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Session 1999-2000
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Delegated Legislation Committee Debates

Draft Broadcasting (Limit on the Holding of Licences to Provide Television Multiplex Services) Order 2000

Second Standing Committee on Delegated Legislation

Wednesday 15 November 2000

[Mr. Roger Gale in the Chair]

Draft Broadcasting (Limit on the Holding of Licences to Provide Television Multiplex Services) Order 2000

4.30 pm

The Minister for Tourism, Film and Broadcasting (Janet Anderson): I beg to move,

    That the Committee has considered the Draft Broadcasting (Limit on the Holding of Licences to Provide Television Multiplex Services) Order 2000.

The order revises the limit set out in paragraph 5(1) and paragraph 5(4)(a) of part III of schedule 2 to the Broadcasting Act 1990, as amended. The Secretary of State is empowered to adjust the limit by paragraph 5(5)(a) of part III of schedule 2 to the Act. Paragraph 5 sets limits on the ownership of television multiplex licences. The order increases the number of licences that any one person may hold from three to six. On 13 July 2000, my right hon. Friend the Secretary of State for Culture, Media and Sport announced his intention to adjust the limit, and the announcement met with no controversy at that time.

Multiplex licences were introduced in the Broadcasting Act 1996, which established the regulatory framework for digital terrestrial broadcasting in the UK. They permit the holder to transmit digital broadcasts for general reception over particular frequencies within the wireless telegraphy system. There are six terrestrial multiplex licences, and each carries six programme services. The Government are committed to the success of digital terrestrial television, and we believe that the current limit represents an unnecessary impediment to growth within the industry.

There are several current restrictions. No one person may at any time hold more than three licences to provide television multiplex services. A participant who has more than a 20 per cent. interest in a body corporate that holds a licence to provide a television multiplex service, but who does not control that body, shall be treated as holding the licence that is held by that body. In relation to each of five or more licences to provide television multiplex services, no one person may, at any time, be either the holder of the licence or a participant with more than a 10 per cent. interest in a body corporate that holds that licence. In addition, a person shall be treated as holding a multiplex licence if the licence is held by a person connected with him.

This restriction on ownership of multiplex licences to a maximum of three was introduced to encourage competition in the early days of digital terrestrial television. However, we now know more about DDT's relationship with other platforms than we did in 1996, when the original legislation was passed. The market has developed in such a way that the principal competition is between, rather than within, platforms. In other words, competition is between satellite, cable and terrestrial providers, rather than between rival commercial operators on the digital terrestrial platform.

The Government want DTT to compete with the other platforms on a level playing field. Therefore, this summer, my right hon. Friend the Secretary of State announced his intention to use his order-making powers to ease the current restriction on multiplex ownership. He took that decision following the Competition Commission's report on the proposed mergers of Carlton and United News and Media, Granada and UNM, and Granada and Carlton. The report stated that the limit made no difference to the commission's overall conclusions. As the limit may have been exceeded by the proposed ITV mergers, necessitating divestments by one or other party, my right hon. Friend decided to remove a restriction on merger activity that, in the Competition Commission's view, was irrelevant in terms of competition.

That decision, although taken as a result of the Competition Commission's report, was a neutral one and should not be taken to favour any one company. My right hon. Friend's announcement was made in advance of any final ITV merger activity, when it was still unknown which—or, indeed, whether—any of the proposed mergers would take place.

The Government want to ensure that there are no unnecessary blocks—by which I mean those not established on competitive grounds—to developments in the digital terrestrial television industry. In raising the number of multiplex television licences that any one person can own from three to six, this order will leave the limit equal to the total number of licences, thus giving it no effect in practice.

In conclusion, given that the Competition Commission is satisfied that the restriction on multiplex ownership raises no competition concerns, the limit can safely be adjusted without harming DTT's future as a platform. On the contrary, the order, together with legislation abolishing the digital point system—which my right hon. Friend laid before the House on 31 October—will help DTT to develop as a mature, quality platform by freeing companies to merge if they wish to do so, and if the Competition Commission agrees. The result will be increasing investment in quality content.

4.36 pm

Mr. John Greenway (Ryedale): It is a pleasure to serve under your chairmanship, Mr. Gale, and to have a Chairman who is knowledgeable about a matter that many hon. Members—although not those on this Committee—would find extremely technical.

My first query concerns which legislation we are amending. The order will amend the Broadcasting Act 1990, but the provisions were included in the Broadcasting Act 1996, which amended the 1990 Act. Of course, it was at the time of the 1996 Act that the arrangements for digital television were approved by Parliament. Like me, Mr. Gale, you will recall that concern was expressed then that limits should be imposed on ownership of digital platforms to ensure the establishment of a competitive framework.

The Minister's interesting comment made it clear that the concern was that there might be a need for competition within different platforms: within the terrestrial, as well as the digital field. However, we now know that the real competition is between, rather than within, platforms. In many ways, that is what happened to satellite television after the 1990 Act was implemented. At that time there were two satellite players, but only one emerged. Although I have no doubt that the limits prescribed in 1996 by amendment to the 1990 legislation were entirely appropriate then, we agree that it is now appropriate for Parliament to make these changes.

In fact, such is the degree of our support for this measure that I have very few questions to ask the Minister. Out of interest as much as anything else, I wonder whether there have been any objections to it. I am certainly not aware of any, although the hon. Member for Lewes (Mr. Baker) might have something to say that could be interpreted as such. The Independent Television Commission wants the measure and ITV companies want it. Moreover, as the Minister said, when the competition authorities approved various changes to ownership of ITV companies in July, they made it clear that the provision is appropriate and would not in any way have affected their decision in respect of inquiries made at that time.

I have only two other comments to make, and in doing so I hope that I will not stray out of order. First, this is a good opportunity to point out that the success of digital terrestrial television is important in ensuring that we move swiftly to analogue switch-off. Dates have been set, and there is general agreement among Committee members and in all parties that the objective is a desirable one. Failure to change the digital platform ownership arrangements and the multiplex service licence in the way in which the order proposes would constitute a barrier to progress, because some divestment of ownership would be required. Given that we are committed to advancing the digital age, it clearly makes sense to agree to this change. Indeed, leaving the rules as they were when Parliament approved them in 1996 would have a perverse effect on digital progress.

Secondly, I shall take this opportunity to ask the Minister—I think I know what her answer will be, but it is worth putting it on the record—whether she envisages any difficulties in respect of content on platforms, some of which have already given rise to concern. For example, certain channels are not available on digital terrestrial television, while others are not available on digital satellite television. There is a general cry from the industry for all that to be clarified by a proper must-carry rule. Does the Minister envisage those issues being formally addressed in the White Paper and in the forthcoming legislation? There is a great deal of interest in the matter, and there was an interesting discussion at the all-party cable and satellite group last night, when the chairman of the ITC came to see us. I know that the Minister will be attending that committee in about four weeks. We need to address these issues.

Lest anyone think that it is very early to be changing regulations agreed by Parliament only four years ago, the answer is that those arrangements were made with the best of intentions, but with the benefit of hindsight we can see that the adjustment is necessary. We therefore support the order.

The Chairman: Order. The hon. Gentleman is extremely knowledgeable on the subject and has raised some interesting issues. Sadly, many of them are not covered by the order. Although they are interesting, and I am sure that the Minister will talk to the all-party cable and satellite group about them, I hope that she will not go too far down that road this afternoon.

4.42 pm

Mr. Norman Baker (Lewes): I hope that you will forgive me, Mr. Gale, for being slightly suspicious when I see such unanimity between the Labour and Conservative parties over objectives. It makes me wonder whether I should join that unanimity. Such is their unanimity that the words ``millennium'' and ``dome'' spring to mind in terms of what might be achieved, and look what happened to that. I do not know whether my comments will be construed as supportive; that is a matter for the hon. Member for Ryedale (Mr. Greenway) to decide.

I want to raise one or two concerns. I am not wholly opposed to the proposal, and I understand why the Government want to go down this road. Competition within platforms is now regarded as passe; we now talk about competition between platforms. However, competition issues still exist. That sector still needs to be addressed. I am not reassured by the views of the Competition Commission that all is fine and dandy on these matters. After all, the commission recently concluded that supermarkets were disadvantaging small shops, but that we should do nothing to remedy that. I am not, therefore, convinced that it has its finger on the pulse.

I am concerned that we are seeing competition in the media generally, including that covered by the order. I understand the need to ensure that our home-based activities are able to compete in a global market. We must not erect or maintain artificial barriers, which inhibit the progress of this fast-developing area. However, there are downsides to the proposals, as well as upsides, which have not been mentioned today. For example, the concentration of ITV companies is regarded as necessary, but it is leading to a loss of regional television production in many areas of the country—although happily not in the Meridian region, which you and I share, Mr. Gale. Concentrations of ownership may involve downsides that have not been addressed. The note that I received from the Library states:

    Of the six available multiplexes, two are wholly reserved by government for existing broadcasters. The first is dedicated to BBC services.

I am keen to understand how that fits into our discussion of the order.

The hon. Member for Ryedale mentioned analogue switch-off. Of course, we all want to endorse moves towards achieving that as fast as possible, because there are significant advantages to the general public in doing so. However, we should not necessarily support any measure that moves us towards analogue switch-off in line with the Government's timetable—which I support—simply because it does so. There may be downsides to consider. We should not eradicate competition unnecessarily merely to arrive at the point where the move towards digital take-up is eased and the analogue switch-off timetable is met.

Has the Minister identified any potential disadvantages in the order, and, if so, how has she sought to overcome them?

4.46 pm

 
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