Select Committee on Culture, Media and Sport Minutes of Evidence


Examination of Witnesses (Questions 609 - 619)

WEDNESDAY 14 FEBRUARY 2001

THE RT HON CHRIS SMITH MP AND MS PATRICIA HEWITT MP

  Chairman: Secretary of State, we welcome you, not for the first time in recent weeks and not for the last time in the weeks that remain before Easter. We are delighted to see you here and we welcome Patricia Hewitt, a newcomer to our revels, who I hope will enjoy being questioned as much as we shall enjoy questioning her.

Mr Fearn

  609. Could I ask straight away why the White Paper is so vague on media ownership reform as a whole, but so specific on its proposals for ITV ownership?

  (Mr Smith) Chairman, if I could just allow myself two words of pleasantry first, may I say that it is always a pleasure to appear in front of you—particularly in such rapid succession. On Mr Fearn's question, first we must remember that although we make very specific proposals for removing the bar on the ownership of the two London franchises and the 15 per cent rule on ITV, what we do not do, of course, is remove the provisions of normal competition policy in relation to ownership matters within ITV. That will remain very much and very firmly in place. If there were to be, therefore, a move towards amalgamation of ITV companies, they would have to satisfy the competition authorities that this was not an anti-competitive move in the same way that they would have had to do before. On the broader question of cross-media ownership, we flag up in the White Paper the fact that this is a complex area; that it is subject to rather detailed percentage provisions at the moment in the current legislation; we also indicate that there are two fundamental principles that need to be borne in mind—the first is diversity and the second is plurality and the two are not, of course, the same—and that any sensible approach to policy in this area has to take account of both of those principles. What we go on to say, however, is that there is no clear measure of agreement in the world outside about how you should do so. There are a number of different mechanisms in different countries and a number of different proposals emerging from different quarters, and what we have said is that we would like to hear more from what people have to say on this, so we very deliberately said we wish to consult more widely and over a longer period before we come to a resolution on this matter because there are such widely differing views on this and no one place anywhere around the world seems, as yet, to have hit on absolutely the right way forward.

Chairman

  610. Could I interrupt one moment there, Secretary of State, since Mr Fearn is talking and you are responding about cross-media ownership, and ask one small question so you can dispose of what I think we all hope is a chimera. The Daily Mail came before us yesterday and, in their document, they expressed concern that any efforts whatever that might be made to control content on the Internet might result in control of or interference with what properly constituted newspapers—like the Daily Mail or other national newspapers—are doing because they provide content or even their entire newspapers on the Internet. Now I very much hope that there is absolutely nothing in anybody's minds that would justify such fears, but it would be very useful if you could dispose of them.
  (Mr Smith) There is no justification for those fears.
  (Ms Hewitt) Chairman, it is certainly a pleasure for me to appear before your Select Committee. We are not proposing any new regulation of the Internet, nor are we proposing censorship of the Internet. It is very important to make that clear because clearly there are rumours or beliefs to the contrary. The law that applies off-line also applies online and, clearly, that will remain the case whether it is the law on paedophile abuse of children, money laundering, the law of libel or anything else. I do not think the Daily Mail or anybody else would expect that to be different. Our concern with the Internet is simply to make sure that everybody can use it safely and securely. For instance, therefore, in the field of illegal pornographic content we have helped to set up the Internet Watch Foundation which is really a model for co-regulation where the industry itself has agreed that, where there is an illegal site identified on the Internet, the Internet service providers will simply take it down. Similarly various departments, including the Department for Education, have worked with the industry to ensure that there is good filtering software available, for instance, to parents through the National Grid for Learning so that parents can make their own choice about what they and their children have access to on the Internet. There are no new proposals for regulation of the Internet.

  Chairman: Thank you very much.

Mr Fearn

  611. Thank you for that explanation. It is a pity that part of it is not in the White Paper itself. Yesterday we had a witness here who said when I asked him a question that he thought it was a very poor White Paper. Is that because there is lack of explanation in the White Paper, or lack of direction?
  (Mr Smith) I think you will find a wide spread of views about the quality of the White Paper. It has been rather warmly welcomed by rather a large number of people but there will always be some who will disagree or be disappointed. What we were setting out to do in the White Paper was to propose some fairly radical changes to the structure of regulation and to set out proposals for a broadly lighter touch approach to regulation but at the same time to seek to protect the genuine public interest. We think on the whole we have the balance right; the consultation period for most of the elements of the White Paper has, of course, just come to a conclusion; we have been reading through those responses very carefully, and there are some proposals that we will, indeed, wish to take up and consider further. On the whole, however, the broad consensus that we have been able to discern is that the proposal for a converged regulator is right: that the combination of lighter touch with public interest that we are proposing is broadly right and, of course, there will be points on the margins that people wish to disagree about in detail.

  612. Last July you told the House of Commons that the review preceding the White Paper was considering the role of the BBC Board of Governors which currently, you said, "acts as both judge and jury, managers and regulators". Why does the White Paper do so little to remedy this situation which you have criticised?
  (Mr Smith) The White Paper does quite a lot in this respect. Firstly, it sets out, under the first tier of broadcasting regulation, proposals for all broadcasters including the BBC to be subject to external regulation in relation to matters such as impartiality[1], taste and decency, and also a final arbitration on complaints. That is new as far as the BBC is concerned. In the second tier of regulation for broadcasting the BBC as a public service broadcaster is included and a number of matters relating, for example, to independent production quotas and regional programme making are included and will be externally regulated. In addition, we propose to impose a requirement on the BBC for the first time to deliver news and current affairs in peak time. In addition to that, of course, economic regulation of the BBC as opposed to content regulation will be subject to all the provisions for both OFCOM's activities and the competition authorities and the detailed external analysis of fair trading that we have put in place. So there is a lot there that looks quite sharply at what the BBC is doing and wants to make sure that it is delivering the best possible public service broadcasting to the public.

  613. Finally, Mr Chairman, can I ask about the deaf and the hard of hearing? There does not appear to be a lot of direct involvement in the White Paper for the deaf and hard of hearing. What are we doing for them?
  (Mr Smith) The reason that we did not flag this up very much in the White Paper, other than saying we wanted to make progress, was that we were still coming to the end of a fairly detailed consultation period on, very specifically, issues about audio description, signing and subtitling. We published proposals and tabled them in the House—in fact, about two weeks ago—as a result of that consultation process and we have proposed that we should make very substantial changes, particularly in relation to people who are deaf and hard of hearing. We have proposed that the target for digital terrestrial television should rise in the ten year period of the target from 50 per cent subtitling to 80 per cent subtitling, and we have also proposed that the same requirements that we have, up to now, envisaged in the document—80 per cent subtitling for DTT—should also apply to cable and satellite. Now those two essential proposals, 50-80 per cent and that 80 per cent applying across the board to cable and satellite as well as DTT, have been very warmly welcomed by, for example, the Royal National Institute for the Deaf.

Derek Wyatt

  614. I am sure you are aware that, in 1936, the Home Office uncertain whether to plump for Logie Baird's 205 lines or Thorn's 405 had a competition which was supposed to be for six months but after two months they realised there was a sharper picture on 405 lines so poor old Logie was done over, really, having invented it. There was an example of the Government saying that this was important and that they would tell the TV manufacturers the rules. In the digital environment, do you think that you ought to say to the TV manufacturers that there must be Internet access on every television set by, say, 2004? If you are sympathetic to that, does it require an Act of Parliament, or can you do it without? OFCOM is quite a long way away, probably two and a half years, but we want to get there, so what do you think of that?
  (Mr Smith) I will ask Patricia to say a word or two about the Internet and policy on spreading access to the Internet in a moment. As far as I am aware, and I will check this, we have no power to issue any such instruction at present. What we will wish to see, however, and we flagged this up in our discussion of the powers and duties of OFCOM, is OFCOM ensuring that viewers can make a ready and easy choice between different platforms of digital television. Whether we should go further and include powers in the Bill that sets up OFCOM to take action on Internet access is a matter which we would need to give some greater thought to. It is certainly our hope that Internet access will come as part of the development of digital television. It is an obvious way of getting Internet access into every home in the country for those who wish it. Certainly the experiments up to now in, for example, ONdigital's service for Internet access have been extremely popular and very successful.
  (Ms Hewitt) First of all, could I add to the point that Chris has just made about what the digital television companies are saying about the popularity of their interactive online services, basically Internet-based services. E-mail, for instance, through television as well as access to particular sites is proving very popular. Clearly not everybody is going to want to access the Internet at home through a PC so Internet access through digital television—or, indeed, analogue but basically digital television—and through mobile devices with the arrival of third generation is absolutely crucial to making the Internet a truly universal medium. As I understand it, there is already a requirement under European regulation for television sets to have at the back one of those slots into which you can put the card for a digital converter. There is not, at the moment, the requirement for all television sets to have built in the integrated digital function, or separately the integrated Internet function. My understanding is that it would not be possible to impose such a requirement unilaterally within the United Kingdom alone but, because this is an issue I have been discussing recently with digital television companies and manufacturers, I have asked my officials to take another look at this to see whether we should be pursuing this issue if not at national level then possibly at European level. In the meantime, we are already seeing the arrival of the £169 Internet-enabled television set—a small, relatively portable set—within the shops; we are seeing quite a rapid take-up curve for digital television with the possibility of Internet access; and we are working with the manufacturers and the digital television companies on the issue of much clearer labelling of television sets so that consumers can find out much more easily whether what they are buying is an integrated digital television set that will give them interactivity and digital television or whether it is one that requires one or more set-top boxes to get the additional services they want.

  615. Thank you for that answer. On the same principle of whether the Government could do more, today the Financial Times has a page on the new smart economy—what I call version 2.0—but just reading from it, this is about David Lewis Waller who runs a web development company in Bangor in North Wales who cannot get access to broadband because he is over three and a half kilometres from the broadband access. Could we as a government, like we do with water and gas and electricity in a planning regulation by insisting that they are there, now insist in planning regulations and say, "And you must also lay either the pipe or the co-axial cable or the carbon fibre", or whatever it is? Could we insist that one system is laid in every planning, whether it is for new build for offices or new estates?
  (Ms Hewitt) In a sense there are two questions in that because, clearly, anything done on the planning side is not going to help the gentleman quoted in the FT today or many others who live too far away from the exchange to get broadband through ADSL even if the exchange itself is modernised to make ADSL available. We cannot, I am afraid, overcome that particular technical problem although what is very clear from the industry is that the price of laying fibre direct to the end user is falling very rapidly and, certainly for new build, is beginning to become competitive with ADSL or cable. As you indicated, yesterday we published our new broadband strategy designed to try and get the market for broadband working much more effectively than it is at the moment. The planning issue, of course, is really one for my colleagues at DETR, and I have asked them to look at the issue of what is appropriate to include in the planning guidance, given the restrictions obviously within which they operate, and for what it is proper to lay down planning requirements.

  616. Finally—and I would love to ask lots of questions but I appreciate time is short—we had a private presentation because we needed to understand your area more from an Internet guru, I suppose, who really said that you must switch off, tomorrow is not quick enough, and that one way that the Government should do this is by providing a digital box for every home which he felt—although this has been disputed by ONdigital—could cost as little as £10 or £20, and it is really the same question here. What we have done is laid out a whole lot of philosophy but no government action. If this digital question is really important and if we are to be the most competitive nation in the world, can we not ease up the analogue bandwidth separately and sell it, and reinvest that in the box? Is there not some clever way in which we could enable the switch-off much faster and the box?
  (Mr Smith) The first part of the answer to that is that this is a proposal which has been made by quite a number of people over quite a period of time, and there are serious problems with it. At the moment the cost of a set-top box is somewhere around the £2-300 mark. It is almost certain that, during the course of the next 3-4 years, the cost of set-top boxes, as happens with virtually all electronic goods, will come tumbling down. What we do not know, as yet, is what figure it will end up at and, of course, one of the points to be borne in mind is that, if those set-top boxes are to include provision for Internet access, that may make them a little bit more expensive as well. The cost will come down, however, and we will be talking certainly below £100—quite possibly below £50—within a few years. If at this stage we were to envisage, either through government action or through the broadcasters or manufacturers, making available to people set-top boxes either at an artificially low price or for free, if we were to put in place such a proposition now it would almost certainly mean that people intending to switch to digital now would put off doing so until such time as the free or cheaper boxes became available. It is very difficult to envisage anyone doing anything of that kind at this stage. What the manufacturers, the broadcasters and others will wish to do in a few years' time, of course, we can only guess. No one would have predicted four years ago that both digital satellite and digital terrestrial would be offering free set-top boxes to people who took out a subscription. That has undoubtedly driven the take-up of both platforms very substantially. In this rather rapidly changing world, therefore, I think it would be foolish for us to make assumptions now but obviously what decisions either the commercial players or, indeed, a future government might want to make on this are very much a matter for speculation.

  Chairman: Are you not going to ride your hobby horse about the fund? I was going to ask a question.

  Derek Wyatt: I did not think I had time for that.

  Chairman: I am giving you time in order that I can ask a question!

Derek Wyatt

  617. We have had large numbers of people coming to talk to us, and we have had greatest sympathy, really, for the community radio people because if, for instance, a school has a community radio system, it has to close it at 4.00 pm and the community cannot go in because the air waves stop at the school gate—unbelievably—in the 1990 Broadcasting Act. Even if we could unbundle that bit, therefore, and allow the community to use the facilities to create community radio, the next problem is there is no funding. What we would like you to reflect on is that that is a public service in our book; it is a different public service than has previously been thought of but it does serve huge numbers of people locally and it is very different radio and very popular at local level so, understandably, they need money. Would it be a good idea for the licence fee not to go one hundred per cent to the BBC but to OFCOM, and for community people—radio or community television or community Internet or whatever—to have an opportunity to bid for a finite portion of that, perhaps 5 per cent or 10 per cent so that the BBC would get its 90 per cent, so that we would have another way of developing a different series of talents and services that the BBC has, frankly, given up on.
  (Mr Smith) I would make three points, if I may, Chairman, in answer to Mr Wyatt: firstly, we do have proposals in the White Paper for the creation of an access radio fund. We are working on a number of propositions about how such a fund could be brought into being and we are in quite detailed discussion with the Radio Authority about how that might shape up, and I would be very keen on pushing this forward. Secondly, on the issue of the school radios that close down at 4.00 or 5.00 in the evening and what might be possible during the course of the evening, I know that the Radio Authority have considered this matter and are nervous about this proposal being a possible back door to a local commercial licence. I think personally they may be being too nervous on that subject: certainly I will want to continue discussing this with them to see whether other local use could be made of such frequencies. In relation to the third point, the hiving off of a segment of the licence fee income, we have, of course, put in place a planned progress in licence fee income for the BBC over the next six years. To disrupt that settlement at this stage now that we are into it with them basing all their forward plans on an expectation of that income would, I think, be difficult, but I am always open to new ideas. I will, of course, consider the point that you have made but I would have to emphasise that at the moment I see difficulties in taking it forward.

Chairman

  618. Now that Mr Wyatt has taken you by surprise by asking you that question, Secretary of State, could I put a question to you which I have been asked to put to you by an organisation that operates in Manchester called Radio Regen which is a not-for-profit community media and urban regeneration project, funded by Manchester City Council the European Social Fund and is a registered charity. I say all that to make it clear that I am not advancing some commercial interest by putting the question. They are active in my constituency both in working with two high schools for their own radio stations but also in community radio within my constituency. They tell me that at the Radio Authority access radio seminar on Monday of this week they were given the impression that the Radio Authority were prepared to start piloting community radio with appropriate independent monitoring as soon as they get the go-ahead from your Department and, therefore, they asked me to ask you if you would ask the Radio Authority to commission a pilot scheme because they say it is all that is missing for them to get on with quantifying the benefits of community radio ahead of legislation.
  (Mr Smith) I take it from the question, Chairman, that they might be envisaging proposing themselves as a pilot scheme here? If the Radio Authority were to come to me with such a proposition I would certainly look on it with great sympathy and very constructively. I do not know, obviously, the individual circumstances of the particular proposal but local community based not-for-profit radio is undoubtedly a very important part of local communities: it can provide great social benefit; and if there are ways that we can find within the spectrum of constraints that we have at the moment of giving it a further boost, I would love to do so.

Mr Maxton

  619. Can I return to the Internet and television? There is a danger of looking at the Internet as somehow a nice little add-on that you put on television sets so that everybody can, at least, exchange e-mails and do a bit of shopping and that is it. The Internet and broadband access which is much wider than just the Internet, is not just a matter of that: it is key to the way in which our economy develops in this country in relation to other countries. First of all, therefore, can you tell me what is your definition of "broadband"?
  (Ms Hewitt) "Broadband" can cover a very wide range of rates.


1   Note by witness: BBC impartiality is to remain the responsibility of BBC Governors (see Q. 647). Back


 
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