Select Committee on Culture, Media and Sport Minutes of Evidence

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 interoperability.


  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 digital society.

  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 plan

  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 TV sets

  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 increase—and 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 slots—at peak viewing times—informing 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 the work.


2.1  OFCOM

  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 Review—technology 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 margin—20db—protects 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.

2.3  Plurality

  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 BSkyB—the UK's dominant, vertically integrated pay TV operator—has 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 channels—notably Sky Sports—in 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 way—whether the web is available via a PC, a TV or a handheld device.

2.5  Interoperability

  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.

February 2001

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Prepared 23 February 2001