Fourth Standing Committee on Delegated Legislation
Monday 18 December 2000
[Mr. Jim Cunningham in the Chair]
Draft Broadcasting (Limit on the Holding of Licences to Provide Television Multiplex Services) Order 2001
The Minister for Tourism, Film and Broadcasting (Janet Anderson): I beg to move,
That the Committee has considered the draft Broadcasting (Limit on the Holding of Licences to Provide Television Multiplex Services) Order 2001.
I apologise to you, Mr. Cunningham, and other Committee members for having to revisit this issue so soon after previous discussions, but I hope that my speech will spell out the reasons for that.
The order revises the limits set out in paragraph 5(1), (3), (4)(a) and (4)(b) of part III of schedule 2 to the Broadcasting Act 1990 as amended. The Secretary of State is empowered to adjust the limits by paragraph 5(5)(a) of part III of schedule 2 to the Act. The order replaces that laid before Parliament on 1 November 2000, which was debated in the House of Commons on 15 November and withdrawn on 30 November. Sadly, that order failed to make various consequential amendments to the legislation and thus restricted the scope of the intended changes, which were to remove the existing restrictions on the holding of licences to provide television multiplex services. Paragraph 5 sets limits on the ownership of television multiplex licences.
Mr. Michael Jack (Fylde): I am grateful to the Minister for giving us a flavour of the reasons why we are revisiting this territory, but can she explain in a little more detail why the first order failed? In other words, what was the failure in the draftsmen's instructions?
Janet Anderson: If the right hon. Gentleman is patient, his questions may be answered during my speech. If they are not, he may want to intervene again.
Multiplex licences were introduced in the Broadcasting Act 1996 and permit the holder to transmit digital broadcasts for general reception over particular frequencies within the wireless telegraphy system. There are six terrestrial multiplexes, and each carries six programme services.
The Government are committed to the success of digital terrestrial television, but the current limit represents an unnecessary impediment to the industry's growth. I shall explain the restrictions. No person may at any time hold more than three licences to provide television multiplex services. A person who is a participant with more than a 20 per cent. interest in a body corporate that holds a licence to provide a television multiplex service, but who does not control that body, shall be treated as holding the licence held by that body. In relation to each of five or more licences to provide television multiplex services, no one person may at any time be the holder of the licence or a participant with more than a 10 per cent. interest in a body corporate that holds the licence. A person who, under any arrangement with the British Broadcasting Corporation, provides a television multiplex service for the BBC is limited to holding two licences and may not, in relation to each of four or more licences, be the holder or a participant with more than a 10 per cent. interest in a body corporate that holds the licence.
Those restrictions were introduced to encourage competition in the early days of digital terrestrial television, but we now know more about the relation of DTT to other platforms than we did in 1996. The market has developed in such a way that the principal competition is between, rather than within, platforms. Competition is between satellite, cable and terrestrial providers, rather than between rival commercial operators on the digital terrestrial platform.
My right hon. Friend the Secretary of State for Culture, Media and Sport took the decision to revise the limit on ownership of licences for TV multiplexes following the publication in July this year of the Competition Commission's report on the ITV mergers, which stated that the limit made no difference to the commission's overall conclusions. However, because the limit may have been exceeded by the ITV mergers then proposed, necessitating divestments by one or other of the parties, my right hon. Friend decided to remove the restriction on merger activity, notwithstanding the Competition Commission's view that the restriction was irrelevant in terms of competition.
Although the decision was taken as a result of the Competition Commission's report, it was neutral and should not be taken as favouring any one company. My right hon. Friend's announcement was made in advance of any final ITV merger activity, before it was known whichor, indeed, anyof the proposed mergers would take place.
The Government want to ensure that there are no unnecessary blocks, by which I mean those not established on competitive grounds, to developments in the digital terrestrial television industry.
I shall outline the effects of the draft order. It will increase from three to six the number of multiplex television licences that any one person can own. Primary legislation is required to remove the limit from the statute book, so my right hon. Friend chose to make use of a statutory instrument to remove, at least for the present, current restrictions.
The previous draft order did not fully address all necessary parts of the legislation, so it restricted the intended scope of the changes. The right hon. Member for Fylde (Mr. Jack) asked what happened. It is a highly technical area and there was an oversight, which we are seeking to rectify today. The draft order was therefore withdrawn and the new order drafted. It preserves the scheme of the legislation by stipulating the maximum number of licences that a person can hold and specifies the extent of the interest in additional licences that that person may have.
Under the scheme of the Act, if all restrictions on multiplex ownership are to be removed, the numbers specified in the order must be higher than the number of licences currently available. For example, the order will allow a person to hold six multiplex licences, plus a greater than 10 per cent. share in a seventh, plus a share of 10 per cent. or less in an eighth. In practice, of course, no such seventh or eighth multiplex exists, but it is necessary to make this provision in order to remove all the restrictions on multiplex ownership in respect of five multiplex licences.
The order maintains parity between holders of the licences for commercial multiplexes and those involved in an arrangement with the BBC to provide a technical service to run its multiplex. Because of the Competition Commission's satisfaction that the restriction on multiplex ownership raises no problems about competition, the limit can be safely adjusted without harming the future of DTT as a platform. That principle is supported by the ITC and the order, which is supported by the industry, will help DTT to develop as a mature quality platform by freeing companies to merge if they wish and to increase investment in quality content. I hope that members of the Committee will support the order.
Mr. John Greenway (Ryedale): Christmas is meant to be a time of good will, so we need to be charitable. That is not a difficult proposition for me, because I always try to be helpful. We agreed the previous order and we shall not obstruct this one. Nor shall we rehearse all the arguments again. We agree with what the Minister said about the consequence of ITV mergers and we agree that the present restrictions are an unnecessary impediment. We also agree that, since the 1996 legislation, competition has emerged between, rather than within, platforms. Since the Committee last met, progress has been made on must-carry and open access, which will contribute to a more competitive marketplace.
It is embarrassing for the Minister and the Department that those consequential changes were not included. I understood entirely her explanation that this had been spotted but, as her answer will either mitigate or exacerbate the problem, could she tell the Committee who spotted the mistake? Was it spotted within the Department or by one of the companies that will be affected by the changes made necessary by the sloppy drafting? What has been done within the Department to prevent a re-occurrence of this kind of difficulty?
Mr. Jack: I am in awe of my hon. Friend's understanding of this matter. In the light of that, could he tell us what now gives him confidence that the Government have got it right this time?
Mr. Greenway: My right hon. Friend, who has had ministerial experience as opposed to my more humble shadow ministerial experience, knows that the fact that the mistake was spotted this time does not necessarily mean that it will not re-occur. That is precisely why I pose the question. This cannot just be passed off without comment. There was a lack of attention to detail, and that is a serious concern, but, given the complexity of broadcasting legislation that has clearly mesmerised my right hon. Friend a little, it is important that the Committee, which is scrutinising this on behalf of the whole House, is reassured as far as is reasonable and practicable that these matters will not re-occur.
This is important because the White Paper, which was published only last Tuesday, envisages a simpler and more flexible framework for regulation of broadcasting and, more important still, envisages significant changes in the very cross-media ownership rules that are at the heart of the number of multiplexes that may be owned. It is not total ownership but in some instances 20 per cent. ownership and in others 10 per cent. ownership. That will be reconsidered. One cannot even take comfort from the thought that, once we have passed the order, that will be the end of this kind of difficulty. On the contrary, we will have to revisit this issue right across the media ownership spectrum. That pun was unintentional, and I hope that it will be pardoned.
These are complex and complicated matters. I cannot speak for my right hon. Friend or the hon. Member for Southport (Mr. Fearn), but I speak for the Opposition and I understand these issues. As the Minister knows, I had a long period as a consultant to ITV companies and then to ITV. We entirely appreciate why the change is necessary, but I should be grateful if the Minister could explain how the mistake was spotted. The Committee has a right to know that. As we co-operate again by agreeing the order, will she acknowledge our concern that this should not re-occur? What is being done in the Department to ensure better drafting and that the lessons of this will be learned? I make it clear that it will be my party that will have the opportunity to put the White Paper proposals into legislation at some future date.