STATEMENT OF REASONS FOR DECISION TO MAKE ANEXEMPTION ORDERST/EO-150 FOR OPTUS VISION MEDIA PTY LTD IN RESPECT OF THE SUBSCRIPTION TELEVISION SERVICE OVATION CHANNEL

  1. DECISION

On 14 March 2014, 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 Optus Vision Media Pty Ltd (the Applicant) in respect of the subscription television service the Ovationchannel (the Service), for the specified eligible period of 1 July 2013 to 30 June 2015 (the Order).

  1. LEGISLATION
  2. 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.
  3. 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 50 percent, as the Service is a Category A subscription television general entertainment service.
  4. Subsection 130ZY(1) of the BSA provides that a 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 :

  1. is expressed to relate to a specified subscription television service provided by the licensee in a specified eligible period; and
  2. 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.
  1. The Applicant seeks an exemption order, which would have the effect of exempting the Applicant’s Service from the requirement to meet the 50 percent annual captioning target during the eligible period.
  2. 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.
  3. 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:

  1. setting out the draft exemption order; and
  2. 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).

2.7Section 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.

2.8Section 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
  2. On 23 December 2013, the ACMA received an application from the Applicant in respect of the Service, seeking an exemption order under subsection 130ZY(1) (the Application). The Applicant applied for an exemption order for the eligible period of 1 July 2013 to 30 June 2015.
  3. The Applicantis a subscription television licensee. It provides, amongst other subscription television channels, the Service.The Service is provided by the Ovation Management Pty Ltd (Channel Provider) to the Applicant.
  4. The Serviceprovides arts and entertainment programs for the Australian subscription television with its programming embracing performance, drama, music, entertainment and visual arts. The Service is available to subscribers as part of the 'Optus TV featuring Foxtel' Digital Essentials Package.
  5. The Service’s genre is general entertainment and is listed as Category A which would normally attract an annual captioning target of 50 percent for the 2013-2014financial year and 55 percent for 2014-2015.
  6. The Service is also provided by another subscription television licensee Fetch TV Pty Ltd (Fetch TV) to its subscribers. The ACMA granted an exemption order (ST/EO-13) for the Service to Fetch TV in March 2013, for two financial years from 1 July 2012 to 30 June 2014.
  7. On 31 January 2014, the ACMA published on its website a notice setting out a draft exemption order for the Service and invited persons to make submissions to the ACMA within 30 days (the consultation period).
  8. EVIDENCE AND REASONS FOR PRELIMINARY DECISION
  9. In deciding to make the Order, the ACMA considered whether the failure to make an exemption order would impose an unjustifiable hardship on the Applicant, having regard to the matters specified in subsection 130ZY(5) of the BSA (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, the information provided by the Channel Provider in support of the Applicationand one submission received during the relevant consultation period. The submission was from Media Access Australia.
  10. The Applicant provided submissions on a commercial in-confidence basis about the detriment likely to be suffered during the eligible period if an exemption order were not granted by the ACMA.According to the Applicant, the detriment arises because it cannot meet captioning obligations independently of the Channel Provider. The Applicant advised that:
  • The Service is delivered to customers of Optus TV Featuring Foxtel via the Foxtel platform, despite the fact that the Service is not part of the retail Foxtel offering.
  • As a wholesale customer of Foxtel, the Applicant does not have the technical capability to provide captioning for the Service. In order to caption the Service, the Applicant would need to contract with an independent live captioning provider, and separately gain agreement and enter into a contract with Foxtel to deliver the live captioning service to customers of the Optus TV featuring Foxtel service.
  • It is not economically viable for the Applicant to provide the live captioning capability, as the cost of providing live captioning is prohibitive considering the number of customers who access the Service.

The Applicant also provided information on an in-confidence basis about the detriment that would be suffered by the Channel Provider if an exemption order is not granted by the ACMA.

The ACMA considers that, if an exemption order is not granted, the detriment likely to be suffered by the Applicant during the eligible period would be both serious and likely, having regard to considerations discussed under 4.5 and 4.6.

4.3As to the anticipated impact (of making an exemption order) for deaf and hearing impaired viewers, or potential viewers, of the Service, the Applicant submitted that this would be minimal, because of the following factors:

a)the number of subscribers, details of which the Applicant provided the ACMA on a commercial in-confidence basis.

b)a number of programs on the Service are sub-titled (has English translation for the audio that is not in English); and

c)captioning was not previously (or currently) available on the Service.

The ACMA considers that making the order will be detrimental for viewers, or potential viewers, who are deaf or hearing impaired. In forming this view, the ACMA notes reported percentages of the Australian population with total or partial hearing loss.[[1]] [[2]] While the ACMA accepts evidence provided by the Applicant about the number of subscribers, the ACMA recognises that the number of subscribers to the Service may increase if captions were provided on the Service.

4.4The Applicant referred the ACMA to its website for details of the Applicant’s current financial results at:

This information provides details of Singapore Telecommunications Limited (SingTel) amongst other Optus companies (SingTel being the parent company of the Optus companies). The informationindicatesthat in the quarter ending 30 September 2013, the Optus companies recorded a total net profit of $218 million, an increase of 33 per cent despite operating revenue declining 5 per cent. The financial circumstances of the Applicant are not clear from this material. The Applicant stated in its application that the SingTel Group gives consideration to commercial opportunities that are supported by a business case on an individual basis.

4.5The Applicant did not provide the estimated expenditure that the Applicant would be required to make if the ACMA does not grant an exemption order. Instead, the Applicant referred the ACMA to the estimates provided by the Channel Provider of the expenditure that the Channel Provider would need to make, in the event the ACMA did not make an exemption order.

The Channel Provider advised that none of the program content on the Service is captioned in English outside Australia. The Channel Provider estimated that to produce pre-prepared/offline captioning for one broadcast hour would require three hours of closed captioning work. This estimated cost was provided by the Channel Provider on a commercial in-confidence basis, which the ACMA considers would be a significant financial outlayfor the Channel Provider. However, the relevant considerations are the financial circumstances of the Applicant and the estimated expenditure that the Applicant would be required to make. This is because the legislative obligation is on the Applicant, as the subscription television licensee, to meet the captioning target requirements.

The Applicant indicated that the cost of obtaining live captioning for the Service, which would be the only way that the Applicant could caption the Service, would be prohibitive considering the number of customers who access the Service. The Applicant did not provide the estimated cost for providing live captioning for the Service. However, the estimatedcosts of establishing and providing live captioning for the Service are available to the ACMA from another source.

The ACMA notes from Optus’ website ( the cost of subscriptions to the Optus TV featuring Foxtel Essentials Package, which offers the Service as part of a bundle of 41 channels. The subscription fee is $47 per month for the whole package of 41 channels (including the Service).

While the ACMA only has evidence of the financial information of the Applicant’s parent company (SingTel) and does not have evidence of the Applicant’s specific financial circumstances, the ACMA regards the likely cost to establish and provide live captioning for the Service as significant, considering the following factors:

  • the number of subscribers to the Service (as part of a package of channels)
  • the cost of subscriptions
  • theestimated costs of providing live captioning for the Service to meet its annual captioning target which are available to the ACMA.
  • In its Application, the Applicant described the likely impact of a failure to make an exemption order on the quality and quantity of television programs transmitted on the Service provided by the Applicant. This information was provided to the ACMA on a commercial in-confidence basis. The ACMA considers the potentialimpact to be both serious and likely.

The ACMA also notes that the cost of captioning was a factor in the decision made by Optus Mobile Pty Ltd, another Optus company, to cease providing five television channels to mobile services from 28 October 2013.

4.7Apart from this application, there is no other current application for an exemption order or target reduction order from the Applicant.

4.8The ACMA has considered the submission from Media Access Australia (MAA) relating to the draft Order that was received during the consultation period. The ACMA considers that the submission 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.

4.9The submission 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 potentially 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 uneconomical 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.”

4.10MAA’s submission 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. MAA also asked the ACMA to make public the exact criteria for approving applications based on financial hardship. The ACMA notes that in jurisdictions like the UK and the USA, the exemption processes are different and are based on correspondingly different legislative frameworks. In addition, the ACMA does not have the power to mandate specific financial or subscriber thresholds for television services for the provision of captioning services. The criteria applied by the ACMA 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 and listed in Attachment 1 below. Certain criteria require the ACMA to have regard to an applicant’s financial circumstances and the estimated amount of expenditure that an applicant would be required to make if the Order were not made. These matters have been discussed in preceding paragraphs.

4.11MAA also submitted that an exemption should only be granted after the Applicant has made a commitment to investigate and plan the logistics of providing captioning so that captioning can be provided in a timely fashion when the Service becomes profitable enough to warrant caption requirements. As discussed above, the current exemption process for subscription television services under the BSA requires the ACMA to consider whether a failure to make an exemption order would impose an unjustifiable hardship on the applicant having regard to the matters specified in subsection 130ZY(5) of the BSA (Attachment 1).

4.12The specified eligible period in the Application is two financial years, from 1 July 2013 to 30 June 2015. MAA stated in its submission that it did not support the ACMA making an exemption order for longer than a 12-month period. Under the BSA, while it is open for the ACMA to refuse to make an order, it is not open to the ACMA to make an order for a period other than the specified eligible period in the Application. As mentioned above, having regard to the estimated captioning costs and the revenue of the Service, the ACMA considers that not making the Order for the two financial years from 1 July 2013 would impose an unjustifiable hardship on the Applicant.

4.13The ACMA is satisfied that a refusal to make the exemption order would impose an unjustifiable hardship on the Applicant. Considering the number of subscribers for the Service and the costs of subscription to the Service, the likely cost of providing captioning for the Service by the Applicant would be significant. Therefore, the ACMA is persuaded that if an exemption orderwere not granted,it would be likely to have a significant impact on the quality and quantity of television programs transmitted on the subscription television services provided by the Applicant.The ACMA sees a potential greater detriment to a greater number of people if the requirement for a broadcastertomeet captioning obligations on a particular television service makes it uneconomicalfor the broadcaster 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). Therefore, on balance,if an exemption order were not granted, the hardship that would be imposed on the Applicant would not be justifiable in these circumstances.

  1. DECISION
  2. Following consideration of the material referred to in paragraph 4.1 above, on 14 March 2014, 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 2013 to 30 June 2015.
  3. APPEAL RIGHTS

6.1Under 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.

6.2Section 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 28days of the decision being made.

6.3Further information about making an applications for review can be obtained through the Administrative Appeals Tribunal website at or by telephoning the Tribunal on 1300 366 700.