Examination of Witnesses (Questions 208
WEDNESDAY 7 FEBRUARY 2001
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.
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 coveragewhich,
it is essential, should happen at some speed, if the Government
is to achieve anything like its ambition for analogue switch-offthe
bureaucracy does look like something that was designed by Kafka
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
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 entryand one of those things is improving coverageis
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
fieldI have said on the Floor of the House of Commons,
this whole element is being market-led and that is a very good
thingbut there have been suggestionsmaybe indeed
some of my colleagues may be making the suggestion this morningthat
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 wellyou 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 millionis 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
(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 expensiveand,
I think, more expensive than perhaps you think it would bein
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 declineand 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.
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
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.