As observers have noted, there is considerable irony in the fact that New Zealand, the first nation to legislate for state control of sound waves, with the Wireless Telegraphy Act of 1903, should have created what the reforming Minister of Broadcasting, Richard Prebble, claimed was "the most open communications market in the world" eighty-six years later. The development of television has been at the centre of this movement from strong state direction to a competitive marketplace.

In 1935, the first Labour administration set up the National Broadcasting Service as a government department to bring the emerging medium under public control. The following year twenty two private radio stations were nationalised to create a state monopoly.

A government inquiry into the prospects for television was appointed in the 1940s but did not report until 1957. It advocated a public monopoly and a full service was eventually launched in 1960. Its take off coincided with a major change in the overall organisation of broadcasting when, in 1961, the old National Broadcasting System became the New Zealand Broadcasting Corporation (NZBC), an institution closer to the BBC model.

Because of the country's relatively small population it was clear that the licence fee would not generate sufficient income to cover the costs of the new service and so advertising was allowed from the outset as a supplementary source of income. Consequently, although the NZBC looked to the BBC as a model it never enjoyed the same relative independence from commercial pressures, or from political overlordship, as its British counterpart.

As a national monopoly it was expected to reflect and foster national culture and national identity. However, its ability to do this was severely limited by financial constraints. The start up costs of the new television service were substantial. Constructing a transmitter system across a huge, topographically difficult, land area was particularly expensive. Comparatively little funding was therefore available for original programme production, and scheduling relied heavily on imported material, particularly from Britain. By the late 1960s, NZBC was the largest purchaser of BBC programmes in the world.

In 1972, the organisation successfully fought off a bid to introduce a competitive commercial service and launched a second channel. This made imported programmes even more attractive to cost conscious executives. They were ten to twenty times cheaper than domestic productions and filled the screen for two days for the price of one hour of home produced material. By the mid-1980s, imports were providing the majority of programmes but taking only 4% of the television division's total expenditure. When a UNESCO study calculated local content on television in 1983, Great Britain logged 85%, Australia 50% and New Zealand 25%--including sports, game shows, news and current affairs--strong evidence that in a market of only 3 million people, financial logic worked powerfully against public television's ability to reflect the full diversity of national life.

Despite the rebuff to the private sector lobby in 1972, a limited form of competition was introduced in 1974 when NZBC's two channels became separate operating companies and entered into vigorous competition for viewers and advertising. This pushed programming towards a more populist, entertainment oriented style. Television viewing increased appreciably.

This fueled renewed pressure from private companies wishing to enter the increasingly lucrative market for television advertising. In 1976 the newly elected conservative, National Government, responded positively with a Broadcasting Act which set up a quasi-judicial Broadcasting Tribunal, with the power to licence new stations by issuing broadcasting warrants. However, it took rather longer to break the public monopoly than many early enthusiasts had anticipated. The private consortium that later became the country's first terrestrial commercial service, TV3, lodged an application for a warrant in 1984. It obtained a favourable decision in August 1987 but a judicial review in their favour was not handed down until September 1988. The channel finally went on air in November 1989. It entered a depressed economy encumbered with debts accrued from the protracted Tribunal process and went into receivership after only six months. It had also underestimated the public channels' ability to fight their corner.

In addition to establishing the Tribunal, the 1976 Act had also replaced the old Broadcasting Service with the Broadcasting Corporation of New Zealand (BCNZ) a publicly owned institution with two major operating divisions, radio, and Television New Zealand (TVNZ). The two television channels were brought under unified control and run as complementary services. The Government also addressed the organisation's mounting deficit produced by the costs of launching the second channel and converting from black and white transmissions to colour. In 1977 they agreed to retire the debt on the condition that future developments were funded from revenues. To underline the point the licence fee was held constant. By 1993 it stood at $NZ110. If it had been indexed linked to inflation since 1975 it would have been $NZ280. Faced with a capped income from the licence fee TVNZ set out to attract more advertising revenue successfully increasing its overall share of the advertising market from 21% to 30% in the ten years from 1977. By 1987 advertising accounted for 80% of its total revenues helping it to record a return on equity of close to 20%.

This more commercially minded attitude ran counter to the recommendations of the Royal Commission on Broadcasting that had sat between 1984 and 1985. It had advocated a strong public service system with limits on advertising levels and a local programme quota. But even as it reported it sounded like an echo from the past.

As a division within a public corporation, TVNZ was free to retain any earnings and reinvest them. The Treasury however, favoured returning them to the public purse for general use. Its 1984 briefing to the incoming government floated the idea of converting commercially viable public operations into state owned trading enterprises (SOE's) which would function as private sector businesses and return a dividend to the government. The process began in 1986. Nine new SOE's, including telecommunications were established, and at the end of 1988 the principle was extended to radio and television broadcasting.

However, TVNZ's capacity to increase its revenues was affected by a radical shift in the terms of competition in the television marketplace initiated by two key pieces of legislation passed in 1989. In response to widespread concern about the costs and delays of the Tribunal process for granting new licenses, the government introduced the Radio Communications Act. This allocated radio frequencies by tender, the winning bidder becoming the frequency "manager" for a twenty year term with freedom to pass the licence on to another party. The first auction of national and regional UHF frequencies in 1990, opened the market to several new services. They included; Sky Network, the country's first pay-TV service, rebroadcasting satellite sports, news and film services; a regional service based in Canterbury in the South Island; and a racing channel, Action TV.

Television New Zealand, which had become a separate operating company in December 1988, in preparation for increased competition, responded aggressively in an effort to cut costs and increase revenues. Staffing numbers were cut and employees moved to limited term individual contracts. Much of the programming formerly made in-house was contracted out to independent producers. Internal subsidiaries looked for outside clients. And the organisation moved to spread its interests beyond its traditional business of mass market national broadcasting. It acquired a 35% stake in Sky, formed a partnership with Clear Communications, the second force in the emerging telecommunications market, and entered the burgeoning overseas broadcasting market with a 29.5% stake in Asia Business News.

It also retained its dominant position in the national television market. By October TVNZ's two channels still commanded an 80% share of the television audience as against TV3's 17.3% and Sky's 1.5%. Its share of television advertising however showed a steeper decline, dropping from 100% in 1984, before the advent of competition, to 70% ten years later. At the same time, TVNZ lost its monopoly control over the licence income.

The 1989 Broadcasting Act transferred responsibility for collecting and distributing the public broadcasting fee to a new body, the Broadcasting Commission, with a particular responsibility for funding local production. It later adopted the title New Zealand on Air (NZOA). Although anyone could bid for funds TVNZ held on to its dominant position with 76% of NZOA's 1992 production budget going to programmes made by or for its two channels. A substantial portion of this figure was spent on the medical soap opera Shortland Street, NZOA's major prime-time vehicle for representing a changing national culture.

Although the introduction of competition has significantly increased the number of television services available within New Zealand, there is heated debate as to whether it has extended the range of programming on offer.

Critics of the reforms point to the cultural costs of the minimal restrictions on commercial operators, the intensified competition for ratings points, and the shift towards transnational ownership with the removal of all restrictions on foreign holdings in television in 1991. They point to the absence of any quota to protect local programming, to NZOA's inability to compel stations to show the programmes it has funded in favourable slots; and to the marked increase in advertising time which gives more space to commercial speech and less to other voices. Although the figures are contested, one government report suggested that between 1988 and 1991, advertising on the two TVNZ channels increased from an average of nine to ten minutes an hour to fifteen minutes.

This eclipse of public service ideals by commercial imperatives is, critics argue, part of a pattern of change which has produced plurality without diversity. Whether this pattern will be broken or reinforced by current moves towards multi media convergence and interactivity is the central question for the coming decade.

-Graham Murdock