§ 3.33 p.m.
§ The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood)
My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
§ Moved, That the House do now again resolve itself into Committee. —(Lord Inglewood.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The CHAIRMAN OF COMMITTEES in the Chair.]
§ Lord Inglewood moved Amendment No. 64:
§ After Clause 25, insert the following new clause —
§ THE S4C DIGITAL SERVICE
- a) to provide it as a public service for disseminating information, education and entertainment.
- (b) to ensure that all the programmes in Welsh which are broadcast on S4C are broadcast on S4C Digital at the same time,
- (c) to ensure that the programmes which are broadcast on S4C Digital but not on S4C maintain—
- (i) a high general standard in all respects (and, in particular, in respect of their content and quality), and
- (ii) a wide range in their subject matter, having regard both to the programmes as a whole and also to the days of the week on which, and the times of the day at which the programmes are broadcast.
§ (2) Sections 57(4), 58(5), 59, 60 and 64 of the 1990 Act shall apply in relation to S4C Digital as they apply in relation to S4C.
§ (3) In this section "programme" does not include an advertisement.").
§ The noble Lord said: Before I speak to the amendment, the noble Lord, Lord Prys-Davies, wishes to draw a matter to the attention of the Committee.
§ Lord Prys-Davies
I invite the Minister to agree that there is an omission from subsection (2) of the new clause. I should like to think that it is inadvertent. I believe there should be reference to Section 58(1) of the 1990 Act, which is a key section for S4C.
§ Lord Inglewood
I am most grateful to the noble Lord. It is no part of our proposals to affect a change to the policies introduced by that provision in the new digital era. Therefore, perhaps I may at an appropriate time introduce a relevant amendment, probably on Report. I beg to move the amendment.
§ On Question, amendment agreed to.
§ Lord Inglewood moved Amendment No. 65:
§ After Clause 25, insert the following new clause —
§ ADVERTISEMENTS INCLUDED IN QUALIFYING SERVICES
§ (". Where an independent analogue broadcaster other than the Welsh Authority includes in a qualifying service advertisements which are not included in the corresponding analogue service (within the meaning of section 2(2)), sections 8 and 9 of the 1990 Act shall have effect as if the provision of the advertisements constituted the provision of a service licensed under Part 1 of the 1990 Act.").
§ On Question, amendment agreed to.
§ Lord Thomson of Monifieth moved Amendment No. 66:
§ After Clause 25, insert the following new clause—
§ ("Subscriber management and subscriber authorisation services
§ SUBSCRIBER MANAGEMENT AND SUBSCRIBER AUTHORISATION SERVICES
§ .—(1) An application for a licence to provide a subscriber management service or a subscriber authorisation service (in this Part referred to as a "subscriber management licence" or a "subscriber authorisation licence") shall—
- (a) be made in such manner as the Commission may determine, and
- (b) be accompanied by such fee (if any) as they may determine.
§ (2) At any time after receiving such an application and before determining it, the commission may require the applicant to furnish such additional information as they may consider necessary for the purpose of considering the application.
§ (3) Any information to be furnished to the Commission under this section shall, if they so require, be in such form or verified in such manner as they may specify.
§ (4) Where an application for a subscriber management licence or a subscriber authorisation licence is made to the Commission in accordance with the provisions of this section, they shall grant the licence unless precluded from doing so by section 3(3)(a) or 5(1).
§ (5) Licences under the 1990 Act to provide—
- (a) local delivery services,
- (b) prescribed diffusion services, or
- (c) other diffusion services,
§ shall be taken to authorise the provision of subscriber management services and subscriber authorisation services in so far as they relate to the provision of those licensed services.").
§ The noble Lord said: In moving the amendment perhaps I may speak to the amendments associated with it and refer the Committee also to Amendment No. 14 which I withdrew on Tuesday in the interests of a more coherent debate on this important issue today. My name is also associated, as is that of the noble Lord, Lord Donoughue, with Amendment No, 187, to be moved by the noble Viscount, Lord Astor.
§ The amendments have the same purpose; namely, to establish here and now a system of licensing and regulation for conditional access and encryption for analogue cable and satellite broadcasting. The difference is that the chosen regulator in the amendment I am moving is the Independent Television Commission; the chosen regulator in that to be moved by the noble Viscount, Lord Astor, is the Department of Trade and Industry. I prefer the ITC as the regulator for reasons that I shall attempt to give in a moment. However, what is important about both amendments is the principle of getting the system in place in the course of this legislation. It was because the noble Viscount was much more efficient and tabled his amendment much more quickly that I put my name to that amendment. In the immortal words, on which I was brought up, of the famous Clydeside MP, Jimmy Maxton, "If you can't ride two horses at the same time, then you're no good in this bloody circus." I apologise to the Committee for putting my name to two amendments with a slight, but riot insignificant, difference between them.
§ For the benefit of Members who do not follow these matters in the detail they no doubt deserve, conditional access is simply the smart card technology which enables cable or satellite subscribers to have access to the programme provider of their choice. At present in Britain conditional access is dominated by a company that is part of the Murdoch organisation while BSkyB, which is also closely associated with the Murdoch organisation, dominates the world of satellite broadcasting.
I freely concede that both activities reflect the enterprise and risk-taking of the Murdoch organisation. I have no dispute at all with that. However, as I remarked at Second Reading:
On any principle of competition law it seems wrong that there is no public control where a programme provider is also the gatekeeper and can control access to other programme providers who compete with him".
That is the principle with which we are dealing this afternoon. I was much encouraged in that the Minister appeared to recognise that very clearly at Second Reading. He said:
Providers of the encryption technology and subscription management services should not be able to abuse their position as 'gatekeepers'. We [the Government] intend, through licensing, to ensure that they do not discriminate unduly between broadcasters or multiplex providers and that they do not unreasonably refuse access to their services". —[Official Report. 16/1/96; col. 472.].
§ I was encouraged by those words but discouraged and battered by the fact that the Minister should confine that ringing declaration of principle in relation to competition law to future digital broadcasting, and so far has refused to apply it to present analogue broadcasting. I hope that he may be persuaded this afternoon to change his mind on that matter.
§ I also hope that the Minister will look again at the case for the ITC being the appropriate regulator rather than the DTI. I prefer the ITC because it is the statutory body established under the Broadcasting Act 1990 to license and regulate broadcast television in the United Kingdom —that is, other than the BBC and the S4C services —with particular regard to the content, range and terms upon which programmes are provided to viewers. Subscription television is undoubtedly a growth area. The relationship between broadcasters and providers of conditional access and subscriber management services will have an important bearing on the content, range and terms upon which those services are offered to viewers. Those are essentially broadcasting matters that come properly within the scope of broadcasting legislation and very much within the scope of the ITC's responsibilities and expertise.
§ Secondly, the ITC already has a statutory duty in relation to fair and effective competition. Those powers extend to the provision of conditional access and subscriber management services by its licensees. The problem is that the existing statutory provisions can be avoided by licensees ensuring that the provision of conditional access services is located in separate corporate entities even within a single group of companies. There are a number of matters of avoidance for the purposes of legislation in regard to broadcasting that we shall be dealing with in this Committee stage.
§ Therefore, what is required is not another regulatory system which will overlap with the ITC's existing powers and give rise to double jeopardy, but an extension of the Broadcasting Act powers to close that loophole. The ITC has all the necessary experience and can proceed quickly and economically without charge to a complainant and would not need to incur the costs and delay which might be involved if the parties had to seek recourse to law under other procedures. Moreover, the ITC is accustomed to working with other regulators, notably the OFT, the MMC and Oftel, wherever there are overlapping issues.
§ For all those reasons, I commend these amendments to the Committee. The proposed amendments would replace the Government's proposals which involve 343 DTI licensing and Oftel regulation and would extend them to analogue satellite and cable for which, if there is a case for the digital broadcasting of the future, there is equally a very strong case for the analogue broadcasting of the present. I beg to move.
§ 3.45 p.m.
§ Lord Donoughue
I support the amendment of the noble Lord, Lord Thomson. I remind the Committee that my name is also on Amendment No. 187 which will be moved by the noble Viscount, Lord Astor. I look forward very much to supporting him on that amendment. I accept that there are minor differences. There is an emphasis on analogue in the one amendment and on digital in the Bill here. This amendment is under the digital umbrella and we seek to extend to analogue. Like my noble friend Lord Thomson —history, I think, allows me to call him my noble friend —I propose to ride those two horses comfortably. I worked for a while for the late Lord Wilson who often rode three horses. So I have no problem there at all.
Our purpose in this amendment, as has been said, is basically to regulate conditional access systems on a fair, reasonable and non-discriminatory basis. The fundamental problem currently is that one operator of conditional access systems at present has the dominant so-called gatekeeper position in the analogue satellite market. We want to ensure that in this Bill nobody is in that dominant gatekeeper position, either in digital in the future where, I may say, we are broadly comfortable with the DTI's separate proposals, or now. We are concerned to open up the present analogue control to freer access. That is the main concern of our amendment. We are taking the opportunity when discussing digital to extend it to analogue.
The problem of gatekeeper dominance will grow more acute because with digital —whether digital terrestrial or digital satellite, I may say, with the growth of cable —it will be the subscription method and the pay-per-view method that will be the growth area. Those need the smart card —the key to unscramble the broadcast at the receiving end —and also a subscriber management system, basically to document, collect subscriptions and decide who has right to access.
Yet, in that future, inevitably there will be only a few conditional access providers, perhaps only two or, as now, only one. But whoever has that dominant gatekeeper position controlling access is in a position with high potential for abuse. That requires regulation. As I said, we start with digital but move to analogue because the gatekeeping arguments apply there also.
Gatekeeping is technologically neutral. It offers control whatever the technological system. It is neutral between analogue and digital and we must deal with both. Our amendments introduce that licensing for the keys to decode receivers and for the subscriber management systems to provide fair and effective competition requirements and to secure the necessary open access. It is the same for analogue as for digital. As I said, on digital we are very much in line with the DTI.
344 My noble friend raised the question of who licenses. That is a very important argument taking place between the ITC and Oftel. I share my noble friend's sympathy with the ITC. We feel that they understand broadcasting and its separate values; so we should be very happy to have it. The Government propose Oftel and I suspect that that will prevail. Certainly, we are not opposed to Oftel, nor to the admirable director. Either of the two will do the job perfectly well. Our sympathy is with ITC but we understand the arguments of Oftel.
Let me make a final point about cable. We share the concern of the cable operators that the regulation that we introduce should indeed be regulation of the mechanical conditional access systems. We do not wish to have regulation of the underlying transmission networks. The problem for cable is that the system and the underlying transmission are linked. If we impose regulation, it will discriminate against cable because cable has the transmission network which, for instance, Sky does not —Astra is Sky's transmission system. We do not want that and we do not want to discourage the cable industry, which has taken considerable risks in making major network provision.
That is an additional point I put to the Minister. I support everything the noble Lord, Lord Thomson, said and I support the amendment.
The noble Lord, Lord Thomson, was kind enough to mention my amendment which comes later in the Bill and to which the noble Lord, Lord Donoughue, attaches his name. It covers a similar area —conditional access —but my amendment is narrowly focused and only covers conditional access on analogue systems whereas the amendments we are debating cover digital and its future technology. It is probably convenient therefore to keep discussion for my amendment until it arises later.
In support of both noble Lords who have Spoken, I would agree that conditional access is crucial if we are to have fair competition in the industry. At the moment we have a system whereby those who control the gateway to the system can disbar anybody, though they generally do not do so. There are usually no reasons for doing so, but we do not know what may happen in the future and there must be a robust system in place for dealing with that situation.
The Government came forward with the announcement that Oftel will be the regulator. Oftel is the right body in that regard and I am sure that my noble friend the Minister will be able to assure the noble Lords, Lord Thomson and Lord Donoughue, that the Government take the matter seriously and that they will be robust in the conditions that they place on future licensees of digital services.
§ Lord Howell
This is a continuation of a discussion we had on Tuesday in relation to Amendment No. 1, in the sense that we are now looking to the future and what it may hold for us all. I repeat that I have an interest as a director of Birmingham Cable and Wembley Stadium, both of which will be interested in future digital developments. The cable industry, which has been an enormous success in this country, will have invested £12 billion by the year 2000, providing 25,000 jobs.
345 I remind the Committee of what the Department of Trade and industry said in its consultation document, which I put forward as embracing the views of all three Members who have spoken in this matter. It states,An obligation to provide services to all relevant broadcasters, all multiplex operators who request them and a prohibition of undue preference or discrimination is what they seek. In this context the relevant broadcaster would be one otherwise having access to the delivery system, multiplex or network involved".I am sure that we all endorse those sentiments.
When we think of the future and the "decoders", as I call them, we must recognise the fact that at the moment they are all owned by News International. That becomes a central question when we envisage that sporting bodies, owners of stadiums and cable companies will wish to produce pay-per-view programmes. Can the Government give us an assurance that, even though News International has access to all those decoders, other organisations will not be precluded in that regard. I am not suggesting that the policy would be to prevent proper access being made available on reasonable terms, but I take it that the purpose of these amendments is to underline the importance of that possibility. On Tuesday gave the illustration of the Cup Final, which is one of the listed events, and the Test matches. The Test and County Cricket Board has been persistent in its representation to us. Certainly the Rugby League Cup Final, which is not one of the listed events, has strong views about the position the Committee took on Tuesday.
In all those cases, and possibly the Derby and the Grand National as well, I can see in the future that if it were possible to provide pay television to the football organisations and the cricket and horseracing authorities, at a reasonable price —not a prohibitive price —that may be the way forward. That may be a point where the Government, the Opposition and sporting bodies may find a degree of concurrence in their thinking for the future.
I can envisage that the people we were trying to protect on Tuesday —the elderly and the more impoverished —may well be able to find £10 to watch the Cup Final or a Test match, where they cannot afford £300 to take in Sky, as was envisaged. That is an important consideration and one which I have no doubt we shall be exploring together in the later stages of this Bill. There is a reasonable argument that can be put forward for that. As I say to my sporting friends, if millions of people wanted to watch the Rugby League Cup Final, which presented this argument to me rather forcefully, and were happy to pay a reasonable price of admission such as when one goes to Wembley Stadium, the income for Rugby League would be considerably more than it is likely to obtain under the arrangements we were discussing on Tuesday and were so disapproving of.
While I favour the views put forward by my two noble friends sitting on these Benches as to who should he the regulatory authority, I do not feel that that is a matter for which one should go to the stake if the view of the noble Viscount, Lord Astor, should prevail. It is important that we obtain from the Government today an undertaking that, whichever route we go down, 346 particularly when we come to digital, the ownership of the decoders will not use them to prevent the cable companies, the sports bodies or any such organisation which wants to put out programmes on pay television when the digital opportunities become available, from doing so by making unreasonable demands. If the Minister will give us such an assurance, it will make us happy and content.
§ Lord Ashley of Stoke
Perhaps I may make a brief contribution to this debate. My noble friend is right to emphasise the importance of sport. But I am sure that he will agree that the anxiety in relation to these amendments goes wider than sport. If an operator controlling the gateway is able to exclude more than just some sports, but the whole of public service broadcasting, that is a matter of concern to the whole nation.
In so far as some operators may be tempted to squeeze out the competition, it is imperative that one of these routes should be taken. The Minister and the Government should be willing to be sympathetic to the amendments. They are in line with competition. If any operator is able to squeeze out the opposition —public service broadcasters or others —by definition competition is reduced and that will be against the Government's principles. I hope therefore that the Minister will look sympathetically at the amendments.
§ 4 p.m.
§ Lord Desai
I rise briefly to support the amendment. Some noble Lords will recall that on Tuesday I put down Amendment No. 29 which covered similar territory. When I discovered Amendment No. 187 I withdrew my amendment, not realising that Amendment No. 66 also covered similar territory. These are all rather confusing and technical matters so we are learning quite fast.
The principle that there should be a single box to which all the transmitters can have access is the correct one. It is technologically feasible. If one had that box the viewers of BBC, Channel 4, ITV and so on could use a telephone and then be charged appropriately for watching whichever programme they chose. Such technology is not only possible but has already been implemented in Germany. It has decided to have a single consortium to provide such a service. That is the right way to go forward.
This will not hinder competition because competition should be about the services being provided and not about the access technology that is necessary. We do not want to have different boxes for different transmitters. It would be much better to have a single access technology and then have competition confined to service provision.
§ Lord Chalfont
I intervene briefly to support the suggestion that the ITC is the logical regulator in this case rather than the DTI. As two noble Lords have already said, this is not a matter to go to the stake for. It is not an issue that bring crowds into the streets. But it is worth mentioning that we already have a proliferation of regulators in the broadcasting industry. 347 As I have said before, and as I will go on saying until someone listens to me, what we really need is a single overarching regulator to regulate the whole of this extremely complicated and important industry. However, while we do not have that, it seems to me that the case for regulation has been forcefully made by the noble Lords, Lord Thomson and Lord Donoughue.
As to the identity of the regulator, the ITC was set up in 1990 precisely to perform this kind of function. It is equipped to do it and, as the noble Lord, Lord Thomson, has said, it is by now, six years on, practised in dealing with other regulators and ensuring that broadcasters are not subject to double jeopardy. I would say without any great passion or conviction that if there is a choice to be made between the DTI and the ITC, it is probably the ITC that should be chosen logically as the regulator in this case.
§ Lord Donoughue
With the permission of the Committee, I should like to intervene again to follow up the points made by my noble friends behind me and to make a point I meant to make earlier but did not. The danger in the monopoly control of the box is particularly acute when the controller of the mechanical system is also a provider of programmes, as is currently the case in analogue. If the provider of the conditional access system is just a technological service with no other interests, there is very little danger. But when, as at present, the controller of Sky also controls the gateway, there is a serious potential danger. Then there is the danger of an incentive to the controller of the gateway to discriminate against the programme competition. That discrimination could take a number of forms. We do not want to be in the position where the provider of some services from satellite can control the access of competing programmes. That is the present position. I believe that some of the cable companies are already being a little squeezed.
§ Lord Inglewood
I am grateful to those noble Lords who have spoken for spelling out a number of most important points. I can assure the Committee that we always listen to the points that are made. With apologies to the Committee, I shall take a little time to explain the Government's position. I hope noble Lords will then feel that their points have been covered and that the position the Government have taken is the right one in the particular circumstances.
Perhaps I may begin by touching on the final point made by the noble Lord, Lord Donoughue, in his opening remarks. He is quite right in respect of the possible problems where one has a physical link, as in the cable system, between the conditional access and the transmission system. We on this side of the Committee are pleased that those on the Benches opposite entirely concur with us on the potential mischief that would arise were the state of affairs the noble Lord described to take place.
What we are talking about here is the matter of the market for conditional access and the way in which this might he regulated in the public interest. As has been explained, conditional access services are the means by which a broadcaster or multiplexer may ensure that only 348 those who have a valid contract with them may receive and view their commercial programme offerings and that they get paid. We are at one with them in the generality of their concerns. These services are the "gate" through which programmes reach the consumer. As a result those who control that gate exercise significant power. The potential for anti-competitive behaviour or for abuse of a dominant position therefore demands regulation to ensure that the market for digital television services can both develop and operate fairly and effectively in the national interest.
That is why, on 15th January this year, the Government published proposals for the regulation of conditional access services for digital television. I should explain that the Government's proposals do not appear in the Bill only for the simple reason that they can be implemented under existing legislation. They provide a comprehensive and flexible approach for dealing with this problem, and fulfil our obligations under the European Directive on Television Standards, which impose a specific set of legally binding obligations which we must transpose into domestic law.
After careful consideration, and after extensive consultation between the Department of Trade and Industry, which published the proposals, my own department, Oftel and the ITC, the Government concluded that the DTI should issue, and Oftel should enforce, licences for digital conditional access services which, inter alia, will stipulate that the services system must provide fair, reasonable and non-discriminatory access to potential users. That is spelt out in terms in Article 4 of the television standards directive.
The ITC will be closely consulted on both the issue of licences and their enforcement. Both the DTI and Oftel have given clear commitments on this. The Government remain of the view that this arrangement will serve the interests of the developing market best, ensuring the greatest degree of certainty and consistency.
The amendments we have been considering, with the exception of Amendment No. 187, envisage regulation via the ITC. But all conditional access services already require a licence under the terms of the Telecommunications Act 1984. They are therefore already subject to regulation by the Office of Telecommunications, Oftel, on the core issues addressed by the amendments. The Government's proposals are therefore limited to amending the conditions which the relevant Telecommunications Act licences would include. As the amendments before us now show, the powers of the ITC require extension to deal with conditional access —a step which would place operators under the risk of regulatory double jeopardy.
The core activity of Oftel is the economic regulation of telecommunications. Conditional access systems are telecommunications systems being concerned with controlling the transmission and receipt of signals. Oftel has a long and, as I hope noble Lords on all sides will agree, effective track record in dealing with anti-competitive behaviour in markets where a small number of operators may occupy dominant positions.
349 The director-general exercises powers to enforce licence conditions and to regulate potential anti-competitive behaviour. He also has powers to exercise functions over the Director-General of Fair Trading as they would apply to this area. That is not to say that the ITC will not have a vital role in the area of conditional access which, after all, might, in the digital future, have a significant bearing on the content of broadcast services. It is for this very reason that our own proposals require the ITC to be so closely consulted. The draft code of conduct which the ITC recently issued was a very important contribution to the discussion which led to the Government's proposals. It is also a very important contribution to the creation of a detailed regulatory regime.
It is worth noting that Oftel and the ITC already co-operate in the licensing of broadcasters. Our proposals for further co-operation on conditional access do not in any way affect the powers of the ITC proposed in this Bill or which already exist.
I turn now to the detail of the amendments that we are discussing. As has already been said, it is clear that we share a common purpose in seeking to regulate conditional access although I believe that the Government's proposals provide a more comprehensive framework containing more effective safeguards for providers and consumers, while providing greater clarity for those being regulated. For example, Members of the Committee opposite require all service providers, with the exception of existing cable operators, to apply for an individual licence. It seems to us that this would be an unnecessarily bureaucratic process because they will not be competing against others for the licence as would be the case, for example, for a broadcasting licence and this licence has no bearing on the supply of content.
Members of the Committee will know that I, in common with the rest of the Government, approach this matter from a deregulatory standpoint. We must ask whether each new regulatory provision is justified. In the case of conditional access services for digital television, we have decided that regulation is necessary, but the additional burdens of the licensing regime proposed by the noble Lords cannot, it seems to me, be justified in terms of achieving necessary and effective protection beyond that inherent in a system of general licences.
The Government's proposals cover all that is necessary to support effective competition and to guard against the abuse of any dominant position. This would include controls to prevent excessive pricing, unreasonable contract terms, undue preference for, or discrimination against, particular supplies and making service conditional on the use of particular transmission facilities: in fact all the issues, and more, covered by these amendments. These conditions would be applied automatically to all operators through two-class licences. The Director-General of Oftel would, however, then be able to require an operator to apply for an individual licence if he breached those conditions, behaved anti-competitively or abused a dominant position. That means that the regulatory burdens fall where regulatory attention is needed and avoids the onerous requirements that would be imposed on all
350 licensees, large and small, by this group of amendments. After all, we do not want to discourage new entrants to this market by subjecting them to inherently unnecessary administrative bureaucracy.
The powers of enforcement available to the Director-General of Telecommunications are very wide. He can enforce licence conditions by arbitrating in cases of disagreement; for example, where two operators fail to agree terms for service provision, by issuing orders for compliance. Where orders have been issued he can seek injunctions against non-compliance or anti-competitive behaviour and, ultimately, revoke licences. Further, any third-party affected by non-compliant or anti-competitive behaviour can seek damages for the full amount of any loss suffered as a result. This protects their interest in a way which is much more effective than a straightforward fine on the transgressor, or a two-year revocation, as proposed in these amendments.
I would now like to turn to the question of analogue conditional access. We differ from the noble Lords opposite on whether conditional access services for existing analogue television should he regulated under a special regime, as advocated by this group of amendments. The Government have considered this question carefully, and have reached the conclusion that it is unnecessary for reasons that I shall now explain.
First, it is clear that the conditional access to analogue systems is a transitional and temporary matter. We may argue about the exact time-frame, but this Bill is concerned with the development of digital services in terrestrial television and about digital broadcasting via other delivery systems. I see little value in introducing specific additional regulation into a developed sector of the market which is going to decline rather than increase in significance, beyond the existing comprehensive and effective provisions of general competition law. And let us not forget that now only about 20 per cent. of households have access to analogue pay-TV, for cable and/or satellite. That figure will he much greater for digital, which will allow terrestrial pay-TV for the first time and simultaneously, and yet quite independently, will vastly increase the number of channels available via cable and satellite.
Secondly, we have a widely recognised reputation for regulatory stability. This has allowed us in the UK to sustain a high degree of investor confidence with remarkable consequences. Let us be under no illusion: the building of cable networks, providing sustainable competition to the dominant telecommunications operators, is a long-term, high-risk project —one which investors assess with care and caution. Yet the consistency we have given to reasonable, responsible and effective regulatory stability for the cable companies has led to over £10 billion being invested in this technology and in the future in the UK during this decade. The investment in 1994, for example, was more than double that in the entire period from 1986 to 1991, which is the year in which we announced our cable policy. The development of digital services is just as long-term and high-risk a project as the building of cable resources. A sudden shift in the system of regulating an established market with limited shelf-life, already subject to effective regulation under competition 351 policy, would undoubtedly damage investor confidence in opportunities for digital terrestrial. And as is generally recognised, investor confidence, or the lack of it, will be the crucial pre-condition for the success or failure of digital terrestrial television in this country.
Thirdly, of course, specific intervention in established markets is justified in some circumstances, but the Government believe that general competition law provides all the necessary protection in this case to deal firmly with any problems which might remain in the transitional period. The Committee will be aware that the Director-General of Fair Trading is currently active in this field. He is undertaking a review of BSkyB's arrangements for the wholesale supply of programming.
The domestic regulation of conditional access in the analogue environment is covered under existing general competition law. It is the Government's view that the remedies available are sufficient to deal with the present transitional situation. In order to illustrate the point I will spell out the action which can be taken.
The Director-General of Fair Trading has a general duty to monitor markets to ensure that they operate in a competitive manner. As the Committee is aware, the Director-General of Fair Trading is presently carrying out a review of BSkyB's position in the wholesale market for the supply of programming to cable companies, following complaints from within that industry. This will specifically cover related services such as access to encryption, subscriber management and transponders. His review is due to be completed in May this year, after which he will decide if further action is necessary.
The Director-General of Fair Trading can make inquiries into a monopoly situation, which can lead him to accept undertakings from a monopoly or to refer the matter to the Monopoly and Mergers Commission. If it finds the case to operate against the public interest this may then require the Director-General of Fair Trading to seek and then monitor suitable behavioural undertakings. The Secretary of State may also choose to make an order.
Under the Competition Act 1980, inquiries into anti-competitive practices are also possible, which will usually be referred to the Monopolies and Mergers Commission if suitable undertakings are not forthcoming, following the Director-General of Fair Trading's initial inquiry into the specific practices complained about.
In addition, he has a duty to examine agreements between persons and companies under the Restrictive Trade Practices Act 1976. As we have seen this week in respect of the agreements for televising Premier League football matches, he can decide that such agreements contain significant restrictions on competition and refer the matter to the Restrictive Practices Court. The RPC will then decide whether such agreements are against the public interest and may order the parties involved not to enforce the restrictions of the agreement.
No competition system is infallible. However, this is a Bill dealing with the future, which is digital conditional access, rather than the past. The
352 Government are committed to a vigorous response to proven anti-competitive activity in this area, as in others. It is also a Government committed to deregulation. I therefore suggest to the Committee that extending the Bill to analogue conditional access regulation would impose unnecessary regulatory burdens which we can all do without.
For the reasons I have explained, I hope that it is now clear that we share common cause on the broad purpose of these amendments. But I also hope that the Committee will understand the reasons why we have chosen to go in a certain direction.
Perhaps I may revert to the opening remarks of the noble Lord, Lord Thomson, about riding two horses. In this instance it is true that the Government are riding two horses, but they are both good runners. We do not see the need to pull one up and substitute another for it. I hope that that explains our position.
§ 4.15 p.m.
§ Lord Thomson of Monifieth
I am grateful, as I am sure are other Members of the Committee, for the very great care and clarity with which the Minister has explained the background to these issues. I believe it is the general feeling as regards conditional access as it relates to future digital broadcasting between the ITC, DTI and Oftel as rival regulators, that there is in many ways a nicely balanced case. I am sure that the ITC will want to study closely what the noble Lord said. Although I was not wholly convinced by it, as the noble Lord, Lord Chalfont, said, it is not something over which any of us would want to die in the last ditch or even go into the Division Lobbies.
I was a great deal less convinced by what the Minister said about the view that we expressed, that the conditional access regulation system that is proposed for digital in the future should be applied to analogue satellite broadcasting now. I am bound to tell the Minister that I think that he will find that in the broadcasting world, where there are so many enterprising and conflicting interests, there will be a good deal of dissent from his view that the present system is working not too badly. It is a highly monopolistic system in which there is the coming together of two near-monopolies, the satellite programme-providing monopoly on the one side and the subscription regulation monopoly through conditional access on the other. I stick to my point of view which is that, as a general principle, the right way to deal with such a situation in the public interest is to reinforce the normal operations of competition law on which the Minister laid such great emphasis by a licensing system such as is proposed for digital when it comes along.
I was astonished that the Minister seemed to suggest that the present satellite broadcasting system, with its associated subscription machinery, was a short-term and temporary phase. The Bill deals with the next century in terms of new digital broadcasting and it would be a rash person who would forecast with any certainty exactly what that future will be. On Second Reading, I referred to the fact that the noble Earl, Lord Ferrers, had been mistaken in his forecasts about the way in 353 which subscription satellite broadcasting would operate. The noble Earl had thought that it would he on an entirely pay-per-view system and that ordinary general subscription would not pay its way. That was an entirely mistaken forecast. I freely acknowledge that even with my interest in broadcasting I have been so frequently wrong in my forecasts that I have now stopped gazing into the crystal ball.
I find extraordinary the Minister's view that this is a short-term and temporary proposition, especially on the very day when BSkyB has announced a big increase in its operating profits and is bidding to take ITN's place in terms of independent television. It is extraordinary that the Minister discards our view about having some sort of system for analogue satellite on the basis that it is a temporary phenomenon on the part of BSkyB and satellite broadcasting.
I do not want to take up any more of the Committee's time on this, but I profoundly hope that in tabling other amendments we have not in any way shot the fox of the noble Viscount, Lord Astor, on Amendment No. 187. As the Minister continued with his totally unconvincing case in regard to his rejection of some form of licensing for analogue satellite, I began to feel that I had been not merely a little lazy, but extraordinarily prescient, in putting my name to the noble Viscount's amendment so that we can return to this specific issue in some detail a little later in our Committee proceedings. I hope that by that time the Minister will have had some second thoughts about his extraordinarily complacent view about the present satellite broadcasting situation being a short-term and temporary phenomenon.
§ Lord Donoughue
I agree with the views that have just been expressed by the noble Lord, Lord Thomson. 1 too hope that we have not shot the foxes of the noble Viscount. As he knows, I hold unfashionable views on this side of the Committee on what we should do about foxes, so we want to be very careful in that area.
I particularly agree with the noble Lord, Lord Thomson, that the Minister was uncharacteristically complacent. We normally view him as radically open-minded but I feel that he is being conservatively complacent on this matter. I cannot accept why the system that has been put up by the Government as being so appropriate for digital —we agree —is somehow not appropriate for analogue when analogue is what we live with. I wrote down exactly the same point as that to which the noble Lord drew attention —and added exclamation marks when the Minister said that analogue is temporary and transitional. Analogue may be the system for at least 50 per cent. of our nation for the next 15 years. Many people who look at what we are doing will think that it is a good thing that we are dealing with the future. Although it is indeed a distant future, what we are trying to do now is to deal with the system for our lifetimes. I refer to the system that will be watched by most Members of this House —even our Peter Pans for most of their lifetimes.
We want to eliminate monopoly abuse now in terms of the television that we all watch. Although I understand what the Minister says about general competition law being enough, I do not think that it is enough, but I accept 354 that the Director-General of Fair Trading is being encouragingly active at the moment. We look forward to his proposals. I have a great deal of confidence in him. However, the problem has existed for some time and is with us now. I cannot see why we cannot have such provisions on the face of the Bill. If they coincide with the general drift of the director-general's views and judgments, fine; there is nothing wrong with that. I am sure —indeed, I am confident —that he would welcome such a belt-and-braces provision in the legislation.
Perhaps I should point out to the Minister that this matter relates directly to an amendment that I tabled on Tuesday about which he expressed some puzzlement. That amendment sought to build into the Bill a provision to ensure that the Director-General of Fair Trading should be compelled specifically to take into account the public interest, which is not sufficiently specifically provided for in the Bill. I intend to return to that point. I was trying to link my provisions to the fact that the Director-General of Fair Trading is the main instrument in this. If the Minister had been or, on reconsideration were to he, more sympathetic on that point, although I would regret that we did not have such a provision in the Bill, I would feel more confident that the director-general had all the powers necessary. However, without either the public interest or a provision such as this being included in the Bill, I think that we shall be exposed in this area to potential abuse for many years to come. I am sorry that the Government are not proposing to deal with that.
§ Lord Thomson of Monifieth
I am sure that we shall return to the issue of conditional access for analogue broadcasting when we reach Amendment No. 187. While waiting for that useful amendment, with the permission of the Committee, I beg leave to withdraw this amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 67 to 69 not moved.]
§ 4.30 p.m.
§ Baroness O'Cathain moved Amendment No. 70:
§ Before Clause 26, insert the following new clause—
§ ELECTRONIC PROGRAMME GUIDES
§ (". —(1) Any person or body who operates or provides directly or indirectly an electronic programme guide must have a licence to do so from the Commission.
§ (2) In discharging their functions as respects the licensing of the service referred to in subsection (1), the Commission shall ensure that—
- (a) there is fair and effective competition in the provision of such services, and
- (b) publicly funded channels and services are guaranteed a prominent position on the first page of any menu-driven navigational or other aid used in connection with the electronic programme guide.").
§ The noble Baroness said: Those of us who are relatively computer-literate should have little difficulty in coping with the selection of programmes in the inevitable huge increase in the diversity of programmes and services offered by the new digital delivery services, but many people will need help. Basically, there will he a graphic display on the screen which can be accessed and scrolled through by a hand-held zapper. I am aware 355 that the words "accessed", "scrolled through" and "zapper" are not yet familiar terms, but they will become so.
§ An electronic programme guide gives details on screen of what will be on the TV in the future, be it today, any other day during the week or even longer. It also selects and tunes. That is particularly important with the "virtual channels" on a multiplex. In addition it gives reminder messages; for example, there can be a message on screen saying that "Panorama is starting now". The electronic programme guide can be linked to a video recorder, and can include programme trailers and features. In the longer term, probably after another Broadcasting Bill, there could be a large additional menu to cover items such as home shopping, home banking, video on demand selection, and even parental censorship setting.
§ From that brief description, the Committee will appreciate that those electronic programme guides will have a huge influence on consumer choice. It is imperative that they are not used to distort competition. The amendment would remove that concern, in effect guaranteeing that the choice is made by the viewer, and that any receiver or set top box can access any broadcast or programme.
§ Although a deregulator by instinct, I believe that there should now be statutory protection for publicly funded channels. They should not be pushed to the back of the electronic programme guide. A prominent position is necessary to ensure their ready availability. Without that obligation, the principle of universality upon which the licence fee obligation is based, may be compromised. Uncontrolled use of electronic programme guides to offer viewers their favourite programme type could be, first, abused to favour the network's own channels; and, secondly, undermine the unifying experience offered by public service channels, offering balanced schedules, thereby weakening shared political and cultural reference points.
§ The issue has been addressed effectively abroad, especially in the USA where mass use of cable systems is now the norm. The current and proposed regulatory framework in the USA recognises the need for effective access. Current US regulations on must-carry recognise that by insisting that all channels must be positioned at the same channel number as they are with terrestrial reception; for example, BBC1 would be at one and Channel 4 would be at four.
§ The US Congress is currently considering proposed legislation on these topics from the House of Representatives and the Senate. The proposals include the following requirements: first, established TV networks to be available on first tier of electronic programme guides; secondly, viewers to have instant access to their local TV stations —that is, they should not have to navigate through complicated devices, or scroll through multiple programme menus to find their local broadcasters; thirdly, viewers should be able to access any TV station signal without first having to view advertising or promotional material, or any guide or menu that omits broadcast stations on its list; fourthly, no discrimination among content providers in the 356 presentation of their programmes; fifthly, no alteration to programme services by distributor or electronic programme guide provider; and, sixthly, suitable and unique identification of programme services to viewers.
§ That may all seem highly complicated and exceedingly technical, but I can assure the Committee that after just a little time spent studying the issue, and being briefed by the BBC, I understand the function of the electronic programme guides and the necessity for the amendment. Independently, I received a short comment from Carlton TV stating that it is in agreement with the legislation currently being considered by the US Congress to ensure that TV networks are available on the first tier of electronic programme guides and that viewers should have instant access to their local TV stations, without having to scroll through multiple programme reviews or complicated devices to find their local broadcasters. Carlton states that they agree wholeheartedly with what the BBC has said.
§ On Tuesday, I spoke to Amendments Nos. 17 and 18 on the must-carry/must-offer requirement. I referred then to the actions of Videotron in respect of its cable customers in South East London. There, despite being just a few miles away from the Crystal Palace transmitter, viewers are choosing to buy into the cable system because local hills mean that they have appalling reception. Until December, Videotron offered the four main channels (BBC1, BBC2, ITV! and Channel 4) on the standard buttons one, two, three and four. Now however, for reasons unknown to Videotron's subscribers, Channel 4 can no longer be obtained on button four. It is now number 40 within the cable system. That means that viewers must first go to button five, and then use a separate hand control to scroll through to number 40. Then they can see Channel 4.
§ That is a peculiar situation which illustrates the potential problem. I took heart from the comments of my noble friend the Minister that he would look at what I said on Amendments Nos. 17 and 18. If he does, as I hope, agree with those amendments, their effectiveness will be greatly reduced without this amendment on electronic programme guides.
§ Mainstream public service channels should be offered prominently on electronic programme guides, and should therefore be on the same hand set button; that is, one, two, three and four, as they are now on standard TV sets, so that viewers are not confused and so that services which are paid for by the licence fee (BBC1 and BBC 2) are given prominence and priority on the new electronic programme guides.
§ This is a common sense case. I hope that the Government will accept the amendment to secure a healthy position for our public service channels in the new digital future and incorporate it within the Bill. I beg to move.
§ Lord Ashley of Stoke
I support the amendment because it guarantees a prominent position on the first page of electronic programme guides for publicly funded channels. As the electronic programme guides develop, they will supersede newspaper and magazine listings. They will become not merely important but crucial for access to publicly funded channels.
357 We have already seen an example of manipulation of standard buttons with number four disappearing from its usual place and popping up, surprisingly, at number 40. People have difficulty in finding it. In order to anticipate further difficulties which may be created, all we have to do is to imagine that we now have the expected 200 channels up and running. Operators wanting to refine the Videotron technique of manipulation could exercise their talents for misplacing the buttons. They could say, "Let us put this number not too high, because it will be found easily. Let us not put it too low at number 200 because that is the second place people will look. Let us perhaps put it at 91 or 157 where people will not think of looking or will have to scramble around looking for it". The operators can play a deadly game, damaging publicly funded channels. They will do that, because it is in their interests to try to damage the opposition.
That manoeuvre has already been played by Videotron. We know from experience how newspapers tend to "lose" a correction or an apology near the bottom of a boring column or on an inside page. The same dirty tactics can be used in television with these electronic guides. The amendment shackles the operators to fair play. Some of them will not like it. That is just too bad. Those who play fair will not object to the amendment, and those who do not play fair should be deprived of the chance to play foul.
§ Lord Boyd-Carpenter
I wonder whether my noble friend Lady O'Cathain could explain to me at any rate, who fails to understand it, what is meant by the expression:any menu-driven navigational or other aid used in connection with the electronic programme guide".What does that mean?
§ Baroness O'Cathain
I could go into a long dissertation on that. It all goes back to computer technology where we operate on screens with menus. It is a completely new use of the words that we have been using all our lives. It would be better for me to take my noble friend aside and explain it to him.
§ Lord Thomson of Monifieth
I am sure that if the noble Lord, Lord Boyd-Carpenter, takes his distinguished daughter to one side, she will put him in the picture very quickly.
I support the amendment moved by the noble Baroness, Lady O'Cathain. I always listen with interest to what she says and not only on broadcasting matters. But what she says on this particular issue, which is very important, as the noble Lord, Lord Ashley, has just said, carries all the more weight because, as she said, she is not an instinctive regulator. She is a free market person. Therefore, when she says what she does about this issue, her views carry very great weight and should be listened to by the Government.
I am all in favour of fair and effective competition in the provision of electronic 358 programme guides. But I suggest that the devil is in the detail of subsection (2)(b) of the amendment moved by my noble friend. I do not see why if Channel 4 or even Sky wishes to produce its own electronic programme guide, it cannot put its own programmes on the front page.
But more than that, let us suppose that an electronic programmer decides, as I have seen happen in other countries, that it will use the time of a programme for the guide. For example, at 3.30 in the afternoon three new programmes are starting and are all put next to each other and then at 5 o'clock other programmes come on and they are all put together. If such a broadcaster is stuck with the detail of the proposed subsection (2)(b) it would be impossible to produce such a perfectly acceptable programme guide. If there is to be fair and effective competition, that would be a matter best left to the person responsible for ensuring it rather than writing it on the face of the Bill.
§ Viscount Brentford
I support these amendments. Many of the arguments for them are similar to those put forward in respect of the previous group of amendments except that here we are dealing with electronic programme guides rather than the actual gateway itself.
I emphasise that this is about fair competition. It is important that that should be written onto the face of the Bill. In view of what my noble friend said previously, whether we give the right to the commission or to Oftel is a matter that does not concern me greatly. I believe that there should be somebody who has the right to supervise the use of EPGs so that if they are being abused in any way, somebody has the power to make the necessary regulations to prevent such abuse.
On Tuesday the Minister said in another context that there is always scope for primary legislation to amend any problems which may arise. But that may take a couple of years. It seems to me that that does not provide fair and effective competition in this field.
I am certainly concerned that if there is totally uncontrolled use of EPGs, they could be abused. Like others on this side of the Committee, I am against extra bureaucracy and unnecessary regulations. But it is extremely important to ensure that we have fair and effective competition in the provision of electronic programme guides and somebody should have a supervisory role, although that may take up a little time. I believe very strongly that all the stations, including the public service stations, should have fair access on EPGs. I am sure that none of us could quarrel with the terms of the proposed subsection (2)(a) even if there are questions in relation to subsection (2)(b). I commend the amendment to the Committee.
§ 4.45 p.m.
§ Lord Colwyn
Perhaps I may strike a different note and oppose the amendment. My reasons are that as no EPG digital services as yet exist, it seems strange to force potential investors to place other programmes on the first page of their EPGs. That would be a major disincentive to invest the substantial amounts of time and money required in the first place.
359 The amendment is discriminatory. Why should the BBC, with its guaranteed licence fee, two nation-wide networks reaching into most homes and its own digital multiplex, be allowed to place its programmes in the prime spot on an EPG which has been developed by private companies in direct competition to it? The BBC does not offer first page prominence or indeed equal treatment to satellite channels on its terrestrial teletext services or listing magazines.
Those regulatory requirements are premature. If new systems and dominant market positions are established and abused, competition law and regulatory remedies would be appropriate. I believe that my noble friend said that it is imperative not to distort competition. If the BBC wishes to obtain a privileged position on the first page of a commercially developed EPG, it must be willing to pay for that privilege or willing to develop another on its own or in partnership with other investors. I oppose the amendment.
§ Lord Donoughue
I was slightly puzzled when the question was asked why we should deal with this because the problem is not yet with us. The whole Bill is put before us on that basis. As has been said, this matter relates to what we discussed previously in relation to conditional access. It will be a very important matter because through those navigation guides, the viewer will be able to select and view particular programme channels. When there are hundreds of channels to choose from, the electronic programme guide becomes one more gateway. It is a gateway direct to one channel among those hundreds, by-passing the others.
Therefore, as has been said, the order of programmes in the guide, the prominence and the promotion given to a preferred group is a potential abuse and is potentially discriminatory and unfair. Therefore, it is extremely important that the EPGs are not used to distort competition, favouring some and discriminating against others. Basically it means that every receiver must be able to access any programme and the conditional access providers should not control the navigation. Order and prominence should not be used to favour and discriminate.
We should note that the United States, which already lives with many of the problems that we are now discussing, is currently and urgently proposing legislation to deal with this issue. We should take this valuable opportunity to do the same because we do not often have the opportunity for primary legislation in this area and it would be very sad if we did not take it now. Therefore, I support the amendment.
§ Lord Inglewood
I am most grateful for the comments that have been made about this important subject. I concur with all those Members of the Committee who have emphasised that this is an important topic.
I should like to make some comments about the amendment and then make a few comments about the problems in relation to reception in the Crystal Palace area. I have just received a note about that. It is 360 interesting because it is illustrative of some of the potential problems that face those involved in this field which in turn indicate some of the problems which we, as legislators, need to have in mind when trying to formulate proposals to cover all eventualities.
The Government are aware of the potential that electronic programme guides might provide for unfair competition, in particular where an EPG operator is also a broadcaster. A hierarchical arrangement of different information "windows" and menus, through which users must navigate, could clearly be used to disadvantage rival broadcasters by placing their programme services only in the lower levels of the hierarchy. I hope that my noble friend will agree that that is the same as she was saying, only expressed in a different way.
§ Lord Inglewood
We intend to ensure that that does not happen. However, we are not clear at this stage that the matter requires further specific regulation beyond the provisions of the Bill as drafted and of existing European and domestic competition law.
A corpus of European law directly relevant to the issue has evolved with respect to computer systems supplied by airlines and used by travel agents to select flights. That has established that the criteria used for ranking service offerings on a display screen should not depend directly or indirectly on the identity of the operator and the supplier of the software; in other words, the airline. Thus it is anti-competitive always to show the airline which built the system first in response to every inquiry. That is exactly the kind of issue raised by electronic programme guides.
As I have already explained in debating earlier amendments, the Office of Fair Trading also has extensive and effective powers under general competition law. Further—and this is an important point—a digital EPG would, under the Bill as drafted, require an additional services licence. Thus the ITC would have the means to regulate EPGs should that prove necessary.
Of course, I can assure Members of the Committee that the Government will keep the question under close review, as the use of EPGs begins to develop. Indeed, we have recently issued proposals for the regulation of conditional access systems—to which I have referred—which are closely linked with EPGs, and will wish to consider the responses to those proposals. Should it become clear that more is required, we will look at how to include an appropriate response within the regulatory framework.
As I said in Committee on Tuesday, the Government are in agreement with my noble friend and other noble Lords in that we want to see that the public service channels continue to he available to all. As I have explained previously, I think that they will have an important role to play in generating demand for new programming services and that consequently cable and satellite companies will wish to carry them. For the same reasons, the public service broadcasters will have a strong negotiating position with regard to the presence of their services on EPGs. However, to mandate that 361 such carriage should always be on the first page might be interpreted as contrary to the principles established by the European provisions, which I mentioned in connection with airline reservation systems.
That takes us back to the point made by my noble friend Lord Chelmsford. In those circumstances, I hope that my noble friend and other Members of the Committee will agree that it would, perhaps, be more appropriate to allow the channels to negotiate their own arrangements for presence on electronic programme guides, subject always to the provisions of competition and broadcasting law. I see that my noble friend wishes to intervene. I give way.
§ Baroness O'Cathain
I am much obliged. I should like to question my noble friend the Minister as regards relating the reservation systems for airlines to the electronic programme guide. The nub of my problem with EPGs is the fact that we are concerned with public service broadcasting. Perhaps I may repeat what I said in Committee on Tuesday:The BBC Charter ... obliges the BBC to carry government information at times of war or in a national emergency. That requirement is obvious, necessary and makes sound commonsense. If we are to be consistent to that requirement in the charter, then all delivery systems should be obliged to carry and offer mainstream services".—[Official Report, 6/2/96; col. 177.]I suggest to my noble friend the Minister that it is slightly different to compare that requirement to a schedule for airline travel which is really not a national public service broadcasting-type requirement, if I make myself clear. For example, if there are flights, say, between Brussels and Rome, and if the system is actually owned or run by Sabena, I can understand why it should not, under European legislation, put its flights on screen first simply because such flights operate from Brussels. Indeed, it should also display British Airways or Alitalia flights if such flights operate.
However, we are talking about national responsibility. There is no national responsibility for any airline to carry passengers from A to B; but there is such a responsibility on our public service broadcasters actually to be there and to give information to the public at times of national emergency. That is my real concern. Perhaps my noble friend the Minister could comment on that particular issue. I really do not think that we are comparing like with like on this occasion.
§ Lord Inglewood
I am most grateful to my noble friend for explaining her concern in more depth. I believe that there are two slightly separate points at issue. First, there are other public services broadcasters in this country apart from the state-funded service. Secondly, if my noble friend is concerned about the dissemination of information in emergencies, I am not convinced that the avenue down which she proposes to go in the context of EPGs will necessarily take her to the destination that she desires.
However, I should like further to consider the wider point raised by my noble friend; namely, that we are talking about a medium which transmits information. Perhaps we should think about it in that way. The question of national emergencies does not arise in the present context. Public service broadcasters, and others, 362 will be required under other provisions in the Bill to make their capacity available in such circumstances. I had hoped to be able to say that at the beginning of my response, but I did not have chapter and verse before me.
We have had a certain amount of debate about the reception problems in the Crystal Palace area. Since we began proceedings today, I have received some information on the subject. It will take a minute or two to outline it to the Committee, but it indicates the type of problems with which we are faced.
Videotron supplies television services in the area around the Crystal Palace transmitter. Customers who opt for a full cable television service receive signals through a special set-top box with its own handset and with access to all the cable channels offered. They include the four terrestrial channels, which are in fact carried twice. One set of the terrestrial channels can be tuned to the handset which comes with the television, so they appear on buttons one to four of the television handset. The other set of those channels is tuned to buttons on the handset which comes with the set-top box; that is, the cable handset. Therefore, the customer can switch between the four terrestrial channels using his TV handset or the cable handset.
It is indeed extremely complicated. I can see that I am losing the attention and patience of Members of the Committee. However, in summary—and I hope that I have understood it correctly myself—there has been a re-tuning of the response that the person who is holding the handset gets from pressing particular buttons. If I have understood the position alright, the re-tuning means that, if you slightly re-tune the handset, you will actually achieve the state of affairs sought by my noble friend. Information was distributed by the cable company explaining how that should be done. A considerable number of complaints were received, so the previous arrangement was reinstated. An additional publicity drive was mounted to explain what was proposed, and the change that was originally withdrawn has now been reinstated.
However, I imagine that there are still a few people who are in a muddle about it. That is the kind of difficulty that we face both when dealing with the nuts and bolts of the electronic age and when trying to legislate to ensure that consumers receive a system which they can find their way round.
§ Lord Thomson of Monifieth
I wonder whether the Minister is aware that I am actually on the verge of taking a decision on whether or not I should sign up with Videotron. I am bound to say that I am not wholly clear as regards whether his response encourages or discourages me.
§ Lord Inglewood
I should be willing to let the noble Lord have sight of the document. Of course, I am in no position to be for or against Videotron in the matter.
§ Baroness O'Cathain
I should like, first, to thank all Members of the Committee who have taken part in the debate and who supported the amendment. We have indeed had a most interesting discussion and I am 363 especially grateful to my noble friend the Minister. However, on the last point regarding Videotron, I have to say that, if I were one of its subscribers living in the lee of Crystal Palace and I received such an explanation, I would probably give up television viewing altogether and go back to reading books.
However, if I could take my noble friend the Minister outside and show him a video on how complicated the operation of Videotron in Crystal Palace is, I should be delighted to do so—
§ Baroness O'Cathain
I realise that I have not really got my point across. I can see the problems about which we have had a graphic description. I should especially like to thank the noble Lord, Lord Ashley of Stoke, for the rather chilling picture that he painted. If we are to have 200 television channels, someone trying to locate, say, BBC 1 for a particular programme and having to scroll through 167 programmes or whatever, might well give up. There is probably a great future for this process. If this amendment, or some variation on it, is not accepted by the Government, there will probably be a great switch from television to radio. Perhaps that is not a bad thing.
However, as the Minister has said, this topic is important. I can see that much additional explanation will have to be given on the matter, and there will have to be additional research into the various possibilities. I warn the Minister that I shall return to this matter on Report, but in the meantime I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 26 [Promotion of equal opportunities]:
§ 5 p.m.
§ Baroness Dean of Thornton-le-Fylde moved Amendment No. 71:
§ Page 24, line 20, leave out ("or digital programme") and insert (", digital programme licence or digital additional services").
§ The noble Baroness said: The Committee will be pleased to hear that this is not a complex issue. It is a technical issue, but not technical in the sense of equipment. We believe there has been an omission in the Bill in this respect, although we do not believe it was deliberate. In moving Amendment No. 71 I wish to speak also to Amendments Nos. 138 and 139. Amendment No. 71 seeks to amend clause—
§ Baroness Trumpington
On the groupings list this amendment is grouped with Amendments Nos. 137A, 138, 138A and 139. I am not sure whether the noble Baroness mentioned Amendment No. 137A and one of the other amendments. I do not know whether the grouping is correct.
§ Baroness Dean of Thornton-le-Fylde
I shall speak to the amendments as they are grouped. We are happy to consider Amendments Nos. 137A and 138A, but I am speaking particularly to Amendments Nos. 138 and 139. Amendment No. 71 seeks to amend Clause 26 of the 364 Bill. That clause corresponds almost exactly to Section 38 of the 1990 Broadcasting Act which concerns equal opportunities in television. Amendments Nos. 138 and 139 concern radio and are based on the wording of Section 108 of the 1990 Act.
Amendments Nos. 71, 138 and 139 seek to extend the provisions on equal opportunities to digital additional service licences. The clause, as it is presently drafted, imposes a requirement to promote equal opportunities only on multiplex licensees and digital programme licensees. However, it does not apply to the third new type of broadcasts, the digital additional services. The amendments will extend the requirement as regards equal opportunities to digital additional licences for radio; to local digital sound programmes; and to local radio multiplex licences. Through these amendments we seek to plug what we believe is a hole in the Bill as the requirements on equal opportunities are not extended across the whole range of broadcasting. We cannot believe that was the intention of the drafters of the Bill. I beg to move.
§ Lord Inglewood
I am most grateful to the noble Baroness for drawing attention to the fact that the clauses do not cover local radio, or additional service providers. She will be aware that the equivalent sections of the 1990 Act, on which these clauses are based, do not do so either. I am prepared to consider the extension of these clauses to accommodate the amendments of the noble Baroness. However, I am sure she will appreciate that there are complex issues here which prevent me from giving any commitments at this point. Further discussion will be necessary between my department and the Department for Education and Employment before I can give the noble Baroness a detailed response. We may, in the case of local radio stations and additional service providers, be talking about small companies, to which some legislation in the field of equal opportunities does not generally apply, or applies differently from the way it applies to larger organisations.
§ Baroness Dean of Thornton-le-Fylde
That response was most helpful. We on these Benches would be pleased to engage in discussions on this issue which is clearly not as straightforward as one might think. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Lord Ashley of Stoke moved Amendment No. 72:
§ Page 24, line 23, leave out second ("and").
§ The noble Lord said: In moving Amendment No. 72 I wish to speak also to Amendments Nos. 73 and 74. I shall speak briefly to these amendments as their intention is so obvious. They create equality of opportunity not only as regards gender and race—that is, quite properly, included in the Bill—hut also as between disabled and non-disabled people. The need for that is so obvious that it is hardly worth stating. It is a curious omission and an obvious oversight by the Government not to have included it. The extent to which discrimination exists towards disabled people in the world of employment is now extensively documented. 365 I should be most grateful if the Minister would confirm that the Government have committed an oversight and that he will accept the amendment. I beg to move.
§ Lord Inglewood
I am most grateful to the noble Lord for his introduction to the amendments. According to my groupings list Amendment No. 76 is also grouped with the amendments that we are discussing. Therefore, propose to address Amendment No. 76 too. I am not hostile in principle to the extension of the relevant clauses to cover disabled people but, as with the previous amendment, I cannot give any commitments to the Committee at this stage. I must point out that other legislation is in place with regard to the employment of disabled people by all companies above a certain size. In addition, legislation generally applies rather differently to equal opportunities for the disabled from the way it does to equal opportunities for different races and sexes. In short, some complex issues are involved in this matter and further discussion will be necessary between my department and the Department for Education and Employment before I can give the noble Lord a detailed response. However, I hope that what I have said has provided some reassurance.
§ Lord Ashley of Stoke
I am most grateful for the Minister's response. I do not believe that the matter is half as complicated as he says it is. However, I accept what he has said in good faith. I hope that after discussion we shall be able to resolve something. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 73 to 76 not moved.]
§ Clause 26 agreed to.
§ Clauses 27 and 28 agreed to.
§ Schedule I agreed to.
§ Clause 29 agreed to.
§ Clause 30 [Interpretation of Part I]:
§ Lord Inglewood moved Amendment No. 77:
§ Page 26, line 8, leave out ("has") and insert ("and "on S4C" have").
§ The noble Lord said: I have already spoken to this amendment. I beg to move.
§ On Question, amendment agreed to.
§ Lord Inglewood moved Amendment No. 78:
Page 26, line 8, at end insert —
(" "S4C Digital" means the service referred to in section 57(1A) of the 1990 Act, and "on S4C Digital" means in that service.").
§ On Question, amendment agreed to.
§ [Amendment No. 79 not moved.]
§ Clause 30, as amended, agreed to.
§ Clause 31 [Radio multiplex services]:
§ Baroness Smith of Gilmorehill moved Amendment No. 79A:
§ Page 26, line 18, leave out subsections (1) to (4).366
§ The noble Baroness said: In moving Amendment No. 79A standing in my name, I shall speak also to the other amendments in the grouping. At the same time, I shall speak to those clauses in respect of which I wish to oppose the Motion that they stand part of the Bill. I begin by apologising for presenting such an enormous set of amendments at my first participation in a Committee stage.
§ The amendments which begin with Amendment No. 79A and progress in stately fashion through many clauses, including nine clauses on which I wish to oppose the Motion that they stand part of the Bill—namely, Clauses 43, 45, 48, 52 to 57 and 59—are all related to the two principal issues which we believe are extremely important. The grouping is as shown on the list before the Committee.
§ The issues themselves are not complex, but if our view is accepted, the changes required to the Bill extend throughout Part II.
§ Clause 31 introduces the concept of the radio multiplex service and the digital sound programme service. We do not think that either is necessary. The first carries the danger of creating a new broadcasting monopoly, and the second applies today's analogue regulatory requirements to tomorrow's digital technology. All our amendments seek to eradicate the radio multiplex service and establish the radio digital service as the style of licence which the Radio Authority will be responsible for issuing and regulating in place of the multiplex service.
§ The concept of the radio multiplex service assumes, wrongly, that digital technology requires different legislative transmission arrangements from those which currently apply under analogue technology. The proposed Radio Authority multiplex licence effectively takes editorial responsibility and programme control away from the broadcasters and hands it to the transmission providers, introducing a cumbersome extra layer to be regulated. To give the Radio Authority the responsibility of licensing seems to assume, despite all the evidence to the contrary, that commercial radio operators are incapable of getting together to provide services that listeners want without some special government-approved arrangement. I believe that it is in their own interests to club together if the technology dictates that.
§ A radio multiplex is a means of transmission. At the moment analogue transmitters are licensed under the Wireless Telegraphy Act by the DTI. Programme services are licensed by the Radio Authority. It is not considered necessary that the person who provides an analogue transmission service should have any programme control. Why should digital technology change that?
§ The Bill seeks to pass responsibility for the maintenance and development of the characteristics of services from the individual programme service providers to the radio multiplex licensees. That would mean that multiplex owners would reduce some of the regulatory content control exercised by the Radio Authority and erode the business and creative control enjoyed by current commercial radio broadcasters. That 367 transfer of control from a number of licensed services to a single multiplex owner runs counter to the Government's intention to protect plurality of ownership. An example of a probable effect which demonstrates that point is that the four different commercial radio companies currently responsible for the six commercial services heard in Birmingham would come under the effective control of a single new broadcaster, interposed for no good reason.
§ Digital audio broadcasting technology does not only offer better audio quality. The data and text possibilities are even more exciting. We believe that existing commercial radio stations will want to develop all those opportunities, and we do not see why the Bill needs to hand them on a plate to a few Radio Authority multiplex licensees. When independent radio stations go digital, they will not want their digital licence to restrict them to a single channel for a single purpose, as current legislation treats today's analogue licensees. That would be yesterday's regulation applied to tomorrow's technology. We see no reason why independent radio stations should not have the duty and flexibility to provide audio, text and data within each of their digital service licences thereby protecting the diversity and plurality of both ownership and listener choice.
§ We therefore seek to remove the distinctions in the Bill between programme service licences and digital additional service licences. Let broadcasters be given sufficient capacity to develop and provide both and make the most of the new technology. Our amendments to Clause 31 and those which are consequent on them simplify the regulatory structure for commercial DAB. I beg to move.
§ 5.15 p.m.
§ Lord Colwyn
I should like to support this long and complex list of amendments. It is an enormous job to try to take the radio multiplex out of the Bill, but I speak as one of the few present who has directly experienced the joys and sorrows of creating and marketing a new radio service. Although I am no longer involved, I understand how commercial radio folk think.
I believe that one of the strengths of radio in this country is the way that it has evolved. Each development is built on a previous one. I can understand why my noble friend the Minister may have grasped an opportunity to start with a blank sheet of paper. The creation of a single entity in each local area making the most of the new technology is beguiling. At one stroke it gets rid of those quarrelsome local broadcasters and meets the need for integration which the new technology seems to require. However, the appeal of local stations has little to do with corporate planning. It is to do with lively competition, which a multiplex licensed to organise the output of programme providers into the most effective structure, whether in terms of revenue production or programme output, is likely to dampen.
Perhaps more important is the need to get as many as possible in commercial radio to participate and feel part of the DAB system of things as soon as possible. If one reduces the local autonomies which exist in local 368 commercial radio at present or artificially places one element in a position of power over another, as one will surely do if one advertises multiplex licences, commercial radio operators will not participate as keenly in DAB as they will in the scenario envisaged by the noble Baroness. I support the amendment.
§ Lord Inglewood
I must begin by welcoming the noble Baroness to the Dispatch Box. I should like to congratulate her on moving such a spectacular number of amendments—more, I suspect. than a number of noble Lords move in a lifetime. One might as well go in for a penny as for a pound! I am also sure that I speak for all Members of the Committee when I say how grateful we are to the noble Baroness for agreeing that we might take all the amendments together.
The debate is not about the detail of the amendments before us, as the noble Baroness pointed out, but rather about two quite different models for the regulation of digital audio broadcasting—or DAB, as it is known for short.
There is no question that we all share the same objective: the successful launch of DAB in this country, leading to better quality of radio reception and sound; greater choice of stations catering for all tastes and interests, nationally and locally; the development of new additional or data services, for business, education, particular interest groups or individuals; and much more efficient use of the spectrum. We all recognise that that will not happen overnight, and it will not happen without significant levels of investment.
The provisions contained in the Bill set out the Government's model for the regulation of DAB. It is a model which, as for television, is built around the new concept of the multiplex provider—a concept which was welcomed by the Opposition when we unveiled it in our policy document last year and which, as we know from our debate on Part I of the Bill, continues to enjoy their support with regard to television. However, radio is different from television—a fact which we all too often neglect. So I welcome this opportunity to debate and justify the appropriateness and effectiveness of the regulatory framework which we propose.
It may be helpful if I first summarise the key features of what we propose in the Bill. We envisage frequencies for national and local independent DAB being assigned to the Radio Authority, just as frequencies for independent analogue radio are assigned at present. Following established precedent frequencies for the BBC's national DAB, services have already been assigned directly to the BBC, and as I am sure Members of the Committee know the BBC started broadcasting its five national services on DAB last September. The authority will be responsible for licensing and regulating independent DAB services. There will be three types of licence: for multiplex providers, for sound programme services (that is, what we all think of as radio broadcasters, or radio stations), and for additional services (for example, text or data services). The multiplex provider will be responsible for filling his multiplex, and his application for a licence will be judged on three main criteria: the variety of programme services to be broadcast; his plans to roll out the 369 infrastructure to bring DAB to the listener; and, for national multiplexes, his plans to encourage listeners to buy DAB radios.
Programme service and additional service licence holders will be subject to the normal licence conditions relating to taste, decency and impartiality. The three existing independent national radio stations will be offered guaranteed places on the one independent national multiplex available, and the BBC would, with the agreement of the authority, have capacity reserved on local multiplexes for its local services. Multiplex providers would have to use at least 90 per cent. of the capacity of the multiplex for programme services, ensuring that the bulk of the spectrum allocated for broadcasting radio programmes was used for that purpose for which it was allocated—that is, broadcasting.
The model put forward by the noble Baroness opposite would differ from our preferred approach in three significant regards. I hope that I fairly describe their position. First, there would be no multiplex provider. Secondly, there would not be a separate licence for additional service providers; and, thirdly, frequencies would be assigned to the Radiocommunications Agency rather than the authority, although the authority would be responsible for licensing broadcasters.
If simplicity in regulation were our sole objective, this model would be very tempting. After all, it is normally we who advocate stripping away layers of regulation. I can therefore assure the Committee that we thought most carefully before putting forward the proposals now reflected in the Bill. It was during that process of consideration that we realised that the world which DAB opens up is complicated and requires a more imaginative response rather than mere tinkering with the framework inherited from analogue.
As I said in the Second Reading debate, digital technology brings to an end the one to one relationship between a broadcaster and a frequency. Digital compression means that the frequency now bringing Radio 4 or Classic FM could, in the future, bring that station, perhaps five other stereo stations, or even more mono ones, and some data channels.
This is all done by digital compression and the subsequent mixing of several services into one radio signal for transmission. Perhaps I may touch on one point mentioned by the noble Baroness. We want to be clear that a multiplex is not a transmission. It is a separate function and the provider of the multiplex need not necessarily also be the provider of the transmission. As I described, that is the technical function of a multiplex provider: to compress and mix. It is an essential function, and it is new. It is unique in the context of radio to DAB.
Although it is a technical and, at first sight, limited function, it has significant implications. It inevitably creates a relationship between broadcasters sharing the same frequency—a relationship that needs to be ordered in some way or other. It means that the amount of capacity used by a particular service at a particular time—can he varied according to the nature of that service, allowing the possibility of the flexible allocation of capacity between different users. And it means that 370 everyone using—or rather, benefiting from the use—of that frequency has an interest in transmitting that frequency to the greatest number of listeners.
It is for these reasons that we chose to license the multiplex provider, and to give him a key active role in DAB which goes far beyond that which the Radio Authority, the industry regulator, could properly he expected to carry out. The multiplex provider "concept" has several key advantages. It provides a focus for co-ordinating and drawing together all matters affecting the service providers sharing a frequency: rolling out the transmission infrastructure; managing the use of the capacity on the multiplex efficiently; putting together proposals for promoting the services and encouraging listeners to buy digital radios; and, possibly most significantly of all, sorting out the broadcasters' requirements and effecting the fullest use of the spectrum. It allows non-broadcasters—that is, outside businesses and expertise—to become involved in DAB, bringing new investment and fostering new, creative partnership.
I fear that the proposals from the noble Baroness ignore some of these realities and would squander the advantages. The seductive simplicity of a regime based on a one-to-one relationship between the Radio Authority and the broadcasters would, I fear, mean that the authority itself was forced into taking over the function of the multiplex provider. I do not think it is a function which sits easily with the responsibilities the authority has for regulating the sector.
If we went down this route how many individual broadcaster's plans for rolling out infrastructure will they need to look at, and how many separate proposals for promoting DAB and encouraging listeners to buy sets? Who will co-ordinate those plans and proposals and ensure that they are implemented? Who will manage use of the capacity on the multiplex and broker deals between broadcasters? Those are serious defects as regards the model put forward by the noble Baroness who moved the amendments.
The independent multiplexer on the other hand will more easily be able to encourage plurality and diversity, because of his greater freedom in putting together a diverse package of broadcasters—diverse not only in output but also in economic characteristics which might lead to agreed cross subsidy between them to put together as diverse a package as possible.
It has also been argued that allocating bits of capacity to individual broadcasters will ensure a more efficient use of spectrum. Let us examine that proposition. The Government's proposals allow flexibility across the whole multiplex. Capacity can he traded between broadcasters, through the medium of the multiplex provider, allowing complete flexibility subject to the continued satisfaction of the variety criterion and the requirement that there is a maximum of 10 per cent. of capacity which can be used for additional data services. The alternative is that sections of the multiplex are allocated to individual broadcasters. These broadcasters can use that capacity either for radio and/or data services. So far as each allocation is concerned, only 10 per cent. would be available for data. Ten per cent. 371 of much less is very little. The spectrum is fragmented in a rigid way. This is a recipe for inflexibility and curtails the proper exploitation of the technology when surely what we need to do is to encourage flexibility thereby realising the maximum benefits which DAB can bring.
I am also confused by the new role ascribed to the Radiocommunications Agency. Why should it be necessary to assign frequency to anyone other than the Radio Authority—the established broadcasting regulator? The agency is part of Government—the Secretary of State for Trade and Industry would be assigning frequencies to himself. The role of the agency is quite clear: its concern is the efficient use of all radio spectrum. Some of that spectrum is allocated for broadcasting use. Other frequencies are used for citizen's band, amateur or ship radio, and many other uses. The agency licenses transmission under the Wireless Telegraphy Acts. The transmission providers for DAB will need such licences. I do not see the purpose, or need for, the new role put forward in these amendments, unless it is intended to place the Radio Authority more clearly in the role of de facto multiplex provider.
As I have indicated I believe that there are substantial flaws in the model proposed by noble Lords opposite. I believe that the multiplex provider route which we have chosen provides the framework best suited to allowing DAB to be launched successfully and ensuring that there is a rich profusion of radio and data services from the most efficient use of the spectrum. But these are complicated issues, and the digital future is a complicated world. We have had only a matter of days—in some cases hours—to consider these amendments, and only now have I been able to hear them explained. I can assure the noble Lords opposite and the noble Baroness who moved these amendments that I shall reflect on the points that they have made and if I believe that there are improvements which can be made to the Bill which will answer some of the concerns expressed, then we shall certainly make them. But I must conclude that I shall do that from the standpoint that our approach and not theirs is the right one.
§ Baroness Smith of Gilmorehill
I thank the Minister for dealing in detail with the issue. I thank, too, the noble Lord, Lord Colwyn, for his support. We appreciate that it is difficult to legislate for untried technology. But it is counter-productive to award digital output licences by today's methodology—that is, limiting a specific channel to a single defined use. To do so does not reflect the nature or benefits of DAB. Surely it would be better for the characteristics of the services to become the responsibility of the service provider who in turn would apply for a proportion of the band width of the multiplexes concerned—perhaps a percentage or number of the available bits. Within that he would be able to provide a number of different audio data or text services.
The greater the flexibility of the digital service licensees to change and adapt within their own bit resources, the greater the plurality and diversity of the service and the greater the counter to the otherwise 372 irresistible influence of the Radio Authority licence multiplex provider. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 80 had been withdrawn from the Marshalled List.]
§ [Amendment No. 81 not moved.]
§ Clause 31 agreed to.
§ Clause 32 [Meaning of "independent national broadcaster" and "simulcast radio service"]:
§ [Amendment No. 81A not moved.]
§ 5.30 p.m.
§ Lord Donoughue moved Amendment No. 82:
Page 27, line 24, leave out subsection (5) and insert—
("(5) No order under subsection (4) shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.").
§ The noble Lord said: It gives me great pleasure to follow my noble friend and I wish to congratulate her on her first appearance, speaking beautifully in that lovely Edinburgh accent.
§ Amendment No. 82 is one which recurs. We have already moved a similar amendment and in this case it reflects our concern that periodically through the Bill the Secretary of State is given wide and unaccountable powers dramatically to change or reverse the meaning of the Bill. In this case the percentages can be changed by the Secretary of State from 80 per cent. to 8 per cent., 50 per cent. to 5 per cent. and so on. When I raised it on another clause, the Minister was extremely understanding and said that he would consider it. I hope that he will say the same about this amendment and the subsequent ones, which would limit the time we spend on them. I beg to move.
§ Lord Inglewood
As the noble Lord, Lord Donoughue, pointed out, he has moved amendments on a number of topics to do with this matter. I must begin by saying that in this case I find his arguments less persuasive than some others. If he will permit me, I wish to explain why.
The expansion in the number of services which digital technology will allow for radio is much less than for television. In the current state of development, the spectrum allocated for digital radio multiplexes will only allow for a modest increase. Accordingly, it has not been possible to give existing independent national radio broadcasters, like their television counterparts, sufficient capacity to allow the immediate development of whole new channels.
A balance has to be struck. On the one hand, existing independent national radio licence holders need to be given a reasonable opportunity to provide distinctive new programmes on their digital service to help attract listeners to the new technology. On the other, the guaranteed places for independent national radio stations have been given on the basis of their existing licensed analogue service. It would not be right to give existing stations the competitive advantage of being allowed to broadcast a wholly or primarily different service on their guaranteed capacity.
373 We think the arrangements proposed in Clause 32(3) strike the right balance. The digital programming must be at least 80 per cent. the same as the analogue service, so it will clearly be recognisable as the same station, but will he able to include new material. At least 50 per cent. of that 80 per cent. must be broadcast at the same time, which leaves the broadcaster free to reschedule particular programmes at times which some listeners may find more convenient. But we may well not have got it precisely right. Moreover, technological progress may in future allow INR broadcasters to broadcast a wholly new service within that guaranteed capacity. If the take-up of digital sets is sufficient to allow analogue signals for INR to be switched off, the percentage of simulcasting will need to be increased to 100 per cent. If that should happen, order-making powers will be needed.
The issues here are essentially about adjusting to market and technological developments. There is no question of the less advantaged listener becoming increasingly deprived of the best programmes as digital takes off, because if digital reception becomes the norm for INR the government response would, as I have said, be to increase the simulcasting requirement. I would also remind the Committee that INR services, unlike Channels 3 and 5 on television, and unlike BBC radio, do not have public service programming obligations. It is therefore hard to argue that major public policy issues are involved in the extent to which they are simulcast.
In the light of those arguments, I hope that the noble Lord will understand our position and be prepared not to press the amendment.
§ Lord Donoughue
I thank the Minister for that explanation and accept that it is less pressing with this amendment than with certain of the others. I am happy to beg leave to withdraw it.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 83 had been withdrawn from the Marshalled List.]
§ Clause 32 agreed to.
§ Clauses 33 and 34 agreed to.
§ Clause 35 [Restrictions on the holding of licences]:
§ Lord Dubs moved Amendment No. 84:
Page 30, line 22, at end insert—
("(f) impose conditions on future local radio licence applications to ensure that new entrants are not disqualified from operating small scale radio services (as defined in subsection (8A)) by financial and other service limitations which the Authority believes appropriate to the operation of large scale radio services.")
§ The noble Lord said: Clause 34 sets down the general licence conditions applying to new companies coming in. The fear is that some of the conditions, while perfectly reasonable for large companies wishing to enter the radio business, may be too difficult for small-scale radio operators to comply with. The point of Amendments Nos. 84 and 85 is to make it easier for small-scale radio operators to enter by exempting them from some of the more difficult conditions that would apply to the large-scale operators. The idea is to make 374 it possible for small companies to operate and to enter the business without having to meet the rather stringent financial conditions.
§ The benefit of such a situation is that it would help to encourage wider diversity in ownership and operation of small-scale radio services. As such, it has much to commend it. I beg to move.
§ Lord Inglewood
The authority has agreed that it will allow small groups who find it difficult to demonstrate the likely viability of their proposal for the eight-year duration of the licence to apply for shorter-term licences. Indeed, last month the authority advertised such a licence in Cambridge, explicitly stating that the intention was to accommodate applicants who may consider that a licence term of a shorter duration than eight years is more appropriate to their proposed funding or other aspects of their arrangements. In addition, the Radio Authority has agreed to encourage community radio by continuing with a flexible use of the restricted service licence regime, which permits the licensing of stations for 28-day periods. The Radio Authority decided, in 1994, to set aside capacity in the 107 to 108 megahertz band specifically for small-scale radio stations.
On digital radio, I hope there will be plenty of opportunity for all sorts of programming to be part of a multiplex, and the variety criterion which we have introduced will ensure that is the case. The multiplex system allows flexibility of contractual arrangements which could benefit small-scale radio. Multiplex providers will be looking for new types of programmes and I am sure small-scale and community radio will emerge naturally, alongside many other types of service catering for all tastes and interests. We do not need to require it, and so risk discouraging prospective multiplex providers from applying for licences because they find the conditions unnecessarily prescriptive.
Taken together, we are confident that these measures will be sufficient to safeguard the position of small-scale radio services without needing a statutory definition. I hope that that will satisfy the noble Lord and reassure him over his concerns.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 85 not moved.]
§ Clause 35 agreed to.
§ Clause 36 [Assignment of frequencies by Secretary of State]:
§ [Amendments Nos. 86 to 90 not moved.]
§ Clause 36 agreed to.
§ Clause 37 [National radio multiplex licences]:
§ [Amendments Nos. 91 to 96 not moved.]
§ [Amendment No. 97 had been withdrawn from the Marshalled List.]
§ [Amendment No. 98 not moved.]375
§ Clause 37 agreed to.
§ Clause 38 [Award of national radio multiplex licences]:
§ [Amendments Nos. 99 and 100 not moved.]
§ Lord Donoughue moved Amendment No. 101:
Page 34, line 16, at end insert —
("( ) the capacity of the digital sound programme services proposed to be included in the service to provide a sufficient amount of programmes of high quality.")
§ The noble Lord said: This amendment concerns the important issue of quality, and quality criteria, which we discussed at some length at the previous meeting of the Committee in relation to television. We dealt with the arguments fairly thoroughly. We are now discussing them in relation to radio. I shall not detain the Committee since the arguments are all on the record—as are the Minister's replies, to which we shall return at a later stage. I beg to move.
§ Lord Inglewood
Like the noble Lord opposite, I do not want to go over the well-trodden ground of Tuesday's debate. I believe that we have quality independent radio now, and an increasing diversity of services to meet the varied tastes and interests across the country. It is the product of a regime that does not have any quality thresholds for the award of licences. The duty of the Radio Authority is to seek to ensure that independent radio, taken as a whole, provides services of high quality. It is performing that duty well with regard to analogue radio. The Bill extends the duty to digital radio. I can therefore see no case at all to introduce quality thresholds which would inevitably be subjective and might place unnecessary extra costs on an enterprise hardly off the ground.
I appreciate that the noble Lord might not find my reply very satisfactory and may return to the matter at a later date. However, I thought it important to put that particular point on the record at this stage.
§ Lord Donoughue
I thank the Minister for that reply. I look forward to that later stage. Meanwhile, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 38 agreed to.
§ Clause 39 [Reservation of capacity for independent national broadcasters]:
§ [Amendments Nos. 102 to 107 not moved.]
§ Clause 39 agreed to.
§ Clause 40 agreed to.
§ Lord Thomson of Monifieth moved Amendment No. 108:
§ After Clause 40, insert the following new clause—
§ DUTY OF AUTHORITY TO RESERVE CAPACITY FOR DIGITAL COMMUNITY SERVICES
§ (".—(I) In exercising their powers to grant local radio multiplex licences, the Authority shall reserve such digital capacity as the Authority consider appropriate for the provision of local digital sound programme and additional services which are operated for the 376 benefit of the community, or a particular section of the community, by one or more non-profit-distributing bodies, other than the BBC ("digital community services")
§ (2) The amount of digital capacity so reserved shall not be less than 256 kilobits per second in any area or locality where the coverage area of one local radio multiplex service is to a significant extent the same as that of another local radio multiplex service.
§ (3) Where a local radio multiplex licence is granted in respect of a frequency and area or locality in which digital capacity is reserved in pursuance of this section, the licence shall include such conditions as appear to the Authority to be appropriate for the purpose of securing that, in consideration of the making by local digital sound programme or additional service licensees, in relation to whom capacity is reserved under subsection (1), of such payments as are agreed from time to time between the holder of the licence and such licensees, the holder of the licence uses such digital capacity for the broadcasting of such service.").
§ The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 112. These amendments are linked with a more substantial later amendment, Amendment No. 190. They relate to seeking to use the exciting new development of digital audio broadcasting to provide the possibility of new opportunities for establishing a healthier community radio sector than we have so far had.
§ I confess to the Minister that I should not like to have to explain the technical detail of the text of Amendment No. 108. However, I shall set it against a few words of background as to why these amendments appear on the Marshalled List.
§ I do not think that over the years—I have had my share of responsibility in the past—we have done as well as we ought to have done in this country in regard to the encouragement of community radio. Other countries on the European mainland do a great deal better. There are over 400 community radio stations in France, for example. For various reasons we have not done very well over a section of activity that is right at the grass roots of broadcasting. Radio offers opportunities to do things at grass roots level that are more difficult for the more sophisticated broadcasting media. It engenders a very great deal of local enthusiasm.
I therefore begin my case by quoting the present chairman, Sir Peter Gibbings. (I see the former chairman, the noble Lord, Lord Chalfont, in his place). In the recently published 1994 annual report, he stated:
During the debate on the  Broadcasting Bill the Minister responsible for broadcasting at the time said that the Government supported community radio. However, they did not provide the mechanism within the Act for the authority to differentiate this class of licence from other local services".
§ In these amendments we seek to take the opportunity of this new dimension in radio broadcasting to see whether we can provide a mechanism that differentiates this class of licence from the other local services.
§ The purpose of this particular amendment is to reserve capacity on the local digital radio multiplex for digital community radio services. It would be the responsibility of the local radio multiplex operator to assign this capacity to one or more digital community radio services—similar to the local channel requirement on cable operators. Local radio multiplex operators will wish to maximise their commercial return subject to meeting the licensing criteria set out in Clause 42. 377 Unless positive steps are taken in the face of this new development, with all the pressures and difficulties of a new enterprise that the Minister outlined, there is a real danger that the opportunity to establish a reasonable sector, without being too ambitious, for community radio, may very well be lost.
§ In 1994 the issue of community radio was highlighted in the report by the Radio Communications Agency on the future management of the radio spectrum. The report used words that I commend to the Minister. It concluded that the management regime of the radio spectrum should aim to obtain the optimum value from the spectrum in support of a competitive open economy but avoid squeezing out non-economic users, and that that would require a careful balance to be struck.
§ These new developments provide an opportunity to encourage community radio in a way that has not taken place in the past. That is the spirit of these amendments. beg to move Amendment No. 108.
§ Lord Milverton
I support the noble Lord's amendment. Like the noble Lord, I should not be able to explain all the detailed technicality. However, from information I received from the community radio representative whom I met, I understand that it is sound and good. I agree with all the points made by the noble Lord, Lord Thomson.
In so far as I can understand it, it would give community radio a greater identification and strength, and a firmer foundation on which to do its work. At the moment it is a "stop-go" process—go for a period and then stop, or if not stop completely, slow down. It does not help to bring in gifted artistes with talent. It seems only sensible and right that the energy and effort that can be put into community radio should be more available and give more help. I hope that my noble friend the Minister will reflect carefully on these amendments so that he comes to realise that those involved cannot do their work properly if they do not have the means to have a continuous foundation on which to work. I hope that he will give an appreciative hearing to this amendment and the others that stand in the name of the noble Lord, Lord Thomson, and in my name.
§ Baroness David
I should like to support the amendments moved by the noble Lord, Lord Thomson, which are aimed, as he said, at ensuring that community radio is given an opportunity to be heard in this country as it is in many other European and English-speaking countries around the world. The amendment has widespread grassroots public support in Cambridge—where there is a local community station that asked me to help in trying to have these amendments accepted—and in many other rural and urban areas around the country. That is demonstrated by the evidence of thousands of listeners to community radio groups broadcasting on restricted service licences for up to a month at a time, which is a very unsatisfactory way to proceed. That is the maximum period available in most areas under present Radio Authority regulations.
Like the group in Cambridge, those groups broadcast with volunteers from the local community, which are more able to reflect it and provide a truly 378 local choice without having to concern themselves about maximising profit. Cambridge Community Radio had to wait 11 years for the opportunity to apply for a full-time broadcast licence because previous Acts failed to include that sector. Britain is lagging behind many other developed countries which have licensed that sector. For over 20 years Australia has had a very successful legislative arrangement, similar to the one proposed for the United Kingdom. It now has around 140 stations to which over 5 per cent. of the population listen. All of them arc owned and run by local people for the benefit of their local community. We could have the same system here if the amendments are supported.
Nowadays, a great deal is said about communities and trying to help them. It seems to me that community radio is one way to do that. I hope that the Minister will be able to take a favourable view of the amendments.
§ Lord Inglewood
The noble Lord, Lord Thomson, explained the purpose of his amendment. He hopes that it will encourage community radio services to continue to expand and flourish in the digital era. I share the noble Lord's aim to see community services spread and flourish, but I do not believe that his amendment is necessary for that purpose.
As several Members of the Committee mentioned both in this debate and during Second Reading, there is a real difficulty in defining what is meant by community radio. I hasten to assure the Committee that I do not resort to quibbling over words and with the terms in which the amendment is drafted. There is a clear definitional problem at the heart of the community radio issue. Indeed, many—if not most—local independent radio stations regard themselves as a community service in one way or another.
The Radio Authority is well aware of the anxieties of the community radio lobby and has acted to take those on board in relation to the award of analogue licences. Both I and the noble Baroness, Lady David, mentioned that point. It has set aside capacity in the 107 to 108 megahertz band specifically for small-scale radio stations. On 19th January it published its advertisement for a small scale licence for Cambridge which permits applications for shorter term licences than the normal eight-year period. That was specifically to enable smaller groups which might find it difficult to demonstrate the likely viability of their proposal for the eight year duration of the licence to apply for a shorter term licence. I should stress that a successful applicant for a licence period shorter than eight years cannot extend his licence to the full eight year term. That is not a means for a large commercial operator to secure a full licence on the cheap.
On digital radio I hope that there will be plenty of opportunity for all sorts of programming to be part of a multiplex, and the variety criterion which we have introduced will ensure that is the case. The multiplex system allows flexibility of contractual arrangements which could benefit small-scale radio. Multiplex providers will be looking for new types of programmes. I am sure that small-scale and community radio services will emerge naturally, as a direct consequence of the 379 development of DAB, alongside many other types of service catering for all tastes and interests. We do not need to require it and so risk discouraging prospective multiplex providers from applying for licences because they find the conditions unnecessarily prescriptive.
The Radio Authority is proving in its actions that it has the will to look after the whole radio sector including the widest definition of community radio services. The amendment of the noble Lord, Lord Thomson, due to the problems of defining what is meant by a community radio service, would, if enacted, create confusion in the licensing system. The Radio Authority will have taken careful note of the comments made in this debate. I hope that all those who have spoken will see that we share his aim of encouraging the expansion of the smaller scale operators in the radio market, both digital and analogue. We are helping to bring that about.
§ Lord Thomson of Monifieth
I am grateful to the Minister for his reply. We shall want to consider it rather carefully to see whether those who are active in the community radio movement wish to pursue the matter further in later stages of proceedings on the Bill or indeed finally and in another place. I hope that the Minister is right and that the new dimension of multiplexes will offer opportunity for that kind of grassroots activity. There is a difference between that and even the smallest of the commercial radio stations. For instance, Moray Firth Radio Station in Scotland, which I used to know very well, has done splendid service. That is an independent commercial local radio station which has succeeded with a great deal of voluntary help. The boundaries between a pure community radio station and a small commercial radio station are not very firm. On the other hand, in Scotland there is Heartland FM around Pitlochry and Aberfeldy which serves just 5,000 people on a full licence and is doing it remarkably well.
There is an area here which requires further study and needs as much encouragement as is technically possible. But, like the noble Lord, Lord Milverton, I do not profess to understand all the technicalities. At this stage I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 41: [Local radio multiplex licences]:
§ [Amendment No. 109 had been withdrawn from the Marshalled List.]
§ [Amendment No. 110 not moved.]
§ [Amendment No. 111 had been withdrawn from the Marshalled List.]
§ [Amendments Nos. 112 to 118 not moved.]
§ [Amendment No. 119 had been withdrawn from the Marshalled List.]
§ [Amendment No. 120 not moved.]
§ Clause 41 agreed to.
§ Clause 42 [Award of local radio multiplex licences]:
§ [Amendments Nos. 121 to 123 not moved.]
§ [Amendment No. 124 had been withdrawn from the Marshalled List.]380
§ [Amendments Nos. 125 to 131 not moved.]
§ Clause 42 agreed to.
§ Clauses 43 and 44 agreed to.
§ Clause 45 [Conditions attached to national or local radio multiplex licence]:
§ [Amendments Nos. 132 and 133 not moved.]
§ Clause 45 agreed to.
§ Clause 46: [Additional payments to be made in respect of national radio multiplex licences]:
§ [Amendments Nos. 133A and 133B not moved.]
§ Clause 46 agreed to.
§ Clauses 47 and 48 agreed to.
§ Clause 49 [Duration and renewal of national or local radio multiplex licences]:
§ [Amendments Nos. 133C and 134 not moved.]
§ Clause 49 agreed to.
§ Clause 50 [Enforcement of national or local radio multiplex licences]:
§ [Amendments Nos. 134A and 134B not moved.]
§ Clause 50 agreed to.
§ Clause 51 [Licensing of digital sound programme services]:
§ [Amendments Nos. 134C and 134D not moved.]
§ Clause 51 agreed to.
§ 6 p.m.
§ Clause 52 [Duration and conditions of digital sound programme licence]:
§ [Amendments Nos. 135 and 135A not moved.]
§ Clause 52 agreed to.
§ Clause 53 agreed to.
§ Clause 54 [Digital additional services]:
§ Baroness O'Cathain moved Amendment No. 136:
§ Page 51, line 4, leave out ("digital sound programme") and insert ("radio digital").
§ The noble Baroness said: In moving Amendment No. 136 I hope to encourage the Government to address an issue of interest and concern to them. The Government have proposed a realistic threshold of 10 per cent. on the broadcast of data through each multiplex. I believe that that is intended to restrict the level of business data sold to companies and only available through exclusive subscription.
§ That is perfectly correct. However, the Government have not defined "data" effectively enough. "Data" as defined in the Bill, will comprise all material that is not listened to at the time of broadcast. That would preclude one of the most interesting features of DAB—digital audio broadcasting. DAB sets will offer the listener access to public broadcast programmes, information and news items that have been broadcast previously. For example, I shall be able to access the midnight news programme at 7 o'clock the following morning; Members of the Committee, if they so wish, will be able to listen to the cricket scores from Australia at their convenience.381
§ Those features distinguish DAB from analogue broadcasting and form part of the public broadcast nature of the technology. If all data is placed within the umbrella of the 10 per cent. threshold, the incentive to buy a DAB set will be greatly reduced.
§ The amendment redefines digital additional service by defining the data within the 10 per cent. threshold as excluding radio digital service, rather than excluding digital sound programme. By that definition the 10 per cent. threshold will include business-to-business data but will allow for delayed reception of broadcast audio and other broadcast data to be available to the public at large.
§ The Bill also excludes advertising from ancillary services. The amendment allows for advertising as an ancillary service, because to edit out of programmes all advertising, including local event information, would be impossible and significantly change the local information content of local radio. I beg to move.
§ Lord Colwyn
Clause 54 defines digital additional service as not being, among other things, an ancillary service. In so doing it prevents ancillary services consisting in advertising. In that regard I refer to Clause 54(2)(d).
It is difficult to see why an ancillary service to a commercial radio service should not consist in advertising. For example, one can imagine why listeners may wish to hear or see on a small screen or via a coupon dispenser, which I understand may be a part of DAB radio sets, a choice of service or product in a specific category. An ancillary service may carry further details regarding something advertised more briefly on a sound service. I ask the Government to allow commercial DAB participants to utilise the commercial facilities of the technology. I support the amendment.
§ Lord Inglewood
Perhaps I may go round the general parameters of this general topic. I feel that the matter has been properly addressed but, if Members of the Committee feel that there are deficiencies in the way that we look at it, I shall be grateful to learn what those deficiencies are.
Amendment No. 137 affects advertising in the form of text, or in any other form not part of the sound programme service. Where such advertising is related to the content of sound programmes or to the content of sound advertisements, the amendment would categorise it as an ancillary service. Digital sound programme service providers would therefore no longer need an additional services licence to transmit the advertising concerned.
Let me make entirely clear that sound advertisements provided as part of the main sound programme service will not need any separate licence. Let me make clear also that under the Bill as drafted, text advertising will he permitted. However, it will need to he covered by an additional services licence and will therefore be counted towards the calculation of the percentage of each multiplex used for additional services. That percentage will, under Clause 45, be limited to 10 per cent. I should stress that the limit 382 will not be set in stone. It will be amendable, by order, to allow the flexibility to respond to technical advances and market conditions. We touched on that general point earlier this evening.
The Government have made abundantly clear that they welcome the potential that digital technology will provide for broadcasting frequencies to be used for additional services such as text and data. However, I am sure my noble friend Lady O'Cathain will agree that we need to ensure that broadcasting frequencies are used primarily, though not exclusively, for broadcasting.
This amendment would mean that any digital sound programme licence holder could transmit any amount of text advertising, if there were a link to programme content. In the case of, say, a recipe programme, that could lead to a lot of text advertising. The amendment would also permit unlimited amounts of text advertising of records played on the sound service, and of related merchandise. Perhaps even more importantly, any advertiser providing advertisements for the sound service could, with the programme licence holder's agreement, place unlimited text advertisements.
Let us remember that, because digital audio broadcasting technology will provide increased capacity, and is flexible, that does not mean it provides unlimited capacity. Indeed, on radio space will be very tight. Any of that capacity being used for text advertising or other additional services means less for sound broadcasting, and therefore either fewer sound services or lower quality. So the Government's view is, by all means let us have text advertising on radio frequencies, but let us keep it within limits.
Our concern about the amendment is that it would severely restrict our ability to do that. I hope that my noble friend now has a better understanding of the thinking behind our proposal.
§ Baroness O'Cathain
I am grateful to my noble friend for explaining the thinking behind this clause. I understand his view in relation to unlimited advertising. That is something we do not want. On the other hand, it is restrictive. However, bearing in mind that he is prepared to be flexible and keep the matter under review, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 137 not moved.]
§ Clause 54 agreed to.
§ Clauses 55 to 57 agreed to.
§ Clause 58 [Promotion of equal opportunities]:
§ [Amendments Nos. 137A to 142 not moved.]
§ Clause 58 agreed to.
§ Clauses 59 and 60 agreed to.
§ Clause 61 [Interpretation of Part II]:
§ [Amendments Nos. 142A to 142E not moved.]
§ Clause 61 agreed to.383
§ Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.