Memorandum submitted by Artsworld Channels
Artsworld Channels Ltd is an independent UK
company owned by British corporate and private shareholders. Its
current services comprise Artsworld, a digital subscription television
channel, and artsworld.com, an Internet portal, both devoted to
the arts. Artsworld's programmes comprise performances of classical
music, opera, dance, jazz and world music, drama and films; features
or documentaries on these subjects as well as the visual arts,
literature, design architecture, and theatre; and topical reviews,
previews and advance information about the arts throughout Britain.
Further details of its programmes are attached
The White Paper's proposals rest on the premise
that there are only two sectors in British television. The first
of these is "public service broadcasting", represented
principally by the BBC but also by the regulated programme output
of ITV, C4, C5 and S4C. The second sector comprises all other
broadcasters, ranging from Artsworld and Discovery to ITN and
Sky News, lumped together under the pejorative description "purely
commercial broadcasters". Since commercial television has
now been with us for nearly 50 years, and has regularly proved
the equal of the BBC in creativity, integrity and popularity,
this distinction no longer serves any valid purpose.
The Role of Independent Commercial Broadcasters
Unacknowledged by the White Paper, there are
in fact now three distinct sectors in British television, all
of them providing public services:
There is publicly-funded television, providing
public services financed by direct taxation via the licence fee,
and represented at present only by the BBC. The proper description
for this entirely distinct sector is not "public service
broadcasting" but "publicly-funded broadcasting".
There is commercial television, providing public
services without any public subsidy, but using scarce public resources
of spectrum for their transmission, and being required by regulation
to show certain categories of programme. This sector is represented
by ITV, Channel 4, Channel 5 and S4C. Rather than "public
service broadcasting", it could more correctly be called
"commercial public broadcasting". It may be noted that
much of the output of these broadcasters in prime viewing time
consists of programmes that are outside the mandated "public
service" categories defined by the White Paper.
Finally there is commercial television which
provides public services using private capital and other sources
of revenue, pays commercial providers for transmission, and is
entirely independent of any form of public money or resource.
This is "independent commercial broadcasting". It is
this sector that contains the great majority of channels available
on digital television, and the principal systems on which they
are transmitted. Its channels are entirely analogous to commercial
publishing, providing public services at a reasonable cost to
their users and at no cost to the taxpayer. Artsworld Channels
Ltd is just one such independent commercial broadcaster among
many. Like many others, its output consists wholly of programmes
that fall within the White Paper's "public service"
Driving digital television growth
These independent commercial channels, and not
the publicly-funded nor the commercial public broadcasters, are
providing the increased programme choice so valued by the users
of digital television. Their existence, together with the high
subsidies to digital receiving equipment invested and risked by
BSkyB and ONdigital, has driven the rapid growth of domestic digital
television in the last two years and will continue to do so.
The virtually unlimited capacity of digital
satellite and cable transmission, and improvements in technology
which have lowered costs of both transmission and production,
have ushered in a new wave of these independent commercial broadcasters.
They are already offering an immense variety of programmes for
British viewers, and in the next five years could be providing
a further explosion of new and valuable channels and services.
(A few may provide unmitigated dross, but the essence of such
channels is that people are not forced to pay for them nor watch
them.) These channels and their transmission systems are the creators,
and will be the sustainers, of the digital broadcasting revolution.
They are the epitome of the "dynamic and competitive communications
market" that the White Paper claims as one of its principal
The pariahs of the White Paper
Yet the reaction of DCMS and, even more surprisingly,
of DTI to the emergence of these new broadcasters is to treat
them as pariahs. Instead of recognising that they can add to British
broadcasting the very diversity and plurality that the White Paper
seeks, and at no cost to the taxpayer, the Government aims to
ensure that they face unequal competition and hostile regulation.
The White Paper's fundamental position is that
"public service broadcasting will continue to have a key
role to play in the digital future, potentially an even more important
role than it has now". This may be true, though the evidence
provided to support the latter assertion is flimsy and subjective.
[White Paper 5.3.] But since this fundamental statement is employed
to justify everything from inequalities in regulation to expansion
of BBC services, it is worth testing.
Using the White Paper's definitions, the statement
means two different things simultaneously. It means that broadcasting
by the BBC, funded by the licence fee, will have "potentially
an even more important role than it has now", which suggests
substantial expansion. It means also that the regulated content
of commercial broadcasting will have the same "potentially
even more important role". Between these heavy potential
importances, something must inevitably be crushed into a position
of no consequence. That "something" is independent commercial
Whether independent commercial channels show
the arts, news, education, entertainment or sport, the White Paper's
proposals will place them deliberately at several major competitive
Existing and new BBC channels, ITV, Channel 4,
Channel 5 and S4C and other channels selected by Government, will
be designated as "must carry" channels on all present
and future digital platforms. Independent commercial channels
are excluded from this provision. [White Paper 3.4.]
This is a distortion of the market which will
create unfair competition for existing independent channels and
form a barrier to entry for new ones, raising the cost of platform
access to deterrent levels for many of them and preventing it
entirely for others.
All these existing channels, and future channels
selected by Government, will be given special prominence on electronic
programme guides. Independent channels are excluded from this
provision. [White Paper 3.5.]
This is a distortion of the market, through
which Government will try to determine which channels people should
watch by promoting some and reducing the visibility of others.
Existing independent channels and the development of new ones
It should be noted particularly that the mandated
"public service" elements of ITV and C5 (summarised
by the White Paper as news, educational material, children's programmes,
religious programmes and coverage of arts, science, current affairs
and international issues) are already largely absent from prime
viewing time and are likely to reduce further. [White Paper 5.6
Independent channels which consist wholly of
such desirable categories of programmefor example arts
or science or news channelsshow far more of these "public
service" programmes in prime viewing time across the week
and across the year. Despite this, they are excluded from the
must-carry and EPG-prominence provisions afforded to their competitors.
This holds out the absurd prospect of Channel 5's prime time fare
of soap operas, game shows, crime and cookery being given "public
service" privileges, while independent channels consisting
wholly of education or arts or science or children's programmes
are denied them.
Public money in the form of the licence fee can
continue to be used to introduce new services which may duplicate
the output of those that exist, and prevent the creation of others
that could be provided without taxation, Public money in the form
of the Channel 4 surplus can continue to be used to subsidise
services which fall outside its remit. Both can compete unfairly
with independent channels by using their main channels to promote
new services with excessive expenditure. [White Paper 5.8.]
No safeguards against this anti-competitive behaviour
are provided in the White Paper.
Reckless competition by the BBC
In addition to giving these competitive advantages
to a minority of selected broadcasters, regulation of competing
services will be unequal and lacking in transparency. Although
subject to a degree of regulation by OFCOM, the BBC will continue
in most important respects to enjoy self-regulation by its Board
of Governorswhom the public and many in Parliament now
find it hard to distinguish from its Board of Management. All
other broadcasters will be subject fully to OFCOM regulation,
without any commensurate self-regulatory advantage. [White Paper
Few would object to the BBC Governors maintaining
their historic role of upholding editorial integrity and independence.
But none of the changes in BBC accountability and transparency
that have previously been recommended by the Culture, Media and
Sport Committee, by the Davies Panel and by the Committee of Public
Accounts is to be introduced.
The impact of this lack of transparency and
accountability on the other channels is potentially severe. Without
proper scrutiny the BBC can act recklessly with public money in
its pursuit of competitive advantage. In particular, if given
permission to extend its present range of channels, it can as
a matter of policy determine to do the following:
Outbid competitors for programme
rights and costs, without regard to market prices or reasonable
Outspend competitors with profligate
promotion and advertising.
Target existing niche commercial
channels by focussing content and promotion in identical genresthen,
once damage is done, changing aim to the next target.
Refuse to sell programmes at market
prices to commercial channels, even when BBC channels do not require
Prevent commercial channels having
access to BBC-owned information providers (eg magazines, teletext,
Internet programme guides) which should have a duty to be neutral
suppliers of public information.
Some of these practices already take place and
since the BBC's Director General has now outlined its strategy
as one of direct commercial competition rather than complementary
provision of services, this kind of excessive spending and unfair
competition must become a likelihood rather than a possibility.
Even the possibility should be ruled out by the introduction of
equal regulation and full accountability.
Ambition v financial control
It is notable that recent BBC proposals for
new channels require massively greater expenditure than would
or could be employed by any commercial channel. This is on the
grounds (according to the BBC's proposals submitted to DCMS) that
the BBC's channels are "more ambitious" than cited examples
including Artsworld and the Performance Channel. As the Culture,
Media and Sport Committee concluded in its Third Report, "The
BBC has shown a disinclination to view its budget as a guide to
the scope of its digital provision, preferring instead to advance
an enormously ambitious vision".
Ambition is not confined to the BBC, but in
other broadcasters it is allied to realistic financial controls
that appear absent where the BBC's use of licence fee income is
concerned. The result is that a publicly-funded BBC, with a policy
of beating the opposition at all costs and no regulation to control
its expenditure, can enter markets created by commercial broadcasters
and use its financial muscle to dominate them. The White Paper
legitimises this behaviour, which the Government would regard
as anti-competitive in any other sector.
The reality of "digital citizenship"
To justify maintaining the BBC's unregulated,
unaccountable, dominant market position and limitless ambition,
the White Paper calls in aid the concept of "digital citizenship".
In the words of the Secretary of State for Culture, Media and
Sport, digital citizenship incorporates the provision via digital
television of impartial news and current affairs, education for
children and adults, creative and cultural activity, religious
or humanist experience, and access to common knowledge, including
a national understanding of Britain "in all its cultural,
ethnic, local, regional and national variety" and in a British
framework. It is a high ideal and worthy of pursuit.
The White Paper's mistake is to believe that
in a multi-channel world this ideal can be achieved by creating
dominance for a single publicly-funded broadcaster. There are
already digital citizens, in more than a quarter of Britain's
homes. They exercise their right to choose freely among the channels
and programmes offered by privately-funded and publicly-funded
services. They choose to watch the arts on Artsworld or BBC or
Channel 4. They choose to watch documentaries on The History Channel
or Discovery or BBC Knowledge. Despite the fact that they are
forced to pay for publicly-funded television, they choose to pay
for a wide variety of alternatives.
This is the reality of digital citizenship.
The digital city is not yet built in its entirety, but its citizens
do not wish to go back to a place where a very few programme controllers
dictate their viewing, and the voices of a narrow range of opinion
(including the Government's of whatever hue) command the screen.
Pay v "free"
The Government disparages independent commercial
channels because people choose to pay for them (not "have
to" pay for them as the White Paper suggeststhat applies
only to the licence fee). It makes much of the "free"
services of the BBC, created with £3 billion of compulsory
taxation. It invokes that invisible minority of people who "cannot
afford to pay" for digital services they want to watch, as
a reason for supporting the wide ambitions of the BBC. No evidence
is supplied about the numbers of people who cannot afford to pay
for their desired digital services, though there will undoubtedly
be a small number in that category.
What the White Paper fails to do is make any
assessment of their numbers or their wishes, or to assess the
alternative ways of providing them with services they require,
and the relative costs thereof to taxpayers and consumers. Nor
does it acknowledge the declining cost to the consumer in real
terms of digital channel provision by commercial services, or
the consistent results of research which shows that current digital
customers in all income groups regard their subscriptions as good
Instead of its thesis that "purely commercial
channels" are to be disregarded in the digital consumer world
and the digital economy, the Government should be promoting them
in parallel with other providers of public broadcasting services.
A home which can choose from a thriving, high-quality, good-value
range of commercial channels, complemented but not duplicated
by programmes from publicly-funded and commercial public broadcasters,
will fulfil the social, cultural and economic criteria that DCMS
and DTI have set out.
Diversity, plurality and fairness
The White Paper declares correctly that "Fostering
competition is the first step to promoting plurality in the media"
[White Paper 4.2.6]; that "we must ensure that the new technologies
deliver not just more channels, but more choice and diverse services"
[White Paper 1.2.8]; and that "developing and sustaining
a dynamic market is one of the Government's key objectives"
[White Paper 2.2.1].
None of these goals is achievable unless competition
is fair between the three sectors of UK broadcasting.
The publicly-funded sector, ie the BBC, should
provide services that are complementary to those of other broadcasters
and which cannot be provided without the direct taxation of the
licence fee. It should be regulated in precisely the same way
as other broadcasters. Its costs should be independently monitored
to prevent excessive expenditure and waste. It should not be financed
to enter markets already catered for by either of the commercial
sectors, nor to create aggressive and dominant market positions.
It is not free, but paid for compulsorily by all regardless of
their use of it or need of it. It should therefore be openly accountable
to those who pay for it.
The commercial public sector, comprising ITV,
C4, C5 and S4C, should receive no privileges that other commercial
companies do not. Such regulated element of their output as will
remain after OFCOM review should be regarded as the appropriate
price of using public spectrum, and should not entitle the sector
in addition to favourable treatment over other commercial broadcasters.
Channels created by the sector that are not commercial public
channels should be separated entirely and transparently from their
"parent" organisations, and become part of the independent
commercial sector in all respects.
The independent commercial sector should be
regulated in a way that encourages its growth and development.
It should not be treated by Government as a weak, tertiary tier
of digital broadcasting, but as de facto the principal
driver and energiser of digital take-up by consumers. As such
it should be protected from unfair competition and from excessive
dominance by publicly-funded and commercial public broadcasting.
Where the independent commercial sector is providing channels
that consist wholly of "public service" categories of
programme, they should be able to grow, develop and increase their
range and their reach without publicly-financed intervention to
The White Paper suggests that "The end
of spectrum scarcity does not mean that broadcasting will automatically
become a perfectly functioning market" [White Paper 5.3.5].
This is true. For many years there will be a need for publicly-financed
broadcasting which, in the recent words of the Chairman of the
BBC Governors before the Culture, Media and Sport Committee, "remedies
the deficiencies of the market". But the BBC should not create
those market deficiencies by using its dominant power to crush
new initiatives, and the Government should not permit them to
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