Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 311 - 319)



  Chairman: We would like to welcome you to this Select Committee which is most of the time very strongly radio-orientated. It is a curious thing that radio is a very, very popular medium of communication but curiously neglected in public discussion. Mr Wyatt.

Derek Wyatt

  311. Good morning. Could you comment on this business of schools not being able to broadcast beyond their walls. Is that a rather analogue sort of rule?

  (Mr Stoller) Good morning. Yes, I am happy to comment on it. What the Authority has done is to stretch as far as we feel we can this bit in the existing legislation which talks about restricted licences. We took that initially to be the short duration licences. We have moved that forward now to allow long-term restricted licences. We have imposed a restriction which is that this should be used when there is a transient population. The reason for that, from our thinking, is clear, that as the legislation is currently written, although we would like it to change, we are very worried about giving permanent licences by the back door. The point about being able to serve schools and for that matter army barracks and hospitals is that we can extend the concept of restricted service licences without running into that particular risk. It is against the background of saying that these distinctions after a while become unnecessarily arbitrary that we have come forward with a proposal for access radio. That is the reason for the distinction at present.

  312. Just remind us which law and Broadcasting Act that was?
  (Mr Stoller) What we have done is to take the definition of the 1990 Act and say this allows us to do more, it allows us to do INR and ILR, but it will also allow us to do what have become restricted service licences. That was before my time so I can praise my predecessors. It was pioneering work on their part which has opened up this opportunity which we now think could be taken further.

  Derek Wyatt: Thank you for that. If we can move to the bigger argument about OFCOM. The radio has always been a Friday afternoon activity. You have the Chairman of the BBC, the Chief Executive and Head of Television who could not tell us anything about Radio 3 audience figures.

  Mr Maxton: Are there any?

  Chairman: Those who are of the highest quality!

Derek Wyatt

  313. You have heard some the debate earlier today. If OFCOM had radio presumably that would enable your organisations to merge? It does seem mad that the BBC would be ring-fenced. Is that how you feel too?
  (Mr Hooper) Chairman, Mr Wyatt, good morning. I think there are two questions there. One is about the distinctiveness of radio and we feel strongly that over the last ten years, having a dedicated regulator of 40 or 50 men and women good and true who worry about one industry and are not an afternoon thought on Fridays because television is such a big hitter in terms of agendas and so on. In our submission to the White Paper, second submission next Monday, we have argued that there should be some distinctive role and distinctive team work for radio within the OFCOM structure. I think we agree with that. In relation to the BBC we are suggesting three things. The fundamental principle is that there should not be a continuation of self-regulation of the BBC and the reason for that is that a player cannot also be a regulator in a competitive market. That is a fundamental principle we put in our submission last year and we believe that strongly and I think there is widespread support for that view. There are three specific things we are suggesting in our submission next Monday which is, one, that the reserve powers that are with the Secretary of State at the moment, that is to say for example should the BBC be allowed to launch new digital television and radio services or not, that those should pass to OFCOM, either at Charter at the year 2006 or ideally earlier. That is the first point. The second point is we are suggesting that OFCOM should have frequency planning powers over the BBC and commercial radio. Currently the Radio Authority frequency plans for commercial radio and the BBC frequency plans for the BBC. We feel that would be a much better use of the spectrum and a number of the issues that Mr Buckley and his colleagues at the CMA have raised are about finding better use of the spectrum. That is the second point. The third point is we are suggesting that the Radio Broadcasting Department, or whatever the team is within OFCOM, should be the body responsible for what are called the "tier three" obligations on the BBC that are in the White Paper. Those are three very specific things.

  314. On the funding idea 20 or 25 years ago there used to be a radio licence and a TV licence and now there is one. In a sense that messed up radio in a way or took it down a different road and it might have been freed up earlier. Do you feel that if OFCOM collected the licence fee, which is not in the White Paper but is something I am sympathetic to, it could say that of the licence fee 15 per cent (I am taking figures out of the air) should go to BBC Radio and five per cent to another public service sector of the radio? It is very hard to get the annual figures out of the BBC. If it carries on as it is it will still be hard to get them out of OFCOM, so nothing changes.
  (Mr Stoller) I think the fact that the BBC looks for cross-funding between its organisation is without question. They are difficult to unpick whether they are commercial or non-commercial activities let alone if they are radio or television so, yes, the idea that OFCOM might be the drawer in of all funds coming into broadcasting and telecommunications regulation is attractive. I think a difficulty might arise with the new European Directives which are very limited on the extent to which you can take funds which come in in the general sense and apply them to a specific use. That would need to be teased out, but the basic idea is appealing, yes.

  315. Can you just say, this is ignorance on my part, what this new EC Directive might or might not say?
  (Mr Stoller) I was hoping you were not going to ask me in detail! There are four new Directives and among other points they limit the ability of domestic administrations and domestic regulators to make charges in relation to licensing which are not for other than the administration of that particular licensing process and, therefore, one needs to steer very carefully around the European Directives in the funding within OFCOM itself when we get to it and the extent and the way in which you will charge separately for radio and television licensing, the way in which you will handle the proceeds of spectrum auction, and I am absolutely certain (without being an expert) that the same difficulty would apply to ring-fencing BBC funding in. It is not impossible we have found so far, but it does need working through with some care.

  316. Have you been disappointed with the lack of debate anywhere on public service radio? I cannot remember an article I have read yet, perhaps you can jog my memory. There does not seem to have been a debate anywhere, I have not heard it on radio or television either.
  (Mr Hooper) I think there is a fundamental difficulty with public service broadcasting and that is that it has been going since 1926 and we are still arguing about the definitions of it, which would suggest that the definitions are relatively elusive if we are still discussing them now. Having said that, we have a very clear idea of what public service broadcasting is. We have a clear idea of what the BBC's role is in it. I do not think it is just a market failure role although that is obviously a central part of the definition. We tend in radio (because it has become a more deregulated market over the last ten years with the 1990 Act and the 1996 Act) to talk about broadcasting in the public interest. We feel if you have a spectrum and you have it for free then you have public obligations and we have a very clear idea what those are, for example, the "localness" of local radio stations. I think that is an extremely important point—that they should reflect the community that they are broadcasting in.

  317. Do you have a view about switch-off?
  (Mr Stoller) We are very sympathetic to those who are trying to move digital radio forward as we are. Having a switch-off date would help the process enormously. I do not feel it is realistic to expect any government to try and even assay a possible date. We know that radio audiences are conservative. We recall the near riots the BBC faced when they wanted to move Radio 4 to long wave and long wave has to be the least modern of the radio technologies. What we hope and what I think the White Paper reflects is that government will acknowledge that it needs to move towards a switchover from analogue to digital. It will establish some of the criteria which will apply when the time is right but in terms of setting a date, whilst it is desirable for the health of digital radio it does not seem to us at the moment to be practical. I say that with reluctance but that is our judgment.

  318. Is that an educational role? We have one of the highest penetrations of PCs, the highest of mobile phones, it is extraordinary how many DVDs were sold at Christmas—as you know, you could not buy one. We are pretty quick. What you are saying is that it is an older population that is listening to radio and that is the issue?
  (Mr Hooper) If you look across the world, I think it has already been mentioned this morning, the United Kingdom leads the world in digital radio. There is no question. We have something like 160 programme services operating right now of which roughly half are new services, and not just simulcasting of existing analogue. In that sense the regulatory framework is there thanks to the 1996 Act which was actually quite deregulatory in style and flavour. We have a lot of commercial radio companies who are making very significant investments. One of the problems you have, Mr Wyatt, with new consumer electronics products is this famous chicken and egg. That is to say I (the manufacturer of the equipment) will not build it until you (the service provider) provide the service, and you will not provide the service until I have built it and got it out in the market. That has not happened so far in digital radio because the commercial radio companies have invested considerably in multiplexes and in services and the boot is clearly on the foot of the manufacturers to move out into the market with volume and get the prices down. We are down to £299. It was £800 a year ago.
  (Mr Stoller) If I might come in on the back of that. People keep telling us that there is to be a £99 set any time now. We look forward to it. A number of things have to come together before the S-curve can get moving and those are very much in the hands of the manufacturers and that has an international dimension. Then you have additionally the fact, in our view, that people listen to the radio they grew up with and to convert them does take time and some of us are never really converted from what we grew up with. You have an age issue, you have a natural conservatism and that close loyalty between any radio service and its listener and you have the difficulty of making technology widely available to get consumer uptake started. It seems to be a medium-term prospect. I heard one of your witnesses say earlier on that the commercial radio companies believe they are investing over a ten-year period. That seems to me to be wholly realistic and even at the end of that ten years the 100 million radio sets in the UK are unlikely to have shifted in the quantity we need to contemplate switchover, but it will come.

  319. In the television environment we know there are four or five television sets in a household which do not get dumped any more, they go into children's rooms or the kitchen rooms, so the question is if you go to digital television can you enable the other sets, and now you can, there is a piece of technology that will enable those. Is it impossible to do that for transistor radios?
  (Mr Hooper) That would be very difficult.
  (Mr Stoller) It is effectively impossible because of the very low cost of an analogue transistor radio.

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