Joint Committee on The Draft Communications Bill Minutes of Evidence


Examination of Witnesses (Questions 680-699)

MS DAWN AIREY, MR GRANT MURRAY AND SUE ROBERTSON

MONDAY 24 JUNE 2002

  680. I think we are all a bit worried about that.
  (Ms Airey) That is good news because currently we are regulated obviously by the ITC, which significantly downscaled its operation and passed on the savings to broadcasters. One of my anxieties is that OFCOM costs more than the current regulatory regime that we pay for, and that would be totally and utterly unacceptable to us. We are also seeking clarification on the interim costs of OFCOM with no parity. We are trying to run a business; you are running Government; and between the two of us —

Nick Harvey

  681. We are not; we have not made it yet.
  (Ms Airey) Some of you are.

  682. What is the point of setting up a consumer panel to be there as a lobby on behalf of consumers if it is only allowed to look at these issues of access, but is not empowered to consider what that access is to?
  (Ms Airey) The content Board does have representations, both in the regions, and does have a link into what the viewer thinks and says about the services. It would be ludicrous if it did not and that is what we are all trying to do, to be frank—to serve the viewer—and everything flows from that. I just see it as double jeopardy.
  (Ms Robertson) It would be duplicating what the Content Board should actually be doing with public service broadcasters. The draft Bill states that the main consumer panel should be handling carriage issues. Some of the issues are with telecoms and cables, etc., of which there are many. Only on occasions where it is directed to by the Content Board should it be looking at public service broadcasting and broadcasting issues. We think that that is about right. To have a content board doing loads of research, and regional advisory committees with viewers, which ITC does at the moment, but also to have the consumer panel doing it is just making the whole body huge and unwieldy, and providing a complicated set of signposts for the viewer as to who is handling the issues that they are concerned with.

  683. The Content Board, being part of OFCOM is involved in making decisions. The Consumer Panel, as a lobby on behalf of consumers, is there simply to put a consumer point of view to OFCOM for them to make their decision on. If it is going to do that job effectively, has it not got to take the view of the consumer in the round, to put the evidence in front of OFCOM, and OFCOM then gets on with makings its decision?
  (Ms Robertson) The Content Board is doing its own reviews on the ecology of public service broadcasting. There is some discussion as to whether they should be tri-annual or annual. They will be doing more than just making specific decisions on content issues and will look at the overall ecology of public service broadcasting. The research they do in that context will be a very important, major role for OFCOM. We are just saying, why have the Content Board doing all of this and the Consumer Panel as well; and do not extend the Consumer Panel's role from that which you envisaged in the draft legislation at the moment.

  684. Regulators have sometimes got things wrong in the past and have done things that have not worked in the consumers' interests. How is the consumer to tell OFCOM that they are getting it wrong if their champion representative body is not allowed to consider issues of content?
  (Ms Robertson) For a start, it will be paid for by OFCOM and be part of OFCOM.
  (Ms Airey) OFCOM are not going to ignore what the consumer has to say, and if they have a point of substance, it will be referred back down to the Content Board.

Chairman

  685. We are trying to frame legislation that is able to address the inevitable tensions between economic regulation and content. If you found yourself in later life as a chair of the Content Board of OFCOM and you found yourself working alongside a mad regulatory Director General, what sort of powers would you wish to have as chair of the Content Board in terms of what you felt would be a legitimate voice of the content provider?
  (Ms Airey) I did not know I was going to have to play "Fantasy Regulator".

  686. We are all being required to do that.
  (Ms Airey) It is difficult, is it not?

  687. Yes.
  (Ms Airey) At the end of the day, OFCOM will have the ultimate powers that reside in their economic clout, but for OFCOM to work for parliament and for the industry, it will have to take the views and concerns of the service providers and the viewers seriously. As chief executive of the Content Board, in so far as my chairman is also a member of OFCOM, I would expect all of the issues that I raise of substance to be discussed and debated. I would be part and parcel of that discussion and debate, and hope that a sensible decision would be made. I would also hope for a degree of autonomy in certain areas as well, because I am the expert on content, and these guys are the experts on economic regulation. Where you draw the divide is very, very difficult; and it is virtually impossible for me to sit here and give a perfectly worded answer—apart from the fact that I would want autonomy. In terms of being able to tell broadcasters that, say, within a period of time things need to change if it is a public service broadcasting issue—that I have a period and can note the issues, and public service broadcasters have a year to respond to it. Ultimately, what I would look for from OFCOM is the ultimate sanction that the only thing I ever expect them to totally support me on—or to overrule me on—is where they thought that a content provider had breached the rules—say 122 or 123—so comprehensively that they were lined up for a fight.

  688. Would you like in that role to have guaranteed access once a year to a select committee to put the content case?
  (Ms Airey) That is a very interesting proposition—so long as that select committee has clout and influence, I think I possibly would, yes.

  689. Not to put words into your mouth, you understand!
  (Ms Airey) No.

Mr Lansley

  690. You have already said that you are concerned about the transition costs and structural costs of OFCOM will be, but structural costs, even if they are constrained, are large and are likely to be transferred in the form of charging. Clause 19 sets up a power for OFCOM to charge for its services, but where electronic networks and services are concerned, there is a subsequent series of clauses from Clause 29 thereon, which sets up a detailed set of provisions, including particularly the statements of charging principles, that charges have to be proportionate to the services provided to those particular networks and services, or categories of networks and services. I may be leading the witness, but would it be therefore desirable from your point of view if there were a similar structure of principles and constraints under part 3 as well as part 2?
  (Ms Robertson) Yes. The principles have something to do with apportionment of costs, which are outlined in Clause 29. We think they should be carried over to the overall principles in clause 19.

  691. Are you happy with the structure from Clause 29 onwards.
  (Ms Airey) I think so, yes. It is that principle of apportioning costs that we feel is important. At the moment we have been given no indication as to what the costs will be and what we should be putting into our budget for a year and a half's time. We have been given no indication as to how costs will be apportioned. We know the ITC has gone to great lengths to make themselves more efficient, and has downsized. We have no idea about whether the 650 staff in the radio communications agency are as a result of having gone through a similar process, and how much of what they would be doing is at all relevant to us, and how much of that we should be paying. We are paying £1 million a year at the moment for our regulation, which is quite hefty. What we do not know is whether it will be doubled, or whether it will be the same.

Lord McNally

  692. I do not want to worry you, but all the regulators that have appeared before us have expressed great satisfaction at the discussions they have had and the plans ahead. How do you see us creating that lean and mean machine, and not just a conglomeration of the existing regulators, with a conglomeration of costs plus?
  (Ms Airey) We do not like costs plus ever; we like costs minus, as a business. There has got to be savings, just simply in backroom functions; there just has to be when you are putting together all those separate and disparate authorities. They all have finance and personnel functions and there is a huge amount that should be able to be saved through back office. The Bill is also enabling a more streamlined media industry, going forward, so therefore the existing bodies, even if simply put together in one single unit, should be dealing with less issues, one hopes. Maybe that is wishful thinking. There has to be quite substantial cost-savings, and also I do not know what the other authorities outside of the ITC have done in terms of operating best practice. If they all do, then that is fine, and the costs are apportioned in accordance to the use by the individual sectors, and there should not be a problem.

  693. You do look to OFCOM being a different kind of organisation than simply an accretion of its separate parts.
  (Ms Airey) Yes, we do.
  (Ms Robertson) What would be the point of it? If you join five organisations and simply base them all in one location, with maybe a few extra competition powers. Why have we spent the last few years debating it?
  (Mr Murray) The point I would add to that is the fact that we have not had any indication of what the setup costs and the costs of transition are going to be, so that will be an additional layer of costs of putting the lot together. On that, as Dawn said, we are hoping in the fullness of time, when these bodies come together, that there will be rationalisation of all functions coming together where there may be savings in the future, but currently there is no transparency in any of that.
  (Ms Airey) I think that if anybody wants help in finding a lean, mean organisation, we are happy to provide ourselves as a very good example of that.

Lord Pilkington of Oxenford

  694. You expressed concern about the Secretary of State having a power to amend any aspect of the public service remits. You say that it will create uncertainty for broadcasters and investors. However, there is the provision of subsection (2) that she cannot do anything except following a recommendation by OFCOM. Is not that a sufficient safeguard? The Secretary of State does not exercise the powers arbitrarily. Are you not basically trying to limit OFCOM in this section?
  (Ms Airey) No, I do not think we are trying to limit OFCOM. We are just trying to be very practical and also aware of some cases recently, without mentioning names (but you will probably know the ones to which I am going to allude), where the Secretary of State feels a necessity to respond rather quickly to events and actually does not necessarily make the best judgement. OFCOM, to be frank, are the experts in economic and content regulation through the Content Board, and we believe OFCOM should have the powers to change remits—inevitably remits will be changed—but they should do so by giving the broadcaster at least a year's notice of any changes, because those changes could be material to the business. Whilst Channel 5 is a public service broadcaster and only too pleased to be a public service broadcaster, I am also running a business, so if there are going to be major variations to how I run my business and the business obligations, I want time in which to be able to respond to those.

  695. Therefore, you do not object to the principle? Because remember, it is a recommendation by OFCOM. The basis of what you are aiming at is that you want a year to make your mind up, do you not?
  (Ms Airey) We do not object to the principle.

  696. Even if it is a serious thing, you still want a year?
  (Ms Airey) Yes.

  697. It is a very natural thing, in an Act of Parliament, to have reserve powers. You might do something dreadful. I know you would not, but something may happen.
  (Ms Airey) If we did something dreadful, for a start we could be fined and there would be huge explanations back and forth about this. I have not seen any forecast—you might go ahead and cite a whole list of things—where you have done something so outrageous, that so deeply troubled and offended viewers or has been a gross misuse of one's airwaves. I just have not seen that in my time.

  698. As chairman of a regulatory body without any teeth, I think that there are things that I would not like to talk about, and in fact it does become of importance to you.
  (Ms Robertson) We would like the arm's-length principle to be extended as much as possible, and that within or on the recommendation of OFCOM, parliamentary approval is sought through the affirmative procedure rather than just—You understand parliamentary procedure.

  699. Forgive me for saying this, but are you not making a lot of fuss about something which is obvious? This would only occur in a dire emergency. OFCOM have to recommend it. The Secretary of State, who is in the end responsible to Parliament, would have to implement it. Are you not wanting icing and cream on your cake?
  (Ms Airey) It is cream on the cake, and ice cream too is quite nice, but I do not think we are asking for that. We just have a general concern that this sort of thing can lead to knee-jerk reactions, and that is not good.


 
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