Digital Television Services: Regulations (Hansard, 18 November 1996)

§ Lord Fraser of Carmyllie
My Lords, regulations have been in place since 23rd August this year, well in advance of any manufacturing agreements for decoders for digital television, which deal with the licensing of proprietary conditional access technology. Additional regulations covering the supply of conditional access services, including subscriber management services, will come into force around the end of this year.

§ Baroness Dean of Thornton-le-Fylde
My Lords, I thank the Minister for that reply. I apologise to the House for the complexity of the Question, which has certainly exercised my mind. This is a complex area. Will the Minister confirm that the August regulations relating to the European directive cover conditional access? Does the Minister agree with me that to ensure that there is no monopoly of this new technology it is also necessary to give the director general of Oftel full powers to deal with the other aspects of this matter, such as intellectual property rights at a fair price, the applications interface and, of course, the electronic page guides, without which we are in grave danger of allowing a monopoly situation to arise in this important developing area?

§ Lord Fraser of Carmyllie
My Lords, I certainly congratulate the noble Baroness on her firm grasp of this extremely technical subject. I can confirm that the statutory instrument that was introduced in August implemented obligations under the directive. It related to the technology of conditional access. What we are consulting on at the moment relates to another part of the directive; namely, the conditional access services and the extent to which those should be regulated. I have indicated that we hope to introduce regulations in respect of that before the end of the year. The noble Baroness is absolutely right; it is not simply a question of leaving the matter there. Changes will be introduced in terms of the Telecommunications Act Licence which would be subject to the direction of the director of Oftel. We are determined to secure that broadcasters may gain 1097 access to the services on a fair, reasonable and non-discriminatory basis. I know there is a concern that at present there is potential for anti-competitive abuse of the so-called "gatekeeping position" as regards the company or individual who has control of the box that will sit on top of televisions in years to come. We are determined to ensure that there is a proper regulation of that situation so that the abuse which is feared will not arise.

Viscount Astor
My Lords, does not my noble and learned friend agree that it would be preferable to have one box on the top of everyone's television to cover digital satellite television and digital terrestrial television as opposed to having many boxes? Does not my noble and learned friend also agree that the regulations should include conditions that satellite broadcasters should be made to license their technology to other manufacturers? If that does not happen, those satellite broadcasters with conditional access systems could block free-to-air television services, which would be detrimental both to the industry and to the consumer?

§ Lord Fraser of Carmyllie
My Lords, I cannot offer a view about whether there should be only one box. However, if my noble friend has asked me whether I consider that there will be only one box, the answer is yes. It is for that reason that we must ensure that the arrangements for conditional access are properly in place. As regards technology, the regulations that we have already introduced cover the licensing of conditional access technology. As I indicated, that must be undertaken on a fair, reasonable and non-discriminatory basis. There will also be a further protection for manufacturers who wish to include what is described as a common interface, which can be either satellite, terrestrial or cable. It would not be permissible for one licensing body to exclude the opportunity for a manufacturer to include such a common interface. I hope that is reasonably clear to my noble friend.

§ Lord Thomson of Monifieth
My Lords, is the Minister aware that under these technical matters there lies a serious public interest issue as regards the field of competition policy? We are dealing with one media group; namely, the Murdoch group, which at the moment owns 36 per cent. of our national press and has a dominant position in satellite subscription broadcasting. If the Government do not take sufficiently vigorous action, the Murdoch group could have a dominating position with regard to the new digital technology. Is it not necessary for the Government to take pro-active action here rather than wait to see what the Murdoch group does and then try to seek to deal with matters later? Is there not a real danger of the Murdoch interests becoming digital dictators?

§ Lord Fraser of Carmyllie
My Lords, the whole purpose of my answers has been to explain that we are not prepared to see an anti-competitive position adopted by whoever may be first into the market. However, I neglected to respond to one part of my 1098 noble friend's question, which may be relevant to what the noble Lord, Lord Thomson, has mentioned. Those who are described as free-to-air broadcasters will have exactly the same rights for access to the conditional access service as anyone else who would otherwise pay. We have to recognise that those who move first and take the greatest investment risk have a legitimate first mover advantage. However, we are concerned that no one should adopt a dominant position. We have the technology regulations in place. We are consulting on the conditional access services position. If anyone has any further views on how those should be refined, my department will be interested to receive those representations.

Lord Bruce of Donington
My Lords, in view of the fact that this directive became operative in the Recess, and of the importance which my noble friend Lady Dean, and indeed the Government, attach to this matter, would it not be wise for the Government to initiate a full-dress debate upon this whole subject? Will the noble Viscount the Leader of the House take steps to ensure, in conjunction with the usual channels, that an adequate opportunity is afforded to the House to discuss this question?

§ Lord Fraser of Carmyllie
My Lords, if there is to be a full-dress debate, I suggest that on that occasion my noble friend Lord Inglewood might respond to it. I am beginning to reach the end of my knowledge on this complicated matter.
There are no such digital arrangements in place yet. It was desirable that we had the regulations published as soon as possible; as I indicated, I very much hope that the second part of them will be introduced before the end of the year. Then, well in advance of any activity using conditional access, all the regulations will be in place.

§ Lord Chalfont
My Lords, I apologise for pressing a question that has already been asked at least once; however, I should like some reassurance upon it. Is it not a fact that, under the regulatory regime as presently drafted, upon the launch of digital television there is a danger that one broadcaster could exercise a monopoly over access to all digital television—unless of course the viewer were to purchase a number of technology boxes for the top of his set to decode different signals? If that is so, is it not a matter of the greatest importance that the Government pre-empt that before the launch of digital television and ensure that no monopoly is possible? Will the Minister please give the House that assurance?

§ Lord Fraser of Carmyllie
My Lords, I believe I answered that question. However, if it is not clear, perhaps I may attempt to clarify the matter further. The regulations we have already introduced cover the licensing of conditional access technology. That licensing must be undertaken on fair, reasonable and non-discriminatory terms. It would not be open to 1099 the one granting the licence to require of the manufacturer that a common interface arrangement be excluded. If someone regards himself as having been improperly refused such a licence, then the regulations would allow him to take action in court. That is not the only aspect of the matter. Even if the technology is in place and only one box allows access from satellite, terrestrial or cable television, we want to have in place regulations that allow proper access to the services. Those regulations are presently out for consultation and we hope to have them in place before the end of the year. If the noble Lord has views on the draft regulations and is concerned to see them amended, I have already extended an invitation to offer representation. As I hope he will appreciate, our purpose is exactly the same as his; namely, that those who come into the business and take large risks should secure a first mover advantage. However, at the same time we strongly resist the idea that any monopoly should be created.

§ Lord Cledwyn of Penrhos
My Lords, will the noble and learned Lord arrange for an explanatory paper to be published so that the people who pay the licence can understand what he is talking about?

§ Lord Fraser of Carmyllie
My Lords, I should be delighted to have such a paper myself.

§ Lord Donoughue
My Lords, I join in congratulating the Minister both on his rapid mastery of this delightful subject and on the reassuring tone of his remarks. He will have noticed the strong feeling on all sides of the Chamber. Does he agree that it is not spoken words in this House that matter, but that we examine the regulations in great detail? Is he aware that the directive contains ambiguities which might allow a potential monopolist to wriggle off the hook? Will he therefore assure the House that the regulations will be absolutely precise in a number of areas? In particular, will he ensure that broadcasters will be able to issue their own smart cards to their own customers and not be subject to the control of a monopolist gatekeeper?

§ Lord Fraser of Carmyllie
My Lords, I am grateful to the noble Lord for his opening remark. If there are points of ambiguity in the regulations, it is precisely during the period of consultation upon which we are presently engaged that we wish to have them cleared up. I shall be grateful to him if he will let me know of any such ambiguities.
The position is not entirely easy. We cannot adopt certain steps being urged upon us such as the mandatory licensing of intellectual property. That would be an extreme step. Nothing at the present time indicates that such a course would be appropriate. As I have stated on a number of occasions, we do not wish to see a monopoly in place; but we want to allow those who take the risk of investment to take 1100 proper advantage of it, while at the same time ensuring that no such complete restriction is allowed to favour them.

§ Lord Monkswell
My Lords, I appreciate that the situation is difficult and complicated. However, am I right in thinking that the regulations referred to by the Government are based on a European Union directive? If that is the case, will the Government give an assurance that, if the final regulations allow Rupert Murdoch to have a monopoly that excludes the BBC, they will not blame the European Union for that outcome?

§ Lord Fraser of Carmyllie
My Lords, I hope that none of my remarks led the noble Lord to believe that we should try to blame anyone else. We are concerned to ensure that, as we hope, the pre-eminent position that the United Kingdom presently enjoys in this field can be secured. It is a massive opportunity for exports and trade. We want to maintain that position. At the same time we are well aware of the dangers of establishing a monopoly and seek to introduce regulations to avoid that possibility.

§ Lord Archer of Weston-Super-Mare
My Lords, will the Minister agree that the Question has proved that there are far too many television programmes already?

§ Lord Fraser of Carmyllie
My Lords, I am a little anxious in responding to my noble friend since the one thing I do understand about digitalising the signal is that it will possibly allow him to enjoy as many as a further 200 channels.

§ Baroness Dean of Thornton-le-Fylde
My Lords, I thank the Minister for dealing so fully with the Question. Will he take into account that, in relation to the regulations presently out for consultation, time is of the essence? I gather that the present monopoly supplier of satellite television is already out to tender for the new set-top box which will be launched next autumn. Time is of the essence in putting the regulations in place very quickly, in order to give the director-general the right to cover and license these areas.

§ Lord Fraser of Carmyllie
My Lords, all the points that the noble Baroness made are well understood. As I indicated, that is why we put out the regulations on 23rd August, giving the maximum time available to put the provisions in place. Clearly it is desirable to ensure that some of the anxieties that noble Lords have will be met, that access will be very much greater than at present, and that the opportunities that lie in the television world will be very much extended and to the benefit of the United Kingdom as a whole.