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Division No. 1

CONTENTS

Acton, L. Addington, L. Ashley of Stoke, L. Astor, V. Barnett, L. Beaumont of Whitley, L. Berkeley, L. Blackstone, B. Blease, L. Broadbridge, L. Brooks of Tremorfa, L. Carmichael of Kelvingrove, L. Carter, L. Castle of Blackburn, B. Chandos, V. Chapple, L. Cledwyn of Penrhos, L. Cocks of Hartcliffe, L. Darcy (de Knayth), B. David, B. Dean of Beswick, L. Dean of Thornton-le-Fylde, B. Devonport, V. Diamond, L. Donaldson of Kingsbridge, L. Donoughue, L. Dormand of Easington, L. Dubs, L. Falkender, B. Falkland, V. Farrington of Ribbleton, B. Fisher of Rednal, B. Gainsborough, E. Gallacher, L. Geraint, L. Gladwin of Clee, L. Glenamara, L. Graham of Edmonton, L. Gregson, L. Grey, E. Halsbury, E. Hamwee, B. Hanworth, V. Harris of Greenwich, L. Haskel, L. [Teller.] Hayman, B. Hilton of Eggardon, B. Hollick, L. Hollis of Heigham, B. Holme of Cheltenham, L. Hooson, L. Howell, L. Howie of Troon, L. Hughes, L. Jay of Paddington, B. Jeger, B. Jenkins of Hillhead, L. Jenkins of Putney, L. Kennet, L. Kilbracken, L. Lockwood, B. Longford, E. Lovell-Davis, L. McIntosh of Haringey, L. Mackie of Benshie, L. McNair, L. Mallalieu, B. Marsh, L. Mason of Barnsley, L. Mayhew, L. Merlyn-Rees, L. Milner of Leeds, L. Molloy, L. Monkswell, L. Morris of Castle Morris, L. Nicol, B. O'Cathain, B. Orr-Ewing, L. Prys-Davies, L. Rea, L. Redesdale, L. Richard, L. Rippon of Hexham, L. Robson of Kiddington, B. Rochester, L. Rodgers of Quarry Bank, L. Russell, E. Seear, B. Sefton of Garston, L. Serota, B. Shaughnessy, L. Shepherd, L. Simon, V. Smith of Gilmorehill, B. Southwark, Bp. Stedman, B. Stoddart of Swindon, L. Strabolgi, L. Taylor of Blackburn, L. Temple of Stowe, E. Tenby, V. Thomson of Monifieth, L. [Teller.] Tordoff, L. Turner of Camden, B. Varley, L. Wedderburn of Charlton, L. White, B. Williams of Crosby, B. Williams of Elvel, L. Winchilsea and Nottingham, E.

NOT-CONTENTS

Aberdare, L. Addison, V. Ailsa, M. Allenby of Megiddo, V. Archer of Weston-Super-Mare, L. Ashbourne, L. Bathurst, E. Bethell, L. Blaker, L. Blatch, B. Boardman, L. Boyd-Carpenter, L. Brabazon of Tara, L. Brigstocke, B. Brookeborough, V. Brougham and Vaux, L. Bruntisfield, L. Campbell of Alloway, L. Carnegy of Lour, B. Carnock, L. Chalker of Wallasey, B. Charteris of Amisfield, L. Chelmsford, V. Chesham, L. [Teller.] Clanwilliam, E. Clark of Kempston, L. Clinton, L. Coleraine, L. Colwyn, L. Courtown, E. Craig of Radley, L. Cranborne, V. [Lord Privy Seal.] Crathorne, L. Crawshaw, L. Crickhowell, L. Cross, V. Cumberlege, B. Dean of Harptree, L. Denham, L. Denton of Wakefield, B. Dixon-Smith, L. Eden of Winton, L. Ellenborough, L. Elles, B. Elliott of Morpeth, L. Elton, L. Faithfull, B. Ferrers, E. Gardner of Parkes, B. Geddes, L. Gibson-Watt, L. Gilmour of Craigmillar, L. Gisborough, L. Goschen, V. Gray of Contin, L. Grimston of Westbury, L. Harding of Petherton, L. Harmar-Nicholls, L. Harrowby, E. Henley, L. Holderness, L. Hooper, B. Hothfield, L. Howe, E. Inglewood, L. Jenkin of Roding, L. Johnston of Rockport, L. Kenilworth, L. Kimball, L. Knollys, V. Lane of Horsell, L. Lauderdale, E. Lindsey and Abingdon, E. Long, V. Lucas, L. Lucas of Chilworth, L. Lyell, L. McColl of Dulwich, L. McConnell, L. Mackay of Ardbrecknish, L. Mackay of Clashfern, L. [Lord Chancellor.] Mancroft, L. Manton, L. Marlesford, L. Masham of Ilton, B. Massereene and Ferrard, V. Merrivale, L. Mersey, V. Miller of Hendon, B. Montgomery of Alamein, V. Mountevans, L. Mowbray and Stourton, L. Munster, E. Murton of Lindisfarne, L. Newall, L. Norrie, L. Northbourne, L. Northesk, E. Orkney, E. Oxfuird, V. Park of Monmouth, B. Pender, L. Peyton of Yeovil, L. Plummer of St. Marylebone, L. Prentice, L. Pym, L. Rankeillour, L. Rawlings, B. Rawlinson of Ewell, L. Reay, L. Rees, L. Renwick, L. St. Davids, V. St. John of Fawsley, L. Saint Oswald, L. Savile, L. Seccombe, B. Shaw of Northstead, L. Skelmersdale, L. Stewartby, L. Stockton, E. Stodart of Leaston, L. Strange, B. Strathclyde, L. [Teller.] Strathcona and Mount Royal, L. Sudeley, L. Swansea, L. Teviot, L. Thomas of Gwydir, L. Torrington, V. Trumpington, B. Tugendhat, L. Ullswater, V. Vivian, L. Whitelaw, V. Willoughby de Broke, L.

Resolved in the negative, and amendment disagreed to accordingly.

5 Mar 1996 : Column 192

5.31 p.m.

Baroness O'Cathain moved Amendment No. 5:


After Clause 5, insert the following new clause--

Digital broadcasting service licences

(".--(1) Any person who operates a conditional access system, for digital television broadcasting, receivable in the United Kingdom must have a licence granted by the appropriate regulatory authority.
(2) In discharging their functions as respects the licensing of the service referred to in subsection (1) the appropriate regulatory authority shall ensure that there is fair and effective competition in the provision of such services and the access services connected with them.
(3) Conditions may be attached to such licences requiring system or service operators to--
(a) offer all broadcasters fair, reasonable and non- discriminatory access to such services,
(b) ensure that access to any system is not conditional upon the use of any subscriber management or other support services,
(c) ensure that tariffs are unbundled with prices for transport or access services separately identified,
(d) comply with European Union competition law and other related legal broadcasting requirements; and
(e) ensure that there is a clear business separation in cases where the owner of the system or service operator is also a broadcaster.").

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The noble Baroness said: My Lords, in rising to move this amendment I wish to speak also to Amendments Nos. 6, 7 and 49. The noble Lord, Lord Donoughue, and the right reverend Prelate the Bishop of Southwark have put their names to these amendments and the noble Lord, Lord Ashley of Stoke, has put his name to Amendment No. 7. The amendments are linked. In the interests of coherence, and to save time, I think it best to deal with them together. The subjects of the amendments are conditional access, "must offer", "must carry" and electronic programme guides.

We have already discussed the fact that competition policy and broadcasting policy go hand in hand. Therefore an amendment is needed to ensure that there is effective competition for conditional access and for subscriber management services. My noble friend the Minister's commitment at Committee stage to implement the European Directive on Television Standards is very welcome and I hope that it will achieve the aims of Amendment No. 5; namely, fair, reasonable and non-discriminatory access to conditional access. However, important though competition policy is, it will not achieve everything. Competition authorities would not feel comfortable or able to take decisions on the grounds of universality or--this is a very important point--preserving our national culture. I believe that this last point is of prime importance to all noble Lords but it would not necessarily be top of the agenda for a non-national television service provider through satellite or cable. Because of that, "must offer" is needed.

The European Television Standards Directive does not mention free public service channels. It states that equipment manufacturers would not be able to prevent viewers getting channels broadcast free to air. But public service broadcasters may well not be distributed free to air because they need to target their channels at one country. That is where they are funded from and it would be wrong for them to spend public money on buying the rights that would be needed to cover the entire satellite footprint which could indeed extend right across Europe.

The European Television Standards Directive is also the basis for ensuring that subscription services are provided on fair terms. But that would not cover free public service channels either. Public service channels cannot charge their customers. They would therefore be disadvantaged by a pricing regime that was created for subscription broadcasters. Under the directive all that the competition authorities would have to ensure is that public service channels were not discriminated against. But that means there would be nothing to stop public service channels being forced to charge viewers. There would be nothing to stop conditional access providers charging free channels the same for carriage as subscription channels and there would be nothing to ensure that public service channels broadcast over satellite were easy to find. That is why all the amendments link together.

Competition law is too slow for "must offer". It can take five years or more. For example, the Government and Oftel proposed the need for number portability in

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1990. It was not until November 1995 that the Monopolies and Mergers Commission finally ruled that number portability should happen, and it may be another year or even more before the service is actually offered to customers. Five years is half the term of the BBC Charter and quite honestly the BBC could not afford to lose 10 or 20 per cent. of its viewers for that long. As anyone knows, in business, if you lose your customers for that period of time, it is a difficult task to get them back again; and it could be that the damage would be irreversible.

In a normal competition situation there can be financial compensation. But how would you compensate the BBC for loss of public support, perhaps indeed leading to the end of the licence fee if it did not have enough public support having lost it that way, or indeed leading to the non-renewal of the Charter? How could that be financially compensated? Satellite companies would know that the BBC could not afford to take this risk. It could be a case of delivery blackmail in which the BBC was forced to accept unreasonable terms or even to charge for its service. "Must offer" is needed to avoid that.

The amendment would ensure that viewers had automatic access to public service channels which were distributed by satellite. This is an extension of the principle in the European Television Standards Directive that conditional access providers should not be able to prevent viewers receiving channels broadcast free to air. The directive also states that subscription channels will be able to contract with conditional access providers on fair, reasonable and non-discriminatory terms. However, the directive does not cover free channels that are also encrypted. In future, public service channels may be encrypted, for obvious copyright reasons, to ensure that they are not received outside the intended country. But they would still be free. "Must offer" is needed to fill this gap in the regulation and to ensure that consumers can receive free but encrypted public service channels.

The aim of the amendment on "must carry"--Amendment No. 7--is to guarantee viewers access to public service channels in the digital age by ensuring that cable companies must carry public service channels. There are two types of cable licence: those granted under the Cable and Broadcasting Act 1984 and those granted under the Broadcasting Act 1990. Holders of the 1984 licences must carry the BBC's publicly funded services and Channel 3 and Channel 4 public service broadcasting; in other words, BBC 1, BBC 2, ITV, Channel 4 and S4C. The 1990 Act removed that obligation. It was a move in the field of deregulation, which of course I support. But, in these circumstances, some of the cable franchisees have the 1984 statutory requirement but the 1990 ones do not. But eventually all cable franchisees will have to apply for the 1990 Act licences. Therefore, ultimately, all cable franchisees could stop distributing the public service channels.

The amendments would extend the "must carry" obligations to the 1990 Act licences ensuring that all cable companies carry the BBC publicly funded services plus Channels 3, 4 and S4C--that is to say, all public service broadcasting. In return for this "must carry"

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obligation, the cable companies get free carry. The Copyright Act 1988 gives the cable company exemption from copyright law when re-transmitting public service broadcasts which are neither encrypted nor broadcast by satellite. With digital broadcasting encryption will be more common. As worded, the exemption would therefore not apply to many future public service channels.

The Cable Communications Association, in response to the White Paper on digital broadcasting, specifically requested that the Copyright Act should be amended to allow free carriage of new digital public service channels, whether or not they are encrypted. Therefore, subsection (5) of the new clause proposed in Amendment No. 7 grants the cable companies an exemption from copyright when carrying out their "must carry" obligations.

Amendment No. 49 deals with the electronic programme guides. It seeks to ensure that electronic programme guides cannot be used to prevent effective competition or to bury deep down 127 or 150 free public service channels. In the world of hundreds of television channels, which is quite feasible, electronic programme guides will be essential for viewers in order to make an informed choice about what they will want to watch. The electronic programme guides can be extremely sophisticated, acting like an electronic media helpmate in effect, learning their owner's programme preference; remembering to video their favourite programmes; guiding them towards new programmes that they will enjoy. All this sounds wonderful for those of us who are technologically challenged at the moment! They will be very powerful.

However, if there is no effective competition in the market for electronic programme guides, the owner of the dominant electronic programme guide could abuse that position to guide viewers towards their programmes. Public service channels, which the electronic programme guide owner may see as free competition to his pay television channels, could be buried at the bottom of the programme guide. Amendment No. 49, therefore, seeks to create effective competition in the market for EPGs by creating a pro-competitive licensing regime regulated by the ITC and ensures that if a dominant electronic programme guide does develop, it cannot be used to bury public service channels. I beg to move.


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