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

Annex 1




  This submission is a distillation of the views of the members of the Satellite and Cable Broadcasters' Group (see Annex for list of member companies). It focuses only on issues where there is a broad consensus. Individual companies may, in their own submissions, comment on separate points, or expand on the issues mentioned.

  The SCBG brings together the major satellite and cable broadcasters licensed in the UK and between them they collectively represent more than 70 of around 130 cable and satellite channels now available to British viewers. The cable and satellite sector is an increasingly significant part of the television market, employing over 6,000 people and with total revenues exceeding £2.1 billion in the 1999-00 financial year. By the end of 2000, over nine million UK households (over 43 per cent of the total) had access to multi-channel television, and 28 per cent of UK households now have access to digital television. In 2001, SCBG members expect to broadcast over 300,000 hours of programmes in the UK alone. This is more than seven times the output of the five main terrestrial channels.


  The White Paper's commitment to create a dynamic market which will lead the world in innovation, and a climate that is good for investment is encouraging (1.2.2). However, the delivery of this will depend not only on the regulatory framework but also the way in which OFCOM uses its powers. The objectives to keep regulation "to the minimum necessary" and the duty on OFCOM "to keep markets or sectors under review and roll back regulation promptly" (1.3.9 and 8.11) are important. Specific constraints should be imposed on OFCOM to be light touch.

  OFCOM needs a clear new regulatory perspective and orientation which focuses it firmly on the creation of a vibrant and competitive communications sector. OFCOM's primary duty, as a regulator with "concurrent powers", should be to promote competition. It should also be required to develop an attractive climate to encourage continued speculative investment in building distribution infrastructure (be it cable, satellite, terrestrial, mobile or ADSL), and developing innovative content, be it interactive or linear based entertainment that nurtures creativity in domestic production.

  The existence of nine different regulators, and the disparities between the regulatory regimes of the different parts of the communications sector, are increasingly causing difficulties and delays in the day to day operation of our business. SCBG members therefore stand to benefit considerably from the greater coherence of regulation (1.3.5) that can be introduced by collapsing five regulators (possibly six) (8.3.1) into a single regulator (OFCOM), and from the avoidance of "double jeopardy".

  It is essential that OFCOM be required to conduct regular regulatory assessments to judge the market impact of its actions across the whole supply chain. This will help OFCOM avoid a system of premature or inappropriately burdensome regulation that could inhibit the emergence of effective competition. The Better Regulation Task Force principles of transparency, proportionality, consistency and targeting (8.5.3) should be supplemented by the principles of independence, relevance and flexibility, fairness and technological neutrality, and regulators should be required to have technical and industrial expertise.


  The contribution made by cable and satellite broadcasters to viewing choice and diversity for all sectors of the population is not properly acknowledged in the White Paper. Nor does it acknowledge the fact that the commercial broadcasting sector, not public service broadcasters, will drive digital take-up, with 75 per cent of British homes expected to subscribe to some sort of digital pay TV package by 2002. The perception remains that public service broadcasters deliver quality and diversity, and the commercial broadcasting sector delivers only popular programmes. This is far from the truth. Programming traditionally associated with public service broadcasting is increasingly being delivered by cable and satellite broadcasters. Niche channels have increased viewing choice for various sectors of the population whose interests have been under-served by public service broadcasting. However, public service broadcasters such as the BBC are often acting in very commercial ways.


  The White Paper places considerable emphasis on preserving and promoting public service broadcasting as being the primary means of delivery of quality and diversity. The SCBG supports the continuation of public service broadcasting, as long as the Bill shores up and does not relax their regulatory obligations which are the price of the privileges of "must carry", "due prominence", and use of scarce spectrum that the PSBs enjoy. The legal framework must ensure that the public service broadcasters are affordable, and have reach and relevance for all sectors of the population. If the BBC and ITV in particular are permitted greater flexibility, this will have an adverse market impact on the cable and satellite sector which could hinder its development.

  The White Paper fails to establish satisfactory external, independent regulatory scrutiny for the BBC in terms of both economic and content regulation. OFCOM should be given responsibility for the BBC's role and remit, content, the approvals process for new BBC channels/services, the ongoing appropriateness of the BBC's privileges and access to scarce spectrum, and the enforcement of state aid in compliance with EU competition rules. Unless OFCOM has such powers of scrutiny over the BBC, as the largest single UK broadcaster, it will be unable to fulfil effectively its objective to protect and promote competition in the sector.

  The Government will need to think seriously how public service programmes will be delivered in the long-term, as the reach and audience appeal of public service television declines over time. The Bill should anticipate this by establishing alternative mechanisms, such as a public service fund, which would run in parallel with the licence fee for the next few years to nurture the production of public service programmes from sources alternative to the BBC. It should minimise the anti-competitive effect of measures such as "must carry" and "due prominence", which artificially bolster the position of public service broadcasters, by ensuring that distribution platforms are fully compensated. It should also establish a sunset period for these protectionist measures which should have no place in a competitive market.


  The three tier regime for regulating broadcast content establishes a sliding scale to reflect different consumer expectations. However, the SCBG is very concerned about the additional licence requirements which would be imposed on cable and satellite broadcasters under the current proposals in tier one, including mandatory targets for subtitling, signing and audio description across all broadcast platforms and training targets.

  The boundaries between the Internet and cable and satellite broadcasting are increasingly unclear and will fade completely before the ink is dry on the Bill. The SCBG believes the regulatory distinctions between tier one (which would apply to cable and satellite broadcasters) and tier zero (which will apply to the Internet) will have to become as minimal as possible since exactly the same content can already be delivered to viewers by several different media.

  We hope the Bill would look further ahead than the White Paper in taking into account forthcoming reviews of existing European legislation. It would be helpful, for example, if the Government were to signal its intention to abolish European quotas completely in the forthcoming review of the EU TV without Frontiers Directive since they are not necessary in the competitive European broadcasting market.

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