Select Committee on Culture, Media and Sport Minutes of Evidence

Memorandum submitted by Carlton Communications Plc


  Carlton Communications Plc is one of the UK's leading commercial broadcasters. We hold regional ITV licences for London, the Midlands, the West of England and Wales and own 50 per cent of ONdigital—the world's leading commercial digital terrestrial television (DTT) operator.

  Carlton welcomes the key objectives set out in the White Paper:

    —  ". . . to make sure that the UK is home to the most dynamic and competitive communications market in the world";

    —  ". . . to develop a clear and effective strategy for completing the switchover to digital broadcasting"; and

    —  ". . . to achieve universal Internet access by 2005".

  The UK has a number of key advantages in the information age: a competitive telecomms industry; the most advanced digital television market in Europe; an established production base; and English, the international language of television and other media. The prospects for economic growth, for job creation and for education are significant.


  The UK was the first country to launch DTT. We have the fastest growing pay digital television market in Europe. Consumers can now choose between three platforms—terrestrial, cable and satellite. There are seven million digital pay television subscribers in the UK.

  The Government can build on that success by pushing ahead with the switchover from analogue to digital. Switchover will also generate considerable revenue for the Exchequer by releasing extra spectrum, which can be sold on to other users.

  We believe that the Government should set a date for analogue switchover. This would encourage television manufacturers to promote digital equipment. The White Paper simply states that it is "expected between 2006-10".

  This should be accompanied by the introduction of: a kite marking scheme for digital television sets; and a Government led campaign to inform the public about the switchover from analogue to digital.


  One of the biggest obstacles to achieving full Internet access by 2005 is the cost of personal computers. However, Internet access through the television is now a reality—enabling some of the most disadvantaged in society to gain access to the worldwide web.

  ONdigital now offers full Internet access from a set-top box via the television for £5 a month. Enhanced DTT coverage would boost Internet penetration rates amongst the most disadvantaged in society who cannot afford the cost of a personal computer.

  The Government should set targets for improvements in DTT coverage. DTT is the key to unlocking the digital, interactive age, with universal Internet access. Improvements to its coverage—and additional capacity—would help to boost Internet take-up.


  We agree that the core public service broadcasting (PSB) channels (BBC1, 2, ITV and Channel 4) should be available on all delivery platforms—terrestrial, cable and satellite. The White Paper hints that this could be achieved by requiring PSBs to offer their services ("must offer") and platform operators to carry them ("must carry").

  However, the White Paper does not explicitly state that "must carry" will be extended to satellite (it currently only applies to cable). We understand that this may require a change to EU law, but believe that "must carry" across all platforms is an essential quid pro quo for imposing "must offer" on PSBs. Without it, the ability of PSBs to negotiate carriage on satellite at fair and reasonable terms will be severely undermined.

  In the meantime, the Government should encourage OFTEL to amend the guidelines governing charges for satellite services. They currently prevent Sky from taking into account the public service nature of a channel when setting prices for access to the satellite.

  We believe that access to satellite for the PSB channels should be charged at cost. PSBs, like ITV, only require access to Sky's encryption facilities to prevent programmes being seen by viewers in other countries where the rights have not been cleared. Pay television operators need them to generate revenue.

  The BBC is currently paying millions of pounds every year to Sky for carriage of BBC1 and 2—despite the obvious benefits that Sky receives from having the BBC on its platform. The cable operators make no charge for the carriage of these channels on their systems.


  We welcome the Government's decision to abolish the 15 per cent audience share limit and the "London ITV split", which prevent future consolidation within ITV. We believe that competition law—rather than specific ownership restrictions—should increasingly be used to control market power and prevent abuse of dominance in media markets.

  We believe that the Government should repeal the restriction preventing any one company from owning more than 20 per cent of ITN. In almost every other country in the world, the main commercial channels own their own news supplier. ITN's impartiality and independence are fully protected via the licensing regime.


  As the White Paper makes clear "the independent production sector is thriving". We accept the need for ongoing independent production quotas in the medium term, although we believe that they will eventually become redundant.

  In the meantime, the restrictions (at both an EU and UK level) preventing broadcasters owning more than 25 per cent of an "independent" should be lifted to 49 per cent. Broadcasters are the principal sponsors of the UK production base, but the current legislation restricts their investment in independents—denying that sector a source of capital.


  We support the White Paper's proposals to sustain PSB and welcome the principle behind the new three-tier system for regulating content. We have always argued that there should be a gradation of public service responsibilities, based on each broadcaster's ownership structures and funding.

  However, we need to see more detail before we can be sure that the proposed structure will rationalise content regulation in practice.

  We believe that OFCOM should be responsible for regulating content on all the PSB channels. Because the White Paper does not bring the BBC fully within OFCOM's remit, it risks undermining the regulator's ability to look at public service broadcasting across the board.

February 2001

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