Memorandum submitted by ntl
ntl is pleased to have the opportunity of commenting
on the joint DCMS/DTI White Paper A New Future for Communications
(Cm 5010) as part of the Culture, Media and Sport Select Committee's
inquiry on the White Paper.
ntl is a communications company providing affordable
access to TV, radio, telephone, Internet and other services throughout
the UK. We are the largest company in our market, with over three
million customers. In addition, our broadcast transmission division
(whose origins lie in the Independent Broadcasting Authority's
engineering arm) is a major provider of transmission and other
services to TV and radio broadcasters.
These written observations set out ntl's overall
reaction to the main issues raised in the White Paper. We recognise
that the Committee has expressed a particular interest in four
aspects of the White Paper, and would be pleased to expand on
our views on these four aspects (and any other of interest to
the Committee) when we give oral evidence.
ntl sees the White Paper as a sensible, competent
and pragmatic document which identifies and addresses a wide range
of significant issues in relation to broadcasting and telecommunications
policy. We are strongly supportive of many of its individual conclusions
including the creation of a single coherent system of regulation
focused on consumers.
However, the White Paper as it stands is an
incomplete document. Before the new communications policy it sets
out is enshrined in legislation, ntl believes there needs to be
a further substantial input of radicalism. The essence of consumer
benefit in this area is the willingness to take risks. Risk-taking
underpins the huge investment in new networks and technologies
which has characterised recent years, and which needs to continue.
Risk-taking also underpins the creation of genuinely high quality
TV and radio programming (whether public service broadcasting
or commercial). Any retreat from the radical and brave tradition
of British policymaking both in telecommunications (where we were
the first country to liberalise most telecoms services) or broadcasting
(such as the creation of Channel 4 and the licensing of digital
terrestrial TV services) would be to the detriment of consumers.
There are plenty of interests, commercial and otherwise, lined
up on the side of caution and tradition. ntl would urge the Committee
to put the case to the Government for a more radical policy, as
ntl intends to do directly.
The White Paper seeks a synthesis of policy
in three areas: commercial; cultural and general public policy.
ntl agrees that there is no simple one-to-one correlation between
the commercial and cultural dimensions and telecommunications
and broadcasting respectively. Telecommunications is vital to
the healthy cultural life of the UK, just as broadcasting is an
increasingly important commercial sector of the economy. Hence
we support the creation of a single coherent policy to encompass
these two areas. We also recognise and support the Government's
commitment to ensuring that this new policy is not at the unreasonable
expense of other public policy objectives, including public safety,
the environment and the rights of the disabled. Interconnected
as these policy areas are, it is nevertheless convenient to divide
our remarks on the White Paper under those three headings. In
each case, we believe there is scope for a more radical vision
on the Government's part.
The UK has long been seen as a leader internationally
in terms of encouraging broad-based competition in telecommunications,
broadcasting and the use of radio spectrum. Notable achievements
included the early privatisation of BT and subsequent licensing
of infrastructure-based competitors such as ntl itself; championing
of the PCN (second-generation) mobile standard; and introducing
the world's first digital TV and radio services. Each of these
has brought great benefits to UK citizens as well as strengthening
the UK's competitive advantage abroad.
ntl believes there is a compelling argument
for making the promotion of competition the foremost tool of the
new regulatory system. The key argument for competition, of course,
is consumer benefit (with consumer defined in the broad sense
of all actual or potential customers) rather than competition
for its own sake. But unless very carefully defined, putting consumer
benefit as the primary objective of OFCOM risks undermining competition,
because short-term policies which purport to deliver benefits
to consumers may be placed above long-term solutions building
on the strengths of open and competitive markets. Identifying
long-term consumer benefit, with competition as the key component
of delivering that, will, in ntl's view, guarantee both.
This conclusion is strengthened by reading paragraph
8.5.1 of the White Paper, which reveals that the Government envisages
that OFCOM should have three central regulatory objectives: protecting
consumers; maintaining high quality of content, and protecting
the interests of citizens. There is no indication of how OFCOM
should attempt to balance these objectives, which risks lack of
clarity, inconsistency of rules and compromising all three objectives.
ntl believes that the promotion of open and competitive markets,
which currently appears only as a subsidiary objective to protecting
consumers, would be capable of delivering all the objectives,
and allowing OFCOM to do so in a coherent and consistent way.
Competition should be actively embraced, not
merely endured. As it stands, the White Paper pays lip service
to open and competitive markets, but relegates them in the overall
scheme of regulation.
ntl does not believe truly effective competition
will happen in these markets without vigilance. The White Paper
is right to propose underpinning the whole system of economic
regulation with standard competition laws and giving OFCOM concurrent
powers with the OFT. However, there is also a need to maintain
certain well-established elements of sector-specific regulationsuch
as geographic averaging of BT's priceswhere a dominant
player already exists. In contrast, ntl believes there will be
a premium on avoiding interference in emerging markets unless
significant consumer detriment is apparent and no credible route
for the market itself to deal with such problems is in sight.
Much discussion of communications markets involves vague references
to "gatekeepers" and "bottlenecks". In ntl's
view, enduring as opposed to temporary concentrations of power
are actually quite rare in emerging markets, and can be dealt
with quite effectively using established competition law principles
ntl's key focus is on providing affordable access
to a wide range of communications services, from TV to telephone,
the Internet, interactive services of all kinds and pure speed
or "bandwidth". Building and operating the networks
which can deliver these services is highly capital-intensive and
therefore inherently risky. We have been fortunate to have hadso
fara consistent and supportive policy environment in the
UK, and long-term dedicated investors. The success of the UK's
policy approach so far should not be taken lightly. Confidence
is more easily lost than won. The new policy environment needs
to intensify support of the investment in access infrastructure
which ntl embodies, and recognise that this is a vital economic
activity in its own right. Broadband access is more than just
a passive enabler of content services; it is a fundamental building
block of the UK's national infrastructure and key contributor
to our international competitiveness.
This approach does, of course, rely on OFCOM
being genuinely independent from Government, adequately staffed
with top-quality people, and led with courage and clear-sightedness.
OFCOM should be powerful enough both to act swiftly and effectively
when action is needed, and to be able to refrain from interfering
unless and until action is really necessary.
The White Paper attempts to strike a balance
between public service broadcasting and the commercial sector.
ntl agrees with this objective. PSB will continue to have an important
place at the heart of British broadcasting, and indeed our national
cultural life. ntl's provision of affordable access will enable
millions of citizens to have full access to new PSB services in
the digital age.
To be effective, however, public sector broadcasters
need to be focused. In ntl's view, PSB is more about institutions
(the BBC is more than just a collection of rights and duties)
and about specific programmes (such as the broadcasting of Parliamentary
debates) than it is about channels. It should not be a test of
a public sector broadcaster's strength that it produces progressively
more and more channelsparticularly if the quality of individual
programmes on them suffers as a result. Better than such broadcasters
are judged on the quality of the programming they create or commission.
The traditional scarcity of radio spectrum for
broadcasting has been a central feature of the development of
an admirable tradition of Public Service Broadcasting in the UK.
If the BBC had had access to 20 channels of spectrum from the
outset, it is highly unlikely that it would have developed into
the institution we see today, with a worldwide reputation for
quality and originality. BBC20 is never likely to match BBC1.
In ntl's view, risk-taking is at the centre
of such a search for quality. Not all PSB programmes will be successful
(even in their own terms, let alone in viewer numbers). Nor should
they be. But a measured programme of risk-taking will nevertheless
deliver the goods over a reasonable spread of activityand
higher quality goods than a pursuit of ratings and safety. Hence
the importance, in ntl's view, of nurturing our PSB institutions
One important implication of this approach for
ntl is the handling of the must carry arrangements. ntl does not
have any difficulty with these so long as they assume manageable
proportions, though we believe they are not strictly necessary
given our desire to provide a full range of services to our customers
anyway. However, they should not be used to remove any risk from
the public service broadcastersthis would simply lead to
substandard channels, such as BBC20.
There are three key components to a must carry
regime. First, the must carry obligations should be restricted
to a small number of genuinely public service channels. Second,
the obligations should also be entirely platform neutralapplying
equally to satellite, terrestrial and new technology platforms
such as DSL as well as cable. Third, the costs associated with
must carry obligations must be recognised. An access provider
like ntl can either spread these over its other activities or
find some way of recovering them more directly. The White Paper
should not rule out any reasonable resolution of this dilemma.
Risk-taking is also a key component of commercial
broadcasting, but in this case a combination of cultural and commercial
risk-taking. ntl finds it disappointing that the White Paper takes
an overly-restrictive approach in this regard. On the one hand,
it insists that no matter how great the proliferation of services,
each should remain "impartial", politically and otherwise.
On the other hand, it includes a statement to the effect that
all TV broadcasters should behave in other media than traditional
television as if the same regulatory framework applies. It does
not and should not. The White Paper is pragmatic enough to recognise
that the Internet, as an open and international system, is simply
not amenable to the same regulatory and policy tools as traditional
media. The only effect of a policy of differential regulatory
expectations would be to marginalise some of the most capable
and responsible companies in exploiting the new media to the full.
Attempting to regulate only those you happen to be able to reach
for other reasons is short-sighted and will ultimately prove counter
The White Paper touches on a range of other
public policy issues. These are, in many cases, not easily reconcilable.
As a major provider of transmission masts and services to broadcasters,
mobile operators and others, ntl is acutely aware of the environment
and public safety debates around these installations. We recognise
that OFCOM will need powers to ensure that they are both environmentally
justified and safe, although we ourselves are confident that they
are. At the same time, it is vital that the benefits that these
and other aspects of communications bring to the UK population
as a whole are fully recognised. We believe a focus on competition
will maximise these direct benefits and so make the overall judgements
as comprehensive as possible.
Not all additional public policy issues are
potentially negative. We applaud the Government's ambition to
ensure the entire country has access to the Internet by 2005.
Its commitment to putting its own services online should both
validate and bolster this ambition. The benefits of, first, access
and, second, broadband access are multifarious and substantial,
ranging from specifics like educational opportunities through
to the most general, like addressing social exclusion. ntl's vision
of providing affordable access means we should be able to provide
substantial assistance with these ambitions.
One specific public policy issue which receives
surprisingly little attention in the White Paper is the question
of when analogue TV services could reasonably be switched off.
ntl is no more able than other commentators to offer precise assurances
on this, but our belief is that pursuing a more ambitious vision
both of commercial and cultural policy will help underpin an earlier
switchover to digital than would otherwise be possible. The greatest
threat to early switchover is that the digital environment looks
essentially similar to the analogue environment. ntl believes
this need not be the case. Both public sector and commercial broadcasters
have a vital role to play in creating compelling digital services.
And access providers like ntl can help ensure widespread availability
of affordable digital servicesnot just TV, but also Internet
and othersif we are allowed and encouraged to do so.
Important questions remain to be answered, although
the White Paper makes a good start. ntl is particularly concerned
to ensure that the gains for consumers from past policies are
continued in the future. For instance, a very major issue still
to be resolved in the telecoms sector is the regulatory reaction
to BT's decision to break itself into semi-autonomous parts. This
is a brave decision by BTwhich is to be applauded for taking
such a riskbut needs a carefully-considered and comprehensive
response from the regulator to ensure the result is better, not
worse, for competition and consumers.
ntl therefore urges the Committee to consider
whether the White Paper, while pointing in generally the right
direction, could and should be more radical, in particular by
putting encouragement of reasonable risk and competitive markets
at the heart of the new framework.