Select Committee on Culture, Media and Sport Minutes of Evidence

Memorandum submitted by BIPA

  The British Internet Publishers' Alliance (BIPA) was formed in December 1998.

  It comprises a number of substantial publishers and commercial broadcasters, several of whom have made early and significant investments in pioneering Internet services. BIPA has grown rapidly in size and influence in the past two years. Membership ranges from major newspaper groups, through magazine publishers, radio and television broadcasters, to leading edge pure Internet businesses. A full list of current members is attached.

  The core purpose of the Alliance is to promote the growth and development of new Internet services in a way which permits a wide diversity of entrants to the market, on a free and fair competitive basis.

  BIPA is primarily concerned about two aspects of the White Paper:

    —  the failure of the proposed powers of OFCOM fully to cover the commercial impact of the BBC's activities on the Internet; and

    —  the extension to the Internet and electronic publishing of regulatory principles previously applied only to broadcasting.


  1.  BIPA believes that OFCOM should have subsumed the powers of the BBC Governors. The proposed new system leaves the BBC to make new service proposals to DCMS, not to OFCOM.

  2.  BIPA remains deeply concerned that the continuing expansion of BBC Internet services, and the search for commercial revenue to fund them, is crowding out competition, and stifling diversity for consumers. DCMS has been slow to introduce its new approvals procedures, during which time the BBC has put in place an investment of over £100 million from Licence Fee income. DCMS appears predisposed to regard the Internet as "the third arm of broadcasting", to the detriment of Internet publishing.

  3.  We believe that commercial regulation by OFCOM would provide a fairer basis for balancing the interests of the BBC and its commercial competitors. DCMS seems focused on the narrow issue of ensuring that Licence Fee money is not used on clearly commercial activities. OFCOM should have broader powers to investigate the necessity and the consequences of BBC activities on the totality of Internet provision, and their effect on competition and choice.

  4.  These problems are increasing, and are clearly running ahead of regulatory scrutiny. Within the past few months we have noted the following activities and announcements:

    —  multi-million expenditure (announced 28 November) on BBC local and regional web sites, in direct competition with the commercially funded web sites and newspapers of the regional press;

    —  £50 million planned expenditure on regional sports rights (also 28 November) available for exploitation on BBC web sites;

    —  the intensive advertising campaign (Autumn 2000) using the publicly-financed BBC brand to promote its commercial retail business on;

    —  proposals for additional BBC Online educational services (15 September). The success of the National Grid for Learning, and the delivery of real choice for schools, students and parents, require a fair and plural market in online educational services. The proposals again threaten to crowd out commercial competition;

    —  statement by Greg Dyke (1 November) that BBC Online should be allowed to sell advertising; and

    —  proposals (14 January) that BBC News Online should take advertising overseas, using Licence-funded assets in direct competition with the international commercial activities of ITN, FT and other high quality English language news media online.

  5.  The mere announcement of such plans can be sufficient to deter competition. Why invest in a business which might be destroyed by an unexpected BBC decision to use its secure income, powerful brand, programme-derived assets and unique cross-promotional abilities to set up a rival proposition? Internet publishers are not transient dot.coms seeking fantasy fortunes. They are serious companies who, at their different levels of scale, are prepared to risk substantial shareholder capital: they need a fair and transparent regulatory regime to protect their interests.

  6.  The justification for public service provision on the Internet must be different to its justification on radio and television. On the Internet there is no shortage of either spectrum or suppliers. Paragraphs 5.2.5 and 5.2.6 of the White Paper dismiss this point by rolling the Internet in with radio and television, as if they are comparable in scale and scope, and observing that public service broadcasting will have "a key role in the digital future".

  7.  This is dishonest: the argument for ensuring fair competition on the Internet is quite different from the debate about the role of public service provision in the broadcasting market. It involves thousands of actual and potential publishers, not just balancing the interests of a smaller number of well-established broadcasting enterprises.

  8.  BIPA does not deny the BBC's role in public service provision on the Internet, but seeks to ensure fair competition, and a proper recognition of the difference between the legitimate extension of broadcasting, and activities which curtail an open environment for new commercial publishers. The quality of the BBC Online offering is not disputed. We would certainly expect quality for £100 million. The question is what price is being paid in terms of inhibiting commercial provision, and limiting the diversity of output available? OFCOM should be the arbiter.


  9.  The White Paper throughout deals with Internet as if primarily an extension of broadcasting. Broadcasting has been a closed system of high costs, where public service funding and provision preceded a commercial competition. The Internet is qualitatively and quantitatively different: it closely resembles publishing, where there has historically been no perceived need for public service intervention. On the Internet anyone can be a publisher.

  10.  BIPA has argued that Internet is being colonised from two directions—broadcasting and publishing. In many respects it is more akin to publishing than broadcasting:

    —  an open system, no spectrum scarcity;

    —  lower cost of entry;

    —  potential for wide diversity of input and output;

    —  many-to-many, not few-to-many;

    —  users proactively seek out what they want; and

    —  predominantly text-based.

  11.  Publishing and broadcasting have different regulatory histories and traditions. In print, democracy is served by freedom of opinion and expression, subject to general laws of defamation, obscenity &c. In broadcasting, spectrum scarcity and higher costs have restricted the activity to a small number of large entities: it became a state-licensed activity with specific regulations covering impartiality, and matters of taste and decency.

  12.  OFCOM is required in the White Paper to apply a set of "high level objectives" to all electronic communication. These may be backed up by statute. OFCOM is effectively being charged with applying an across-the-board approach which threatens to apply to Internet publishing (derived from print) concepts of content control previously applied only to broadcasting. For example, a newspaper editorial published on the Internet would be required to avoid offence, to meet "generally accepted community standards".

  13.  The promise of media-sensitive flexibility is not enough. Nor is the instruction that where possible regulation will be rolled back. There should be no hint of any restriction on existing freedoms of expression. It is wrong in principle for OFCOM to be given powers of regulation in respect of material published online which would not be so regulated offline.

  14.  The rules are also dangerously subjective, while doing nothing to combat serious Internet problems such as the international transmission of pornography—which is already illegal. Recourse to the proposed "citizens' juries" makes them no less so. It is a system which promises to be capricious and unpredictable.

  15.  BIPA proposes that Internet publishing should remain subject only to existing general legislation, and not to a set of subjective principles imposed on all electronic communication. This does not preclude higher tier regulation being applied, for example, to video-streamed entertainment on the Internet, though the potential volume suggests a regime of self-classification rather than rigid and unenforceable rules.


    Chairman: Rob Hersov, CEO, Sportal.
    Associated New Media.
    Capital Radio.
    Commercial Radio Companies Association.
    Guardian Unlimited.
    Independent Digital.
    News International plc.
    The Publishers Association.
    Talk Radio.
    Trinity Mirror New Media.
    Telegraph Group Limited.
    United News and Media.

January 2001.

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