Joint Committee on The Draft Communications Bill Minutes of Evidence


Memorandum submitted by the BBC

1.  INTRODUCTION

  1.1  The BBC supports the Government's broad policy objectives for the broadcasting market—in particular:

    —  To promote a vibrant economy which encourages investment

    —  To promote the provision of a wide range of diverse services, meeting the needs of consumers, including high quality public services

    —  To ensure access to plural sources of information, supporting democracy

    —  To make rapid progress towards analogue switch-off

  1.2  Achieving these objectives requires a careful regulatory balance to be struck. In its comments below, the BBC considers how successful the Government has been in striking that balance in particular policy areas, and what more might need to be done to ensure that the UK enjoys the full potential benefits of the expanding and converging communications market.

2.  PUBLIC SERVICE BROADCASTING

  2.1  The public service broadcasters have a vital role to play in delivering broader public interest objectives for broadcasting, which the market alone cannot do. The BBC welcomes the Government's commitment to strong and diverse public service broadcasting.

  2.2  As the Government has said, in the hierarchy of public service requirements, the BBC has the greatest responsibilities. The BBC welcomes this, but must have effective regulatory backing in two important respects if it is to be able to deliver what is expected of it in the wider communications marketplace:

    —  Within the common regulatory framework the Board of Governors must be free to safeguard the public interest in the delivery of the BBC's remit, independent of commercial and other interests (see section 3 below).

    —  The Government and regulators must make sure that the BBC's services can be delivered universally, free at the point of delivery, to the whole audience (see section 4 below).

  2.3  The BBC will rise to the challenge of continuing to deliver core public service benefits in the modern media marketplace, but the Government must will the means as well as the ends.

3.  REGULATION OF CONTENT

  3.1  The BBC supports a common regulatory framework for all broadcasters, but one which takes account of their differences and creates a hierarchy of obligations. The BBC welcomes the opportunity to work with OFCOM, and to be under its jurisdiction in many respects, in order to achieve a healthy public service broadcasting ecology in the UK. The BBC agrees that it is right that it will be placed "under OFCOM" in the following respects: competition policy, fair trading and economic regulation; basic content standards; quotas and targets for original, independent and regional output; and appeals by complainants. In all of these important matters, it is appropriate that the BBC should be treated similarly to commercial broadcasters.

  3.2  This leaves the BBC's public service remit. On this, the BBC believes that its role and objectives are distinct from most other broadcasters. The Boards of commercial broadcasters are charged with the duty of representing their shareholders, not the public. Therefore it is appropriate that the public interest is safeguarded by the external regulator, OFCOM. For the BBC, the public and the shareholders are one and the same, so the Board of Governors faces no conflict of interest similar to that of commercial broadcasters. It is right that the back-stop powers in these matters of public interest should lie with the Secretary of State, not with OFCOM, a body which has been designed primarily as a light touch regulator of commercial activities. The BBC strongly believes that it would be a mistake to shift these back-stop powers to OFCOM. This would amount to double regulation, which would hamstring the BBC, and seriously handicap its ability to serve its audiences in the public interest. The BBC notes that the ITC, in its oral evidence to the Joint Scrutiny Committee, supported the continuation of the Board of Governors' responsibility for the BBC's public service remit.

  3.3  In view of its unique public service remit, in addition to being subject to the common regulatory framework, it is right that the BBC should be subject to specific additional requirements, including:

    —  A Board of Governors with specific responsibility to ensure the delivery of its unique, detailed remit in the public interest. The Board has listened carefully to criticisms of its role in these respects, and has responded by strengthening its governance and accountability structures and processes, including clarifying the distinction between the respective roles of the Board of Governors and the Executive. This, and other recent reforms, will underpin the Board's delivery of its unique responsibility.

    —  A requirement to consult the public on new service proposals and obtain the Secretary of State's approval for their launch.

    —  A requirement that all new services are reviewed by DCMS after three years.

    —  Decennial review of the BBC, in the Charter renewal process.

  We now turn to more detailed comment on each of these matters.

Tier 1—basic content standards

  3.4  The BBC accepts that basic content standards should apply across the industry and be regulated by OFCOM. The BBC's Board of Governors will continue to set standards for the BBC which will at least match, and in many cases exceed, the requirements of OFCOM's codes.

  3.5  The BBC believes that broadcasters should usually be the first port of call for complaints about programmes, but complainants should have a right of appeal to OFCOM. The Board of Governors takes seriously its responsibility to ensure proper handling of complaints, including ensuring that effective remedial action has been taken by management against offenders. The recent changes to governance and accountability structures and processes within the BBC, have underpinned that continuing role. The BBC's Programme Complaints Unit, which considers serious complaints on behalf of management, will more clearly be separated from the responsibility of the Governors' Programme Complaints Committee, to monitor the effectiveness of complaints handling and to hear appeals on individual complaints. In carrying out this function, the Governors' Committee will for the first time have access to external advice on editorial matters if they require it.

  3.6  The Government is consulting on whether OFCOM should be able to fine the BBC. For commercial companies, fines provide a disincentive to break the rules, since they reduce the value of the company involved. The same consideration does not apply to the BBC where any fine would effectively penalise licence payers, not the BBC.

Tier 2—measurable aspects of public service broadcasting

  3.7  The BBC accepts that certain public service obligations, expected of each of the public service broadcasters, are readily quantifiable. The BBC is content that in these cases the Board of Governors should propose quotas and targets to OFCOM for agreement, and be held to them by OFCOM with a formal report each year.

  3.8  The BBC's current Charter and Agreement already include a number of specific requirements about such aspects of its service, and the Governors currently set objectives and targets in relation to them. The BBC welcomes the clarification of its remit, by making these requirement subject to specific quotas, subject to external monitoring, and by including new obligations on the proportions of original programming, the provision of news and current affairs in peak time, and the carriage of party political broadcasts.

  3.9  The BBC is committed to ensuring that its services reflect the needs and interests of audiences through the UK—in Scotland, Wales, Northern Ireland and in the different regions of England—both in the types of programmes provided for audiences in the nations and regions and in the range of programmes which are commissioned for a UK-wide audience from programme makers throughout the UK. This BBC has recently significantly increased its investment in the nations and regions. This longstanding commitment will be underpinned by the new requirement to publish agreed quotas for these areas of programme output, and to account for performance against them.

Tier 3—self-regulation of public service remits

  3.10  Analogue terrestrial broadcasters continue to occupy an influential position even in multi-channel homes and enjoy regulatory privileges such as the requirement that they be carried on cable networks. They should also therefore continue to be required to deliver public service benefits.

  3.11  Where ITV companies are concerned, however, a balance has to be struck if they are to be able to compete effectively and attract investment. The reduction of detailed prescriptive requirements on ITV is therefore welcome.

  3.12  The BBC endorses the self-regulation of remits by all the public service broadcasters, through Statements of Programme Policy. Backstop powers (exercised by OFCOM for its licensees and the Secretary of State for the BBC) should only apply where self-regulation clearly has not worked.

  3.13  The delivery of the BBC's own public service has to be guaranteed by a body wholly focussed upon the public interest in the BBC. That is the key role of the Board of Governors. Light touch regulation by an external regulator, of the kind envisaged for the commercial broadcasters, is not sufficient. In preparing for OFCOM taking on its broader regulatory role, therefore, the Board of Governors will focus their attention on the BBC's public service remit more than ever before. To support this, the BBC is introducing a new framework for setting objectives within the BBC and for monitoring their delivery.

  3.14  The BBC agrees that OFCOM should review the whole public service broadcasting ecology including the BBC every three years and will pay attention to its findings. However, in the interest of all public service broadcasters this must not undermine the self-regulatory nature of Tier 3: OFCOM should not be drawn into second-guessing details of the public service provision by individual broadcasters. In the BBC's case, where the Board of Governors has specifically been charged with delivering the remit, detailed involvement by OFCOM would amount to double-regulation, and would be unworkable.

4.  REGULATION OF ACCESS

  4.1  The BBC welcomes the Government's stated commitment to ensuring access for the public service broadcasters to audiences via all platforms, both before and after digital switchover. However, the Government needs to ensure that this commitment is translated into effective legislative measures in the draft Bill. The BBC is concerned that in a number of key respects, what is proposed falls short of what is required in practice.

Must offer/must carry on DSat

  4.2  Public service broadcasters are effectively obliged to provide their services via DSat ("must offer") for which the platform operator levies charges. This creates an unequal negotiating position between the broadcaster and the platform operator, BSkyB. At present, the problems this raises are not addressed effectively through regulation by Oftel, which provides too great a degree of price flexibility for the BSkyB. In particular:

    —  The public broadcasters are charged for use of a proprietary Conditional Access system as if they were pay channels using it to collect subscriptions, rather than being obliged to purchase conditional access primarily to meet their obligations to provide regional services.

    —  The BBC currently pays an annual charge for smartcards for satellite viewers who do not subscribe to Sky pay services. The Government's ongoing aim is that smartcards should be provided, at switchover, to free-to-air viewers with access to no other digital system. However, if this aim is to be realised, there needs to be a review of current charges for free-to-air smartcards, and an assessment of who should meet such a charge and how second and third sets would be treated after switchover.

  4.3  "Must offer" should be matched by "must carry": an obligation on BSkyB to carry the services and to make available, on terms which reflect their public service status, all facilities required to ensure that audiences receive them.

  4.4  The Government's current proposals do not deliver "must carry" until after digital switchover. The BBC does not understand the logic of this: switchover will not be achieved in practice unless consumers have the confidence that they will have ready access—and will continue to have access—to free to air digital public services, whatever digital platform they choose. Must carry is therefore an issue of central importance to achieving switchover, not just an issue post-switchover.

Must carry on DCable

  4.5  The BBC welcomes the obligation on the cable companies to carry all public services. but is concerned at the mention of "remuneration" if it were to imply that broadcasters might have to pay for access. Currently, the cable companies pay nothing for the public services provided, nor do the public broadcasters pay the cable companies for being present on the platform. As with satellite, money paid to platform operators by the BBC (along with C4 and S4C), beyond what is required to cover marginal costs after taking account of the value of the broadcasters' offering to the platform, means less money going into the programmes and services which will drive digital switchover.

Electronic Programme Guides (EPGs)

  4.6  EPGs are an increasingly significant gateway: without due prominence for public services, they can effectively be inaccessible to audiences. The BBC therefore welcomes the commitment to due prominence for public service television channels but is disappointed that this does not yet cover radio. Millions of people access digital radio via DSat and DCable. It is essential that radio stations paid for by licence payers are readily accessible to them.

Spectrum

  4.7  Public service broadcasters are required to use terrestrial spectrum to deliver signals to the whole country and must therefore have access to enough spectrum to meet this regulatory obligation.

  4.8  The BBC shares the Government's aim of ensuring the efficient use of spectrum. The greatest opportunity for improving spectrum efficiency is digital switchover, and all concerned must work together to achieve this.

  4.9  The BBC is concerned that the suggestion of charging broadcasters for the spectrum they use would run counter to that objective. It is more likely to delay rather than accelerate the switch to digital, by diverting investment away from new services and transmitter roll-out.

  4.10  In practice, broadcasters have little or no flexibility to release spectrum. Pricing "incentives" would simply become an unavoidable, punitive tax. Access to spectrum is essential, not optional, if public service broadcasters are to deliver what is expected of them. Again, the Government must will the means as well as the ends.

5.  OFCOM'S STRUCTURE AND RESPONSIBILITIES

  5.1  OFCOM as envisaged in the draft Bill should be able to make a positive contribution to the delivery of public objectives:

    —  The BBC particularly welcomes OFCOM's central objective of safeguarding the interests of consumers in broadcasting, but believes that the interests of citizens throughout the UK should also be central to OFCOM.

    —  A Consumer Panel focussed on service delivery should make a valuable contribution to the achievement of this objective, so long as it properly reflects the range of consumer views.

    —  The objective of the Content Board should be to deal effectively, fairly and quickly with issues concerning standards and complaints in relation to Tier 1 standards.

  5.2  The BBC welcomes the proposal that both the Consumer Panel and the Content Board should include representation from England, Scotland, Wales, Northern Ireland, ensuring that OFCOM is aware of the needs of consumers and citizens throughout the UK. The BBC will continue to draw upon its National Broadcasting Councils in Scotland, Wales and Northern Ireland, as well as its Regional Advisory Councils throughout England, to ensure that the Board of Governors is supported in its own responsibilities for setting objectives for the BBC which meet the needs and interests of all its audiences.

6.  MEDIA OWNERSHIP

  6.1  The BBC agrees that the broadcasting market cannot be completely deregulated if it is to deliver the full range of public benefits. The Government is right to leave in place controls to safeguard plurality and diversity.

  6.2  However, the BBC is concerned that there may be some significant consequences for the health of the UK's broadcasting ecology as a whole resulting from the changes which have been proposed. We are particularly concerned at the effect that the liberalisation of controls on ownership of ITV and Channel 5 licences, may have on the UK's content market.

  6.3  The BBC is also concerned about the effect that some of the proposed relaxations to ownership rules could have on the diversity of content available to audiences, especially access to original UK content, and the impact this could have on broadcasting's ability to play a critical role in the social, democratic, cultural and economic life of the UK.

  6.4  There is a significant risk that the ensuing consolidation and cross-media holdings might curtail competition for sports rights, for particular content rights, and for talent. The consequence of this would ultimately be to restrict universal, free-to-air access to some types of programming which consumers currently enjoy across a range of channels. We therefore suggest that in the case of consolidated groups over a certain size, which have cross media holdings in a number of sectors, OFCOM should be empowered to impose conditions restricting their scope to purchase key rights bundled together—such as free to air and pay rights for TV.

  6.5  While there are benefits to be gained from global investment in the UK media sector, it must be recognised that it will be impossible for UK companies to become global players in key markets until they have achieved comparable open access to that which the Government proposes for the UK. In pre-empting this, there is a risk that UK companies will be permanently disadvantaged abroad.

  6.6  The BBC therefore believes that there is a case for arguing that the Bill should provide that foreign ownership restrictions should only be lifted where reciprocal arrangements are in place.

June 2002


 
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