Satellite Broadcasting: Competition (Hansard, 30 March 1993)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield)
My Lords, the Government have not initiated inquiries into the ownership of encryption technology for satellite broadcasting. It would be for the Office of Fair Trading to investigate complaints that the ownership of such technology is being abused to suppress open competition in the satellite television market.

§ Lord Thomson of Monifieth
My Lords, is the Minister aware that new entrants in the growing business of satellite broadcasting by subscription now face a potentially monopolistic situation in a practical sense because BSkyB controls the plastic smart-card technology? Should it not be a matter of concern to a government who believe in competition that the Murdoch media interests, which currently control 35 per cent. of the national newspaper market and which dominate control of BSkyB, should now have a fully-owned subsidiary—News Datacom—which stands at the tollgate for new entrants? Is there not a clear case for investigating that potentially monopolistic situation before it goes too far?

§ Baroness Denton of Wakefield
My Lords, we believe that the OFT provides effective recourse against anti-competitive practices. I understand that the director general has not received any representations on this matter.

§ Lord Renton
My Lords, can my noble friend enlighten some of us by defining encryption technology? Can she also let us know who owns it?

§ Baroness Denton of Wakefield
My Lords, encryption technology is a system which allows people to charge for broadcasts from satellites. It is a conditional access system which works in two distinct ways. The television signal is scrambled to make it unwatchable and the information which will allow the viewer to unscramble the signal is encrypted.

§ Lord Taylor of Gryfe
My Lords, is the Minister aware that in order to protect their entry into satellite broadcasting it is necessary for companies to subscribe to this technology? However, if such technology is in the hands of one private operator, which operates Sky television, it becomes extremely difficult for newcomers to enter the field since the technology and the licence are in the hands of one operator who is already in that business. Is this not a case where the Government should refer the situation to the OFT rather than simply waiting for the OFT to take it up?

§ Baroness Denton of Wakefield
My Lords, I suggest to the noble Lord that we are not dealing with unsophisticated players. Other people such as UK Gold are using the system. Should they feel a necessity to complain to the OFT, I am sure that they will.

§ Lord Orr-Ewing
My Lords, is my noble friend aware that there are a number of encryption services? News International BSkyB estimates that it has already spent £200 million on perfecting its service. Is the Minister aware that commercial broadcasters have successfully made a deal with Japanese TV and with TV Asia? Negotiations are under way in the partnership which exists between the BBC and Thames to try to form an agreement. Surely, it is better that those negotiations should continue between competitors rather than a solution being imposed on them by someone else.

§ Baroness Denton of Wakefield
My Lords, I agree with my noble friend. We believe that open competitive practice is the best means.

§ Baroness Birk
My Lords, does the Minister agree that there are no open competitive practices at present? The monopoly outlined by the noble Lord, Lord. Thomson of Monifieth, is held by Rupert Murdoch. He has a great slice of the press in this country and the satellite stations too. Much as we sought to obtain a change in that situation under the Broadcasting Act, it was not possible. Since there are no competitors against him, is it not now time for the Government to give a nudge to the Office of Fair Trading so that something at last is done about the outrageous monopoly in the ownership of Rupert Murdoch?

§ Baroness Denton of Wakefield
My Lords, as the noble Baroness states, the ownership restrictions were extensively debated when the ownership order was before the House. The Government are not convinced that they need to be changed. Negotiations with companies such as UK Gold and Japanese companies to use the same system, as my noble friend suggested, are taking place.

§ Lord Harmar-Nicholls
My Lords, if only a few of the dangers outlined by the noble Lord, Lord Taylor of Gryfe, arise, ought not the Government to take an interest at the earliest possible stage in order to avoid them?

§ Baroness Denton of Wakefield
My Lords, I point out to my noble friend that there are alternative news services, in particular the BBC and ITN.

§ Lord Donoughue
My Lords, I am sure that all noble Lords are grateful for having been made familiar with encryption technology. Is not the heart of the technology that it controls the gateway to the Astra satellite broadcasting? Is it not indefensible that one person who is a major media baron elsewhere should control that gateway? Do the Government really believe in competition, or is it competition for the miners with a cosy monopoly for newspaper barons? Surely it is a case for Sir Bryan Carsberg, who has just taken over at the OFT, urgently to investigate.

§ Baroness Denton of Wakefield
My Lords, I remind the noble Lord that CNN is also broadcast by a satellite outside the system. However, perhaps I may state firmly that no evidence has been presented to the OFT to suggest that the current situation is anti-competitive or monopolistic within the terms of existing legislation.

§ Lord Chalfont
My Lords, does the Minister not agree that there is no need for any greatly advanced technology to make most television programmes unwatchable?

§ Baroness Denton of Wakefield
My Lords, I believe that the noble Lord will attract much sympathy from your Lordships' House on that matter.

§ Lord Thomson of Monifieth
My Lords, the noble Baroness referred to UK Gold in which the BBC is involved. The BBC is financed by our licensing fees. It tried to establish an independent arrangement for its encryption but finally felt obliged to surrender to BSkyB. Does the Minister believe, having regard to the expression of views from both sides of the House today, that sufficient representations have been made from your Lordships' House to encourage the Government, in the public interest, to urge the OFT to investigate the matter?

Noble Lords
Hear, hear!

§ Baroness Denton of Wakefield
My Lords, perhaps I may say to the noble Lord that I am sure the BBC made the decision on commercial grounds. As I said in reply to most questions, it is for complainants to go to the Office of Fair Trading.