Memorandum submitted by the Radio Authority
INTRODUCTION
1. The Radio Authority was set up by the
Broadcasting Act 1990 to license and regulate independent radio.
There are currently in issue 250 independent local radio (ILR)
licences, three independent national radio (INR) licences, one
national digital multiplex licence and 16 local digital multiplex
licences carrying between them 160 digital sound programmes services.
The Authority has around 90 long-term RSL (LRSL) licences in issue
to schools, colleges, hospitals and other institutions with a
transient population, and awards some 400 short-term restricted
service licences (RSLs) each year. The Authority's engineering
staff undertakes frequency planning, commissioning and technical
regulation for these services. Taken together, the Authority is
responsible for some 40,000 hours of programming and advertising
output each week, which is co-regulated with the industry according
to a series of statutory Codes.
SUMMARY
2. The development of new radio services
will be a continuing task for regulation in the coming years.
It is most effectively carried out through a licensing process,
which relates closely to content and technical regulation as well
as providing funding for the regulator without demands on the
public purse. It will be necessary to include within OFCOM's structure
a separate capacity to undertake these licensing tasks which would
be overseen by an independent committee reflecting the public
interest, rather than being left to a single professional regulator.
Plurality of ownership is a proper and necessary
objective for any public policy applying to broadcasting and will
not be delivered by the market alone, where there remain only
a limited number of outlets due to spectrum scarcity, which will
be the case for radio into the foreseeable future. The Authority
believes that plurality rules are required locally, but the accumulation
of ownership across the UK as a whole shall be subject only to
competition rules.
The Authority recommends a series of transparent
formulae to ensure local plurality, based on the principle that
in each local area where there are sufficient licences, there
shall be three separate commercial owners of local licences plus
for the BBC. We propose similar formulae for cross-ownership between
radio and newspapers and radio and television. We believe that
rules concerning local plurality should be based upon a universe
of local services, rather than including national radio stations
in any calculation.
The Radio Authority welcomes the proposals in
the White Paper to regulate where necessary the selling on of
recently awarded local licences, and the proposals to amend disqualifications
over the ownership of digital local radio licences by religious
bodies. The Authority does not believe that there should be any
further relaxation of the ban on ownership of national radio services
by single religious bodies, but multi-faith ownership—fully
reflecting the religious nature of UK society—would be permitted.
Access Radio, a new "third tier" of
non profit stations, is to be the subject of a seminar organised
by the Radio Authority on 12 February, following which the Authority
will express further views on this proposal.
The powers in respect of the BBC which the White
Paper envisages remaining with the Secretary of State for the
time being should, at the time of charter renewal, pass to OFCOM.
OFCOM should plan all use of radio broadcasting spectrum by both
the public and private sector and be given the task of evaluating
the public service remit of BBC radio.
The internal structure of OFCOM should be so
organised as to ensure that a separate division applies radio
experience and radio expertise to the regulation of licensing,
programme formats and local plurality rules for commercial radio,
the administration and licensing of the Access Radio "tier"
and such matters relating to BBC radio services as OFCOM is required
to undertake. OFCOM will therefore need to have vertical sectoral
divisions, alongside horizontal operating divisions.
THE DEVELOPMENT
OF INDEPENDENT
RADIO
3. Unusually among established media, existing
terrestrial radio is characterised by a continuing demand for
the licensing of new services, as well as the obligations under
present legislation to re-advertise and re-license existing services.
There remains a very high level of demand for the remaining existing
analogue opportunities, which will require the Radio Regulator
to undertake a good many years more of new licensing on the existing
frequency allocation, and those which may be added to it. The
FM spectrum review, set up by Government to consider whether more
intense use could be made of the FM bands currently deployed for
radio broadcasting, could identify further analogue frequencies
which may help to meet the unsatisfied demand for access by existing
and new operators, and therefore extend UK radio licensing requirements
to be carried out by a future regulator. For digital audio broadcasting
or digital radio as it is now termed in consumer marketing, where
multiplex licensing is the crucial element in ensuring access,
the existing frequency allocation will occupy a licensing body
for many years. Complete coverage of the UK, using additional
space on Band III, will also extend this process. During the later
years of the decade, the availability of L-band will create new
licensing duties, and in particular will offer access to digital
for smaller areas as well as opening up digital radio to the non-commercial
private sector. At the same time it is likely that both the demand
for and opportunity to provide further small-scale services on
analogue FM will go forward for many years. Thus whatever changes
are made to regulatory structures to deal with technical convergence,
the task of radio licensing as we know it today will need to continue
for many years, and provision needs to be made in any new structure
for this function which is best achieved through a sectoral regulatory
division of OFCOM.
4. The Radio Authority is in no doubt that
economic regulation is most effectively carried out through a
licensing process. This is especially so since licensing inter-relates
closely with effective content and technical regulation. Sanctions—whether
relating to programme content, technical compliance or to enforce
ownership provisions—are most meaningful when applied to
the continued holding of licences. A licensing regime allows for
swift complaints handling which, unlike the judicial process,
is readily available to all listeners. The licensing system also
builds a constructive relationship between the regulator and the
licensee, allowing regulation to be at an appropriate level and
sufficiently flexible to work in both the public and commercial
interests, rather than simply on a non-discretionary administrative
basis. The licensing mechanism also provides funding for the regulator,
without demands on the public purse. Commercial radio is in fact
a net contributor to the Consolidated Fund, of monies, coming
from cash payments made by Independent National Radio stations
together with station fines totalling some £10.5 million
in 2000.
5. The White Paper acknowledges the continuing
task for OFCOM in licensing new analogue radio services, rolling
out digital multiplexes and readvertising existing analogue licences
(3.6.3). Given existing spectrum resource, there is likely to
be a significant degree of new analogue licensing until at least
around 2006. After that, there is the prospect of additional small-scale
licences in less densely populated areas. For digital radio, assuming
access to L-Band and some additional Band III spectrum after the
middle of the decade, new digital multiplex licences might continue
to be offered until the latter part of the decade, and smaller-scale
digital multiplexes for some years thereafter. Restricted Service
Licences will continue at or close to their current level. (We
estimate that last year RSL's involved some 20,000 people in doing
radio). In addition, subject to the outcome of the continuing
review of the use of the FM spectrum, there may be an additional
tranche of new analogue licensing to be undertaken. It will therefore
be necessary to include within OFCOM's structure a separate capacity
to undertake these licensing tasks.
6. It is the Authority's view that the final
decision on such licensing should not be left to a single professional
regulator. Radio licensing is the last major licensing task where
awards will be made on the basis of specific statutory criteria.
The licensing of radio so far has been carried out with decisions
being made by a Board of independent part-time Members, reflecting
the public interest. That collegiate, lay approach, time-honoured
in broadcasting matters, means that decisions are made by those
whose only remit is to serve the public interest and who—whatever
their necessary expertise—do not have a professional involvement
in the day to day regulation of the industry. This is a necessary
protection when allocating a valuable public resource for commercial
exploitation. There is fierce competition for licences and this
can generate a remarkable level of passion. An individual making
such decisions on his or her own would be placed in an unacceptably
exposed position. The public interest is best served by establishing
a Radio Committee, as a sub-committee of OFCOM, and chaired by
one of OFCOM's independent part-time Members which would guarantee
the necessary level of independence in licensing.
THE REGULATION
OF INDEPENDENT
RADIO
The nature of radio
7. Throughout the 20th Century, radio has
remained a distinctive medium despite the growth of television,
cinema, video, cable and satellite distributed audio services,
telephone services and the ubiquitous availability of recorded
music. The Radio Authority believes that it will remain similarly
distinct for the coming decade at least, and thus throughout the
currency of any new legislation. Indications so far are that new
technologies will complement and enhance the role of radio, rather
than change mass consumer behaviour, during the next 10 years.
It is also clear that analogue FM in particular will remain of
great importance for small scale radio services into the foreseeable
future. The Authority judges that by 2010, at least 80 per cent
of radio listening will continue to be to universally accessible,
free-to-air, terrestrially delivered services. The exciting opportunities
offered by the Internet and mobile telephony platforms (such as
3G) already show signs of re-invigorating terrestrial radio rather
than replacing it over this time scale.
8. The Radio Authority believes that over
the next 10 years radio will continue to be distinguished by its
current characteristics:
— Radio is generally and universally
available and is not dependent on wired delivery (although it
may he supplied by wired delivery) and can use any available platform.
— Radio is simultaneously available
to all potential listeners, almost always without a charge, and
thus "free-to-air".
— Radio services can be all received
in mobile and portable mode.
— Radio is primarily audio and not
dependent on pictures or other features which, if present, are
supplementary.
— Radio tends not to be made up of
a service of separate programmes, but its output is packaged to
offer added value and a distinct character, not merely to offer
audio streams or clips.
— Radio is linear and mostly live.
Unlike television, recorded radio, for time-shift listening, is
not generally popular and timed audio recorders are rarely sold
or used.
— Radio is personal not collective,
and its close relationship with its audience is not dependent
upon interactivity.
— Radio unlike television is both a
primary and a secondary medium, and as a secondary medium it is
easy to combine with other activities.
— Radio is inexpensive, whether to
the programmer, the broadcaster or to the listener.
— Radio creates a unique intimacy and
engenders a passion among its listeners, who can interact with
radio through their imagination.
9. Existing evidence suggests that terrestrially
broadcast radio will remain the dominant means of delivery through
the next decade. While new technologies are readily available,
there is no indication that they will automatically replace the
existing radio technology. Unlike the Internet and other services
dependent mainly on fixed links, terrestrial radio broadcasting
offers mobility and portability. Unlike mobile telephony services,
terrestrial radio is free for consumers, and relatively cheap
for broadcasters to reach the mass audiences to which their content
is suited. Research conducted by Arbitron in the United States
and by its sister company Continental Research in the UK, clearly
shows that radio listening remains at least constant in Internet-capable
households, in contrast to the decline of television viewing.
Indeed, there is evidence that the growth of the Internet stimulates
radio listening. There is a natural symbiosis between radio and
the Internet, the former supplying wide bandwidth, the latter
offering immediate impact and sign-posting. Since radio is a secondary
medium, it is patronised at the same time as surfing the web.
There has been a significant growth of Internet sites linked to
existing radio services and of dot.com advertising on contemporary
radio.
10. Despite the popularity of radio sites
on the Internet, the fundamental economics of free-to-air radio
(one-to-many) will remain hugely more favourable than wired services
(one-to-one) for the foreseeable future. We recognise that the
impact of Moore's law on technology will continue to increase
processing power. Hand in hand with this, bandwidth for fixed
access systems will become more plentiful and much cheaper. However,
radio spectrum is inherently finite, particularly where mobility
and portability are a requirement. Significantly, there is no
evidence that Moore's law acts also on consumer behaviour. The
conservatism which characterises radio listening indicates that
consumer behaviour will change much more slowly than changes in
available technology.
11. That innate conservatism of radio audiences
is illustrated by the slow take-up of VHF/FM in the 1970s and
1980s, and by the intense opposition in 1992-93 to the proposed
removal of BBC Radio 4 from long wave. We estimate that there
are at least 100 million analogue radio sets currently in use
in the United Kingdom. Existing analogue radio is also available
as part of a significant number of other consumer goods such as
cars, clocks and computers. For that reason, there remains uncertainty
about the speed of take-up of digital radio. The specific purchase
of sets to receive Internet radio or mobile-telephony-delivered
audio—as distinct from their incidental acquisition—is
unlikely to be a major element for 10 to 15 years at least. The
wide patronage of existing analogue radio services sees nine out
of 10 people in the UK listening to radio every week for an average
of some three hours a day, representing over one billion listening
hours each week. Such consumer behaviour underpins the high level
of demand which still exists for new analogue licences advertised
by the Radio Authority and the industry demand for more analogue
as well as more digital spectrum. These factors taken together
lead the Authority to its 80/20 prediction, that by 2010 80 per
cent of all radio listening will still be to terrestrial services,
whether delivered by analogue or digital transmissions. That may
even prove to be an under-estimate.
12. If technical convergence is to be defined
as the ability of all platforms and all networks to carry all
services, then the convergence of radio shows very different characteristics
from that of television and telecommunications. Radio is essentially
cheap and easy to receive, free-to-air, using low cost portable
equipment. Since it is a secondary medium, it operates alongside
the Internet rather than in opposition to it. Consumer behaviour
and existing patronage suggest that consumer take-up of new radio
technologies will be slow. While new regulation needs to stimulate
and facilitate change, it must also protect those millions of
listeners who want to continue to listen as they do now. Unlike
the situation in respect of television and telecommunications,
there is little industry drive towards radical convergence. Commercial
radio is the last of the traditional broadcast media still to
be expanding significantly through new licensing, analogue as
well as digital. The Authority takes the view that radio convergence
of a type that will fundamentally change listener behaviour will
take place only in the decade after 2010, and only after significant
changes in market behaviour for other media and further development
of audio technology. We think it likely that a researcher surveying
the radio industry at the end of the new decade may well observe
how similar it is to that which applied at the turn of the old
century rather than how different. They may remark upon the way
in which new technologies have added to the scope of radio, but
they are likely to conclude that the bulk of public use of radio
has changed little since the end of the 20th Century.
13. Given the continuing scarcity of radio
spectrum for those types of services which are likely to continue
to attract the great majority of radio listening, the Radio Authority
believes that the over-riding aims of radio regulation should
be:
— to manage the balance between the
public interest and the commercial interest in the use of the
scarce radio spectrum allocated to it by Government;
— to reduce the levels of inappropriate
sectoral regulation as changes in the social, technological and
political environment make such reduction appropriate, and to
increase levels of co-regulation;
— to facilitate the introduction and
development of digital terrestrial radio broadcasting; and
— to apply radio solutions to radio
problems where the distinctive nature of the medium so requires.
RADIO OWNERSHIP
RULES
Concentration of radio ownership
14. Plurality of ownership is a proper and
necessary objective for any public policy applying to broadcasting.
The Radio Authority believes that it is undesirable for ownership
to become so concentrated that even where there is a multiplicity
of radio stations these can be in the hands of only one or two
operators. While recognising that the presence of BBC radio provides
some natural plurality (and increased diversity), the essentially
non-commercial nature of the BBC means that plurality obligations
still remain for commercial radio itself. The Radio Authority
is not convinced by the argument that existing radio operators
need further ownership liberalisation in order to avoid takeover,
since large groups are just as attractive as small ones and there
are existing protections against non-EEA control of UK radio licences.
Nor is the Authority persuaded that media groups need ownership
liberalisation in their home market in order to compete overseas.
There is every indication that a successful but limited domestic
company has as a consequence more incentive to expand into other
countries. Nevertheless, we feel that the existing ownership rules
for radio are becoming anachronistic because they contrast unfavourably
with the rules which apply to other established media.
15. The Authority therefore recommended
in June 2000 that the existing points system should he removed
and that accumulation of ownership of commercial radio, both analogue
and digital, across the UK shall be subject to normal competition
rules, with plurality rules applying only in individual localities.
This liberalisation will assist existing operators with their
longer-term investment in digital radio. The White Paper envisages
that this sectoral competition regulation will be done by OFCOM
itself under concurrent powers.
16. The Authority has also found that the
system of public interest tests established by the Broadcasting
Act 1996 both for in-area concentration of radio ownership and
for cross-media ownership has proved cumbersome and opaque. We
wish the new regime to be as clear and specific as possible, and
to provide maximum certainty for both the industry and the regulator.
We recommended therefore that the public interest test regime
should he replaced by straightforward and transparent new rules
based on clear formulae (one of a number of examples in our submission
of retaining regulations). We further recommended that any such
formulae should be capable of amendment by secondary legislation,
so that in the uncertain future there will be sufficient flexibility
to amend such rules without recourse to primary legislation.
17. The Radio Authority does not believe,
however, that the principle of plurality should be abandoned.
On the contrary, it is important that it is protected and made
entirely clear. Plurality of voice for broadcasting is the cultural
equivalent of competition policy and the Authority believes that
it is culturally and socially unacceptable, putting aside competition
issues, for any media company unreasonably to dominate output
on a single medium. We therefore recommended that the new legislation
should establish transparent formulae with the broad aim that
there shall be not fewer than three separate owners of commercial
local radio services in any locality. There would be a "grandfather"
clause to allow existing owners of stations to retain the current
holdings where these are allowed by the legislation now in force.
We propose therefore the following formulae for analogue radio,
which represent a further liberalisation of the existing ownership
rules:
— In any area where twelve or more
ILR licences exist, no more than five may be owned by any one
company;
— In any area where nine to 11 ILR
licences exist, no more than four may be owned by any one company;
— In any area where six to eight ILR
licences exist, no more than three may be owned by any one company;
— In any area where three to five ILR
licences exist, no more than two may be owned by any one company;
— In any area where there are only
two licences no restriction shall apply; and
— These rules shall be applied without
regard to waveband.
18. For digital radio, we propose the following
formulae:
— Given the key position occupied by
the multiplex operator as "gatekeeper", no company which
owns one multiplex in a local area may own more than 20 per cent
of any other local multiplex in that locality;
— On a national (ie UK-wide) multiplex,
no programme provider may hold a licence to provide more than
three services; and
— On local multiplexes, no programme
provider may hold a licence to provide more than one third of
the total number of commercial digital programme services available
on local multiplexes in a given locality.
We anticipate that, once digital radio has moved
beyond its development stage, rules governing the ownership of
multiplexes might well become matters for competition rules rather
than formulae of this nature.
19. In every instance, the formulae assume
an effective definition of "control". In order to establish
plurality rules from the perspective of the individual listener,
and to avoid heavy regulation, a mechanism based on co-regulation
will require operators to ensure that there is no point within
their licensed areas where they are in breach of these formulae.
This also gets away from the existing complicated rules regarding
overlaps. The OFCOM would then deal with any breach by requiring
companies to sell down with immediate effect.
Cross-media ownership
20. We propose the following formulae to
govern cross-media ownership between radio and newspapers and
radio and commercial television (we use the specific term "national"
for UK-wide radio and television licences):
— No newspaper with more than 50 per
cent of a local market in terms of circulation should be able
to own an analogue radio station in that market unless there exist
at least two other analogue ILR radio stations—not so owned—except
in areas with only two ILR stations where one may be owned by
the newspaper;
— A newspaper should not be able to
own a local digital multiplex in that area unless there is at
least one other multiplex not so owned;
— No UK-wide newspaper should be able
to own an analogue INR station or a national digital multiplex;
— No company should be able to own
both a national commercial television licence and an analogue
INR licence;
— No company should be able to hold
a regional commercial television licence and an analogue ILR licence
for the same area unless there exist at least two other analogue
ILR stations not so owned, nor own a local digital multiplex in
that area; and
— Subject to those rules, there should
be no limitation on cross-ownership between radio and newspapers,
or radio and independent television, except those which apply
to the concentration of radio licence or multiplex ownership itself,
as are set out above.
21. These rules would apply to all ILR services,
whether local or so called "regional". The legislation
should be so framed to enable the amalgamation of analogue and
digital rules, by Order, once digital radio services have attracted
significant audience numbers.
Basis for ownership calculation
22. The Radio Authority proposed to Government
in its previous submission that the existing points systems should
be replaced by a series of simple numerical formulae, applying
at any point within the licensed area of a local service. This
approach assumed a universe of stations calculated using only
Independent Local Radio licences, and was based upon a principle
that where sufficient such licences exist there should be no fewer
than three separate owners in any area. Working on this basis,
and taking into account the services provided by Independent National
Radio operators and the range of non-commercial services from
the BBC, the Authority was satisfied that the necessary plurality
of ownership would be protected and made clear. We note that the
White Paper establishes "plurality of public expression"
as central to OFCOM's regulatory objectives. (8.5.1)
23. It has been argued that the universe
forming the basis for calculating the number of licences which
may be held should include Independent National Radio services
and all BBC services, the latter counted according to the number
of different radio stations provided by the Corporation in a locality.
The inclusion of Independent National Radio, whereby three services
are provided in most parts of the United Kingdom would bring in
competition issues which are not part of the sector-specific local
plurality issues (leaving aside issues raised by Atlantic 252
etc). For that reason it is not appropriate to include INR services.
The position of the BBC is rather different. However, the Corporation's
five national services are not relevant in adding to potential
for the expression of local views or the provision of specifically
local information. The Authority therefore does not think it appropriate
to include BBC national services in any calculation. So far as
BBC local stations are concerned, although expression of views
and provision of information is obviously relevant, the Authority
would not wish to depart from its principle that there should
be three separate owners of local radio stations plus the BBC
in any locality. BBC local radio is therefore taken account of
in the existing calculation. The Authority does not believe that
the existence of a BBC local radio station in any locality means
that plurality would be adequately served if there were merely
two commercial owners of other radio stations.
The selling on of radio licences
24. The Authority warmly welcomes the signal
given in the White Paper that a mechanism should be put in place
to regulate where necessary the selling on of local radio licences
(5.11.1). It shares Government's concern that a uniform move "towards
a middle ground of national taste" would be against the public
interest. The Authority will be proposing to Government that provisions
similar to those which apply to Independent National Radio, in
section 103 of the 1990 Broadcasting Act, could be applied to
local radio licences. This would give the regulator the power
to prevent a change of control, if it seems that such a change
would be prejudicial to the principles of section 105 of the 1990
Broadcasting Act (or its equivalent in any new legislation) on
the basis of which the licence was originally issued. The Authority
believes that the "relevant period" during which such
consideration might be given for ILR licences should be two years.
The existing power under section 86(7) of the 1990 Act to withhold
consent to a transfer unless satisfied that the new owner will
be able to comply with all the existing conditions of a licence
should, for the new regulator, be extended to all changes of control.
The Authority also believes that the power it has under section
93 of the 1996 Broadcasting Act, to firm up licence conditions
which protect the character of a radio station when it is taken
over, should be extended to the new regulator and should apply
to all licences, not just those awarded before the 1996 Act came
into operation.
Religious ownership of national independent radio
services
25. The Authority welcomes the proposals
in the White Paper to amend ownership disqualifications (4.9).
It is particularly appropriate that the anomaly whereby religious
bodies may hold analogue but not digital local radio licences
is to be addressed. The Authority does not believe that there
should be any further relaxation of the ban on ownership of national
radio services by single religious bodies. However multi-faith
ownership, fully reflecting the religious nature of UK society
would be permitted. We have noted the opinion of the European
Court of Human Rights that existing UK legislation is justified
by the scarcity of available frequencies. Since, with spectrum
available for just three INR licences, it is wholly out of the
question that even the majority of established religions can have
the privilege of ownership of a licence in this scarcity, the
Authority continues to believe that only allowing multi-faith
ownership is the fairest way to proceed. The existence of digital
radio, at least in the spectrum presently allocated to it or likely
to be allocated to it in the future, does not in any significant
way alleviate this spectrum scarcity. The Authority feels the
greatest reluctance at allowing a situation to come about where
rival religious bodies have to engage in competition to place
the highest cash bid, in order to gain access to a national radio
service, and thereby to exclude equivalent access for another
religion or another denomination.
OTHER WHITE
PAPER ISSUES
Access Radio
26. In response to the invitations issued
in 4.5.2 and 4.5.3 of the White Paper for views and debate about
the concept of a separate tier of Access Radio services and of
a Radio Fund to support it, the Authority has organised—with
the agreement of Government—a seminar to be held on 12 February
2001. We hope that will be an occasion for all those with an interest
in these concepts to express and debate their views. Following
the seminar, the Authority may wish to add to its own submission,
set out in June 2000 on Access Radio.
27. The Community Media Association has
argued, in line with the Radio Authority's June 2000 submission
to Government, that there should be a range of pilot experiments
to cover as many aspects as possible of the proposed Access Radio
sector. However the White Paper has not indicated that Government
necessarily intends to proceed with Access Radio, nor has it given
any authorisation to the Authority to undertake such experiments.
Given the wide range of small scale services already established
by the Authority, and the progress which has been made with long-term
Restricted Service Licences as well as the widely used and highly
effective short-term Restricted Service Licence scheme, the Authority
does not feel justified in initiating any such experiments at
this stage. We will, however, be alert to indications from Government
following the 12 February seminar and the opportunity to consider
views expressed on that occasion.
The regulation of the BBC
28. The Radio Authority judges that the
White Paper's approach to the content regulation of public service
broadcasters, described as "tier three" regulation,
is a valuable way of protecting and enhancing the public interest.
We consider it important that, as envisaged in paragraphs 5.8.4
and 5.8.5 of the White Paper, OFCOM shall be given the task of
evaluating the performance of BBC Radio against the self-imposed
high level remits. This will require OFCOM to have both the capacity
and expertise to undertake such a radio specific task. It will
have the value of ensuring that there is a more even set of rules
governing formats for public service radio and for the commercial
sector.
29. We recommend that powers in respect
of the BBC which the White Paper envisages remaining with the
Secretary of State for the time being (paragraph 5.8.6.) should,
at the time of the Charter renewal, pass to OFCOM. In terms of
spectrum management, we consider it an essential part of OFCOM's
functions in this respect that it shall oversee spectrum used
by all broadcasters, including both the BBC and the commercial
sector. Indeed there is a strong case that OFCOM should take over
frequency planning for both radio sectors (plus Access Radio)
to ensure the most productive use of a scarce public response.
With that in mind, we recommend that the role currently undertaken
by DCMS in respect of the BBC's use of spectrum should be carried
through by the new regulator ab initio.
The structure of OFCOM
30. The Radio Authority welcomes the intention
set out in the White Paper that OFCOM shall follow the established
principles of good corporate governance, and Better Regulation,
and be governed by a Board with a separate Chair and Chief Executive.
Given the particular public interest in the regulation of media
and communications, we regard the representation of that public
interest will be best protected by ensuring that OFCOM itself
includes a majority of independent non-executive Commissioners,
although they will clearly require experience and expertise in
these fields. We anticipate that OFCOM will oversee a Management
Board, and that the Chief Executive and a small number of others
from that Board will serve on the Commission itself.
31. OFCOM will be required to undertake
such a range of tasks that it is clearly unduly simplistic to
seek to establish either two separate self-contained structures
(content and infrastructure) or even three (adding spectrum management).
Not only are there a number of significant tasks that will not
easily fit within the artificial straitjacket of a dualistic approach,
but matters such as competition affect both content and delivery
whilst retaining a necessary separateness. If OFCOM is to work
as envisaged, as a properly integrated single regulator, each
of its many and separate functions will need to be represented
as an integral unit incorporating appropriately qualified professional
staff who can work both cross-sectorally and have the necessary
sectoral expertise.
32. At the same time, it will be necessary
to protect the separate needs of radio as identified in the White
Paper (8.6.2), at least for so long as those distinctions continue
to exist. With that in mind, we recommend that OFCOM shall include:
(i) a separate Radio Broadcasting Division
to undertake new analogue and digital licensing, with relevant
support in respect of frequency management and technical policy
associated with that, the supervision of formats and format amendments
for ILR stations ("tier two" content regulation), the
supervision of BBC Radio delivery of its "tier three"
content obligations, supervision of the radio sector-specific
ownership rules and management of Access Radio;
(ii) other horizontal departments within
OFCOM, including finance, engineering and spectrum management
and content regulation, to contain and retain specific radio expertise;
and
(iii) that OFCOM would put in place effective
co-ordinating machinery.
We do not believe that this needs to be reflected
in the new Communications Act as a statutory requirement, but
urge that it shall form part of the clear instructions given during
the establishment of OFCOM.
The Radio Authority will be pleased to amplify
any of these points in giving oral evidence to the Committee,
or to deal with any other issues which the Committee wishes to
raise.
February 2001
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