Examination of Witnesses (Questions 311
WEDNESDAY 7 FEBRUARY 2001
Chairman: We would like to welcome you
to this Select Committee which is most of the time very strongly
radio-orientated. It is a curious thing that radio is a very,
very popular medium of communication but curiously neglected in
public discussion. Mr Wyatt.
311. Good morning. Could you comment on this
business of schools not being able to broadcast beyond their walls.
Is that a rather analogue sort of rule?
(Mr Stoller) Good morning. Yes, I am
happy to comment on it. What the Authority has done is to stretch
as far as we feel we can this bit in the existing legislation
which talks about restricted licences. We took that initially
to be the short duration licences. We have moved that forward
now to allow long-term restricted licences. We have imposed a
restriction which is that this should be used when there is a
transient population. The reason for that, from our thinking,
is clear, that as the legislation is currently written, although
we would like it to change, we are very worried about giving permanent
licences by the back door. The point about being able to serve
schools and for that matter army barracks and hospitals is that
we can extend the concept of restricted service licences without
running into that particular risk. It is against the background
of saying that these distinctions after a while become unnecessarily
arbitrary that we have come forward with a proposal for access
radio. That is the reason for the distinction at present.
312. Just remind us which law and Broadcasting
Act that was?
(Mr Stoller) What we have done is to take the definition
of the 1990 Act and say this allows us to do more, it allows us
to do INR and ILR, but it will also allow us to do what have become
restricted service licences. That was before my time so I can
praise my predecessors. It was pioneering work on their part which
has opened up this opportunity which we now think could be taken
Derek Wyatt: Thank you for that. If we
can move to the bigger argument about OFCOM. The radio has always
been a Friday afternoon activity. You have the Chairman of the
BBC, the Chief Executive and Head of Television who could not
tell us anything about Radio 3 audience figures.
Mr Maxton: Are there any?
Chairman: Those who are of the highest
313. You have heard some the debate earlier
today. If OFCOM had radio presumably that would enable your organisations
to merge? It does seem mad that the BBC would be ring-fenced.
Is that how you feel too?
(Mr Hooper) Chairman, Mr Wyatt, good morning. I think
there are two questions there. One is about the distinctiveness
of radio and we feel strongly that over the last ten years, having
a dedicated regulator of 40 or 50 men and women good and true
who worry about one industry and are not an afternoon thought
on Fridays because television is such a big hitter in terms of
agendas and so on. In our submission to the White Paper, second
submission next Monday, we have argued that there should be some
distinctive role and distinctive team work for radio within the
OFCOM structure. I think we agree with that. In relation to the
BBC we are suggesting three things. The fundamental principle
is that there should not be a continuation of self-regulation
of the BBC and the reason for that is that a player cannot also
be a regulator in a competitive market. That is a fundamental
principle we put in our submission last year and we believe that
strongly and I think there is widespread support for that view.
There are three specific things we are suggesting in our submission
next Monday which is, one, that the reserve powers that are with
the Secretary of State at the moment, that is to say for example
should the BBC be allowed to launch new digital television and
radio services or not, that those should pass to OFCOM, either
at Charter at the year 2006 or ideally earlier. That is the first
point. The second point is we are suggesting that OFCOM should
have frequency planning powers over the BBC and commercial radio.
Currently the Radio Authority frequency plans for commercial radio
and the BBC frequency plans for the BBC. We feel that would be
a much better use of the spectrum and a number of the issues that
Mr Buckley and his colleagues at the CMA have raised are about
finding better use of the spectrum. That is the second point.
The third point is we are suggesting that the Radio Broadcasting
Department, or whatever the team is within OFCOM, should be the
body responsible for what are called the "tier three"
obligations on the BBC that are in the White Paper. Those are
three very specific things.
314. On the funding idea 20 or 25 years ago
there used to be a radio licence and a TV licence and now there
is one. In a sense that messed up radio in a way or took it down
a different road and it might have been freed up earlier. Do you
feel that if OFCOM collected the licence fee, which is not in
the White Paper but is something I am sympathetic to, it could
say that of the licence fee 15 per cent (I am taking figures out
of the air) should go to BBC Radio and five per cent to another
public service sector of the radio? It is very hard to get the
annual figures out of the BBC. If it carries on as it is it will
still be hard to get them out of OFCOM, so nothing changes.
(Mr Stoller) I think the fact that the BBC looks for
cross-funding between its organisation is without question. They
are difficult to unpick whether they are commercial or non-commercial
activities let alone if they are radio or television so, yes,
the idea that OFCOM might be the drawer in of all funds coming
into broadcasting and telecommunications regulation is attractive.
I think a difficulty might arise with the new European Directives
which are very limited on the extent to which you can take funds
which come in in the general sense and apply them to a specific
use. That would need to be teased out, but the basic idea is appealing,
315. Can you just say, this is ignorance on
my part, what this new EC Directive might or might not say?
(Mr Stoller) I was hoping you were not going to ask
me in detail! There are four new Directives and among other points
they limit the ability of domestic administrations and domestic
regulators to make charges in relation to licensing which are
not for other than the administration of that particular licensing
process and, therefore, one needs to steer very carefully around
the European Directives in the funding within OFCOM itself when
we get to it and the extent and the way in which you will charge
separately for radio and television licensing, the way in which
you will handle the proceeds of spectrum auction, and I am absolutely
certain (without being an expert) that the same difficulty would
apply to ring-fencing BBC funding in. It is not impossible we
have found so far, but it does need working through with some
316. Have you been disappointed with the lack
of debate anywhere on public service radio? I cannot remember
an article I have read yet, perhaps you can jog my memory. There
does not seem to have been a debate anywhere, I have not heard
it on radio or television either.
(Mr Hooper) I think there is a fundamental difficulty
with public service broadcasting and that is that it has been
going since 1926 and we are still arguing about the definitions
of it, which would suggest that the definitions are relatively
elusive if we are still discussing them now. Having said that,
we have a very clear idea of what public service broadcasting
is. We have a clear idea of what the BBC's role is in it. I do
not think it is just a market failure role although that is obviously
a central part of the definition. We tend in radio (because it
has become a more deregulated market over the last ten years with
the 1990 Act and the 1996 Act) to talk about broadcasting in the
public interest. We feel if you have a spectrum and you have it
for free then you have public obligations and we have a very clear
idea what those are, for example, the "localness" of
local radio stations. I think that is an extremely important pointthat
they should reflect the community that they are broadcasting in.
317. Do you have a view about switch-off?
(Mr Stoller) We are very sympathetic to those who
are trying to move digital radio forward as we are. Having a switch-off
date would help the process enormously. I do not feel it is realistic
to expect any government to try and even assay a possible date.
We know that radio audiences are conservative. We recall the near
riots the BBC faced when they wanted to move Radio 4 to long wave
and long wave has to be the least modern of the radio technologies.
What we hope and what I think the White Paper reflects is that
government will acknowledge that it needs to move towards a switchover
from analogue to digital. It will establish some of the criteria
which will apply when the time is right but in terms of setting
a date, whilst it is desirable for the health of digital radio
it does not seem to us at the moment to be practical. I say that
with reluctance but that is our judgment.
318. Is that an educational role? We have one
of the highest penetrations of PCs, the highest of mobile phones,
it is extraordinary how many DVDs were sold at Christmasas
you know, you could not buy one. We are pretty quick. What you
are saying is that it is an older population that is listening
to radio and that is the issue?
(Mr Hooper) If you look across the world, I think
it has already been mentioned this morning, the United Kingdom
leads the world in digital radio. There is no question. We have
something like 160 programme services operating right now of which
roughly half are new services, and not just simulcasting of existing
analogue. In that sense the regulatory framework is there thanks
to the 1996 Act which was actually quite deregulatory in style
and flavour. We have a lot of commercial radio companies who are
making very significant investments. One of the problems you have,
Mr Wyatt, with new consumer electronics products is this famous
chicken and egg. That is to say I (the manufacturer of the equipment)
will not build it until you (the service provider) provide the
service, and you will not provide the service until I have built
it and got it out in the market. That has not happened so far
in digital radio because the commercial radio companies have invested
considerably in multiplexes and in services and the boot is clearly
on the foot of the manufacturers to move out into the market with
volume and get the prices down. We are down to £299. It was
£800 a year ago.
(Mr Stoller) If I might come in on the back of that.
People keep telling us that there is to be a £99 set any
time now. We look forward to it. A number of things have to come
together before the S-curve can get moving and those are very
much in the hands of the manufacturers and that has an international
dimension. Then you have additionally the fact, in our view, that
people listen to the radio they grew up with and to convert them
does take time and some of us are never really converted from
what we grew up with. You have an age issue, you have a natural
conservatism and that close loyalty between any radio service
and its listener and you have the difficulty of making technology
widely available to get consumer uptake started. It seems to be
a medium-term prospect. I heard one of your witnesses say earlier
on that the commercial radio companies believe they are investing
over a ten-year period. That seems to me to be wholly realistic
and even at the end of that ten years the 100 million radio sets
in the UK are unlikely to have shifted in the quantity we need
to contemplate switchover, but it will come.
319. In the television environment we know there
are four or five television sets in a household which do not get
dumped any more, they go into children's rooms or the kitchen
rooms, so the question is if you go to digital television can
you enable the other sets, and now you can, there is a piece of
technology that will enable those. Is it impossible to do that
for transistor radios?
(Mr Hooper) That would be very difficult.
(Mr Stoller) It is effectively impossible because
of the very low cost of an analogue transistor radio.