STATEMENT OF REASONS FOR THEDECISION TO MAKE ANEXEMPTION ORDER FOR TELSTRA PAY TV PTY LTD IN RESPECT OF EACH OF THE SUBSCRIPTION TELEVISION SERVICES PROVIDED THROUGH MOBILE FOXTEL (APPLICATION NUMBERS 305 to 338)

  1. DECISION

1.1On 1 June 2017, for the reasons set out below, the Australian Communications and Media Authority (ACMA) decided to make an exemption order for Telstra Pay TV Pty Ltd (the Applicant) in relation to each of the following services provided through Mobile Foxtel (the Services) (the Exemption Order). The Exemption Order for each of the Services was made under subsection 130ZY (3) of the Broadcasting Services Act 1992 (the BSA).

No. / Application number / Service / Category / 2016–17 captioning target
1 / 305 / A&E / General Entertainment Category A / 65%
2 / 306 / ABC1 / General Entertainment Category B / 55%
3 / 307 / AFL TV / General Entertainment Category A / 65%
4 / 308 / Arena / General Entertainment Category A / 65%
5 / 309 / BBC World News / News / 25%
6 / 310 / Cartoon Network / General Entertainment Category A / 65%
7 / 311 / Channel [V] Hits / Music / 15%
8 / 312 / Foxtel Smooth / Music / 15%
9 / 313 / CNN / News / 25%
10 / 314 / Discovery Mobile / General Entertainment Category A / 65%
11 / 315 / Disney Channel / General Entertainment Category A / 65%
12 / 316 / Disney Junior / General Entertainment Category A / 65%
13 / 317 / E! Entertainment / General Entertainment Category A / 65%
14 / 318 / Eurosport / Sports / 25%
15 / 319 / Eurosport News / Sports / 25%
16 / 320 / FOX8 / General Entertainment Category A / 65%
17 / 321 / Fox Sports / Sports / 25%
18 / 322 / Fox Sports News TV / Sports / 25%
19 / 323 / FX / General Entertainment Category A / 65%
20 / 324 / LifeStyle YOU / General Entertainment Category A / 65%
21 / 325 / MAX / Music / 15%
22 / 326 / MTV / General Entertainment Category A / 65%
23 / 327 / National Geographic Channel / General Entertainment Category A / 65%
24 / 328 / Nat Geo People / General Entertainment Category A / 65%
25 / 329 / Nick Jr. / General Entertainment Category A / 65%
26 / 330 / Nickelodeon Mobile / General Entertainment Category A / 65%
27 / 331 / SBS1 / General Entertainment Category B / 55%
28 / 332 / Sky News Business / News / 25%
29 / 333 / Sky News Headlines / News / 25%
30 / 334 / Sky News Weather / News / 25%
31 / 335 / SportsFan / Sports / 15%
32 / 336 / The Comedy Channel / General Entertainment Category A / 65%
33 / 337 / The Lifestyle Channel / General Entertainment Category A / 65%
34 / 338 / TVH!ts / General Entertainment Category A / 65%

1.2The Exemption Order for each of the Services exempts the Applicant from the requirement to ensure that a captioning service was provided to meet the applicable captioning target in the financial year 1 July 2016 to 30 June 2017 (the Specified Eligible Period).

  1. LEGISLATION

2.1Part 9D of the Broadcasting Services Act 1992 (the BSA) provides that

  • a subscription television licensee that provides a subscription television service in a financial year must meet the annual captioning target for that financial year (ss130ZV(1)).
  • a subscription television licensee may apply for an order that exempts them from complying with the annual captioning target (s130ZY) for one to five consecutive financial years.
  • before making an exemption order the ACMA must publish a notice of the draft exemption order and invite submissions within 30 days of publication (ss130ZY(6)).
  • the ACMA must consider any submission received and may not make the exemption order unless it is satisfied after having regard to specified matters (Attachment A), that a refusal to make the exemption order would impose an unjustifiable hardship on the applicant (s130ZY(4)).

2.2Section 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.

2.3Section 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.

  1. BACKGROUND

3.1On 8 and 13 March 2017, the Applicant submitted applications seeking exemption orders under paragraph 130ZY(1)(a) of the BSA in relation to each of the 34 Services for the Specified Eligible Period.

3.2The Applicant is a subscription television licensee. The 34 Services were provided by the Applicant and known as ‘Mobile Foxtel’ (Mobile Foxtel).

3.3The Applicant ceased providing Mobile Foxtel, and therefore each of the Services listed, from 27 July 2016.

3.4On 21 April 2017, the ACMA published on its website a notice setting out the draft exemption order for each of the Serviceslisted and invited persons to make submissions to the ACMA by 21 May 2017.

  1. EVIDENCE AND REASONS FOR DECISION

4.1In deciding to make the Exemption Order for each of the Services, the ACMA assessed firstly, whether a failure to make the Exemption Order for each of the Services would impose hardship on the Applicant and secondly, whether such hardship would be unjustifiable in light of the objects and purposes of the BSA. In making this assessment, the ACMA had regard to the matters specified in subsection 130ZY(5) of the BSA.

4.2The ACMA has relied upon written representations and supporting evidence submitted by the Applicant in its current and previous applications for an exemption order for each of the Services. Information provided to the ACMA on a confidential basis has not been reproduced.

4.3Additionally, the ACMA has relied upon submissions received during the consultation period from Deaf Australia and Media Access Australia (MAA). These submissions are discussed in greater detail below in paragraphs 4.25 – 4.35.

Nature of the detriment likely to be suffered by the applicant (paragraph 130ZY(5)(a) of the BSA)

4.4The Applicants submits that it ceased broadcasting Mobile Foxtel, including each of the Services, from 27 July 2016.

4.5The Applicant submits that if the exemption order is not made by the ACMA for each of the Services, the detriment likely to be suffered by the Applicant would be significant financial costs which would be incurred in duplicating Mobile Foxtel to provide captioning capability, in addition to the captioning costs involved for each Service.

4.6The Applicant submits that despite its genuine efforts, it encountered technical difficulties that prevented it from introducing closed captioning capability for Mobile Foxtel, including for each of the Services while it was in operation. In previous exemption order applications, the Applicant provided extensive information regarding the technical issues it faced.

The Applicant submits that the only potential technical solution that would have enabled it to provide captioning for the Services would have been to create duplicate Mobile Foxtel channels for each of the Services. Duplicating channels would have required the Applicant to stream two versions of each channel, one encoded with open captions and one without, at a significant cost.

4.7As each of the Services was not captioned and the Services are no longer broadcast, the Applicant would not be able to meet its annual captioning target for each of the Services for the financial year 1 July 2016 to 30 June 2017.

4.8Based on the information provided, the ACMA is satisfied that the cost of duplicating Mobile Foxtel channels would be unreasonably high, relative to the income received from providing the Services during the Specified Eligible Period. The ACMA is, therefore, satisfied that a refusal to make the Exemption Order for each of the Services would impose an unjustifiable hardship on the Applicant, given the significant financial costs associated with duplicating its Mobile Foxtel channels and the provision of captioning during the Specified Eligible Period.

Impact of making an exemption order on deaf or hearing impaired viewers, or potential viewers of the broadcasting service concerned (ss130ZY(5)(b) of the BSA)

4.9The Applicant submits that if the ACMA makes anexemption order for each of the Services, it would have no impact on deaf or hearing impaired viewers as the Applicant:

  • ceased broadcast of Mobile Foxtel, including each of the Services, from 27 July 2016; and
  • did not provide any captioned content for each of the Services while it was broadcast.

4.10Considering that the Applicant no longer broadcasts the Services, the ACMA is satisfied that making the Exemption Order would not have a detrimental impact on deaf or hearing impaired viewers of each of the Services.

Number of subscribers (paragraph 130ZY(5)(c) of the BSA)

4.11The Applicant submits that there are currently no subscribers to the Services, as the Applicant no longer broadcasts Mobile Foxtel.

4.12The Applicant has provided the number of people that subscribed to Mobile Foxtel, including for each of the Services, as well as average viewer numbers, when Mobile Foxtel was in operation on a commercial-in-confidence basis.

4.13The ACMA considers that each of the Services had a small viewing audience although the number of subscribers who had access to the Services was much larger while the Services were broadcast by the Applicant.

4.14The ACMA also notes that the Services are currently not available to any subscriber of the Applicant, as the Applicant ceased to provide the Services on 27 July 2016.

Financial circumstances (paragraph 130ZY(5)(d) of the BSA)

4.15The Applicant has submitted information about its financial circumstances, including profit and loss statements on a commercial-in-confidence basis.

4.16From its examination of the financial information provided by the Applicant on a commercial-in-confidence basis, the ACMA is satisfied that a refusal to make the Exemption Order for each of the Services would impose unjustifiable hardship on the Applicant.

Cost to caption the service (paragraph 130ZY(5)(e) of the BSA)

4.17The Applicant submitted that, if there was a failure to make an Exemption Order for each of the Services, the only technical solution would have been to duplicate the Mobile Foxtel channels.

4.18The Applicant also submitted that Mobile Foxtel and therefore each of the Services, was only broadcast from 1 July to 26 July 2016 in the Specified Eligible Period.

4.19Based on the information provided, the ACMA is satisfied that the expenditure required by the Applicant if there was a failure to make the Exemption Order for each of the Services would impose hardship on the Applicant. Such hardship would be unjustifiable as the cost to caption each of the Services would be disproportionate to the benefits of captioning.

Captioning services for television programs provided by the applicant (paragraph 130ZY(5)(f) of the BSA)

4.20The Applicant indicated that it had not provided any captioning for Mobile Foxtel and therefore any of the Services.

Application or proposed applications of exemption orders or target reduction orders in relation to any other broadcasting services provided by the applicant (paragraph 130ZY(5)(h) of the BSA)

4.21The ACMA has previously made the following exemption orders for services provided by the Applicant:

Financial year / Exemption orders for services provided
as part of Mobile Foxtel
1 July 2012 – 30 June 2013 / 35
1 July 2013 – 30 June 2014 / 34
1 July 2014 – 30 June 2015 / 34
1 July 2015 – 30 June 2016 / 34

4.22The Applicant applied for exemption orders for 34 channels provided by the Applicant as part of Mobile Foxtel for the Specified Eligible Period.

The likely impact on the quantity and quality of television programs transmitted on broadcasting services provided by the applicant (paragraph 130ZY(5)(g) of the BSA)

4.23The Applicant submitted that if the ACMA did not make an exemption order for each of the Services, there would be no impact on the quantity and quality of television programs transmitted on the broadcasting services provided by the Applicant, as the Applicant has ceased each of the Services.

4.24Given the Services are no longer supplied by the Applicant, the ACMA is satisfied that a failure to make the Exemption Order for each of the Services would not have any impact, whether positive or negative, on the quantity and quality of subscription television programs transmitted on the broadcasting services provided by the Applicant.

Submission received from Deaf Australia

4.25Deaf Australia objected to the ACMA granting an exemption order for each of the Services, on the grounds that doing so would limit access to the Services and allow the broadcaster to discriminate against deaf and hard of hearing people who wish to subscribe to the Services.

4.26Deaf Australia referred to the first outcome of the National Disability Strategy (the NDS), which is ‘inclusive and accessible communities’. This outcome seeks to ensure that people with a disability live in accessible and well-designed communities with opportunity for full inclusion in social, economic, sporting and cultural life[1]. Deaf Australia also referred to the principles of Universal Design referred to in the NDS, which call for products and services to be developed in such a way that they do not need specialised or adapted features to be used by everyone. Deaf Australia noted that the NDS quotes “captions on all visual material such as DVDs, television programs and videotapes”[2] as an example of universal design.

4.27Deaf Australia also referred to the United Nations’ Convention on the Rights of Persons with Disabilities (the Convention), and in particular quoted the article of the Convention which refers to persons with disabilities having the right to enjoy access to television programmes, films, theatres and other cultural activities, in accessible formats.

4.28In respect of Deaf Australia’s submission, the ACMA recognises the importance of the NDS and the Convention. The ACMA’s decision to make the Exemption Order is based on relevant evidence and the criteria specified in section 130ZY(5) of Part 9D of the BSA. The objectives of Part 9D of the BSA are directed at increasing access to television and as such are consistent with Australia’s international obligations under the Convention and domestic policies, such as the government’s social inclusion policy. This was noted in the Statement of Compatibility with Human Rights in the Explanatory Memorandum to the Broadcasting Services Amendment (Improved Access to Television Services) Bill 2012, which introduced Part 9D of the BSA.

4.29The ACMA also notes that the NDS states that “each level of government has specific roles and responsibilities across the range of policies and programs that impact on people with disability, their families and carers. The Strategy does not change the nature of these roles and responsibilities, but seeks to create a more cohesive approach across all governments”[3]. The ACMA notes that one of its roles and responsibilities includes granting an exemption order where an applicant meets the criteria specified in the BSA.

Submission received from MAA

4.30In its submission, MAA did not object to the ACMA granting an exemption order for each of the Services, given that the Applicant ceased broadcasting the Services in July 2016.

4.31However, MAA expressed concerns regarding the ACMA’s reason for granting anexemption order for each of the Services—that providing captions would have caused ‘unjustifiable hardship’ to the Applicant. MAA submitted that:

  • the ACMA did not define ‘unjustifiable hardship’ nor indicate how profitable the Applicant would have needed to be before it was required to deliver captioning, and
  • the ACMA should specify the exact criteria it uses to approve applications for exemption orders based on financial hardship or burden.

4.32The ACMA acknowledges MAA’s submission, however, notes that the term ‘unjustifiable hardship’ is undefined in both the BSA and the Explanatory Memorandum to the Broadcasting Services Amendment (Improved Access to Television Services) Bill 2012 (the Explanatory Memorandum). The ACMA does not have the power to set rules to define what constitutes ‘unjustifiable hardship’. The criteria the ACMA uses to assess whether a refusal and/or failure to make an exemption order would impose unjustifiable hardship is specified in subsection 130ZY(5) of the BSA. When considering the financial circumstances of an applicant, the ACMA assesses each application case by case and in the circumstances as a whole.

4.33MAA suggested that the ACMA adopt a similar approach to the ones used in the UK and USA for determining whether an applicant should be excluded from meeting its captioning obligations on the basis of the audience share and/or channel revenue. The ACMA acknowledges that different exemption processes apply under different legislative frameworks in the UK and USA. Under the BSA, the ACMA does not have the power to mandate financial and/or subscriber thresholds relating to the provision of captioning for subscription television services. The ACMA also does not have the power to override legitimate claims for confidential treatment of commercial-in-confidence information provided by the Applicant, in order to provide the financial transparency MAA is seeking.

4.34MAA submitted that it acknowledged what appeared to have been genuine efforts by the Applicant to introduce captioning for the Services. MAA was, however, disappointed that the Applicant’s efforts to provide captioning for the Services ultimately proved unsuccessful. MAA noted that there are technical solutions available which allow captioning on mobile video platforms.

The ACMA acknowledges that technical solutions may exist which would allow captioning on mobile video platforms. However, the ACMA undertakes its assessment based on the Applicant’s circumstances. Based on the information provided, the ACMA is satisfied that the Applicant’s infrastructure and video platform was not capable of providing closed captioning for the Services without significant further technical development.

ACMA’s overall assessment

4.35Based on the information provided by the Applicant and having regard to the submissions from Deaf Australia and MAA, the ACMA is satisfied that a refusal and/or failure to make the Exemption Order would impose an unjustifiable hardship on the Applicant for the following reasons:

a)there are currently no subscribers to the Services as the Applicant ceased broadcasting each of the 34 Services from 27 July 2016;

b)each of the Services had a small viewing audience while it was broadcast by the Applicant;

c)technical difficulties prevented the Applicant from being able to provide captioning for each of the Services, for the Specified Eligible Period; and

d)the cost of duplicating the 34 Mobile Foxtel channels to facilitate the provision of captions, is likely to have exceededthe Applicant’s income from Mobile Foxtel during the Specified Eligible Period.

  1. DECISION

5.1Following consideration of the matters outlined above, on 1 June 2017 the ACMA decided, under subsection 130ZY(6) of the BSA, to make the Exemption Order in respect of each of the Services, for the Specified Eligible Period.

  1. APPEAL RIGHTS

6.1Under section 204 of the BSA, a person whose interests are affected by this decision to make the Exemption Order may apply to the AAT for a review of this decision.