Memorandum submitted by ITV Network Ltd
1.1 ITV welcomes the Government's intention
to modernise and rationalise the current system of broadcasting
regulation in recognition of the major changes occurring in the
1.2 ITV endorses the Government's support
for public service broadcasting in the digital age and, in particular,
its support for ITV's role as a public service broadcaster (PSB).
1.3 ITV welcomes the proposal that broadcasters
should have greater self-regulatory control over the qualitative
elements of their remits within a new three-tier regulatory structure.
1.4 However, ITV is disappointed that the
Government has failed to bring the BBC fully within the new regulatory
framework. This will undermine OFCOM's ability to take a holistic
view of public service broadcasting in the UK.
1.5 ITV believes that the Government should
extend "must carry" to satellite. In addition, OFTEL
should amend the rules governing "must offer" so that
operators like Sky are required to take account of the public
service status of a channel when setting the price for the use
of essential facilities such as conditional access. The current
rules specifically prohibit them from doing so. These changes
are a necessary quid pro quo for the Government's desire
to see carriage of the core public service channels on every digital
platform and for the imposition of "must offer".
1.6 ITV acknowledges the Government's desire
to manage spectrum more efficiently. However, the review of spectrum
management needs to take account of the extensive public service
obligations on ITV's 15 licensees, and the substantial licence
payments they already make for use of that spectrum.
1.7 In order to make swift progress towards
digital switchover it is essential that the Government sets out
a clear "route map" for achieving this end. ITV believes
that the independent review of spectrum management could play
a useful role in this process.
2.1 ITV Network Ltd is responsible for the
commissioning and scheduling of programmes on the national ITV
network. It also represents the collective views and interests
of the holders of the 15 regional ITV licences.
2.2 ITV is the UK's most popular channel
and is watched by an average of 48 million people every week.
It is funded entirely from commercial advertising and sponsorship
and in 2001 will spend nearly £1 billion on programming.
It is also a public service broadcaster (PSB), with extensive
regulatory obligations at both the network and regional level.
2.3 ITV's positive programme obligations
today require it to provide a range of high quality programmes
in nine prescribed categories (drama, entertainment, sport, news,
factual, education, religion, arts, children's) of which five
have mandatory minimum weekly targets (news, current affairs,
children's, religious and regional).
2.4 ITV believes that increasing competition
in the multi-channel world and the switchover from analogue to
digital will have a significant impact on public service broadcasting.
The Government therefore needs to reassess the way in which it
2.5 ITV believes that its public service
role should in future revolve around its unique characteristics
as the UK's leading mass audience channel, the major commercial
producer of UK originated programmes and the UK's primary regional
2.6 In this submission ITV has focused on
its two key concerns with regard to the White Paper:
the proposed system for regulating
public service broadcasting in the digital age; and
the Government's proposals to ensure
universal access to core services.
2.7 This submission does not cover media
ownership issues, which the individual licensees address in their
3.1 ITV welcomes the Government's commitment
to public service broadcasting and in particular ITV's role as
a commercial provider of public service television. In addition
ITV welcomes the general intention to rationalise the regulation
of broadcasting to provide greater coherence and flexibility.
The proposed three-tier system for content regulation is in theory
a logical way of achieving this.
3.2 However, ITV is concerned that the proposals
contained in the White Paper may not actually achieve the Government's
objectives. For example, the BBC is largely excluded from the
proposed new regulatory structure, which may make it difficult
to develop a coherent approach to the regulation of public service
broadcasting. The ecology of broadcasting is a subtle one and
the way in which the Corporation is run has a direct impact on
the rest of the sector.
The new regulatory structure
3.3 ITV broadly welcomes the proposal to
create a single regulator, OFCOM, with a comprehensive economic
and content regulation brief. This should reduce regulatory overlap
and produce greater regulatory consistency and coherence.
3.4 The Government's proposed Three-Tier
system has the potential to rationalise content regulation, which
will give broadcasters the flexibility to respond more quickly
to viewers' demands whilst also maintaining high standards of
public service broadcasting.
3.5 However, ITV believes that there are
a number of areas that need to be clarified.
3.6 Under the proposals contained in the
White Paper first tier obligations would apply to all broadcasters
licensed by OFCOM as well as to the BBC. These obligations would
cover matters such as minimum "negative" content standards
and rules on advertising and sponsorship, although the BBC Board
of Governors would retain responsibility for regulating impartiality
requirements. This is a sensible approach and ITV welcomes the
fact that most of the provisions within this tier will apply to
all broadcasters including the BBC.
3.7 This tier will apply exclusively to
the public service broadcasters including the BBC and represent
"positive" regulation of their output to ensure public
policy objectives are met. Tier Two will contain varying statutory
obligations that are quantifiable for each of the public service
broadcasters. ITV accepts in principle the notion that a range
of statutory obligations should be applied to each of the public
service broadcasters, although given the lack of detail contained
in the White Paper it will wait to see the precise obligations
proposed in any Bill before giving unconditional support. ITV
welcomes the proposal to increase the regional obligations placed
on other broadcasters, although it anticipates remaining the principal
producer and commissioner of programmes from the nations and regions.
3.8 Tier Three will cover individual public
service broadcasters' qualitative obligations. It offers ITV the
opportunity to take much greater responsibility for regulating
its own output. ITV welcomes the proposal for each broadcaster
to develop statements of programme policy and self-regulatory
mechanisms to replace the current "box-ticking" that
is so cumbersome. ITV recognises the need to manage these self-regulatory
mechanisms in such a way as to ensure that the channel continues
to provide a diverse schedule of high quality programmes.
3.9 OFCOM will retain backstop powers to
review performance and ensure that broadcasters deliver on the
commitments made in their statements of programme policy. ITV
believes that OFCOM should only exercise these powers once a broadcaster
has clearly failed to deliver on its promises. This should involve
a formal review process.
3.10 The White Paper makes no reference
to the potential impact that programme policy statements might
have on existing ITV licences, which have in general just been
renewed for a further period of 10 years. The licences currently
contain detailed positive programme commitments made on behalf
of each licensee and the statement of programme policy could potentially
cut across these obligations. ITV will be seeking further advice
from the Government regarding how it intends to deal with this
issue in the forthcoming legislation.
Regulation of the BBC
3.11 Whilst the decision to extend certain
statutory obligations in Tiers One and Two to cover the BBC is
welcome. ITV is disappointed that the Government does not propose
giving OFCOM responsibility for the regulation of the BBC's commitments
under Tier Three. It is at this level that each of the public
service broadcasters will most clearly articulate their distinctive
remits. ITV has always argued that there should be a gradation
of public service responsibilities, based on each broadcaster's
ownership structure and funding. Yet under the proposals put forward
by the Government, OFCOM will not be in a position to look at
public service broadcasting across the board.
Regulation of Channel 4
3.12 ITV welcomes the proposed review of
Channel 4's remit to ensure that it keeps its distinctive and
innovative voice and remains the main provider of public service
broadcasting after the BBC. The Government's pledge to ensure
that Channel 4 is not able to exploit its privileged commercial
position to subsidise the development of new services that are
unrelated to its public service remit is also welcome.
Regulation of Channel 5
3.13 Channel 5 was rightly given a less
onerous public service remit than ITV when it launched to reflect
the fact that it was a new entrant with less than 90 per cent
coverage. Now that it is better established ITV believes that
it is appropriate to review this remit.
4.1 ITV welcomes the Government's acknowledgement
in paragraph 3.2.3 that "The existing provisions that secure
access to public service broadcasting are . . . not sufficiently
robust against the future changes in the way we will receive broadcast
services in the digital world". There is little point getting
the framework for content regulation in the future right for public
service broadcasting if viewers are unable to access these services
easily and affordably.
Must Carry/Must Offer
4.2 The White Paper makes clear the Government's
policy objective to ensure that the core public service channels
are carried on every digital platform, via the mechanism of placing
a "must offer" obligation on the PSBs. However, it fails
to extend "must carry" requirements to cover all platforms.
In ITV's view it is inherently unfair to require public service
broadcasters to offer their services to a platform if that platform
is not similarly required to carry the service. This lack of equivalence
will undermine the ability of public service broadcasters to negotiate
carriage on fair and reasonable terms.
4.3 If, as the Government acknowledges,
the public service broadcasters will need to be available on a
variety of platforms in order to provide universal access and
facilitate digital switchover then it is important that all platforms,
including terrestrial, cable, satellite, "must carry"
4.4 ITV recognises that it is difficult
to extend the existing "must carry" requirement that
applies to cable operators to satellite given that it would require
obligations to be placed on a Luxembourg operator, SES. However,
ITV is currently pressing for changes in EU law that will in the
future permit the extension of "must carry" to satellite.
In the meantime, it is important that the Government strengthens
existing provisions. Otherwise, Sky, with its effective monopoly
on the necessary conditional access facilities, will be in a position
to exploit these broadcasters that "must offer" their
4.5 Based on Sky's current ratecard of 30p
per subscriber for an "automatically entitled" free-to-air
broadcaster ITV would have to pay over £20 million per annum
for conditional access services alone to go on the platform. Given
that the marginal cost of carrying an additional broadcaster is
minimal this would represent almost pure profit for Sky. Money
that could be better spent by ITV on content would go straight
to a rival broadcaster simply because it has monopoly control
of the essential facilities needed to access satellite viewers.
This will also be a significant issue for the other public service
broadcasters when their current contracts with BSkyB come up for
renewal in 2002-03.
4.6 The only protection the Government is
currently offering is the retention of the current provisions
guaranteeing broadcasters access to the proprietary conditional
access systems used to deliver and charge for satellite services
on fair, reasonable and non-discriminatory terms. However, the
current interpretation of these provisions, as applied by OFTEL,
expressly prohibits providers of conditional access services from
taking into account the public service nature of a channel when
setting a price for access to these essential facilities. This
fails to recognise the fact that, unlike other broadcasters, the
PSBs carry extensive positive programming obligations.
4.7 In addition, free-to-air PSBs like ITV
only require access to encryption facilities to prevent their
signals spilling over into non-UK territories and infringing copyright.
By comparison, pay TV broadcasters need encryption facilities
to generate revenue.
4.8 OFTEL has promised to consult shortly
on whether these guidelines should be amended. ITV has submitted
preliminary comments to OFTEL and is urging the Government to
ensure OFTEL amends the current guidelines. If broadcasters "must
offer" their services to platform operators then those operators
"must offer" broadcasters access to essential facilities
at marginal incremental cost. It cannot be the intention of the
legislation to compel the public service broadcasters to go on
the satellite platform regardless of the terms extracted by the
monopoly provider of an essential gateway facility.
Electronic Programme Guides (EPGs) and due prominence
4.9 ITV welcomes the proposal to give OFCOM
powers to regulate EPGs and "similar new systems" (paragraph
2.1 and 2.6.2) such as PVRs in order to guarantee due prominence
for services, in particular the public service broadcasters. Given
the increasing reliance of consumers on EPGs and similar systems
for accessing broadcast services it is essential that service
providers and platform operators give fair, reasonable and non-discriminatory
access to them.
4.10 ITV supports the proposal in paragraph
3.5.2 that OFCOM should also consider whether public service channels
should be listed by genre as well as channel. It would be reasonable
and proportionate to require content from a small number of channels
to be listed under the relevant genre, alongside the thematic
channels. It does not serve the viewer interest, for example,
that live sporting events on the main free-to-air channels are
not listed alongside those featured on the dedicated sports channels.
4.11 Notwithstanding ITV's support for regulation
of EPGs and similar gateways in principle the regulator needs
to adopt a flexible and light touch approach in order not to discourage
innovation in new markets. Regulation should focus on those areas
where individual operators exercise significant market power and
there is concern that this position might be abused.
5. OTHER ISSUES
5.1 ITV recognises the need to review the
management of spectrum used by broadcasters as part of the Government's
intention to manage spectrum more efficiently. In addition ITV
welcomes the fact that, in paragraph 2.7.3, the White Paper acknowledges
that account needs to be taken of the "particular circumstances"
of broadcasting. The cost of meeting public service broadcasting
commitments, including universal coverage, and the cost of simulcasting
until digital switchover are all factors which need to be taken
into account when considering the price paid by ITV for its use
of spectrum. The substantial payments already made by ITV companies
for their licences also need to be taken into account. It would
be anomalous for ITV companies to pay substantial sums for their
use of spectrum in addition to those they already pay for their
5.2 ITV notes that the Government is commissioning
an independent review followed by a consultation and that it will
not change the status quo before this process is complete. ITV
also understands that no significant changes will be made to increase
the cost of ITV companies' licences during the current licence
periods, and that equally there is no intention to introduce changes
to the two initial multiplex licence periods established by the
1996 Broadcasting Act.
5.3 It is important that the Government
gives a clear lead on digital switchover and ITV is, therefore,
surprised that there is no reference made in the White Paper to
digital terrestrial (DTT) spectrum. Given DTT's crucial role in
assisting analogue switchover and the consequent need to make
it a success it is important that the Government takes this opportunity
to signal its intention to release more spectrum for at least
5.4 In order to make swift progress towards
digital switchover it is essential that the Government sets out
a clear "route map" for achieving this end so that the
UK is able to maintain its position as a world leader in digital
media. ITV believes that the independent review of spectrum management
would perform an extremely valuable function if it took the opportunity
to help map out a clear route to switchover.
The licensing regime
5.5 ITV understands the Government's desire,
as articulated in paragraphs 8.8 to 8.8.5, to create a licensing
regime that is sufficiently flexible to adapt any fundamental
changes in the sector and in the nature of public service broadcasting
as digital switchover approaches. However, commercial operators
of public service television such as ITV must be given sufficient
certainty that licences will be renewable if they are to be encouraged
to make the necessary investment to maintain quality and diversity.
Reception of regional services
5.6 ITV accepts the Government's observation
in paragraph 3.3.3 that it is important "that viewers and
listeners are able, as far as reasonably practicable, to receive
the regional programming intended for their community". It
has always been a feature of terrestrial television that certain
viewers have not been able to receive the correct regional service
because of the nature of the technology. Over time ITV has managed
to eliminate many of the anomalies but problem areas remain and
for those viewers who are affected it is deeply frustrating.
5.7 ITV is currently in discussion with
Government about ways in which digital technology might offer
a solution to this problem. ITV believes that carriage of the
channel on the digital satellite platform will provide a route
to resolving this problem for many viewers.
4 Anglia Television, Border Television, Carlton Broadcasting,
Carlton Broadcasting-Central Region, Channel Television, Grampian
Television, Granada Television, HTV Group, LWT, Meridian Broadcasting,
Scottish Television, Tyne Tees Television, Ulster Television,
Carlton Broadcasting-Westcountry Region, Yorkshire Television. Back