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Lord Inglewood: I must begin by welcoming the noble Baroness to the Dispatch Box. I should like to congratulate her on moving such a spectacular number of amendments--more, I suspect, than a number of noble Lords move in a lifetime. One might as well go in for a penny as for a pound! I am also sure that I speak for all Members of the Committee when I say how grateful we are to the noble Baroness for agreeing that we might take all the amendments together.

The debate is not about the detail of the amendments before us, as the noble Baroness pointed out, but rather about two quite different models for the regulation of digital audio broadcasting--or DAB, as it is known for short.

There is no question that we all share the same objective: the successful launch of DAB in this country, leading to better quality of radio reception and sound; greater choice of stations catering for all tastes and interests, nationally and locally; the development of new additional or data services, for business, education, particular interest groups or individuals; and much more efficient use of the spectrum. We all recognise that that will not happen overnight, and it will not happen without significant levels of investment.

The provisions contained in the Bill set out the Government's model for the regulation of DAB. It is a model which, as for television, is built around the new concept of the multiplex provider--a concept which was welcomed by the Opposition when we unveiled it in our policy document last year and which, as we know from our debate on Part I of the Bill, continues to enjoy their support with regard to television. However, radio is different from television--a fact which we all too often neglect. So I welcome this opportunity to debate and justify the appropriateness and effectiveness of the regulatory framework which we propose.

It may be helpful if I first summarise the key features of what we propose in the Bill. We envisage frequencies for national and local independent DAB being assigned to the Radio Authority, just as frequencies for independent analogue radio are assigned at present. Following established precedent frequencies for the BBC's national DAB, services have already been assigned directly to the BBC, and as I am sure Members of the Committee know the BBC started broadcasting its five national services on DAB last September. The authority will be responsible for licensing and regulating independent DAB services. There will be three types of licence: for multiplex providers, for sound programme services (that is, what we all think of as radio broadcasters, or radio stations), and for additional services (for example, text or data services). The multiplex provider will be responsible for filling his multiplex, and his application for a licence will be judged on three main criteria: the variety of programme services to be broadcast; his plans to roll out the

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infrastructure to bring DAB to the listener; and, for national multiplexes, his plans to encourage listeners to buy DAB radios.

Programme service and additional service licence holders will be subject to the normal licence conditions relating to taste, decency and impartiality. The three existing independent national radio stations will be offered guaranteed places on the one independent national multiplex available, and the BBC would, with the agreement of the authority, have capacity reserved on local multiplexes for its local services. Multiplex providers would have to use at least 90 per cent. of the capacity of the multiplex for programme services, ensuring that the bulk of the spectrum allocated for broadcasting radio programmes was used for that purpose for which it was allocated--that is, broadcasting.

The model put forward by the noble Baroness opposite would differ from our preferred approach in three significant regards. I hope that I fairly describe their position. First, there would be no multiplex provider. Secondly, there would not be a separate licence for additional service providers; and, thirdly, frequencies would be assigned to the Radiocommunications Agency rather than the authority, although the authority would be responsible for licensing broadcasters.

If simplicity in regulation were our sole objective, this model would be very tempting. After all, it is normally we who advocate stripping away layers of regulation. I can therefore assure the Committee that we thought most carefully before putting forward the proposals now reflected in the Bill. It was during that process of consideration that we realised that the world which DAB opens up is complicated and requires a more imaginative response rather than mere tinkering with the framework inherited from analogue.

As I said in the Second Reading debate, digital technology brings to an end the one to one relationship between a broadcaster and a frequency. Digital compression means that the frequency now bringing Radio 4 or Classic FM could, in the future, bring that station, perhaps five other stereo stations, or even more mono ones, and some data channels.

This is all done by digital compression and the subsequent mixing of several services into one radio signal for transmission. Perhaps I may touch on one point mentioned by the noble Baroness. We want to be clear that a multiplex is not a transmission. It is a separate function and the provider of the multiplex need not necessarily also be the provider of the transmission. As I described, that is the technical function of a multiplex provider: to compress and mix. It is an essential function, and it is new. It is unique in the context of radio to DAB.

Although it is a technical and, at first sight, limited function, it has significant implications. It inevitably creates a relationship between broadcasters sharing the same frequency--a relationship that needs to be ordered in some way or other. It means that the amount of capacity used by a particular service at a particular time--can be varied according to the nature of that service, allowing the possibility of the flexible allocation of capacity between different users. And it means that

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everyone using--or rather, benefiting from the use--of that frequency has an interest in transmitting that frequency to the greatest number of listeners.

It is for these reasons that we chose to license the multiplex provider, and to give him a key active role in DAB which goes far beyond that which the Radio Authority, the industry regulator, could properly be expected to carry out. The multiplex provider "concept" has several key advantages. It provides a focus for co-ordinating and drawing together all matters affecting the service providers sharing a frequency: rolling out the transmission infrastructure; managing the use of the capacity on the multiplex efficiently; putting together proposals for promoting the services and encouraging listeners to buy digital radios; and, possibly most significantly of all, sorting out the broadcasters' requirements and effecting the fullest use of the spectrum. It allows non-broadcasters--that is, outside businesses and expertise--to become involved in DAB, bringing new investment and fostering new, creative partnership.

I fear that the proposals from the noble Baroness ignore some of these realities and would squander the advantages. The seductive simplicity of a regime based on a one-to-one relationship between the Radio Authority and the broadcasters would, I fear, mean that the authority itself was forced into taking over the function of the multiplex provider. I do not think it is a function which sits easily with the responsibilities the authority has for regulating the sector.

If we went down this route how many individual broadcaster's plans for rolling out infrastructure will they need to look at, and how many separate proposals for promoting DAB and encouraging listeners to buy sets? Who will co-ordinate those plans and proposals and ensure that they are implemented? Who will manage use of the capacity on the multiplex and broker deals between broadcasters? Those are serious defects as regards the model put forward by the noble Baroness who moved the amendments.

The independent multiplexer on the other hand will more easily be able to encourage plurality and diversity, because of his greater freedom in putting together a diverse package of broadcasters--diverse not only in output but also in economic characteristics which might lead to agreed cross subsidy between them to put together as diverse a package as possible.

It has also been argued that allocating bits of capacity to individual broadcasters will ensure a more efficient use of spectrum. Let us examine that proposition. The Government's proposals allow flexibility across the whole multiplex. Capacity can be traded between broadcasters, through the medium of the multiplex provider, allowing complete flexibility subject to the continued satisfaction of the variety criterion and the requirement that there is a maximum of 10 per cent. of capacity which can be used for additional data services. The alternative is that sections of the multiplex are allocated to individual broadcasters. These broadcasters can use that capacity either for radio and/or data services. So far as each allocation is concerned, only 10 per cent. would be available for data. Ten per cent.

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of much less is very little. The spectrum is fragmented in a rigid way. This is a recipe for inflexibility and curtails the proper exploitation of the technology when surely what we need to do is to encourage flexibility thereby realising the maximum benefits which DAB can bring.

I am also confused by the new role ascribed to the Radiocommunications Agency. Why should it be necessary to assign frequency to anyone other than the Radio Authority--the established broadcasting regulator? The agency is part of Government--the Secretary of State for Trade and Industry would be assigning frequencies to himself. The role of the agency is quite clear: its concern is the efficient use of all radio spectrum. Some of that spectrum is allocated for broadcasting use. Other frequencies are used for citizen's band, amateur or ship radio, and many other uses. The agency licenses transmission under the Wireless Telegraphy Acts. The transmission providers for DAB will need such licences. I do not see the purpose, or need for, the new role put forward in these amendments, unless it is intended to place the Radio Authority more clearly in the role of de facto multiplex provider.

As I have indicated I believe that there are substantial flaws in the model proposed by noble Lords opposite. I believe that the multiplex provider route which we have chosen provides the framework best suited to allowing DAB to be launched successfully and ensuring that there is a rich profusion of radio and data services from the most efficient use of the spectrum. But these are complicated issues, and the digital future is a complicated world. We have had only a matter of days--in some cases hours--to consider these amendments, and only now have I been able to hear them explained. I can assure the noble Lords opposite and the noble Baroness who moved these amendments that I shall reflect on the points that they have made and if I believe that there are improvements which can be made to the Bill which will answer some of the concerns expressed, then we shall certainly make them. But I must conclude that I shall do that from the standpoint that our approach and not theirs is the right one.

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