OFCOM and the BBC
35. The balance of evidence submitted to us, including
from the current regulators, was in favour of the BBC being regulated
entirely by OFCOM. This was argued on the grounds that it made
little sense for a significant part of the broadcasting market
to be outside the purview of the broadcasting regulator.
In addition Mr Tim Gardam, of Channel 4, argued that bringing
the BBC into the fold would benefit public service broadcasting
as a whole because it would set BBC output as the standard for
the broadcasting industry.
36. ITV Network, in concert with ITV Digital, pointed
to BBC decisions which, taken in isolation, it alleged to have
had damaging effects on the rest of the public service broadcasting
ecology. These included: moving the evening news and Panorama,
broadcasting more EastEnders and "the abandonment ... of
a serious arts programming strand". ITV stressed the advantage
of a single regulatory body overseeing the whole of the broadcasting
sector. Mr Tony Stoller, Chief Executive of the Radio Authority,
told us that "I am entirely clear that the BBC Governors
should be regarded as the governors, rather than the regulators,
of the BBC."
He went on to say that regulating the BBC was a role for OFCOM.
37. However, it is equally clear that the preference
of the Secretary of State for Culture, Media and Sport, as stated
recently to us and to the Parliamentary Media Group's annual conference,
is for the BBC Chairman and Governors to remain responsible for
the BBC's fulfilment of its Charter.
The existence of the Charter and the special nature of the funding
of the BBC through the licence fee demand, so it is argued, that
it remain accountable to Parliament directly. As we have pointed
out above, in relation to OFCOM's accountability, this Committee
is an instrument of the BBC's accountability to Parliament. Later
this year, July 2002, we will, at the request of the BBC, be conducting
specific scrutiny of the BBC's Report and Accounts for 2001-02
and looking at the BBC's accountability in the round.
38. The BBC has recently announced changes in its
arrangements for supporting its Governors which it argues will
create a sharper divide between the Board of Management and the
Governors. These reforms were announced after the BBC had given
evidence to the Committee in this inquiry. We were not surprised
by the focus of the BBC's efforts because when members of the
Committee suggested, in oral evidence, that there was little distinction
between the Board of Management and the Governors, Mr Greg Dyke,
Director-General, replied "There is clearly a distinction
between what the Governors do and what the management do. It is
pretty obvious: the management ... are professionals in a particular
field and the Governors are there to represent the public interest."
However, the BBC Chairman, Mr Gavyn Davies, revealed subsequently
that a clearer delineation of what Governors did, and what the
executive did, had been the subject of internal study, the fruits
of which were to be announced shortly.
We shall study the effects of these changes. We recommend that,
in addition to the other reforms in train, the BBC Governors hold
their meetings in public and that their openness and transparency
be equivalent to the approach we have suggested for OFCOM.
39. It was suggested in evidence from National Consumer
Council that the timing of the forthcoming Communications Bill
(set to become law in 2003) and the BBC's Charter renewal (due
in 2006) was fortuitous in that it would allow OFCOM to settle
down. Thereafter there would be the formal opportunity to revisit
the BBC's constitution in the light of the new regulator's performance.
This at least was an argument of which Channel 4 could "conceive".
We intimated to the BBC our intention to engage in this debate
in due course and this was welcomed by Mr Davies.
New BBC services
40. As mentioned above, the approval of new BBC services
remain with Government. Tessa Jowell, Secretary of State for Culture,
Media and Sport, told us that OFCOM will have a role in advising
Ministers on the approval of new BBC services.
These decisions are highly significant in relation to the wider
broadcasting market and the investment plans of commercial broadcasters;
clearly the presence, or threat, of licence-fee funded BBC services
in an area of potential private sector investment, may be a deterrent
to a commercial operator. Mr Tony Ball, Chief Executive of BSkyB,
described the BBC as a monster genetically programmed to get bigger
and bigger and suggested that public service broadcasting should
be redefined to tackle this problem.
NTL wrote that public service broadcasting was "a policy
'time bomb' waiting to go off". The cable company complained
that there could be no credible basis for the "must carry"
obligation on cable operators if they were to be required to set
aside capacity to "facilitate BBC 3's ratings clash with
Sky One and E4".
NTL asserted that, with the ITC focused on traditional broadcast
issues, there was effectively no "sector specific" competition
regulator for broadcasting.
41. In principle we are sympathetic to a more substantial
role for OFCOM with regard to the approval of new BBC services
as the Office is likely to be best placed to understand the market,
both in terms of its failures, where remedial action by the BBC
may be desirable, and areas of actual, or potential, over-supply.
OFCOM is also likely to be best placed to assess the impact of
any changes proposed to BBC services across the broadcasting and
42. We are seriously dissatisfied with the present
procedures for approving new BBC services. We therefore recommend
that the approval of such services should be the subject of published
statutory advice from OFCOM to Ministers.
33 Ev 226ff Back
Ev 227, paragraph 18 Back
Ev 226 and BBC press release, 26 February 2002 Back
Ev 227, paragraph 10 Back
Ev 117, Q 412, Ev 125 and 149 Back
Q 593 Back
Q 3 Back
Q 6 Back
Q 85 Back
Q 63 Back
Q 593 Back
Q 192 Back
Ev 92 Back
Ev 192 Back