Select Committee on Culture, Media and Sport Second Report


141. Our principal conclusions and recommendations are as follows:

  (i)  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 Paper (paragraph 13).

  (ii)  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 (paragraph 17).

  (iii)  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 (paragraph 18).

  (iv)  We recommend that a statutory duty be imposed on the new regulator to conduct and lay before Parliament an annual audit of performance in relation to the stated Government objective of making the United Kingdom "home to the most dynamic and competitive communications and media market in the world". We envisage that this audit would look beyond sectors subject to direct oversight by the new regulator, to the film industry, for example, to broaden understanding of relations between the sectors (paragraph 21).

  (v)  We are not convinced that inflexible legislative provisions relating to training expenditure by all licensed broadcasters are desirable, but we support the granting of a power to the new regulator to promote training activities, where appropriate with specified universities, that are proportionate to the public service obligations and privileges of particular licensed broadcasters (paragraph 23).

  (vi)  We recommend that the new regulator be given distinct objectives relating to consumer protection and to the promotion of open and competitive markets. We further recommend that the Government prepare policy guidelines for the new regulator on matters affecting the priority of its different objectives to be debated as part of the legislation giving effect to the proposals in the White Paper (paragraph 27).

  (vii)  We support the proposals in the White Paper to grant sector-specific powers to the new regulator. The exercise of these powers will have a vital role to play in the continued development of accessible networks and fair and competitive markets. It is appropriate that such powers be exercised by the new regulator (paragraph 31).

  (viii)  We recommend that, notwithstanding the proposed removal of specific legislative barriers to further ITV consolidation above and beyond the general provisions of competition law, separate licences be retained for each ITV region, including provisions relating to regional production and the contribution of each region to network programming. We further recommend that there be a legislative obligation upon the new regulator to maintain a network of offices in the nations and regions of the United Kingdom to facilitate effective monitoring of compliance with regional obligations by broadcasters (paragraph 34).

  (ix)  We do not believe that the case for specific restrictions on radio ownership at national level has been made and we recommend accordingly that legislation giving effect to the White Paper proposals should remove all such restrictions (paragraph 36).

  (x)  We consider existing rules on cross-media ownership contained in the Broadcasting Acts 1990 and 1996 to be increasingly unnecessary in a more diverse and competitive media market in which general competition law, sector-specific regulatory powers and content regulation by licensing all apply. We view restrictions based on "share of voice" as quite impractical even if they were desirable. We consider that matters of such parliamentary and public importance as media ownership and control should not be open to significant amendment by means of secondary legislation. A certain inflexibility is inherent in primary legislation, but this is a price worth paying for full scrutiny. The inflexibility inherent in such controls in primary legislation is a compelling reason why specific controls should be maintained in forthcoming legislation only if the case for such controls is overwhelming and enduring (paragraph 45).

  (xi)  The new regulator is best placed to judge the impact of new BBC services on the development of open and competitive markets, and also to weigh that impact in the balance against the regulatory objective of "maintaining high quality of content, a wide range of programming, and plurality of public expression". The new regulator should be able to reach such decisions transparently and in a manner that is free from any imputation of political interference. The decisions relate precisely to the type of issues that the new regulator is being established to regulate. We recommend that, from the time of its establishment, the new regulator assume the powers to approve and to review new BBC licence fee-funded services currently held by the Secretary of State for Culture, Media and Sport. We expect that the new regulator would be given powers to ensure that, while the BBC retained the right and the ability to continue with services and to launch new services funded from the licence fee, such services would be conducted on the basis of fair competition (paragraph 54).

  (xii)  The Government has already responded to criticism of the failure to make new proposals about digital television and analogue switch-off in the Communications White Paper by announcing initiatives to promote digital television in the Competitiveness White Paper published on 13 February 2001 (paragraph 56).

  (xiii)  The task of developing a clear labelling scheme for digital television sets is urgent. We recommend that the Government aim to establish a scheme for "kite-marking" integrated digital television sets no later than October 2001 and report on progress on consultation with the industry about achieving that aim in its response to this Report. This scheme should ensure that potential purchasers of non-digital television sets are warned about the limited life expectancy of their television sets without the purchase of additional equipment in view of the advent of analogue switch-off in the near future (paragraph 61).

  (xiv)  We recommend that, by October 2001, the Government agree with the television industry the text of a leaflet on digital television to be distributed to every home in the United Kingdom. We further recommend that this be backed up by a public information campaign on all free-to-air television channels, ideally with the same content on each channel (paragraph 64).

  (xv)  While the Government will not wish to take precipitate action that might threaten the development of the commercial market in digital television, it is important for the Government to keep an open mind on all options that might assist in facilitating early analogue switch-off, particularly those options that would have the added advantage of advancing other Government objectives relating to universal access to the Internet and to the wider development of broadband (paragraph 68).

  (xvi)  The new regulator must see it as a priority to ensure that the market delivers a range of competitive packages for unmetered access as an essential component if the Government's objective of universal access to the Internet by 2005 is to be realised (paragraph 71).

  (xvii)  Access to the Internet can be an important driver of the take-up of digital television, and the expansion of digital television services can be fundamental to achievement of the Government's objective of universal Internet access by 2005. We are concerned that these links are not readily apparent in the two separate Government policies at present. We recommend that the promotion of Internet access through digital television become a more prominent element in Government policy for the Internet and that the promotion of digital television by the Government and the industry lay greater stress than is currently evident on digital television as an easy and affordable gateway to the Internet (paragraph 72).

  (xviii)  Current universal service provision of both television and telephony service provides a vital unifying factor in British society and in the British economy. It is of paramount importance that this unifying force is maintained in the digital era (paragraph 87).

  (xix)  The Government is right to think in terms of a future universal obligation to provide high bandwidth digital services. We accept that, given the early stage of development of broadband in this country, it would be wrong for the Government to put all its eggs in one technological basket or to set a firm timetable for a new universal obligation when it is far from clear what form such an obligation will eventually take. However, we are deeply disappointed that the Government's broadband strategy appears to be developing in virtual isolation from the public and consumer needs and opportunities created by analogue switch-off. The role of both digital television and of Internet-based broadcasting as consumer services in driving broadband take-up is largely neglected in that strategy. We believe this reflects a broader underestimation by both Government and industry of consumer demand for broadband services. Despite the protestations of close and effective working between the Department of Trade and Industry and the Department for Culture, Media and Sport, the Government's business-oriented broadband strategy and its consumer-oriented strategy for analogue switch-off do not intersect as they must if the Government is to respond to and harness the opportunities of the converged world. We expect the Government to tackle these weaknesses as a matter of urgency (paragraph 90).

  (xx)  We recommend that, in its response to this Report, the Government set out the proposed role for the new regulator in taking forward the Government's objectives for analogue switch-off and broadband provision. We further recommend that a statutory duty be imposed upon the new regulator to conduct and lay before Parliament an annual audit of progress towards the Government's objectives for analogue switch-off and for broadband (paragraph 91).

  (xxi)  We recommend that, in its response to this Report, the Government set out its assessment of the main factors to be borne in mind in reaching a decision on radio analogue switch-off (paragraph 93).

  (xxii)  There is an enduring future for public service broadcasting, provided it is recognised that that future will not be like the past (paragraph 94).

  (xxiii)  Public service broadcasting is a constantly changing phenomenon. Accordingly, it is not appropriate to criticise the White Paper on the grounds that the document has failed to provide a simple definition of public service broadcasting. However, we consider that there are three general principles which should guide the future provision of public service broadcasting that are not fully reflected in the White Paper (paragraph 96).

  (xxiv)  The first principle is that, while the combination of funding arrangements, status and regulatory positions of the "privileged broadcasters"—the BBC, ITV, Channel 4 and Channel 5—means that they will continue to produce considerable public service content for the foreseeable future, it does not follow that the output of those broadcasters can be equated with public service broadcasting (paragraph 97).

  (xxv)  The second principle that should inform the future development of public service broadcasting is that the current position of the "privileged broadcasters" brings with it very considerable costs, both in terms of direct and indirect charges upon the public and in terms of the impact on the development of a competitive and dynamic market, and that these costs should be transparently identified and continuously assessed against other means of achieving the desired ends in terms of public service content (paragraph 102).

  (xxvi)  The third principle is that the focus in future should be on ensuring the provision of public service content from whatever source is most appropriate rather than on protecting the privileges of certain broadcasters for their own sake (paragraph 105).

  (xxvii)  We recommend that, as a matter of urgency, the Radio Authority identify pilot schemes for expanded community radio projects for launch in advance of the introduction of legislation to give effect to the proposals in the White Paper. We envisage that pilot schemes would include projects focused on distinct neighbourhoods for periods significantly more than 28 days and extensions of the scope of school-based projects with current restricted service licences (paragraph 109).

  (xxviii)  We are convinced that there is both a strong need and an overwhelming case for the establishment of a permanent community radio sector in the United Kingdom, distinct from and complementary to commercial radio. We support the creation of an "Access" Fund both to assist in the establishment of new projects and to provide continuing funding to reflect the fact that funding of the sector will not be primarily commercial. We expect that the level of this Fund would reflect the two distinct functions of support for launch and continuing financial support. In the light of the likely level of demand, we recommend that the Fund be financed principally from general taxation (paragraph 111).

  (xxix)  We welcome the clear and unequivocal statements that the Government is not seeking to establish any new forms of Internet regulation by means of proposals in the White Paper. We consider, however, that fears on this score arise directly from what can most generously be interpreted as infelicitous drafting in the White Paper. The same mistake must not be repeated in the legislation that follows. We recommend that the new regulator be explicitly excluded by statute from imposing regulatory obligations relating to Internet content. We further recommend that the Government reaffirm its commitment to self-regulation as the best and only way forward for Internet content regulation and clarify that the Government does not envisage any form of "co-regulation" of the Internet involving additional powers of enforcement that go beyond the principle that the general law should apply online as offline (paragraph 116).

  (xxx)  We consider that it would not be appropriate for the new regulator to use its licensing powers for media with spectrum scarcity as a back-door method of Internet content regulation and we recommend that there be a specific statutory prohibition on the new regulator doing so (paragraph 118).

  (xxxi)  In the future, universal negative content regulation will cease to be possible. As the Internet becomes used increasingly as a medium for broadcast content, there will be an alternative to the licensed broadcasters. The regulatory régime for licensed broadcasters, and for non-scheduled services in particular, must reflect this (paragraph 121).

  (xxxii)  We expect there to be a continuing case for positive programming requirements for the "privileged broadcasters" and any other licensed broadcasters that may in future be in receipt of direct or indirect subsidy in respect of public service content (paragraph 122).

  (xxxiii)  We strongly support the Government's recent proposals to establish more stretching targets for subtitling on digital terrestrial television and to extend such obligations to digital cable and satellite services by means of new primary legislation. We consider that any decision by the new regulator to exempt providers from these targets should be transparent and based on clear criteria (paragraph 123).

  (xxxiv)  There is a real danger that the regulatory régime for broadcasting will be in a state of almost continuous flux and uncertainty from now until 2006. By failing to provide for an integrated approach by the new regulator to all broadcasters including the BBC, the Government has left a large amount of unfinished business. We find it absurd to suggest that Parliament's role in reviewing the BBC's status would somehow be diminished if the BBC were subject to equal treatment with other broadcasters in legislation that will doubtless be subject to extended and detailed consideration by both Houses of Parliament. We recommend that the House of Commons be given a full opportunity early in the next Parliament to consider the future regulation and governance of the BBC as part of the process leading to enactment of the new regulatory régime (paragraph 129).

  (xxxv)  We recommend that the Prime Minister establish a separate Department of Communications with its own Secretary of State and assuming the relevant responsibilities currently within the Department for Culture, Media and Sport (relating to broadcasting and the media), the Department of Trade and Industry (relating to telecommunications and the Internet), the Cabinet Office (relating to the electronic delivery of Government services) and the Home Office (relating to the regulation of videos) at the earliest possible opportunity (paragraph 132).

  (xxxvi)  We consider it vital, not least on grounds of public accountability, that the internal structure of the new regulator is set out in the legislation giving effect to the proposals in the White Paper rather than being left to the governing body of the new regulator to determine. In particular, we recommend that the legislation establish a mechanism to provide for greater lay involvement in content regulation than in competition regulation and create a distinct body within the new regulator responsible for radio (paragraph 136).

  (xxxvii)  The powers that the new regulator will have are so extensive that a collegiate approach is more appropriate than regulation by a single individual. We welcome the fact that this is reflected in the White Paper, but regret that a somewhat different approach is implied in the proposed title for the new regulator. We consider that the internal structure would be better reflected if the new regulator were called the Communications Regulation Commission, and we recommend accordingly (paragraph 137).

  (xxxviii)  We welcome and support the proposal to establish a consumer panel. We recommend that the panel be empowered to examine and to seek to represent the interests of all consumers and potential consumers and not be narrowly confined to issues of service delivery for customers with a financial relationship to service providers (paragraph 138).

  (xxxix)  We recommend that a specific duty be imposed on the new regulator to ensure that its governing body and its sub-commissions or committees meet in public unless the governing body is satisfied that, in the case of any particular issue under consideration, the interests of public disclosure are outweighed by the need for commercial confidentiality. With such a need to weigh these factors in the balance, we would not expect all meetings concerning commercial activities to be held in private. We further recommend that legislative provision be made to ensure that, where any decision is reached by vote, the voting records are published and to require that all meetings with broadcasters to discuss their annual reports on delivery of programme statements are held in public (paragraph 139).

  (xl)  We consider that close scrutiny of the establishment of the new regulator and its work will be a crucial task for the relevant select committee or select committees of the House of Commons in the next Parliament (paragraph 140).

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