Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 208 - 219)



  Chairman: Mr Prebble, we welcome you here today. We have had a little delay due to the fact that you have brought a very large audience! We are always extremely pleased to see you and your colleagues who are here today and we will go right into the questions.

Mr Fearn

  208. Good morning. You argue that the Government should appoint a champion for analogue switch-off. Could this function be performed by OFCOM?

  (Mr Prebble) I think it needs to happen much more quickly than is envisaged for the setting up of OFCOM. If you look at the process for extending digital coverage—which, it is essential, should happen at some speed, if the Government is to achieve anything like its ambition for analogue switch-off—the bureaucracy does look like something that was designed by Kafka to befuddle.

Derek Wyatt

  209. That is far too generous.
  (Mr Prebble) The responsibility falls between the DTI and the DCMS and the Radio Communications Agency and the ITC and the BBC and ourselves. Our view is that, in order really to have a sense of purpose and momentum, if the Government really is serious about, concerned about the digital divide, the need to make it as brief as possible and shallow as possible means that this whole area needs a much higher priority than it has got. Our view, which is expressed everywhere we can find an opportunity to do so, is that this is much more likely to be effective by appointing a single person who would be responsible for making it happen.

Mr Fearn

  210. What do you mean by the Government's ambition: "if this is to be the Government's ambition"?
  (Mr Prebble) As I had understood it from Chris Smith's statement 18 months ago, it is a public policy intention to arrive at analogue switch-off sometime between 2006 and 2010. We obviously welcome that. I think there are lots of social, economic, political benefits to achieving that. This country did start out with a remarkable lead in digital technology and it would be very good if we could keep it. If that aspiration is to be realised, we have to go about it in a much more determined and systematic way than we are at the moment, across a range of issues, and coverage is one of them.

  211. ntl argued that "Digital take-up would be driven in future more by services than channels." Is this also your view?
  (Mr Prebble) No. I think there is a range of things that we will need to achieve, and obviously all of us who are providing digital services need to broaden the appeal, extend the range of what we are offering. You could argue that we are doing reasonably well: 10 million multi-channel homes, but that means that 15 million homes have not chosen to go down this path. I have not heard many of the 15 million people saying, "I'm waiting for video-on-demand" or "I'm waiting for fast Internet access". They are basically waiting, I think, for us to offer a wider range of choice of basic television services and, most importantly, to make it easier to get. Reducing the barriers to entry—and one of those things is improving coverage—is therefore very important to do.

  212. You also argue that the person responsible for analogue switch-off should report to "a single Secretary of State". What do you mean by that?
  (Mr Prebble) Only really to expand on what we said before, that currently this responsibility does fall between the DTI and the DCMS, Radio Communications Agency, ITC, and, as I say, lots of other bodies. It is not our intention to be critical of anybody involved in it at the moment, but I think just experience in business, politics and everything else tells you that if you give this job to one particular person and say, "This is an important public policy priority, it is your responsibility to deliver it," that seems to us much more likely to be effective.


  213. Following up on two of the questions that Mr Fearn has been putting to you, and on the point that you just made, I think Mr Maxton and I have the right to say that we, on the old National Heritage Committee, let alone the present Committee, were way ahead of the field in advocating a single Government department. I deeply regret that that has still not come about. But on the question of analogue switch-off and take-up of digital, the question I am going to put to you is meant in no way as critical of your own company or of your colleagues who are in the digital field—I have said on the Floor of the House of Commons, this whole element is being market-led and that is a very good thing—but there have been suggestions—maybe indeed some of my colleagues may be making the suggestion this morning—that in order to make it easier for people to move into digital, the Government should provide everybody with a free set or box. It has been estimated that that might cost about £10 per box. Certainly that is an attractive proposition. On the other hand, taking into account that the move to digital is pretty well totally because of individual companies like yourselves, Sky and cable (I cannot think of anybody who has subscribed to digital to get the BBC channels) and taking into account that you yourselves are doing pretty well—you are chalking up your first million and it looks as though the total as a whole fairly early on this year is going to be seven million—is there not something to be said, since it is your market and that of your colleagues, for the digital operators as a whole, in advocating an early digital switch-off, to have a scheme themselves for providing either free or cheap boxes for those who are not yet subscribing to digital TV?
  (Mr Prebble) I think it is very hard to see the financial model that makes that possible. The cheapest possible set or box that you could effectively give away to every household would cost not very much less than the set or box that we provide to people. That is based on an economic model where they are paying us a monthly subscription. If we were to think of giving such a box to people who were not at that point interested in paying for a television or other services, it would be extraordinarily expensive. The other thing is that at the moment if anybody declared that this was an intention, the bottom would completely fall out of the pay television market because everybody would say, "Why would I pay to subscribe to pay television because the Government is about to give me a free set or box?" We believe that if we could solve the coverage issue and the full range of people who are willing to pay for pay television services were allowed to do so over the next two or three years, what you would actually find is that the rump of people for whom you had to provide a free service would, in our view, be much smaller than is currently envisaged. We expect that the quality of the service will improve, the cost of the service should go down, so that actually the problem the nation will need to address, in order to get to that last stage before analogue switch-off, could be much smaller than we think it is. Today it would be extraordinarily expensive—and, I think, more expensive than perhaps you think it would be—in order to provide this box to everybody.

  214. One of the things that we have been looking at is either free local calls from BT or universal connection of BT (which is one of the conditions that some United States' cities lay down for their telephone companies before giving them a licence). It is not exactly the same. On the other hand, since you yourself are saying that as we move on towards the analogue switch-off date, whenever it is, the proportion of people who have not gone digital will decline—and obviously there will be all kinds of different projections but it is not going to be too long before half the households in Britain are connected to digital, is it?
  (Mr Prebble) No.

  215. —then, while I understand that the cost projections of the industry of providing free boxes at this moment might be discouraging, nearer the analogue switch-off date they might be a good deal less of a deterrent.
  (Mr Prebble) I think that is exactly our view. If we are thinking of five or six or seven years between now and analogue switch-off, in my view, for three or four of those, the market will persuade as many people who are potentially willing to pay for the service to do so as possible, and, by the time you get to, perhaps, the last couple of years before switch-off, there is a reasonable chance that the cost of a basic digital device will become a bit more manageable and we will have a much clearer idea of the size of the problem.

Derek Wyatt

  216. Good morning. I want to continue the debate, as it were. Is there not a sort of conflict, in the sense that the Government wishes to get us on digital; you want to get us on your digital. And they may not be the same thing. For instance, if you are to get the digital BBC channels, which are free, then all you need is to provide a box for that service. And if that box could give you Internet access, then we could online the community very quickly. That particular box, we have been told, if there was a substantial order, would be £10 to make.
  (Mr Prebble) OK. We do not believe that or anything like £10.

  217. If it is important that we are the smartest nation and the smartest economy and we move as fast as possible, switch-off must be tomorrow. It cannot be 2010. That would give our rivals all over the world an economic advantage. So it is mad to say that there must be 90 per cent or 98 per cent coverage before you can switch off. Is that your view?
  (Mr Prebble) No. I do not think it is going to be acceptable to switch off analogue before the overwhelming majority of people can have access to digital. What I do believe is that it is within our power, should we decide to exercise it, to get to a situation where digital coverage was at 99.5 per cent much more quickly than 2006 or 2010. If we really do believe that the digital divide is a serious political, social, economic problem, and we address resources to it in a way that is commensurate with the size of that problem, we could solve it much more quickly.

  218. Do you mean you could as a company or do you mean we could as a country?
  (Mr Prebble) I meant we could as a country.

  219. Given that Warwick University have said today that any student coming in 2002 will have to have a lap-top (which has caused some consternation)—they say, "Well, to get over the digital divide, they may as well provide the facility, or, if they cannot afford it, raise the funds to buy one of these"—do you not think that is where the Government currently should be? It should just say, "Digital divide? Let's get it out, let's do it." 2006 is too far away almost.
  (Mr Prebble) I do believe that the Government ought to be doing everything available to it to make this divide as brief and as shallow as possible. One of the things that we believe we bring to the party is Internet access via the television. It is a very attractive experience. It takes away the biggest barrier to entry, which is the cost of a PC. ONdigital offers Internet access via the television for a £5-a-month subscription. It is not the full use of a PC, but it is access to the Internet, and for many people, as I say, it takes away a very important barrier. If we could seriously solve the coverage problem, this has the potential to make a very serious contribution towards universal Internet access much faster than is currently envisaged.

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