§ 3.10 p.m.
§ Report received.
Lord Howell moved Amendment No. 1:
After Clause 1, insert the following new clause—
"UNBUNDLING" OF SPORTS BROADCASTING RIGHTS
(".—(1) Notwithstanding the provisions of section 182 of the 1990 Act, the Commission or the Radio Authority shall do all that they can to ensure that broadcast sporting events are available as widely as possible in the United Kingdom and in particular shall ensure that, in respect of any person who is a licensee either of the Commission or the Radio Authority—
(2) For the purposes of this subsection—
(3) Every licence granted by the Commission and the Radio Authority pursuant to this Act and the 1990 Act shall include such conditions as are necessary for securing compliance by their licensees with directions given by the Commission or the Authority in the discharge of their duties under this section, and such directions shall he enforceable at the suit of the Commission or the Authority as the case may be.
(4) In discharging their duty under subsection (1)(c) and (d) the Commission or the Radio Authority shall have regard to the interests of the local area or national region as far as the sporting event is concerned.
(5) If the holder of exclusive rights is a licensee neither of the Commission nor the Radio Authority, and is not S4C or the BBC, and he fails to make those rights available on reasonable terms for the purposes of subsection (1) the Commission or the Radio Authority shall refer the matter to the Director General of Fair Trading who shall determine the terms on which those rights or any of them are to be licensed.
(6) The Governors of the BBC shall be under a duty to ensure that the BBC complies with subsection (2) as if the BBC had been expressly referred to in that subsection.
(7) The Welsh Authority shall be under a duty to ensure that S4C complies with subsection (1) as if S4C had been expressly referred to in that subsection.
(8) For the purposes of subsection (1) above any agreement for exclusive rights for the broadcasting of any sporting event shall be registered with the Director General of Fair Trading.").
§ The noble Lord said: My Lords, Amendment No. 1 is concerned with a subject with the unfortunate title of "unbundling"; or, to we laymen, the right to show highlights of sporting events on television on any channel when those events have been negotiated live by another channel. It follows naturally from our discussions in Committee and the vote taken by this Chamber on that occasion to protect the eight listed events so that they are always available on terrestrial television.
§ The Government announced yesterday that they have accepted the will of the House on that matter. I immediately welcome that decision and thank the Minister for it. So far so good. Such a decision will be appreciated throughout the country by the millions of people who do not have access to Sky or cable. However, we have not yet had sight of the amendment and need to look at that before giving the statement a total and unqualified welcome.
The noble Lord, Lord Inglewood, said in his statement that one of his objectives was to make the list "more transparent", whatever that means; to establish a criteria,
as a reference point for the future";
and to give further consideration to this "interesting suggestion". I have no quarrel with any of that. However, the Minister will appreciate that we must wait to see what that means in practice, especially in relation to any period of time for review of the matter.
§ I turn to the amendment, which deals with the question of highlights of all sporting events outside the listed events; that is, the majority of sporting events which appear on television. It is a question of major importance for the sporting public and for television viewers. Your Lordships will have some idea of the events in question when I refer to the Ryder Cup in golf, the Open Golf Championship, the Cheltenham Gold Cup Festival, Royal Ascot, the Five Nations Rugby Tournament, the European Golf Tour and the Rugby League Cup, among others. That will tell the House how important is the matter that we are discussing.
§ Unless action is taken to protect the rights of the public, those events could disappear from the television screens in millions of homes. I illustrate the point by reference to the Open Golf Championship, for which I understand Mr. Murdoch offered £24 million. It has not yet been signed up. If he secures that event, and if there is no provision such as is sought by the amendment so that the highlights can appear on the BBC, independent television or Channel 5, then three-quarters of this nation will see nothing of the event on their television screens. If we apply that argument to the other events I mentioned, the House will gain an insight into the seriousness of the situation that will arise.
§ I cannot believe that the Government want that to happen. Undoubtedly there would be an uprising in the land if all that sporting excellence is suddenly removed from the television screens in the homes of so many people, which is what happened in regard to the Ryder Cup. The House will recall that when we last debated the matter I quoted the exclusion clause which excluded the BBC. Sky has since told me that the BBC got it wrong and was in fact referring to other golfing tournaments. I do not accept that, but as I have only just been given that information I shall need to look at it with care.
§ In my judgment it will do a great disservice to sport as well as to the national interests of the viewing public if we allow the dangers I outlined—which are very real—to exist. The Murdoch millions could remove a great chunk of British sport from the television screens of the great majority of British viewers.
§ The amendment seeks to say that where a pay television broadcaster has exclusive live rights it must make the highlights available to a terrestrial broadcaster; where a terrestrial broadcaster owns the exclusive live rights it must make highlights available to a pay TV broadcaster; and, where a broadcaster holds the radio rights but is unable to exercise that right because, for example, it does not have a radio station, then it must ensure that the live rights are sold to another broadcaster and are not hoarded.
§ The amendment attempts to be even-handed and provide the rights to both terrestrial and subscription television. It places a specific duty upon the Independent Television Commission to ensure that, if live rights have been sold into one market, then the highlights should be sold into another. If a pay channel has exclusive live rights—as, for example, in the forthcoming boxing match between Tyson and Bruno—then highlights 158 should be offered on reasonable terms to universal broadcasters, and vice versa. The Radio Authority is given a similar responsibility in respect of rights holders which are commercial radio stations.
§ The term "television highlights" is given a legal definition with the selection of extracts to be made by the purchaser. The legislation is intended to cover the BBC, with clear obligations on the governors to ensure, first, that it complies, and on the Welsh Authority in relation to S4C; and, secondly, that the matter is effectively dealt with. That obligation is also upon Channel 5, where it is included in the universal market to reflect the obligations it has taken on to maximise its audience by spending money to retune video recorders.
§ A new duty is created to register all those deals and to give the Office of Fair Trading the power to unbundle where the offending party is not a licensee of the ITC or the Radio Authority. The price for these events—a reasonable price—would be decided between the purchaser and the vendor. That is happening today—this very day—with cricket World Cup highlights being shown to BBC viewers under an agreement between the BBC and Sky. Noble Lords will remember that we informed them of that in the previous debate. I believe that it came about largely because of the tabling of the amendment we are now discussing. The offer was made again to the BBC and taken up at a price of £1 million. Whether I am right about that is a matter of small consequence. What is important is that the highlights have been made available. Every night we can watch World Cup cricket. We can hope that the England team get it right and do a bit better. I am happy to say that I think the £1 million well spent. I hope that it will be better well spent when we reach the quarter finals of the competition in a few days' time.
On the "Today" programme on 6th February Mr. David Elstein, head of programmes for Sky, told James Naughtie, that our proposals would be,
wonderful news for Sky. We would now get highlights of all the listed events".
Exactly, my Lords. He got it right. I am very pleased that it is good news for Sky. I hope that Sky and Mr. Elstein will maintain that posture about the rest of the highlights we seek to protect. I hope that they are not opposed to the amendment. From discussions I have had I fear that I may be hoping in vain.
§ The Minister will tell us, according to the statement he issued yesterday, which again we appreciate—he was being very helpful as he always is—the result of the Government's ludicrous consultation exercise. We were told that the Government would consult all and sundry—everyone in the land—over a period of two years. I am sorry, I should have said two weeks. Two years would have been more appropriate. I am sorry for that slip. He will claim that that is what they have done. He will say, I believe, that his consultation exercise shows no substantial demand for protecting the highlights and that all the concern is about the listed events. That is not the case. I am sorry to say to the Minister that I take issue with him about his interpretation of his consultation exercise, although we really do not know much about it.159
§ For example, the Independent CHA Sensor Poll, carried out on 20th February, which is only a week or two ago, found that two-thirds of cable and satellite viewers were unlikely to take up pay TV and that 80 per cent. of all viewers think the Government should legislate to protect the highlights. I hope the Minister will tell us today the organisations which were consulted and which could speak for the 30 million people without cable or Sky television. That is an important matter. I, for one, would like to meet the organisations the Government believe speak for the nation in order to find out exactly what they said and why the Government have not accepted their advice. They have rejected their advice.
One of the organisations consulted was the Voice of Listener and Viewer organisation. I have had the opportunity this morning to speak to Professor Vincent Porter of Westminster University who tells me that he was consulted. He spoke to officials in the department for one-and-a-half hours. What he told me is quite fascinating. He said that he drew the Government's attention to the fact that the Copyright Act guarantees,
freedom to report news and current events".
That removes from our discussion any doubt as to whether the terrestrial channels can show on news programmes events which Murdoch has bought. That seems to have been cleared up, and I should like the Minister to confirm that.
§ Professor Porter drew my attention to a case in the European Court. I know that this is not a good day to quote in aid the European Court; nevertheless it decides what European law is. Therefore, we have to take account of it. The professor told me that it had recently made case law in a case which the BBC lost. The court determined that any holder of a contract for live television would be in breach of competition policy if it did not provide for the separation of highlights. That is a recent decision of the European Court. Not to do so would be contrary to the competition directive of the European Commission. The European Commission is apparently following up the matter.
§ The key is that the policy has to be exercised for the maximum benefit of the viewer. The European Court decided that not to allow highlights would not be for the maximum benefit of the viewer. If that case law is right there is no need for my amendment. I am anxious to hear what the Minister has to say. I assume that the Government know about the decision of the European Court. No one has informed us about it until now. I assume that since the professor spoke to the officials in the department the Government have had the opportunity to examine what the professor told them. I hope that the Minister feels able to give an authoritative comment and ruling today. If this viewers' organisation is wrong, we must persist with our amendment. If it is right, we shall probably need to think again. We await the Minister's response.
§ There is one final point. If we cannot protect the highlights of so many events of such importance to millions of people, and if, as appears to be the case, the Government do not wish to assist us to do that, then almost inevitably we shall have to do the job ourselves 160 at Third Reading. We shall have to seek to add to the list of events. The Five Nations Rugby and some of the other events I read out need to be protected. That is my judgment and, I believe, the judgment of many of your Lordships and certainly masses of the public. If the Government will not protect them, and if they are not protected, I hope the Minister will take note that inevitably we shall have to return to the matter at Third Reading and attempt to extend the number of listed events in order to achieve our objective.
§ As I said, I hope very much that, having moved this amendment in what I hope is a reasonable spirit of conciliation with the Government, we can get some movement. I am aware that the Sports Council is trying now to draw up a voluntary code of conduct in these matters. I am not usually very enamoured by voluntary codes because often people find ways to break them. It will be a significant advance if a voluntary code is drawn up and all the television companies and sports bodies agree to accept it. We shall have to wait and see how that goes. I do not expect the Minister to be able to tell us much more about it now.
§ I hope that I have done enough to convince your Lordships that this is another matter of major importance, but perhaps we might have to do more work on it. However, it is right to raise it now and possibly to seek a vote either today or at Third Reading. I beg to move.
§ 3.30 p.m.
§ Lord Aberdare
My Lords, I congratulate the noble Lord, Lord Howell, on his success at Committee stage in getting the present Clause 1 written into the Bill. I also join with him in thanking my noble friend the Minister in having agreed that this is a worthwhile clause and that he is to produce another amendment at Third Reading which will help it along.
At first sight, and from what the noble Lord said, this amendment too is very attractive despite that most unattractive word "unbundling". The amendment has been eloquently moved. But I have come to the conclusion that it is not an amendment which your Lordships should accept. It is immensely complicated. Your Lordships have only to look at the amendment on the Marshalled List to see how difficult it is to understand. Even after the noble Lord's explanation, I do not believe that I really understand what it is all about. I am sure it will cause great difficulty in its implementation, both to broadcasters and to the governing bodies of sport.
More importantly, it interferes radically with the rights of the sports bodies to negotiate freely with the broadcasters. They own these rights and they are used to negotiating with the broadcasters, covering all the various alternative arrangements that are available, from live broadcasting, recorded broadcasting and radio broadcasting. It is one thing to interfere with the so-called "jewels in the crown". That covers an already existing list, presently applied to terrestrial broadcasting only, and great national sporting occasions, which should indeed be available to the widest possible public. It contributes to that expression which we were discussing recently in another debate, "social cohesion".
161 But to go further and interfere by statute in all sporting rights is a much more serious step. Is it really necessary? Rights holders with sufficient mass appeal are already unbundling their rights. Cricket, football and Rugby Union authorities have all chosen a mixture of satellite and terrestrial coverage. The noble Lord mentioned the World Cup. I saw the England v. Pakistan World Cup highlights and I agree with him that it was not always pleasurable viewing; but there it was on Channel 2. Sports authorities are perfectly well able to decide between the large financial incitements offered by BSkyB and the far greater audiences offered by BBC and ITV. That has proved the case where the Olympic Games and lawn tennis have both opted in favour of large audiences.
These are complicated negotiations that have to take place each time and in my opinion they are much better left to be decided without statutory interference. Moreover, there are a number of minority sports where compulsory unbundling would be quite inappropriate and probably to their disadvantage. Is it intended, then, to issue another list of sports liable to unbundling?
Recently the noble Lord, Lord Howell, criticised the Central Council for Physical Recreation. I say nothing about his criticism, but I believe that even he would recognise that the views expressed by the CCPR do represent those of most, if not all, the governing bodies of sport. They have benefited greatly from the increase in sports broadcasting and they would greatly resent any statutory interference with their rights.
§ Lord Howell
My Lords, I am grateful to the noble Lord for giving way. Perhaps I may inform him that the views that he ascribes apply to one part of the council; namely, the major spectator sports division. It makes them no less important, but that is the case. The chairman and the executive of the Central Council for Physical Recreation represent 300 bodies and they have never been consulted about these matters since the letter was sent out in the past few days, which I believe the noble Lord mentioned.
§ Lord Aberdare
My Lords, I am grateful for what the noble Lord says. I am not in any way denying how he criticises the leadership of the CCPR. What I am saying is that all major national sports bodies are not anxious to have statutory interference with their negotiations on their own rights.
I believe that the present system of freely negotiated coverage is the best for all parties. But I do welcome also, like the noble Lord, the idea of a sports council and a voluntary code of conduct. I believe that would fill the bill admirably and would be much preferable to the present idea of statutory interference. I hope that your Lordships will not accept this amendment.
§ The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood)
My Lords, my noble friend Lord Aberdare is much quicker on his feet than I am. I hope that it might be of assistance to your Lordships, before we turn to the specific amendments, if I outline the Government's 162 position on the important issue of broadcast sports rights. Noble Lords may recall that I explained to your Lordships at Committee stage that I would come back with the Government's position by Report stage and I feel that I must do that at the outset.
I am sure that we shall have another useful debate. No one can be in any doubt about the strength of feeling on this issue. Parliament has the last word on it and it is for Parliament to decide. Your Lordships' House is playing a full part in that process. The Government will take careful note of all the points of view expressed this afternoon.
Since your Lordships last debate in Committee on 6th February, the Government's consultation exercise has proceeded and is now effectively complete. We have had meetings with broadcasters, regulatory authorities, consumer groups and sports bodies. I shall willingly send a list of them to the noble Lord, Lord Howell. We have received a number of written representations to supplement extensive correspondence from Members of Parliament, sporting and other interests and, above all, from the public. We have reviewed the recommendations of an earlier report on this subject by the National Heritage Select Committee in another place. Of course, we have had very much in mind your Lordships' earlier contribution in discussion of the Broadcasting Bill.
Overall, the consultation process has proved useful. It was welcomed by all the participants. It has given everyone concerned the opportunity to put their case when they knew the matter was under consideration. It has allowed the Government to reach a clearer and better informed understanding of the complex issues involved.
There are no easy answers here. Current arrangements for the broadcasting of sports events have brought significant benefits for sport in the form of investment in new facilities and training programmes at all levels. There is more sport on television than ever before. But the Government recognise public concern that the next stage in the development of subscription television could affect the ability of terrestrial free-to-air broadcasters to provide coverage of key sporting events—that is to say, those which have a resonance not only to sports fans—and we believe that legislative change to secure this is justified. In deciding the terms of such change, we need to find a measured balance between all the interests involved.
It is clear from the representations that we have received that the public's primary concern relates to listed events and to how coverage of them should be protected for free to air terrestrial television. In that context, I am referring to the vast majority of letters from members of the public direct to Ministers or via their Members of Parliament. They are concerned at the loss of live coverage of sporting events and are not seeking extensive highlight coverage.
That moves me towards the issue covered by the noble Lord's amendment on which your Lordships voted in Committee, and which now stands as Clause of the Bill. It extends the existing controls in the Broadcasting Act 1990 to prevent the live transmission 163 of listed events on an exclusive basis by pay-per-view or subscription services. The Government had already put forward that idea in their own discussion paper. We accept that an extension of existing protection along the lines which your Lordships voted so emphatically into the Bill is justified and that a clause modelled on the amendment tabled by the noble Lord, Lord Howell, should accordingly form part of the Bill, but we should like to build on the thinking underlying the amendment and in addition to put right some specific deficiencies to which I drew attention in Committee.
For that reason, the Government propose to introduce at Third Reading an amendment to guarantee the availability of live coverage of listed events to terrestrial television and to provide for a number of associated measures to secure the best deal for sports bodies, broadcasters and the public. I am sorry that it has not proved possible to table an amendment for Report stage, but I hope that it may help the House if I outline now the main elements of the Government's proposed approach.
Our intention is that a subscription or pay-per-view service would not be permitted to broadcast live coverage of a listed event unless rights were made available to a terrestrial service on fair and reasonable terms. Equally, on the basis of reciprocity, a terrestrial service would not be permitted to broadcast live coverage of a listed event unless rights were similarly made available to a subscription or pay-per-view service. Within classes of service, exclusive sales to individual broadcasters would he possible.
Such an approach would safeguard listed events for terrestrial television, but at the same time be more liberal than the controls in the 1990 Act which imposed a rigid ban on the live coverage of listed events on pay-per-view services. It would help to sustain competition on price in the interests of sports bodies. There would be scope for subscription broadcasters to offer alternative or fuller coverage of a listed event which was shown on a terrestrial channel. This would be to the benefit of the viewers who might wish to avail themselves of it. Enforcement would be through the ITC by analogy with the 1990 Act provision; and we should expect the BBC to commit itself to a regime along similar lines. There should be a review mechanism to reflect the need for flexibility in the fast-moving broadcasting sector.
Such an approach goes fully with the grain of the amendment passed by your Lordships' House. It is also in line with an earlier recommendation of the Select Committee of the other place. We believe it strikes a fair balance between the reasonable interests of all those concerned; and I hope that our planned amendment to this effect will commend itself to your Lordships when we present it to you.
I have said that public interest has focused very largely on listed events. Alongside calls for added protection for coverage of listed events there have been various suggestions that the list itself should be modified. The Government keep the list of listed events under continuing review. Any proposals to add to or subtract from it need to be considered carefully in consultation with the various interests specified in the 164 1990 Act. One point that has been made in consultation is that the process of deciding on the contents of the list should be made more transparent, and in particular that criteria should be established to act as a reference point for future discussions. The Government think that this is an interesting suggestion and we shall consider it further.
This might be an appropriate moment for me to sit down because, with your Lordships' leave, I should very much welcome the opportunity to hear the comments of other noble Lords on the amendment before commenting on it myself on behalf of the Government.
§ 3.45 p.m.
§ Lord Thomson of Monifieth
My Lords, I am sure that the whole House is indebted to the Minister for what he has just said which is for the convenience of the House. It will be helpful to discuss the amendment which was so ably moved by the noble Lord, Lord Howell, against the background of the announcement that the Government have just made.
We should also congratulate the Minister on having conducted one of the fastest processes of consultation in the history of this somewhat slow-moving and dilatory Government. If there were an Olympic gold medal for speed of consultation, I think that the Minister should now be enjoying it. We shall want to study carefully the detail of what the Minister has said about the amendment which he is to move on Third Reading to deal with the listed events provisions which your Lordships passed at an earlier stage.
I shall say no more about that at this stage beyond underlining what the noble Lord, Lord Howell, said about one aspect of the consultation. If I remember rightly, the consultation paper relied largely on statistics provided by BSkyB. The Minister seemed to rely on the rather speedy consultation process and on letters that he has received on the matter. He should not rely too much on the fact that ordinary, concerned citizens who give their views should, as he put it, have an interest only in protecting listed events and do not have an interest in the wider area of the broadcasting of sporting activities. I do not think that the ordinary concerned citizen can follow the detail of these matters too closely. The noble Lord, Lord Howell, quoted a figure from one newspaper opinion poll suggesting that 80 per cent. of people felt that Parliament should legislate to protect sporting events more generally rather than simply the listed events. That figure should be given due weight.
Having said that, I turn to the amendment moved so ably by the noble Lord, Lord Howell, who has great knowledge and experience of these matters. He put his case extremely modestly and fairly. It is important to realise the distinction between listed events and protected events and what we are discussing in this amendment which goes a great deal wider. The listed events, the so-called "Crown Jewels" as the noble Lord, Lord Aberdare, called them, are more than sporting events. They are national occasions. They are part of the social Cohesion about which the noble Lord spoke.
Beyond that, a wide range of major sporting events are now broadcast. The proliferation of satellite and cable channels which are mainly dependent on 165 subscription has meant that sporting events are now more widely available, as the Minister has just said. Undoubtedly, in general that has been good for the sporting organisations which can now get a much fairer price for their sporting rights than was the case in the days when only the BBC and independent television competed for them. It has been good for BSkyB and other satellite and cable operators. In general, it has been good for viewers and listeners, apart from the concerns which are the main thrust of this amendment.
In my judgment, given the spread of the broadcast of sporting events, our starting point ought to be that there is now ample money to go round if no one is too greedy or too shortsighted and if there is a willingness to put the interests of the general viewing and listening public first.
We must bear in mind that for some years ahead the vast majority of people will depend on the main public terrestrial channels for their viewing of sporting events. All the research indicates that well into the next century main viewing will remain with the terrestrial channels. The rights to television highlights or to live radio should therefore not be "hoarded", to use the word of the noble Lord, Lord Howell. Where a broadcaster has bought exclusive live rights for subscription, there should be a legal obligation to make the highlights available to channels with a universal audience.
We believe that the ITC should be responsible for regulating that. It can do so through the conditions that it already imposes in licences on subscription broadcasters. One should not forget that once the Bill becomes law the ITC will be able to regulate the BBC if the BBC decides to go in for a minority subscription channel in the future in just the same way as it can regulate BSkyB and other satellite operators.
The amendment does not prefer one channel to another. The ITC would regulate those over which it had coverage; the Radio Authority would regulate the radio channels; and the Director General of Fair Trading would, of course, have the ultimate sanction. If concern remains about the BBC avoiding regulation, the provisions can—I would support this—be made binding upon the governors. It goes without saying that the changes that we propose in the amendment are in no way retrospective. There is no question of existing contracts being hit.
The change can help the sports bodies—I say this to the noble Lord, Lord Aberdare—if they take other than the most short-term view of where their interests lie. It will help to create a longer term market—a new set of secondary sporting rights. They will be able to negotiate in different markets and extract the highest price from them all.
My experience of the preparations for the Bill, and the vigorous lobbying that we have all received from the various interested parties, has been a vivid insight into the fact that the market place for sporting rights has become a jungle in which everyone fights fiercely, and understandably, for their own interests. I do not in the least regard the BBC or ITV as knights in shining armour with regard to operations within that 166 marketplace. No one who has spent time as chairman of the IBA could ever regard ITV as a knight in shining armour. Nor do I regard the other side, represented by the subscription broadcasters, as being the forces of darkness.
In the amendment we are genuinely trying to strike what the Minister called the balance of various conflicting interests. From these Benches, we believe that in the interests of the viewer and listener the marketplace requires some statutory regulation. It cannot be left just to voluntary codes of conduct and to the chance of agreements being made, as they have sometimes been made recently, at the very last minute. In such cases, I believe sometimes that it is only because the matter is being debated in your Lordships' House. For those reasons, we believe that the amendment is the best way to look after the interests of the viewer and listener, and it is the best long-term bet, incidentally, to stop undesirable monopolies emerging.
§ Viscount Whitelaw
My Lords, this is an important advance. My noble friend Lord Thomson—if I may call him so—has put forward a generous offer. He believes that it is the right way for the Government to go forward. I understand the important way the noble Lord, Lord Howell, has put forward the matter. It should be considered carefully, but when one hears what my noble friend the Minister said—he has worked extremely hard in a difficult situation—I feel that it is an opportunity for the House to make a valuable advance which can be taken forward by the Government when the Bill goes to another place.
This seems to be a sensible plan for many people who are anxious and want to see the service developed. I thank my noble friend the Minister for having made a considerable effort in moving in what I believe to be the right way.
§ Lord Barnett
My Lords, I believe that the Minister has done a marvellous job generally in his handling of the Bill. I would be the first to concede that he has done an excellent job generally throughout our discussions. The discussions I have had with him have confirmed that.
The noble Lord, Lord Aberdare, said that he did not understand the issue of unbundling. Perhaps I may try briefly to explain. For example, last night—the noble Viscount, Lord Whitelaw, with his previous interest in the north east may be sorry to know this—Newcastle lost to Manchester United. I was pleased about that, but I did not have an opportunity to see the match. I should have liked to have seen it. Under my noble friend's amendment, we would have had a chance to see it on terrestrial television. That must be helpful. I see that the noble Viscount agrees. I hope that if the Minister does not accept the amendment today he will at least come back, as he has done on the main amendment, at the next stage of the Bill.
It is important that the ITC, and no one else, as the noble Lord, Lord Thomson, said, should have the responsibility. That is not because, as he said, the BBC and ITV are knights in shining armour. As a former vice-chairman of the BBC I never saw myself as a 167 knight in shining armour, as I know he is aware. The change could help everyone concerned. This is the big issue. It helps the sports bodies. It would help them create a new set of secondary sporting rights. There would be live rights on television for all concerned.
There would be no question of doing anyone out of the responsibility of presenting the sporting programmes that we all want to see. I see that one noble Baroness, the noble Baroness, Lady O'Cathain, does not want to see them. I know that there are some people who do not want to see sport on television, but they can watch other channels or not bother at all.
To answer the noble Lord, Lord Aberdare, the matter is simple. There are no complications about this. Anything a monopoly television power has on its subscription or other channel should be available elsewhere. Even if it is a monopoly to the BBC or ITV, that should equally be available elsewhere. That is all that is being said by my noble friend Lord Howell. The change would work in the interests of viewers, listeners, and the sporting bodies themselves. It is also in the best long-term interests of stopping monopolies emerging any where.
My noble friend Lord Howell will correct me if I am wrong, but that is the main purpose of the amendment. Put briefly in that way, I hope that your Lordships will support it.
§ Lord Newall
My Lords, at first glance I had great sympathy with the amendment, but after looking at it more carefully I feel that it is not right. Many of the movers of the amendment are friends of mine. I have supported them and they have supported me. I support the Government over my noble friend the Minister's recommendation that the so-called unbundling provisions are neither desirable or necessary.
As noble Lords know, and as I have said on many occasions, I have an interest to declare as chairman of the British Greyhound Racing Board. Greyhound racing, together with all other major spectator sports in this country, strongly opposes the suggestion that rights for live and recorded television and radio rights should be sold separately.
Recorded rights could lose all their value, as any broadcaster could claim them by statutory right. That is not what we want. The bidding process would be almost impossible. It would be impossible for a rights holder to agree a price with a broadcaster for exclusive rights if neither party knew the extent or the price of the highlights package. That is important, although it is complicated.
We have to ask what are the reasonable terms which the amendment suggests, and how are they arrived at. Who would have to agree them? It is a minefield. The Government are wise to oppose instant legislative solutions in this area. We need to look at this issue in much more depth in the future. Without taking a great deal of time, I agree with my noble friend the Minister and oppose the amendment for the reasons I have given.
§ 4 p.m.
My Lords, I support what my noble friend said. Perhaps I may comment on the amendment and say who it affects. The main beneficiaries will he those who operate the terrestrial television channels. It is worth noting that the ITV Association, which represents all ITV companies, has said that on balance it prefers to allow the market to take its course on unbundling within existing competition rules rather than the complicated legislative process which the noble Lord, Lord Howell, is suggesting. We must remember that competition rules carry weight. If there is any anti-competitive behaviour those who feel hard done by can go to the OFT. The problem with the amendment is that it is extremely complicated and, I believe, unworkable. The terrestrial broadcasters who are affected say that they would prefer the market to take its course.
The BBC, which is also affected, states that it is in favour of the amendment. However, we must remember that the BBC is a past master at anti-competitive behaviour because it does not make its highlights available to other broadcasters. The noble Lord, Lord Howell, criticised the Minister's consultation exercise as ludicrous. I offer the same criticism of the noble Lord's survey, which was the same as asking, "Do you wish to have everything for free?". Of course, the answer is always yes and we must not read too much into the survey. We must look at what those in the industry say and take their comments to heart. My noble friend the Minister has made an offer which we should consider most carefully.
The Earl of Harrowby
My Lords, my noble friend Lord Astor said that the main beneficiaries will be the organisations concerned. Perhaps I may remind him that the main beneficiaries should be the viewing public, who we must also consider.
When the related amendment was debated in Committee I was snow-bound and regretted that I was unable to support it. When I entered the Chamber I intended to support the noble Lord's amendment and I still intend to do so. However, I would qualify that because I would wish to read what my noble friend the Minister has said. His comments were difficult to follow exactly and they could alter one's opinion.
Two issues are involved. The first is that we are dealing with individual assets and it has been asked whether it is right to circumscribe one's rights to deal with those assets. That is not a unique problem and it would not be a precedent to say, "No, you cannot". Perhaps I may remind your Lordships that, for instance, I am not allowed to sell a mantelpiece in a house that I happen to own freehold. There are innumerable instances of inability to have freedom to deal with assets.
The second issue is the financing of sport. The phrase "short-termism" has been mentioned and I endorse the comment. In my view, the opponents are adopting extreme short-term attitudes if they believe that by eliminating 85 per cent. of the viewing public they are advancing the interests of their sport. In the short term 169 they might be doing so, but I am sure that in the long term it will be the ruination of their sport. That is why I support the original decision reached by the House and this amendment.
I conclude by asking the Minister to mention to the Secretary of State the fact that I can think of no better way of losing for her party and mine 500,000 votes at the next election than by denying the general public the opportunity to watch not the finals of Wimbledon but the whole of Wimbledon.
§ Baroness Rawlings
My Lords, I fully support what was said by the noble Lord, Lord Aberdare, but I understand what was said by the noble Lord, Lord Barnett, about the screening of a football match last night that he was unable to watch. But why does the noble Lord believe that if the amendment were accepted he would be able to watch such a match? If no one could afford to pay the subscription he still would not be able to see the match. I support the Government and I agree with the noble Viscount, Lord Whitelaw, that we need to consider the matter again. I oppose the amendment.
§ Lord Orr-Ewing
My Lords, I support the idea because it is important that the highlights should be shown separately from the main event. Time is of the essence for television because many people are not at home when events are shown live during the afternoons. It is desirable that highlights are shown in the evenings, perhaps on a different channel.
The Minister was sensible in proposing flexibility because that is also desirable. Circumstances are changing fast, not only technically but in sport too. The Boat Race used to be one of the highlights of the reserved sporting events. Although it is still televised it is not a protected event. Rugby League was played mainly north of The Wash but now it is a popular event and the finals must be considered. There will be many more changes and I am in favour of flexibility and consultation taking place over the years. These items are not set in tablets of stone and they will change. Therefore I ask the Minister to build flexibility into the system.
§ Lord Dixon-Smith
My Lords, I agree that public taste in sport changes. It may well be that in future there must be negotiations about what have been defined as the crown jewels of sport. However, that is not the purpose of this amendment. It deals with the issue of highlights appearing on the screen if there is an exclusive contractor for pay television on the terrestrial channels or vice versa.
Such matters are one's of taste and judgment. It is my opinion, because I am an impatient man and I do not mind admitting it, that the highlights are considerably more worth while seeing than the original event. I should have thought that any contractor such as Sky, which has exclusive rights to a match or series of matches, would have a valuable market in which to sell the highlights. However, the value of that market is difficult to determine.
170 The amendment provides for "reasonable terms". The difficulty with that phrase is that it will be a part of the law which will depend on the agreement of third parties who are not party to the law. They may be susceptible to it but they are not party to it. What will happen if they do not agree? That being the case I ask: why bother with an amendment? I believe that we should allow a reasonable market for what I regard to be a most valuable commodity. In that case the BBC or ITV will, if they wish, readily purchase for a reasonable sum the highlights of an event to which they do not have exclusive rights. I believe that the matter would be best left in that form and therefore the amendment is unnecessary.
§ Lord Ashley of Stoke
My Lords, the issue of the crown jewels has already been settled and my noble friend rightly seeks to go further. I believe that that is the proper thing to do. I never regarded the crown jewels as being the major issue. It is an important issue but we wish to go wider because people are interested in more sport than is included in the crown jewels. When noble Lords opposite say that we should leave it to competition they appear to assume that the academic concept of perfect competition can be operated. However, it does not operate like that in any industry and certainly not with broadcasting and sport because the so-called competition leads to monopoly. A monopoly means that the vast majority of people cannot watch sport because the monopoly rests with those who can afford to pay the most. That is the nub of this debate.
The noble Lord mentioned Rugby League. That is now of national interest. It is of national interest because it was not confined to Sky Television. The BBC televised it. That is why we must preserve the freedom for the majority of people to watch sport, and that is why my noble friend's amendment is the right way forward. I hope that the Minister will accept it.
§ Lord Donoughue
My Lords, I thank the Minister for accepting the will of this House and the country on Clause 1. I was intrigued to read that the Secretary of State was in favour of our clause all along. You could have kidded me in view of the tussles which took place beforehand. However, we graciously welcome the conversion.
We are still not happy with the Government's statement, especially in regard to highlights. In that respect we support everything which my noble friends Lord Howell and Lord Ashley and the noble Lord, Lord Thomson, said. I did not add my name to the amendment but that reflects what I might call the clamour for signatories. On these Benches we give the amendment total support.
I shall not repeat all the arguments because we have a great deal more work to do today. However, I emphasise that the amendment is basically an implementation of the basic principles of Clause 1 which the Government have accepted. Those are the principles of national public access and non-exclusivity. I believe that the 85 per cent. of the British sporting public who do not pay hundreds of pounds a year for satellite television should not be 171 excluded from watching the highlights of golf, rugby and its Five Nations competition, Formula One, and so on. In practice, such exclusion would be the consequence of rejecting the amendment.
The Government's main argument against the amendment will be the familiar one of market forces. I do not accept that. The purchase and sale of monopoly rights for a minority audience is not the ideal example of the free market in operation. In fact the amendment seeks to safeguard competition by ensuring broadcasting competition and consumer choice. Above all, it prevents minority monopoly control. Nor do we believe that the sporting bodies which control golf, rugby and so on will benefit if they create a monopoly view for 15 per cent. of supporters. They have an obligation to their wider constituency of supporters, including the young, the old and the poor who cannot afford satellite fees. I believe also that it is not in their interests to create a monopoly purchaser. I agree with everything the noble Earl, Lord Harrowby, said about that.
I make a particular point which I ask the Minister and the Government to take into account. The logic of eliminating highlights from protection will increase the pressure to extend the protected list. It is possible to have a short protected list when people have highlights of other sports such as, for example, golf. But if 85 per cent. of the nation is not able to view any golf—for example, the British Open or the Ryder Cup—then there will be great pressure to put it on the protected list. That will apply also when the rights to the Rugby Five Nations competition are renegotiated. I believe that Sky will purchase the rights to live coverage. If the highlights are not protected most people will not be able to watch any rugby. Therefore, if the highlights are not protected we shall have to consider adding to the protected list.
The amendment is not anti-pay TV and not anti-subscription satellite. It gives to Sky the same rights to highlights when the BBC or ITV are showing live coverage as happens vice versa. Clause 1 gives Sky the same non-exclusive live coverage rights as it gives the BBC. In our view it is a fair amendment. It is fair between broadcasters and it is fair to television and radio customers. I hope sincerely that before Third Reading the Government will think again.
§ 4.15 p.m.
§ Lord Inglewood
My Lords, with the leave of the House, I hope that I may turn now to the amendment in the name of the noble Lord, Lord Howell. I begin by confirming that in that area the fair dealing provisions contained in the Copyright, Design and Patents Act 1988 apply. That permits the use of news clips of sporting events in news programmes. That would have enabled the noble Lord, Lord Barnett, to have seen at 172 least the goal to which he referred. I speak with sadness as a Member of a House full of Newcastle United supporters.
§ Lord Thomson of Monifieth
My Lords, I am grateful to the noble Lord for giving way so quickly. Would it allow any of us to see the knock-out in the big fight if it lasts only one minute?
§ Lord Inglewood
My Lords, my understanding is that one could not only see the knock-out but the whole fight. The Government have considered unbundling with great care. We have discussed it with all the relevant interests as part of our consultation process. I am very grateful for the comments made by my noble friends Lord Whitelaw and Lord Orr-Ewing. But we remain unpersuaded that any advantages of an unbundling provision would exceed the disadvantages of a major and complex interference in the market. We are therefore not able to support it.
This amendment is different in kind from the amendment on listed events. It introduces an entirely new concept unparalleled in any other aspect of broadcasting here or, to our knowledge, elsewhere in the world. Its scope is far wider than the listed events amendment. All events of national and local interest, actual and potential, are covered. The financial effect on sporting bodies could, we believe, be considerable, with corresponding damage to investment in facilities and training. Moreover, it imposes rigidities at a time when broadcasters need flexibility to respond to technical and market developments.
Nor are such controls justified by public policy considerations. As I explained, we are taking action to protect the sporting events which are of acknowledged special importance to the nation as a whole, and we retain the power to extend that protection by adding to the list of listed events. There is no substantive public demand for wide-ranging new powers to make more sport available on television and radio. Viewers can already enjoy over 2,500 hours of sport a year on terrestrial free to air TV. There is no question of an insufficiency of sport in general. Coverage includes items on the list and live coverage of many other events, highlights of major events, and a plethora of lesser interest sports. At an average of seven hours a day on terrestrial free to air television, I do not think that viewers can seriously consider themselves deprived of sport. Indeed, some respondents in our consultation exercise thought that broadcast sports coverage was already excessive. And we must not overlook that large proportion of the public, of whom my noble and learned friend Lord Hailsham spoke, who do not like sport and want to look at other things on television.
The Government understand, as my noble friend Lord Astor pointed out, that the ITV Association thinks it preferable that the market should take its course within existing competition rules and sees advantages in this approach. Furthermore the Government also understand that the Sports Council advocates a voluntary code of conduct including an agreement by governing bodies of major spectator sports that viewers and listeners should have the widest possible access to 173 major sporting events. The Government also see attractions in that approach and invite the Sports Council to develop it with the governing bodies. No doubt they will bear in mind the comments of my noble friend Lord Harrowby and the fact that the popularity of sport depends on the public's access to it.
The amendment implies, as my noble friend Lord Aberdare pointed out, an intrusion into the legitimate rights of sports rights holders which we consider unwarranted as drafted. It fails to recognise the reality that in general there is widespread availability of highlight coverage, duly negotiated between the sports bodies and broadcasters. It is clearly in the interests of sports bodies to secure wide coverage for their sports. Despite a number of specific causes célèbres, some of which may not be quite as generally supposed, we do not believe that the case has been made for the kind of changes proposed. Indeed, the publicity generated by your Lordships' House in debating this subject is, we believe, likely to focus sports rights holders and broadcasters on the central issues involved and we hope that this will lead to sensibly thought-out policies recognising the implications for all those affected. In short, the amendment would impose controls where we believe they are not justified on grounds of public policy, as my noble friend Lord Newall pointed out. I must conclude by saying to the noble Lord, Lord Howell—I am sure that it will be a disappointment to him but not a surprise—that the Government cannot support his amendment.
§ Lord Howell
My Lords, I am most grateful to all the speakers who have taken part in our reasonably brief but fascinating debate and for the spirit in which they have done so. I shall be brief and comment on just one or two points that were made. The noble Lord, Lord Aberdare, wondered whether the principles were necessary here, having previously told us that he supported the same principles in the Division Lobby regarding the listed events for which I expressed my appreciation. But we are now dealing with the very same principle; indeed, it is the very same principle that I am asking the House to accept and extend to major sports not included in the listed events. I repeat what my noble friend Lord Donoughue said; we may have to look again at the listed events. I believe that that is what the country would want us to do.
The noble Earl, Lord Newall, told us that it would be difficult to agree a price for such matters if highlights were to be negotiated. Why would it be so difficult? There has been no difficulty in negotiating the price of World Cup cricket: it was £1 million and both sides agreed that that was a reasonable price. Indeed, that has happened where other highlights have been shown. There is no difficulty in agreeing a price when reasonable people want the highlights to be shown. All the mechanisms of supply and demand apply.
I am most grateful to the noble Earl, Lord Harrowby, for the point that he made. Indeed, he raised matters which the House will know concern me regarding the social responsibilities of sport. However, I shall not repeat that argument, except to say that I have raised the 174 matter several times in Committee and on Second Reading and in private correspondence to some of the major sports bodies. I have asked the latter how they intend to discharge their social responsibilities regarding the elderly and others who do not have Sky or cable television because they cannot afford it—£300 to install and a yearly charge just to look at sport. I have also asked them, "How do you intend to discharge your responsibilities to the youth of the country?". If millions of homes are deprived of seeing any sporting excellence, that might undermine the future of British sport. The noble Earl was right to raise the matter again, because we have received no response whatever from those sporting bodies as to how they intend to meet that situation. If they cannot tell us how they intend to discharge their social responsibilities to the nation, they can have no complaint if this House decides that we must do something about it. Those responsibilities remain.
The noble Lord, Lord Dixon-Smith, told us that we could have highlights concentrated in the evening and that that would be most valuable. I am inclined to agree with him—
§ Lord Howell
My Lords, I can tell the noble and learned Lord that I am getting on with it. I am sorry that he feels a little exhausted, but that is because he does not like sport; indeed, he likes to see legal matters, which is hardly the sort of sporting contest that the rest of us enjoy.
I should tell the noble Lord, Lord Dixon-Smith, that it is because there is no commitment at present to show highlights that we have this problem. If the commitment was there by subscription and terrestrial TV—and I believe the Government hope that that will be the case, especially if the voluntary code of conduct of the Sports Council comes into being—that would deal satisfactorily with the matter.
As always, the Minister has dealt with the matter most kindly and gently. I believe that, like us, he is trying to reach some sort of agreement, or consensus—if the latter word is more appropriate. The reason for the issue of highlights not arising in his consultation process is that no one has been talking about them. The whole public argument on television, in press reports and elsewhere has been about listed events. Had we gone into the subject of highlights at an earlier stage I can assure the Minister that his postbag would have reflected the situation; indeed, that would be the case were we to do so now.
I am disappointed that the Minister has not responded to the point that I made about the ruling of the European Court. I regard that as being extremely important. As I said earlier, if the European Court has decided that highlights must be sold separately under European competition policy, that is an important consideration. However, I do not ask the Minister to comment now on that aspect because the course of action that I am about to ask the House to follow will enable him to give more consideration to it just as I intend to do. Indeed, the point was only brought to my attention this morning.
175 If it is right that the European Court's decision now means that, according to case law, it will now be unlawful not to "unbundle" highlights from the main contract, then obviously that would render my amendment unnecessary. I also have regard to the fact that the Sports Council is trying to negotiate a voluntary code of conduct. I am prepared to give that a fair wind. I hope that the council will be able to do so and that it will be able to tell us how it has got on by the time we reach Third Reading. If the council makes progress and if all the sports bodies and the terrestrial and subscription channels of television find it possible to agree to a code of conduct as a voluntary matter, I am sure that that would be a great relief to all of us. It would unite both the Minister and myself and obviate the necessity to proceed much further.
It is because I want to bring that agreement about and ensure that in future we do not have another case like the Ryder Cup, where a great event was screened but denied to the majority of the public, that I believe the amendment should be withdrawn now in the knowledge that, when we have all reflected further on the matters which have arisen, we can return to the issue on Third Reading. That being the case, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Howell moved Amendment No.2:
After Clause 1, insert the following new clause—
HOLDING OF LICENCES: RESTRICTIONS ON INVOLVEMENT IN ADMINISTRATION OF SPORT
(".—(1) Sections 5 and 88 of the Broadcasting Act 1990 are each amended as follows.
(2) In subsection (1)(a), after "who" insert—
("(i) is involved, or any of whose employees, agents or representatives is involved, in the government or administration of any sport in respect of which he is the holder of any exclusive broadcasting right, or
(3) At the end there is inserted—
(8) In this section "exclusive broadcasting right" means any contract or agreement providing for the exclusive right to include in a broadcasting service any programme which consists of or includes the whole or any part of a sporting event, or of a recording of that event.".").
§ The noble Lord said: My Lords, I call this the "conflict-of-interest amendment". That ought rightly to be prevented, but many of us have a suspicion that it may be necessary to do so by legislation. It seems increasingly clear that in certain sports people are speaking both for the sport and for the television company in discussions which they are holding with each other. I shall not spend much time on the matter, but I should like to point out that when we negotiate such important contracts, which involve large sums of money and the rights of television companies, it is absolutely vital that there should be a clear distinction between the executives of the television companies and the governing bodies of sport. Therefore, the amendment has been tabled to express that opinion and 176 to seek the Government's views as to whether they think that that is a danger for which Parliament ought to legislate. I beg to move.
My Lords, I read the amendment with great care. I have to tell the noble Lord that, while one has a certain sympathy for much of what he said as regards his earlier amendment and indeed the one that he moved on the last occasion when we debated the matter, the current amendment would seem to have a rather dangerous effect. When the noble Lord replies to the Minister's response, I wonder whether he could answer a few questions. First, why should those who have a stake in a sport not be allowed to have a stake in its broadcasting? There seems to be no reason why they should be excluded.
I shall give a couple of examples. The noble Lord's amendment would affect the Racecourse Association which owns a share of SIS which is the service which is transmitted to betting shops and also, via cable or satellite, into people's homes. Under the noble Lord's amendment such services would be excluded because they would be classed as shareholders in a broadcaster, and as sporting bodies. Further, a sport which is currently unable to find an outlet on television might, in order to try to encourage interest in the sport, commission its own programmes and then transmit them on a cable channel, whether that be in London or in the noble Lord's home town of Birmingham. It might do that for the sound reason of encouraging interest in that sport.
I believe that the noble Lord's amendment would stop any of those things happening and that must have a bad and restrictive effect on sport and sports' ability to be broadcast. All noble Lords know that the noble Lord, Lord Donoughue, is a keen racing aficionado. I hope that he will consider the impact of this measure on racing. I believe that the amendment of the noble Lord, Lord Howell, could be damaging to certain sports' bodies.
§ 4.30 p.m.
§ Lord Inglewood
My Lords, I am grateful to the noble Lord, Lord Howell, for explaining that this amendment is intended to avoid possible conflicts of interests for those involved in negotiations between sports rights holders and broadcasting bodies. I am sure we would all agree with the sentiment underlying the first of these amendments. Conflicts of interest for those involved in negotiations between sports right holders and broadcasting bodies are clearly wrong. However, the Government are not persuaded of the case for legislation to deal with a matter that is best dealt with under the criminal law which has a full range of sanctions at its disposal.
Legislative provision along the lines of the amendment would also have damaging effects of the kind alluded to by my noble friend Lord Astor. It would prevent the development of new television services by sports bodies, using digital broadcasting techniques—that idea is being seriously considered by a number of sports—which in turn would damage digital television 177 and digital audio broadcasting. We do not believe this could possibly be in the public interest. For that reason the Government do not support this amendment.
§ Lord Howell
My Lords, I am grateful to the noble Viscount, Lord Astor, for his comments, and to the Minister for his explanation. The short answer to the noble Viscount, Lord Astor, is that we should not allow people to negotiate with themselves. I agree with what was said about the possibilities of digital techniques and about some sports' bodies wishing to promote their own programmes, or to engage producers to put a programme together. I do not object to that concept, but I object to people who negotiate with themselves. I believe there is some evidence that that is happening, or there is a danger that it could happen. However, this amendment has served its purpose for the moment by enabling us to have a brief discussion on this matter. I hope that my friends involved in sport and in television will take note of the discussion and of the fact that we do not want any conflicts of interest in negotiations on the televising of sport. The advent of digital television may be some years away, but I hope that when that matter is discussed these principles will be borne in mind. As I have said, the amendment has served its purpose in allowing me to express these anxieties. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Howell moved Amendment No. 3:
After Clause 1, insert the following new clause—
ADVISORY COMMITTEE FOR BROADCASTING AND SPORT
(".—(1) The Secretary of State shall establish a committee to be known as the Advisory Committee for Broadcasting and Sport.
(2) The Committee shall consist of—
(3) The Committee shall—
(4) Any report or recommendations made under subsection (3) shall be laid before Parliament.").
§ The noble Lord said: My Lords, I regard this amendment as one of considerable importance. It seeks to establish an advisory committee of people representing the interests of broadcasters, sporting bodies, and viewers of and listeners to broadcast services, to advise the Secretary of State on matters concerning listed events. It is incredible that the matter of whether or not an event should be labelled a listed event depends entirely on the whim of the Secretary of State.
§ When Mr. Kenneth Baker, when he was Home Secretary, drew up the previous list in 1990, he consulted no one. Out of the blue he declared that the 178 eight listed events that we are discussing today—and have discussed on previous occasions—were the jewels in the crown. He was more or less correct in that assertion but it is monstrous that one Minister should be able to take such a decision without being required to consult anyone and without any known criteria having been established. We have applied our minds to this matter to establish what we can do to prevent that position persisting in the future. We have sought to suggest who should be represented on the committee. We propose that the Secretary of State should be allowed to appoint the members of the committee. We are not trying to impose any members on the Secretary of State whom he would find unacceptable.
§ We believe there are three main areas of interest where the relevant people should be consulted when listed events are determined. Those people are the broadcasters, the sporting bodies and the viewers of and listeners to broadcast services. That seems to me to be perfectly reasonable. I hope that the Minister can embrace the principle, if not the wording of this amendment. If he cannot do so, I hope he will tell us how in future the Government will determine listed events. We shall return to these matters from time to time but I should prefer to have a simple, tidy and permanent solution as to how these matters will be determined, and what criteria should be applied. This amendment seeks to achieve that solution. I beg to move.
§ Lord Inglewood
My Lords, the noble Lord, Lord Howell, has most helpfully put forward the case for a committee to assist the Secretary of State by advising her on matters relating to the broadcasting of sport. I can see the arguments for a committee of this sort although I remain to be convinced of its precise remit and added value. The Government are prepared to consider this proposal further although, obviously, can give no commitment. I hope on the basis of that assurance the noble Lord, Lord Howell, will feel able to withdraw his amendment.
§ Lord Howell
My Lords, I am delighted to receive that assurance. I believe that as this day has progressed we have moved closer together in what we intend to achieve. That is a good sign. Sport should not be a matter of party political argument. We should seek to reach agreement, as I have endeavoured to do, on the principles of these matters, even if some of the wording is not quite right. I welcome what the Minister said. In the circumstances I am content to leave the matter with him. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Dean of Thornton-le-Fylde moved Amendment No. 4:
After Clause 3, insert the following new clause—
MEANING OF "SUBSCRIBER MANAGEMENT" AND "SUBSCRIBER AUTHORISATION" SERVICES
(".—(1) In this Part a "subscriber management service" means a service provided to any holder of a licence under the 1990 Act to provide a television programme service, or to any holder of a licence under this Act to provide a digital programme service or a multiplex
service, for billing or payment handling in respect of charges for and payments received from viewers within the United Kingdom of encrypted television programmes.
(2) In this Part a "subscriber authorisation service" means a service provided to any holder of a licence under the 1990 Act to provide a television programme service, or to any holder of a licence under this Act to provide a digital programme service or a multiplex service, for the remote actuation, processing or control of equipment for receiving encrypted television programmes within the United Kingdom.").
The noble Baroness said: My Lords, in moving Amendment No. 4 I wish to speak also to the whole list of amendments grouped with it. The purpose of the amendments is to create a legislative framework for the ITC to license and regulate for the provision of conditional access and subscriber management for digital terrestrial, digital satellite and analogue satellite. At the moment the ITC cannot apply a code to News Datacom—that is the company which supplies the Videocrypt conditional access system used by BSkyB—or to any other provider which is not an ITC licensee. The matter was debated in some detail on the second day in Committee. That debate makes very interesting reading. The noble Lord, Lord Thomson of Monifieth—I hope that he will not object to my calling him my noble friend—with his support not only for these amendments but also for the amendment in the name of the noble Viscount, Lord Astor, spoke of the Clydeside MP, Jimmy Maxton, and his reference to riding two horses at one time. Perhaps I should refer to what might appear to be another "riding of two horses" at one time. My noble friend Lord Donoughue has his name in support of the amendment of the noble Viscount, Lord Astor, Amendment No. 164. As my noble friend Lord Donoughue supported the amendments of the noble Lord, Lord Thomson, and the noble Viscount, Lord Astor—and I hope that he will support my amendment today—my mind turned back to the old proverb attributed to G. Herbert dating back to 1640. Noble Lords will understand that one carries this sort of saying in one's head day in and day out. The proverb came into my thoughts:
For the want of a nail the shoe is lost;
for the want of a shoe the horse is lost;
for the want of a horse the rider is lost".
We do not want to lose our horse. If we lose our rider, the viewer—in modern-day parlance—will be lost. That is why we have put down the amendments.
§ The amendment before the House today is not the same as the amendment in Committee in the name of the noble Viscount, Lord Astor. This group of amendments has a wider application. The key difference is that we refer to the role and the involvement of the ITC whereas the noble Viscount's amendment leaves the matter to the DTI and Oftel.
§ To use the horse analogy, we should not allow this important matter to become a battle for turf, although I rather suspect that that might have been a factor behind the scenes in the discussions on the European directive between the DNH and the DTI when considering the issues. How much easier it would be if we had not had such a proliferation of regulatory bodies in the communications field.180
§ Conditional access has become one of the key issues in our consideration of the Bill. It is not surprising that that is so. The availability of wider choice, of diversity of programming, will themselves be dependent on the gateway access availability—a gateway which must not be so restrictive as to squeeze out competition and the start up of small service providers.
§ The issue of open competition and access was of concern to the noble Lord, Lord Thomson of Monifieth, at Committee stage. Indeed, the area of competition and access was referred to by the Minister at Second Reading.
§ On these Benches, we readily accept investment. The courage and money available to take a gamble in the market place have to be recognised and not penalised. However, the viewing public interest has a place in this debate. In dealing with broadcasting, one cannot simply treat the issue with a class licence as one does in telecommunications. In the nature of broadcasting, content will be a crucial factor, not just for diversity but in leading to commercial success too. We readily accept that the new digital era will provide not just broadcasting and television services but a range of services, many of which we have not even thought about as we discuss the Bill today.
§ I believe that it is in that area of broadcasting—diversity for the viewer—that the ITC has the prime experience: that of balancing the requirements of fair, effective competition with content. Indeed, it has such a responsibility under the 1990 Broadcasting Act.
§ The Minister confirmed, as does the DTI consultative document on conditional access, that the ITC will be consulted. But what does that mean? One can consult a range of people when making changes. It could end up a useless consultation with the views of the ITC not required to be taken on board by the regulator or the Secretary of State for the DTI. If there is open competition at present, as we are told by so many, why is there no rival to Sky Sport or some of the other services which one would think would be attractive to the public, having a range of similar services available?
§ At Committee stage, at col. 351, the Minister referred to the review of BSkyB's position by the Director General of Fair Trading. It was referred to earlier today. That review relates to the cable industry. The problem is that the review is due to be completed by May of this year. That is too late for consideration before this Bill leaves this House. Depending on the consultation procedure, it is probably too late for the other place to consider it when dealing with the Bill.
§ When dealing with the amendments at Committee stage, the Minister referred to an extension of powers necessary for the ITC which would place operators under the risk of regulatory double jeopardy. Of course, no one wants that. Under the 1990 Act, the ITC's duty in relation to fair and effective competition extends to services such as conditional access and subscriber management where they are connected with the licensed programme services. These amendments do not take the ITC into new or totally unoccupied territory. They allow the regulator to perform his duties across the sector rather than in selected and therefore defective areas of it.181
§ I believe that the cable companies are concerned—I believe that the anxiety was raised in Committee—that regulating conditional access could lead to unequal treatment of their sectors. Let me assure noble Lords that that is not the intention of the amendments. We recognise that there are issues so far as concerns the cable sector.
§ The amendments—they are the same as those discussed in Committee—are before us today because although it has been the Government's intention to keep conditional access outside the Bill, it has been very much at centre play in our considerations. I hope that the amendments find approval with your Lordships today. I beg to move.
§ 4.45 p.m.
§ Lord Thomson of Monifieth
My Lords, I am happy to support my noble friend Lady Dean of Thornton-le-Fylde on the amendment that she has so ably moved. I congratulate her on the work that she has done in producing this series of amendments. My name is on the Marshalled List in support of the amendment in the name of the noble Viscount, Lord Astor. As I said in Committee, whether the body is the ITC or Oftel is not the fundamental issue. Perhaps understandably my balance of attraction goes to the ITC because, generally speaking, in the new developments between telecommunications and broadcasting I am always anxious to safeguard the broadcasting considerations. Those seem to be more considerations of creative value than of the technical issues as regards the DTI. However, that is not the most fundamental issue here. The fundamental issues are those which the noble Baroness stated.
Amendment No. 4 seeks to define rather usefully the encryption system on the one hand and the subscription system on the other. It is important to bear in mind that those are two different operations, sometimes with different although linked considerations. At present, with analogue transmission BSkyB is the gatekeeper for rival programme providers with which it competes. I do not wish to repeat my arguments at Committee stage. However, that seems to me to be fundamentally wrong in principle. It demands an open and transparent licensing system. For the life of me I still cannot see why what is regarded by Government as essential for the digital future (albeit for European Union reasons)is not regarded as necessary for the analogue present, which may be with us for a long time.
I leave that side of it and move on to the digital aspects of conditional access. I am becoming disturbed by what I hear about the Government's attitude to the European Union's directive and proposals for digital encryption. As the Minister will know, the directive provides for a standard encryption system but leaves conditional access to a code of conduct. There is a risk in that. The code of conduct is intended to make it possible for any conditional access system to work both with the standard European encryption system and with any subscriber management system to link them.
182 The two systems now becoming available on the continent, I am told—Multicrypt and Simulcrypt—satisfy that condition. But there is no assurance that Videocrypt, which is developed by BSkyB, does. I understand that the Government are reluctant to face up to the situation. If they do not it will leave BSkyB able to impose its own proprietary system in the new digital age. There will be created a new de facto monopoly.
In common with other noble Lords, I have received a letter from EUTELSAT, the inter-governmental organisation for European telecommunications. It emphasises the same point—the need in the Bill for a single common conditional access interface. The letter goes on:A mandatory common Conditional Access interface will mean that the same receiver/decoder can be used to access all channels even though the Conditional Access systems may differ…Key to achieving choice and accessibility will be the development of a Common Conditional Access Interface".That is linked with the need to have a receiver/decoder which,should be able to receive from all types of distribution be it terrestrial, satellite or cable".During the progress of the Bill I have tried to make a test of the views I have expressed from these Benches—the viewer and listener interest. I well recognise that there are many conflicting and valid interests to be balanced, as the Minister said. But the viewer and listener interest is extremely important. Together with the noble Viscount, Lord Whitelaw, I am a patron of the Voice of the Listener & Viewer. That society puts the issue in simpler language than I have been using from authoritative sources. It says:The universal adoption of a common interface would enable manufacturers to simplify their products and bring prices down most rapidly".I conclude by asking the Government to seek to define what is essentially the public interest in this complex matter. I believe that the public interest is that the consumer has a single black box with a common technology that enables him to move freely between the various on-line services. Linked to that is the ability of the providers of programmes and other interactive services to use a common interface to bid for customers. If the Government were ready to look at the case for a mandatory interface, it would enable both manufacturers and retailers to compete in the high street stores with the new device alongside any other electrical appliance. That would speed up the digital revolution by bringing prices down.
I hope that I am wrong in hearing that the Government appear in discussions to be setting their face against a mandatory common interface. I hope that they will reconsider the matter. If they do not, once again we will need to look at the European dimension to see whether, through the European Union, we can bring about a mandatory arrangement that the Government in this country are not ready to recognise as being in the public interest of viewers and listeners 183 here. That is a new development since we discussed matters in Committee. I thought it right to bring it to your Lordships' attention at Report stage.
My Lords, my Amendment No. 164 is similar to that of the noble Baroness. Although it is not grouped with hers, it is on the same issue, except that my amendment makes Oftel the regulator while hers makes ITC the regulator. The noble Baroness said that she was letting the noble Lord, Lord Thomson, know that she was going to ride two horses. I am more modest. I find great difficulty riding one horse at a time. Therefore, I shall speak to my amendment when it comes, but it may help your Lordships if I say a few words on Amendment No.4.
First, I wish to thank the Minister for arranging a meeting for me with the Parliamentary Under-Secretary at the Department of Trade and Industry. It is the policy of the department that affects the issue. I am grateful to the Minister for meeting me. We had a useful discussion after which we understood each others' views much more clearly. Unfortunately, having said that, at the meeting I was unable to persuade the Minister of the validity either of my case or of that of the noble Baroness. His arguments were not dissimilar to those we discussed previously: first, that digital would arrive relatively quickly; secondly, an amendment could undermine investor confidence in the future by the fact that we are changing the rules; and, thirdly, analogue transponder capacity is limited and therefore it is a much more serious obstacle than the terms that would be offered from BSkyB. In any event, the Minister's final point was that it was all covered by competition law.
There are good answers to those points. First, as regards digital arriving quickly, even BSkyB cannot say when it will begin transmitting by digital satellite. If anyone knows, it should. As we have heard, no one can say when there will be a switch off for analogue satellite broadcasting so we do not know when it will happen. The second point was that any amendment could undermine investor confidence. The simple answer to that is that any future investor in digital will have to abide by the same rules. All we are doing is taking the Government's own rules and extending them to analogue. Thirdly, there is the point that analogue capacity is limited. Of course it is. There are about 80 channels, some more successful than others. They change hands between broadcasters; the spectrum is bought, sold, transferred and rented out. That does not mean that anyone could be excluded. Fourthly, we all know that competition law covers the area. As the noble Baroness said, the OFT is looking into the issue, but we know that the review will take at least six months. OFT reviews always seem to take at least six months. The point of putting it in the Bill is that it does not have to take six months; it is there as a licence condition.
It is worth making another two points. I just about understand my amendment; I do not understand that of the noble Baroness because it is even longer. I am sure that mine does not stray into the area of regulation in cable transmission capacity. I believe that the focus should be on conditional access systems only. Any regulation of cable would remove incentives from cable 184 operators to invest in network provisions. I believe that I am right in saying that neither the noble Baroness's amendment nor mine applies to the underlying networks.
My other point is that my amendment and that of the noble Baroness have strong support throughout the industry; the ITV companies support them. The thrust of the amendments is important because we believe in competition. I hope that we believe in fair competition. Without the amendments there is the possibility that BSkyB will have an unfair advantage over anyone who wishes to join the market. Without this amendment companies face the possibility of having to wait until the introduction of digital. We know that that is somewhere down the line. By the time digital is introduced, BSkyB will have had the ability to saturate the market. It will be too late. The very reason that BSkyB has been so successful—and we must commend it on its success—is that the 1990 Act prevented ITV companies from joining in the game. They are not allowed to by statute. We are not trying in any way to inhibit the growth of BSkyB, or affect it. What we say is that there must be fair competition. I very much support in principle the noble Baroness's amendments. I hope that mine are marginally better, since they offer Oftel as the regulator, which seems to be the way things are going, and follow the Government's line.
As the noble Lord, Lord Thomson, said, what matters is not who the regulator is, but the fact that there is regulation.
§ 5 p.m.
My Lords, I make two points. First, the best technical advice that I have been able to receive concerning digital and set-top boxes is that it would be dangerous at this moment to plump for any one of the particular systems mentioned and that, if we hang on, something better may emerge which allows everything that the noble Lord, Lord Thomson, seeks and which I wholeheartedly endorse. I caution against fixing on something at this particular stage for digital.
Secondly, I am grateful to the noble Baroness, Lady Dean, for her comment that her amendments are not intended to include cable companies. However, I draw her attention to Amendment No. 43, which links subscriber management systems to local delivery services. Local delivery services include cable companies. They provide a gateway for access provision. As I hope everyone realises, those gateways are wide open. The more the companies can bring through the cables, the happier they are.
§ Lord Colwyn
My Lords, I spoke briefly in Committee on this group of amendments covering analogue conditional access and subscriber management systems. I have to admit that, as the debate continued, I realised that I did not fully understand the position. However, I have now done some homework and, regretfully, I still cannot support the amendments. I hope to be able to cover some further points on this matter, including the analogue/digital position, in further 185 discussion on my noble friend's Amendment No. 164. At this stage, I ask the House to reject these amendments.
§ Lord Inglewood
My Lords, once again we have had a very useful debate on this subject. In addressing my remarks to it, I shall speak to the grouped amendments to which the noble Baroness, Lady Dean, referred. I shall also touch on the substance of the amendment tabled by my noble friend Lord Astor. I suppose that it will enable your Lordships to have a preview of some of my later arguments. But at the same time I hope it may assist the House in the general consideration of what is by any standards an important subject.
We saw in Committee the general substance of these two amendments. They seek two broad results: first, to institute a licensing regime for both analogue and digital conditional access services; and, secondly, to establish the ITC as the regulator in this area. In Committee, as the House may remember, I gave a full account of our reasons for selecting Oftel as the appropriate regulator, and many noble Lords indicated that this was, to quote the noble Lord, Lord Thomson, "obviously not an issue we would wish to die in a ditch over". The greatest attention focused on the question of analogue conditional access, on which I intend to concentrate.
First, let me just rehearse, briefly, the question of which regulator. As I noted in Committee, conditional access systems already require licensing under the Telecommunications Act framework—they are concerned fundamentally with the transmission and processing of telecommunications signals. The ITC's powers would need to be extended to deal with them, and this could result in regulatory double jeopardy. Close co-operation would in any event be required by our proposals between the DTI, Oftel and the ITC in administering the licensing regime. Broadly speaking, Oftel licenses communications-related systems, while the ITC is concerned primarily with broadcast services. This is, in our view, a sensible division of labour which is already working well.
The noble Baroness, Lady Dean, referred to the question of the content that flows through the conditional access gateway. She made the point that because it is the content that is so important—and Oftel is a regulator principally concerned with the mechanics of gate-keeping rather than the substance of what passes through the gate—it is therefore appropriate that the regulator should not be Oftel but should be the ITC, since it is the best body to deal with the matter of regulating content. That overlooks the important fact that the content passing through this particular gate is not just content "plucked out of thin air"; it is either content that will be regulated by the ITC under general broadcasting legislation, or content coming to this country under the rules of the single market, with the relevant safeguards and regulatory systems inherent in that. What we are seeing here is not a gateway which is a form of tariff through which an enormous cascade of unregulated content will pour, but rather a gateway through which content regulated and controlled content 186 at a previous stage in its existence will pass. I therefore feel that that particular approach by the noble Baroness is inappropriate for the reasons I have just given.
So far as digital conditional access systems are concerned, the Government's proposals seek to provide the necessary support for effective competition in the market-place. This includes requirements to offer services on fair, reasonable and non-discriminatory terms, to prohibit linked sales, to implement accounting separation, and to allow the director to demand published tariffs where necessary. They also provide, in our view, for more effective and comprehensive remedies for anyone affected by abuse of a dominant position or anti-competitive behaviour.
I believe that our debate has again underlined that we all wish to see the development of an efficient and competitive market in television programme services. The difference between us appears to be only a question of judgment as to the benefit of new regulation in analogue satellite broadcasting.
The question has been raised on several occasions: if regulation is needed for digital, surely it must also be needed for analogue—what is the difference? The fundamental difference is that when digital services are fully developed the digital conditional access services will be the gateway to every home and customer in the country, over every delivery mechanism—that is, for terrestrial as well as cable and satellite broadcasts.
Analogue satellite, by contrast, serves just 15 per cent. of homes in the country. It is unlikely that this will grow significantly in the future. Even with the latest advances in conditional access technology for analogue systems, the scope for any of the existing broadcasters using satellite to support a significantly larger pay-TV base seems distinctly limited, particularly on pay-per-view. Our judgment is therefore that the market is unlikely to grow to any significant degree.
The reason is that any of them would probably need to cannibalise some of their existing channel capacity for conditional access signals, which would reduce the attractiveness of their offerings. That is because the signals needed to authorise a set-top box to descramble a particular programme have to be packed onto the available analogue frequencies along with the programme itself. The bandwidth available for this is extremely limited in analogue, but more is required if there are to be more subscribers. Any substantial development of pay-per-view services is even more demanding of bandwidth. Taken together with the absence of a return path from the customer to the service provider, this makes significant expansion of pay services on analogue satellite before the move to digital highly unlikely.
In considering the move to digital, there is a clear advantage to being the first mover in the new markets. With the prospect of competition between terrestrial, cable and satellite there is a clear strategic incentive to begin the move sooner rather than later. Once begun, it would be beneficial to move subscribers across quickly to focus resources on the new markets with growth potential and to build the subscriber base as quickly as possible.
187 Analogue satellite is therefore a small segment of the total analogue market which is unlikely to grow significantly but which is likely to give way relatively quickly to digital services. That is not the sole basis for the Government's view of the need for licensing, as some have attempted to suggest. But it is the background against which we have to judge the balance of interest in imposing a major change in the regulatory framework for an established market.
One key issue we must consider in reaching this judgment is the investment environment for companies in long-term projects such as new broadcasting services. It is important for companies, and their investors, to understand clearly the framework of regulation which will apply at the outset of their investment. Stability in this framework is very important in maintaining investment confidence, particularly in financing bond and equity markets. That is why we have set out our proposals for digital conditional access now—before the markets have developed. We have to consider the impact of a major change in regulation for an established but limited market on investment confidence—not just in analogue, or even in digital, but in the wider market opportunities in the UK. We have to take account of the potential impact that such a move could signal in the widest context.
We know well the importance of regulatory stability in this regard from our experience in setting the framework for competition in the provision of cable entertainment and telephone services. Here, a guarantee of regulatory stability produced a step change in the investment in alternative telecommunications infrastructure in this country to the tune of over £10 billion in this decade.
That does not mean that we are prepared to tolerate abuse of a dominant position or anti-competitive behaviour to the detriment of competition and consumers. Ex post facto, additional regulation may be justifiable where such behaviour has been demonstrated. The Government are committed to making a robust response to any proven instances of anti-competitive behaviour. There is already a proper framework and process for all established markets through the general provisions of competition law. Noble Lords will know that that is currently being used to examine questions in the very area that we are debating, as has already been mentioned. The Director-General of Fair Trading is conducting a thoroughgoing review into various aspects of BSkyB's wholesale supply of programming. Should he have a concern about competition, options open to the director include seeking binding, enforceable undertakings from the offending parties or referring all or parts of the matter to the Monopolies and Mergers Commission for a ruling. Both give the scope to introduce any further measures that are demonstrably required.
A second key issue that we must build into our considerations is what benefit there might be in introducing new regulation. We must ask who could gain from this new regulation. It has been suggested that, for example, existing ITV companies, which prior to the changes proposed in this Bill were prevented from offering satellite transmissions, might now wish to offer 188 subscription or pay-per-view services on analogue satellite, before the move to digital. If so, it is argued, they would not wish to develop their own analogue encryption system, but would naturally seek to use the News Datacom Videocrypt system to provide the conditional access services that they would need. They might, however, get a more favourable commercial deal for the provision of conditional access services if detailed regulation were imposed specifically to drive down prices.
However, the most fundamental issue for any broadcasters wanting to take this step for the first time is likely to be not conditional access, but the availability of analogue satellite transponder capacity. Analogue satellite capacity is basically saturated at present. Astra—the principal satellite provider—is now providing new capacity as digital only. Although there may be some scope to buy out, or take over, existing channels from a variety of other broadcasters currently using analogue, there is in practical terms very little room, if any, to accommodate them alongside the wide range of broadcasters already transmitting through the satellite.
Contracts for conditional access services in analogue markets are in any case already covered by the general provisions of competition and contract law to regulate any anti-competitive behaviour. Furthermore, there is nothing, as I understand it, to prevent such broadcasters from seeking encryption services from BSkyB while providing subscription management themselves or seeking it from other providers—of which several already exist. That would certainly provide a basis for negotiation of acceptable terms. The question is whether it is appropriate to intervene directly in a transaction between two companies in an established market with further specific and detailed regulation. The outcome of the OFT inquiry into the current practice on issues of this kind will be known by the time any such moves for new analogue channels come about. It is, in our view, only justifiable to introduce such additional regulation ex post facto, if there is a clear case of anti-competitive behaviour. To date, that case has not been made, but should the Director-General of Fair Trading have competition concerns, then it will be possible to implement any necessary action at that time, as I have already noted.
Before concluding, I should like to make some comments on the points made by the noble Lord, Lord Thomson, about what I might describe as the establishment of a mandatory single interface. In this context, I echo the remarks of my noble friend Lord Chelmsford. From this perspective, one cannot be sure what might be the best form of interface, if one were to go down that particular road. It is relevant that the digital television group is working currently in co-operation among its various component members on this very problem.
As I understand it, the European directive sets certain standards without establishing a single form of mechanism. In doing so, it also specifies that one cannot so arrange matters as to exclude one's competitors. Indeed, that is underscored by competition policy. Equally, later I shall move an amendment on behalf of 189 the Government in respect of the multiplex licensing criteria, which is concerned particularly with ensuring that the way in which the ITC—we are talking here principally about television—looks at possible multiplex proposals has to be judged against an overarching criterion of measuring it against its ability to drive forward the successful take-up of digital television. In itself that is a very considerable impetus towards bringing subscription management and encryption systems together in such a way that any individual player in the game has to try to devise his proposals in a manner that will encourage the take-up of digital as a whole; and anyone doing the kind of things to which the noble Lord, Lord Thomson, alluded—namely, to try in some way or other uncompetitively to exclude some other player in the game—would undoubtedly be undercutting efforts to develop the digital terrestrial television in this country as a whole.
In summary, the Government remain of the view that the suggested amendments are not needed. The Government have published proposals for regulating digital conditional access systems. Analogue satellite is an established market segment, which has strictly limited growth potential, but which is likely to give way relatively quickly to digital markets. Concerns about behaviour in this market are being addressed through the current OFT investigations. This process will be able to provide for any further action which is necessary if those concerns are substantiated. The case for benefits which might flow from the amendment is very unclear. On the other hand, the potential for damage to investment confidence in UK markets is very clear, on the basis of our experience in the last several years. This is the balance of our judgment and why we shall oppose the amendments if the noble Baroness wishes to press them to a vote.
§ 5.15 p.m.
§ Baroness Dean of Thornton-le-Fylde
My Lords, first, I must thank all noble Lords who supported this group of amendments in the discussion. Perhaps I may sum up on three key points that have emerged from the debate. In front of me I have the consultative document from the DTI. The Minister put up a valiant argument as to why the DTI is the appropriate department. But the Secretary of State for National Heritage said that:we have always recognised the importance of conditional access to digital television … I welcome the DTI's proposals and in particular their commitment to full co-operation with the ITC".To me, such Whitehall language is saying, "We put up a valiant fight but we didn't win. We just hope that the DNH and the regulatory bodies accountable to us will have some part to play in the future of regulation in this field."
The noble Viscounts, Lord Astor and Lord Chelmsford, quite rightly raised the issue of cable. I should like to give an assurance to the House that there is no intention in the amendments that I put forward in any way to harm the cable industry. That is not the intention of the amendments.
190 The third point was the issue of fair competition. The OFT can always look at that as they are looking at BSkyB at the moment, as can the Monopolies and Mergers Commission. But those bodies take a long time. In my experience when a service provider has an idea for a service to put on, it is nipped in the bud if it comes up against a power bloc which does not allow it reasonable access to promote those services.
I hold a press release from New Media Markets dated November 1994 which says that a company called Travel wanted to provide a service through BSkyB. Discussions took place—no one has ever said that there have not been discussions. The company did not go on line with BSkyB because it was told that the satellite company wanted a 50 per cent. stake in the channel which was to provide the travel service. The result was that it did not go on air. Those are the kinds of worries I have in relation to free competition. That is not the market at play; that is dominance at play. That is one of our concerns and one of the reasons the amendments were tabled.
I am grateful to the noble Viscount, Lord Astor, for lifting the curtain on the discussion that took place between himself and the junior Minister for the DTI. At the end of the day it would appear that the amendment of the noble Viscount will be opposed up to the hilt, as this one has been. I am becoming extremely concerned about the whole area. There is general consensus across the House that conditional access is crucial in the Bill. It is crucial for the consumer, for the industry and to ensure that we have competition, fair access and that the new services are successful.
We seem to be up against a brick wall, though in the course of the debates we have seen the Government make a considerable number of acknowledgements and changes. They have been extremely co-operative. The Minister has been complimented, and rightly so, for the open-minded way in which the Bill has been approached; that is, until we came to this crucial issue. We need to test the opinion of the House. This is an important part of the Bill and I ask the House to decide the issue.
§ 5.22 p.m.
§ On Question, Whether the said amendment (No. 4) shall be agreed to?
§ Their Lordships divided: Contents, 110; Not-Contents, 136.192
|Division No. 1|
|Acton, L.||Carter, L.|
|Addington, L.||Castle of Blackburn, B.|
|Ashley of Stoke, L.||Chandos, V.|
|Astor, V.||Chapple, L.|
|Barnett, L.||Cledwyn of Penrhos, L.|
|Beaumont of Whitley, L.||Cocks of Hartcliffe, L.|
|Berkeley, L.||Darcy (de Knayth), B.|
|Blackstone, B.||David, B.|
|Blease, L.||Dean of Beswick, L.|
|Broadbridge, L.||Dean of Thornton-le-Fylde, B|
|Brooks of Tremorfa, L.||Devonport, V.|
|Carmichael of Kelvingrove, L.||Diamond, L.|
|Donaldson of Kingsbridge, L.||Marsh, L.|
|Donoughue, L.||Mason of Barnsley, L.|
|Dormand of Easington, L.||Mayhew, L.|
|Dubs, L.||Merlyn-Rees, L.|
|Falkender, B.||Milner of Leeds, L.|
|Falkland, V.||Molloy, L.|
|Farrington of Ribbleton, B.||Monkswell, L.|
|Fisher of Rednal, B.||Morris of Castle Morris, L|
|Gainsborough, E||Nicol, B.|
|Gallacher, L.||O'Cathain, B.|
|Geraint, L.||Orr-Ewing, L.|
|Gladwin of Clee, L.||Prys-Davies, L.|
|Glenamara, L.||Rea, L.|
|Graham of Edmonton, L.||Redesdale, L.|
|Gregson, L.||Richard, L.|
|Grey, E||Rippon of Hexham, L.|
|Halsbury, E.||Robson of Kiddington, B.|
|Hamwee, B.||Rochester, L.|
|Hanworth, V.||Rodgers of Quarry Bank, L.|
|Harris of Greenwich, L.||Russell, E.|
|Haskel, L. [Teller.]||Seear, B.|
|Sefton of Garston, L.|
|Hayman, B.||Serota, B.|
|Hilton of Eggardon, B.||Shaughnessy, L|
|Hollick, L.||Shepherd, L|
|Hollis of Heigham, B.||Simon, V.|
|Holme of Cheltenham, L.||Smith of Gilmorehill, B|
|Hooson, L.||Southwark, Bp.|
|Howell, L.||Stedman, B.|
|Howie of Troon, L.||Stoddart of Swindon, L.|
|Hughes, L.||Strabolgi, L.|
|Jay of Paddington, B.||Taylor of Blackburn, L.|
|Jeger, B.||Temple of Stowe, E.|
|Jenkins of Hillhead, L.||Tenby, V.|
|Jenkins of Putney, L.||Thomson of Monifieth, L. [Teller.]|
|Kilbracken, L.||Tordoff, L.|
|Lockwood, B.||Turner of Camden, B.|
|Longford, E.||Varley, L.|
|Lovell-Davis, L.||Wedderburn of Charlton, L.|
|McIntosh of Haringey, L.||White, B.|
|Mackie of Benshie, L.||Williams of Crosby, B.|
|McNair, L.||Williams of Elvel, L.|
|Mallalieu, B.||Winchilsea and Nottingham, E|
|Aberdare, L.||Courtown, E.|
|Addison, V.||Craig of Radley, L.|
|Ailsa, M.||Cranborne, V. [Lord Privy Seal.]|
|Allenby of Megiddo, V.||Crathorne, L.|
|Archer of Weston-Super-Mare, L.||Crawshaw, L.|
|Ashbourne, L.||Crickhowell, L.|
|Bathurst, E.||Cross, V.|
|Bethell, L.||Cumberlege, B.|
|Blaker, L.||Dean of Harptree, L.|
|Blatch, B.||Denham, L.|
|Boardman, L.||Denton of Wakefield, B.|
|Boyd-Carpenter, L.||Dixon-Smith, L.|
|Brabazon of Tara, L.||Eden of Winton, L.|
|Brigstocke, B.||Ellenborough, L.|
|Brookeborough, V.||Elles, B.|
|Brougham and Vaux, L.||Elliott of Morpeth, L.|
|Bruntisfield, L.||Elton, L.|
|Campbell of Alloway, L.||Faithfull, B.|
|Carnegy of Lour, B.||Ferrers, E.|
|Carnock, L.||Gardner of Parkes, B.|
|Chalker of Wallasey, B.||Geddes, L.|
|Charteris of Amisfield, L.||Gibson-Watt, L.|
|Chelmsford, V.||Gilmour of Craigmillar, L.|
|Chesham, L. [Teller.]||Gisborough, L.|
|Clanwilliam, E.||Goschen, V.|
|Clark of Kempston, L.||Gray of Contin, L.|
|Clinton, L.||Grimston of Westbury, L.|
|Coleraine, L.||Harding of Petherton, L.|
|Colwyn, L.||Harmar-Nicholls, L.|
|Harrowby, E.||Northbourne, L.|
|Henley, L.||Northesk, E.|
|Holderness, L.||Orkney, E.|
|Hooper, B.||Oxfuird, V.|
|Hothfield, L.||Park of Monmouth, B.|
|Howe, E.||Pender, L.|
|Inglewood, L.||Peyton of Yeovil, L.|
|Jenkin of Roding, L.||Plummer of St. Marylebone, L.|
|Johnston of Rockport, L.||Prentice, L.|
|Kenilworth, L.||Pym, L.|
|Kimball, L.||Rankeillour, L.|
|Knollys, V.||Rawlings, B.|
|Lane of Horsell, L.||Rawlinson of Ewell, L.|
|Lauderdale, E.||Reay, L.|
|Lindsey and Abingdon, E.||Rees, L.|
|Long, V.||Renwick, L.|
|Lucas, L||St. Davids, V.|
|Lucas of Chilworth, L.||St. John of Fawsley, L.|
|Lyell, L.||Saint Oswald, L.|
|McColl of Dulwich, L.||Savile, L.|
|McConnell, L.||Seccombe, B.|
|Mackay of Ardbrecknish, L.||Shaw of Northstead, L.|
|Mackay of Clashfern, L. [Lord Chancellor.]||Skelmersdale, L.|
|Mancroft, L||Stockton, E.|
|Manton, L.||Stodart of Leaston, L.|
|Marlesford, L.||Strange, B.|
|Masham of Ilton, B.||Strathclyde, L. [Teller.]|
|Strathcona and Mount Royal, L.|
|Massereene and Ferrard, V.||Sudeley, L.|
|Merrivale, L.||Swansea, L.|
|Mersey, V.||Teviot, L.|
|Miller of Hendon, B.||Thomas of Gwydir, L.|
|Montgomery of Alamein, V.||Torrington, V.|
|Mountevans, L.||Trumpington, B.|
|Mowbray and Stourton, L.||Tugendhat, L.|
|Munster, E.||Ullswater, V.|
|Murton of Lindisfarne, L.||Vivian, L.|
|Newall, L.||Whitelaw, V.|
|Norrie, L.||Willoughby de Broke, L.|
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 5.31 p.m.
Baroness O'Cathain moved Amendment No. 5:
After Clause 5, insert the following new clause—
DIGITAL BROADCASTING SERVICE LICENCES
(".—(1) Any person who operates a conditional access system, for digital television broadcasting, receivable in the United Kingdom must have a licence granted by the appropriate regulatory authority.
(2) In discharging their functions as respects the licensing of the service referred to in subsection (1) the appropriate regulatory authority shall ensure that there is fair and effective competition in the provision of such services and the access services connected with them.
(3) Conditions may be attached to such licences requiring system or service operators to—
§ The noble Baroness said: My Lords, in rising to move this amendment I wish to speak also to Amendments Nos. 6, 7 and 49. The noble Lord, Lord Donoughue, and the right reverend Prelate the Bishop of Southwark have put their names to these amendments and the noble Lord, Lord Ashley of Stoke, has put his name to Amendment No. 7. The amendments are linked. In the interests of coherence, and to save time, I think it best to deal with them together. The subjects of the amendments are conditional access, "must offer", "must carry" and electronic programme guides.
§ We have already discussed the fact that competition policy and broadcasting policy go hand in hand. Therefore an amendment is needed to ensure that there is effective competition for conditional access and for subscriber management services. My noble friend the Minister's commitment at Committee stage to implement the European Directive on Television Standards is very welcome and I hope that it will achieve the aims of Amendment No. 5; namely, fair, reasonable and non-discriminatory access to conditional access. However, important though competition policy is, it will not achieve everything. Competition authorities would not feel comfortable or able to take decisions on the grounds of universality or—this is a very important point—preserving our national culture. I believe that this last point is of prime importance to all noble Lords but it would not necessarily be top of the agenda for a non-national television service provider through satellite or cable. Because of that, "must offer" is needed.
§ The European Television Standards Directive does not mention free public service channels. It states that equipment manufacturers would not be able to prevent viewers getting channels broadcast free to air. But public service broadcasters may well not be distributed free to air because they need to target their channels at one country. That is where they are funded from and it would be wrong for them to spend public money on buying the rights that would be needed to cover the entire satellite footprint which could indeed extend right across Europe.
§ The European Television Standards Directive is also the basis for ensuring that subscription services are provided on fair terms. But that would not cover free public service channels either. Public service channels cannot charge their customers. They would therefore be disadvantaged by a pricing regime that was created for subscription broadcasters. Under the directive all that the competition authorities would have to ensure is that public service channels were not discriminated against. But that means there would be nothing to stop public service channels being forced to charge viewers. There would be nothing to stop conditional access providers charging free channels the same for carriage as subscription channels and there would be nothing to ensure that public service channels broadcast over satellite were easy to find. That is why all the amendments link together.
§ Competition law is too slow for "must offer". It can take five years or more. For example, the Government and Oftel proposed the need for number portability in 194 1990. It was not until November 1995 that the Monopolies and Mergers Commission finally ruled that number portability should happen, and it may be another year or even more before the service is actually offered to customers. Five years is half the term of the BBC Charter and quite honestly the BBC could not afford to lose 10 or 20 per cent. of its viewers for that long. As anyone knows, in business, if you lose your customers for that period of time, it is a difficult task to get them back again; and it could be that the damage would be irreversible.
§ In a normal competition situation there can be financial compensation. But how would you compensate the BBC for loss of public support, perhaps indeed leading to the end of the licence fee if it did not have enough public support having lost it that way, or indeed leading to the non-renewal of the Charter? How could that be financially compensated? Satellite companies would know that the BBC could not afford to take this risk. It could be a case of delivery blackmail in which the BBC was forced to accept unreasonable terms or even to charge for its service. "Must offer" is needed to avoid that.
§ The amendment would ensure that viewers had automatic access to public service channels which were distributed by satellite. This is an extension of the principle in the European Television Standards Directive that conditional access providers should not be able to prevent viewers receiving channels broadcast free to air. The directive also states that subscription channels will be able to contract with conditional access providers on fair, reasonable and non-discriminatory terms. However, the directive does not cover free channels that are also encrypted. In future, public service channels may be encrypted, for obvious copyright reasons, to ensure that they are not received outside the intended country. But they would still be free. "Must offer" is needed to fill this gap in the regulation and to ensure that consumers can receive free but encrypted public service channels.
§ The aim of the amendment on "must carry"—Amendment No. 7—is to guarantee viewers access to public service channels in the digital age by ensuring that cable companies must carry public service channels. There are two types of cable licence: those granted under the Cable and Broadcasting Act 1984 and those granted under the Broadcasting Act 1990. Holders of the 1984 licences must carry the BBC's publicly funded services and Channel 3 and Channel 4 public service broadcasting; in other words, BBC 1, BBC 2, ITV, Channel 4 and S4C. The 1990 Act removed that obligation. It was a move in the field of deregulation, which of course I support. But, in these circumstances, some of the cable franchisees have the 1984 statutory requirement but the 1990 ones do not. But eventually all cable franchisees will have to apply for the 1990 Act licences. Therefore, ultimately, all cable franchisees could stop distributing the public service channels.
§ The amendments would extend the "must carry" obligations to the 1990 Act licences ensuring that all cable companies carry the BBC publicly funded services plus Channels 3, 4 and S4C—that is to say, all public service broadcasting. In return for this "must carry" 195 obligation, the cable companies get free carry. The Copyright Act 1988 gives the cable company exemption from copyright law when re-transmitting public service broadcasts which are neither encrypted nor broadcast by satellite. With digital broadcasting encryption will be more common. As worded, the exemption would therefore not apply to many future public service channels.
§ The Cable Communications Association, in response to the White Paper on digital broadcasting, specifically requested that the Copyright Act should be amended to allow free carriage of new digital public service channels, whether or not they are encrypted. Therefore, subsection (5) of the new clause proposed in Amendment No. 7 grants the cable companies an exemption from copyright when carrying out their "must carry" obligations.
§ Amendment No. 49 deals with the electronic programme guides. It seeks to ensure that electronic programme guides cannot be used to prevent effective competition or to bury deep down 127 or 150 free public service channels. In the world of hundreds of television channels, which is quite feasible, electronic programme guides will be essential for viewers in order to make an informed choice about what they will want to watch. The electronic programme guides can be extremely sophisticated, acting like an electronic media helpmate in effect, learning their owner's programme preference; remembering to video their favourite programmes; guiding them towards new programmes that they will enjoy. All this sounds wonderful for those of us who are technologically challenged at the moment! They will be very powerful.
§ However, if there is no effective competition in the market for electronic programme guides, the owner of the dominant electronic programme guide could abuse that position to guide viewers towards their programmes. Public service channels, which the electronic programme guide owner may see as free competition to his pay television channels, could be buried at the bottom of the programme guide. Amendment No. 49, therefore, seeks to create effective competition in the market for EPGs by creating a pro-competitive licensing regime regulated by the ITC and ensures that if a dominant electronic programme guide does develop, it cannot be used to bury public service channels. I beg to move.
§ The Lord Bishop of Southwark
My Lords, I welcome the opportunity to support the amendments tabled by the noble Baroness, Lady O'Cathain. In speaking to them I do so as someone who carries within the Church a particular responsibility for the regulation of the broadcast media, chairing as I do the Central Religious Advisory Committee.
The quality of provision of our public service channels is world renowned. The networks produce programmes such as "Cracker", "Prime Suspect", "The People's Century" and "Pride and Prejudice"—award winners which, in addition to securing huge audiences at home, are in demand throughout the world. Whereas every other advanced European broadcasting economy 196 has a "must carry" rule, and whereas so many other countries cherish public service broadcasting, here we threaten its role.
What is that role? I wish to highlight but two crucial functions. First, the provision of important programming that is not viable in a commercial, profit-oriented environment. That applies especially, but not solely, to the BBC and, most importantly, to programmes that address religious and moral issues from a mainstream perspective. The public service broadcasters in this country have an excellent record of meeting the spiritual needs of the population in their programming. Indeed, it is part of the BBC's Charter which has just been renewed for the next 10 years.
At the same time, and not dissociated from this work, are those challenging and excellently produced programmes which examine life from a moral standpoint; programmes such as "Everyman" and "Heart of the Matter" to name only two. They constantly seek to address issues of the day from a perspective that values ethics in a modem society.
These programmes do not draw the largest of audiences, but they draw substantial audiences; not perhaps large enough to make them into attractive money-making possibilities, but large enough for them to be sadly missed if no longer available to the vast majority of the population. I believe that if there is no obligation to carry and offer public service channels, the effectiveness of mainstream religious and ethical broadcasting will be seriously damaged.
The second function of public service broadcasting is to provide a national focus. That is especially important at critical times in the life of the nation. Royal and national events receive outstanding coverage in this country. The BBC has long played a role in providing dignified, thoughtful and commanding coverage of those occasions that draw the nation together and contribute to a sense of belonging and social cohesion. To lose that would be a very damaging step in an already fragmented society. Despite changes in society over recent years, there was still a huge audience for the VE and VJ Day celebrations last year. There remains a great need for this kind and standard of broadcasting.
I shall be voting for the amendments which propose that the providers must offer; that they must carry and that the programmes must be easy to find because I believe strongly that this is important for the nation. I hope that your Lordships will agree with me that we must not destroy a great tradition of public service broadcasting which is the envy of the world, but must ensure that it is there and freely available for all the people of this country in the years to come.
§ 5.45 p.m.
§ Lord Ashley of Stoke
My Lords, I hope that the Government are able to support these amendments. I am encouraged by the comments made by the noble Lord, Lord Inglewood, in Committee as regards Amendments Nos. 6 and 7. He said that the Government were in full agreement with the aims behind them. This amendment is seeking to secure something of very great value for all viewers in the next century. We have comprehensive, 197 first-class television programmes providing for all sections of the community in our society. The BBC and ITV are now the core of our television provision, with some additional extras that have to be paid for. But those who do not want or cannot afford to pay extra are getting as much excellent television as they want just for the price of the licence fee. That fee is like a season ticket to television.
We all know that the future of television will be profoundly different. There will be a plethora of channels and an abundance of programmes. That point has been made repeatedly in this House. Of course, these will all be wonderful programmes—perhaps! I am sure that they will not all be free and that is what matters. People who want season tickets for any service are those who use it often. That applies to rail travellers, health club enthusiasts and equally to television viewers.
The people who watch television a great deal are those who, for one reason or another, spend a lot of time at home. They are the elderly people, those who are ill or disabled, the carers, people with children, the unemployed and those on low incomes. Those are the people who will suffer if they are unable to watch what I would call "season ticket television" and if they are left increasingly with merely subscription or pay-per-view programmes. That would be for the minority.
The Minister seems to think that there is no risk of that happening. He also seems to think that if it does happen there will be time to change the system. That was the clear impression that he gave in Committee. I am sure that he will correct me if I am wrong. I happen to disagree with the Minister's view on that because it is true that the cable companies so far have willingly transmitted the main television channels. They have done so to attract customers. However, I think that we should anticipate, and be prepared for, the new television world. Commercial interests will feel no affection for our current broadcasters. That is realism. That is the truth of the matter. They can and will be competitors for each others' offerings. If it suits their commercial interests—I believe that it will—they will obviously not hesitate to squeeze out the old favourites. In their terms, that makes commercial common sense.
I was particularly concerned by the Minister's comment that the public service channels,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".That is a remarkable statement.
Our television is praised all over the world, yet the Minister damns it with such faint praise. The BBC and ITV have a far greater role to play in our society than merely being generators of demand for new programme services. If ever their role as generators of demand diminishes and if the gateways are allowed gradually to close, that would hit the people to whom I referred earlier—those who simply want to enjoy their television for free after paying the licence fee. I am certain that it is our present structure which has given us such high quality television. Of course, the BBC and ITV watch both pounds and pennies, but the certainty of their 198 respective incomes has given them the assurance to provide what is undoubtedly the best television in the world. If the amendments are accepted, that will continue well into the next century. That is why I regard Amendments Nos. 6 and 7 as being particularly important.
I should like to say a brief word about the electronic guides, to which the noble Baroness referred. I support the amendment, as I did in Committee, because it gives a cast-iron guarantee of a prominent place for BBC and ITV programmes on the electronic guides. This is an issue of growing importance because, over time, the electronic programme guides will become the main shop window, displaying the programmes available.
I know now that I was too critical of Videotron when I accused it in Committee of manipulation, which I regarded as dirty tactics. Mr. Phil Kirby of Videotron has explained the situation in a letter to the noble Baroness, Lady O'Cathain, with a copy to me. It seems that Videotron's action in relocating Channel 4 on its cable television network was necessary. There was, I believe, no manipulation intended to dissuade viewers from watching the channel. However, that episode illustrates the difficulties that non-technical people like myself find with procedures that are transparently clear to the scientifically minded.
I hope that the Government will be able to give a more constructive and more sympathetic response to this amendment than they gave in Committee. Although I welcome the Minister's awareness of the importance of the amendment, I really do not think that it is an adequate response for him to say that we should rely on European and domestic competition law and the review. We need visibility for our traditional channels and protection against anti-competitive behaviour and potential abuse. Those basic principles should be written into the Bill. That can be done most effectively by the Government accepting the amendment.
My Lords, not for the first time we have heard some stirring words, but they do not altogether seem to tie up with the wording of the amendment. I should like to make three points. The first is technical and can easily be changed. We are dealing now with digital terrestrial broadcasting and the amendments are wide enough to include satellite.
Subsection (1) of Amendment No. 5 states that any person who operates a conditional access system requires a licence. The licence can apparently tell him that he "may", if the regulatory authority chooses, not be able to use his own conditional access system. I cannot see why he should bother to apply for a licence in the first place. I do not think that that is what was intended.
Turning to Clause 6, we find that it is the duty of the regulatory authority, under paragraph (b), to ensure that the broadcaster is not paid other than through a television licence. If he is a satellite broadcaster, he is hardly going to broadcast if he does not have any revenue coming in. It seems to me that there are some curious drafting errors in the amendments.
§ Lord Thomson of Monifieth
My Lords, I hope that it is sufficient for me to say from these Benches, with the serried ranks in support behind me, that we agree totally with what the noble Baroness, Lady O'Cathain, said about "must carry", "must offer" and the electronic guides. In some ways, the electronic guides are the most important. It may very well be the case that what the noble Lord, Lord Ashley of Stoke, called commercial common sense will be sufficient to ensure "must carry" for some years ahead, but electronic guides are a much more immediate matter and I hope that the Government will respond positively on that point.
§ Lord Dixon-Smith
My Lords, I must admit to being slightly puzzled. I understand the need to carry so-called "public service broadcasting". I use that term deliberately because people are perhaps over-defensive of it and seem worried that it will not be able to stand the heat of the competition that is coming. I do not share that lack of confidence.
I accept that such broadcasting must be free to the recipient who has paid for it through his licence. However, if I understood correctly, what was being suggested was free carriage of such programmes down the cable. I am not sure that I can go along with that. There are costs in transmitting down cables, so I have some difficulty in understanding why public service broadcasters, such as the BBC, should not pay those who carry their service for them—in other words, the cable companies—for the privilege of having their public service programmes sent down the cable. Therefore, although I accept the concept of the service being free at one end, I have the gravest difficulty with the concept of it being free throughout. That applies particularly to what I would call the "transmission end". I have some problem in resolving that point.
§ Baroness O'Cathain
My Lords, if I may rise now I hope that I shall be able to put noble Lords' minds at rest. If there are costs involved by the satellite people or the cable people—
§ 6 p.m.
§ Lord Inglewood
My Lords, I shall try to take the amendments in order. I shall begin with Amendment No. 5 but speak only briefly because we have just had a discussion of most the issues involved. I reiterate that the Government have published proposals in the policy document The Regulation of Conditional Access Services for Digital Terrestrial Television which cover in full all the matters covered by the amendment. Indeed, those proposals are based on the need to ensure that digital conditional access providers offer all 200 broadcasters fair, reasonable and non-discriminatory terms. They also prevent providers refusing to supply encryption and subscriber management services separately and making supply of those services dependent on acceptance of others. The proposals, in line with the European Community directive on advanced television standards, require separate accounting for conditional access services whether or not the provider is also a broadcaster.
I shall be glad to have further discussions with my noble friend. I wish now, however, to move on to Amendment No. 49, an important amendment which covers electronic programme guides. Again, I am happy to assure my noble friend that the Government to a large extent take the same view as she does and have proposals in place to address it through the Bill we are debating.
Let me once again state unequivocally that the Government are concerned to ensure that electronic programme guides are not used to distort competition between broadcasters. It therefore seems eminently sensible for the Bill to establish certain principles, as it does. EPGs will need an additional services licence and as such will be subject to the ITC's general power and duty to ensure fair and effective competition in the provision of all the services it licences. In that context it means that one cannot deliberately bury someone else's offering on the system.
Commercial as well as regulatory considerations are likely to work in favour of public service broadcasters. They will have an important role to play in generating demand for new programming services and consequently cable and satellite operators 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. Nevertheless, as I made clear in Committee, the Government intend to monitor the situation carefully. And should EPGs in the digital market develop in a way which makes further regulation necessary, we shall introduce it. But we cannot yet predict exactly how they will develop either in technical or commercial terms.
What is not sensible therefore is to write on to the face of the Bill specific requirements which depend on a particular conception of how EPGs might be configured. And that is what the second part of this amendment would do by requiring that the existing public service broadcasters be given a prominent position on the first page of all guides. By the time digital television is up and running, this sort of terminology may well be obsolete. Indeed, some existing guides do not even have first pages but scroll continuously through pages so that the viewer's point of entry depends on the exact moment he or she consults the guide, in the same way as multi-page Teletext entries. EPGs might also be configured by type of programme. Thus, if you were to call up an EPG and ask it for a selection of sports programmes currently showing, and no public service broadcasters were showing a sports programme, it would not be reasonable for their services to appear on the first page. To take an example which might be more redolent of science fiction—but how many existing technologies appeared 201 not so long ago to be fantasy—it is not too far-fetched to suggest that some EPGs might eventually be speech-activated. I use that example merely to illustrate the unpredictability of the technology we are debating. If we set down a requirement of the sort my noble friend proposes it would either mean that all EPGs had to have a designated first page or that those that configure their system in another way will not be covered by the regulation she suggests.
The effect of that sort of prescriptive requirement, depending on exactly how it is set out and interpreted, might therefore be either to constrain providers of EPGs in terms of the technical arrangements they can make or, conversely, strictly to regulate something that to all intents and purposes does not exist while allowing providers to evade the principles of that regulation. Having said that, the Government are in agreement with my noble friend in that we want fair competition. We also want to see that the public service channels continue to be available to all and that they are accessible without difficulty. But the way to fair competition is to regulate by reference to principles, not to speculate on what technology might look like in 10 or 15 years' time. In view of those considerations, I hope that my noble friend will be reassured.
I turn now to Amendment No. 6. Again, I thank my noble friend for raising the points in the amendment and for the helpful discussion she had with me and my officials following Committee stage. I hope I shall be able to offer her a considerable degree of reassurance.
First, conditional access services, including subscriber management, for digital satellite television are clearly covered by the provisions in the EC directive on advanced television standards and the proposals in the Government's policy document The Regulation of Conditional Access Services for Digital Television, published in January. Such services will require a licence as has been said a number of times today, issued by the DTI and enforced by Oftel, both in close co-operation with the ITC. That licence will include a number of conditions intended to ensure fair and effective competition. I do not propose to go into detail here. Instead I refer noble Lords to the policy document concerned.
Those conditions are also relevant to the second part of the amendment, which, if I understand my noble friend correctly, is intended to ensure that viewers have access to public service channels through their satellite set-top boxes where those services are transmitted by satellite. I understand from my own discussions with the BBC last week, at which my noble friend was present, that what is sought in the amendment is an assurance that public service broadcasters using satellite delivery will be able to reach viewers through satellite set-top boxes whether the services they are transmitting are encrypted or not. If those services are not encrypted, then Article 4(a) of the directive requires that all digital consumer equipment shall be able to receive them.
As my noble friend said, even programme services for which the broadcaster does not intend to charge viewers might be encrypted in order to avoid encroachment into countries where they are not intended to be received. 202 In that case, of course, the broadcaster concerned will need either to provide for himself, or to purchase, encryption services. Providers of such services, according to our legal advice on the meaning of the directive, will be required to provide them on a fair, reasonable and non-discriminatory basis to all relevant broadcasters. If the BBC, or any other public service broadcaster, wishes to provide an encrypted service, regardless of whether the viewer is to be charged for the key, and if that public service broadcaster has contracted with a provider of satellite transmission capacity, say Astra or EUTELSAT, then a conditional access provider cannot unreasonably refuse to supply the encryption and de-encryption services necessary to enable those viewers who have digital satellite set-top boxes to receive the service. It will, of course, charge the broadcaster a fair price for them. But the viewer will pay nothing beyond the cost of his TV licence and the set-top box if the broadcaster does not wish to charge him anything.
In summary, if I have understood the purpose of the amendment correctly, so far as concerns digital satellite television, the intention behind the amendment is already achieved by the proposals I have spoken of. If a public service broadcaster wishes to transmit a service, free to air or encrypted, via digital satellite, it will have to meet the costs of doing so, just as it needs to meet the costs of its terrestrial broadcasts. But it will not be possible for a conditional access provider to use its position in the market to prevent viewers receiving that service by denying the broadcaster supply of encryption services on reasonable terms. I appreciate that I have spoken at some length. I shall be happy to have further discussions with my noble friend if she would find that helpful.
I turn now to Amendment No. 7. Again, I do not wish to go over the ground I covered in response to my noble friend in Committee. However, I think it worth repeating that the Government are in full agreement with the aims behind her amendment in so far as we want the services of existing public service broadcasters to continue to be available to all the people of the United Kingdom. Indeed, that is one of the key principles on which our proposals for digital terrestrial television are based. It is why we are offering them guaranteed places. But there are other principles from which I am very reluctant to depart and which this amendment infringes. One of those is that regulation should be introduced only where necessary. Another is that industry should not be faced with frequent moving of regulatory goalposts. The amendment would involve rescinding provisions made in the 1990 Act, as my noble friend pointed out, regarding the conditions of local delivery licences during the validity of a number of such licences. This might be largely symbolic. As I shall explain, we do not think whether or not regulation is reintroduced in this area will affect cable companies' behaviour. But we must give a message to industry more widely that the regulatory environment will be stable. I made that point earlier today.
As I also said in Committee, the Government intend to monitor the situation as it develops. That will be a continuous process, though the review of the scope for analogue switch-off, due to take place within five years 203 after the commencement of digital terrestrial television, will clearly need to cover among other issues the matter of the availability of the public service channels. There is no reason at this stage to take unnecessary regulatory action. Indeed, we believe that to do so would be precipitate.
Currently, all viewers can receive the public service channels via terrestrial aerials; and analogue services will not be switched off until the vast majority of viewers have acquired digital receiving equipment. Until then, viewers will continue to be able to receive the BBC and Channels 3, 4 and 5 in the same way as they do now.
It is pretty clear that viewers like those channels. That is a great vote of confidence in them and echoes the views of the right reverend Prelate. Even in homes with cable and satellite they are by far the most watched, which is a credit to those who provide them. Everything suggests that they have every reason to be confident that viewers will not suddenly turn against their programmes. Viewers will not simply renounce terrestrial and switch to other means of reception unless they know that they will continue to receive the public service channels. Is there something which public service broadcasters imagine will make them do that? If so it would be interesting to hear of it.
Once viewers have the appropriate set-top boxes or digital receivers they will, at no further cost and using their existing aerials, be able to receive a substantial number of free-to-air services, including the existing channels and new services, at very high technical quality, via digital terrestrial transmission. I believe that that will be an attractive proposition. To compete with it, it will be all the more necessary for cable companies to provide what people want, and that includes the terrestrial channels.
All cable companies currently choose to carry the services of terrestrial broadcasters and will continue to do so. They want to attract customers and I repeat that public service broadcasters attract customers. What is more, once cable goes digital operators will have far more capacity. This will make it even more likely that they will continue to wish to carry the main terrestrial channels. If they carry them now, when they have 40 or so channels to play with, why would they stop when they have 500? Introducing regulation to ensure that cable companies carry the BBC, ITV and Channel 4 would simply be obliging them to act in their own interest.
I am aware of the fear of the noble Lord, Lord Ashley, that cable companies might offer the public service broadcasters, along with their other services, for a while and then once they have built up a significant customer base, drop them and leave their customers marooned. In the first place, this supposition betrays a view of the cable industry which I am bound to say is self-evidently somewhat cynical. It is also unrealistic to suppose that industry wins by acting against its customers' interests and wishes, in particular this kind of industry. But I am glad to reassure your Lordships that any such case of a monopoly franchisee abusing its dominant position to deprive customers of services they want to receive, 204 or making access to those services deliberately difficult, having attracted custom on the basis that it would offer those services, would swiftly attract the attention of the fair trading authorities. Indeed, the phrase "their feet would not touch the ground" would seem apt.
All of that said, however, let me repeat the assurance that I previously gave. Should further action become necessary, and I am far from certain that it will, we shall take it. But far better to take that action once we have a fuller picture of exactly what dangers, if any, we are seeking to eliminate and what the problem we are seeking to remedy might be. For example, if by the time analogue is switched off the industry has developed receivers able to receive all three modes of transmission—terrestrial, cable and satellite—then what would be the point of requiring more than one of those to carry particular broadcasters? Meanwhile, we can recognise the continuing success of British public service broadcasting and the success of the cable industry. Neither is a threat to the other. They are complementary, not mutually exclusive, and the cable operators clearly realise this. That is why they carry public service broadcasting.
I recognise the real and heartfelt concerns that have been expressed in the debate. However, I hope that on hearing that exposition of the Government's position and the legal background to it noble Lords will come to the conclusion that the kind of amendments being proposed are not appropriate for dealing with the problems that they are intended to tackle.
§ 6.15 p.m.
§ Baroness O'Cathain
My Lords, I am grateful to the Minister for giving us such a detailed, conciliatory and helpful response to the four amendments. Perhaps I may deal with them in turn. As regards Amendment No. 5, the Minister said that he was prepared to discuss the matter further with me and I shall be taking him up on that offer. I thank him for it.
As regards Amendment No. 6, he spent a great deal of time talking about everything that is reasonable. I began by looking at the whole Bill on the basis that everyone was innocent until proved guilty. However, the more I look into what is happening with satellite and cable and the way in which the operators view public service broadcasting the more concerned I become.
I accept that our public service broadcasts take the great proportion of viewing time at the moment. However, I must remind the Minister that the satellite and cable companies are in business to obtain as many of the viewers' hours as possible so that in turn they can run a commercial business. If they cannot say to their advertisers, "We are gaining a market share. We now have 25 per cent. of the viewers' hours", they will not have a good commercial future. Therefore, commercial reality is such that there will always be a pressure on the satellite and cable companies to push their product ahead of public service broadcasts. That is what the marketplace is like.
I repeat that the public service broadcasting companies in this country—that is, the BBC, ITV, Channel 4 and S4C—represent to a greater or lesser 205 extent the culture of this country and we must be sure that we preserve that situation. We cannot have wall-to-wall imported programmes. Although the companies might carry public service broadcasts, if they do not carry them in a prominent position or, by extension, do not allow them to be advertised prominently on electronic programming guides there is a concern about the future. I promise noble Lords that I am not looking for problems but I feel greatly uneasy about that. However, my noble friend the Minister asked us to be reasonable, so I shall be; but I will enter into further discussions on the matter.
As regards electronic programming guides, I was given many crumbs of comfort by the fact that my noble friend said that the Government will monitor them and any abuse will be dealt with. I take the point that, with the ever galloping advances in technology, it could well be that the amendment will appear to be stupid because it requires the public service broadcasting to be on page 1 of the guide and there may not be pages in the guide. But at the moment pages are suggested on the guide and while that is the case I should like to see the public service broadcasts on page 1. I take the point that if one were to scroll the guide looking for a sports programme but there did not happen to be an offering on a public service broadcast network the provision would be a little foolish. However, I believe that we are trying to anticipate what the technology will be and I am a little concerned about that issue.
As regards Amendment No. 7, I agree that regulation should be introduced only when necessary, but that apparently makes a nonsense of making a regulation in 1984, removing it in 1990 and then proposing to implement it again. Of course, a stable regulatory environment is needed. I subscribe to all of that. However, I am scared—and I put it as strongly as that—that the competition from the satellite and cable companies will leave us in a situation in which the public service broadcasts will suffer.
It may be that I am being very suspicious and highly cynical about this, which is not in my nature. I am anxious, but my anxieties have been reduced to quite a large extent by my noble friend's offer of further talks between now and Third Reading, and I shall avail myself of that offer. I thank all noble Lords who have taken part in the debate and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ [Amendments Nos. 6 and 7 not moved.]
§ Clause 8 [Multiplex licences]:
Baroness Dean of Thornton-le-Fylde moved Amendment No. 8:
Page 7, line 38, leave out ("and (f)" and insert (",(f) and (ff)").
§ The noble Baroness said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 10, 16 and 23. These amendments refer to a single set-top box. I am aware that we strayed into that area when we talked about conditional access and we also did so in Committee.206
§ If these amendments are accepted, they will ensure that there is a single standard set-top box providing availability of access for all digital terrestrial services. As presently drafted, the Bill makes no such provision. In fact, without the amendments the reverse could happen.
§ In Committee the noble Viscount, Lord Chelmsford, said that it is too early to look at technical standards for a single set-top box. I know that the noble Viscount, Lord Chelmsford, has some expertise in this field and is president of the European Informatics Market, of which I am a member. The noble Viscount was referring to the fact that the main European suppliers have agreed a voluntary common standard for set-top box equipment—a DVB agreement, which has been referred to today. The view of EURIM is that there is still a potential problem in that the agreed standard allows two options: the first providing a single set-top box with several slots so that several channels can be received with access by use of a smart card which is paid for; or one box with one slot for a proprietary conditional access system.
§ The amendments do not seek to state which technical standards should apply. I suggest that the Bill provides the only opportunity for discussion on that single standard. We must not have a monopoly dominance, as we do at present, which prevents people having access unless they pay for a different box. I believe that we all have the same aim; namely, one box for which an entrance fee is paid which provides access to whichever services or channels one wishes to access. But the technical requirement should be a single standard. We must bear in mind also that although we are discussing this Bill now, it will not reach the statute book until much later this year and I understand that talks are taking place at present about that very issue.
§ When we discussed this on the first day of Committee, the Minister accepted that there were concerns about the whole area. He said that he was prepared to look at the criteria to be applied by the ITC. As yet, we have had no response, but I do not criticise the Minister because I see how many amendments there are on the Marshalled List and in view of the number of changes that have been made, it may be that there has not been an opportunity to deal with this matter.
§ In Committee, the Minister referred to the DTI consultation document on conditional access, a copy of which we received on the day of that debate. The Minister went on to say that many of our anxieties were dealt with outside the Bill; and therein lies the problem. Those anxieties are real. They refer to broadcasting. I presume that the Minister is referring to the DTI consultation document.
§ The fact is that the DTI document gives no assurances that the viewer will see the emergence of a single standard through which access can be gained to digital services. The ITC has said that an integrated digital receiver, which is capable of receiving all digital terrestrial programme services, is in the best interests of the viewer. It is not surprising that he said that because I believe that that is generally accepted as the commonsense view. The amendment does not mean that 207 there will be one identical receiver—in other words, a monopoly supply. We are talking about a single technical standard.
§ The difference between us is not whether a single set-top box is desirable, because I have heard no opposition to that proposition. We all agree that it is desirable. The difference is whether we accept that there is a need to make provision on the face of the Bill for the ITC to take into account proposals for set-top box compatibility when assessing applications for multiplex service licences. We believe that there is a need to have that on the face of the Bill.
§ In Committee it was mentioned that the German companies had concluded agreements on a standard decoder and that is referred to in the paper by the European Informatics Market and the review that it has carried out. The noble Viscount, Lord Chelmsford, is right in thinking that there may be some drawbacks to that. I gather that talks are taking place in the UK but I have heard only rumours and I do not have much detail about them. The Minister referred to that earlier today.
§ If there is nothing on the face of the Bill to ensure that we have a single decoder system and if no industry-wide agreement is concluded, where do we go? It means that we reach a position in which there is no fair competition. If it is not on the face of the Bill, it will be too late to take measures which may be needed to deal with the problem. I suggest that it will be too late not only for the viewer but also for the many services which we all hope will take off.
§ We cannot leave this matter to chance or even to common sense. Unfortunately, all too often there is too little of that about when one is dealing with money and competition. Since we discussed this matter in Committee, I have received two interesting briefing notes. The noble Lord, Lord Thomson of Monifieth, referred to one of them from EUTELSAT, the European Telecommunications Satellite Organisation. That organisation also refers to the need for a single decoder. It notes the amendments put forward in Committee and that they were subsequently withdrawn. It urges us to put forward those amendments again at this stage. EUTELSAT is not a consumer organisation but it rightly says that market forces will determine an acceptable level of charge for the services, which is our intention. We want the customer to pay what he is prepared to pay. But to have a system which means more than one decoder box will not allow that competition to develop.
§ The other letter which I received is from the British Radio and Electronic Equipment Manufacturers' Association whose members last year manufactured 5.6 million colour television sets and 3 million video recorders in the UK. The association makes it quite clear that there are shortcomings in the Bill on set-top boxes. It does not want the issue to be left open—and it represents the manufacturers of televisions and video recorders here in the UK—to a voluntary agreement being reached. The association supports the ITC; as we do on these Benches. It wants the ITC to have the authority in the Bill to take into account how proposals from applicants for multiplex licences will ensure viewer access to the whole range of the new digital terrestrial services.208
§ As BREMA says in its briefing note, the general principle which motivates its anxieties—and ours—that there should be a single standard is that there should also be a free market which would encourage consumers to purchase equipment in the knowledge that it will be cost effective and will give them access to the variety of services available. It will be convenient to use; it will be flexible; and it will not tie people to any one particular programme or service provider. How right BREMA is! That is what the amendments are intended to achieve. Those are the principles lying behind them.
§ 6.30 p.m.
§ Lord Thomson of Monifieth
My Lords, I strongly support the noble Baroness in what she said. She put the case most carefully and thoroughly. I believe her argument that such a provision ought to be on the face of the Bill at this time is a strong one. I shall not say more beyond that because, as the noble Baroness said, I strayed into the matter during the course of debate on her earlier amendments. Therefore, having committed the sin of trespass, I think that the best price I can pay is to say that I am content to stand on the arguments that I put to the Minister earlier.
My Lords, I certainly support the noble Baroness on the desirability of having a single set-top box for digital terrestrial transmission, although it would be nice if we could have one that was wider. I also support the noble Baroness that it is right for the ITC to put pressure on all the parties concerned to try to move towards that position. However, I am neutral on whether there is a need for such a provision in the Bill. Indeed, I am not sure. I do not remember the ITC's latest briefing paper requesting further powers in that respect, and it has not been backward in asking for powers when it felt that it did not have sufficient. Finally, I thank the noble Baroness for promoting me, but I am only a director of EURIM.
§ Lord Inglewood
My Lords, as the noble Lord, Lord Thomson, said, the noble Baroness very comprehensively explained the amendments which relate to the matter of a single set-top box for digital terrestrial television. The amendments would make co-ordination between multiplex providers on a single set-top box a criterion for the award of a multiplex, and would allow the ITC to set minimum requirements to be met by all applicants seeking those licences. The implementation of the measures proposed for co-operation would then, in turn, become conditions in the licence.
As I said when we debated the amendments in Committee, the industry is well seized of the importance of co-operation to the success of digital terrestrial television. Fragmentation would be in no one's interests. The existence of the Digital Television Group is proof of that. I am pleased to inform your Lordships that, since we last discussed the issues, membership of that group has continued to expand so that now some 24 companies are involved.
Noble Lords will also be aware that I am moving an amendment to Clause 9 which fulfils the commitment that I made in Committee to look again at the criteria 209 for the award of multiplex licences. I referred to that amendment earlier when responding to a point made by the noble Lord, Lord Thomson, which was indeed the beginning of the trespass in which we all seem to have become involved. In particular, I said in Committee that we would consider whether we might do more to take into account the extent to which an individual multiplex applicant's proposals would contribute to the overall development of digital terrestrial television. It is clear that a multiplex provider's commitment to co-operation on the provision of a single box could be a significant element in the contribution his proposals might make to that end.
Therefore, I hope that the noble Baroness will not seek to press the amendments. I also hope that she will support my amendment, the purpose of which both she and the noble Lord, Lord Donoughue, welcomed in Committee. It will pull together the future development of set-top boxes without prescribing the form that any particular box might take—which might well in fact be illegal under the rules of the single market—in a form within the general parameters imposed by the licensing conditions and competition policy. I hope that my response will reassure the noble Baroness.
§ Baroness Dean of Thornton-le-Fylde
My Lords, I thank the Minister for his detailed response. We looked at his amendment to Clause 9. It seems that we are in fact backing two horses in this Bill. However, we think that ours is a stronger one because we believe that our amendment would give the viewer much more assurance for the future.
I hope that I can persuade the noble Viscount, Lord Chelmsford, towards my point of view regarding the ITC. He asked whether such a provision was needed on the face of the Bill. We believe that it is because we shall have a proliferation of service providers, not just the very narrow group that we have seen thus far in the UK. Experience shows that the more people one gets in the ring, the more likely one is to face litigation about one's authority. If such a provision were on the face of the Bill, such a possibility would be avoided.
The Minister would like us to support his amendment. But, with my background as a trade unionist, I am inclined to enter into a little negotiating here and suggest to the noble Lord that we will support his amendment if he will support ours. However, I do not believe that that would succeed in this arena. I believe that we could have provided a good measure for the viewer had we been able to put such a provision in the Bill, although it is always possible that the matter will be raised in another place. It is with great reluctance that I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ [Amendments Nos. 9 and 10 not moved.]
Lord Inglewood moved Amendment No. 11:
Page 8, line 19, at end insert—
("( ) In subsection (4)(f) "acquisition" includes acquisition on hire or loan.").
§ The noble Lord said: My Lords, in moving the above amendment, I shall speak also to Amendments Nos. 18, 54 and 56. The amendments seek to clarify two existing provisions in the Bill. The Bill provides that applicants for television multiplex and national radio multiplex licences must submit proposals for promoting the acquisition of digital receiving equipment by consumers in the area of their service. The amendments seek to clarify that the word "acquisition" does not just mean purchase but also includes equipment acquired under hire or loan arrangements. I beg to move.
§ On Question, amendment agreed to.
§ Clause 9 [Award of multiplex licences]:
Lord Inglewood moved Amendment No. 12:
Page 8, line 43, leave out from ("regard") to end of line 44 and insert ("to the extent to which, taking into account the matters specified in subsection (2) and any representations made to them in pursuance of section 8(7)(b) with respect to those matters, the award of the licence to each applicant would be calculated to promote the development of digital television broadcasting in the United Kingdom otherwise than by satellite").
§ The noble Lord said: My Lords, the award of multiplex licences is the key element in the establishment of digital terrestrial television and radio. The multiplex provider plays a pivotal role in the introduction of the new technology and the new services.
§ The Bill, as introduced, provided for the award of a television and a national radio multiplex licence to be made mainly on the basis of three particular criteria. First, there are the applicant's plans and time-scale for putting in place the transmission infrastructure, so that the services on his multiplex might be received as widely as possible and as quickly as possible throughout as much of the country as can be reached by the multiplex.
§ Secondly, there is the capacity of the broadcast services to be offered on the multiplex to appeal to a variety of tastes and interests. Thirdly, there are the applicant's proposals for promoting or assisting viewers and listeners to obtain equipment capable of receiving digital broadcasts.
§ Each of those elements is vital to the successful launch of digital terrestrial broadcasting. However, as I have already indicated, in response to amendments tabled by the noble Baroness, Lady Dean, there is a further factor particularly important to television which needs to be taken into account; namely, the way that, taking everything together, a prospective multiplex provider's proposals will contribute to the overall development of digital broadcasting.
§ The amendments which I have tabled address this issue. In doing so they provide the regulators with a framework, a common currency, in which to weigh the separate elements of the proposals put to them by the applicants for the multiplex licences. The regulators will therefore be able to look at the applicants' proposals in the round and judge them by looking at the contribution they will make to the successful launch of digital terrestrial broadcasting as a whole. This means that the ITC can look at proposals for promoting and encouraging the acquisition of set-top boxes, and 211 consider whether they are likely to lead to a cohesive rather than a fragmented market. They can look at whether multiplex providers intend to co-operate with each other on other aspects, too; for example, the roll-out of transmission infrastructure, where significant economies of scale might be achieved through co-operation with other multiplex providers.
§ I believe that these amendments go a long way towards meeting the concerns of noble Lords opposite, and will provide a clearer and more effective framework for the regulators to do their job. They establish the development of digital terrestrial broadcasting as a whole as the touchstone for decisions on multiplex licences. We all want this enterprise to succeed. We cannot do that by state direction, but we believe that willing co-operation between the various parties involved is likely to make a successful outcome more likely, and this measure we believe will help to achieve that. These amendments will help ensure that digital terrestrial broadcasting is given the fairest of winds as it sets sail. I beg to move.
§ On Question, amendment agreed to.
§ 6.45 p.m.
Baroness Jay of Paddington moved Amendment No. 13:
Page 9, line 7, at end insert ("and the extent to which such services (taken as a whole) may be expected to include programmes of quality,").
§ The noble Baroness said: My Lords, in moving Amendment No. 13 I wish to speak also to Amendment No. 14—which stands in the names of my noble friends Lord Donoughue and Lady Dean of Thornton-le-Fylde—and to Amendments Nos. 17 and 19, which stand in my name. The purpose of all of these amendments is to make a further attempt to ensure that requirements about the quality of future services are placed on the face of the Bill. The arguments about the importance of quality in broadcasting have been rehearsed at earlier stages of your Lordships' deliberations but it is worth summarising and highlighting a few of them again.
§ It has been generally agreed on all sides that we in the United Kingdom have an enviable tradition of high programme standards, of which we are justifiably proud. However, the Government now seem to feel that it is enough to rest on our past laurels and that little needs to be done to try to ensure that those high standards continue into the digital world. There are, of course, exceptions. The obvious one is that of simulcast transmissions of existing services where existing quality regulations will continue. However, the situation we should be considering now is that of the medium term when digital broadcasting will be the only terrestrial system for any listener or viewer. As the Minister predicted at Second Reading, there will be initially—I stress the word "initially"—18 national channels on six multiplexes.
§ The Government have proposed that together with technical ability, variety not quality will be the touchstone against which service bids for a multiplex will be judged. At Second Reading the noble Lord, Lord 212 Inglewood, said that the ITC would take full account of proposals for local, regional, community and special interest channels and programming as an important element in increasing variety. Amendments Nos. 14 and 19 would simply ensure that on that same basis and formula, quality as well as variety is considered. After all, variety in broadcasting is certainly a commendable and appropriate aim but it does not by any means always embrace quality. There can be an enormous variety of programmes, all of them of poor quality. Any of your Lordships who have switched between the 20 or 30 cable channels on offer today in any large American city will have a vivid and pretty depressing picture of what low quality multiple-choice TV can produce, however it is delivered in a technical sense.
In Committee, the Government also seemed to believe that the powers of the new Broadcasting Standards Commission to publish guidelines and to consider complaints about taste, decency and impartiality will in the future be sufficient protection against the worst excesses. Your Lordships will remember from the Committee proceedings that we on these Benches do not think that the present proposals for the remit and the activities of the Broadcasting Standards Commission are sufficiently pro-active to act as a significant voice of the viewer and the listener. In our opinion, they are certainly not robust enough to establish and monitor general quality standards. In this context, noble Lords may have been as apprehensive as I was to read the remarks of Mr. Kelvin MacKenzie, the ex-editor of the Sun newspaper and now head of Live TV, at a media conference last week. He looked forward to more and more TV channels which would result in an electronic freedom to match that of print. Mr. MacKenzie gave an example when he said:
My own guess is that 20 years from now people will look back at the impartiality requirements of broadcasting as a quaint piece of history… The present rules will not be heeded and they will wither away".
Surely that is something which we should try to prevent in this Bill, not, as my noble friend Lord Donoughue said in Committee, to achieve lofty cultural ambitions but simply to raise the sights of the digital operators.
§ The Minister has argued that to impose quality constraints on multiplex providers would badly inhibit the development of new services. In Committee the Minister warned that in his opinion a tight corset of regulation would mean that entrepreneurs would simply not bother to invest in digital television. It might, he said, be strangled at birth. He spoke somewhat dramatically as though this were a threat to our cultural life as we know it. We on these Benches do not see it in that way at all. The prospect of an absolutely unregulated market of expanding digital services does not seem irresistible, particularly if it produces dozens, or indeed hundreds of television programmes all of the type which—as I have said—we can already see on American cable networks, or as enthusiastically envisaged by Mr. Kelvin MacKenzie. In those circumstances it would seem that there is no advantage to the viewer. We would be quite happy for choice and variety to be less and quality higher.213
§ It is, of course, a question of achieving the right balance between appropriate growth and appropriate standards. However, as the Bill stands, the balance seems to be tilted too far towards uninhibited development. Frankly, I think that the Government have been too cautious. After all, there is nothing whatsoever in the history of television development—since the days when we talked about the licence to print money when ITV was set up in the 1950s—to suggest an entrepreneurial reluctance to invest in new opportunities.
§ The ITC apparently believes that quality criteria will not stop digital TV taking off. It has sought an additional qualification, as expressed in Amendment No. 13. In Committee, in reply to the noble Lord, Lord Thomson of Monifieth, the Minister admitted that the Government had rejected the ITC's advice on this matter, but nonetheless the commission continues to press for statutory powers to be able to evaluate applications for quality. Amendments Nos. 13, 17 and 19 propose a flexible formula to allow the ITC to ensure that multiplex operators provide quality programmes within a range of programme services. They do not insist that each and every programme available on a multiplex should fulfil those criteria. It is not too late for the Government to empower the ITC in this way. After all, in 1990 in the previous Act the Government created the quality threshold for licence applications which undoubtedly mitigated but did not harmfully impede the free flow of market forces. These amendments simply seek a similar environment for the digital future. I beg to move.
The Earl of Stockton
My Lords, I support the broad thrust of the argument of the noble Baroness, but there were one or two aspects which concerned me slightly. I have to confess to being a book publisher, which is perhaps an extremely outdated form of communication in terms of this Bill.
I detected a prescriptive element here. One of the successful aspects of broadcasting is that it should be as broadly cast as possible. I was a little nervous that we were getting into the realm of somehow having organisations, or even Parliament, deciding what people should be watching. The terms of the amendment bring us dangerously close to that. On the other hand, like the noble Baroness, I have the deepest suspicions of people who would exploit public taste. I have no doubt that she agrees with me that William Randolph Hearst was probably right when he said that no man ever lost money by underestimating public taste.
However, I believe that the terms of the amendment are probably unnecessary. In the 400 years in which the publishing industry has been fairly active in this country, there have been very bad publishers and very good publishers. I can reassure the noble Baroness that on the whole it is the good publishers who survive.
§ Lord Renton
My Lords, I, too, was sympathetic to what the noble Baroness said. I raised my hopes when I saw the word "quality" in Amendment No. 13. I listened carefully to the noble Baroness but I was a little 214 mystified as to whether the word went far enough to eliminate the violence and sex of which we have much too much on the television even now.
When considering Amendment No. 19 and the meaning of quality, we find reference to matters which, quite frankly, do not have much to do with quality. It refers to,programme production from the regions; new and original programmes; independent productions; British-made programmes; and programmes catering for minorities".There is not a word there about good taste or the avoidance of violence or sex.
Although I have a great deal of sympathy for the way in which the noble Baroness presented her case, I am not sure that her amendments fulfil her desire.
§ Lord Inglewood
My Lords, I have listened most carefully to the noble Baroness, Lady Jay, presenting her case for fundamentally shifting our country's approach to digital terrestrial television, an industry which hardly exists now and which requires millions if not billions of pounds to create. I have listened; I understand her concerns. I sympathise with some of her aspirations, but I have not been convinced by her arguments. Were these proposals to be accepted, I do not believe that we would somehow acquire some kind of "superior" digital terrestrial television. I think that we would have none at all.
We have been told that it is in the public interest to require quality by statute: that it is necessary to legislate for programme services that are free to air, or consist of original productions or programmes catering for minorities; that it is necessary to pile obligations upon requirements on to prospective multiplex providers and broadcasters. I should like to step back from the detail of each individual amendment—Amendments Nos. 9, 13, 14, 15, 17 and 19—and assess the overall impact. What messages do these amendments give the two groups most important to the success of digital terrestrial television—the industry and the viewer?
I believe that those contemplating investing in the programmes, the multiplexing and the transmission necessary to launch digital terrestrial television, would think again, and then probably think no more, if these proposals were imported into the Bill. They are looking for encouragement and flexibility. These amendments would box them in on every side. They would conclude that "the game is not worth the candle".
And what message goes out to the viewer? It is that the programming on the new channels will not be designed to meet their viewing wishes. Rather, it will be predetermined by high-minded and well meaning people who know better than they what they should watch and spend their money on. They are the up-to-date manifestation of the "men from Whitehall" who know best.
Perhaps I may revert briefly to the comments of my noble friend Lord Stockton. He referred to publishers. As he said, what applies to publishers also applies to television programmes. Those books which are read and re-read are good books. Those television programmes which are viewed and re-viewed are good programmes. 215 I believe that the kind of world painted for us by the noble Baroness is one where those potential viewers will vote with their feet, their wallets, or perhaps I should say their smart cards. They will not buy the sets; they will not watch the programmes being broadcast at such great expense. That in turn would undermine the whole enterprise.
During the Committee stage of the Bill, I explained fully the Government's views on these issues. I should like briefly to remind noble Lords of the salient points.
We, like the Opposition, value public service broadcasting which, as I mentioned earlier, is popular. It is and will remain at the heart of broadcasting in this country. That is why we are providing for four, soon to be five, terrestrial broadcasters to move to digital, and why the existing licence regime for those broadcasters will continue in place for their digital simulcasts. The BBC will have scope to expand the range of quality programmes that it provides under the terms of its Charter and Agreement. I suspect that the other existing terrestrial channels will be keen, too, to maintain their reputations as quality broadcasters in any new services they provide.
But the future digital world is different. More spectrum and more channels will be available. There is no inherent need to extend the present public service broadcasting regime with its quality and other thresholds to the further new services which digital technology makes possible. As we all know, they will be subject to the general rules relating to taste, decency and impartiality and so on which apply to all broadcasters.
It seems inherent in what has been said from the Benches opposite that there is some underlying assumption that the market must deliver rubbish. But surely that is not the case. After all, the real case is that instanced by my noble friend Lord Stockton.
The key issue for us now is that we must do all we can to create the right environment for digital terrestrial television to take root and flourish. The Bill as it stands does that. We are taking steps to improve it where possible and we welcome all the constructive suggestions that we have been given. We have been given plenty of helpful comments and suggestions throughout the currency of the Bill. We want to create an enabling framework, not a disabling one.
It is for those reasons, and in the interests of the future success of digital terrestrial television, that I hope that those who propose the amendments will not seek to press them.
§ Baroness Jay of Paddington
My Lords, I am grateful to those Members of your Lordships' House who took part in the debate, and to the Minister for his reply. My first concern is that all noble Lords who spoke seemed to imply that some level of prescription was going to be devised by some body of the great and good. It was not entirely clear whether it would be great and good enough for the noble Lord, Lord Renton, or too great and good for the Minister and the noble Earl, Lord Stockton.
Put simply, the aim was to put the regulatory device in the hands of the ITC. Whether the ITC qualifies under this heading is not perhaps relevant to this debate. 216 But the aim was certainly not to set up some additional star chamber to police those concerns. That may be one misunderstanding; perhaps I did not make the position sufficiently clear.
I take up the point of the noble Earl, Lord Stockton, about parallels with publishing. As has been mentioned at all stages of debate on the Bill, the broadcast media have enormously greater powers, sometimes for good and sometimes for bad, than even the most reputable and distinguished publisher of books. It is in that context that we on these Benches are a little more fearful of the influence of the market.
The Minister considers that we are cynical—he did not use that word—or over-suspicious in believing that the market must always deliver rubbish. We do not wish to believe that, but my example of the cable television diets that we are offered in the United States as a possible prospectus of what we might be offered here on digital television is not necessarily unrealistic.
I am concerned that the Government do not feel that they need to be consistent about the adoption of quality standards as provided in the 1990 Broadcasting Act, or that they need to ensure that those standards will remain in the new technological future. I hope that another place will return to these arguments. We feel strongly that they are relevant to the enormous power that the broadcasting media have on the culture and social life of our society. The noble Lord, Lord Renton, rightly drew attention to that. However, for the moment, I beg leave to withdraw the amendment.
Amendment, by leave withdrawn.
§ [Amendments Nos. 14 to 17 not moved.]
§ 7 p.m.
Lord Inglewood moved Amendment No. 18:
Page 9, line 14, at end insertߞ
("( ) In subsection (2)(e) "acquisition" includes acquisition on hire or loan.").
§ On Question, amendment agreed to.
§ [Amendment No. 19 not moved.]
Lord Inglewood moved Amendment No. 20:
Page 9, line 15, leave out subsection (3).
§ On Question, amendment agreed to.
§ Clause 10 [Power to require two or more multiplex licences to be granted to one person]:
§ [Amendment No. 21 not moved.]
§ Clause 11 [Failure to begin providing licensed service and financial penalties on revocation of licence]:
Lord Inglewood moved Amendment No. 22:
Page 10, line 27, after ("or) insert ("whichever is the greater of—
§ The noble Lord said: My Lords, Amendment No. 22 is grouped with a large number of other amendments and unless your Lordships wish I shall not read out all the numbers. The numerous amendments relate to one topic: the system of fining licence holders who have failed to comply with their licence conditions.217
§ Current provisions in the Bill hold that the amount of any financial penalty should be calculated according to percentages of the multiplex revenue accountable to a licence holder for his last complete accounting period. This system of fines is used right across the board—for multiplex licence holders, digital programme service licence holders and additional service licence holders for both digital television and digital radio.
§ However, we are concerned that in the start-up period, multiplex revenue may be modest and the proposed percentages will therefore mean only negligible fines. This would undermine the enforcement regime. The sums involved may provide an inadequate sanction.
§ Our amendments make provision for the two types of penalties which may be levied: first, the penalty for failure to begin providing the licensed service, which by definition can only fall upon the multiplex provider. Our amendments provide that a penalty levied for this reason should be whichever is the greater of £50,000 or 7 per cent. of the multiplex revenue attributable to him. The other type of penalty is against failure to comply with conditions of licence; this may be levied against multiplex providers, programme service providers and additional services providers. We need to be more flexible here in recognition that there will be companies of hugely differing sizes within this group. Our amendments provide that the penalty for breach of licence conditions should not exceed whichever is the greater of £50,000 or the appropriate percentage of multiplex revenue attributable to the licence holder. The important difference is that the regulators are granted discretion to set the penalty at a figure which is less than £50,000 or calculate the appropriate percentage of multiplex revenue. This gives the regulators some discretion as to which base it is appropriate to invoke and to decide whether a £50,000 fine or a fine based on a percentage of multiplex revenue would provide the most appropriate penalty. I believe that this will allow more realistic and more effective sanctions.
§ The purpose of these amendments is therefore to bring the Bill into line in the various sections.
§ There is also another provision to which I would draw your Lordships' attention. The new clauses to be inserted after Clause 30 and Clause 61 allow the Secretary of State to vary by negative resolution the £50,000 figure set out in the clauses on financial penalties. This recognises the fact that such a figure may need to be varied at some point in the future in order to take account of inflation.
§ In addition, Amendments Nos. 168, 169 and 223 have been brought forward following representations we have received from the Independent Television Commission to regularise the position of all their licensees. I should stress that these amendments deal solely with the maximum levels of fines for breaches of ITC licences. The level of actual fine imposed and in what circumstances remains a matter for the ITC. The amendments bring the holders of non-domestic satellite service licences and the holders of licensable programme service licences into line with Channels 3, 4 and 5.218
§ Under the current provisions of the Broadcasting Act 1990, the maximum financial penalty the ITC can impose on these two categories is £50,000. That limit can be altered by the Secretary of State by order. With the growth of the broadcasting industry and particularly rapid growth in some sectors we accepted the ITC's point that such fine limits could quickly become out of date. Rather than the Secretary of State having to amend limits by order, we agreed with the ITC that it was more sensible to base maximum fines on the same basis that applies to Channels 3, 4 and 5; namely, a financial penalty up to 3 per cent. of the qualifying revenue for the licensee's last complete accounting period for the first offence and a fine not exceeding 5 per cent. for subsequent offences.
§ While the new limits bring the non-domestic satellite service licensees and licensable programme service licensees into line with other broadcasters, we have retained the £50,000 provision as well, since for some licensees such as small community cable channels, it is more sensible to keep the cash limit as qualifying revenue can be negligible.
§ The differing arrangements were made at a time when many satellite and cable services were newly established and needed significant help to get off the ground, but there is no reason now why they should not face the same level of fines. I beg to move.
§ On Question, amendment agreed to.
§ Clause 12 [Conditions attached to multiplex licence]:
§ [Amendment No. 23 not moved.]
Lord Inglewood moved Amendment No. 24:
Page 11, line 43, leave out subsection (6) and insert—
("(6) No order under subsection (5) shall be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.").
§ The noble Lord said: My Lords, with this amendment I wish to speak to Amendment No. 62. The first of the amendments relates to television, the second to radio and they mirror one tabled by the noble Lord, Lord Donoughue, at Committee stage and on which I undertook to think further. They provide that the Secretary of State's power to alter the percentage of the broadcasting spectrum which may be used for additional services should be subject to affirmative rather than negative resolution. We accept the noble Lord's argument that an order which alters the extent to which the broadcasting spectrum is actually available for programme services might well raise substantial issues for which the affirmative resolution procedure would be justified. I beg to move.
§ Lord Donoughue
My Lords, I thank the Minister for being so constructive and helpful on the matter.
On Question, amendment agreed to.
§ Clause 15 [Attribution of multiplex revenue to licence holder and others]:
Lord Inglewood moved Amendments Nos. 25 and 26:
Page 15, line 9, leave out (" 17(2)") and insert (" 17(2A)").
Page 15, line 23, leave out (" 21(2) or section 25(2)") and insert (" 21(2A) or section 25(2A)").
On Question, amendments agreed to.
§ Clause 16 [Duration and renewal of multiplex licences]:
Lord Inglewood moved Amendments Nos. 27 to 30:
Page 16, line 12, leave out subsection (4) and insert—
("(4) At any time before determining the application, the Commission mayߞ
(4A) The consent of the Secretary of State shall be required for any exercise by the Commission of their powers under subsection (4) and for any decision by the Commission not to exercise those powers.").
Page 16, line 25, leave out from beginning to ("or") in line 28 and insert—
("(b) any supplementary technical plan or supplementary proposals submitted under subsection (4)(a) fail to meet requirements notified to the applicant under subsection (4)(b),").
Page 16, leave out lines 32 and 33 and insert—
("(7) Subject to subsection (7A), on the grant of any such application the Commission may with the consent of the Secretary of State, and shall if so required by him—").
Page 16, line 42, at end insert—
("(7A) Where an order under section 13(2) is in force on the relevant date, no percentage of multiplex revenue shall he payable as mentioned in subsection (7)(a) during the period for which the licence is to be renewed.").
§ The noble Lord said: My Lords, I beg to move Amendments Nos. 27 to 30 and speak to Amendments Nos. 65 to 68. We have provided in the Bill as it stands for multiplex licences to be awarded for 12 years and to allow licence holders to renew their licences at the end of the first licence period for a further 12 years. These arrangements recognise the investment needed and the likelihood that the return on that investment will begin to be realised towards the end of the first licence period.
§ As I have so often emphasised, we cannot be certain how far and how fast the digital terrestrial market will develop. But we certainly hope that it will develop in such a way that will allow us to set a timescale for the withdrawal of analogue frequencies and to switch to an all-digital regime. It could well be that, as we approach the end of the first multiplex licence period, we are in a position to prepare the ground for the end game in our analogue switch off strategy.
§ The Bill already provides for the ITC and the Radio Authority to set new minimum requirements for the roll-out of transmission and the promotion of receiver take-up which licence holders would have to be prepared to meet if they wanted to renew. My amendments require the regulators to obtain the Secretary of State's approval of those minimum requirements. This does not undermine the proper role 220 of the regulators, but rather underlines the Secretary of State's role in determining the timescale for analogue switch off—a policy issue which is clearly for Government rather than the regulator.
§ My amendments also require the regulators to obtain the Secretary of State's approval to the percentage of multiplex revenue to be paid on renewal, again reflecting the importance of creating the right conditions for the future of digital broadcasting and for analogue switch off. I would remind your Lordships that we have already stated clearly our intention that no payments to the Exchequer should be made during the first licence period. We will need to reassess the position as licences fall due to be renewed, and will take into account then the state of development of the market and the need for licence holders to provide the taxpayer with a reasonable return in exchange for the use of spectrum, which is of course such a valuable commodity. I beg to move.
§ On Question, amendments agreed to.
§ Clause 17 [Enforcement of multiplex licences]:
Lord Inglewood moved Amendments Nos. 31 to 33:
Page 17, line 25, leave out from beginning to ("3") in line 27 and insert ("shall not exceed whichever is the greater of—
(2A) The amount referred to in subsection (2)(b) is—
(a) in a case where a penalty under this section has not previously been imposed on the holder of the multiplex licence during any period for which his licence has been in force ("the relevant period")").
Page 17, line 30, leave out ("shall, in any other case, not exceed") and insert ("in any other case").
Page 17, line 32, at end insert—
("and in relation to a person whose first complete accounting period falling within the relevant period has not yet ended, paragraphs (a) and (b) above shall be construed as referring to 3, or (as the case may be) 5, per cent. of the amount which the Commission estimate to be the share of multiplex revenue attributable to him for that accounting period (as so determined)").
§ The noble Lord said: I beg to move these amendments en bloc.
§ On Question, amendments agreed to.
§ 7.15 p.m.
§ Clause 19 [Duration and conditions of digital programme licence]:
Lord Ashley of Stoke moved Amendment No. 34:
Page 18, line 36, at end insert—
(c) that by the eighth anniversary of the commencement date of the digital programme licence not less than 95 per cent. of the programmes to be broadcast in the service are subtitled to such technical standards as is specified by the Commission,
(d) that by the eighth anniversary of the commencement date of the digital programme licence not less than 10 per cent. of the programmes to be broadcast in the service are presented or interpreted into sign language and
(e) that by the tenth anniversary of the commencement date of the digital programme licence not less than 50 per cent. of the programme hours to be broadcast are audio-described.").
§ The noble Lord said: My Lords, of all the amendments to the Bill this is the most significant for deaf, hard-of-hearing and blind people. I regard the amendment as terribly significant for those people who are very often deprived of enjoying television. I hope the Minister will be able to accommodate us tonight. Millions of deaf people and blind people are looking forward to the Government's co-operation in opening television to them.
§ The amendment seeks to set targets for subtitling, signing and audio-description for digital services. As the noble Lord will know, the respective targets are 95 per cent. for subtitling; 10 per cent. for signing; and 50 per cent. for audio-description for blind people. The reason for the 95 per cent. is that we want to accommodate the difficulties and technical problems that will arise. We do not want to penalise people if they cannot keep to 100 per cent. However, we do want to achieve mass coverage. Therefore we are setting a target of 95 per cent. Ten per cent. for signing is a very small step forward but a very important one for those who depend on signing. Blind people need audio-description to explain what is going on.
§ The point of the amendment is that the targets are to be achieved by fixed dates. Targets are essential if those who are seriously impaired are to follow and enjoy digital television. In Committee the noble Lord, Lord Inglewood, rejected similar amendments. He expressed concern about "the need to strike a balance" and to avoid "suddenly imposing onerous requirements out of the blue." The Minister wanted to avoid deterring new entrants. He was right. I do not want to deter new entrants either. Nor do deaf people; nor do blind people. I am anxious to strike a balance, as the Minister wanted. I also want new entrants into television. By specifying now what will be required in eight or 10 years the amendment removes uncertainty, itself a great deterrent to entry. It also ensures that there are no sudden, onerous requirements on the television companies. The requirements are carefully—some would say too crefully—phased in. I hope that that allays the anxieties of the Minister.
§ For sensorily impaired people, the expansion of television through digital channels will be welcome; but it is not enough. There will be no gain from the entry of even 1,000 new companies if they are all unintelligible, as they will be if there is no subtitling for deaf people, no signing for hard-of-hearing people and no audio-description for blind people. In other words, provision for television can be multiplied as much as we like, but it will remain inaccessible to deaf, hard-of-hearing and blind people without the provisions of the amendment. Without parliamentary pressure that could happen. Those people will still be deprived while television provision is expanding for everybody else. We have a responsibility to those people which I hope the House, and especially the Government, will accept.
§ History is on our side. We know that it was the addition by the Minister—I underline the word "addition"—to the 1990 Broadcasting Act of the amendment to set targets that resulted in the gradual but definite increase in subtitling. Subtitling is now at 222 37 per cent. but is on course to meet the target of 50 per cent. by 1998. It is significant that the ITV companies are doing no more and no less than the Act requires. The targets set in the Act are determining progress. That is why those targets are essential. It is also significant that there has been no increase in signed programmes comparable with that of subtitled programmes. The reason is that there were no signing targets in the 1990 Act.
§ Each year hearing people have available to them, according to ITC/BBC figures, over 200,000 hours of terrestrial, satellite and cable television. Yet 62,000 profoundly deaf people, reliant on sign language, have no access to general programmes. That means they are prohibited from watching television. The new technology will enable signing to be done without being visible to the hearing audience. That will be encouraged by the amendment. If the amendment, or any measure that the noble Lord can present to the House, does not become part of the Bill there is no doubt whatever that deaf, hard-of-hearing and blind people will be excluded from enjoying digital television. That would be a terrible deprivation. We have a unique opportunity to include them in the new television era.
§ On the question of cost, the seemingly miraculous simultaneous presentation of words on a screen as they are spoken is not unduly expensive in relative terms. In fact it is very cheap. I put the figures to the Minister in an interview with him a short time ago. The cost of subtitling is about £600 an hour. That has to be compared with the cost of £600,000 an hour for television drama, £120,000 for documentaries, and £34,000 for sport. So £600 is a very tiny amount, especially when official figures show that some 10 million people use the subtitling provision. Apart from the "See Hear" programme, there is no signing or audio-description. I am reliably told that the cost of that provision would be of the same order.
§ The amendment calls for the targets on subtitling and signing to be met by the eighth anniversary of issuing a licence and by the 10th anniversary for audio-description. In an area where technology is galloping ahead those timescales are very generous. In the 1990 Act, a five-year period was allowed. We are now allowing an eight-year and 10-year period. Today it is far easier to advance subtitling because the mechanisms are well understood. Much of the expertise is available, although there will be a need for more trained operators. Once the size of the market is defined and the salary earned by operators becomes well known, I anticipate that market forces will establish training schools. At present the BBC is doing virtually all the training.
§ I hope the Minister will not say that the amendment is not required because we have the Disability Discrimination Act. I know that. The noble Lord was number two on that Bill as it passed through Parliament. There are good reasons why we should not leave the question of digital television access for seriously impaired people to that Act.
§ The Disability Discrimination Act rests on what is "reasonable". Until codes and regulations are published we have no idea what the Government will consider to 223 be reasonable. This is an issue of very great importance to broadcasters and disabled people. It should not be left to others—in this case the ITC and civil servants—to decide what is "reasonable". It should be decided by Parliament and hence be part of the Bill.
§ It will also take some time before the codes and guidance emerge. But with this amendment companies planning to enter this exciting market will know, immediately the Act is passed, precisely what is required of them. That is beneficial to the companies and to a large section of their potential audience. It is far better to develop those facilities as they go along rather than try to tag them on at a later date. The "tagging on" approach would inconvenience the television companies and is an inappropriate and unacceptable way to meet the needs of disabled people.
§ I hope that the Minister will be able to respond constructively. On his words tonight will rest the hopes of millions of deaf people and blind people of watching television. I hope that he is able to oblige. I beg to move.
§ Lord Inglewood
My Lords, I do not want now to cover all the ground that I covered in responding to the noble Lord in Committee. I repeat that the Government take this issue extremely seriously and fully acknowledge the importance of the services described in the amendment to people with a sensory disability. I should also like to say how grateful I am to the noble Lord, Lord Ashley, for the helpful meeting that he arranged with representatives of some of those suffering from disabilities.
I apologise to the House for the fact that we have not yet managed to bring forward the amendments in this area which I agreed in principle to accept at Committee. I refer to the amendments requiring the ITC to consult representatives of those with sensory disabilities before publishing its code on provision for those people and to publish the code in accessible forms. I intend to bring those forward at Third Reading, with the House's permission.
We want to ensure that the maximum amount of subtitling, signing and audio-description is provided compatible with the investment needed to launch digital terrestrial television and make it a success. But we must also bear in mind that other relevant legislation has also recently been passed. I may disappoint the noble Lord, but I should like to refer to the Disability Discrimination Act of last year, which in Section 21 states:where an auxiliary aid or service would enable disabled people to make use of a service, it is the duty of the provider of that service to take such steps as it is reasonable … for him to have to take in order to provide that auxiliary aid or service".That is the approach we need to take here. A general principle has been established in law, and it should be followed through.
Of course, the crux of the matter is how we define "reasonable". The Disability Discrimination Act does not attempt to do that on the face of the Act, but provides for detailed provisions to be drawn up. After all, "reasonable" will mean different things in different circumstances. And what is reasonable can change over time. For example, a technological improvement making an auxiliary aid or service cheaper to provide may make 224 it reasonable to expect an increase in its provision. I think that in dealing with the issue of provision for people with sensory disabilities by digital terrestrial broadcasters, it makes sense to ensure that we achieve the flexibility to take account of differing and changing circumstances. That is the principle behind the provision in the Bill for the ITC to draw up a code of practice and I see no reason to depart from that principle. The approach ties in well with the provisions of the Disability Discrimination Act. One way of dealing with this matter—though I shall need to look into it further—might be a regulation brought forward in that Act which would simply make it clear that, so far as broadcasting is concerned, the circumstances in which it is reasonable for auxiliary aids or services to be provided are set out in the Broadcasting Act 1990 and in the code drawn up by the ITC in this Bill, on which there will be detailed consultation. However, we deal with the relationship before the two pieces of legislation. I am convinced that a code is the right way forward.
I acknowledge that the code represents a different approach from that adopted in the 1990 Act, which, as I said, predates the Disability Discrimination Act, for subtitling by existing analogue broadcasters. As the noble Lord explained, the 1990 Act sets down progressively increasing minimum requirements for commercial broadcasters, and those are also reflected in the BBC Charter and Agreement. But we were dealing then with a set of circumstances considerably clearer and less uncertain than our current vision of the digital future.
I should like to set out the main differences. I do so shortly, bearing in mind the time of evening. First, in 1990 the four existing analogue channels had established audiences and revenue flows. The audience for digital terrestrial will initially be close to nil. Secondly, they had large programme budgets. Thirdly, those existing broadcasters were using an existing transmission network and broadcasting to sets that already existed. Fourthly—and it is an important point—the existing analogue broadcasters all provide heterogeneous services which include comedy, films, drama, sport, news, and current affairs and, even more importantly, those which include a mixture of live unscripted, live scripted and pre-recorded programmes. The increase in the number of programme services permitted by digital technology will mean that many new broadcasters are likely to provide specialist services, just as cable and satellite broadcasters do.
The effect of that is that, depending on the nature of the programme broadcast, the costs of doing the relevant subtitling—if I may so describe it in shorthand—will vary considerably. For example, some programmes might cost as little as £200 an hour, whereas others, involving unscripted live performances might be up towards £2,000 an hour. We are concerned that the nature of the programmes offered will have a very big impact on the nature and cost of the type of subtitling, and so on, which will be appropriate. Against that background, there will be problems of what is reasonable for a particular broadcaster. If the 225 broadcasters are all new broadcasters, it means that they all start from a very low base and incur quite different costs.
I appreciate that much of what I said will be felt by the noble Lord as offering little comfort. But I should like to make some suggestions which I hope will convince your Lordships that the Government have taken full account of the points raised and, having done so, are prepared to make sensible alterations to their position without compromising the principles that I set out in my earlier remarks and promising things which, quite honestly, cannot reasonably be delivered by broadcasters.
As I said in Committee, broadcasters will act in their own interests to provide as extensive a service as they can for disabled people. This Government believe that regulation for its own sake should not be imposed. But I recognise that that cannot be guaranteed. We might need to look again, once the market is up and running, at the status of the code. If some broadcasters, after a reasonable time, do not comply, it might be appropriate to take steps to enforce compliance. But we believe that the position from which we start should be that we should not place figures on the face of the Bill. We believe that that would be both inflexible and unfair. Rather, we believe that the code is the right delivery mechanism (if I may use a television analogy), which will allow the industry the flexibility to adjust requirements on provision for disabled people both in the light of the development of the market as a whole and the differences in the situation of broadcasters within that market.
That is in line with the principles of the Disability Discrimination Act. Therefore, it is a solution that we continue to support. We believe that it is the right way to deal with this particular important problem, in the context of the very differing abilities of new broadcasters to deliver, at the same time bearing in mind the significant differences in the products that those new broadcasters will place on the market.
I hope that my words help explain to the noble Lord first that we take these matters very seriously and secondly that this is the right way to address them.
§ Lord Ashley of Stoke
My Lords, I must not detain the House. I know that people are waiting to get on to other business. But perhaps the House may hear a very brief response to some of the points raised by the Minister.
The fact that the new companies begin from a low base means nothing whatever. If they are unable to make provision for deaf people and blind people, they should not be in business. The BBC and ITV have incurred the expense of subtitles and icons of audio description. Therefore, with digital television, they should do likewise.
The nature of the programmes and the nature of the subtitling is irrelevant. If a programme is on TV, it should be subtitled. If it is not subtitled, deaf people cannot follow. There is no point arguing about the lack 226 of need for subtitles and saying that it cannot be done on this or that programme. Subtitles are subtitles; they are the key to understanding for deaf people.
The Minister says that it is in the interests of the programme companies to provide the service; that is not the case. History proves that it is only because of the provisions of the 1990 Act that subtitling was brought forward—admittedly, the BBC is the exception—and the programme companies only maintain the targets laid down in the 1990 Act. That is why we want targets on the face of the Bill.
The Minister says that we should wait until the programmes are up and running. That is the wrong way to go about it. It is like tagging an out-house on to the main building of a house; it is an oddity. It is far better to build as one goes along. The subtitling and the audio description can be integrated.
The Minister says that there should be no target. That is quite wrong. The target is crucial. We are leaning over backwards; we are saying five years, eight years and 10 years. We are giving more than adequate notice. When the Minister considers the rights of the programme contractors I beg him to bear in mind the rights of deaf people and blind people to follow television. Those are basic fundamental rights and they go by the board unless targets are laid down in a Bill passed by both Houses of Parliament. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ 7.30 p.m.
§ Clause 21 [Enforcement of digital programme licences]:
Lord Inglewood moved Amendment No. 35:
Page 20, line 18, leave out ("two years") and insert ("one year").
§ The noble Lord said: My Lords, in moving Amendment No. 35 I shall speak also to Amendments Nos. 39, 72 and 77. They are technical amendments. I beg to move.
§ On Question, amendment agreed to.
Lord Inglewood moved Amendments Nos. 36 to 38:
Page 20, line 22, leave out from beginning to ("3") in line 24 and insert ("shall not exceed whichever is the greater of—
(2A) The amount referred to in subsection (2)(b) is—
(a) in a case where a penalty under this section has not previously been imposed on the holder of the digital programme licence during any period for which his licence has been in force,").
Page 20, line 28, leave out ("shall, in any other case, not exceed") and insert ("in any other case").
Page 20, line 30, leave out ("(2)(a)") and insert ("(2A)(a)").
§ On Question, amendments agreed to.
§ Clause 25 [Enforcement of digital additional services licences]:
Lord Inglewood moved Amendments Nos. 39 to 42:
Page 22, line 39, leave out ("two years") and insert ("one year").
Page 22, line 43, leave out from beginning to ("3") in line 45 and insert ("shall not exceed whichever is the greater of—
(2A) The amount referred to in subsection (2)(b) is—
(a) in a case where a penalty under this section has not previously been imposed on the holder of the digital additional services licence during any period for which his licence has been in force,").
Page 23, line 3, leave out ("shall, in any other case, not exceed") and insert ("in any other case").
Page 23, line 5, leave out ("(2)(a)") and insert ("(2A)(a)").
On Question, amendments agreed to.
§ [Amendments Nos. 43 to 46 not moved.]
§ Baroness Trumpington
My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, I suggest that the Report stage begins again at 25 minutes before nine o'clock.
Moved accordingly, and, on Question, Motion agreed to.