Select Committee on Culture, Media and Sport Minutes of Evidence

Memorandum submitted by BSkyB

  BSkyB welcomes the Committee's inquiry into the Communications White Paper. This memorandum covers three main issues: the regulatory structure, public service broadcasting and ownership.


  BSkyB welcomes the proposed rationalisation of the plethora of existing regulators into a single regulatory body for the communications and media industries—OFCOM. This is a major step towards eliminating the considerable overlap, inefficiencies and confusion which exist at present.

  BSkyB also supports the principles of regulation outlined by the White Paper, particularly the requirements:

    —  for regulatory practice to be informed by the Better Regulation Task Force principles of "transparency, accountability, proportionality, consistency and targeting" (8.5.3);

    —  to "keep markets or sectors under review and roll back regulation promptly where increasing competition renders it unnecessary" (8.11);

    —  to encourage "co-regulation" and "self-regulation" (8.11.1);

    —  for the "minimum necessary level" of regulation (8.11.2); and

    —  to "ensure that regulation is not framed in terms of particular technologies and does not restrict technical innovation" (8.11.3).

  In order to justify distinctive sectoral rules in future, there must be an indefinite problem which cannot be resolved through the application of competition law or appropriate self-regulation. BSkyB is concerned that a thorough analysis of the need for sector-specific rules has not been undertaken and these will remain too prevalent.

  There are also a number of details about how OFCOM will operate—including, in particular, the effectiveness and fairness of the appeals process—which require clarification.


  The role of public service broadcasting was identified by the Government as one of the crucial issues to be addressed in the White Paper. Its failure to do so, however, impedes the resolution of a variety of major policy questions.

  There is, in particular, no attempt to determine whether, in the light of the wide range of services available to many viewers today, the programmes provided by public service broadcasters represent good value in relation to the privileges that they enjoy. Yet, at the same time, new privileges are introduced, such as extended must-carry and due prominence rights, which will compound the dominance of the traditional broadcasters and harm the competition and new market entry that the Government wishes to encourage.

  Critically, there is no reference to "market failure" or any other test to determine the role and scope of public service broadcasting, and how much of existing public service broadcasters' output actually comprises programming aimed at correcting this market failure. Nor is there any suggestion that there might be alternative, and possibly more cost-effective and efficient, ways of achieving the desired outcome.

  The White Paper's vision of the need to preserve—and extend— public service broadcasting, insulated from the marketplace, rests on two unsubstantiated assumptions. First, that the market will not deliver the range or quality of programmes of the kind people want—that public service broadcasting is "the best way" of providing high quality, original, bold and popular programming. Second, that public service broadcasting is needed to ensure a plurality of views and opinions.

  This approach ignores the question of whether, in an environment where nearly 45 per cent of individuals have access to a range of high quality multi-channel programmes[1], there are any other alternative means of providing public service broadcasting. It also fails to recognise the achievements and growing role of the commercial sector in delivering programmes and services that were once considered to be the province of public service broadcasting[2].

  These questions cannot be resolved without a clear analysis and understanding of the role, purpose and scope of public service broadcasting—in particular the BBC—in the wider communications landscape. Neither can such analysis wait until digital switchover and the consultation on public service broadcasting proposed for that time (8.8.4). The continued incursion of BBC licence fee-funded services, as well as those of Channel 4, into areas which the market is well able to serve is happening now, and without proper scrutiny.

Regulating the BBC

  BSkyB believes that the regulation of the BBC must be included within OFCOM's remit: it is a large player in the communications sector and its unique privileges make it a strong and effective competitor to commercial companies. If it is not, OFCOM will be unable to exercise effectively its responsibility for economic regulation and competition law, and the existing disparities (for example in rules concerning cross-promotion and sponsorship) will persist. This does not necessarily mean that the BBC's Board of Governors should be abolished, but simply that they become answerable to OFCOM in the same way as all other industry participants.

  BSkyB notes, to this end, the conclusion of the Committee following its inquiry into The Funding of the BBC that:

    "the BBC's role and governance in coming years are highly contentious and inseparable from other broadcasting regulatory matters . . . the BBC's self-regulatory position separate from the rest of broadcasting is no longer sustainable"[3].

  Furthermore, the National Consumer Council has already indicated to the Committee its disappointment at the failure to bring the BBC completely under the independent regulation of OFCOM.

  OFCOM should also be given overall responsibility for the scrutiny and approval of all new BBC channel proposals, within the context of a more rigorously defined role and remit, and with a specific obligation to ensure that such services do not duplicate—or foreclose entry by—similar commercial services. While the recently published criteria and process for the approval of new BBC licence-fee funded services is a first step in this direction, they fail to adopt a sufficiently robust approach to the issues of market distortion, caused by public service broadcasting.


  In the past, the choices of television services available to viewers were strictly limited by the scarcity of spectrum and by Government policy. Today, however, the introduction of new delivery technologies and the launch of digital television mean that there is sufficient capacity to support the entry of a large number of competing voices and sources of opinion, including channels targeted primarily at niche audiences—eg news channels, ethnic channels, documentary channels and parliamentary coverage. The entry that has occurred to date and the potential for further entry have caused a sea change in the structure of the broadcasting industry. The widespread deployment of digital technology has resulted in, and will continue to produce, an increasingly diverse and pluralistic media with reduced need for Government or regulatory intervention to protect these objectives.

  In this light, the application of existing UK competition rules—including merger control rules—is sufficient to ensure diversity and plurality. Sector specific rules designed to regulate media ownership are no longer necessary.

  The White Paper, however, takes an inexplicably asymmetric approach to the reform of media ownership rules. On the one hand, it specifically proposes the abolition of the 15 per cent limit on the share of TV audience, and the rules preventing single ownership of the two London ITV licences. In doing so, it also makes clear that this liberalisation is for the benefit of one specific sectoral interest in the near to mid-term, ITV, which is already free to control a combination of analogue and digital terrestrial, cable and satellite channels and newspaper interests. On the other hand, proposed reform of the cross-media ownership rules that effectively bar just one existing UK broadcaster, BSkyB, from entry into analogue terrestrial television (and the benefit of gifted digital terrestrial multiplex capacity granted to those broadcasters) is addressed only by "inviting comments".

  The White Paper thus fails to deliver an effective and coherent vision for the future. If the market is now sufficiently competitive and pluralistic to allow—with competition authority approval—single-ownership of ITV, which attracts approximately 30 per cent of UK television viewing, and extensive cross-ownership opportunities for all other UK broadcasters, it is unclear to BSkyB (which only accounts for around 6 per cent of UK viewing) why the same line of argument should not be applied to all media ownership issues.

February 2001

1   Source: RSMB, February 2001. Back

2   For example, quality impartial news channels, coverage of minority sports, ethnic services, and increasing original production in comedy, drama, film and documentaries. Back

3   Paragraphs (xix) and (xx), Vol 1 Summary of Conclusions and Recommendations, Third Report, The Funding of the BBC, Session 1999-00. Back

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Prepared 23 February 2001