Tom Frewen: Why don't they ask about the cost to the public purse and about market dominance?

Our news media report news about themselves with as much objectivity as a Fox News war correspondent embedded with the US Cavalry.

Filing reports from the frontline on the advent of free-to-air digital television, for instance, they have faithfully reproduced most of the government's PR handouts down to the helpful question and answer sheets.

Most usefully for the government and their own industry they have accentuated digital television's positives while downplaying its costs.

Broadcasting Minister Steve Maharey, who comes from Palmerston North and thinks digital is the best thing since colour, set the standard in answering a question in the House last week.

"The most likely cost right now for a person making the shift would be $200 for a set top box and $30 to have someone come round to twiddle with the aerial. Over time, those costs may well come down to next to zero."

Yeah, right.

Just $30 to twiddle your aerial (if you have one and live in a city). No UHF aerial? That'll be $200 installed whereas out in the country you'll be needing a dish and looking at $400-600 all-up. You'll also need a box for each TV set, maybe another for the VCR. If your TV is more than five years old it may not have enough slots in the back to accommodate all your boxes, VHS recorder, DVD player and Playstation.

Although the $38 million forecast to be spent on CPE (Consumer Premises Equipment) over the next eight years will be a cost to consumers, it is counted as a benefit in the cost benefit analysis that the government commissioned to justify a $25 million taxpayer investment in digital television over the next five years.

No worries, though, because ­ and I love this ­ the bulk of costs will be met by broadcasters.

Apart from CanWest and the TAB the broadcasters are TVNZ (partially taxpayer-subsidised by about $80 million a year), the Maori channel ($60 million) and Radio New Zealand ($30 million).

The estimated total cost of building a Digital Terrestrial Television (DTT) network and broadcasting Direct To Home (DTH) via satellite over the next five years is reported to be $75 million, a figure sourced to Transmission Holdings (THL), the state-owned enterprise split from TVNZ in 2003 but which appears nowhere on paper that I can find.

Asked to confirm the figure, a spokesman for Mr Maharey replied: "The final overall cost is still the subject of negotiations between the individual Freeview broadcasters and THL."

That means lengthy and lawyer-lucrative negotiations ahead as Auckland broadcasting executives and Wellington broadcasting bureaucrats fight over CanWest's bill and the amount of dividend TVNZ can withhold to pay its share.

After admitting it could not give a total, the minister's office added "It's not possible to provide a detailed breakdown of costs at this stage."

The main reason for that is revealed on page 139 of the Spectrum Strategy Consultants‚ cost benefit analysis: "BCL (THL subsidiary, Broadcast Communications Ltd) considers its forecasts of the capital investment required to offer DTT managed distribution and transmission services to broadcasters to be commercially sensitive. Therefore, Spectrum has not undertaken a detailed analysis of the financial impact of digital FTA on BCL."

Prevented by the government's transmission company from nailing down crucial facts on the cost side of its analysis, the consultants were restricted to speculation and theory on the benefit side after the government failed to allow them time or money to do basic consumer research.

As Freeview says it will not compete with Sky on sport and movies, and in the absence of any concrete ideas of what to put on the extra channels, the main consumer benefit of digital television is a better picture.

Primary research to establish consumer satisfaction with signal reception should have been a basic starting point. But evidence that most consumers may have already fixed their reception problems lies buried in a footnote "acknowledging" the existence of digital free-to-air television channels from Sky and TVNZ.

TVNZ estimates that 15,000-20,000 homes receive its free-to-air DTH broadcasts of TV One, TV2 and Maori TV.

Yet, incredibly, the $90,000 report, commissioned to justify the government‚s transmission company building and operating a new network on the ground, skates over the fact that the government's television company is already providing the same service via satellite.

Widespread public awareness of that service would have raised the more awkward questions about why we need another transmission network on the ground.

The logic becomes even clearer when you remember that TVNZ and BCL are to television what Telecom is to telecommunications. The government, as their owner, is simply taking advantage of "consumer confusion" to maintain market dominance.

Unlike Telecom, though, TVNZ and BCL have only two shareholders who, as cabinet ministers, have the ability to swing taxpayer funds into subsidising their companies' operations and capital expenditure.

As digital television has the potential to become a big drain on the public purse, taxpayers have reason to be nervous when the media are so easily diverted by the prospect of playing with their new toys.