House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport Second Report

IV. UNIVERSAL PROVISION IN THE DIGITAL ERA

Analogue switch-off

55. A common element of the two main converging sectors, broadcasting and communications, is a tradition of certain services being provided universally. The White Paper seeks to ensure that the principle of universal access to certain television services is maintained in the digital era, that telephone services are available to everybody at an affordable price and that there is universal access to the Internet by 2005. The White Paper also states that the Government will "keep under review the case for requiring higher bandwidth services to be made available universally".[160] The long-term success of the policies set out in the White Paper is likely to be judged in considerable measure by progress in relation to these ambitions.

56. In the context of television services, the digital era will truly have arrived when "analogue switch-off"—the end of analogue terrestrial transmission of free-to-air television services—takes place. The Government has already made a commitment that this will not happen until digital television services in some form are available to everyone and are affordable. Mr Smith has indicated that the meeting of his key tests of affordability and availability "could start to happen as early as 2006 and could be completed by 2010". We have welcomed this policy in a previous Report.[161] Analogue switch-off will free spectrum capacity that may bring significant revenue to the Government, may promote greater economic activity and may facilitate the delivery of a broader range of public services over the airwaves.[162] In these circumstances, some witnesses were surprised how little new was said about promoting digital take-up and preparing the way for analogue switch-off in the Communications White Paper.[163] The Government has already responded to such criticism by announcing initiatives to promote digital television in the Competitiveness White Paper published on 13 February 2001.[164]

57. The success of commercial digital television in this country in the period since launch has been striking. BSkyB's digital satellite service has signed up 5.25 million users, although some systems remain to be installed. BSkyB expects to have reached 5.4 million homes by the middle of 2001, representing over 20 per cent of households in the United Kingdom.[165] Some of these are new users, but BSkyB has also largely succeeded in converting its pre-existing analogue subscribers to digital and expects to switch off its own analogue signal later this year.[166] ONdigital has built a new subscriber base from scratch and now has over 1 million subscribers to its digital terrestrial television service.[167] Digital cable television has about a million customers, but there is scope for early expansion of that number through the continued conversion of analogue cable services to digital.[168]

58. Mr Stephen Carter, Managing Director of ntl, thought that future take-up would be driven more by services, broadband access and interactivity than the availability of more channels: "multi-channel television ... will be a secondary attraction, or possibly a contingent attraction, but not the primary attraction".[169] ONdigital and BSkyB took a different view, believing that greater channel choice would remain the main driver of digital television.[170] Both ONdigital and BSkyB did accept the attraction of Internet-based services to certain types of potential new customers.[171]

59. While there remains significant potential for continued growth of commercial digital television, there are important barriers to universal digital provision. The reach of the digital terrestrial signal, which it was known would not cover the entire United Kingdom, has been even lower than forecast. Digital terrestrial television is available across little more than half the United Kingdom.[172] In some places, such as the Grampian region, digital terrestrial transmission is unlikely ever to be economic.[173] Mr Smith acknowledged both the need to improve the reach of the digital terrestrial signal and to find other forms of provision for areas beyond its reach.[174] Additionally, even where the signal is available, aerial systems are sometimes a barrier to take-up.[175]

60. While the array of competing digital television services available has helped to drive take-up, that variety may have also contributed to uncertainty amongst the public. According to Ms Anna Bradley, Director of the National Consumer Council, "consumers are very confused about what to do and voting with their feet, as consumers do when they are confused".[176] Mr Nigel Walmsley of Carlton Communications plc thought there was "a great deal of misunderstanding, or total absence of understanding, about exactly what is available in terms of both content and, of equal importance, access and the technical functionality of the different devices".[177]

61. ONdigital was particularly concerned at the confusion about digital television among those buying new television sets. The company noted that the vast majority of the four million television sets sold every year are still analogue rather than integrated digital television sets, thus making the task of achieving switch-off larger rather than smaller.[178] The continued popularity of analogue television sets results in part from the continued price differential between analogue and digital receivers, but there is also concern that those actively seeking state-of-the-art television sets are not being given clear guidance about digital reception.[179] Drawing in part upon her own recent experience in trying to buy a digital television set, Ms Hewitt concluded that current labelling of such sets was "not adequate".[180] The Government is now committed to developing a clear labelling scheme, in consultation with the industry, to ensure awareness about services and equipment.[181] This task is urgent. We recommend that the Government aim to establish a scheme for "kite-marking" integrated digital television sets no later than October 2001 and report on progress on consultation with the industry about achieving that aim in its response to this Report. This scheme should ensure that potential purchasers of non-digital television sets are warned about the limited life expectancy of their television sets without the purchase of additional equipment in view of the advent of analogue switch-off in the near future.

62. ONdigital argued that the Government should go further, and mandate the inclusion of digital receivers in new television sets over a given period agreed with manufacturers and retailers.[182] Mr Stuart Prebble, Chief Executive of ONdigital, thought that such a development would be analogous to the introduction of the catalytic converter in cars.[183] Ms Hewitt explained that a national requirement for an integrated digital receiver would not be possible under current European law, but said that she was exploring whether changes might be made to European legislation on the matter.[184]

63. Another symptom of the confusion that surrounds digital television relates to free-to-air services. There remains a widespread assumption that pay-television and digital television are synonymous.[185] The free-to-air digital services provided by the BBC and ITV have simply not been of the quality or prominence to make people who are unwilling or unable to pay a subscription switch to digital television in large numbers.[186] This helps to explain the limited demand both for integrated digital television sets that can provide such free-to-air services without any further cost and for installation of digital satellite reception equipment without a BSkyB subscription.[187]

64. There is a pressing need for a proper public information campaign about digital television led by the Government.[188] As Mr Smith noted, broadcasters are well-placed to explain the advantages of digital television to the viewer.[189] We were told that ITV was "ready, willing and able" to contribute to a campaign, provided problems about promotion of ONdigital could be overcome.[190] The Government is seeking a "consensus approach" on this matter across the industry.[191] Mr Smith stated that the Government was considering "a very simple leaflet" to be available at the point of sale.[192] We are not convinced this goes far enough. We recommend that, by October 2001, the Government agree with the television industry the text of a leaflet on digital television to be distributed to every home in the United Kingdom. We further recommend that this be backed up by a public information campaign on all free-to-air television channels, ideally with the same content on each channel.

65. The growth of digital television is reliant and will remain reliant upon subsidy of set-top boxes. Both ONdigital and BSkyB provide free boxes to new customers, in the former case in return for subscription and in the latter case with a higher installation fee if no subscription is involved.[193] This involves the service provider bearing a significant initial loss due to the considerable cost of the set-top box, in most cases off-set over time by income from subscription.[194] Mr Prebble considered that this commercial model of subsidy would go a long way towards providing digital television across the country.[195]

66. However, the commercial sector alone is unlikely to provide the complete solution for analogue switch-off. One reason for this is that the principal aim of commercial providers is to gain more subscribing households and digital capacity is sometimes confined at the moment to only one television set in each home, but analogue switch-off will render all television sets without digital capability useless. Almost two-thirds of British households have more than one television set and many have several.[196] When we put this problem to Mr Prebble, his suggested solution was to move the set-top box from set to set, a suggestion that implies a certain lack of realism given the current size and weight of a set-top box.[197] There will doubtless be a growing trend towards networking within the home between sets as a partial solution to the problem, but we are some way away from households being able to watch one digital channel in one room, to view another digital channel elsewhere and to video a third.[198] It is also far from clear whether the public is ready to pay more to commercial providers for the necessary additional functionality.

67. The Government has announced plans to launch small-scale pilot projects offering free conversion to digital television, designed to include access to free-to-air digital channels and to interactive services, including the Internet.[199] Mr Dyke told us that the BBC had already undertaken work on whether the BBC might give away free set-top boxes and said that "without an initiative at some stage it is very hard to see how one gets to switch-off".[200] Ms Patricia Hodgson, the Chief Executive of the ITC, thought it "inevitable" at some stage that free non-commercial provision would be necessary, but also considered that an early give-away would destroy the commercial businesses currently driving take-up.[201] The negative effects of early public provision on the pay-television market were also a concern for ntl and ONdigital.[202] BSkyB suggested that a "voucher system" might provide an incentive to take-up that would leave the consumer free to choose a provider.[203]

68. Mr Smith was cautious about public provision for digital television access. He suggested that the cost of a box at present was between £200 and £300, although he accepted that this price was likely to fall. He was concerned that, if public provision seemed likely, potential digital consumers would hold back until a free box became available. Partly for this reason, he did "not want to speculate at this stage".[204] While the Government will not wish to take precipitate action that might threaten the development of the commercial market in digital television, it is important for the Government to keep an open mind on all options that might assist in facilitating early analogue switch-off, particularly those options that would have the added advantage of advancing other Government objectives relating to universal access to the Internet and to the wider development of broadband.

Television, the Internet and broadband

69. Nearly three years ago, in our Report on The Multi-Media Revolution, we argued "that the issue of analogue switch-off should be taken forward not in isolation but in the wider context of the future of universal access".[205] This was because we perceived the future development of television and of the Internet as fundamentally intertwined and because we considered then that broadband networks, principally discussed in the context of telecommunications and business development, actually had a fundamental role to play in the future of what is now broadcasting. We recommended that the Government "establish as a strategic objective for the first decade of the new millennium the development of a universal broadband infrastructure (including an adequate return path capacity) available to every home in the United Kingdom" and argued that "the same date should be set for both meeting the strategic objective and analogue switch-off".[206]

70. The starting point for convergence of the kind we envisaged is universal access to the Internet, initially in most cases through a narrowband connection. The Prime Minister has set a target for universal access to the Internet by 2005 that is reaffirmed in the White Paper.[207] The National Consumer Council pointed out that there is a lack of clarity in the White Paper about what such universal access actually means.[208] The White Paper refers to the fact that "access will be either through devices at home, work or on the move or through access in a nearby community centre".[209] Access through community centres such as public libraries and schools is of great importance, as we have noted before.[210] Access at work is vital for the competitiveness of business. Access through mobile phones has many uses. However, as we have suggested before, "availability of the Internet in every home" is the key if the Internet's power to transform the way we live our lives is to be truly realised.[211]

71. Two economic barriers remain if universal access in the home is to be possible—the cost of telephony and the cost of receiving devices. In 1998 we suggested that universal availability of the Internet at home might evolve "initially on the basis of a flat-rate charge for a narrowband service for a limited period of time each week".[212] We made this proposal partly on the basis of experience in the United States of America, where flat-rate charges for local telephone calls have been a major engine of the rapid growth of the Internet. Unmetered access to the Internet in this country is growing: use of unmetered packages grew from one quarter of homes on the Internet to one third between August and November 2000.[213] BT Openworld told us that it had more customers with unmetered access than any other provider and offered a range of charges for access during certain time periods, but believed that metered access would remain a cheaper proposition for those who only wanted to make limited use of the Internet.[214] Since then Oftel has required BT to offer other operators a new wholesale unmetered Internet access product.[215] The new regulator must see it as a priority to ensure that the market delivers a range of competitive packages for unmetered access as an essential component if the Government's objective of universal access to the Internet by 2005 is to be realised.

72. The absence of a personal computer remains a crucial barrier for the many people who cannot afford or do not wish to buy one. The Government has established a scheme to offer 100,000 computers to low income families at low rent.[216] The computer will remain the preferred device for many work and study-oriented aspects of Internet usage, but television offers many advantages for Internet access, the most fundamental of which is the near universal availability of television sets.[217] As the White Paper notes, "the television can become the information and entertainment centre of the home with two-way communication".[218] ONdigital considered that "digital television offers the best opportunity for the Government to achieve its goal of creating an online digital nation by 2005".[219] Mr Prebble believed that Internet access via the television set could "make a very serious contribution towards universal Internet access much faster than is currently envisaged".[220] Both Mr Smith and Ms Hewitt commented upon the popularity of access to the Internet through digital television.[221] BSkyB pointed out that e-mail and e-commerce services were likely to have a different demographic profile to multi-channel television.[222] Access to the Internet can be an important driver of the take-up of digital television, and the expansion of digital television services can be fundamental to achievement of the Government's objective of universal Internet access by 2005. We are concerned that these links are not readily apparent in the two separate Government policies at present. We recommend that the promotion of Internet access through digital television become a more prominent element in Government policy for the Internet and that the promotion of digital television by the Government and the industry lay greater stress than is currently evident on digital television as an easy and affordable gateway to the Internet.

73. For the vast majority of users, particularly in the home, current Internet access is over a telephone line using a modem that provides what is termed "narrowband" access. Bandwidth in digital systems is measured in binary digits (bits) per second. A narrowband connection offers a speed of 28.8 or 56 kilobits per second (kbit/s). Such a connection also usually involves a separate dial-up to the Internet. With narrowband access to the Internet, it is estimated that one third of user time online is spent waiting.[223] Services are becoming available at much greater speeds. These facilitate more uses of the network and also provide continuous access to the Internet. In analysing these higher speed services, the Government differentiates between the following: higher bandwidth, defined as services provided at speeds greater than 384 kbit/s; current generation broadband, defined as services provided at speeds of 2 Mbit/s and over; and next generation broadband, defined as services provided at speeds of 10 Mbit/s and over.[224] The Government seems confused in its own mind about whether all of these services constitute broadband. The White Paper states that "broadband is generally defined as bandwidth of greater than 2 Mbit/s".[225] However, Ms Hewitt told us that this was only "one of the definitions we use", and subsequently stated that her preferred definition would be to include all services provided at speeds greater than 384 kbit/s within the meaning of broadband and higher bandwidth.[226] For convenience, we examine all services above 384 kbit/s in this section on broadband, not least because, if the White Paper's definition is employed, there are almost no services currently available in the United Kingdom to consider.[227]

74. However defined, broadband networks are "hugely important", as Ms Hewitt observed, for reasons well-expressed by ntl: "Broadband access is more than just a passive enabler of content services; it is a fundamental building block of the United Kingdom's national infrastructure and key contributor to our international competitiveness".[228] The Government has understandably placed stress on the importance of business use of broadband services.[229] Broadband is also fundamental to the quality of Internet access and related use by public services such as schools, public libraries and the National Health Service.[230] Nevertheless, it is vital not to lose sight of the importance of broadband services for the consumer in the home. There will be many domestic uses for broadband access, including distance-learning, online games, news and streamed video. Industry forecasts indicate that a quarter of households or more might have higher bandwidth or broadband connections by 2005.[231]

75. Although BT's thinking about broadband was principally concerned with business use, they did tell us that 60 per cent of current customers for higher bandwidth services provided through the local loop were consumers in the home.[232] This is almost wholly due to the ground-breaking use of local telephone lines for delivering video-on-demand and interactive television services by Video Networks Limited, which has launched a service under the brand name "HomeChoice".[233] Mr Simon Hochhauser told us that he expected HomeChoice to be able to provide a full broadcast service, in addition to current on-demand and time-shifted services, by this means "within the year", but also referred to problems faced by a new service in gaining access to content from traditional providers.[234]

76. Other video content for delivery over broadband networks is also being developed. For example, a web site called Online Classics has been launched in this country, using the latest technology for audio-visual streaming, which streams live performances from some of the most famous performing arts centres in the world and provides access to an archive of over 150 hours of video-on-demand of opera, theatre, concerts, dance and musicals that are available to watch entirely at the user's convenience.[235]

77. The Government has acknowledged that "content is a key driver of the take-up of digital technologies", but gives only very limited recognition to the crucial role of consumer products in enhancing demand for broadband.[236] AOL UK expected broadband services to lead to a "step change in how consumers want to access content and the type of content they want to access", but thought that the development of content to drive demand was at a very early stage.[237] This is not surprising. Content such as that provided by HomeChoice or Online Classics is only readily accessible to those with broadband connections. Both Mr Hochhauser and AOL UK had no doubt that content development was held back at the moment by a fundamental problem—the inadequacy of access to broadband networks.[238]

78. In the race to develop widespread and competitive broadband networks, the United Kingdom has barely left the starting blocks while others are some way down the track. In Sweden, there is higher bandwidth penetration in 2 per cent of all households, whereas the main such technology in this country is not yet available in 20,000 homes.[239] In the Netherlands, almost 20 per cent of homes with Internet access have a high speed cable modem.[240] By the Government's own assessment, roll-out of broadband services in the United States "is arguably about one year to 18 months ahead of the United Kingdom".[241] In a valuable submission on the problems of broadband development, Mr Tom Steinberg warned that, "without action, the White Paper could create the world's first truly converged regulator, only to find the United Kingdom trailing irrecoverably behind the rest of the world in terms of actual convergence".[242]

79. Ms Hewitt rejected "the very pessimistic views ... that we are hopelessly lagging behind".[243] The Government has established a goal for the United Kingdom "to have the most extensive and competitive broadband market in the G7 by 2005".[244] Ms Hewitt characterised this target as "a stretching one", but said that "I am quite confident that we can reach it".[245] She considered that there were signs of "the beginning of a very competitive marketplace" in broadband services, a development seen by the Government as the key to achieving its goal.[246]

80. The most widespread higher bandwidth technology currently available in this country is Asymmetric Digital Subscriber Loop or Line (ADSL), which provides much greater compression through the existing copper wire to the home, relying on new equipment in the exchange and a modem at the customer end.[247] ADSL is currently offering Internet access speeds of up to 500 kbit/s, although there is potential for higher speeds through this type of technology.[248] The Government has recently made the rather optimistic statement that ADSL "is being rolled out rapidly across the United Kingdom".[249] We received a somewhat different impression from BT's oral evidence. BT told us that "the roll-out of ADSL ... has caused significant problems all around the world".[250] ADSL had proved "a difficult technology" to provide "over all the old systems that are needed to run a telephone company".[251] There are currently only around 25,000 ADSL subscribers.[252] BT did not hold out hopes for expansion at a breathtaking rate. Conversion of an exchange to ADSL capability requires a large investment, and BT did not expect to secure a return on that investment in an exchange with less than 2,000 ADSL subscribers in the next five years. Based on BT's forecast of ten per cent take-up, BT considered that investment in ADSL would not be economic for exchanges with fewer than 20,000 lines.[253] BT expected this economic rationale to translate into ADSL capability across 50 per cent of the country by March 2001 and 70 per cent in 2002.[254]

81. The difficulties with the roll-out of ADSL are intertwined with the progress, or lack of it, of "local loop unbundling"—the opening up of the local loop network to other service providers by sale or lease.[255] The Trade and Industry Committee has examined the regulatory and industry failures over local loop unbundling in a recent inquiry.[256] The process of unbundling BT's network was only begun recently, a delay attributed by Ms Hewitt to previous concentration on competition between the BT network and cable networks.[257] BT seemed pleased with the progress made with local loop unbundling.[258] Other evidence suggested that the process had not been conducive to the development of broadband networks. Mr Hochhauser thought that the method of unbundling had been "a little bit messy" and that the lessons from other countries had not been learned.[259] He pinpointed the difficulties of information exchange and cooperation with BT, a problem also noted by the Government and partially acknowledged by BT.[260] It has been questioned whether the internal structure of BT is such as to maximise its incentives to support unbundling.[261] The Government has promised "vigorous action to complete the unbundling of BT's local loop".[262] Ms Hewitt thought that Oftel was "driving through" the process "with a set of very tough decisions" and contended that BT had been given "the right set of incentives".[263]

82. ADSL has limitations as a broadband technology. First, ADSL is expensive. BT Openworld currently charges customers £150 for installation plus a monthly fee of £40.[264] This compares with monthly charges of £37 in France, £31 in Germany and £32 in the United States.[265] Mr Hochhauser told us that Video Networks Limited was paying BT £625 to connect an ADSL line and £60 a month in running costs, almost all of these costs being borne by the company and not passed on to the customer.[266] Second, ADSL technology through the current copper loop has a fundamental geographical limitation. ADSL will only work over a distance of up to about 3 kilometres from the local exchange.[267] Even if every BT exchange were upgraded to supply ADSL services, only about 85 per cent of the population would be able to receive such services.[268] According to BT "particularly in rural areas, it is not the technology which is going to bring the broadband".[269]

83. Other technologies are developing that can also provide higher bandwidth services to the home. Cable networks, which now pass more than half of United Kingdom households, are well-suited to broadband provision, although, as ntl put it, "the benefits of the cable platform are yet to be fully realised".[270] In March 1998 we witnessed the importance of cable modems in the United States as a means of providing high-speed Internet delivery to the home.[271] Three years on, cable modems are only just beginning to be rolled out in this country; ntl has 4,750 cable modem subscribers.[272] As Ms Hewitt observed, the weak performance of the cable industry in this regard has passed almost un-remarked compared with the criticism directed at the performance of BT over ADSL.[273]

84. Satellite is well-established as a means of providing one-way high bandwidth capacity for television, but also has potential for two-way higher bandwidth capacity. At present, two-way capability is expensive, although Ms Hewitt expected prices to fall.[274] Hybrid solutions incorporating the use of other technologies for a return path are also developing.[275] The near-universal coverage of satellite across the United Kingdom means that satellite has great potential as a high bandwidth network for rural areas.[276] Astra Marketing Limited has drawn attention to the potential of Astra's broadband interactive services, provided that problems posed by licensing restrictions can be resolved.[277]

85. Fixed wireless networks have potential for broadband transmission and overcome some of the problems associated with the access infrastructure. Radio does, however, have problems of reach even in the regions that it is intended to cover. Some operators of these new radio networks have been licensed and the auction process is continuing.[278] The Government is seeking to make more radio spectrum available for such services.[279] Third generation mobile telephony services, which are due to be launched next year, have potential as a means of providing high-speed Internet access and broadcast material.[280]

86. In analysing the options which then appeared to be available for broadband networks in 1998, we noted the importance of competition and "the need not to be wedded or glued to one particular delivery system in a rapidly changing market".[281] The emergence of new possibilities since 1998 and the disappointing pace of development of others have reinforced the importance of this approach.[282] The precise types of broadband services that will be needed in the future are not yet clear.[283] According to ntl, "as technologies develop ... the market is actually better positioned than the Government to decide either which single technology or which multiple technologies are going to get you fastest towards the goal that you are aiming at".[284] There is almost certainly some truth in that, but it still does imply some clarity of thinking about goals, which for the Government must be social as well as economic.

87. Current universal service provision of both television and telephony service provides a vital unifying factor in British society and in the British economy. It is of paramount importance that this unifying force is maintained in the digital era. The White Paper shows some signs of recognising this, stating: "All our citizens should have access to the advantages and opportunities provided by the next generation of communications technologies".[285] The White Paper also indicates that the Government "will keep under review the case for requiring the communications industry to make higher bandwidth services available universally".[286] The Government maintains that it is too early in broadband roll-out to make final decisions, but notes that "the case for a universal obligation to ensure everyone has access to more rapid digital services may, however, become more compelling as the roll-out of these services accelerates and as more of the services necessary for full participation in modern society, particularly public services, are delivered electronically".[287]

88. All of the broadband services that are expected to be marketed to the consumer in the near future are incomplete in their geographical availability. Fifteen to twenty per cent of the population are expected to be left unserved by higher bandwidth and broadband services by 2003.[288] To a considerable extent, this will represent the urban/rural divide that concerned us in 1998.[289] We have already referred to the geographical limitations on ADSL technology and BT's reluctance to invest in such technology in exchanges serving smaller communities. Equally, there is a strong urban bias to existing cable networks.[290] Given these limitations, Mr Donald Emslie, Chief Executive of SMG Television, told us of his concerns that, "from a commercial perspective, Scotland is seen as almost a second-class digital area".[291] Scotland would not be alone. The Government forecasts that 45 per cent of the population in the South West and Wales might be unserved by higher bandwidth networks by 2003.[292] Satellite broadband has an important role to play in rural areas, but is not foreseen by the Government as a major consumer product in the near future.[293]

89. Ms Hewitt assured us that one of the aims of the Government's strategy was "to drive the market into the rural areas in particular where otherwise people would be left without the broadband networks".[294] She told us that the Government was seeking to pull together demand for broadband services from the public sector—including schools, universities, hospitals, police stations, GP surgeries and public libraries—to provide better value for money, but also to establish a clear demand in rural areas.[295] We would be more impressed with the innovativeness of this concept had we not ourselves raised the very same idea with Ministers nearly three years ago and returned to the issue last year.[296] The Government is also establishing a challenge fund to provide £30 million over three years to support Regional Development Agencies and devolved administrations in taking forward schemes to enhance the reach of broadband networks.[297] Improving the reach of broadband services will be of some importance, particularly for the rural economy, but the social issue of universal access is not only a matter of geography. As Mr Cruickshank observed when asked about broadband and digital access for remote areas of Scotland, "when one examines where the disadvantaged are, there will be many more people in the centre of Glasgow than there will be in the Highlands and Islands".[298]

90. The Government is right to think in terms of a future universal obligation to provide high bandwidth digital services. We accept that, given the early stage of development of broadband in this country, it would be wrong for the Government to put all its eggs in one technological basket or to set a firm timetable for a new universal obligation when it is far from clear what form such an obligation will eventually take. However, we are deeply disappointed that the Government's broadband strategy appears to be developing in virtual isolation from the public and consumer needs and opportunities created by analogue switch-off. The role of both digital television and of Internet-based broadcasting as consumer services in driving broadband take-up is largely neglected in that strategy. We believe this reflects a broader underestimation by both Government and industry of consumer demand for broadband services. Despite the protestations of close and effective working between the Department of Trade and Industry and the Department for Culture, Media and Sport,[299] the Government's business-oriented broadband strategy and its consumer-oriented strategy for analogue switch-off do not intersect as they must if the Government is to respond to and harness the opportunities of the converged world. We expect the Government to tackle these weaknesses as a matter of urgency.

91. Although there are fears that impetus in promoting high bandwidth availability will be lost during the transition from Oftel to OFCOM,[300] once the new regulator is established its responsibility for both broadcasting and telecommunications should enable that regulator to make a valuable contribution to a more coherent approach to the issues of analogue switch-off and broadband provision. We recommend that, in its response to this Report, the Government set out the proposed role for the new regulator in taking forward the Government's objectives for analogue switch-off and broadband provision. We further recommend that a statutory duty be imposed upon the new regulator to conduct and lay before Parliament an annual audit of progress towards the Government's objectives for analogue switch-off and for broadband.

Digital radio

92. Digital radio is less central to the convergence revolution than digital television. The main advantages digital radio offers relate to quality of reception and range and variety of radio services.[301] Nevertheless, digital radio will have potential for text, graphics, pictures and interactivity.[302] Digital radio take-up is much slower than that of digital television, in part because radio is almost exclusively a free-to air medium and in part because reception of digital radio requires the purchase of new equipment rather than the conversion of existing radios. Sales of digital radios are growing slowly, held back by the continuing price differential between digital and analogue sets in the market for what is traditionally a cheap product.[303] Car radio is likely to be an early growth area for digital radio.[304] The reach of services provided by the commercial sector and the BBC is gradually increasing and both are committed to further development.[305]

93. With over 100 million analogue radio sets in the country requiring replacement, it is not surprising that the Government does not "plan to set an early date" for radio analogue switch-off.[306] The Radio Authority did not feel that it was "realistic to expect any government to try and even assay a possible date".[307] Ms Jenny Abramsky, Director of BBC Radio, noted that the move from medium wave to FM had taken about 25 years.[308] GWR Group plc and the Radio Authority wished to see the Government establish criteria for radio analogue switch-off.[309] We recommend that, in its response to this Report, the Government set out its assessment of the main factors to be borne in mind in reaching a decision on radio analogue switch-off.