Examination of Witnesses (Questions 260
- 277)
WEDNESDAY 7 FEBRUARY 2001
MR TIM
SCHOONMAKER, MR
TREVOR DANN,
MR RALPH
BERNARD, MR
ROGER LEWIS
AND MR
QUENTIN HOWARD
260. How many of them would be basically pop
music in some form or another?
(Mr Howard) On Digital One half my channels are music
stations, half are speech stations. Typically, across digital
radio, we are seeing about 25 or 30 per cent of them being speech
orientated.
261. I must say I am delighted to hear that.
It always seems to me that on analogue radio when you listen,
you can switch through 10 so-called different radio stations and
they are all playing pop music. That is not choice, is it?
(Mr Howard) We have a lot of evidence now from digital
radio listeners who are buying a digital radio and being surprised
and delighted by the content, people who say to us, "We are
now listening to the radio for the first time again for a long
time because of the content and the choice. Thank you very much."
262. Could I ask a question about getting this
rolled out, if you like. I am sure I am not unique but my major
area of listening to radio is in my car. You have to persuade
the car manufacturers to put digital radios into cars—right
through the range, not just at the top.
(Mr Howard) I could not agree more. But it is not
just car listeners. Dealing with car manufacturers, which is increasingly
more difficult to do from this country, means that you are dealing
with production plans which are five and six years out. It is
quite difficult to get them to make any changes to their cars.
There have been announcements from people like Ford that they
will put car radios typically from 2004. We know that a number
of car manufacturers are offering digital radio as an upgrade
now—work that we have done in persuading them to do so.
But, at the end of the day, you are selling two million new cars
a year in the United Kingdom, so you will upgrade two million
out of the 25 million cars per year. You have to do that in parallel.
It is absolutely important that you have to do it in parallel
with in-home sets—and remember that in the home, typically,
there are five or six radio sets, which ultimately all need to
be upgraded to digital.
263. But people do buy new car radios.
(Mr Howard) Yes, they do.
264. So you are going for, if you like, the
replacement market as well.
(Mr Howard) The replacement market is about one million
units a year as well. It is all about price. When you get the
price of a digital radio—whether it is a car radio or a
cassette player or a hi-fi—to a price that is approaching
that of an existing model, then there will be no resistance.
265. As I understand it—and I am emphasising
this a little just to get it right—the car radio is, in
a sense, where one of the major benefits of digital radio comes
in, in that, as you move across an area, the signal remains constant
and you are not having that breakdown and break-up of whatever
the signal is. Whereas, with an in-home set, once you have set
your radio, if it is a decent radio, really what digital brings
in terms of quality is not that great.
(Mr Howard) No, actually, I think you would be surprised
by the answers we are getting. The BBC have got about 100 digital
radios out with a test audience at the moment. They get feedback
from them regularly and one of the top reasons why people say
they like their digital radio after they have got it—not
necessarily the reason they buy it, but one of the things they
appreciate most—is the sound quality. That surprised us
all, because we thought sound quality was one of those givens,
but actually that is what people appreciate—in home radios
I am talking about. So sound quality is something which people
do appreciate once they have heard it.
266. May I switch to another area—two,
if I am allowed. One is new recording technologies. MP3 in particular,
allows people now to record enormous amounts of music on to their
own personal machines, either directly from the CDs they have
bought or of course down through the Internet. Is this going to
damage your market in the long-term? There is now one, I gather—and
I am not going to give its name because that would be advertising
it—where on one machine, about that size, you can
record the equivalent of 100 CDs, and the quality apparently is
CD quality. So why would you listen to radio stations?
(Mr Howard) I think that is a question generally about
radio, which is about how strong radio is and how strong the relationship
with the listeners is. It does not just apply to digital; it applies
in stations like Classic FM and the Emap stations—any radio
station which people listen to.
(Mr Lewis) Yes, certainly that competition has always
been there, with ourselves as radio broadcasters and the record
industry. One can go out and programme one's own music by playing
one's record collection. I think the skill of radio has been its
ability to programme a range of music to certain tastes at certain
times of the day.
267. That is exactly what you now can do with
your own MP3 recorder. You can record onto it whatever music you
want and listen to it in whatever order you want to listen to
it.
(Mr Howard) But there is a difference between because
you can and whether you will and I would challenge whether people
really will.
Chairman: Mr Wyatt.
Derek Wyatt: It seems to me that in the
White Paper there really is not a heavy discussion on what public
service radio is. It seems to me that Classic FM is a wonderful
public service station.
Chairman: You are joking.
Derek Wyatt: I am not. I am sorry. You
should not be so elitist, Chairman!
Mrs Golding: I agree with you, Derek.
Derek Wyatt: They do concerts, children's
stuff, the teaching. Classic FM is fantastic.
Mrs Golding: Hear, hear.
Derek Wyatt
268. I will be president of their fan club after
this! The question really is: across the range you do fulfil different
public service remits but you do not get any money for it. Why
has there not been a real debate about public service radio in
this White Paper?
(Mr Bernard) I think public service radio is in the
eye of the beholder. You have just described what we would say
is public service radio and yet we do not have any obligation,
Classic FM or indeed any other commercial radio station, to provide
a "public service". We do produce programming which
is in very much the public interest and we think that it is inevitable
that a lot of the broadcasting provisions that we give will stray
into an area which is very clearly public service. I think this
underlines the difference between those who seek to regulate radio
to ensure that it does fulfil certain public service obligations
and those who say, "Well, actually the market will ensure
that radio will provide those public service obligations, because
that is what makes good radio listening anyway," and the
reason that Classic FM does what it does is entirely because Classic
FM thinks it is doing the best job by doing it.
269. Sure. But if I was the BBC I would just
watch you pour a substantial amount of money somewhere in digital
and think, "That's good. That one has not worked, but I quite
like that," and launch an alternative site against you. And
that is what they are going to do. That does not seem fair to
me, because that is not market failure—which is what we
have argued about public service in television.
(Mr Dann) I think, having worked in the BBC for 25
years, until a few months ago, that is precisely what they do.
You can see it most clearly in television, even more than in radio,
where the BBC is planning to launch services in areas where there
is already substantial competition and I think they are doing
it with insufficient budgets to deliver the kind of quality that
they will pretend that they can. I think in radio they will provide
some services that commercial radio has not yet provided, but
not all of them. You can see that the one they are calling Radio
X, their urban service, will, I would guess, sound exactly like
Kiss 100. I think that is precisely what they do. What they are
doing now is they are watching the market and seeing where they
can attack us.
270. Under the White Paper at the moment the
BBC remains in aspic: it is more or less as it is and we will
just put it in OFCOM. There is no real debate about what radio
should be because of this ring-fencing of the BBC currently, which
I do not think is reasonable or fair—and I suspect you would
share that view. The point is radio is booming. I am just beginning
to wonder, in fact, whether we need the BBC to run the public
service radio. I just wonder whether you have a view on that.
(Mr Schoonmaker) Progressive regulation is great for
us and evolution is great for us. It is about ownership, it is
about OFCOM not allowing radio to be lost in the sauce. It is
going to be a pretty big organisation and our view, I think collectively
across the industry, is that it is time to accept that longer
term separation of regulation for the biggest broadcaster in the
country from the rest of us just does not make sense.
Derek Wyatt: John has mentioned the Internet
and radio Internet music. One can clearly see what he does most
days—but then he is retiring!
Mr Maxton: I am retiring.
Chairman: You are in a very sharp mood
this morning.
Derek Wyatt
271. I am sorry, Chairman. However, as ADSL
rolls out, if it rolls out—goodness knows, after the last
week, with everybody saying they are not going to roll it out,
having been told they were going to roll it last week—is
that also a concern of yours or is that just another platform?
(Mr Howard) The Internet is another platform and there
are others as well. But, the fact is, you cannot take your Internet
into the shower; whereas you can take the radio into the shower.
I think people confuse delivering a service into the home via
cable, via ADSL with the ability to use the radio where you do,
which is anywhere in the home (including on the lawnmower, in
the shower) in the car and wherever you happen to be. So I think
that universal access of radio is its great strength, which is
why we are doing digital radio.
(Mr Schoonmaker) However, of course we recognise that
all these areas of new technology are going to lead to competition
for us, just like everyone else, and that is a good reason why
we are so keen on progressive regulation and changes to it.
272. We heard Stuart Prebble say that the analogue
and digital signals actually hurt one another in the environment
at home. Is that the same for radio as well?
(Mr Howard) No. I guess, in that respect, we are fortunate
in that we have a different set of spectrum for radio, for digital
radio, although that is almost all used up already. I think the
issue for digital radio as regards spectrum is that the industry,
in order to allow all analogue radio to migrate to digital, needs
the release of spectrum which has been allocated to digital radio
for 2007 brought forward to 2003, otherwise there is great danger
that this baby will not be able to grow up properly.
273. Finally, Stuart said to our surprise—or
at least to mine—that they did not have 70 per cent penetration,
they had perhaps 50 or 55 per cent penetration. I had a digital
radio. It worked wonderfully well here in the House but when I
took it home—I live in the countryside in my constituency—it
did not work at all. What is the coverage of digital radio?
(Mr Howard) For Digital One's network we are just
at 79 per cent. The BBC's national network is still in the 60
per cent mark. They have got some catching up to do. We are building
two transmitters a month. That is the investment we are putting
into digital radio. We hope to reach 85 per cent of the United
Kingdom population by the end of 2002. Beyond that, it is partly
about spectrum—more spectrum is needed—and partly
about the resources to be able to make this work. Even in analogue
networks it is not commercially viable to do 100 per cent. There
are diminishing returns as we build additional transmitters. But
that is all part and parcel of the debate about switch-off. ONdigital
talked about analogue switch-off for television and we need the
same kind of régime—or a switch-off tsar, I think,
is what he was talking about—for digital radio as well.
It is the same issues, but, without that switch-off and an ordered
progression from analogue to digital, it creates great uncertainty
in the market. We do not know when we should build new transmitters,
the manufacturers do not know whether they should commit to making
sets.
Mr Keen
274. I was interested in Trevor Dann's comment.
You seem to fear poor BBC production rather than high quality.
(Mr Dann) I do not fear it, but I fear, as a consumer,
that that is too often now what we are going to get. Because I
do not think they are properly funded, sufficiently well funded,
to do the range of new services that they are advertising they
are going to do.
275. They are over-stretching themselves.
(Mr Dann) If you look in television, where they are
saying £3,000 an hour for some of the commissions that they
are going to put out for BBC3, BBC4, I think they will be unable
to live up to the high standards that they have traditionally
set.
276. Does that not contradict Mr Schoonmaker's
submission? You are saying that you fear the BBC, you feel it
will damage . . . I mean, I want your sector to flourish as well
as I want the BBC to flourish. Are you saying that you are worried
about them?
(Mr Schoonmaker) I think both are true in different
circumstances. Maybe I could remake my point, at the risk of appearing
to be single-minded. Regulation of broadcasting is about trying
to get the best service for consumers within the resources and
frequencies that are available. At the moment we have that happening
in two places. We have commercial people, and we are all working
with fairly tight regulations, and we have the biggest broadcaster
in the country who is regulating itself. I do not think that that
can make sense long-term. So both things are the case. I think
in some cases it is probably not the best use of a poll tax; in
some cases it is possible to destroy a commercial market just
by going into a fairly small one that commercial people have found
a place in. They have pushed the boundaries back and they have
found a new way of doing things, and then someone with a huge
sum of money, which is paid by all of us, just comes in and tips
it up. So both problems. And I think it is a result of separate
regulation.
277. If there was a common regulation of BBC
and commercial, it would be like lots of local authorities with
planning, where they do not let two fish and chip shops open in
the same parade of shops. How would you like to see the BBC regulated,
then, under a common regulation? How would you like to see them
reined in?
(Mr Schoonmaker) I think that in the case of radio
we live with format regulation, and that protects the listener,
that provides diversity of choice in listening. There is no earthly
reason that the BBC should not have the same kind of content regulation.
(Mr Bernard) At the risk of using a cliché,
we want a level playing field. The BBC has the opportunity within
itself to govern its programmes and change formats at will—and
has done, both with the most popular service, Radio 1, and now
with the increasingly popular service of Radio 2. It has done
so at the expense of a sector of the audience who has been completely
abandoned. And I might say—just going back to the point
that we were making earlier about digital radio—that my
dad who is 81, who liked listening to music radio, now is able
to listen to the sort of music radio that he appreciates because
he has a digital radio. I bought it for him for Christmas. That
is not something that the BBC provided; that was provided by the
commercial radio sector. The regulation of the BBC, or at least
in terms of content, is in stark contrast to that of the commercial
sector, which, in the so-called "light touch régime"
with which we are living at the moment is very tightly controlled
within formats. It cannot move from one format to another, and
even within the format there are very tight definitions, even
down to single records, or single artists that you can play and
you cannot play. That seems to me to be wholly inappropriate in
today's age.
Chairman: Thank you very much. That is
it. We are having a teach-in this morning and I think it is very
valuable. It is an area not generally covered by discussions on
the White Paper or anything else. Thank you very much, gentlemen.
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