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Late bid to cancel datacasting auction

THE Internet Industry Association has called for Communications Minister Richard Alston to abandon the controversial datacasting licence auction set for later this month.

The calls come after three of the original bidders, including Fairfax and Telstra, dropped out of the process. Barwix, NTL and Aust-ralian Datacasting Corporation remain in the auction, but only NTL will bid for a national licence.

The IIA fears the auction will result in the valuable spectrum being sold at rock bottom prices.

Datacasting is the delivery of interactive Internet content through high-speed cable. Up to 99 per cent of businesses and homes within Australia will be able to receive the service through their television via a set top box. The technology can provide television programs, email services and e-commerce to con-sumers without the need for PCs.

But, like television and radio, datacasting spectrum is extremely limited. The Federal Government had hoped to raise $500 million from the sale, but restrictive rules governing what content can be datacast have made the licences less attractive.

Under the rules, television-style content such as entertainment programs, sport, children’s programs and drama can’t be shown on datacast technology. According to IIA executive director Peter Coro-neos, the restrictions mean it is it extremely difficult to make data-casting a viable business option at present.

“It basically kills the commercial case for any real competition in the area and that’s the reason why most of the bidders pulled out,” Mr Coroneos said.

The Government has been criticised for bowing to pressure from the television networks and refusing to allow the broadcast of TV programs on the broadband service. But Minister Alston is still pushing ahead with the auction, set for May 21.

Mr Coroneos said that, if the auction went ahead, it would result in a massive loss for taxpayers.

He admitted the Government was in a difficult position, but said it could pursue one of three courses of action. It could proceed with the sale, which analysts believe will not raise as much as the Government had hoped due to the lack of bidder competition, or it could abandon the auction and enter into a private negotiation with the bidders. But Mr Coroneos believed there was even less pressure to get competitive prices this way.

“The third option is to postpone the sale. If they do that, it leaves everything in limbo. The spectrum is very valuable and it should be put to use and there are a lot of people that want to make use of the technology,” he said.

Business News understands Mr Alston or a representative will speak to each of the bidders regarding the future of the auction.

A spokesman for NTL said the company was still proceeding with the bid.

“We are keen to see this industry succeed and we are looking to be the infrastructure provider for the content providers,” he said.

The spokesman could not comment on whether the content restrictions would make the licence less valuable.

A spokesman for the Australian Communications Authority said the auction was still scheduled for May 21 and, although he could not comment on the amount expected to be raised through the auction, he said the bidders would determine the price.

But it appears there is more at stake than just the potential for lost revenue for the Federal Government. As information becomes more and more significant this century, datacasting offers the chance for any Australian with a television to access the Internet.

Those on low incomes can use the Internet without the relatively high cost of a PC and associated equipment.

For rural users it sidesteps the problems of slow connection speeds and high costs.

Set top boxes currently cost about $700, but Mr Coroneos said they would come down to around $300 over time. It also was expected that datacasters would provide the set top unit for free and recoup their costs through a contract, similar to mobile phones.

However, many developers of datacasting technology believe this will no longer happen due to the restrictions imposed by the Federal Government.

Mr Coroneos said the legislation might lead to an information divide between Australians who can afford Internet access and those who can’t.

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