APPENDIX 1
Memorandum submitted by Mr Dominic Morris
and Mr Henry Price
EXTENDING COVERAGE OF PARLIAMENTARY PROCEEDINGS
IN THE DIGITAL AGE:
A technological and market assessment
INTRODUCTION
1. This assessment is made on the assumption
that the Select Committee wish to see the following:
— universal and convenient access to
the proceedings of Parliament, including all Select Committees,
to complement the current coverage of proceedings on the floor
of both Houses on BBC Parliament;
— more scope for "accidental"
viewing of Select Committee proceedings, to raise awareness and
grow new audiences.
2. The key conclusions we would draw are
that:
— for the foreseeable future, digital
television would be an expensive and relatively inflexible means
of providing additional coverage on a universal basis;
— coverage through online distribution,
on the other hand, would be a relatively cheap option and would
enable video material—albeit in a relatively basic picture
quality—to be made available in a convenient, searchable
format.
SUMMARY OF
TECHNOLOGICAL OPTIONS
3. Other than print, the available mass
media through which this might be achieved are radio, television
and online.
4. In each case, the advent of digital technology
means, in theory at least, that there is more capacity available
to develop new and complementary services:
— In the case of television and radio,
digital technology is more efficient in its use of broadcast signals—in
short, more information, and thus more channels or stations, can
be transmitted through the air or sent along a cable than is possible
in the same circumstances but using traditional analogue technology;
— in the case of online services, there
is in theory no limit to the amount of information which can be
made available to people on request. The only effective limits
are:
and both of those limits are being increased
all the time as the net is upgraded and extended, as personal
computers become faster and more sophisticated and as better software
is developed.
RADIO
5. The advent of digital radio in the UK
has the potential of supporting in the short term the creation
of perhaps another 10 to 15 new national radio stations, and perhaps
double that if, as expected, further radio spectrum is earmarked
in the next few years for digital radio across Europe as a whole.
Among the BBC's own plans for new services are a dedicated station
carrying proceedings in Parliament—an audio version of BBC
Parliament. This would provide some coverage of Select Committee
proceedings as well as debates on the floor of both Houses.
6. However, the digital radio market is
likely to be slow to develop:
— The economics of radio are less buoyant
than television. Commercial players will thus be slower to enter
the market with a full range of services than they are proving
in digital television, so there will be less enticement for consumers
to adopt the new technology;
— the cost of consumer equipment—digital
radio sets—is very high, at around £500, compared to
existing radios. Unlike in television, the commercial companies
involved are not subsidising the cost of the receivers to drive
growth in the market;
— all of which means that the emergence
of a sizeable listening population for digital radio is probably
at least five years away, and the development of anything approaching
universal coverage is much further off.
7. Digital radio probably does not, therefore,
offer the Select Committee the potential they are looking for.
TELEVISION
8. The digital television market is more
buoyant, with a greater capacity to develop into something approaching
a universal set of services. But it is also a more complicated
market.
9. The key complication is that although
digital television is at its heart a single technology, broadcasters
are using this technology on three different distribution systems
to get their programmes into homes: digital terrestrial—transmitted
from land-based mast to domestic aerials; digital satellite—transmitted
from space to satellite dishes; and digital cable—sent along
a physical cable into the home.
10. The choice of which distribution system
to adopt is for the consumer, and a fragmented market is therefore
emerging:
— since the launch of the commercial
digital satellite service by Sky in October 1998, it is estimated
that up to 800,000 households may have subscribed;
— since the launch of ONDigital's commercial
digital terrestrial service in November 1998, around 300,000 households
have subscribed;
— digital cable has yet to launch—it
is planned for later this year—and the cable companies will
be hoping to sign up a large proportion of their existing three
million analogue customers.
11. Although competing delivery systems
have existed in the analogue world for some time, terrestrial
television still dominates (68 per cent of households have only
analogue terrestrial television): most people have simply not
chosen to change to a different system. However, as people move
into the digital world, perhaps prompted by an announcement by
the Government of a date by which analogue signals will finally
be turned off, they will have to make a choice between the three
competing systems.
12. It is generally believed that the three
systems will continue to exist side by side, and that there will
be a fairly balanced share-out of customers between them. [see
chart]
13. For this reason, anyone who wishes their
television channels to be available universally, to all television
households, needs to ensure that they are available by each of
the three delivery systems. This is the approach taken by the
BBC in respect of its public service channels. But it is an approach
which inevitably has a cost attached.
14. Last year, the cable companies who had
until then been providing The Parliamentary Channel handed over
responsibility for funding and supplying the channel to the BBC.
The companies argued that they were not able to commit the necessary
funding to develop the channel in the way which was needed to
build a strong service. This supports the assumption that parliamentary
television channels are not a straightforward commercial proposition—in
that they cannot attract the necessary levels of advertising or
sponsorship revenue (even were it to be thought appropriate to
include advertising or sponsorship on such a channel), nor is
there a large enough pool of dedicated viewers willing to pay
a subscription to receive it.
15. The Parliamentary Channel has been relaunched
as BBC Parliament, a licence fee funded public service channel
available free to viewers. The channel provides gavel-to-gavel
coverage of proceedings in the House of Commons, as well as highlights
of debates in the Lords and of Select Committee hearings. At a
future hearing of this Committee, colleagues from BBC Parliament
will set out how they see the channel developing into the future.
16. Briefly, BBC Parliament is currently
available on analogue cable and on digital satellite. The audio
feed only is available now on digital terrestrial television,
and we plan to upgrade this to the full video channel in the next
two or three years as technological improvements allow more services
to be fitted into the available frequencies. We are also negotiating
with the cable companies to ensure that BBC Parliament is carried
on digital cable, when that system is launched around the turn
of the year. So in time, BBC Parliament should be available to
every digital household, whether they choose terrestrial, satellite
or cable forms of delivery. And our aim is that it should be provided
at no extra cost to those homes, as a licence fee funded service.
17. As previously stated, going for universality
across three competing digital delivery systems has a cost attached
for the broadcaster:
— with digital satellite, the broadcaster
has to buy space on a transponder—effectively the equipment
which sends the television signal to earth. There is no particular
shortage of transponder space at present, and more satellite launches
are planned which will increase the capacity still further. The
present cost of securing enough transponder space for a single
channel could be up to £1 million, including the cost of
sending the signal to the satellite and the fee paid to the digital
satellite operator, SkyDigital, for a place on the Electronic
Programming Guide which acts as the "menu" for all the
channels on digital satellite;
— digital terrestrial television is
more problematic. Because television signals on earth have to
compete with the many other uses of radio spectrum—radio,
mobile communications, emergency and military use and so forth—only
a relatively small and finite amount of spectrum has been set
aside for digital terrestrial television—perhaps enough
for about 40 channels at present. Most of that space is already
spoke for. The BBC's own allocation is fully taken up with the
broadcasting of BBC One, BBC Two, BBC Choice, BBC News 24 and
the BBC Parliament audio feed. We have had to negotiate with a
commercial operator for additional space for BBC Knowledge, the
new public service channel launched last month. What little space
remains available on digital terrestrial television is in the
hands of the main commercial operator, ONDigital. Any new channel
would have to compete on market terms for that space alongside
high value, perhaps pay-per-view premium channels. The cost could
be in the order of £2-3 million a year;
— securing a place on digital cable
will not be so difficult, as total capacity will be much larger.
However, cable is unpredictable, since the channel provider has
to contract with the cable companies to carry its channel on the
cable networks which are owned and operated by the cable companies,
and then to make the channel available to cable subscribers on
favourable terms. The incremental cost to the cable companies
of including an extra channel is relatively low, and in most cases
the cable companies pass on a share of subscription revenue to
the channel provider, reflecting the value of the channel to its
overall offering to its customers. However, the position with
channels which have a fairly limited audience is different, and
the cable companies seek to gain the greatest possible commercial
return from carrying them. The incremental cost of putting a channel
on digital cable should be limited to the cost of getting the
signal to the cable "head-end", from where it is distributed
throughout the cable system—a cost in the order of several
tens of thousands of pounds.
18. In addition to the high distribution
costs of digital television, producing video pictures of the quality
required for television broadcast would entail equipping each
Committee Room with industry-standard cameras and backing this
up with full studio support. A rough estimate of the cost of doing
so is about £0.5 million for every channel—that is,
if three Select Committees were to be covered at one time, the
studio costs would be £1.5 million per year.
19. In summary, achieving universal access
to Select Committee proceedings via a dedicated digital television
channel would be a complicated business and potentially a very
costly one—say in the region of £5 million a year in
total—for which there is no obvious commercial model.
ONLINE
20. The third means of providing coverage
which has the potential of coming close to a universal service
is online—the Internet. Currently, around 20 per cent of
homes have access to the Internet, about 20 per cent of primary
schools and 80 per cent of secondary schools, and the Internet
is becoming a standard piece of office equipment. Over time, more
Internet services are likely to become accessible via cable or
satellite television, opening up access to non-computer households.
21. The Internet is now able to carry more
than text and pictures. Video pictures and audio streams can be
downloaded, from recorded or "live" sources. The quality
of these streams is currently quite poor. It is constrained by
the speed at which information can be transmitted along the telephone
networks to which most consumer computer equipment is linked.
The current typical rate of 56 kilobits of information every second
is sufficient only to provide a poor quality, jerky picture of
about two inches by one, or an even poorer picture if a larger
screen size is selected.
22. However, over the next two to three
years, download rates are likely to increase to at least 300 kilobits
per second, which will enable a big improvement in picture quality
to something approaching that of a television video tape—the
type of quality we demonstrated at the beginning of this hearing[3].
The first to benefit from such an enhancement will be specialists
who most need such a tool—for example, journalists. Further
down the track, the technology will become standard in schools
and offices. The home market will be relatively slow to upgrade—it
is estimated that 20 per cent of households will have a broadband
Internet connection in seven years time, principally supported
by:
— digital cable television, due to
launch later this year, which is expected to offer fast and unrestricted
Internet connection with near broadcast quality video pictures;
— DSL technology, built upon BT's existing
copper wire telephone network, which is currently under trial
and is expected to start rolling out at the turn of the year and
which will provide a similar level of functionality as broadband
cable.
An alternative to a fast Internet connection
for the home is the ability to download information from the Internet
slowly—say overnight—and store it for viewing later.
The next generation of digital television set top boxes in this
country is expected to contain the hard disk storage capacity
necessary to allow this.
23. Another consideration is cost. Generally,
the service provider has to pay for a certain amount of bandwidth,
which determines how many users can access the information at
any one time. Three factors could reduce bandwidth costs:
— as the networks which make up the
Internet are upgraded and extended, bandwidth will be less at
a premium. On the other hand, just as with the road improvements,
there can also be expected to be an increase of traffic as well
as in the sophistication of material which people put on the Internet,
so the overall impact on competition and cost is difficult to
assess;
— increasingly, the more popular websites
will be downloaded to a large number of local or regional storage
(or "server") sites, from which people can access them
more quickly and cheaply than by going to one central site. This
will make the provision of video pictures on the Internet more
cost effective;
— Internet Service Providers (ISPs)
are keen to take ready-made content and package it within their
consumer offering. In a competitive market, and as Internet content
increases rapidly, many ISPs are becoming specialist, targeted
at particular groups of users with common interests. It is certainly
possible to conceive of a relevant ISP being willing to take video
coverage of Select Committees and distribute it on a ready-made
website at little cost to Parliament other than the cost of getting
the signal to the ISP—say a few tens of thousands of pounds.
24. Whatever the business model, distribution
by Internet (whether received on a personal computer or via interactive
digital television) would clearly be significantly cheaper than
by broadcasting on digital television, and for this cost Parliament
would be buying distribution around the whole world, not just
in the UK.
25. In another respect, online distribution
would entail much lower costs than digital television. Because
the quality of video image required is much lower than a television
picture, the standard of camera and studio equipment required
to produce the image is also much lower. At its simplest, each
Committee Room could be equipped with a single, fixed image camera
of about the same standard as a domestic camcorder—a matter
of a few thousand pounds. This would provide a very basic picture—certainly
not anything close to broadcast quality—but one that would
be quite sufficient for online delivery.
26. For the user, online delivery has one
very significant advantage over broadcasting with regard to news
coverage: it is a truly "on-demand" environment, in
which users can select the information they want to access at
the time that they want it. Large archives of recorded video and
audio material can be stored to be instantly recalled by individual
users. Whole Select Committee hearings could be stored and searched
in this way. The technology exists to index the video pictures
to the text of the words spoken and the name of the speaker, so
that in the same way as one would search a text document on computer
and generate a list of references to a particular word or a particular
person, so one could search Select Committee proceedings—generating
a menu of video clips from which one can find the relevant exchanges.
Much of the leading expertise in this field is in the UK.
27. The more comprehensive the service,
the more expensive. But it is certainly possible to see a commercial
model for such an archive where it might not exist for a general
"broadcast" stream of coverage. Journalists, researchers,
lobbyists and others would be likely to find such an archive very
useful in compiling reports, and may be willing to pay a high
price for a premium service. Internet Service Providers consequently
might see it as an attractive service to offer on their sites.
28. Parliament could put out to tender a
contract to provide a packaged website, including for example
online Hansard, live Committee coverage and either a full
archive or edited video clips, with a fully functional index and
search facility, and to explore partnerships with Internet Service
Providers to distribute the site internationally.
CONCLUSIONS
29. Universal and comprehensive distribution
of Select Committee hearings via digital television would be very
expensive and there is no obvious commercial model to support
it.
30. Online distribution would on the other
hand provide:
— high functionality—providing
the material in an easily accessible and usable format;
— cheaper distribution costs;
— an effective and immediate route
into the office and schools market;
— international distribution.
The initial downsides of the online route would
be:
— relatively low quality pictures;
— not a short-term universal route
into the homes market.
31. A comprehensive online service of this
kind could continue to be backed up by coverage of the highlights
of Select Committee hearings on the BBC's public service television
and radio services, including BBC Parliament.
June 1999
3 Q. 114. Back
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