Joint Committee on the Draft Communications Bill Minutes of Evidence


Examination of Witnesses (Questions 240-243)

MR STEPHEN CARTER, MR MALCOLM TAYLOR, MR HOWARD WATSON AND MR DAVID DOHERTY

MONDAY 10 JUNE 2002

  240. You are worse than politicians!
  (Mr Taylor) Not necessarily. I do not think it is the only answer, because I think it would just take the industry down the track of an infrastructure that might in fact lead us to another solution which was almost a monopoly.

  Chairman: We must adjourn for a division.

  The Committee suspended from 19.55 to 20.09 for a division in the House

Lord Crickhowell

  241. I have one more question. It seems to me you have been extraordinarily reticent about putting forward ways in which you can strengthen the powers to deal with the problem you have identified. Would I be unfair in thinking that perhaps it is because you are afraid that if you did you would find yourself exercising local monopoly powers yourself which could then be used against you?
  (Mr Carter) That certainly is not our concern, although I do sense the Committee's disappointment that we are not stepping forward to put the ball in the back of the net, which you very clearly sketched out for us. I think our view is certainly the view we have expressed, which may not seem trenchant enough, but it is that we think that the Bill should clearly grasp the competition and economic priorities. We do believe that there is a balance to be struck between the content and competition issues; that the creation of the Content Board, notwithstanding the overarching obligations laid out in the Bill, needs a bit of counterbalancing. Whatever may have been the right thing to do in 1984, we do not think that reaching for a solution that may have been right for 1984 in 2002 or indeed 2004 is appropriate. What we have said is that we think the appeals process should be there, should be rigorous, should be applied and should be speedy and, as we have laid out in the submission, the fines that are available should be material in the sense that they act as a material disincentive as opposed to a kind of marginal cost that is a surrounding area on somebody's balance sheet, which encourages them to obfuscate the process.

Paul Farrelly

  242. I wonder if I could wrap up two very large subjects that touch on the issue you have mentioned before. First of all, you are saying your industry is heavily in debt. That is not going to be a situation that carries on forever as the reconstruction proceeds. It might be a case for once bitten, twice shy in the future. At the same time there is a concern that broadband rollout here is proceeding more slowly than anyone would like in the UK. This is the big question. Is there anything that you think pragmatically could be in this Bill that could help? If you want to be more specific on must-carry, please do so. Secondly, you did say the major test, quite rightly, of this Bill would be as future-proof. I think it would be helpful briefly—again, it is a very big subject—for us to hear about what you expect to be the major changes in your industry over the next five to ten years, and whether indeed this Bill is capable of withstanding it in the way it is drafted at the moment.
  (Mr Carter) This is really David's specialist subject, which is the future.
  (Mr Doherty) Do you want to talk about the pragmatic issues?
  (Mr Carter) No, I am happy for you to deal with that!
  (Mr Doherty) I suppose the thing that troubles us—and it is a deep trouble and an economic trouble as well as an organisational trouble—is if this Committee had been sitting around in 1992 thinking about the next ten years, it would possibly have missed the internet, it probably in all likelihood would have missed the internet, it probably would have missed broadband and digital, which are the three major transformers of the modern industry over the past ten years. So I find it difficult to sit here and be convinced that in 2002 we will know what is going to be happening in 2008 and 2012. So although I do also think the Bill is helpful and it is a step forward, I do not think we can sit and pretend that we understand what happens next. To give you a particular example which struck me, a month ago I went to our labs down in Woking and saw a movie called The Matrix screened across the server to a 50-inch plasma television set at 1 MB a second. I was at the BBC helping a digital programme there and we were running that kind of stuff at 4½-5 MB a second. The speed at which that kind of content was coming across the internet and being decoded to devices that connect to television sets is one of the major transformations I can see in the next five, let alone ten, years. It is entirely possible that cable in particular—it cannot be done on other systems—will be delivering internet on demand that may have very high-quality movies, inevitably pornography, games, a whole new generation of content as yet unknown to any Content Board potentially sitting under OFCOM, and they will have to deal with it. That is why we kept saying that whatever happens with this Bill moving into an Act and OFCOM, it is important that the quality of the management that we have in OFCOM understands these issues, and that you cannot judge them by traditional broadcasting standards. This is not traditional bidding on demand, it is not something we have secured from anybody, it is not something we have bought from anybody. Perhaps we are switching onto a server because a customer wants it on the internet. That is essentially separate from traditional economic demand. So is this tradition-proof? Absolutely not. Is it a good start? Yes. Is OFCOM the right vehicle to do it? Yes, as long as it is properly run. Is that reasonable?
  (Mr Carter) It sounds good to me!

Chairman

  243. Is there anything else you would like to say?
  (Mr Carter) I have just one final point on the broadband issue. I do not think we have ever subscribed to the broadband as a busted flush school of popular thought. I think we have shared the view that perhaps it took British Telecom slightly longer than would have been helpful to cram down their wholesale price to a sensible level, but we are in a situation whereby we have over 500,000 connected broadband customers, we have 65 to 70 per cent homes that are broadband passed, and I think the focus should be on driving take-up, where that capacity exists. I understand the public policy debate about what happens in the rural areas, but I think our view on that is that the technology for the rural areas will come along when there is a mass market. The bigger issue, it seems to us in the short term, is providing exciting broadband content, which is in David's area of specialism. We make the point in our submission that the content rules are all laid out, the casting of the content regulator is the approach to content regulation, and the broadband world needs to be not a simple pass-over from the familiar broadcast world, there are different issues and different requirements. Again, that will boil down, prosaic though it may seem, to the way in which it is implemented and the way in which it is staffed.

  Chairman: Thank you very much.





 
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