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


Memorandum submitted by the Federation of the Electronics Industry (FEI)

  The New Inquiry on Communications by the House of Commons Select Committee on Culture, Media and Sport is welcome and well-timed to examine the prospects for a draft Bill on Communications and a range of related issues. FEI is keen to give oral evidence on all aspects of the Inquiry.

  FEI represents the UK IT, Communications and Electronics Industries and with the incorporation of BREMA in the Federation in July 2001, now includes the Consumer Electronics manufacturers. FEI's interests in this Inquiry therefore cover the roll-out of Broadband, the Regulation of a future converged communications environment and the switchover to Digital Television. Our comments cover these three topics.


  FEI has been a leading participant in the Broadband Stakeholders Group (BSG) Executive. Indeed we recommended to the government that a Strategy should be developed based on the original reports from the four BSG working groups and as a result, FEI drafted the final BSG report, which was delivered to the E-Minister in early December. We of course strongly support the BSG recommendations.

  It would be wrong for FEI to submit a separate Broadband document from the BSG. We have recommended that the BSG submit its own evidence. The Committee will receive that shortly.


  The debate surrounding OFCOM is complex. Our belief is that OFCOM must be shaped according to the following five principles, which have been agreed and discussed at length with our members. They arise from our belief that the market must and will be the driving force behind the delivery of the government's objectives. We commend them to the Select Committee.

  OFCOM must have a clear and distinct obligation to promote an open and internationally competitive communications market in the UK.

  OFCOM should be technology neutral in terms of its structure and the policies that it promotes. OFCOM's structure must not perpetuate the current split between broadcasting and telecommunications.

  OFCOM must ensure that long-term infrastructure investment is not stifled by unbalanced consumer driven regulation. OFCOM will have to address many high profile content issues without downgrading infrastructure issues.

  The Government's "Five Better Regulation Principles" (transparency, accountability, proportionality, consistency and targeting) should be written into the Communications Bill. This will help to achieve "appropriate" regulation and open dialogue with industry.

  OFCOM's regulatory regime should reflect the full impact of convergence. Increased choice (in terms of content) means increased consumer responsibility and fewer sector specific rules. This will require a mature dialogue between consumers, Government and industry.


  We support the UK Government's objective of switching over from analogue to digital television between 2006 and 2010. Such a major Project affecting every home in the UK requires Government ownership, the wholehearted commitment of all industry sectors, and a thoroughly professional approach to the leadership and management of a Project extending over many years. The successful achievement of Switchover by 2010 will mark a key step in revolutionising the UK's communications infrastructure.

  The publication of the Government's Digital Television Action Plan in December 2001 is a very significant step forward. It establishes a framework of working groups under the direction of a Steering Board co-chaired by Ministers from the DTI and DCMS. This is a partnership between Government, Industry and Consumer Groups that can build on the success of the last three years in which the UK has established a world lead in digital television.

  Industry places the greatest emphasis on the Digital TV Action Plan and the working Groups established as the means to achieving Switchover by 2010. There is a whole range of issues to be addressed, including those affecting receiving equipment. The pace of technological change means that many of them are critically dependent on the timing of switchover. The need for clarity is especially important for the semi-conductor industry without which the plans for consumer electronics companies to introduce new television receiver products will be delayed.

  Receiver manufacturers and their suppliers of components and semi-conductors are international companies that do not rely on any one market to be commercially successful. The success of the deployment of digital television in the UK and the current lead in the technology has focused our country as a priority for manufacturers. This could quickly change and the UK could be by-passed by manufacturers in favour of continental European markets, especially Germany. If we can maintain our UK edge in digital television technology then other European markets will follow our lead. This will expand the market for consumer electronics manufacturers bringing the benefits of economies of scale reducing costs and therefore prices to UK consumers.

  The vast majority of digital television receivers currently are set-top-boxes. About 120,000 integrated digital television (iDTV) receivers were sold in UK in 2001. We hope that the re-launch of the BBC's digital services and a public information campaign will help to boost iDTV receiver popularity. iDTV receivers are in many ways the logical replacement for analogue television receivers and can greatly assist in attracting non-subscriber households to migrate to digital television. Also crucial to the success of digital television are open standards to allow equipment to be upgraded and provide interoperability between service providers; they are needed now.

  The connection of some 8.5 million UK homes to digital Pay-TV in three years is a remarkable achievement but we believe that around 40 per cent of homes are likely to be strongly opposed to subscribing to Pay-TV. Such homes, almost all of whom receive their television by terrestrial means, will have to be persuaded to move to digital television at the minimum inconvenience in the normal cycle of replacing their televisions sets, and through the attraction of high quality digital free-to-air services.

  The Public Service Broadcasters led by the BBC have a major role in persuading the non-subscriber homes to choose digital television. The rollout of the BBC's revised digital services in Spring 2002 should provide a powerful demonstration of the attractions of free-to-air digital television. Also, public awareness of the full range of benefits of digital television needs to be raised and confusion dispelled, particularly the misconception that digital television is equated with Pay-TV.

  One of the criteria which have to be met before analogue terrestrial television can be switched off is for 99.4 per cent of the population to be covered by digital transmissions. Arguably this target should relate to digital terrestrial alone, thus ensuring that all viewers have access to a basic free-to-air terrestrial service including public service broadcasting. On current plans it is likely that the coverage of free-to-air terrestrial channels could reach about 84 per cent but this will require considerable investment and still falls short of what is ideally needed.

  Given that a substantial minority of households will not wish to subscribe (they will strongly oppose the imposition of digital satellite or digital cable) and at present receive television through analogue terrestrial means, there is a need for Government to recognise the importance of extending DTT coverage for public service broadcasting to at least 95 per cent.

  It is the Government's stated policy to use interactive digital television (iDTV) as a channel for e-Government Services and to enable universal utilisation of the Internet—particularly from home. iDTV is currently possible using satellite, digital terrestrial and cable delivery, with a telephone line or cable return path. Given the ubiquity of television in the home, the key attraction of iDTV is that it is a way of putting the Internet on television and bringing the benefits of connectivity to a broader range of people than PC users.

  We fully support the Government's objective of providing universal access to the Internet by 2005. Currently digital television's interactive Internet-like features are restricted, either through a "walled garden" or by difficulties in viewing standard-format information and services. Digital television-based alternatives to computer-based services are being developed and should be given every encouragement.


  FEI companies represent a very wide range of interests and the Federation is well qualified therefore to provide an industry perspective on the challenges and opportunities we face in revolutionising our communications infrastructure during the next 10 years. We would be very pleased to give oral evidence to the Committee and also to provide more detailed written advice.

24 January 2002

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