Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 100 - 119)



  100. What further action should be taken by the Government then, or OFCOM, for that matter, to promote early analogue switch-off?
  (Mr Carter) I think our view on that would be two-fold. Firstly, there has been reasonably strong take-up of digital television services to date. I think, as we move into what we would call the second stage of that process, where we move from, if you like, the early adopters of both multi-channel television and thereafter digital television, we need to ensure that the range of services on offer are such that the next generation of multi-channel television viewers, customers, are as attracted to it as the previous generation have been. I think our view on that would be that the things that have driven take-up to date are not likely to be the same things that will drive take-up in the future. We would see the emergence of access, broadband access, different types of interactivity, being as attractive to the next generation of multi-channel viewers as, if you like, the attraction of sport media content has been so far.

  101. When you say the take-up has been good so far, or the take-up has been good, what figures have you got?
  (Mr Carter) At the moment, I think BSkyB would say that they have somewhere between 4.5 and 5 million customers, and I think pretty much the totality of their customer base is digital, or pretty close to it. We have over half a million digital customers and we have set a public ambition of having over 1.25 million by the end of this year.


  102. And that is just you?
  (Mr Carter) That is just ourselves. I think Telewest are at round about half a million today, with probably a slightly lower ambition than ourselves, and ONdigital are claiming in and around a million. So even in today's universe you have five, six, seven, eight million digital homes, in 2001. I think you could very easily see a scenario, assuming market conditions are appropriate and the regulatory environment is appropriate, whereby we are up to, I would have thought, 17, 18 million homes would go digital, by dint of self-desire rather than being prompted.

  103. Sorry for interrupting you, but roughly by when are you guessing that will be, if guessing is not an uncomplimentary word?
  (Mr Carter) We would say, probably by 2005, 2006, when the market will be at a point whereby a significant majority of homes, I am assuming you are referring primarily to digital television services, in that question, are receiving digital television services.

Mr Fearn

  104. This is a final one, on something else, Mr Chairman. Do you have the technology in place now to provide subtitles, I am thinking of the deaf and hard of hearing people?
  (Mr Kirby) We have been providing subtitles on our analogue services for some while, of course. Within the digital environmental, around half of all of the homes passed by ntl already support digital subtitling, and the other half will join that position within the next month, or so.

  105. So there is no problem there at all?
  (Mr Kirby) There are more issues within the digital environment, not just about subtitling but about other sorts of additional services, which I think will become easier as the years go by, and certainly all of us who have introduced digital platforms have struggled somewhat in the early days to make sure they all interwork with each other. But, no, I do not believe there is any long-term issue at all.


  106. Before I call Mr Wyatt, could I just follow up one or two of the questions that Mr Fearn has been putting to you. You gave a guesstimate of a very high proportion of the country's homes being on digital TV roughly within five years, because that is what we are talking about, when we talk about 2006, it is not all that long to go. And it is conceivable, I suppose, that it could be sooner, taking into account that while, of course, the poor and deprived and pensioners living only on their pension, plus, say, those on income support, are unlikely to put subscribing to digital as being their first priority, or to be able to afford to do it, in what is, and is likely to remain, a very prosperous country, most people, if they can, will want to take part in this, will they not, and therefore, taking into account the wide spectrum of programmes for all tastes that there are, people will want to avail themselves of them?
  (Mr Carter) We would agree with that. Our view of ourselves and our role in the market is that we seek to provide affordable access to the services that we offer; today, in scalable terms, we offer access to telephony, Internet connection, narrow-band Internet connection, and analogue and digital television services, and in the future broadband Internet connection and broadband services. And we would claim, I think, and I think the data would validate, that we have been a significant force for driving the sort of take-up that you describe, amongst substantial numbers of the population, across all social demographic groups. I think it is absolutely true to say that there will be a proportion of the population for whom the absolute cost of the services will be an issue, although, as you will know better than I, I am sure, Chairman, there are different, if you like, flavours on the shelf, even in today's market, offering different price points and different means of access. But we remain confident, I think, that the attraction not only of digital television services but what are increasingly being bundled with digital television services will drive the next generation of growth, interactive communication and Internet access being two examples of that.

  107. But there is also an interesting consequence of this, that has consequences for Government policy on broadcasting, is there not, and that is that we are reaching the end, possibly for ever, of universal access to every channel, to which people have been used, through the four terrestrial channels, I say four because there is not universal access to Channel Five; but if there are 4.5 million subscribers to Sky Digital now, no doubt there will be very many more, because it is increasing almost exponentially. Now they do not have access to ITV, and sooner or later ITV is going to have to come to terms with that, because its audience is falling badly among Sky digital subscribers, because of the fact that ITV is not on the electronic programme guide; so either ITV will be driven to do a deal, or its audience will go on falling, which will affect its finances. Again, there is now not a table-d'hôte menu but an a" la carte menu of TV channels; if you want the Performance channel, you will not get it on BSkyB, if you want the Artsworld channel, you will not get it on ONdigital. You have got different menus for the cable channels. So, I am saying this as a statement but it is a question, are we coming to the end permanently of universal access to all channels, and should that have an effect on Government policy on communications?
  (Mr Carter) A good question.
  (Mr Kirby) I think we have a situation at the moment, quite possibly as you hint, a temporary situation, in which there are a handful of channels, ITV and ITV2 being the most prominent, which are being used by one or other player as part of trying to create a distinctive proposition for a particular platform. That is not the approach which ntl takes to the market; we see ourselves as a provider of affordable access, and the more channels the better, the more services, indeed, not just channels, the better. If one of the producers of a channel chooses not to sell it to us, because they prefer to try to create a bit of exclusivity, we would be frustrated; because we cannot insist on having access to the channel, but if it is available to us and if we can agree appropriate commercial terms we would want that to be available to all our customers. So while we cannot guarantee that the other platforms would take the same view, I think it is very likely that over the next two to three years we will actually see a situation where that attempt to create exclusive elements of content becomes marginalised, that the content that you are talking about, the various channels, even the niche channels, will tend to appeal to categories of customers who are on all the platforms. All the platforms now have a large number of customers, and without necessarily very, very distinct groups amongst those customers, and I think that, although there are understandable concerns today, citizens may end up with a confusing choice, "If I pick this platform I won't get access to all the channels I want". I think that will turn out to be a misreading of the way the market develops over the next two to three years.

  108. But anybody who is looking ahead to what has become, for the moment, the unfashionable word of convergence, but convergence, it seems to me, remains the name of the game, the logic of wanting to avail oneself of convergence would be to subscribe to cable, because cable is the best platform for convergence, a much better platform than satellite digital, to which I am a subscriber, but I am a subscriber because of all those channels. But as more and more services become available through convergence then the splay of platforms will grow and people will have to think again, will they not, or am I getting it wrong?
  (Mr Carter) We are very glad that you are a subscriber, Chairman, and we would certainly be of the view that, as I tried to allude to in my earlier answer to the first question, the services that will be available in the next two to three years, such as Internet access, broadband or narrow-band, or interactive television services, whatever they may be, will bring customers to the market for those reasons; and multi-channel television, in a sense, will be a secondary attraction, or possibly a contingent attraction, but not the primary attraction. And that will mean, I suspect, that in the next five or six years the choice of platform will become more of a decider than perhaps what television, and certainly what linear television, content is available. So I think we would agree with your analysis on that point. Having said that, on the point about availability of channels, I think the evidence would suggest, certainly the viewing evidence would suggest, that even in a world of 150, 200, 250 channels, in truth, most people watch, on average, between five and seven, and that the current terrestrial channel brands, if you like, command a disproportionate share of viewing audience, as a function of quality, range of programming material and historical connection with the viewer. And certainly we would see, in the foreseeable future, the importance of those channels and their product offering being an important part, if you like, of the television ecology of that bundle of services. Once you get into channel 222, as Phil says, you are into a niche world and there will be some that are deeply appealing to some audiences and some that are irrelevant to others.

  109. But if we are going to move forward, on from simply the very appealing and attractive area of entertainment, and if the Government were to expand the availability of interactive services to do with public services, Child Support Agency problems, housing benefit problems, all of that great array of things which are now utterly stymied by incompetent bureaucracy, if the Government were to introduce that kind of service, as one hopes it will, and the sooner the better, then presumably those who are offering interactive services, whereby somebody can sit in front of their TV set at home and have a good chance of solving their CSA problem, or their housing benefit problem, those are going to have a greater attraction. And it seems to me that, in view of the astounding failure of BT to avail itself of its opportunities, and was shown by the utter smugness of the BT representatives when they were here last week, because they are the ideal vehicle, the absolutely ideal vehicle, surely cable as, if you do not mind my saying so, the next best thing, has got a very big potentiality ahead of it?
  (Mr Carter) Absolutely, I do not mind you saying so. We are certainly a newer arrival on the block than our competitors and colleagues at British Telecom, and we are firmly of the view that the benefits of the cable platform are yet to be fully realised, and, to your point, the attractions of the cable platform are yet to be fully realised. I think our view would be, in the context of the White Paper and the regulatory environment that it seeks to create, that the historical view of regulation around telecommunications is, in part, what has created the second infrastructure that the country has now got, and that second infrastructure is the cable infrastructure. The potential of that is legion, and, as you rightly observe, it is in areas very far removed from 20 channels or 200 channels of television, not to say that they are not important. And I think our primary observation about the White Paper would be that we recognise the importance of the content issues, particularly the importance of where public service broadcasting sits in the future world, but the issues of access and affordable access are going to be critical to creating the sort of environment and the use of that environment that you describe. So, in that sense, I think we would entirely endorse your comments, Chairman.

  110. Do you think that the scope of the White Paper is too narrow in focus, in that it is not dealing with these wider potentialities of convergence, the Internet and public services, but perhaps, like the 1996 Act, is looking backwards to deal with problems which are removing themselves through the advance of technology?
  (Mr Kirby) I think the White Paper covers all the territory you would expect it to cover.

  111. That sounds like very faint praise, to me?
  (Mr Kirby) I was going to agree with you, Chairman, that there is a hint, at points, that it is more concerned about making sure that an existing balance, which on the whole has been favourable for citizens of this country, is not disturbed, and perhaps less concerned than it might be about trying to make sure that the policy and regulatory environment is focused on what is now coming up.
  (Mr Carter) If I may, Chairman, I would like to add to that. I think our view would be that this piece of legislation, depending upon proposed legislation, depending upon when it comes to the House for debate and then hits the statute-book, arrives at a significant junction point for the country, and the real prizes are in the future issues you refer to, not in the historical issues that, understandably, it needs to cover. And we would be of a view that OFCOM should have a positive duty to promote competition in the world of access, and that that environment will be a critically important environment for giving us the sort of infrastructure and the sort of universality that you refer to. And, in five or six years, if we were to return to this room to have this conversation again, I think we would view that to have been the primary achievement of this proposed piece of legislation.

  112. Just before I call Mr Wyatt, let me ask you a question based on your few words. You talk about what may or may not be happening in five or six years; do you think that, sitting here, on the last day of January 2001, we can even anticipate what the environment will be in five or six years?
  (Mr Carter) I sat in a business planning meeting yesterday which had a five-year horizon, Chairman, and certainly we were attempting to achieve that difficult feat. I think it is fair to say that in the world of technology, as many members of the Committee will know, it is very difficult to predict. Having said that, I think there are enough early warning signals to suggest, I think, reasonably clearly, what prompts will be needed to get us to the 80, 85 per cent take-up of digital television services that the other member of the Committee referred to earlier, what is going to happen in the wireless market, what is going to happen in Internet access, what the role in the future of broadband access is versus narrow-band access. I think there are enough pictures emerging to be able to draw a reasonable set of conclusions about where those things will be in 2005, 2006. Equally, I am sure, however, there will be some things that we are not yet aware of that will arrive, in whatever period of time, and may well be as, if not more, important than any or all of those things.

  113. I am sorry, I did say it was my last question, but I have got another one, and that is this. I remember, five or six years ago, when the 1996 Broadcasting Act was being steered through the House of Commons, I exasperated Mrs Bottomley by saying that the Bill was dead before it hit the statute-book. Now, looking at this White Paper and assuming it will not be legislated before next year, at the earliest, to what extent can we be sure that a Bill based on this White Paper will not be dead before it hits the statute-book?
  (Mr Kirby) The piece of this White Paper which is truly radical is the creation of OFCOM, and OFCOM will have key responsibilities to make sure that what you describe does not happen.

  114. In fact, we proposed that three years ago, it is scarcely very radical?
  (Mr Kirby) Absolutely, it is not an original idea, but nevertheless it is a development of where we are today. What will be critical is the objectives set for OFCOM. At the moment, the White Paper sets out three objectives, with no kind of structure as to how OFCOM is supposed to arbitrate between them. We believe OFCOM should have one very clear objective, which is to regulate in the long-term interests of consumers, and to do that in a way which recognises the critical importance of promoting, not merely enduring but actually promoting competition, wherever that is possible, and, in so doing, promoting and encouraging companies to take risks, to develop for the future, not to look backwards. And, we believe, in that way, to create really quality services, quality broadcasting programmes and other services, to pass over these networks. That is the forward-looking vision, and OFCOM really needs to be created with that at the heart of its responsibilities.

Derek Wyatt

  115. Good morning. Can I compliment you on your report. I think it is the best we have had from anybody, anywhere, in the United Kingdom; it is much more radical than anything else. It has been quite depressing, reading some of the stuff; so, well done, on the team. And could I say, Mr Carter, congratulations to you on your work with Raleigh International, that is a personal thing, something close to my heart. Would you say the document generally is a risk-averse document, the White Paper?
  (Mr Carter) No. Genuinely, I do not think we would say that. I think we would say it is a skilfully worded document, which recognises, to the point that the Chairman made previously, that the lifespan of the debate may mean that its contents hit reality some time out. But, to echo my colleague's comment, we do think that the formation of a truly empowered, single regulator is a good thing, and could be a radical thing, and could be a force for good. The single question for us is, how far do its powers stretch and what is its primary focus, does it start from the world of content, or does it start from the world of access, or does it approach both of them simultaneously and recognise that there are different drivers and different issues in both areas.

  116. Let me draw you out on some of those issues. What is the point of worrying about content any more, what is that issue? You cannot really challenge what is on the Internet. Why, with 400 channels, would we want to worry about content, except to acknowledge there might be a nine o'clock junior and senior, although that seems to be going by the board, looking at much of the programmes around the 8.15 watermark? Explain the rationale of the content thing; do we really need it?
  (Mr Carter) Yes, I think we do need it. I think we believe absolutely that there is a need to have a view on content. If you look at the range of services and offers that this White Paper will touch on in a consumer world, television will be a significant part, maybe not a large part, of that. Within the television world, the quality and range of content is a critical factor. I think putting down appropriate guide-points to help steer that, in a measured way, is an important thing. Our view on that is that it is not as clear as it could be on what the role of public service broadcasting is, in this new environment, and we would certainly look for a clearer definition of that; and we recognise your point that in the world of the Internet that is more difficult to regulate and to clarify.

  117. Do you think it is a cultural thing, the content of television, I cannot remember the newspapers having a content regulator, or the 300 publishers in this country having a regulator. Do you think it is just a legacy of the past? We talked about some of the past, as it were, coming in. The Americans do not have a content regulator at the FCC.
  (Mr Carter) No, they do not.
  (Mr Roest) I think there is a danger in comparing what I think you are trying to achieve here with the White Paper with what is happening in the US; one enters areas that I think will complicate the debate. The content is very important; what people actually buy is what they see and what they read and what they feel, so the content is important. There are certain aspects of content that absolutely should be regulated, there are certain aspects of content that need consideration, in the sense of, for example, the Chairman's point, about public services that could interact with people at home through their television set; there needs to be some sort of encouragement for that kind of content. So there is, most definitely, a case for a level of light touch involvement between regulation and content. Our concern though is that the focus is too much on content and not enough on the competitivity of growing access. So it is not that we feel binary about it, it is simply that we would like a little bit more concentration on the access side.

  118. I live in the country, and I do not have access to cable. Does your box have Internet access, on the digital box?
  (Mr Carter) Yes, it does.

  119. Complete, open access, not like Sky's Open, which is closed; it is completely open, I can get anything I like?
  (Mr Carter) It does rather depend on where you live.
  (Mr Kirby) On the Internet, yes, where it gives access to the Internet, it is the whole Internet, it is not a walled garden.

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