Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 260 - 277)



  260. How many of them would be basically pop music in some form or another?
  (Mr Howard) On Digital One half my channels are music stations, half are speech stations. Typically, across digital radio, we are seeing about 25 or 30 per cent of them being speech orientated.

  261. I must say I am delighted to hear that. It always seems to me that on analogue radio when you listen, you can switch through 10 so-called different radio stations and they are all playing pop music. That is not choice, is it?
  (Mr Howard) We have a lot of evidence now from digital radio listeners who are buying a digital radio and being surprised and delighted by the content, people who say to us, "We are now listening to the radio for the first time again for a long time because of the content and the choice. Thank you very much."

  262. Could I ask a question about getting this rolled out, if you like. I am sure I am not unique but my major area of listening to radio is in my car. You have to persuade the car manufacturers to put digital radios into cars—right through the range, not just at the top.
  (Mr Howard) I could not agree more. But it is not just car listeners. Dealing with car manufacturers, which is increasingly more difficult to do from this country, means that you are dealing with production plans which are five and six years out. It is quite difficult to get them to make any changes to their cars. There have been announcements from people like Ford that they will put car radios typically from 2004. We know that a number of car manufacturers are offering digital radio as an upgrade now—work that we have done in persuading them to do so. But, at the end of the day, you are selling two million new cars a year in the United Kingdom, so you will upgrade two million out of the 25 million cars per year. You have to do that in parallel. It is absolutely important that you have to do it in parallel with in-home sets—and remember that in the home, typically, there are five or six radio sets, which ultimately all need to be upgraded to digital.

  263. But people do buy new car radios.
  (Mr Howard) Yes, they do.

  264. So you are going for, if you like, the replacement market as well.
  (Mr Howard) The replacement market is about one million units a year as well. It is all about price. When you get the price of a digital radio—whether it is a car radio or a cassette player or a hi-fi—to a price that is approaching that of an existing model, then there will be no resistance.

  265. As I understand it—and I am emphasising this a little just to get it right—the car radio is, in a sense, where one of the major benefits of digital radio comes in, in that, as you move across an area, the signal remains constant and you are not having that breakdown and break-up of whatever the signal is. Whereas, with an in-home set, once you have set your radio, if it is a decent radio, really what digital brings in terms of quality is not that great.
  (Mr Howard) No, actually, I think you would be surprised by the answers we are getting. The BBC have got about 100 digital radios out with a test audience at the moment. They get feedback from them regularly and one of the top reasons why people say they like their digital radio after they have got it—not necessarily the reason they buy it, but one of the things they appreciate most—is the sound quality. That surprised us all, because we thought sound quality was one of those givens, but actually that is what people appreciate—in home radios I am talking about. So sound quality is something which people do appreciate once they have heard it.

  266. May I switch to another area—two, if I am allowed. One is new recording technologies. MP3 in particular, allows people now to record enormous amounts of music on to their own personal machines, either directly from the CDs they have bought or of course down through the Internet. Is this going to damage your market in the long-term? There is now one, I gather—and I am not going to give its name because that would be advertising it—where on one machine, about that size, you can record the equivalent of 100 CDs, and the quality apparently is CD quality. So why would you listen to radio stations?
  (Mr Howard) I think that is a question generally about radio, which is about how strong radio is and how strong the relationship with the listeners is. It does not just apply to digital; it applies in stations like Classic FM and the Emap stations—any radio station which people listen to.
  (Mr Lewis) Yes, certainly that competition has always been there, with ourselves as radio broadcasters and the record industry. One can go out and programme one's own music by playing one's record collection. I think the skill of radio has been its ability to programme a range of music to certain tastes at certain times of the day.

  267. That is exactly what you now can do with your own MP3 recorder. You can record onto it whatever music you want and listen to it in whatever order you want to listen to it.
  (Mr Howard) But there is a difference between because you can and whether you will and I would challenge whether people really will.

  Chairman: Mr Wyatt.

  Derek Wyatt: It seems to me that in the White Paper there really is not a heavy discussion on what public service radio is. It seems to me that Classic FM is a wonderful public service station.

  Chairman: You are joking.

  Derek Wyatt: I am not. I am sorry. You should not be so elitist, Chairman!

  Mrs Golding: I agree with you, Derek.

  Derek Wyatt: They do concerts, children's stuff, the teaching. Classic FM is fantastic.

  Mrs Golding: Hear, hear.

Derek Wyatt

  268. I will be president of their fan club after this! The question really is: across the range you do fulfil different public service remits but you do not get any money for it. Why has there not been a real debate about public service radio in this White Paper?
  (Mr Bernard) I think public service radio is in the eye of the beholder. You have just described what we would say is public service radio and yet we do not have any obligation, Classic FM or indeed any other commercial radio station, to provide a "public service". We do produce programming which is in very much the public interest and we think that it is inevitable that a lot of the broadcasting provisions that we give will stray into an area which is very clearly public service. I think this underlines the difference between those who seek to regulate radio to ensure that it does fulfil certain public service obligations and those who say, "Well, actually the market will ensure that radio will provide those public service obligations, because that is what makes good radio listening anyway," and the reason that Classic FM does what it does is entirely because Classic FM thinks it is doing the best job by doing it.

  269. Sure. But if I was the BBC I would just watch you pour a substantial amount of money somewhere in digital and think, "That's good. That one has not worked, but I quite like that," and launch an alternative site against you. And that is what they are going to do. That does not seem fair to me, because that is not market failure—which is what we have argued about public service in television.
  (Mr Dann) I think, having worked in the BBC for 25 years, until a few months ago, that is precisely what they do. You can see it most clearly in television, even more than in radio, where the BBC is planning to launch services in areas where there is already substantial competition and I think they are doing it with insufficient budgets to deliver the kind of quality that they will pretend that they can. I think in radio they will provide some services that commercial radio has not yet provided, but not all of them. You can see that the one they are calling Radio X, their urban service, will, I would guess, sound exactly like Kiss 100. I think that is precisely what they do. What they are doing now is they are watching the market and seeing where they can attack us.

  270. Under the White Paper at the moment the BBC remains in aspic: it is more or less as it is and we will just put it in OFCOM. There is no real debate about what radio should be because of this ring-fencing of the BBC currently, which I do not think is reasonable or fair—and I suspect you would share that view. The point is radio is booming. I am just beginning to wonder, in fact, whether we need the BBC to run the public service radio. I just wonder whether you have a view on that.
  (Mr Schoonmaker) Progressive regulation is great for us and evolution is great for us. It is about ownership, it is about OFCOM not allowing radio to be lost in the sauce. It is going to be a pretty big organisation and our view, I think collectively across the industry, is that it is time to accept that longer term separation of regulation for the biggest broadcaster in the country from the rest of us just does not make sense.

  Derek Wyatt: John has mentioned the Internet and radio Internet music. One can clearly see what he does most days—but then he is retiring!

  Mr Maxton: I am retiring.

  Chairman: You are in a very sharp mood this morning.

Derek Wyatt

  271. I am sorry, Chairman. However, as ADSL rolls out, if it rolls out—goodness knows, after the last week, with everybody saying they are not going to roll it out, having been told they were going to roll it last week—is that also a concern of yours or is that just another platform?
  (Mr Howard) The Internet is another platform and there are others as well. But, the fact is, you cannot take your Internet into the shower; whereas you can take the radio into the shower. I think people confuse delivering a service into the home via cable, via ADSL with the ability to use the radio where you do, which is anywhere in the home (including on the lawnmower, in the shower) in the car and wherever you happen to be. So I think that universal access of radio is its great strength, which is why we are doing digital radio.
  (Mr Schoonmaker) However, of course we recognise that all these areas of new technology are going to lead to competition for us, just like everyone else, and that is a good reason why we are so keen on progressive regulation and changes to it.

  272. We heard Stuart Prebble say that the analogue and digital signals actually hurt one another in the environment at home. Is that the same for radio as well?
  (Mr Howard) No. I guess, in that respect, we are fortunate in that we have a different set of spectrum for radio, for digital radio, although that is almost all used up already. I think the issue for digital radio as regards spectrum is that the industry, in order to allow all analogue radio to migrate to digital, needs the release of spectrum which has been allocated to digital radio for 2007 brought forward to 2003, otherwise there is great danger that this baby will not be able to grow up properly.

  273. Finally, Stuart said to our surprise—or at least to mine—that they did not have 70 per cent penetration, they had perhaps 50 or 55 per cent penetration. I had a digital radio. It worked wonderfully well here in the House but when I took it home—I live in the countryside in my constituency—it did not work at all. What is the coverage of digital radio?
  (Mr Howard) For Digital One's network we are just at 79 per cent. The BBC's national network is still in the 60 per cent mark. They have got some catching up to do. We are building two transmitters a month. That is the investment we are putting into digital radio. We hope to reach 85 per cent of the United Kingdom population by the end of 2002. Beyond that, it is partly about spectrum—more spectrum is needed—and partly about the resources to be able to make this work. Even in analogue networks it is not commercially viable to do 100 per cent. There are diminishing returns as we build additional transmitters. But that is all part and parcel of the debate about switch-off. ONdigital talked about analogue switch-off for television and we need the same kind of régime—or a switch-off tsar, I think, is what he was talking about—for digital radio as well. It is the same issues, but, without that switch-off and an ordered progression from analogue to digital, it creates great uncertainty in the market. We do not know when we should build new transmitters, the manufacturers do not know whether they should commit to making sets.

Mr Keen

  274. I was interested in Trevor Dann's comment. You seem to fear poor BBC production rather than high quality.
  (Mr Dann) I do not fear it, but I fear, as a consumer, that that is too often now what we are going to get. Because I do not think they are properly funded, sufficiently well funded, to do the range of new services that they are advertising they are going to do.

  275. They are over-stretching themselves.
  (Mr Dann) If you look in television, where they are saying £3,000 an hour for some of the commissions that they are going to put out for BBC3, BBC4, I think they will be unable to live up to the high standards that they have traditionally set.

  276. Does that not contradict Mr Schoonmaker's submission? You are saying that you fear the BBC, you feel it will damage . . . I mean, I want your sector to flourish as well as I want the BBC to flourish. Are you saying that you are worried about them?
  (Mr Schoonmaker) I think both are true in different circumstances. Maybe I could remake my point, at the risk of appearing to be single-minded. Regulation of broadcasting is about trying to get the best service for consumers within the resources and frequencies that are available. At the moment we have that happening in two places. We have commercial people, and we are all working with fairly tight regulations, and we have the biggest broadcaster in the country who is regulating itself. I do not think that that can make sense long-term. So both things are the case. I think in some cases it is probably not the best use of a poll tax; in some cases it is possible to destroy a commercial market just by going into a fairly small one that commercial people have found a place in. They have pushed the boundaries back and they have found a new way of doing things, and then someone with a huge sum of money, which is paid by all of us, just comes in and tips it up. So both problems. And I think it is a result of separate regulation.

  277. If there was a common regulation of BBC and commercial, it would be like lots of local authorities with planning, where they do not let two fish and chip shops open in the same parade of shops. How would you like to see the BBC regulated, then, under a common regulation? How would you like to see them reined in?
  (Mr Schoonmaker) I think that in the case of radio we live with format regulation, and that protects the listener, that provides diversity of choice in listening. There is no earthly reason that the BBC should not have the same kind of content regulation.
  (Mr Bernard) At the risk of using a cliché, we want a level playing field. The BBC has the opportunity within itself to govern its programmes and change formats at will—and has done, both with the most popular service, Radio 1, and now with the increasingly popular service of Radio 2. It has done so at the expense of a sector of the audience who has been completely abandoned. And I might say—just going back to the point that we were making earlier about digital radio—that my dad who is 81, who liked listening to music radio, now is able to listen to the sort of music radio that he appreciates because he has a digital radio. I bought it for him for Christmas. That is not something that the BBC provided; that was provided by the commercial radio sector. The regulation of the BBC, or at least in terms of content, is in stark contrast to that of the commercial sector, which, in the so-called "light touch régime" with which we are living at the moment is very tightly controlled within formats. It cannot move from one format to another, and even within the format there are very tight definitions, even down to single records, or single artists that you can play and you cannot play. That seems to me to be wholly inappropriate in today's age.

  Chairman: Thank you very much. That is it. We are having a teach-in this morning and I think it is very valuable. It is an area not generally covered by discussions on the White Paper or anything else. Thank you very much, gentlemen.

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Prepared 23 February 2001