II. COMMUNICATIONS REFORM: CONTEXT AND
Previous broadcasting legislation in context
5. The legislation foreshadowed in the White Paper
is designed in part to supersede the Broadcasting Acts 1990 and
1996. The Broadcasting Act 1990 built structures for a radically
different broadcasting environment to that today. Broadcasting
had been confined to four terrestrial channels, all with public
Provision was made for a fifth such channel. Sky television had
just launched non-domestic satellite television using the Luxembourg-based
Astra satellite with a handful of channels.
A domestic satellite service with five channels was launched by
British Satellite Broadcasting (BSB) in April 1990, although it
merged with Sky almost before the ink was dry on that year's Broadcasting
Cable television offered the potential for 16 or more television
channels, but in terms of both content development and infrastructure,
cable television was in its infancy.
In that year there were 74 Independent Local Radio stations.
The technical possibility of digital television was foreseen,
but the Government was sceptical about its potential as a major
The Internet did not exist as a consumer service.
6. The Broadcasting Act 1990 established the regulatory
structure that persists to this day. The Independent Broadcasting
Authority was replaced by the Radio Authority and the Independent
Television Commission (ITC), the latter also assuming some of
the responsibilities of the Cable Authority. Although the Government
acknowledged as early as 1989 that "broadcasting and telecommunications
are increasingly converging", the regulation of the two remained
and remains structurally distinct.
7. By the time of the Broadcasting Act 1996, the
television landscape was very different. About one in five homes
had access to multi-channel television through either cable or
satellite. The number of satellite channels available was rising
A franchise for the fifth analogue terrestrial channel was awarded
in that year.
It had become evident that full-scale digital television was technologically
feasible and the Broadcasting Act 1996 successfully laid the foundations
for digital terrestrial television.
However, the Act did not reflect the broader impact of technological
change. In introducing the Bill that became the Broadcasting Act
1996, the then Secretary of State for National Heritage made no
reference to the Internet or to the potential impact of convergence.
She concluded by commending to the House "a common-sense
Bill for the new millennium", but the outlook that underlay
the 1996 Act has been superseded as that new millennium is just
The theory and practice of convergence
8. Any attempt to plan for the future of communications
must begin with an understanding of the concept of convergence.
In essence, convergence is "the ability of different network
platforms to carry essentially similar kinds of services".
Convergence facilitates rapid and combined transmission of audio,
video and text. Telecommunications networks can be used for video
material. Transmission systems such as satellite traditionally
associated with television can be used for accessing the Internet.
The transforming potential of convergence was encapsulated in
the submission from AOL UK:
"At its heart convergence
revolutionises the role of consumers in the communications industry.
Consumers now have the potential to enjoy: multiple ways of accessing
content ... new forms of content ... new ways of controlling content
through interactivity ... and an unfettered ability to create
content and make it accessible to others."
9. For television, the initial gateway to the converged
world is through digital transmission by cable, satellite and
the terrestrial network. The United Kingdom has established a
leading position in digital television.
This has been driven to a considerable extent by effective competition
between the three platforms.
Over 20 per cent of households now have digital television and
the total number of subscribers seems likely to rise above 7 million
in the course of this year.
Digital television is changing viewing habits. While in August
2000 the terrestrial channels still attracted 81.5 per cent of
viewing across the country as a whole, in multi-channel homes
that figure fell to 57.1 per cent. In digital homes, the combined
share of the terrestrial channels stood at just 50.2 per cent.
10. Digital television is part and parcel of a wider
transformation of communications technology in the home. In 1998
we argued that the startling growth of the Internet would have
a transforming effect on what was traditionally seen as broadcasting
and expressed concern "at a prevailing and somewhat complacent
view that the impact of the Internet on broadcasting will be gradual,
perhaps even marginal".
The Government poured cold water on our suggestion:
"The International Bench-marking Study 1998,
'Moving into the Information Age', states that 4.4 per cent of
United Kingdom households were online in 1997, and projects an
increase to 14.6 per cent by 2000. It is impossible to say at
this stage when, if ever, the Internet will begin to have
a significant impact on broadcasting in the United Kingdom."
11. In fact, by November 2000 about 30 per cent of
homes in the United Kingdom were connected to the Internet and
it has been estimated that at least 16 million people use the
Internet at home.
This growth has been driven principally by use of e-mail. The
Internet has not yet become a mainstream medium for video content,
in some measure due to problems with the development of broadband
networks that we examine later.
Although Internet radio accounts for only one per cent of radio
listening and remains costly, the Internet is developing rapidly
as a complementary medium with radio.
The future of broadcasting is inter-twined with the dramatic transformation
being wrought by the Internet. The scale and nature of this transformation
were described by Ms Karen Thomson, Managing Director of AOL UK,
in the following terms: "people are starting to build the
Internet and online services into their daily lives in a way that
was unimaginable five years ago".
12. Almost as startling as the growth of the Internet's
influence has been the development of mobile telephony. By November
2000, the number of mobile telephone subscribers had reached 35.8
million. Seventy per cent of homes in the United Kingdom now claim
to have at least one mobile telephone.
Mobile telephone networks already carry more datain the
form of text messages and imagesthan conversations, with
over 1 million messages every hour.
Mobile telephones are increasing in their interactive functionality
and, with the planned launch of third generation mobile telephony
next year, they will become a means of receiving video content.
13. These are some of the changes that make a converged
regulator for converging markets so necessary. The functional
divisions of current regulators are ceasing to reflect the realities
created by technology. Current operators, and in particular those
concerned with networks and with innovation, face a confusing,
overlapping and inefficient regulatory environment.
In these circumstances, the case for a new regulatory framework
of the kind proposed in the White Paper is overwhelming.
It is also unsurprising that, as Mr Smith told us, there has been
a "broad consensus" in favour of a converged regulator
in the consultation that has followed the White Paper.
Having ourselves recommended the creation of a single regulator
in 1998, we have no hesitation in supporting the proposal for
a new unified regulator contained in the Communications White
Services for citizens: a missing chapter
14. The White Paper refers to three main objectives
of the Government in the areas with which that document is concerned:
· to make the United Kingdom "home
to the most dynamic and competitive communications and media market
in the world";
· to "ensure universal access
to a choice of diverse services of the highest quality";
· to "ensure that citizens and
consumers are safeguarded".
The chapters that follow in the White Paper are concerned
with the ways in which those objectives are to be promoted. These
three objectives are commendable. However, we are concerned that
there is a perspective almost entirely absent from the White Paper,
what might be termed a missing chapteron the links between
public services for the citizen and new communications technologies.
15. The White Paper is overwhelmingly about the interests
of the people of the United Kingdom as commercial consumers of
new services. The document employs the concept of citizenship,
but usually only in a very narrow sense. The word "citizens"
in the White Paper is largely inseparable from words such as "safeguard"
The interests of citizens are largely couched in terms of broadcast
standards, privacy and informed choice over viewing. These are
legitimate interests, but the interests of citizens in the new
technologies and the market manifestations of those technologies
go rather wider than the White Paper acknowledges.
16. The White Paper does accept that the Government
must have a clear policy framework for "this rapidly developing
sector, which will be so central to our economy, democratic life,
culture, entertainment and education",
but does not itself offer such a framework. Not only is the Internet
giving citizens greater choice of information and entertainment
than ever before, its growing interaction with television will
transform the role of the television set. Mr Tony Ball, Chief
Executive of BSkyB, said that payment for services through the
television set would be introduced this year and agreed that the
same principle could be applied to Government as well as commercial
services, adding that "eventually, the television will become
a means of running the household, as much as one uses it for entertainment".
With the services available through the television set expanding,
"television will become more of a necessity", as the
National Consumer Council observed during a previous inquiry.
17. In future, the delivery of public services
direct to the citizen in his or her home must be central to public
policy in this area. We see insufficient signs of such centrality
in the Communications White Paper. Reference is made in the
White Paper to the Government's commitment to deliver all of its
services electronically by 2005.
This commitment itself is welcome, not least because it will bolster
the wider commitment to ensure universal access to new technology.
However, no clear link is forged in the White Paper between these
public sector initiatives and commercial developments in the communications
sector. Mr Jerry Roest of ntl noted the importance of "public
services that could interact with people at home through their
television set", but argued that "there needs to be
some sort of encouragement for that kind of content".
There are few signs in the White Paper of the Government's thinking
on how that encouragement might be offered.
18. When we examined these matters in 1998 we took
evidence from the Rt Hon Dr David Clark MP, the then Chancellor
of the Duchy of Lancaster, and Dr Kim Howells MP, the then Parliamentary
Under-Secretary of State in the Department for Education and Employment.
We were impressed with the evidence we received from both Ministers,
in particular the determination of the former to empower people
by the provision of public services through technologies such
as digital television and the vision of the latter about new learning
and teaching material for the school and the home.
These priorities are barely apparent in the White Paper. We
recommend that, in its response to this Report, the Government
set out its views on the relationship between the development
and regulation of new services in the communications market and
the electronic delivery of public services. We further recommend
that, in the same document, the Government set out its views on
the scope for the new regulator to have a specific duty to pursue
the interaction between the two.
371, 444. Back
in the '90s: Competition, Choice and Quality: The Government's
Plans for Broadcasting Legislation,
Cm 517, November 1988, paras 6.21, 4.26; Q 371. Back
of the Independent Broadcasting Authority, April-December 1990,
pp 7-8. Back
517, paras 4.11-4.14, 5.12. Back
of the Independent Broadcasting Authority, April-December 1990,
p 32. Back
Report from the Home Affairs Committee, The Future of Broadcasting,
HC (1987-88) 262-I, para 87. Back
517, para 2.4. Back
Report from the National Heritage Committee, The BBC and the
Future of Broadcasting, HC (1996-97) 147-I, para 16. Back
para 58. Back
(1997-98) 520-I, para 13. Back
Deb, 16 April 1996, cols 537-551. Back
(1997-98) 520-I, para 9. Back
para 10. Back
p 156. Back
p 118; Q 210. Back
33 Q 500. Back
639, 101-102, 357. Back
of the Box: The Programme Supply Market in the Digital Age,
A Report for the Department for Culture, Media and Sport, January
2001, p 8. Back
(1997-98) 520-I, para 104. Back
Response to the Fourth Report from the Culture, Media and Sport
Committee, Session 1997-98,
Cm 4020, July 1998, p 4; emphasis added. Back
38 www.oftel.gov.uk/research/2001/q3intr.htm. Back
52, 135. Back
326, 303, 331; Evidence, p 103. Back
41 Q 553. Back
42 www.oftel.gov.uk/research/2001/q3mobr.htm. Back
5010, para 1.1.3; Evidence, p 141. Back
310, 334; Cm 5010, p 31. Back
pp 32-33, 104. Back
5010, paras 8.2.1-8.3.1 Back
47 Q 611. Back
5010, paras 1.2.1, 1.2.4, 1.2.10. Back
p 3, paras 1.2.10-1.2.12 and chapter 6. See also Evidence, p
5010, para 1.1.23. Back
p 7; Q 392. Back
Report from the Culture, Media and Sport Committee, The Funding
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5010, p 8. Back
p 24. Back
55 Q 117. Back
(1997-98) 520-I, paras 37-39. Back