VIII. SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS
141. Our principal conclusions and recommendations
are as follows:
(i) Having ourselves recommended the creation
of a single regulator in 1998, we have no hesitation in supporting
the proposal for a new unified regulator contained in the Communications
White Paper (paragraph 13).
(ii) In future, the delivery of public services
direct to the citizen in his or her home must be central to public
policy in this area. We see insufficient signs of such centrality
in the Communications White Paper (paragraph 17).
(iii) We recommend that, in its response
to this Report, the Government set out its views on the relationship
between the development and regulation of new services in the
communications market and the electronic delivery of public services.
We further recommend that, in the same document, the Government
set out its views on the scope for the new regulator to have a
specific duty to pursue the interaction between the two (paragraph
(iv) We recommend that a statutory duty
be imposed on the new regulator to conduct and lay before Parliament
an annual audit of performance in relation to the stated Government
objective of making the United Kingdom "home to the most
dynamic and competitive communications and media market in the
world". We envisage that this audit would look beyond sectors
subject to direct oversight by the new regulator, to the film
industry, for example, to broaden understanding of relations between
the sectors (paragraph 21).
(v) We are not convinced that inflexible
legislative provisions relating to training expenditure by all
licensed broadcasters are desirable, but we support the granting
of a power to the new regulator to promote training activities,
where appropriate with specified universities, that are proportionate
to the public service obligations and privileges of particular
licensed broadcasters (paragraph 23).
(vi) We recommend that the new regulator
be given distinct objectives relating to consumer protection and
to the promotion of open and competitive markets. We further recommend
that the Government prepare policy guidelines for the new regulator
on matters affecting the priority of its different objectives
to be debated as part of the legislation giving effect to the
proposals in the White Paper (paragraph 27).
(vii) We support the proposals in the White
Paper to grant sector-specific powers to the new regulator. The
exercise of these powers will have a vital role to play in the
continued development of accessible networks and fair and competitive
markets. It is appropriate that such powers be exercised by the
new regulator (paragraph 31).
(viii) We recommend that, notwithstanding
the proposed removal of specific legislative barriers to further
ITV consolidation above and beyond the general provisions of competition
law, separate licences be retained for each ITV region, including
provisions relating to regional production and the contribution
of each region to network programming. We further recommend that
there be a legislative obligation upon the new regulator to maintain
a network of offices in the nations and regions of the United
Kingdom to facilitate effective monitoring of compliance with
regional obligations by broadcasters (paragraph 34).
(ix) We do not believe that the case for
specific restrictions on radio ownership at national level has
been made and we recommend accordingly that legislation giving
effect to the White Paper proposals should remove all such restrictions
(x) We consider existing rules on cross-media
ownership contained in the Broadcasting Acts 1990 and 1996 to
be increasingly unnecessary in a more diverse and competitive
media market in which general competition law, sector-specific
regulatory powers and content regulation by licensing all apply.
We view restrictions based on "share of voice" as quite
impractical even if they were desirable. We consider that matters
of such parliamentary and public importance as media ownership
and control should not be open to significant amendment by means
of secondary legislation. A certain inflexibility is inherent
in primary legislation, but this is a price worth paying for full
scrutiny. The inflexibility inherent in such controls in primary
legislation is a compelling reason why specific controls should
be maintained in forthcoming legislation only if the case for
such controls is overwhelming and enduring (paragraph 45).
(xi) The new regulator is best placed to
judge the impact of new BBC services on the development of open
and competitive markets, and also to weigh that impact in the
balance against the regulatory objective of "maintaining
high quality of content, a wide range of programming, and plurality
of public expression". The new regulator should be able to
reach such decisions transparently and in a manner that is free
from any imputation of political interference. The decisions relate
precisely to the type of issues that the new regulator is being
established to regulate. We recommend that, from the time of its
establishment, the new regulator assume the powers to approve
and to review new BBC licence fee-funded services currently held
by the Secretary of State for Culture, Media and Sport. We expect
that the new regulator would be given powers to ensure that, while
the BBC retained the right and the ability to continue with services
and to launch new services funded from the licence fee, such services
would be conducted on the basis of fair competition (paragraph
(xii) The Government has already responded
to criticism of the failure to make new proposals about digital
television and analogue switch-off in the Communications White
Paper by announcing initiatives to promote digital television
in the Competitiveness White Paper published on 13 February 2001
(xiii) The task of developing a clear labelling
scheme for digital television sets 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 (paragraph 61).
(xiv) 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 (paragraph
(xv) 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 (paragraph
(xvi) 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 (paragraph 71).
(xvii) 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 (paragraph 72).
(xviii) 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 (paragraph 87).
(xix) 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, 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 (paragraph 90).
(xx) 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
(xxi) 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 (paragraph 93).
(xxii) There is an enduring future for public
service broadcasting, provided it is recognised that that future
will not be like the past (paragraph 94).
(xxiii) Public service broadcasting is a
constantly changing phenomenon. Accordingly, it is not appropriate
to criticise the White Paper on the grounds that the document
has failed to provide a simple definition of public service broadcasting.
However, we consider that there are three general principles which
should guide the future provision of public service broadcasting
that are not fully reflected in the White Paper (paragraph 96).
(xxiv) The first principle is that, while
the combination of funding arrangements, status and regulatory
positions of the "privileged broadcasters"the
BBC, ITV, Channel 4 and Channel 5means that they will continue
to produce considerable public service content for the foreseeable
future, it does not follow that the output of those broadcasters
can be equated with public service broadcasting (paragraph 97).
(xxv) The second principle that should inform
the future development of public service broadcasting is that
the current position of the "privileged broadcasters"
brings with it very considerable costs, both in terms of direct
and indirect charges upon the public and in terms of the impact
on the development of a competitive and dynamic market, and that
these costs should be transparently identified and continuously
assessed against other means of achieving the desired ends in
terms of public service content (paragraph 102).
(xxvi) The third principle is that the focus
in future should be on ensuring the provision of public service
content from whatever source is most appropriate rather than on
protecting the privileges of certain broadcasters for their own
sake (paragraph 105).
(xxvii) We recommend that, as a matter of
urgency, the Radio Authority identify pilot schemes for expanded
community radio projects for launch in advance of the introduction
of legislation to give effect to the proposals in the White Paper.
We envisage that pilot schemes would include projects focused
on distinct neighbourhoods for periods significantly more than
28 days and extensions of the scope of school-based projects with
current restricted service licences (paragraph 109).
(xxviii) We are convinced that there is
both a strong need and an overwhelming case for the establishment
of a permanent community radio sector in the United Kingdom, distinct
from and complementary to commercial radio. We support the creation
of an "Access" Fund both to assist in the establishment
of new projects and to provide continuing funding to reflect the
fact that funding of the sector will not be primarily commercial.
We expect that the level of this Fund would reflect the two distinct
functions of support for launch and continuing financial support.
In the light of the likely level of demand, we recommend that
the Fund be financed principally from general taxation (paragraph
(xxix) We welcome the clear and unequivocal
statements that the Government is not seeking to establish any
new forms of Internet regulation by means of proposals in the
White Paper. We consider, however, that fears on this score arise
directly from what can most generously be interpreted as infelicitous
drafting in the White Paper. The same mistake must not be repeated
in the legislation that follows. We recommend that the new regulator
be explicitly excluded by statute from imposing regulatory obligations
relating to Internet content. We further recommend that the Government
reaffirm its commitment to self-regulation as the best and only
way forward for Internet content regulation and clarify that the
Government does not envisage any form of "co-regulation"
of the Internet involving additional powers of enforcement that
go beyond the principle that the general law should apply online
as offline (paragraph 116).
(xxx) We consider that it would not be appropriate
for the new regulator to use its licensing powers for media with
spectrum scarcity as a back-door method of Internet content regulation
and we recommend that there be a specific statutory prohibition
on the new regulator doing so (paragraph 118).
(xxxi) In the future, universal negative
content regulation will cease to be possible. As the Internet
becomes used increasingly as a medium for broadcast content, there
will be an alternative to the licensed broadcasters. The regulatory
régime for licensed broadcasters, and for non-scheduled
services in particular, must reflect this (paragraph 121).
(xxxii) We expect there to be a continuing
case for positive programming requirements for the "privileged
broadcasters" and any other licensed broadcasters that may
in future be in receipt of direct or indirect subsidy in respect
of public service content (paragraph 122).
(xxxiii) We strongly support the Government's
recent proposals to establish more stretching targets for subtitling
on digital terrestrial television and to extend such obligations
to digital cable and satellite services by means of new primary
legislation. We consider that any decision by the new regulator
to exempt providers from these targets should be transparent and
based on clear criteria (paragraph 123).
(xxxiv) There is a real danger that the
regulatory régime for broadcasting will be in a state of
almost continuous flux and uncertainty from now until 2006. By
failing to provide for an integrated approach by the new regulator
to all broadcasters including the BBC, the Government has left
a large amount of unfinished business. We find it absurd to suggest
that Parliament's role in reviewing the BBC's status would somehow
be diminished if the BBC were subject to equal treatment with
other broadcasters in legislation that will doubtless be subject
to extended and detailed consideration by both Houses of Parliament.
We recommend that the House of Commons be given a full opportunity
early in the next Parliament to consider the future regulation
and governance of the BBC as part of the process leading to enactment
of the new regulatory régime (paragraph 129).
(xxxv) We recommend that the Prime Minister
establish a separate Department of Communications with its own
Secretary of State and assuming the relevant responsibilities
currently within the Department for Culture, Media and Sport (relating
to broadcasting and the media), the Department of Trade and Industry
(relating to telecommunications and the Internet), the Cabinet
Office (relating to the electronic delivery of Government services)
and the Home Office (relating to the regulation of videos) at
the earliest possible opportunity (paragraph 132).
(xxxvi) We consider it vital, not least
on grounds of public accountability, that the internal structure
of the new regulator is set out in the legislation giving effect
to the proposals in the White Paper rather than being left to
the governing body of the new regulator to determine. In particular,
we recommend that the legislation establish a mechanism to provide
for greater lay involvement in content regulation than in competition
regulation and create a distinct body within the new regulator
responsible for radio (paragraph 136).
(xxxvii) The powers that the new regulator
will have are so extensive that a collegiate approach is more
appropriate than regulation by a single individual. We welcome
the fact that this is reflected in the White Paper, but regret
that a somewhat different approach is implied in the proposed
title for the new regulator. We consider that the internal structure
would be better reflected if the new regulator were called the
Communications Regulation Commission, and we recommend accordingly
(xxxviii) We welcome and support the proposal
to establish a consumer panel. We recommend that the panel be
empowered to examine and to seek to represent the interests of
all consumers and potential consumers and not be narrowly confined
to issues of service delivery for customers with a financial relationship
to service providers (paragraph 138).
(xxxix) We recommend that a specific duty
be imposed on the new regulator to ensure that its governing body
and its sub-commissions or committees meet in public unless the
governing body is satisfied that, in the case of any particular
issue under consideration, the interests of public disclosure
are outweighed by the need for commercial confidentiality. With
such a need to weigh these factors in the balance, we would not
expect all meetings concerning commercial activities to be held
in private. We further recommend that legislative provision be
made to ensure that, where any decision is reached by vote, the
voting records are published and to require that all meetings
with broadcasters to discuss their annual reports on delivery
of programme statements are held in public (paragraph 139).
(xl) We consider that close scrutiny of
the establishment of the new regulator and its work will be a
crucial task for the relevant select committee or select committees
of the House of Commons in the next Parliament (paragraph 140).