways through the utility. Old media with good content are, of course, valuable assets for such a new media company.

I think that the new media company will move in both of these directions, in parallel. The reality is that the old media are, at the same time, the key players in the new media. They will need to jump the S-curve and start generating business models and new revenue streams in the new environment. And the new media company is an excellent vehicle to manage that transformation.

Media Poker
As we have seen in previous shake-ups, the reality will be like a poker game.

All the key players have secured a place at the media poker table. Because of the lack of diversity in the media market they control, between them, dozens of smaller media assets such as content, facilities, programming rights, cinemas, Internet sites, portals, entertainment and film assets, and so on.

All these players have an interest in some of those assets owned by the other parties, and that’s where the action will now take place. It will be a game of musical chairs among the barons; there will be a shake-up, but in the end it will be the same old group that will own all the same old bits and pieces.

However, again remembering previous media reform developments, although some less experienced players (such as, for example, Fairfax, Ten, WAN, Rural Press, Austero, etc) may end up with some short-term money gains, their strategic position in the Australian media market will, as a result of this poker game, be diminished And, let’s face it, there are several players who would probably be more than happy to cash in on the extra value that is suddenly added to their media assets and sell out at such premium prices.

All of this, of course, is not a good outcome for Australia, but it’s the price the country will have to pay for the government’s miserable media policy.

The government was the first one to be forced to throw down their cards – who will be the next?

Paul Budde

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Mobile data tried (and failed) for over a decade to succeed in the mobile content market. Netcasting (also known as podcasting) has succeeded within the short period of 18 months.

Most of the applications that we have read about on the IT pages of our newspapers for the last decade are now being delivered to you by netcast. And most of them are free of change to the user. Premium-based content can now be purchased, often after free sampling of that content. And, of course, advertising models are another source of income.

It is estimated that a staggering 3 billion net- or podcasts are downloaded weekly around the globe.

I don’t even think the mobile operators have realised it yet, but they have been outmanoeuvred and rendered more or less irrelevant by the netcasting industry.

It will be impossible for the various mobile content sites such BigPond, Optus ZOO, Vodafone Life etc to achieve a viable position in this market; because they actually didn’t ever have a real position in this market in the first place.

Because of the nature of the mobile technologies these operators were never able to make content and services available in a way that users could afford. It is quite astonishing that Telstra, their vendors,and even well-respected colleague analysts, are talking up all the wonderful wireless broadband applications that can be delivered over these wonderful technology networks.

They obviously don’t realise, or don’t want to realise, what is happening out there in the real consumer world.

Netcasting (or podcasting) took off in the music market, but it has since developed further, and at the same time has moved into a large number of other markets.

At the various Digital Media Roundtables and conferences I have organised it was just great to see what companies like Destra and Soundbuzz have done, and there are now thousands of such companies around the world.

Also, the presentation given to me by Sony BMG Entertainment last year was an eye-opener. What started off as downloadable music clips have since been turned into true multimedia products – personalised services; pdf files with beautiful music covers that have become collectors’ items; videoclips catering to the user’s convenience (available when and how the user wishes); and, yes, of course, the music itself.

The music industry is rapidly redefining its industry, its marketplace and its business models.

Real estate agents now let you download information onto your MP3 player that can be used when driving around to find properties. This includes maps and satellite images.

All sort of news and entertainment companies now deliver netcasts. As you would imagine, the entertainment world is way ahead of the rest of the industry. Here we see creative users utilising netcasts within the various communities of interest – to poke fun at ‘official’ productions within their own netcasts they and others create viral marketing and a whole heap of other applications. Ninety per cent of the population wouldn’t have a clue that this is happening; nor would they really understand the new culture that is evolving around these new media.

For a decade I have been arguing that mobile content should be unshackled from the mobile operators (operational separation). Mobile operators are engineers and, with the best will in the world and as much money as they might want to throw at it, they simply will never come up with 99.99% of the content that is currently available on podcasts. And, even if they do come up with good content, they operate via flawed business models in delivering this content.

The fact is that their industry has failed to penetrate the mobile content market to any significant extent.

Before the content providers could do anything with their products and services they first had to pass the tollgates set up by the mobile operators, demanding 30%-60% of their revenues. This was, and still is, the most ridiculous situation – and, as is now evident, it is a recipe for disaster.

The results are now clear – beyond the corporate and business market, mobile data is dead. And the mobile data business market has been in existence since the early 1980s, so other than bigger and faster services, nothing much is new there.

Beyond simple texting (SMS) the mobile industry has failed to grab the consumer market. Their technology is still not up to scratch to deliver mobile content in a affordable way – nor are they using the Internet business models which are essential to attract customers in the digital media market. Looking at the expensive new 3G mobile data launches from Telstra and Vodafone it is highly unlikely that this situation will change over the next few years, and this will allow netcasting total freedom to further develop itself into the market.

In reassessing the place of the wireless broadband market in the context of the phenomenal success of netcasting, the reality now is that wireless broadband will only be able to add a bit of extra flavour to the netcast experience – for example, providing location-based services.

It is certainly not going to take that market over, nor will it be able to dominate the market. Within eighteen short months the content market has completely bypassed the mobile industry and, as I said, they still don’t seem to understand what has happened.

Also new access and distribution concepts have been developed around this. The best known one is iTunes. With smart playlists and intelligent filing systems content is filtered and selected where and when the user chooses. As in my analysis of the Internet companies market, here it is the telco industry that has failed to decisively step into the market. With good access and distribution models they could have provided a large of range of value-added infrastructure services to the Internet media companies, rather than trying to compete with them on content and services.

Recent BigPond content offerings from Telstra (Foxtel TV channels, racing programming) indicate that they still haven’t got the message – that they should concentrate on that very important infrastructure market, and leave content to the specialists.

While the mobile data industry has pretty much lost the battle, due to the wrong technologies being used and the high costs associated with them, the wireless broadband industry’s role can still be that of an infrastructure provider to the netcast industry. However, it will be the netcast industry that will set the terms and conditions under which they will use these networks. The monopolistic take-it-or-leave-it attitude that has been in evidence over the last ten years in the mobile telecoms industry will exist no longer.

Netcasting is yet another social and technological development that is greatly contributing to the democratisation of the telco and media worlds.

Paul Budde

Global – Convergence and Digial Media
Australia – Convergence and Digital Media

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DVB-S is widely used in Europe – for instance, BSkyB in the UK, Premiere in Germany, Stream and Tel+ in Italy and Canal in a number of countries. DVB-S is also adopted in most Asian, African and South American countries and in India and Australia.

The multiplexing of video programs into a single MPEG-TS transport stream is similar to that described above for DVB-T, but the radio frequency modulation scheme is completely different. Satellite direct broadcast television requires a correctly aimed parabolic dish antenna with a direct line-of-sight path to the satellite. Since there are no multipath problems with this arrangement, OFDM is not used. Instead, a single carrier is modulated with either QPSK or 16 QAM, with raw data rates up to 44Mb/s. This does not allow the hierarchical reception as described above – receivers on the edge of the satellite’s beam must use a larger antenna to achieve the required signal to noise ratio.

Data is typically carried as MPEG-2 compressed video, and as with DVB-T, audio and non-audio-visual data can be simultaneously carried on the one multiplex.

Satellite broadcasting generally involves geostationary satellites, with short wavelength microwave transmissions – primarily due to the need to create a narrow focused beam with an antenna which is necessarily small. Fixed, typically roof-mounted, receive antenna are typically employed and the service is not suitable for handheld or mobile reception.

The total available bandwidth available at any one site for all geostationary satellite broadcasting is limited by the spectrum available and the need to keep a significant angular separation, from the point of view of receiving antennae, between satellites which are transmitting with the same frequency and polarisation. (Polarisation is the orientation of the electrical field of the radio waves. A vertically polarised signal can be ignored by a horizontally polarised antenna). Consequently, there are upper limits on the ability of satellites to deliver data which make it costly or impractical to use precious satellite transponder resources for sending data to individual customers, as would be required for VoD. The broadcasting uses of satellites are their most important application – and that typically involves video and to a lesser extent sound, rather than any other kind of data.

Satellite broadcasting is most effective near the equator. Closer to the poles, the angle of incidence of the microwaves becomes closer to the horizon. This means there is more attenuation due to them passing through more atmosphere. Similarly, there are more problems with rain-fade at these shallower angles. In high latitude urban areas with multi-storey buildings, this low angle can present problems because many homes may be shadowed by a taller building.

See also: Telecommunications Technology Library

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Introduction

Less than one hour after the new media laws had passed through the Senate in October 2006, PBL confirmed that it would hive off the majority of its media assets into a new company, equally owned by itself and CVC Asia Pacific.

PBL Media will include ACP Magazines, Nine Network (including PBL’s interest in Sky News), its 50% interest in ninemsn and its 41% shareholding in carsales.com.au. PBL itself aims to expand its international gambling business.

The Packer deal took everybody by surprise. It coincided perfectly with the media reform announcements, but in fact had more to do with maximising shareholders value than with media reforms.

Packer’s unique business sense

It became very obvious that there was no way the government could retain control of the media reforms – hence the cheery smiles from James Packer in the weeks running up to the final version of the reforms, in mid-2007.

He arguably could have split the company beforehand, but, ever the astute businessman, he jumped at precisely the right time. With media ownership changes in the air this was the ideal opportunity to make money, and he struck at just the right moment.

We can all remember his father declaring that they heyday of commercial TV was over, and that it was time for the Packers to move out. Slowly but surely media monopolies are disappearing – more due to technological developments than to policy changes. But businesses like the Packer empire thrive in a regulated environment. Policy changes occur frequently in regulated environments and this creates great opportunities to make money. We truly respect and admire Packer’s business acumen.

New Packer media company

But what does the Packer deal actually do for media reform? Very little. It has far more to do with freeing up money to invest in another regulated business that will undergo massive changes – the gambling arena.

Short-term there is plenty of life left in the –thanks to the government – heavily shielded, declining market old media, and that’s where the money will be for the next few years. So we expect them to concentrate more on the opportunities in this part of the market (as a result of ownership rules). However, this now needs to be based on a utility model, as the old media need to be run at much lower costs during the impending period of decline.

Because these media are at the end of their lifecycle we stand by our prediction that the level of activity, in relation to new media developments, will remain limited.

Overview

By 2006, ninemsn had established itself as Australia’s leading portal with 6.9 million Australian visitors each month.

Its content offering includes content provided by, or in conjunction with Nine, such as the National Nine News service, and by ACP Magazines. ninemsn also offers integrated access to Microsoft services such as Hotmail, messenger, Encarta and Search. The site has 75% online reach and continues to lead the market in the online advertising space.

The Microsoft Network (MSN) started its life in the early 1990s as a proprietary online service in competition with the Internet. In Australia it formed a partnership with Telstra to jointly run the proprietary videotex service Viatel under the new name Australia Online. However, within a few years Microsoft very wisely decided to align with the Internet and abandon its proprietary service. This partnership with Telstra also was swept up in the global standardised Internet and soon after this it was abolished. This was followed by a new market alignment, this time with the media giant PBL, which resulted in the formation of ninemsn.

TV on the web

In mid-2007 Ninemsn started to push into advertiser-funded content on the web with short-format, television-style shows to play a larger role in its offer to advertisers as it seeks to boost its share of the $1 billion online ad market.

The company is looking at ways of developing content that goes beyond repurposing TV shows drawn from the Nine Network, rather to develop TV-style shows for brands.

They are keen to strike longer term deals with advertisers for big brand-funded projects similar to the area revolving around beauty tips with brands such as Clairol, Pantene and Olay integrated into the editorial.

ninemsn has an estimated 30% of the $303 million online display advertising market. Brand-funded content represents about 10 to 15% of all media revenues.

BigPond to sell content through Ninemsn network

In December 2007 Telstra BigPond secured a deal to sell its catalogue of music, games and movies through Ninemsn’s online network from early 2008. All music, movie and game download transactions through the ninemsn network will be made through BigPond.

Partnership with Optus

In June 2005 Optus partnered with ninemsn for the provision of converged content across the carrier’s mobile and broadband networks (the broadband agreement is exclusive). Leveraging off a range of PBL content, ninemsn and Optus now offer communications and content services, including email, MSN Messenger, calendar and contacts facilitated through a new portal and across a range of communications devices.

The intention of both companies is for the alliance to provide a foundation for the joint development of new content and the delivery of communications services in the future such as phone-to-PC video calls and Voice over Internet Protocol (VoIP). The latter services are still in development phase.

Optus’ existing mobile portal Optus Zoo remains in place with ninemsn’s mobile content integrated into the portal. A new co-branded portal operated by ninemsn however will replace the OptusNet Portal.

Features of the new merged and transformed portal include:

·         Unified personal information and email/instant messaging accessed via PC or phone;

·         Unified messaging via SMS, voicemail and email;

·         Personal data management, personalised browsing;

·         Exclusive content events and facilities allowing sharing and storage of data.

For more information, see separate report: Optus – Company Overview and Operating Statistics.

Partnership with Telstra for mobile content

In August 2005 PBL group and ninemsn announced that they would deliver mobile content services to Telstra’s 2G and 3G networks. More video and made-for-mobile content from Channel Nine shows and ACP titles and ninemsn services such as Hotmail and Instant Messenger are now made available to mobile users. Telstra indicated it will offer more than 200 content sites.

Mobile advertising deal with Vodafone

Under a deal with Vodafone, ninemsn sells mobile advertising for companies including Coca-Cola, Atari, Citibank and 20^th Century Fox.

Movie advertising has had success on mobile phones. A mobile campaign for American Gangster on Vodafone Live in 2007 had a click-through rate of 6%, significantly higher than the average online banner click-through rate of 1%.

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At the BPL Summit in November 2005 we started to talk about a possible third level of broadband infrastructure that could be facilitated by BPL. The interesting thing about this development is that it pretty much represents a full circle, back to where BPL (then known as PLC) began back in the 1890s.

In those days PLC was already used to send out low-level telecoms signal to activate or deactivate devices along the electricity grid. This technology was further developed over the last century, and is used, for example, for the off-peak hot water services that most electricity companies nowadays offer their customers.

During the 1960s and 1970s this concept was developed further, under the label ‘Demand Side Management’. All the reports we wrote on this topic during the 1980s and 1990s were classified under that name, not PLC.

BPL began to arrive in the late 1990s. Deregulation of the electricity and telco markets saw companies looking at each other’s markets for new business opportunities. Telstra in Australia, for example, got itself an electricity provider’s licence (it hasn’t done anything with this to date).

Most activities, however, were undertaken by the electricity companies. Given their slow-growing, low margin products, they saw telecoms as a new business opportunity. It quickly became clear that the old narrowband PLC technology was inadequate for new telecoms services, and consequently BPL was developed more or less simultaneously by several vendors operating in this space.

However the development of a new technology like BPL takes time and telcos, in the meantime, are not standing still – most developed countries now have nearly full national coverage with their DSL networks. BPL does offer a superior product, full standardisation is still two years away (2008) and, as with all new technological developments, end-user prices are too high to compete with the telco services. This makes any large-scale BPL roll-out economically unfeasible. It is the age-old chicken and egg situation: ‘give me the large orders and I will produce low-cost equipment’ vs ‘give me low- cost equipment and I will sell your products in large quantities’.

So BPL as a broadband access alternative will be first developed in the more easier markets, such as those where there are underground electricity networks

Meanwhile life goes on, and more and more utilities involved in BPL, frustrated by the slow progress of commercially viable products, are being to forced to also look for telecoms solutions for their core business. At the same time they are looking at Demand Side Management services to better manage their network, offer better services to their customers and handle the gigantic increase of electricity demand throughout the world, while managing security issues and the environmental impact of all of that.

Now, the good old PLC products are still around, are selling well, and are often sufficient for the services required from that technology. However, in a more commercial marketplace BPL could add that extra little bit that would allow the utilities to sell extra services. Home automation is opening up a whole new market. Link this with the already highly successful BPL product HomePlug for in-house networking and a whole range of new applications becomes available – applications that don’t require a telecoms-based business model to get them off the ground. Depending on the business model pursued by the utility, Internet broadband access could be included in such a service, or not.

This could well be the BPL utilities model of the future.

Paul Budde

See also:
Global – Broadband Utilities (BPL, PLC)

New technical BPL Reports
These new restructured technical reports provide a lot of insight into how BPL and PLC works. Combined, these are far and away the most detailed reporst in existence on BPL.

Technology – Broadband Power Line 1 – Architecture and Techniques
Technology – Broadband Power Line 2 – Standards and HomePlug PLC
Technology – Broadband Power Line 3 – OPERA, DS2 BPL and Co-Existence
Technology – Broadband Power Line 4 – BPL Access Systems
Technology – Broadband Power Line 5 – Interference and Challenges

Key new sections include:
OPERA tech standard and its "white paper".
UPA’s Market Requirements for PLC.
UPA’s coexistence document, which OPERA adopts.
HomePlug AV "white paper.

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NEX G
In October 2006 Telstra launched its 3G HSDPA network. The network will replace the CDMA network, which is only six-years-old, and as such it will deliver better and more mobile services to regional mobile users.

However, these new and better services are still based on a mobile network and the limitations of that technology make it commercially unviable to offer wireless broadband over that network as an affordable alternative to the fixed-based broadband services.

As with all previous mobile data flavours (WAP, GPRS, MMS, EVDO, Blackberry and others) HSDPA will end up in the 1%-3% top end of the mobile market, mainly in corporate or business applications.

NEX G will certainly offer better services to that category of users; and, of course, those people in regional Australia who have no other choice, and who can afford wireless broadband services over the new network, can use the service for that purpose.

The fact that no end user prices were mentioned for the new service indicates to me that these will be indeed on the high side.

However, while Telstra has been saying ‘we are listening to our customers’, I haven’t heard any of them asking for yet another mobile network. Instead they are not asking, but screaming, for better fixed broadband services.

But Telstra doesn’t want to hear about that.

The real headline is the untold story
The real story that came out of the Telstra show was the untold tale of why Australia doesn’t get true broadband services, like those offered by the incumbent telcos in all other western countries. Once again ADSL2+ was left off the agenda.

Telstra is holding the country to ransom. It doesn’t want to offer this service unless the government is prepared to give it regulatory holidays (effectively sheltering it from the competition).

But the government has been firm on this. They are determined to see viable competition and are not prepared to hand over a new monopoly to Telstra. Telstra’s anti-competitive behaviour in this market also became apparent with the news that the company’s retail share in ADSL had risen from 41% to 44%. Telstra has increased wholesale prices and is hampering the introduction of new wholesale services – and this is clearly affecting the competition.

Telstra also knows that the government will be reluctant to push for the implementation of the new legislation that it put in place in November last year. While the policies look good on paper, there is a lack of will and/or power to implement them in a timely fashion. With T3 on the way it is more likely that the government will postpone strengthening regulatory implementation till well and truly after T3. By that time we will be getting close to the 2009 review and, in all reality, that would be the first time we could seriously look at implementing the 2005 policies.

I find this to be shocking and unacceptable, but unfortunately it is the reality as I see it.
NGN is progressing
A positive element of Sol’s very firm hand is that we are finally starting to see some internal changes within the company. Over the years, previous managements have been pussy-footing around. Back in the mid-1980s I had a discussion with former CEO Mel Ward and the Commonwealth Bank, in which Mel mentioned to me that a network overhaul was needed to facilitate services such as online banking. But very little has happened during the following 20 years. This was acknowledged by Sol and a very rigorous internal overhaul was launched by him, but a massive job like this will take three to five (and some analysts are saying ten) years.

It is also well-recognised that an NGN works best with a fibre network and that’s why I stand by my claim that Telstra is bluffing, and that it will have to roll out its fibre network. Most other incumbent telcos around the world are now rolling out FttN – or have very advanced plans in place for this. However, the reality is that, in the absence of any real infrastructure-based competition, there is no incentive for Telstra to roll out any of this before it is forced to do so – either by its competitors or through regulation. It would prefer to wait till it has more or less finished the NGN, so it can better spread out the necessary investments.

By withholding true broadband services from Australians Telstra can limit the traffic over its network and therefore fend off the need for a more rapid upgrade. However, this will have severe consequences for our economic growth, export opportunities and for social services such as e-health, tele-education and e-government.

Again it comes back to competition and the lack of a much stronger implementation regime of the proactive competition legislation that is already in place.

There is a chance that, with funds of $600 million, the regional network could finally establish infrastructure-based competition but, again, this will take a long time and it will depend on industry cooperation, as no single entity has the slightest chance of taking Telstra on, and winning.

There are some good signs that industry cooperation is working and it is one of the only chances we have to get Australia on a par with the rest of the world. We have already lost the 18 months following Sol Trujillo’s arrival in which to make progress with broadband (metro and regional) in Australia, and we are now four years behind the rest of the western world.

While Telstra chooses to hold the country to ransom I can’t see the gap closing – rather, it looks as though it will widen.

Paul Budde

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