§ Lord St. John of Fawsley
asked Her Majesty's Government:
Whether they will comment on the privatisation of the terrestrial broadcasting transmission system in the light of the Price Waterhouse report.
In the White Paper on Broadcasting we stated that our objective was to move the terrestrial transmission system progressively into the private sector. The Price Waterhouse report analysed the various ways in which this could be achieved. In the light of that report, we confirm that our intention is to privatise the transmission networks owned and operated by the BBC and the IBA as soon as we are in a position to do so. We believe that a move into the private sector will reinforce the pressures for efficiency, and will enable more intensive use to be made of the valuable transmission infrastructure.
We have considered carefully the different possible options for the structure of a privatised transmission industry. On balance we have decided that the best approach would be to set up two national transmission companies based on the present BBC and IBA transmission networks, rather than to restructure the system in the way proposed in the Price Waterhouse report.
The BBC's transmission responsibilities are rooted in their Royal Charter, which lasts until the end of 1996. It has indicated that it does not wish to have these responsibilities transferred to a private transmission operator. We have therefore decided that the BBC should retain its transmission responsibilities, including for the World Service, until the expiry of the charter unless it wishes to divest itself of those responsibilities earlier. The position will be reviewed at that point with a view to privatisation. In the meantime the BBC will be confined to transmitting its own services, and will not be permitted to compete for the transmission of new broadcasting or telecommunications services. We are concerned that the private transmission market should develop in a fair manner; and while the BBC's transmission operation remains in the public sector there would be insuperable difficulties in ensuring that the BBC entered this market in a way which would be perceived to be fair to its competitors.
The IBA has welcomed the proposal that its transmission operation should be privatised, and we will be including the necessary provisions in our legislative proposals on broadcasting. We shall be considering further the timescale for privatisation, bearing in mind the possible implications for the ITV contracts. We have taken note of the wide regional variations in the cost of transmission, and of the possible consequences of these variations for the smaller Channel 3 companies. We propose that there should be a uniform tariff for Channel 3 companies based on their share of the total Channel 3 income, taking account of any subscription and sponsorship revenue as well as net advertising revenue. This arrangement would be reviewed 1157WA following decisions to be taken on the future of the BBC transmission system after 1996.
The private transmission company which takes over the IBA's transmission operation will have a powerful market position and the transmission market is likely to be dominated by a small number of major players for the foreseeable future. We therefore consider that economic as well as technical regulation will be necessary. We propose to amend the Telecommunications Act 1984 to enable this regulation to be carried out by the Director General of Telecommunications. This regulatory framework will be designed to ensure that the transmission market operates fairly, and also that the coverage, quality and reliability of transmission systems are maintained.