APPENDIX 16
Memorandum submitted by the British Radio
and Electronic Equipment Manufacturers'Association (BREMA)
INTRODUCTION
1. The following comments set out BREMA's
views on the future funding of the BBC.
2. BREMA represents companies manufacturing
consumer electronics products in the UK. Approaching 30 per cent
of television production in the European Union is from UK based
factories. Two thirds of our production is exported. Five million
television sets were produced in the UK in 1998 and a positive
trade balance of £260 million was achieved.
3. The start of digital television broadcasting
in the UK is greatly welcomed by our industry. The majority of
digital television receiving equipment is being designed and manufactured
in the UK. The successful launch and development of digital television
in the UK is likely to encourage other member states to follow
this lead quickly. The UK has achieved a world first in starting
digital terrestrial television broadcasting in November 1998.
GENERAL
4. In relation to the BBC funding review,
BREMA has specific comments on certain aspects of the panel's
Report. These relate to the long-term future of the licence fee
and public service broadcasting in the UK. We also have comments
on potential new sources of extending the funding of the licence
fee.
5. BREMA understands the Government's position
of not favouring any single transmission medium for delivering
digital services. However, the Government has set a target that
analogue terrestrial television will not be switched off until
the vast majority of viewers have access to the digital qualifying
services.
6. The current universal access to free-to-air
services of the public service broadcasters through terrestrial
reception, provides the ideal foundation to encourage migration
of digital terrestrial reception and we have recommended that
this should be set as a coverage objective for digital terrestrial
broadcasters. We very much support the Government's concern to
extend the roll-out beyond 90 per cent as quickly as possible.
We believe that there will be an expectation that at least 95
per cent of the UK population should have access to digital terrestrial
television. Reception of satellite television can not be received
by 100 per cent of the population due to a number of factors (lay
out of buildings; terrain; planning permission). Regional coverage
is much more difficult on satellite. Reception by portable receivers
with set-top aerials is not possible.
7. In this context the BBC has a lead role
to play. At a time of great technical change, industry and consumers
need confidence in the continuity of the broadcasters. It is essential
therefore that the current structure and funding of the BBC and
ITVA companies are in no way undermined.
8. It follows that both the BBC Charter
and the Corporation's funding structure ought to remain in place
until analogue terrestrial television broadcasting ceases in 2009-10.
This would mark the complete assimilation of digital television
in the UK.
9. Pay TV services on terrestrial, satellite
and cable will become an increasingly important factor for viewers.
However, after 15 years of subscription cable television and 10
years of satellite television, currently only 30 per cent of UK
households subscribe to Pay TV. This may almost double in the
digital era. But this will still leave about half of UK households
who only wish to have the Free-to-air public services for which
they pay a licence fee.
10. The concept of adding a digital television
surcharge to increase BBC funding would be wholly unwelcome to
consumers, manufacturers, retailers and most broadcasters. Such
a surcharge, which has been likened to the Colour/Black and White
TV licences, would seriously delay the take-up of digital television—some
analysts estimate the take-up rate would be halved. Those not
willing to subscribe to Pay-TV but only wanting Free-To-Air public
services (about half of UK households) would be most deterred
by a digital television surcharge. For Government a slower take-up
of digital receivers would delay the opportunity to release spectrum
for other purposes.
11. A digital television surcharge, even
applied on a sliding scale in the ingenious manner proposed by
the Davies Report, opens a Pandora's Box of competition issues
which could seriously delay our national commitment to achieving
an all digital broadcasting environment "as soon as is practicable".
12. The current television licence is not
universally admired but is probably regarded as the least worst
option of collecting funds for public service broadcasting. In
that context an above average increase in the current licence
to support new (digital) services would be seen as a reasonable
incentive by viewers to upgrade to digital in order to receive
the additional five free-to-air services. This should also be
accompanied by suitable measures for those with special needs—a
factor fully explored in the Davies Report.
CURRENT MARKET
CONDITIONS
13. The launch of digital television in
the UK has been especially successful in the take-up of pay TV.
Published information shows that there are already two million
digital television subscribers. This remarkable success has brought
almost instant awareness of digital television throughout the
UK. However, other than those now enjoying digital television
and those in industry, there is much confusion and lack of knowledge.
14. We therefore very much welcome the initiative
of the Department for Culture, Media and Sport to lead a public
information campaign to explain the full range of the benefits
of digital television to everybody. This will require considerable
emphasis on the free-to-air services of which most viewers remain
unaware or confused. Clearly the public service broadcasters,
led by the BBC, have a key part to play in vigorously promoting
their free-to-air programmes and services.
15. Receiver equipment for all services
is now available. This includes set-top boxes, idTV receivers
with embedded conditional access and Open-Standard idTV receivers
from four manufacturers. These latter idTV receivers will be upgradeable
when the conditional access modules become available in 2000.
16. Those purchasing a television set for
the living room expect at least eight to 10 years service from
the set. This year UK sales of analogue television sets are expected
to reach a record level of 5.5 million. Many of these have been
purchased to be connected with a digital set-top Box to receive
pay TV services. These TV sets are a legacy which can delay the
switch-off of analogue terrestrial television. It is important
that the open standard idTV receiver is seen as the logical replacement
for the analogue television set. As part of the replacement market
we can then look forward with confidence to the switch-off of
analogue terrestrial television within 10 years.
SUMMARY
17. The broadcasting environment is changing
rapidly as new players have entered the market, widening the choice
and range of services. This is all to be welcomed. However, in
this time of change the BBC must continue to play a critical role
as the flagship public service broadcaster. To do this the Corporation
must be adequately funded. We leave to others to define how much
is adequate—but we are in no doubt that the current TV licence
fee is the most appropriate mechanism to raise funds for the Corporation.
Given adequate funding it is incumbent on the BBC to promote free
to air digital television services which will attract those TV
households (half of all households) who do not wish to subscribe
to digital pay TV services.
October 1999
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