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
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
£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 beeb.com;
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
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
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
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
10. BIPA has argued that Internet is being
colonised from two directionsbroadcasting and publishing.
In many respects it is more akin to publishing than broadcasting:
an open system, no spectrum scarcity;
potential for wide diversity of input
many-to-many, not few-to-many;
users proactively seek out what they
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
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 pornographywhich is already
illegal. Recourse to the proposed "citizens' juries"
makes them no less so. It is a system which promises to be capricious
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.
Commercial Radio Companies Association.
News International plc.
The Publishers Association.
Trinity Mirror New Media.
Telegraph Group Limited.
United News and Media.