Examination of Witnesses (Questions 680-699)|
MONDAY 24 JUNE 2002
680. I think we are all a bit worried about
(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
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 frankto
serve the viewerand 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.
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
686. We are all being required to do that.
(Ms Airey) It is difficult, is it not?
(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 answerapart 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 issuethat 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 onor to overrule me onis where they thought that
a content provider had breached the rulessay 122 or 123so
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 propositionso
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.
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
(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.
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
(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 remitsinevitably remits will be changedbut
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 forecastyou might
go ahead and cite a whole list of thingswhere 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 justYou understand
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.