Examination of Witnesses (Questions 320
- 340)
WEDNESDAY 7 FEBRUARY 2001
MR RICHARD
HOOPER AND
MR TONY
STOLLER
Mr Fearn
320. Why do you consider the restrictions on
radio ownership by local or national newspapers should still be
necessary?
(Mr Hooper) We have suggested quite a significant
liberalisation of cross-media ownership and we have set out a
number of transparent rules to get away from what we currently
have which is public interest tests for cross-media ownership.
Having said that, one of the rules is that a local newspaper that
has more than 50 per cent of circulation in a market area should
only be able to own an analogue radio station if there are two
others not so owned. That is the type of rule. In terms of national
ownership we feel there is something very important in the media
industry which is plurality of voice and there is a danger that
could get lost if one had an over-consolidation across media.
321. You think that would happen?
(Mr Hooper) I think it would happen undoubtedly. The
cross-media conglomerates that you see in America you would easily
get here if you are not careful.
322. The White Paper refers to various possible
sources of money for an "access fund" for community
radio. What scale of funding do you really think would be necessary
to establish a flourishing new sector?
(Mr Stoller) It depends whether or not you want the
funding to provide for the continuing service or whether you merely
want to provide for initial set-up costs. Our original view when
we put forward the concept of Access Radio, which I am pleased
to see has got the debate running, was that this funding should
be for start-up only. There is a view you have heard from previous
witnesses that the funding should be to provide continuing costs
as well. You enter into this balance between if you have no continuing
funding then do you allow a degree of commercial funding? If you
exclude commercial funding entirely then you have obviously to
fund your Access Radio services entirely from the public purse
or things that are associated with it. There is an inter-relationship
between the two arguments. Our initial view was that there should
be a limited amount of commercial funding but not coming in through
spot advertising or programme sponsorship and that the radio fund
would provide start up non-recurring costs. This is being debated
and will continue to be debated. If that argument fails then the
balance of the amount of money you would need would also change.
Our initial estimates were that we would be looking at something
between £5 and £10 million for a radio fund for a start-up
purpose. For providing continuing services it is many, many times
a multiple of that.
323. Start-up would be what? £5 to £10
million?
(Mr Stoller) That was a guesstimate on our part, it
is no more scientific than that. It seemed to us to provide for
start up you were looking for that sort of money in radio funds.
324. That is purely the Radio Authority putting
that figure up?
(Mr Stoller) Yes.
325. There is no basis for that?
(Mr Stoller) There is no basis for that.
Mr Maxton
326. Can I come back to the future rather than
possibly the present because there is always a danger because
we now live in a very fast-changing world, and you were talking
about a ten-year timescale for digital radio, and nowadays in
new technology ten years is an extremely long time. Internet access
to radio is already there but limited to slightly strange people
(like me) who listen to it on their PCs. That is not going to
be true in the future, is it?
(Mr Hooper) It does take time and it is all a matter
of degree and there are economic issues behind your question.
Currently in the States I think the figure is four per cent of
radio listening is to Internet radio and there is an equivalent
figure here of one per cent. If we start from base it is a relatively
small base. There is a very significant economic issue, which
Stephen Buckley mentioned, in relation to the costs of providing
radio over an Internet or telephony service as opposed to over
a broadcast network and it is simply this: the Crystal Palace
transmitter costs X pounds irrespective of the number of television
or radio receivers. Ten sets listening to Crystal Palace or 10
million or 100 million, it does not matter. That is not true of
a telephony network. You have got costs which are incremental
per listener. One is the size of the server out of which it is
broadcast eg the television station and, secondly, the bandwidth
and the capacity in the telephony network. There are some economics
which are very favourable to broadcasting methods and so therefore
broadcasting will not die away that rapidly. Having said that,
none of us certainly in the Radio Authority feel we can predict
the future. It is very fast moving. Having said that, the Internet
was founded in 1969 which is 32 years ago so it has taken a long
time to get going.
327. That is where it begun as an American Forces
network or intelligence network. In terms of economic operation
it is a lot shorter than that. I was very interested in what Mr
Buckley said about the cost because the BBC at the present time
broadcast almost all their output live on their web site. What
is it costing them?
(Mr Hooper) I do not think we are parti pris
to that. Jenny Abramsky should answer that question when she comes
if she comes.
328. Can I turn to radio because you are parti
pris to Virgin. What does it cost?
(Mr Hooper) The interesting point, as Jenny Abramsky
has pointed out, is that the number of simultaneous listeners
to BBC radio is 25,000. That is de minimus in the broadcasting
world.
329. That is for each of their services?
(Mr Hooper) Their total simultaneous capacity is 25,000
listeners because of these costs.
330. But it is around the world—and let
us take Virgin because that comes under your remit and they do
it.
(Mr Stoller) Yes, they do.
331. They broadcast their radio station live
on their Internet web site. Is that costing them that much? What
is their audience?
(Mr Stoller) I will try and find out some costs. Perhaps
if it would be helpful I could write to the Committee and let
you know. I do not know that. I do know that the commercial companies
regard this multi-platform approach as something on which they
move forward all of a piece and so audio-streaming within a web
site is only part of the use of the web site because there is
this very close relationship between radio and the Internet. The
radio provides impact, the Internet provides back-up and bandwidth
and data and the two go together very well. Radio companies tend
to advance on a broad front. I will try and get some individual
figures and I will write to the Committee promptly with what I
am able to find out.
332. What would be your position if Virgin were
to produce a separate Internet programme? Do you have any control
over it all?
(Mr Hooper) Not only do we not have any control over
it, we do not seek any control over it. We said clearly in our
submission that we are not seeking to require a licence from Internet
radio stations and the reason we give for that is that the fundamental
reason for licensing broadcasts has to do with spectrum scarcity.
That is the core of the rationale. There is no spectrum scarcity
of any significance on the Internet and therefore it would not
be appropriate for the Radio Authority to seek to regulate radio
stations on the Internet.
Mr Maxton: The next breakthrough in broadband
is going to be into wireless operators which will, of course,
make the mobile phone increasingly a way of accessing sound Internet
on the Internet if not visual Internet. Once that happens, of
course, basically every mobile phone, of which we now have 30
million in this country—
Chairman: —4.5 million sold at
Christmas alone.
Mr Maxton
333. Becomes essentially a radio.
(Mr Hooper) Again there are economics in a mobile
network. There is a limited amount of spectrum from base station
to mobile receiver—
334. That is at the moment.
(Mr Hooper) I think there will always be an issue
of spectrum scarcity. I think the other interesting point is that
the manufacturers are looking at putting digital radio chips into
the mobile phone so that you can receive digital radio broadcasts
through your handset. That is something we are extremely interested
in because that is a very economic way of providing digital radio.
335. But it still only allows you to listen
to those radio stations being produced in that particular area.
(Mr Hooper) Correct.
336. Whereas the great beauty of Internet services—again
being a real anorak I listen to jazz from the United States, Canada—is
that I can pick up the jazz or whatever I want to listen to. I
did raise the question with the digital radio people of the increasing
ability of people to record their own music in forms and styles
in which they want to record it and listen to it in the way they
want to. Do you see this as a major threat in terms of radio in
the future?
(Mr Stoller) I see it as a potential competitor. I
do not think I see it as a major threat. As was said to you before,
I think radio has gone along with gramophone records, long play
records, short play records, CDs, it is perpetually facing challenges
from what you might describe as particular payment for music and
indeed for recorded plays or whatever. I think it is a competitor.
I have a hunch that radio will have the remarkable ability it
has always shown in the past to renew itself but nobody can be
certain. I think as a general rule looking into the future there
are all of these competitive technologies, and one of them may
turn out to see radio off, but nothing has done it yet, I hope
it will not, but it would be daft to say it will never happen;
of course it may.
337. My view is that some of these and what
will follow from that will be qualitatively different from CDs
and from other previous recording prices and will allow you a
flexibility which you never had from previous prices.
(Mr Hooper) The extraordinary thing is that over the
past ten years, with the growth of these new technologies, the
listenership of commercial radio has increased by something like
40 per cent. This is a remarkable figure when you think this is
sometimes described as an old media, 100 years old, it has gone,
it is finished, it is passé. Commercial radio is the fastest
growing advertising medium in the 1990s in the United Kingdom.
I think that radio sits very synergistically with the new media.
For example, when you are surfing the Internet you can listen
to radio at the same time either from the Internet, as you do,
or from terrestrial. That is not true of television. It is quite
difficult to watch television and surf the Internet at the same
time.
338. You can!
(Mr Hooper) I think the experience of audiences in
America and here is that television audiences are showing signs
of declining in Internet households whereas radio is not showing
that.
Mr Maxton: I have to say I can just about
watch television and surf the net at the same time!
Chairman
339. Mr Wyatt opened his questions by talking
about restrictions on broadcasting from schools. Schools are publicly
owned, publicly financed buildings. They obviously perform an
indispensable function in society. On the other hand, in terms
of their existence they are extraordinarily under- used, a limited
number of hours per day, a limited number of days per week, a
limited number of weeks per year. There is a move which all of
us, I guess, round this table support for school facilities to
be used for community purposes, sports facilities, computer facilities.
Why should schools not be available for use for community radio
purposes? Mr Korbel was talking about two community radio projects
in schools in my constituency. Why should not people living in
those areas be able to use the technical facilities, the equipment
that is available in the school and the premises (obviously under
proper controls) for community radio services? It would be able
to expand the voice of ordinary people in an exponential way.
(Mr Stoller) I think it is a very attractive idea.
The Authority's view at the moment is that, as we are currently
set up, we would be exceeding our powers if we were to allow that,
except under a very controlled basis. This is exactly the type
of idea which underpins our proposals that government should legislate
for a third tier of radio. This is precisely the sort of thing
we would like to see happening. I am very sympathetic to the concept.
I am nervous about taking the Authority's role beyond where it
is clearly empowered into an area where it provides competition
with those we have licensed under our duties under the Act, which
might well then be challenged. There is a difficulty and if I
might take it away from schools and on to football clubs, we give
short-term licences to football clubs to broadcast for the day.
We have to strike a very careful balance between what they will
do, being partly commercial at least (and some more than partly
commercial) within an area where there is a commercial station
licensed to provide a service and licensed against very detailed
criteria which, if I may say, you have given us and Parliament
has laid down for the Authority to observe. The licences that
we give on a short-term basis are at our discretion and have none
of those criteria attached to them. We think it is important as
we are currently empowered to strike a balance between what we
do on our own initiative and what we do according to what Parliament
has required of us.
340. Do you think that the Broadcasting Bill
anticipated perhaps next year might be useful to provide the kind
of powers you say you are not sure you have?
(Mr Hooper) This is clearly absolutely
what we are looking for. We have made a strong recommendation
for an access radio category of licence that sits alongside the
BBC and alongside commercial radio, is distinctive from it, not-for-profit,
non-profit distributing and so on. We feel if government legislates
for that new category then many of the things you are talking
about, Chairman, will come to pass.
Chairman: Thank you very much. We are
most grateful to you.
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