Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 20-39)



  20. Is it true that a BBC orchestra was shipped abroad during a G7 summit at a time when you were trying to persuade the G7 on a particular issue on funding?
  (Mr Davies) I have never heard of it.
  (Ms Abramsky) I have not either.
  (Mr Davies) Jenny, who is responsible for the orchestras, I do not think has heard of it either.
  (Ms Abramsky) No.

  21. This was a few years ago. Perhaps you would like to write to the Committee and let us know whether that was the case.

  Chairman: We are going to have to move on, Michael. Every other member of the Committee wants to ask questions.

Rosemary McKenna

  22. I have to say on my own personal behalf and on behalf of my constituents I think the service provided by the BBC is second to none. I think that any year, but this year, after the events of September 11, we realised just how valuable the service was. I was out of the country for quite a bit of the time after that and depended heavily on BBC News 24 and the World Service for reports and I know from family living in the States how important it is to them to be able to access the kind of information that the BBC provides. We are the envy of the world in terms of the service the BBC provides. At the moment, though, there is a real concern that people are not able to access all of the services that are provided. Those of us who are fortunate enough to have digital sets can access all and can afford to pay for it. I think I heard a report last week on the news or in the press media that there is a possibility of a set-top box somewhere in the future which would make access to digital programmes for ordinary people who cannot afford to change their television sets. Are there any hopes, any plans for that in the future?
  (Mr Dyke) We have been discussing with some set-top box manufacturers for some time about the possibility of a free-to-air box and we have done a lot of research on it. PACE last week were the first to announce that they are going to put onto the market in the next three months a set-top box for £99 which, if you plug into the back of your set, will enable you to receive all the free-to-air BBC and other free-to-air digital channels. When we first put an application to the Secretary of State to do more digital channels, it was on the basis that we supported what we believed to be the Government policy and the policy of the last Conservative Government and the policy of the Opposition, to move towards a position of analogue switch off. We think the advent of a free-to-air box quite soon would be a big step forward. We have also been having discussions with ITV, with Channel 4, with Channel 5 about whether we can get an agreement between us—and it is mainly with ITV Digital, of course, because they have most of the spectrum. In the next couple of weeks hopefully we will reach agreement whereby there will be a free-to-air offering on digital terrestrial television—which will be 15 or 16 free-to-air channels, including all ours, and hopefully our radio stations—which will all be available for £99. The great advantage of this is that if it is £99 today, new onto the market, it will be half that in two or three years time, which means switch off becomes a reality, I think. It also means that people who do not want pay television (and there are quite a lot who are pay rejecters, who just do not want pay television—they would like more television but they do not want pay) and certainly the people who cannot afford to pay can actually, for a one-off payment, effectively upgrade their television. So a one-off payment for the box, plug it in . . . Actually, interestingly from our research, there is quite a lot of enthusiasm for that but not everybody believes it.


  23. We all know the number of people, because it is published, who subscribe to Sky Digital, who subscribe to ITV digital, who get digital via Cable. Have you any statistics about how many people have access to and receive BBC digital programmes without paying a subscription to any of the organisations I have mentioned?
  (Mr Dyke) It is very small. We do have those figures and we could let you have those figures. It is very small. Sky have actually just increased the price of their free-to-air offer. Until Christmas or just before Christmas you could have got Sky to fit you a box for, I think, about £99. They have just withdrawn that. That now will cost you, I think, £350. But it is very small.
  (Ms Thomson) If I could add, I think it is around 300,000 people.
  (Mr Dyke) But our research on the terrestrial digital box suggests that there are several million who would be interested in a free-to-air box if it took them from five channels to 15 to 20 channels. The other thing we are trying very hard to ensure it would do, is allow our interactive services—which at the moment are only available on Sky and will be available on Cable—to be available on digital terrestrial as well, so not only would you get 15 free channels, at least 15 free channels, you would also be able to get interactive television for just the one payment of £100.

Rosemary McKenna

  24. Do you think we would be able to move then to switch off on a much quicker timescale than it would appear at the moment?
  (Mr Dyke) I think there are two things that need to come with this and if your Committee can support that in terms of relationship with the Government it would help. One is that obviously a switch-off date would help. Secondly—


  25. I am sorry to interrupt again. The Opposition spokesman yesterday suggested the date of 2006. What is your reaction to that?
  (Mr Dyke) I suspect in that period. Not soon after that. It depends on how fast the price of this £100 box comes down, so I will wait a year to see but I suspect it will come down. Secondly, there is a power issue in the DTT. If you go to Ireland or certain other places that are doing digital terrestrial television, they are playing at a significantly higher power than we are in this country. One of the problems with DTT in this country is that something like one out of five people who buy the box, who live in an area where they can receive DTT, actually have ariels that are not good enough. If you can turn up the power, you overcome the ariel problem. It seems to me those are the two things: When is the switch off time? and can we gradually turn up the power? And we have to be careful, because if you turn up the power and screw up everybody else's signals none of us would be popular, but an increase in the power combined with eventually a switch off date. I think it is not beyond the realms of possibility that this box gets smaller, that actually at the time of switch off you would have something you could almost give away to those who have not got it. If that gets to the right price, you overcome the other major problem which is the second set problem, because when we talk at the moment about digital homes, we talk about one digital set or one set that has got a digital box. Actually I doubt whether there is any politician alive who is going to announce a switch off if in fact what you are doing for an awful lot of people is making their second and third sets redundant.
  (Mr Davies) Can I just clarify, we are not thinking of giving away boxes funded by the licence fee payer yet. We are not talking about free boxes. But if the Director General can bring this deal to fruition I think it will enormously help the issue of changing people into the digital arena.

Rosemary McKenna

  26. I think you are right, £99 will come down very rapidly. Can I just clarify one point, does that mean that all these channels will be available to everyone regardless of who their service provider is?
  (Mr Dyke) Yes.

  27. At the moment, if you are with one of the other service providers—
  (Mr Dyke) They are all available on satellite. On Cable? Yes, they will all be available because they must carry on the Cable, and they are all available on DTT. Anybody can get a box, yes.

Mr Flook

  28. I would like to talk about the digital curriculum and the way in which the BBC promotes itself in that area of education. There are some people around who believe—and, having looked at it, I believe they are correct—that it is an aggressive push into the online commercial market. There are fears around that you may be heavily subsidising that push, which means that you could end up being the monopoly supplier in the digital curriculum market.
  (Mr Dyke) We are totally subsidising it. Effectively one of the first things I did when I was Director General Designate was to announce that in this period I hoped we would expand on our educational services. I also said that day that I hoped we would be able to create the digital GCSE curriculum online. When the Secretary of State approved the licence fee increase two years ago, there were four criteria that were put down on which we hoped the money would be spent and one of them was education. Actually when I made the speech I got a letter from both the Secretaries of State for Education and Culture, both saying, "We welcome this initiative." In the last 18 months we have been through what some of us have found quite a frustrating period of trying to get agreement with the relevant Government department and the industry in terms of building the digital curriculum. We will only build the content. Fifty per cent of that content will be built outside of the BBC but funded by the BBC. We have set aside £150 million over the next five years to do that but the way that content then is distributed to the schools the Department of Education will take responsibility for and not us; in other words, they are looking at that. They, alongside that, have also put up some additional money for those in the commercial sector in education actually to bid for. So there will be the opportunity to bid. Half of our money basically will go to the commercial sector, will go to people who make software outside the BBC, and the Government, I think, put up £40 million for this year and they have said they will look again at the end of the year. It is a very difficult situation. What is clear is that there is no-one on the market who wishes to do the complete digital curriculum. Everybody would like to do maths and science and English but nobody wants to do some of the less popular subjects because they might not be marketable. We have done this because we think it is an initiative that has real value in this society: it is one of the things the BBC should be doing. The BBC has a long history in education and in terms of the digital curriculum, we saw that as the logical next stage.

  29. Could it not be seen as an inappropriate use of State aid?
  (Mr Dyke) Obviously, which is one of the reasons why we are represented in Brussels, if you are taking public money there are all sorts of discussions always about what is and what is not an appropriate use of public money in State aid. Our advice is that this is not, but we will see. The Government announced quite recently the whole initiative but we are still in discussions about the details. We then have to take the proposals to DCMS, because it is a new service, and get the Secretary of State's permission, and the Secretary of State will look at the whole issue of whether or not this is State aid.
  (Mr Davies) I think at the end of the day, Mr Flook, it will be surprising if the BBC makes more than one-third of the total content. I would expect at least two-thirds to be made by private companies. Your original fear that we were going to monopolise this, I think is not true.
  (Ms Thomson) This is a service which will be available free at the point of use in the way that every other BBC service is. It is not one that we are seeking to make money out of and in that sense is a completely logical extension of the work which BBC schools programmes, the video programmes, have done for many years: 90 per cent of schools use our video programmes. Now they are moving online, it is the next step forward. So in that sense it is not competing with raising revenue.

  30. It does have an impact on the commercial viability of a number of other organisations which will provide choice.
  (Mr Davies) I think the other thing to bear in mind here though is that without the BBC doing some of the core curriculum and getting the sort of backbone under way, it may have been difficult for private companies to have done it on their own. I actually think that this process will generate a market place which otherwise might not have existed and certainly will bring earlier into being a marketplace which otherwise might have taken longer.

Miss Kirkbride

  31. Is it not true that schools would pay to go online?
  (Mr Dyke) That would be up to the Government. That would be up to the Department of Education to decide.

  32. So it is not free.
  (Mr Dyke) No, we are making the content, the content is free. The Government will then decide how they fund the distribution system. They are going to have, as I understand it, a competition for that, for how the distribution system is installed in those schools. But actually schools pay to go online at the moment.

  33. So therefore it is not free for schools in the same way as the airwaves are.
  (Mr Dyke) No, in the sense that they are going to have to pay a telephone system but it is fairly cheap. But then that is true of—

  34. Of all your Internet services.
  (Mr Dyke)—all Internet services. You have got to pay for them, you have to pay a telephone call.
  (Mr Davies) I think we should point out as well that it will be free to homes. Households will be able to access this via broadband for nothing.
  (Mr Dyke) Well, no additional cost.

  35. The crucial thing, just to be clear on what I was saying, is that there is no BBC subscription charge either at home or school from the BBC. That is to be expected, bearing in mind £2.5 million of public subsidy.
  (Mr Davies) Exactly.
  (Mr Dyke) Absolutely.

  36. But nevertheless it is not strictly speaking free.
  (Mr Dyke) They also have to buy a television set. It was never free. If you did not have a television set, you could not receive our schools programming in schools.

  37. It is an additional charge.
  (Mr Dyke) Yes, and as I understand it I am not sure whether the school is going to pay or the Department of Education is going to have to.

  38. When you did your report three years ago, you very much stressed market failure. You have just said how the market was providing perfectly good curriculum services in the more popular subjects. Why is the BBC not just doing things like Greek or Latin where the market does not provide rather than getting into the market where the market does provide.
  (Mr Davies) I actually do not think the market was doing a perfectly good job in providing broadband digital curriculum services. In fact, there are not any, are there?
  (Ms Thomson) No.
  (Mr Davies) There are not any. The judgment that I think we had to make was whether we could essentially kick-start this process by providing a backbone content which others could then build around. It is hopefully going to be a partnership between public money, freely accessible by households and schools and an enormous amount to private enterprise as well. I think that is a good way of doing it actually.

  39. Can you tell me why in answer to Ms McKenna's question are you so squeamish about a £100 digital box for people when you ask people to pay £109 every year to provide your services.
  (Mr Davies) I am not sure we were squeamish about the £100 digital box. I think we were saying we hoped that would be seen as value for money—by several million people, Greg said. So I do not think there was a squeamishness there. I am certainly concerned, with £109 that we collect from every household, to ensure that we give them as much value for money as we possibly can squeeze out of that £109. It is one of our main responsibilities to do that. That is why when Mr Fabricant earlier was perhaps hinting that we still were wasting money in some areas of the BBC I am concerned to ensure that that does not happen. One of Greg's prime targets is to substantially reduce the amount of money that goes on anything except programmes and we have made terrific progress, since he became Director General, in that direction.

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