Select Committee on Culture, Media and Sport Appendices to the Minutes of Evidence


Memorandum submitted by Channel M


  Since 1997 the restricted service licence (RSL) created by the 1996 Broadcasting Act has provided invaluable experience for considering how local digital television services could develop in future.

  There has been considerable demand for RSLs—65 local licences have been issued or are pending. New local channels have been introduced—12 are currently on air. Channel M has been broadcasting to parts of Manchester since February 2000, and other channels are located in Oxford, Leicester, Portsmouth, Taunton, Londonderry and the Isle of Wight.

  However, it is extremely difficult to operate a viable local television service in the face of the inflexible regulatory attitude towards RSLs.

  New digital licences would enable local television channels to offer a viable local alternative to existing regional services from ITV and the BBC—as such this would introduce a fresh dimension to UK public service broadcasting.

  While we would not want to see any reduction in ITV regional output, we feel that a committed local channel can supplement such programming with local services of real value.

  This approach was endorsed by the ITC's recent Citizens' Jury in Leeds which recommended that in future "regional TV stays on ITV1 and a network of RSLs should develop across the country".


  The Restricted Service Licence was introduced under the 1996 Broadcasting Act after proposals for a city-based Channel 5 were ruled out by the ITC—the RSL would be able to use "spare" frequencies identified in planning for Channel 5.

  From the outset the ITC took a cautious view of the potential of RSLs. An initial consultative document following the 1996 legislation was so limiting, it would have been impossible to operate an effective local television service.

  Following representations, the terms of the RSL licence were amended to a two year period—it was pointed out at that time that this would not be viable, but nonetheless the ITC allowed a first round of applications in 1997.

  Subsequently two more rounds were held—each of which attracted more applicants than the last. However the ITC has since indicated that it has no plans for a fourth round of applications, any more, citing the problems of frequency availability.

  Channel M applied in 1997 for a licence to broadcast to "students and young people" in Manchester—the channel is backed financially by the Manchester Evening News and University of Salford is the educational partner. All parties involved knew that this would be a pioneering form of broadcasting, dependent on advertising revenue to fund new local services.

  It took until February 2000 for Channel M to go on air—one reason was the caution of frequency planners who were concerned that RSLs generally would hinder their ability to plan for digital terrestrial television which at that stage had not been launched.

  However since our launch, the major problem encountered by Channel M is the failure of frequency planning to reveal that the quality of reception from our channel would be sub-standard.

  The channel is broadcasting on an "out of band" frequency—that is, the aerials used by viewers in Manchester are not the right ones to receive our channel. Consequently their reception is far worse than that for other channels.

  Three months after launch we approached the ITC for an alternative frequency, as it was apparent that viewers were unable to receive an adequate picture and advertisers would not advertise because "no-one can see it". With lower revenue than anticipated we run an extremely cost-effective operation, but nonetheless incur a substantial loss.

  Despite frequent representations to the ITC and meetings with Ministers and officials at the Department of Culture, Media and Sport, no satisfactory solution has been identified.

  At the moment further frequency planning work has been commissioned, but we continue to meet a fundamental objection to our proposals that it is essential for the local channel to operate with an "in band" channel which viewers are able to watch.

  We have been refused access to an in-band frequency for the following reasons:

  The best available frequency is dedicated to radio microphones currently being used by Granada TV for the programme Stars in their Eyes.

  Two streets next to Manchester City football club are using the frequency to improve their signal—our use of it would cause interference to these viewers.

  We may cause interference to a number of viewers using digital TV in the Saddleworth area.


Education and Community involvement

  A local channel such as Channel M has considerable potential to do good for the community. Channel M is unique among RSLs because it has a formal public-private partnership with the Faculty of Media at Salford University.

  The channel is funded and operated by the Manchester Evening News—the University is the educational partner, with a shareholding in the channel and a guarantee that its students' programmes will be broadcast as part of the overall commercial schedule.

  The University is able to train its students in television production knowing that these programmes will be seen and judged by viewers.

  This encourages higher standards—a university documentary programmes made for Channel M in 2001 has recently won an award at the Royal Television Society North West Awards, beating competition from BBC1 and Sky 1.

  The university also produces a weekly discussion programme, tackling issues such as student debt, as well as wider concerns, such as civil liberties. In total, the university provides Channel M with three programmes a week during term time.

  Students' involvement in the channel also counts towards their degrees. Further, students leaving the University have subsequently found full-time work with the channel, and other trainees have gone on to work for broadcasters and production companies in Manchester.

  At the wider community level, Channel M is a local partner in the Commedia Millennium Awards operated by the Community Media Association enabling members of the public to make programmes on subjects such as mental health.

Local programmes, news and the Commonwealth Games

  Channel M's local programmes also reflect a real commitment to the city.

  The police in Manchester have used Channel M in recruitment campaigns, and Channel M programmes have featured campaigns to make the city centre a safer place.

  Our interview programme, The Future of Manchester, provides a platform for local politicians to discuss the key issues—housing, transport and so on—which face the city.

  Our regular magazine programme, Manchester 365 reflects the cultural life of the city, from theatre to local cultural festivals.

  Our ethnic programme strand has featured different ethnic groups in Manchester—a celebration of Ramadan, programmes dedicated to the Chinese, Jewish and Somali communities, and a celebration of young black achievers.

  Channel M provides viewers in Manchester with six hours a day of national and international news from the ITN News Channel—for many viewers without cable or satellite, this service would not otherwise be available.

  We are firmly convinced that viewers in Manchester would appreciate a regular news service and the introduction of local news for Manchester is a strategic objective for Channel M. However, until our business can generate sufficient revenue to afford the capital and operating costs of a news service, this remains out of our reach.

  This year Manchester hosts the Commonwealth Games, a unique opportunity for our channel to celebrate the city of Manchester and its achievements.

  However, unless we are able to secure a new frequency before July, the opportunity will be lost because in many areas of Manchester there is no adequate reception for Channel M.


  Because RSLs have been allocated "spare frequencies"—and because most frequencies have already been allocated to other users, the local channel is seen as a poor quality channel compared with BBC or ITV.

  Many RSLs will encounter similar problems to Channel M and will need to be re-planned. Until a more positive approach to frequency planning for local channels is adopted the potential of the sector will be curtailed.

  Better frequencies could be allocated to RSLs—the priority currently given to RSLs was determined in 1997 by the DCMS in setting frequency planning guidelines which gave the RSLs lowest possible priority.

  Because RSLs come last on this list planners can ignore the RSL if they feel there may be a future digital requirement, or even if radio microphones wish to use the frequency. Likewise if a handful of viewers want the frequency for a self-help scheme. All of these reasons have been used to prevent Channel M broadcasting to the coverage area for which it has been licenced.

  The local channel is in effect the sixth terrestrial channel and should have the same frequency priority as that given to Channel 5—if this were the case, then the scope for real advances in new local public broadcasting would be considerable.

  Amending the priority given to RSLs is a matter of urgency—without better frequencies, few local channels can expect to operate a viable service.


  The ITC recently consulted about the future of RSLs and included the proposal that 60 per cent of the channels output should be local content.

  Contrast our position with that of Granada TV in the North West, where it is required to make less than 10 hours a week of regional programmes—for which it secures massive advertising revenues.

  By contrast, the ITC proposal would have required Channel M to provide eight hours a day local programming—and we have minimal income. Why would the ITC think this appropriate?

  Likewise contrast the proposal for local content quotas with the relaxed attitude the ITC takes towards local cable channel provision.

  For instance, the "local" cable service from NTL in Manchester features no local content and appears to originate in Norwich. Why would the ITC expect a fledgling analogue terrestrial service to dedicate three-fifths of its output to local content when the ITC does not oblige cable companies to meet any local content promises?

  Why has the ITC not intervened to ensure that cable operators do not refuse to carry the RSL on their service?

  The ITC's view of local channels seems to be coloured by its determination to prevent them becoming mini-ITV companies—when in practice, it is impossible to succeed at the most modest local level, due to the restrictions caused by poor reception.


  Following a unanimously negative reaction to its proposals, the ITC this week (9 January) announced it had postponed its plans to tighten the regulatory requirements for RSLs.

  The ITC added that it is concerned about the economic problems facing local broadcasters.

  Yet all it has done is to withdraw its ill-conceived proposals—which would have made life more difficult for RSLs.

  Despite representations from Channel M and other RSLs, the ITC decided no tangible measures are required to help local television at this difficult time.

  The ITC instead looks towards the forthcoming Communications Bill and states:

    "Progress will depend on a place being found for local television services in digital planning beyond analogue switchover, and on an appropriate regime being provided in forthcoming legislation."

  The ITC is saying that those channels which are currently operating must wait until after analogue switch-over before they can gain access to the security of a digital channel.

  The uncertainty of the analogue switch-over timetable means that this is far in the future—far enough away as to be almost irrelevant to anyone operating a local service today.

  This paper seeks to explain why it is essential that an earlier date is found for new digital local services and that regulation of such services needs be undertaken within a more positive policy framework to encourage local television.


  The ITC has consistently under-estimated the length of time required to operate a local channel if investors are to see a return on their investment. Very few media operations are expected to be viable in two years—nor operate on the basis that their licence could be revoked through no fault of their own within that time. Yet the ITC thought this appropriate for RSLs in 1997 and has only grudgingly made concessions since then.

  The change to a four year licence was regarded as a compromise by the ITC—it has turned down requests by Channel M and other channels that eight years is a more appropriate timescale within which to establish a new service and build sufficient revenues to justify the costs of operating the licence.

  In local radio, eight years is the duration of the small-scale licence offered by the Radio Authority.


  The Communications Bill brings forward a prospect of discussing a more positive regulatory framework for local broadcasting—the government has made a commitment to a plan for local digital licences within the Communications White Paper.

  The ITC does not really understand the peculiar challenge that local television represents.

  Consequently, we would like Ofcom to be structured to accommodate the interests of local television channels more effectively than has been the case with the ITC.

  We do not see this as primarily a matter of content regulation, but rather one of market regulation—the barriers to entry into local television broadcasting are far too high (frequency priorities in relation to other spectrum users; costs of transmission; refusal of cable carriage).

  These are the issues that the new regulator should consider in order to determine to what extent unfair competition is responsible for the lack of progress of local broadcasting in the UK.

  The Communications Bill needs to lay the foundations for a third tier of local television channels.

  Such channels will only thrive if they can develop from today's limited analogue services into channels which make the most of a variety of distribution platforms—broadband Internet, digital cable, digital terrestrial, and so on.

  To do so does not require a moratorium on licensing until after analogue switch-off, as seems to be envisaged by the ITC.

  Current regulations could become lighter, so that those channels which have launched will be able to survive until a digital licence is available—consequently transitional arrangements need to be in place.


  We would urge the committee to consider the compelling case for licencing new local digital television services in advance of analogue switch-off.

  For instance, assuming legislation is enacted in 2003-04, it would be possible for local analogue services to apply for new local digital licences to run in tandem with any extension to the existing analogue service, thereby providing for a viable long-term plan for such services.

  We believe that new digital television services will play a significant role in persuading viewers to adopt digital television.

  In the multi-channel home of today, there is often a complaint that no matter how many new channels are offered, there is nothing to watch—yet we can guarantee that our service will stand out from all other channels, simply because no-one has offered a service exclusively for cities and towns.

  Newspapers and radio thrive at a local level—so would television if it were given the chance.

  We would expect our proposal to be rejected by frequency planners on the grounds that it is essential to provide better coverage for existing national digital services than to create opportunities for new and unproven local services.

  We would disagree with this fundamentally—that a vibrant and informative local channel for Manchester, or other towns and cities in the UK, is a more effective use of digital capacity than, say, yet more tepid national channels offering yet more youth programming about holiday reps behaving badly in Ibiza.

Channel M's proposals

  As a matter of urgency, the RSL licence to be extended by the ITC to eight years so that a viable business plan can be developed by existing services.

  Likewise the DCMS to amend its frequency priority list so that RSL licences are given equal status with the other analogue public service broadcasters.

  The ITC to undertake a fourth round of applications for RSLs based on these amendments.

  The above provisions would underpin a sector which is currently struggling—the following measures would provide for a future for this embryonic form of public service broadcasting by introducing provisions within the Communications Bill in order to:

    —  implement new local digital licences—prior to analogue switch-off.

    —  introduce local channel must-carry rules for digital cable operators and prevent cable operators from offering such services themselves.

  These proposals could ensure that the pioneering work of the first wave of local television is assisted at this critical stage in its development. If local services can be helped to flourish new local services can add a new dimension to British public service television, as well as stimulate local interest in digital television.

  We hope that the committee will agree that if RSLs could be turned into a more securely based third tier of broadcasting in the UK, then it would be to the general benefit of viewers and citizens in the UK.

10 April 2002

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