STATEMENT OF REASONS FOR DECISION TO MAKE THE
EXEMPTION ORDER ST/EO-82 FOR TELSTRA PAY TV PTY LTD IN
RESPECT OF THE SUBSCRIPTION TELEVISION SERVICE SKY
NEWS BUSINESS PROVIDED THROUGH TELSTRA MOBILE
FOXTEL
Issued pursuant to section 205 of the Broadcasting Services Act 1992 (BSA).
1. DECISION
On 13 March 2013, for the reasons set out below, the Australian Communications and Media
Authority (the ACMA) decided to make an exemption order, under subsection 130ZY(3) of the
BSA, for Telstra Pay TV Pty Ltd (the Applicant) in respect of the subscription television service SKY
News Business provided through Telstra Mobile Foxtel (the Service), for the specified eligible
period of 1 July 2012 to 30 June 2013 (the Order).
2. LEGISLATION
2.1
Part 9D of the BSA introduced new legislative requirements for the provision of captioning
services by subscription television licensees. Compliance with Part 9D is a condition of a
subscription television licence. The enactment of these provisions indicates Parliament’s
intention that the cost of providing captioning services by subscription television licensees is
a business expense which must be borne by licensees, except where, on an application under
section 130ZY of the BSA, a licensee can satisfy the ACMA that compliance with the
captioning obligations would impose an unjustifiable hardship on the licensee.
2.2
Subsection 130ZV(1) of the BSA requires a subscription television licensee, such as the
Applicant, to meet annual captioning targets for its subscription television service for each
financial year commencing from 1 July 2012. An annual captioning target for a financial year
is a percentage of the total number of hours of programs transmitted on the subscription
television service during the financial year. The annual captioning target for a financial year is
dependent on the category of subscription television service provided by a licensee. For the
Applicant, the annual captioning target for the eligible period for the Service is 10 percent, as
the Service is a subscription television news service.
2.3
Subsection 130ZY(1) of the BSA provides that a subscription television licensee may apply to
the ACMA for:
a) an order that exempts from subsection 130ZV(1) a specified subscription television
service provided by the licensee in a specified eligible period; or
b) an order that:
i.
is expressed to relate to a specified subscription television service provided
by the licensee in a specified eligible period; and
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ii.
for each financial year included in the eligible period, provides that a
specified percentage is the reduced annual captioning target for the service
for the financial year.
2.4
The Applicant seeks an exemption order, which would have the effect of exempting the
Applicant’s Service from the requirement to meet the 10 percent annual captioning target
during the eligible period.
2.5
Subsection 130ZY(3) of the BSA provides that, if an application under subsection (1) has been
made for an exemption order, the ACMA must, after considering the application, either (by
writing) make the exemption order, or refuse to make the exemption order.
2.6
Subsection 130ZY(6) of the BSA provides that, before making an exemption order under
subsection (3), the ACMA must,
a) within 50 days after receiving the application for an exemption order, publish on the
ACMA website a notice:
i.
setting out the draft exemption order; and
ii.
inviting persons to make submissions to the ACMA about the draft
exemption order within 30 days after the notice is published; and
b) consider any submissions received within the 30-day period mentioned in
subparagraph (a)(ii).
2.7
Section 204 of the BSA provides that an application may be made to the Administrative
Appeals Tribunal (AAT) for a review of a decision to make an exemption order under
subsection 130ZY(3) of the BSA, by a person whose interests are affected by the decision.
2.8
Section 205 of the BSA provides that if the ACMA makes a decision that is reviewable under
section 204 of the BSA, the ACMA is to include in the document by which the decision is
notified:
(a) a statement setting out the reasons for the decision; and
(b) a statement to the effect that an application may be made to the AAT for a
review of the decision.
3. BACKGROUND
3.1
On 21 December 2012, the ACMA received an application from the Applicant in respect of
the Service, seeking an exemption order under subsection 130ZY(1) (the Application). Telstra
Pay TV Pty Ltd (the Applicant) is a subscription television licensee. It provides, through
Telstra Mobile Foxtel, the Sky News Business channel (the Service). The Service is one of
35 channels which are purchased in packages by subscribers and delivered to Telstra mobile
devices as ‘Mobile Foxtel’. The Sky News Business channel provides Australian National
Business news service with live bulletins and live updates for stocks and financial markets.
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3.2
On 24 January 2013 the ACMA published on its website a notice setting out the draft
exemption order for the Service and invited persons to make submissions to the ACMA
within 30 days (the consultation period).
3.2
The Applicant is a subscription television licensee. The Service is one of 35 channels delivered
to mobile devices by the Applicant as ‘Mobile Foxtel’. These Mobile Foxtel channels,
including the Service, are purchased in packages by subscribers.
3.3
The Service provides Australian National Business news service with live bulletins and live
updates for stocks and financial markets.
4. EVIDENCE AND REASONS FOR DECISION
4.1
In deciding to make the Order, the ACMA considered, pursuant to subsection 130ZY(5) of the
BSA, whether the failure to make an exemption order would impose an unjustifiable
hardship on the Applicant, by having regard to the matters specified in subsection 130ZY(5)
(see Attachment 1). The ACMA considered these matters in light of the written
representations made by the Applicant in the Application, the supporting evidence
submitted with the Application and three submissions received during the relevant
consultation period. The submissions were from Ms Joanne Beckwith, Mr Michael Lockrey
and Media Access Australia.
4.2
The Applicant submitted that, if an exemption order was not granted by the ACMA, the
detriment likely to be suffered during the eligible period would be both financial and
operational. It submitted that due to a lack of technical capability to deliver closed captioning
on the Service as it currently exists, and the inability to replace this with a new system that
has the required capability within the time constraints of this financial year (2012-2013), the
only option would be to create a duplicate channel for the Service with open captions. The
Applicant submitted that the additional financial cost of creating a duplicate channel with
open captions would render the Service commercially unviable.
Further, the Applicant submitted that the Service is one of 35 channels delivered as ‘Mobile
Foxtel’ which are channels for mobile devices that are purchased in packages by subscribers.
The Applicant submitted that if an exemption order is not granted the result would likely be
that all Mobile Foxtel subscription television services (including the Service) would be
discontinued as the costs of providing the duplicated channels would be unreasonably high
relative to the income received from providing the service.
The ACMA considers that a failure to make the exemption order would likely result in the
Applicant suffering the detriment of discontinuing the Service, given the additional costs,
technical difficulties and time constraints involved with meeting the captioning requirements
within this financial year (2012-2013). The ACMA considers that this detriment, if suffered,
would result directly from a failure to make the exemption order. From its examination of
financial and operational information provided by the Applicant, the ACMA accepts the
Applicant’s submission that failure to make an exemption order would likely result in the
Service being discontinued due to the costs of providing captioning being unreasonably high
relative to the income received from the service. In reaching this view, the ACMA has
considered the information provided in the application including submissions made by the
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Applicant about the lack of technical capacity for closed captioning, the revenue, profit and
loss from providing the service, the cost estimate for creating the duplicate channel, and the
current viewer numbers for the Service and the Mobile Foxtel channels, as well as the
relevant time constraints.
4.3
As to the anticipated impact of the making of an exemption order for deaf and hearing
impaired viewers, or potential viewers, of the Service, the Applicant submitted information
about the current viewer numbers. The ACMA has considered the viewer numbers provided
by the Applicant in context of the application. The ACMA accepts that the making of an
exemption order would be detrimental to subscribers, and potential subscribers, to the
Service who are deaf or hearing impaired.
4.4
In considering the financial circumstances of an Applicant, the ACMA has regard to the
financial information provided, including the Applicant’s income, profit and loss from
providing the Service. From its examination of financial and operational information provided
by the Applicant, the ACMA accepts the Applicant’s submission that failure to make an
exemption order would likely result in the Mobile Foxtel service (including the Service) being
discontinued due to the costs of providing duplicate channels with open captioning being
unreasonably high relative to the income received from the Mobile Foxtel service (which
includes the Service). Current financial statements of the Applicant were submitted on a
commercial-in-confidence basis for the ACMA’s consideration in support of the Application.
4.5
As outlined in paragraph 4.2 above, the Applicant submitted that it is not technically able to
deliver closed captions on the platform currently used for the Service. As such, the
expenditure required by the Applicant as a result of a failure to make the exemption order
would be the cost of creating a duplicate channel for the Service and for each of the other
34 Mobile Foxtel channels provided by the Applicant (as well as the cost of providing open
captioning on the duplicate channels). The Applicant provided an estimate of the cost of
creating duplicate channels for the Service and the other 34 Mobile Foxtel channels.
4.6
The Applicant submitted that it is currently not streaming any captioned content on the
platform used to provide the Service.
4.7
The Applicant submitted that the likely impact on the quantity and quality of television
programs transmitted on subscription television services provided by the Applicant would be
that the Mobile Foxtel subscription television services (comprising 35 channels including the
Service) would likely be discontinued. The ACMA accepts the Applicant’s claim based on the
information provided in the application, as explained in paragraph 4.2 above.
4.8
The Applicant has applied for exemption orders in relation to the 35 Mobile Foxtel channels
listed in the paragraph below, as well as the subscription television sports service channel
Speed. The Applicant has also applied for one target reduction order in relation to the
subscription television sports service channel Fuel TV.
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4.9
The Applicant has applied for exemption orders in relation to the following Mobile Foxtel
channels, all for the same eligible period of 1 financial year (2012-2013):
1. ABC1
2. SBS1
3. SKY NEWS
4. SKY NEWS Business
5. BBC World News
6. CNN
7. FOX SPORTS News TV
8. Cartoon Network
9. National Geographic Channel
10. The Weather Channel
11. MTV
12. Nickelodeon Mobile
13. TV1
14. Discovery Mobile
15. Channel [V]
16. MAX
17. Eurosportnews
18. Disney Channel
19. Disney Junior
20. Nick Jr.
21. E! Entertainment
22. FOX8
23. THE COMEDY CHANNEL
24. Ch [V] Hits
25. Nat Geo Adventure
26. Arena
27. The LifeStyle Channel
28. LifeStyle YOU
29. A&E
30. SF
31. Footy TV (AFL)
32. League TV (NRL)
33. BigPond Sport
34. Fox Sports
35. EuroSport
4.10
Based on the financial and operational information provided by the Applicant in its
application, the ACMA is satisfied that, despite the detriment to deaf or hearing impaired
subscribers or potential subscribers to the Service, a refusal to make the exemption order
would impose an unjustifiable hardship on the Applicant.
4.11
The ACMA has considered the submissions relating to the draft Order that were received
during the consultation period. The ACMA considers that the submissions did not provide
any significant new evidence relating to the statutory criteria which the ACMA is required to
consider under subsection 130ZY(5) of the BSA.
4.12
Those submissions emphasised the detriment for deaf and hearing impaired people of
limiting their ability to access and enjoy television services available for subscription in
Australia. This is an issue well understood by the ACMA, and by the Parliament, which
nevertheless saw a potential greater detriment to a greater number of people if the cost for
a service provider of meeting the new captioning obligations on a particular television service
was likely to make it uneconomic for the service provider to continue to provide that
television service. This consideration underlies the provision made by Parliament for
exemption orders and target reduction orders. Paragraph 63 of the Explanatory
Memorandum to the Broadcasting Services Amendment (Improved Access To Television
Services) Bill 2012 states: “The priority for government is for television services to be
broadcast, and where possible for those services to be broadcast with captions. It is not the
intention of the government that services not be shown because captioning obligations
result in an unjustifiable hardship on broadcasters.”
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4.13
Two submissions suggested that it could be useful for the ACMA to adopt an approach
similar to that used in the UK and the USA for determining when a service provider may be
excluded from meeting captioning obligations. In addition, one of these submissions also
asked the ACMA to make public the exact criteria for approving applications based on
financial hardship. The criteria which the ACMA applied in making the Order are the criteria
which the Australian Parliament has specified in subsection 130ZY(5) of the BSA, referred to
in paragraph 4.1 of this document. They include criteria which require that the ACMA have
regard to an applicant’s financial circumstances and the estimated amount of expenditure
the Applicant would be required to make if the Order is not made. These matters have been
discussed in the preceding paragraphs.
4.14
The ACMA considers the estimates for captioning costs provided by the Applicant appear to
be reasonable in the context of television captioning providers currently established in
Australia. One submitter questioned why the licensee had not sourced quotes from
alternative providers. The ACMA is of the view that while captioning technology is
continually improving, and new providers are entering the market internationally, it is
reasonable for licensees to estimate costs based on established captioning providers, rather
than basing them on emerging technologies, or companies that may not have an established
record of providing television captioning in the Australian market. Notwithstanding this, the
relevant expenditure for the purpose of the Applicant in respect of the Service is the cost of
creating duplicate channels, in addition to the captioning costs.
4.15
The specified eligible period in the Application is one financial year, from 1 July 2012 to
30 June 2013. One of the submitters stated that they did not support the ACMA making an
Order for longer than a 12-month period. The eligible period in this instance is for a period of
12 months only.
4.16
In summary, the ACMA is satisfied that a refusal to grant the order would impose an
unjustifiable hardship on the Applicant as:
(i) There is currently no technical capacity for closed captioning for the Service.
(ii) It is not feasible for the Applicant to procure and implement a new platform that
would provide technical capacity to meet the captioning requirements within the
time constraints of this financial year (2012-2013).
(iii) The only technical option available of creating a duplicate channel with open
captions for the Service, as well as for the other 34 channels which comprise the
Mobile Foxtel service provided by the Applicant, in order to meet the captioning
requirements for this financial year, would impose financial costs that would make
the Mobile Foxtel service commercially unviable and would likely result in the
Applicant discontinuing the Mobile Foxtel service, including the Service.
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5. DECISION
5.1
Following consideration of the material referred to in paragraph 4.1 above, on 13 March
2013, the ACMA decided, under subsection 130ZY(3) of the BSA, to make the Order for the
Applicant in respect of the Service, for the specified eligible period of 1 July 2012 to 30 June
2013.
6. APPEAL RIGHTS
6.1
Under section 204 of the BSA, a person whose interests are affected by this decision to make
an exemption order may apply to the AAT for a review of this decision.
6.2
Section 29 of the Administrative Appeals Tribunal Act 1975 states that an application to the
AAT for a review of a decision, shall be in writing and must contain a statement of the
reasons for the application, identifying the respects in which the applicant believes that the
decision is not the correct or preferable decision. The application must be made within
28 days of the decision being made.
6.3
Further information about making an applications for review can be obtained through the
Administrative Appeals Tribunal website at www.aat.gov.au or by telephoning the Tribunal
on 1300 366 700.
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ATTACHMENT 1
Subsection 130ZY(5) of the Broadcasting Services Act 1992 sets out the matters the ACMA must have
regard to in deciding whether a failure to make the exemption order or target reduction order for a
subscription television licensee, would impose an unjustifiable hardship on the applicant. In this
instance, these matters are:
(a) the nature of the detriment likely to be suffered by the applicant;
(b) the impact of making the exemption order or target reduction order, as the case may be, on deaf
or hearing impaired viewers, or potential viewers, of the subscription television service concerned;
(c) the number of people who subscribe to the subscription television service concerned;
(d) the financial circumstances of the applicant;
(e) the estimated amount of expenditure that the applicant would be required to make if there was a
failure to make the exemption order or target reduction order, as the case may be;
(f) the extent to which captioning services are provided by the applicant for television programs
transmitted on subscription television services provided by the applicant;
(g) the likely impact of a failure to make the exemption order or target reduction order, as the case
may be, on the quantity and quality of television programs transmitted on subscription television
services provided by the applicant;
(h) whether the applicant has applied, or has proposed to apply, for exemption orders or target
reduction orders under this section in relation to any other subscription television services provided by
the applicant;
(i) such other matters (if any) as the ACMA considers relevant.
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