HC Deb 27 April 2004 vol 420 cc246-54WH

4 pm

Mr. Simon Thomas (Ceredigion) (PC)

I am pleased to have the opportunity to discuss digital broadcasting in Wales. It is opportune because today news has come out of the Department about the costs of the digital switchover and only yesterday the BBC published its views on the transfer to a digital future.

I shall address three broad themes—first, the review of public service broadcasting currently being undertaken by Ofcom; secondly, the move to a digital switchover for television services, which again is being reviewed by Ofcom and, finally, the current review of S4C, the Welsh language broadcaster, which also raises several important issues for broadcasters in Wales in both Welsh and English. I raise these matters as someone who was arid who remains sceptical about the mode of regulation chosen by the Government in Ofcom, but in the knowledge that, as elected representatives, we must all engage with those reviews or see our broadcasting future decided for us by unelected quangos.

Let us start with today's news that the Secretary of State is seeking an additional £300 million from the Treasury to fund the digital switchover. That would presumably keep the Government on target for their rolling programme of switch off and switch on between 2006 and 2010. Ofcom, in its report "Driving Digital Switchover", is keen on that and has proposed an independent organisation, properly funded, to market and plan the switchover. I ask the Minister to state what the Government have in mind for the process and say whether the sum sought from the Treasury will be sufficient.

Ofcom's research has shown that many customers are reluctant to go digital if it means extra costs, and they certainly do not want to pay a subscription. We now see how vital was the BBC's stepping in with Freeview. The growth of digital terrestrial television has been surprising and it has helped the Government toward their target. Prices are falling, and the set-top box is now almost an impulse buy for consumers. However, DTT—not to be confused with a dangerous chemical—is not yet universally available. Digital satellite can plug the gap, but it is more expensive and we have still not resolved the problem of satellite carrying all the public service broadcasters—BBC, ITV, Channel 4, S4C and Five—unencrypted and free to view. Indeed, the Solus cards failed again earlier this year.

Mr. Roger Williams (Brecon and Radnorshire) (LD)

At a recent meeting in Knighton, Mr. Rhodri Morgan, one of Ofcom's chief officers in Wales, suggested that some of the reception problems encountered by people living in rural areas in the hon. Gentleman's and my constituency might he overcome if Wales was one of the pilot areas for digital switch-off, but the digital technology was provided by satellite rather than by terrestrial means.

Mr. Thomas

I thank the hon. Gentleman for that intervention. I should not have let him intervene, because he has stolen my thunder. If he waits a second, I shall come to that point—but he is right.

Wales is a good example of the challenge that the Government face in achieving switchover. We in Wales lead the way in digital households: the latest figures available show that 56 per cent. of Welsh homes have digital television—the highest percentage in the United Kingdom, and the percentage has increased since those figures were produced. However, many hon. Members know that some areas of Wales do not receive a good analogue signal, and although the predictions for the digital terrestrial signal are similar to those for analogue reach, one either gets a digital signal or one does not. There is no fine-tuning and no putting the television in a different corner and just about getting a watchable picture: either it is there or it is not. Digital satellite has better penetration—97 or 98 per cent.—but it is bedevilled by customer resistance, by planning issues in some areas, and by encryption, which stops the free terrestrial channels to people who have Sky equipment but no subscription. Similar problems of reach apply in many areas of Scotland, Northern Ireland and England.

We need Government funding. The broadcasters, the poorest and the last people to switch should not have to pick up the tab. Everyone will have to make some contribution. I have a real concern that, if the market dictates the pace of change, rural and upland areas will be left behind and Wales as a whole will lose out. The Government and the BBC in their report into digital switchover published yesterday express the desire for switchover to happen region by region—but what about nation by nation? I do not want Wales to be at the back of the queue when the digital sweeties are handed out. The report suggested that the first region to switch over should be somewhere such as Oxford, because of the ease of installing transmitter relays. However, what is the point in tackling the easiest areas first and leaving the more difficult to last and perhaps to be forgotten? Now that the Department is looking for the money from the Treasury to fund the switchover, Wales can make a very good case for being the first part of the United Kingdom to go digital. The argument is counter-intuitive. If Wales is difficult, sorting it out will make it easier for the rest of the United Kingdom. It will also mean that resources will go where they should do—towards assisting those who would otherwise suffer from a new digital divide, rather than toward propping up what, in time, the market will deliver for many anyway. It would not be easy: Wales has 20 per cent. of UK transmitters and about 5 pet cent. of the UK's population; but sorting out those 20 per cent. of transmitters would give a good start to digital switchover anyway.

Benefits would also be delivered to broadcasting in Wales. I hope that Members representing Welsh constituencies who are present will support me when I say that I expect the territorial integrity of Wales to be preserved in the digital age. We want the transmitters that serve Wales to broadcast the Welsh digital service. No one would lose out—that is one of the glories of digital—but the channels would be where one would expect them to be. We want S4C to be the No. 4 channel on the Welsh digital service, the No. 2 channel to be BBC 2 Wales and the No. 3 channel to be ITV Wales, not any other ITV region. That integrity is vital to meeting the citizenship obligations of the Communications Act 2003. Too many people in Wales do not receive any news about their National Assembly and Government in Cardiff. They might not want to watch or hear such news, but there is a difference between having the choice to reject it and not being provided with it in the first place. At the time of the Assembly referendum, viewers in north-east Wales were told by Granada that the people of Wales were voting for their own Parliament that week—and that was it. That was the extent of Welsh debate.

Let us build on the lead that the people of Wales have already taken. As customers, they have switched on to digital in droves and in greater numbers than elsewhere in the UK. Ofcom and the Communications Act 2003 have the twin duties of providing the Wales-based digital services that we deserve as citizens and ensuring that we are not left languishing as the market delivers to the easy-to-reach 90-odd per cent. but fails to reach those hard-to-reach areas. That can be achieved if Wales pioneers the digital switchover.

When that happens, as it inevitably will, what sort of digital broadcasting will we have in Wales? My favourite medium is radio, but digital radio barely touches Wales at the moment. When can we expect digital radio in Aberystwyth, Pwllheli, Carmarthen or Brecon, or any other part of Wales?

Mr. Wayne David (Caerphilly) (Lab)

Caerphilly?

Mr. Thomas

Caerphilly as well. That is important because, for example, there are opportunities to develop a Welsh language radio station for young people, separate from Radio Cymru. Digitalisation brings a wider spectrum, and my local Dixon's and Curry's are merrily selling digital radios to anyone who wants them. The only problem is that they have to travel 100 miles to get a signal. Digital radio is important to wider citizenship and public service broadcasting, but unfortunately it has not yet been considered in the context of Ofcom, which has concentrated on television. The review of television services now being undertaken by Ofcom has done us a service in trying to open up a debate about what public service broadcasting really is. Ofcom has attempted a definition in the review—the first time that a definition has been attempted—and suggested means of delivering public service television outwith the traditional public broadcasters.

There are some warning signs in Ofcom's report. I hope that Ofcom is listening, because I want it to ditch the ludicrous phrase "citizen consumer". It is trotted it out at every opportunity and used it as if it covered everyone. The Communications Act does not use that phrase, and instead says that it is the principal duty of Ofcom to further the interests of citizens in relation to communications matters; and to further the interests of consumers in relevant markets, where appropriate by promoting competition. That was a compromise, arrived at after a lot of debate in Committee and the House of Lords about the interests of citizens. It is not unimportant that the Act treats citizens and consumers in such a way. As in the Venn diagrams that I remember from school, much of what affects the citizen and consumer is shared; however, some issues are distinct and pertinent to only one or the other. In using the phrase "citizen consumer", Ofcom is guilty of garbled thinking. It reminds me a lot of the old phrase, "EnglandandWales", spoken as if it was one word. We know that there are two distinctive countries.

With that caveat, I believe that the review treats public service broadcasting seriously and makes some points that should be of concern to us in Wales. Ofcom seems to accept that regional or, in this context, national ITV1 programming has relevance in Northern Ireland, Scotland and Wales, but it does not hold up much hope for a continuing commitment to regional ITV in England. Such a loss would be deeply disappointing and short-termist. A weakened regional ITV structure in England would do Wales no favours, as cuts in programming tend to spread like a virus. Just as the poor slots for ITV Wales programmes—for example, the current series by Hywel Williams on the history of Wales has been shoved to 11 o'clock at night—reflect the English situation, so changes in England could have damaging repercussions for ITV Wales. As it is, Wales produces just a measly 1 per cent. of first-run network, UK-wide programmes, while Scotland produces only 2 per cent. I hope that the Minister and hon. Members present here will join me in asking for a continuation of drama, news, current affairs and entertainment programmes being produced in Wales by ITV Wales.

The Ofcom review is predicated on 10 propositions for public service television in a fully digital world, two of which I find disturbing. First, Ofcom says that Competition in the provision of PSB is at the heart of an effective system. That has not been the experience in Wales. As ITV Wales shows now, and as past failure to provide for Welsh speakers has demonstrated, competition does not deliver public service broadcasting in the interests of citizens. Secondly, and even more disturbingly, Ofcom suggests a split purchaser-provider system for meeting public service obligations. That would be disastrous for digital broadcasting in Wales. Grafting failures like Railtrack on to broadcasting would be worthy of a reality TV show, but it would fail the viewers of Wales. I should also point out that it is different from the successful S4C model, in which the corporation is both purchaser and provider. The Ofcom review suggests a new purchaser of public service broadcasting to deal with established broadcasters. I would suggest that that has the disadvantage of bringing in the bureaucracy of the NHS into the purchaser-provider split.

Ofcom's review is convincing in its analysis of the changes of TV viewing. It is clear that digitalisation leads to more niche programming and the decline in the viewing of so-called serious programmes. Interestingly, that is more pronounced with satellite viewers than Freeview, viewers of which tend to stay more with the traditional terrestrial broadcasters. That has implications for public service broadcasting. Encouragingly, viewers—described as citizens, rather than just consumers—still want such serious programming to be provided, even if they do not watch it themselves. Some 87 per cent. still want well-informed news, 81 per cent. want high standards of programme making, and 84 per cent. want a balanced diet of programmes at peak hours. Clearly, public service broadcasting is still relevant and worthy of widespread support. There is much more work to be done, including the BBC charter review, but the Ofcom review and its conclusions support my view that the BBC deserves independent funding to support the strong public service remit that the public expect it to fulfil.

Finally, I turn to the unique position of S4C, the Welsh language broadcaster, which will be considered by Ofcom in the next stage of the review. It is worth saying that a review is currently being undertaken by the Department, and that S4C has published a review of where it has got to, just after its 21st birthday. Digital switchover places particular stresses on S4C. The broadcaster has heti its own as viewing habits have changed. It has maintained standards and embraced the opportunities of digitalisation by establishing S4C Digidol, the first wholly Welsh language channel, and S4C2, which broadcasts the National Assembly. It has been able to bear down successfully on overheads and played a role in the recent increase in the number of Welsh speakers. It is a fantastic success story and a jewel in the crown of diversity and distinctiveness in UK public service broadcasting.

Regrettably, however, S4C has done all of that without any extra resources. While the BBC has gained from an increase in the licence fee to meet the costs of digitalisation, and commercial broadcasters get a digital dividend for every viewer who switches to digital, S4C does not get a penny for its investment in digital services. That must be put right, and the review is the place to consider that and act on it. S4C is well placed to take advantage of digital broadcasting if it gets the chance and the funding. As its good showing in the BAFTA Cymru awards over the weekend demonstrates, S4C has high standards and makes programmes of high quality.

I look forward to a time when S4C can provide an extra channel in Wales, perhaps reporting from the National Assembly reporting news and providing programmes for young people. It is regrettable that S4C has had to withdraw from film production in Wales because of the costs involved. However, it has achieved a huge increase in Welsh language broadcasting: some 80 hours a week are now delivered by digital television, rather than the 34 delivered by analogue. It is a huge success story, and I hope that the Minister will support S4C in its review and in the future.

Mr. Deputy Speaker (Sir Nicholas Winterton)

Before I call the Minister of State to reply, a little bird has told me that there could be a division at 28 minutes past four. If it does start then, I suggest that we give the Minister time to finish, even if I use a little non-hearing discretion, because it would seem a pity to come back for just two minutes.

4.18 pm
The Minister for Sport and Tourism (Mr. Richard Caborn)

I congratulate the hon. Member for Ceredigion (Mr. Thomas) on raising the issue of digital broadcasting in Wales. I know that he has kept the matter on the political agenda, along with many of his colleagues who are in the Chamber this afternoon.

The £300 million figure that the hon. Gentleman referred to in the press shocked me. I have now been told that it was in The Times. I have been in some very detailed discussions about the spending review and I am sure that he appreciates that we do not discuss those in public. However, I do not recall the £300 million figure being mentioned. We have asked a consumer expert group to review affordability and availability and we shall receive their report soon. We do not plan any subsidies for the consumer—I think that he referred to this—because the set-top boxes can now be purchased for about £40. As he said, prices are decreasing, but we shall reconsider the affordability of DTV closer to the switchover date.

I note from the hon. Gentleman's contribution the frustration of viewers in Wales, who want digital television but do not want pay services, and who cannot receive digital terrestrial signals. The position is more difficult in Wales, as he said. The debate is an opportunity for me to give hon. Members an update of how broadcasters are resolving that. First, I want to explain the background of the Government's policy on digital television and digital switchover.

The growth in take-up of digital television is a significant development for broadcasting in this country. The hon. Gentleman gave the figure for Wales as 56 per cent., which surprised me, but on average 50 per cent. of all households have digital television. That strong take-up is the main reason why we believe that the time is right to consider switching over the analogue signal. It is the right decision for the economy and viewers alike.

On 18 September, my right hon. Friends the Secretaries of State for Culture, Media and Sport and for Trade and Industry published a cost-benefit analysis showing that the switchover will bring quantifiable benefits of about £2 billion in net present value terms. There is still some way to go to convince people that switchover is the right thing, and this debate provides an opportunity to set out those arguments again.

One of the main benefits of switchover is to the 25 per cent. of households that can receive analogue channels but not digital services via their aerial. Digital television uses the same spectrum as that used for analogue television, with digital transmission interleaved between the analogue services. By switching off analogue, power levels can be increased, and small relay stations will be upgraded.

In Wales, the problems of terrestrial reception—analogue or digital—are particularly challenging, as the hon. Gentleman outlined. Reliable reception requires a line of sight to a transmitter. Unfortunately, the beautiful hills and valleys of Wales mean that that is difficult to achieve with ground-based transmitters, because the land frequently gets in the way. There is not much that we can do about that. Historically, we have used 200 small relay transmitters to solve the problem by filling in coverage to areas that cannot receive signals directly from a main transmitter.

The six main transmitters in Wales broadcast the full range of digital services, as do three of the larger relay stations. The remainder of the relay transmitters do not broadcast digital services because insufficient frequencies are available while analogue signals are still broadcast. The shortage of frequencies is particularly acute in south Wales where there are a large number of analogue transmitters.

The transmitter network in Wales is proportionally in line with other UK nations where the main stations and a small number of relays broadcast digital signals, the large majority of relays being unable to do so. The shortage of frequencies will not case until analogue services begin to be switched off. When that happens, many of the restrictions on digital coverage will be relaxed and the number of transmitters and their coverage can be increased significantly.

In addition to allowing the digital terrestrial network to be extended, other benefits from switchover are worth highlighting. First, broadcasters spend significant sums on transmitting programmes in analogue and digital form. As a majority of households switch to digital, it increasingly makes little sense to continue with that uneconomic arrangement.

Secondly, the current arrangements are an inefficient use of spectrum. Digital transmission uses a fraction of the capacity of analogue broadcasts while increasing choice, giving access to interactivity and driving electronic programme guides to help viewers in a multichannel environment. Switching off will allow users to work the spectrum harder. It will open the way for new dynamic services to be developed, which will be attractive to consumers and good for the economy.

Given the clear benefits, the question is not whether we switch off analogue broadcasts—that case has been made—but when. However, we must ensure that digital is right for all viewers. We need to ensure that the timetable that we set is achievable and that people who have not yet switched over are able to do so. We have established a consumer experts group to ensure that there is an effective conduit for working through issues affecting consumers. That will report shortly and we will publish the report once we have received it.

Switchover is an extremely complicated undertaking, and I am not sure that some hon. Members appreciate that. It is essential that we get it right. There are still several issues to be resolved before we can set the timetable, but we are making progress.

Switchover cannot be delivered by the Government. It depends on market-led take-up and the response of broadcasters and other stakeholders. One of the tasks for broadcasters will be to produce proposals on the digital terrestrial coverage at switchover. The Government and Ofcom will review the broadcasters' proposals and consider whether they make sufficient provision for those who have no access to digital terrestrial. All parts of the UK will be carefully considered.

One issue that will likely be raised is that of free-to-view Solus cards that enable people—obviously, in Wales as well—who want digital services but who have no terrestrial access to receive the main channels without paying a subscription. As has been said, the issue arose when the BBC decided to end the scheme it had funded and to transmit programmes without encryption using a satellite with a much tighter UK coverage. In a debate in Westminster Hall on 21 October last year, I announced that ITV, BSkyB, Channel 4 and Five had agreed to facilitate a scheme to enable consumers to continue receiving the commercially funded public service channels on a free-to-view basis. The scheme covers all the digital satellite consumers who did not have a subscription to a pay TV service, whether or not they had from the beginning chosen to be free-to-view consumers.

The agreement involved offering existing Solus card holders a new card for a one-off purchase cost of £23.50. The new cards are guaranteed until the end of December 2005. The cost of the scheme was met by ITV, Channel 4 and Five and was intended for those viewers who were about to lose their free-to-view channels. Existing free-to-view satellite customers were informed through on-screen messages on the affected channels. The Department sent a letter explaining the situation and how to purchase a card to all MPs and members of the public who contacted it, and it also put out a statement that included the last date on which the cards could be purchased on its digital television website.

The temporary scheme was successful in ensuring that viewers who had invested in equipment were able to continue watching the main public services on satellite. A total of 111,000 cards were issued through the exercise, which was aimed at ensuring that existing free-to-view satellite viewers did not lose out.

I accept that there is no longer a free-to-air satellite option available to new customers, although BBC analogue and digital services are available by satellite without subscription. Before digital switchover can take place, we need a free-to-view solution for people in more remote areas with marginal coverage, and for those who want Channel 4 and Five in addition to ITV and S4C. Indeed, we note Ofcom's statement in its switchover report, "Driving Digital Switchover", which was published on 5 April 2004. It stated: Ofcom will consider whether regulatory intervention is needed to secure a viable free-to-view satellite proposition before switchover. I believe that the hon. Gentleman referred to that, and the Government will stick to it.

We are working closely with Ofcom, broadcasters and other stakeholders in determining the arrangements for switchover. The problems of coverage in Wales that the hon. Gentleman outlined cannot be resolved separately from digital switchover. It is not possible to improve digital services before switchover for the reasons that I gave. Our position since 1999 has been that analogue terrestrial broadcasting signals should continue until everyone who can at present get the main public service broadcasting channels can receive them free-to-view via at least one of the digital platforms. We believe that it is possible to complete switchover by 2010, but we are not yet able to set a timetable, for the reasons that I have outlined. We will do so when we are certain of the optimum time scale. The end result will be better television services, significant economic gains and improved reception and choice for people in rural areas.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Four o'clock.