Select Committee on Culture, Media and Sport Minutes of Evidence

Memorandum submitted by ITV Network Ltd


  1.1  ITV welcomes the Government's intention to modernise and rationalise the current system of broadcasting regulation in recognition of the major changes occurring in the communications sector.

  1.2  ITV endorses the Government's support for public service broadcasting in the digital age and, in particular, its support for ITV's role as a public service broadcaster (PSB).

  1.3  ITV welcomes the proposal that broadcasters should have greater self-regulatory control over the qualitative elements of their remits within a new three-tier regulatory structure.

  1.4  However, ITV is disappointed that the Government has failed to bring the BBC fully within the new regulatory framework. This will undermine OFCOM's ability to take a holistic view of public service broadcasting in the UK.

  1.5  ITV believes that the Government should extend "must carry" to satellite. In addition, OFTEL should amend the rules governing "must offer" so that operators like Sky are required to take account of the public service status of a channel when setting the price for the use of essential facilities such as conditional access. The current rules specifically prohibit them from doing so. These changes are a necessary quid pro quo for the Government's desire to see carriage of the core public service channels on every digital platform and for the imposition of "must offer".

  1.6  ITV acknowledges the Government's desire to manage spectrum more efficiently. However, the review of spectrum management needs to take account of the extensive public service obligations on ITV's 15 licensees, and the substantial licence payments they already make for use of that spectrum.

  1.7  In order to make swift progress towards digital switchover it is essential that the Government sets out a clear "route map" for achieving this end. ITV believes that the independent review of spectrum management could play a useful role in this process.


  2.1  ITV Network Ltd is responsible for the commissioning and scheduling of programmes on the national ITV network. It also represents the collective views and interests of the holders of the 15 regional ITV licences[4].

  2.2  ITV is the UK's most popular channel and is watched by an average of 48 million people every week. It is funded entirely from commercial advertising and sponsorship and in 2001 will spend nearly £1 billion on programming. It is also a public service broadcaster (PSB), with extensive regulatory obligations at both the network and regional level.

  2.3  ITV's positive programme obligations today require it to provide a range of high quality programmes in nine prescribed categories (drama, entertainment, sport, news, factual, education, religion, arts, children's) of which five have mandatory minimum weekly targets (news, current affairs, children's, religious and regional).

  2.4  ITV believes that increasing competition in the multi-channel world and the switchover from analogue to digital will have a significant impact on public service broadcasting. The Government therefore needs to reassess the way in which it is regulated.

  2.5  ITV believes that its public service role should in future revolve around its unique characteristics as the UK's leading mass audience channel, the major commercial producer of UK originated programmes and the UK's primary regional broadcaster.

  2.6  In this submission ITV has focused on its two key concerns with regard to the White Paper:

    —  the proposed system for regulating public service broadcasting in the digital age; and

    —  the Government's proposals to ensure universal access to core services.

  2.7  This submission does not cover media ownership issues, which the individual licensees address in their responses.


  3.1  ITV welcomes the Government's commitment to public service broadcasting and in particular ITV's role as a commercial provider of public service television. In addition ITV welcomes the general intention to rationalise the regulation of broadcasting to provide greater coherence and flexibility. The proposed three-tier system for content regulation is in theory a logical way of achieving this.

  3.2  However, ITV is concerned that the proposals contained in the White Paper may not actually achieve the Government's objectives. For example, the BBC is largely excluded from the proposed new regulatory structure, which may make it difficult to develop a coherent approach to the regulation of public service broadcasting. The ecology of broadcasting is a subtle one and the way in which the Corporation is run has a direct impact on the rest of the sector.

The new regulatory structure

  3.3  ITV broadly welcomes the proposal to create a single regulator, OFCOM, with a comprehensive economic and content regulation brief. This should reduce regulatory overlap and produce greater regulatory consistency and coherence.

  3.4  The Government's proposed Three-Tier system has the potential to rationalise content regulation, which will give broadcasters the flexibility to respond more quickly to viewers' demands whilst also maintaining high standards of public service broadcasting.

  3.5  However, ITV believes that there are a number of areas that need to be clarified.

Tier One

  3.6  Under the proposals contained in the White Paper first tier obligations would apply to all broadcasters licensed by OFCOM as well as to the BBC. These obligations would cover matters such as minimum "negative" content standards and rules on advertising and sponsorship, although the BBC Board of Governors would retain responsibility for regulating impartiality requirements. This is a sensible approach and ITV welcomes the fact that most of the provisions within this tier will apply to all broadcasters including the BBC.

Tier Two

  3.7  This tier will apply exclusively to the public service broadcasters including the BBC and represent "positive" regulation of their output to ensure public policy objectives are met. Tier Two will contain varying statutory obligations that are quantifiable for each of the public service broadcasters. ITV accepts in principle the notion that a range of statutory obligations should be applied to each of the public service broadcasters, although given the lack of detail contained in the White Paper it will wait to see the precise obligations proposed in any Bill before giving unconditional support. ITV welcomes the proposal to increase the regional obligations placed on other broadcasters, although it anticipates remaining the principal producer and commissioner of programmes from the nations and regions.

Tier Three

  3.8  Tier Three will cover individual public service broadcasters' qualitative obligations. It offers ITV the opportunity to take much greater responsibility for regulating its own output. ITV welcomes the proposal for each broadcaster to develop statements of programme policy and self-regulatory mechanisms to replace the current "box-ticking" that is so cumbersome. ITV recognises the need to manage these self-regulatory mechanisms in such a way as to ensure that the channel continues to provide a diverse schedule of high quality programmes.

  3.9  OFCOM will retain backstop powers to review performance and ensure that broadcasters deliver on the commitments made in their statements of programme policy. ITV believes that OFCOM should only exercise these powers once a broadcaster has clearly failed to deliver on its promises. This should involve a formal review process.

  3.10  The White Paper makes no reference to the potential impact that programme policy statements might have on existing ITV licences, which have in general just been renewed for a further period of 10 years. The licences currently contain detailed positive programme commitments made on behalf of each licensee and the statement of programme policy could potentially cut across these obligations. ITV will be seeking further advice from the Government regarding how it intends to deal with this issue in the forthcoming legislation.

Regulation of the BBC

  3.11  Whilst the decision to extend certain statutory obligations in Tiers One and Two to cover the BBC is welcome. ITV is disappointed that the Government does not propose giving OFCOM responsibility for the regulation of the BBC's commitments under Tier Three. It is at this level that each of the public service broadcasters will most clearly articulate their distinctive remits. ITV has always argued that there should be a gradation of public service responsibilities, based on each broadcaster's ownership structure and funding. Yet under the proposals put forward by the Government, OFCOM will not be in a position to look at public service broadcasting across the board.

Regulation of Channel 4

  3.12  ITV welcomes the proposed review of Channel 4's remit to ensure that it keeps its distinctive and innovative voice and remains the main provider of public service broadcasting after the BBC. The Government's pledge to ensure that Channel 4 is not able to exploit its privileged commercial position to subsidise the development of new services that are unrelated to its public service remit is also welcome.

Regulation of Channel 5

  3.13  Channel 5 was rightly given a less onerous public service remit than ITV when it launched to reflect the fact that it was a new entrant with less than 90 per cent coverage. Now that it is better established ITV believes that it is appropriate to review this remit.


  4.1  ITV welcomes the Government's acknowledgement in paragraph 3.2.3 that "The existing provisions that secure access to public service broadcasting are . . . not sufficiently robust against the future changes in the way we will receive broadcast services in the digital world". There is little point getting the framework for content regulation in the future right for public service broadcasting if viewers are unable to access these services easily and affordably.

Must Carry/Must Offer

  4.2  The White Paper makes clear the Government's policy objective to ensure that the core public service channels are carried on every digital platform, via the mechanism of placing a "must offer" obligation on the PSBs. However, it fails to extend "must carry" requirements to cover all platforms. In ITV's view it is inherently unfair to require public service broadcasters to offer their services to a platform if that platform is not similarly required to carry the service. This lack of equivalence will undermine the ability of public service broadcasters to negotiate carriage on fair and reasonable terms.

  4.3  If, as the Government acknowledges, the public service broadcasters will need to be available on a variety of platforms in order to provide universal access and facilitate digital switchover then it is important that all platforms, including terrestrial, cable, satellite, "must carry" these services.

  4.4  ITV recognises that it is difficult to extend the existing "must carry" requirement that applies to cable operators to satellite given that it would require obligations to be placed on a Luxembourg operator, SES. However, ITV is currently pressing for changes in EU law that will in the future permit the extension of "must carry" to satellite. In the meantime, it is important that the Government strengthens existing provisions. Otherwise, Sky, with its effective monopoly on the necessary conditional access facilities, will be in a position to exploit these broadcasters that "must offer" their services.

  4.5  Based on Sky's current ratecard of 30p per subscriber for an "automatically entitled" free-to-air broadcaster ITV would have to pay over £20 million per annum for conditional access services alone to go on the platform. Given that the marginal cost of carrying an additional broadcaster is minimal this would represent almost pure profit for Sky. Money that could be better spent by ITV on content would go straight to a rival broadcaster simply because it has monopoly control of the essential facilities needed to access satellite viewers. This will also be a significant issue for the other public service broadcasters when their current contracts with BSkyB come up for renewal in 2002-03.

  4.6  The only protection the Government is currently offering is the retention of the current provisions guaranteeing broadcasters access to the proprietary conditional access systems used to deliver and charge for satellite services on fair, reasonable and non-discriminatory terms. However, the current interpretation of these provisions, as applied by OFTEL, expressly prohibits providers of conditional access services from taking into account the public service nature of a channel when setting a price for access to these essential facilities. This fails to recognise the fact that, unlike other broadcasters, the PSBs carry extensive positive programming obligations.

  4.7  In addition, free-to-air PSBs like ITV only require access to encryption facilities to prevent their signals spilling over into non-UK territories and infringing copyright. By comparison, pay TV broadcasters need encryption facilities to generate revenue.

  4.8  OFTEL has promised to consult shortly on whether these guidelines should be amended. ITV has submitted preliminary comments to OFTEL and is urging the Government to ensure OFTEL amends the current guidelines. If broadcasters "must offer" their services to platform operators then those operators "must offer" broadcasters access to essential facilities at marginal incremental cost. It cannot be the intention of the legislation to compel the public service broadcasters to go on the satellite platform regardless of the terms extracted by the monopoly provider of an essential gateway facility.

Electronic Programme Guides (EPGs) and due prominence

  4.9  ITV welcomes the proposal to give OFCOM powers to regulate EPGs and "similar new systems" (paragraph 2.1 and 2.6.2) such as PVRs in order to guarantee due prominence for services, in particular the public service broadcasters. Given the increasing reliance of consumers on EPGs and similar systems for accessing broadcast services it is essential that service providers and platform operators give fair, reasonable and non-discriminatory access to them.

  4.10  ITV supports the proposal in paragraph 3.5.2 that OFCOM should also consider whether public service channels should be listed by genre as well as channel. It would be reasonable and proportionate to require content from a small number of channels to be listed under the relevant genre, alongside the thematic channels. It does not serve the viewer interest, for example, that live sporting events on the main free-to-air channels are not listed alongside those featured on the dedicated sports channels.

  4.11  Notwithstanding ITV's support for regulation of EPGs and similar gateways in principle the regulator needs to adopt a flexible and light touch approach in order not to discourage innovation in new markets. Regulation should focus on those areas where individual operators exercise significant market power and there is concern that this position might be abused.


Spectrum Management

  5.1  ITV recognises the need to review the management of spectrum used by broadcasters as part of the Government's intention to manage spectrum more efficiently. In addition ITV welcomes the fact that, in paragraph 2.7.3, the White Paper acknowledges that account needs to be taken of the "particular circumstances" of broadcasting. The cost of meeting public service broadcasting commitments, including universal coverage, and the cost of simulcasting until digital switchover are all factors which need to be taken into account when considering the price paid by ITV for its use of spectrum. The substantial payments already made by ITV companies for their licences also need to be taken into account. It would be anomalous for ITV companies to pay substantial sums for their use of spectrum in addition to those they already pay for their broadcast licences.

  5.2  ITV notes that the Government is commissioning an independent review followed by a consultation and that it will not change the status quo before this process is complete. ITV also understands that no significant changes will be made to increase the cost of ITV companies' licences during the current licence periods, and that equally there is no intention to introduce changes to the two initial multiplex licence periods established by the 1996 Broadcasting Act.

  5.3  It is important that the Government gives a clear lead on digital switchover and ITV is, therefore, surprised that there is no reference made in the White Paper to digital terrestrial (DTT) spectrum. Given DTT's crucial role in assisting analogue switchover and the consequent need to make it a success it is important that the Government takes this opportunity to signal its intention to release more spectrum for at least another multiplex.

  5.4  In order to make swift progress towards digital switchover it is essential that the Government sets out a clear "route map" for achieving this end so that the UK is able to maintain its position as a world leader in digital media. ITV believes that the independent review of spectrum management would perform an extremely valuable function if it took the opportunity to help map out a clear route to switchover.

The licensing regime

  5.5  ITV understands the Government's desire, as articulated in paragraphs 8.8 to 8.8.5, to create a licensing regime that is sufficiently flexible to adapt any fundamental changes in the sector and in the nature of public service broadcasting as digital switchover approaches. However, commercial operators of public service television such as ITV must be given sufficient certainty that licences will be renewable if they are to be encouraged to make the necessary investment to maintain quality and diversity.

Reception of regional services

  5.6  ITV accepts the Government's observation in paragraph 3.3.3 that it is important "that viewers and listeners are able, as far as reasonably practicable, to receive the regional programming intended for their community". It has always been a feature of terrestrial television that certain viewers have not been able to receive the correct regional service because of the nature of the technology. Over time ITV has managed to eliminate many of the anomalies but problem areas remain and for those viewers who are affected it is deeply frustrating.

  5.7  ITV is currently in discussion with Government about ways in which digital technology might offer a solution to this problem. ITV believes that carriage of the channel on the digital satellite platform will provide a route to resolving this problem for many viewers.

February 2001

4   Anglia Television, Border Television, Carlton Broadcasting, Carlton Broadcasting-Central Region, Channel Television, Grampian Television, Granada Television, HTV Group, LWT, Meridian Broadcasting, Scottish Television, Tyne Tees Television, Ulster Television, Carlton Broadcasting-Westcountry Region, Yorkshire Television. Back

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Prepared 23 February 2001