Previous SectionIndexHome Page

Mr. Wyatt: Is the hon. Gentleman suggesting that each member of the board of directors should hold a specific remit—one for radio, one for broadband and one for the internet, for example? If so, I think that that is quite a good idea.

Dr. Cable: I was not recommending that specifically. The structure does not have to be so formalised and compartmentalised. One is looking for expertise on the board and for people who represent different interests. I would not want to prescribe a specialist for each area. I was simply trying to establish that Parliament can give critical reviews to major appointments—in other words, board members—to safeguard the organisation's independence.

On the related issue of parliamentary accountability, I hope that the Minister will indicate how he intends Ofcom to be accountable to Parliament. Perhaps it might be useful to specify in the Bill exactly how that would occur. At present, there is the occasional requirement to report to the Public Accounts Committee—often a rather narrow and technical form of accountability—and occasionally to the relevant Select Committee. However, perhaps this should be spelled out and we should specify annual debates. The whole area of parliamentary accountability is vague, and this needs to be made clear.

We get into difficulties once we separate discussions on structure and discussions on the Bill's principles and purposes. What is the purpose of regulation? What are we trying to achieve by it? The answer is not self-evident. The Government's objectives, as set out in their preparatory paper, were to strike a balance between the

14 Jan 2002 : Column 76

interests of the industry, which are effectively unfettered commercial activity, and the protection of the consumers. However, consumer protection is very complex, as opposed to the protection in the financial services area. We are talking about quality, regional balance and access for old and disabled people. Defining those factors will be difficult.

The liberal and economic view would be to argue that the nature of the technology makes regulation less necessary, because one is creating choice through digital technology and in other ways. There is a vast cornucopia of choice; people can pick and choose. That suggests the advantage of light regulation, but it needs to be backed up by regulation of a different kind. I want to make the case for that, because the real need for proper and effective regulation is often overlooked.

There is no reason to assume that the industries that will emerge in this new business will be competitive. The nature of many multi-media and telecommunications activities is to generate monopoly. They generate economies of scale. A major concern about the growth of new media communications is what people in the industry call the secret garden problem. Major providers in the satellite communications business and elsewhere create directories which will, in turn, direct viewers to content. The providers will effectively have monopoly control over who sees what through their ownership of the media system. That is a hypothetical concern at present; none the less, it underlines the problem that in this industry there may be a natural tendency to monopolise. That is already the case with software systems and standards. Therefore, we need clarification about how monopoly and breaches of competition will be dealt with. The Bill does not make clear the link between Ofcom and the Office of Fair Trading. Which organisation will take the lead in investigating a serious breach of competition?

The Parliamentary Under-Secretary of State for Culture, Media and Sport (Dr. Kim Howells): That is not in the Bill because this is a paving Bill to set up Ofcom. However, I understand and share the hon. Gentleman's concerns about competition. I give him an undertaking that the issue of concurrency, which is at the heart of this matter as far as the Office of Fair Trading and Ofcom are concerned, will be addressed in the main communications Bill, which will be published in the spring.

Dr. Cable: I thank the Minister for his helpful intervention, which demonstrates his awareness of and concern about the problem. I hope that he will bear in mind the complex problem in the media and telecommunications business of ensuring that monopolies and mergers are regulated appropriately at both a European and national level.

The second issue relates to content. As I have said, there is a wide variety of concerns about quality, regional balance, unacceptable material and so on. I should have thought that one of the board's purposes was to capture some of these various public concerns about broadcasting. That is why I do not fully understand why the number of three to six has been chosen. What was the Government's rationale for that? Why is it so restrictive? Does it encompass the range of representations that will have to be made, particularly on content? It seems unnecessarily rigid, and it would be useful to have an explanation of the reasoning behind it.

14 Jan 2002 : Column 77

Finally, and linked to that point, there is the debate that has been going on during our proceedings about the role of the BBC. There is certainly a debate to be had. The right hon. Member for Manchester, Gorton made several particularly valid points. The BBC's normal programming—quite apart from its specialist commercial activities—has major knock-on effects on the commercial competitors. The BBC is part of the industry; it cannot be considered separately. At the same time, it has a separate remit with a host of social obligations.

The Liberal Democrats certainly believe in public service broadcasting, but getting the balance right will not be easy. We are debating not whether the BBC should be in or out of Ofcom, but how far in or out it should be. At this stage, however, we do not want to prejudge that issue. That is why we argue against including it in the Bill at present—it should be part of subsequent debates.

To summarise, we broadly support the Bill. We regard it as a step forward. It is a useful paving measure. We shall table amendments to strengthen accountability and to ensure the independence of the regulators from day-to-day political interference. With those qualifications, the Government can count on our support.

7.1 pm

Mr. Chris Smith (Islington, South and Finsbury): I draw the attention of the House to the declaration of interests in the register in relation to both Disney and Classic FM.

It is sensible to change, simplify and modernise the regulatory structure in the light of changing and fast moving circumstances. We live in a world in which the fields of communications as a whole—encompassing both broadcasting in the traditional sense and the development of internet communication, telephony and telecommunications—are merging, converging, changing, developing and improving at a very fast rate. It makes complete sense that Parliament and the Government should examine the regulatory structures that apply to those various fields and try to bring the structures up to date.

It makes sense to rationalise them by creating one regulatory body. Given that there is such a fast-converging set of fields, it no longer makes sense to regulate something called telecommunications separately from something called broadcasting. Bringing the existing five regulators together in one body—Ofcom—as the Bill presages is the sensible thing to do.

It is also sensible to make preparations early, so a paving Bill that will enable some of the changes to be introduced as rapidly as possible is also a wise approach. I certainly hope that we shall soon see the detail of the main communications Bill so that we have a clearer idea of exactly what Ofcom is going to do and precisely what its powers will be.

The existing five regulators have been working together extremely well since the publication of the White Paper a year ago—as they had been doing even before that. Their willingness to participate readily in the development of Ofcom is a real tribute to their experience and expertise.

At the heart of what we are doing lies the acknowledgement that some special regulation is required for this range of industries. Broadcasting in particular is not like a material good for sale on a supermarket shelf. The media industries are special in that they rely on a limited range of means of communication with the public.

14 Jan 2002 : Column 78

They are part of the very fabric of our democracy. They form part of the means whereby the citizen gains information as well as entertainment.

As a result, it is important that there are some special rules for the media. Simply to rely on competition policy—however strong and fierce it may now be—is not sufficient. However, it is right for the Government to want to employ that special regulation with a lighter touch than may have been the case in the past. When spectrum was scarce and there was a limited number of means of communication with the public, there was a clear role for very strict regulation. Nowadays, with the development of satellite and cable, the opening up—we hope—of broad band and the development of a more efficient use of even analogue spectrum, there is a much broader range of opportunities to reach the public and communicate with them, so it follows that it is right to go for a lighter touch as regards regulation. I very much hope that that is the way in which Ofcom will develop.

When we are enacting that new legislation we need to ensure that the structures will be flexible. In the past, there has always been a tendency for broadcasting legislation in particular to be catching up with the past rather than preparing for the possibilities of the future. I trust that the full communications Bill will be a mechanism that can itself adapt as technology and the marketplace change and as competition delivers new ways of serving the public. I hope that the mechanisms to be set up can be adapted with relative ease and with speed as the world around us changes.

I hope that Ofcom will be a small and tightly focused body. In many ways, the Government are right to consider that a board of six people will be about the right size. It is important that Ofcom is not an unwieldy bureaucracy; it should also be fleet of foot. I hope that the Government will resist calls, which will be made eloquently in all quarters, for different interests to be represented on the Ofcom board. The board must be focused specifically on its remit from Parliament; it should not be a gathering together of a multitude of interests representing different parts of the country or particular types of communication.

The board must be small and focused, but it must also be given the specific duty of ensuring that it consults deeply with every part of the country and of the industries that it regulates. The organisation should be flexible and nothing like as rigid in its operation as some of the present structures.

I offer the House a small example. At present, there are strict rules—in many ways they are sensible—to deal with the dangers of the promotion of products and the undue prominence that particular commercial products can be given in television programmes. However, a broadcaster cannot go to the Independent Television Commission and say, "We are thinking of making a programme in which there will be a particular product placement. What are the rules about whether we can do that?"

The ITC cannot give prior advice to the broadcaster. All it can say is, "There are the rules; you put the programme out; and we will then decide whether to fine you." That inability to have a prior discussion seems to be daft. Surely it would be sensible to ensure that Ofcom can act flexibly and rationally, so that broadcasters can discuss with it exactly how a certain set of rules will apply to any programme or set of programmes. That would give broadcasters greater certainty and ensure that they could

14 Jan 2002 : Column 79

take more creative risks because they would not be frightened of offending the ITC without knowing whether they would actually do so.

Much has been made in the debate so far about Ofcom's role in relation to the BBC. That is a crucial issue. The BBC is our largest broadcaster and, in many ways, the most important cultural institution in this country. It is therefore important that the BBC fulfils the remit that Parliament has placed on it not only effectively, but fairly. It is worth reminding ourselves that a very substantial role is envisaged in the White Paper for Ofcom in relation to many of the BBC's functions.

In the first and second tiers of regulation envisaged in the White Paper, Ofcom's role is very clear and, with one exception, there is more or less a level playing field between the BBC and the other public service broadcasters. The important difference in the White Paper relates to tier 3—the tier where the broad public service responsibilities of the public service broadcasters are carried forward.

It is envisaged in the White Paper that all the broadcasters will effectively operate on a self-regulatory basis; that at the start of a year, they will issue of set of commitments and a promise of performance about how they intend to fulfil their obligations. That will be monitored towards the end of the year, and Ofcom will have a backstop power to intervene if it believes that the broadcaster is failing to fulfil the obligations placed on it. That self-regulation, coupled with Ofcom's backstop power, seems to be a sensible approach; it will lighten the burden on the broadcasters, but it will keep the public interest firmly in place, if necessary. In the White Paper, Ofcom's backstop power does not apply to the BBC.

The backstop power envisaged in the White Paper lies in the hands of the Secretary of State. As the White Paper states, the Secretary of State is responsible for approving new services and for approving, or withholding approval, changes in services provided by the BBC. That is why my right hon. and hon. Friends have rightly identified, for example, the need to review News 24 in the near future to determine whether it is fulfilling the obligations that were placed on it when initial approval was given for it to go ahead. At the moment, that role lies with the Secretary of State.

I put it to my right hon. and hon. Friends that it is worth considering whether it might be better for that backstop power to rest with Ofcom, rather than with the Secretary of State, to achieve a more level playing field between the different broadcasters. I say that not only because it could create a more even-handed approach between the different broadcasters, but because it might be beneficial for the BBC; it would remove the possibility a political judgment being made in relation to the BBC's services and put it in the independent regulator's hands. I say that in the knowledge that I was largely responsible for writing the White Paper, but I have had the opportunity to reflect further on those matters since then, and I believe that that would make a substantial difference to the BBC's interests.

Next Section

IndexHome Page