Memorandum submitted by ONdigital
Digital television offers the best opportunity
for the Government to achieve its goal of creating an online digital
nation by 2005. The UK leads the world in digital television take-up,
but ONdigital believes that the Communications White Paper misses
a significant opportunity to create the environment which will
ensure this country continues to maintain this lead.
We are concerned by what we believe are significant
omissions from the White Paper. The bulk of this submission therefore
focuses primarily on the areas which ONdigital believes should
have been covered. In the second part of this paper, we provide
comments on specific issues raised by the Communications White
Paper: in particular, OFCOM, spectrum management, plurality and
1. ANALOGUE SWITCHOVER?
The Government rightly puts great emphasis on
the economic, social and political consequences of the "digital
divide". There is a range of good reasons to make this divide
as shallow and brief as possible. It is therefore disappointing
that there is no policy proposed within the White Paper to prepare
the UK for analogue switchover. It is concerning that the first
major piece of broadcasting legislation to come before Parliament
in five years includes very little on this issue which is so crucial
to achieving the social, economic and political benefits of the
Although take-up of digital pay television has
been impressive so far (over 6 million digital households in the
UK), there remain significant barriers against achieving the objectives
set by the Government for analogue switch-off. There is a range
of policies available to government which would increase the momentum
towards a fully inclusive digital society.
1.1 Creation of a national digital switchover
The Government has to do more than lay out the
criteria for switchover to occur. It needs to give its full support
to switchover via a well defined national analogue switchover
plan which is properly resourced and fairly administered.
This should tackle both technical and promotional
issues. First it needs to deal with the complex issue of maximising
and agreeing improved digital terrestrial television (DTT) coverage
to ensure that every household has the optimum choice of platform
provider. It also needs to tackle the technical and logistical
issues relevant to the phasing out of analogue signals.
The plan should also include initiatives to
address the problem of consumer confusion. A public information
campaign was promised by the Government 18 months ago and has
not materialised due to conflicting agendas of the parties involved.
The forthcoming Communications Bill is the best
opportunity to formalise a switchover plan at the heart of the
Government and remove any legislative barriers to achieving switchover.
Some of the recommendations outlined below could be introduced
in a Communications Bill, others could be introduced without the
need for legislation. They could all, however, form part of a
national switchover plan which, at present, does not exist.
1.2 Appoint a digital TV/switch-off champion
We believe it is essential that the Government
should appoint a single person to oversee and drive forward all
policy aspects of encouraging digital take-up and achieving analogue
switch-off. It is imperative that this individual is senior enough
and has at his/her disposal a team of high calibre officials to
tackle the diverse range of often highly technical and complex
regulatory/legislative issues. We suggest this person reports
directly to a single secretary of state and is made accountable
for the delivery of analogue switchover.
1.3 A kitemark for "real" digital
The term "digital" is used too widely
and, misleadingly, labelling of widescreen analogue TVs as "digital"
is a common occurrence, even though these sets are unable to receive
any digital channels. The result is consumer confusion, with many
people no doubt purchasing analogue equipment in the belief that
it is "latest technology".
This needs to be addressed immediately and ONdigital
is working with the DTI, manufacturers and retailers to help to
introduce a "real" digital TV kitemark system. It is
important that the Government gives full support and backing to
such a scheme and we would urge it to do so.
1.4 Require TV manufacturers to include digital
receivers in new sets
In the UK over 4 million TVs are sold each year.
The vast majority of these are analogue. This means that every
day another 13,000 analogue televisions enter UK homes with most,
if not all, of these requiring a set-top box or replacement by
a "genuine" digital television before switchover can
occur. The task of achieving analogue switchover is actually getting
bigger, not smaller, every single day.
Manufacturers and retailers are still focused
on producing and selling analogue sets. Consequently prices of
idTVs are higher due to lower volume production.
We would urge the UK Government to mandate inclusion
of digital receivers in new television sets, over a given period
agreed with manufacturers and retailers. This would lead to an
increase in the production of idTVs, prices would come down and
sales would increaseand the mountain to climb to achieve
analogue switchover would begin to shrink. We understand that
the US Federal Communications Commission (FCC) is currently considering
a similar strategy.
1.5 Tackling public confusion
Consumer confusion is not simply confined to
idTVs. After more than two years of aggressive marketing by three
competing digital platforms, there remains a significant degree
of public confusion over what digital television has to offer
the individual viewer. This is particularly true among the 60
per cent of consumers who have never subscribed to any form of
pay TV. Essentially, this group assumes that digital TV only means
pay TV and is confused about the methods by which it is possible
to access digital services.
The Rt Hon Chris Smith MP addressed the Royal
Television Society in Cambridge in September 1999 and said the
Government would conduct a public information campaign which would
help to inform the public of the benefits of going digital. To
date, there has been no such campaign.
We urge the Government to address this issue
as soon as possible with a high profile information campaign (such
as those used for Y2K or phasing out leaded fuel) on the benefits
of digital television and how consumers can access free-to-air
services. Such are the disparate interests among various broadcasters
that no such campaign will be effectively implemented without
lead by government.
1.6 Free-to-air campaign
We believe that the most effective form of communication
for increasing consumer awareness of digital TV is via free-to-air
analogue channels. We would suggest that public service broadcasters
are required to air a minimum number of information slotsat
peak viewing timesinforming people about digital free-to-air
channels and how they can be viewed. ONdigital is in discussion
on these matters with the BBC and ITV. Ultimately, however, this
initiative requires the backing of the Government if it is to
have maximum impact.
1.7 Shared aerial housing
There are as many as 6-7 million shared aerial
homes (ie flats and maisonettes) in the UK, many of which are
owned by local councils and housing associations. The majority
of these homes cannot receive digital television unless their
aerial systems are modified.
Housing associations and councils have no guidance
from government on this issue. We believe that the Government
should issue targets to modify shared aerial housing stock, to
be carried out over a given timescale and at the minimum cost
necessary. This could be supplemented by ring-fencing limited
funding to help carry out the necessary modifications. We also
suggest the Government consider a relevant training and funding
programme to create the skills and labour necessary to carry out
2. SPECIFIC COMMENTS
ONdigital supports the principle of a single
regulator for communications. Establishing a level playing field
should be paramount.
ONdigital supports the Director-General model
for OFCOM. This model has proved to have greater clarity, transparency,
regulatory certainty and authority than an executive/non-executive
model. We believe that individual responsibility for decision
making is at the heart of effective regulation, especially for
competition powers. The introduction of non-executives to the
regulation of networks and platforms, in particular, raises strong
problems of accountability for quasi-judicial rulings. To balance
this regulatory structure OFCOM should have a positive duty to
commission consumer research, a clear annual workplan and produce
a regulatory audit every two years to ensure that the regulatory
structure remains lean.
OFCOM's guiding principle should be that of
the EU's Communication Reviewtechnology neutral regulation.
Legislation should give OFCOM the specific obligation to ensure
a regulatory level playing field to "level up the regulatory
burden", for example to ensure that the provisions of the
1996 Broadcasting Act apply to all platforms and networks. The
BBC should pay all platforms for carriage or none.
There must be a clear strategy for ensuring
that vertically integrated suppliers should not be allowed to
use their wholesale product to promote their retail product. For
example Sky, as the dominant supplier of sports content, should
offer wholesale programming to its rival platforms in clean feed
format free of Sky cross-promotion to non-Sky Digital customers.
2.2 Spectrum management
ONdigital welcomes moves towards encouraging
the more efficient use of spectrum. ONdigital would like to see
a time identified when digital terrestrial signals will have a
higher priority over analogue signals as the country moves towards
analogue switchover. The current safety margin20dbprotects
existing analogue signals but our research strongly suggests that
this margin is overly cautious and could be halved without any
perceptible impact to analogue.
In valuing spectrum it is essential to consider
the existing "price" that is paid for use of spectrum
by today's broadcasters. Today, free-to-air broadcasters are enjoying
a "free-ride" on the coat-tails of DTT roll-out being
driven by ONdigital.
The "price" paid by ONdigital is the
investment it has agreed to make in the subsidising and marketing
of set-top boxes, digital televisions and DTT coverage monitoring
and improving. This is a very significant burden and any move
to introduce additional spectrum pricing for the use of ONdigital
multiplexes would be unacceptable.
There are a number of spectrum users who pay
little, or nothing, for the privilege of spectrum use and whose
services benefit few, if any. For example, as the White Paper
states, of the 16 Restrictive Service Licences (RSLs) currently
granted, only eight are in operation. RSLs are a barrier to the
DTT planning process and significantly complicate what is already
a complex procedure. Further RSLs should be placed on hold while
DTT roll out is completed.
The Office of Fair Trading's (OFT) current inquiry
into BSkyB in the pay TV market has significant potential implications
for the pace of take-up of digital services. However, its significance
goes wider than this and could directly impact on media plurality.
ONdigital has long argued that BSkyBthe
UK's dominant, vertically integrated pay TV operatorhas
consistently and systematically abused its monopoly position to
the detriment of competition and consumer choice. It does this
in a number of ways including:enforcing an anti-competitive
wholesale ratecard of its Sky channels on competitors; providing
some of its Sky premium channelsnotably Sky Sportsin
formats that contain cross promotional material; and signing exclusionary
supply agreements with channels such as Disney and Discovery which
preclude them being shown on DTT.
We welcome the current OFT investigation of
BSkyB. However, we believe it is important to ensure that future
legislation prohibits abuse of cross-media power and influence
by a pay television player in these areas.
ONdigital will provide the Committee with more
details of BSkyB's anti-competitive behaviour if required.
2.4 Regulation of Internet
ONdigital agrees with the broad thrust of the
White Paper in its recommendation to promote a self-regulatory
approach to content on the Internet in a device-neutral waywhether
the web is available via a PC, a TV or a handheld device.
We have significant reservations about any moves
by OFCOM to impose rules on interoperability. In reality, interoperability
is unnecessary at a time when all platforms are providing the
basic equipment for receiving their programmes free, so consumers
do not suffer cost penalties when they change provider. Moreover,
there is absolutely no evidence of consumer demand for a product
that would make systems interoperable. Enforcing interoperability
would therefore impose significant and unnecessary costs on the
industry, and prove hugely disruptive with no benefit to consumers.
2.6 Communications for disabled people
ONdigital is leading the way in signing audio
description services for disabled people. However, we have consistently
argued that the obligations that fall on DTT in this area should
fall equally on cable and satellite. We are pleased to see that
it is the Government's intention to extend these obligations cross
platform "when legislation permits". However, we would
urge that this should be done as soon as possible. The fact that
these platforms will have must carry provisions for public service
channels makes this argument even stronger and should be addressed
in the Communications Bill.