Examination of Witnesses (Questions 20-39)
MR GAVYN
DAVIES, MR
GREG DYKE
MS JENNY
ABRAMSKY AND
MS CAROLINE
THOMSON
TUESDAY 22 JANUARY 2002
20. Is it true that a BBC orchestra was shipped
abroad during a G7 summit at a time when you were trying to persuade
the G7 on a particular issue on funding?
(Mr Davies) I have never heard of it.
(Ms Abramsky) I have not either.
(Mr Davies) Jenny, who is responsible for the orchestras,
I do not think has heard of it either.
(Ms Abramsky) No.
21. This was a few years ago. Perhaps you would
like to write to the Committee and let us know whether that was
the case.
Chairman: We are going to have to move
on, Michael. Every other member of the Committee wants to ask
questions.
Rosemary McKenna
22. I have to say on my own personal behalf
and on behalf of my constituents I think the service provided
by the BBC is second to none. I think that any year, but this
year, after the events of September 11, we realised just how valuable
the service was. I was out of the country for quite a bit of the
time after that and depended heavily on BBC News 24 and the World
Service for reports and I know from family living in the States
how important it is to them to be able to access the kind of information
that the BBC provides. We are the envy of the world in terms of
the service the BBC provides. At the moment, though, there is
a real concern that people are not able to access all of the services
that are provided. Those of us who are fortunate enough to have
digital sets can access all and can afford to pay for it. I think
I heard a report last week on the news or in the press media that
there is a possibility of a set-top box somewhere in the future
which would make access to digital programmes for ordinary people
who cannot afford to change their television sets. Are there any
hopes, any plans for that in the future?
(Mr Dyke) We have been discussing with some set-top
box manufacturers for some time about the possibility of a free-to-air
box and we have done a lot of research on it. PACE last week were
the first to announce that they are going to put onto the market
in the next three months a set-top box for £99 which, if
you plug into the back of your set, will enable you to receive
all the free-to-air BBC and other free-to-air digital channels.
When we first put an application to the Secretary of State to
do more digital channels, it was on the basis that we supported
what we believed to be the Government policy and the policy of
the last Conservative Government and the policy of the Opposition,
to move towards a position of analogue switch off. We think the
advent of a free-to-air box quite soon would be a big step forward.
We have also been having discussions with ITV, with Channel 4,
with Channel 5 about whether we can get an agreement between us—and
it is mainly with ITV Digital, of course, because they have most
of the spectrum. In the next couple of weeks hopefully we will
reach agreement whereby there will be a free-to-air offering on
digital terrestrial television—which will be 15 or 16 free-to-air
channels, including all ours, and hopefully our radio stations—which
will all be available for £99. The great advantage of this
is that if it is £99 today, new onto the market, it will
be half that in two or three years time, which means switch off
becomes a reality, I think. It also means that people who do not
want pay television (and there are quite a lot who are pay rejecters,
who just do not want pay television—they would like more
television but they do not want pay) and certainly the people
who cannot afford to pay can actually, for a one-off payment,
effectively upgrade their television. So a one-off payment for
the box, plug it in . . . Actually, interestingly from our research,
there is quite a lot of enthusiasm for that but not everybody
believes it.
Chairman
23. We all know the number of people, because
it is published, who subscribe to Sky Digital, who subscribe to
ITV digital, who get digital via Cable. Have you any statistics
about how many people have access to and receive BBC digital programmes
without paying a subscription to any of the organisations I have
mentioned?
(Mr Dyke) It is very small. We do have those figures
and we could let you have those figures. It is very small. Sky
have actually just increased the price of their free-to-air offer.
Until Christmas or just before Christmas you could have got Sky
to fit you a box for, I think, about £99. They have just
withdrawn that. That now will cost you, I think, £350. But
it is very small.
(Ms Thomson) If I could add, I think it is around
300,000 people.
(Mr Dyke) But our research on the terrestrial digital
box suggests that there are several million who would be interested
in a free-to-air box if it took them from five channels to 15
to 20 channels. The other thing we are trying very hard to ensure
it would do, is allow our interactive services—which at
the moment are only available on Sky and will be available on
Cable—to be available on digital terrestrial as well, so
not only would you get 15 free channels, at least 15 free channels,
you would also be able to get interactive television for just
the one payment of £100.
Rosemary McKenna
24. Do you think we would be able to move then
to switch off on a much quicker timescale than it would appear
at the moment?
(Mr Dyke) I think there are two things that need to
come with this and if your Committee can support that in terms
of relationship with the Government it would help. One is that
obviously a switch-off date would help. Secondly—
Chairman
25. I am sorry to interrupt again. The Opposition
spokesman yesterday suggested the date of 2006. What is your reaction
to that?
(Mr Dyke) I suspect in that period. Not soon after
that. It depends on how fast the price of this £100 box comes
down, so I will wait a year to see but I suspect it will come
down. Secondly, there is a power issue in the DTT. If you go to
Ireland or certain other places that are doing digital terrestrial
television, they are playing at a significantly higher power than
we are in this country. One of the problems with DTT in this country
is that something like one out of five people who buy the box,
who live in an area where they can receive DTT, actually have
ariels that are not good enough. If you can turn up the power,
you overcome the ariel problem. It seems to me those are the two
things: When is the switch off time? and can we gradually turn
up the power? And we have to be careful, because if you turn up
the power and screw up everybody else's signals none of us would
be popular, but an increase in the power combined with eventually
a switch off date. I think it is not beyond the realms of possibility
that this box gets smaller, that actually at the time of switch
off you would have something you could almost give away to those
who have not got it. If that gets to the right price, you overcome
the other major problem which is the second set problem, because
when we talk at the moment about digital homes, we talk about
one digital set or one set that has got a digital box. Actually
I doubt whether there is any politician alive who is going to
announce a switch off if in fact what you are doing for an awful
lot of people is making their second and third sets redundant.
(Mr Davies) Can I just clarify, we are not thinking
of giving away boxes funded by the licence fee payer yet. We are
not talking about free boxes. But if the Director General can
bring this deal to fruition I think it will enormously help the
issue of changing people into the digital arena.
Rosemary McKenna
26. I think you are right, £99 will come
down very rapidly. Can I just clarify one point, does that mean
that all these channels will be available to everyone regardless
of who their service provider is?
(Mr Dyke) Yes.
27. At the moment, if you are with one of the
other service providers—
(Mr Dyke) They are all available on satellite. On
Cable? Yes, they will all be available because they must carry
on the Cable, and they are all available on DTT. Anybody can get
a box, yes.
Mr Flook
28. I would like to talk about the digital curriculum
and the way in which the BBC promotes itself in that area of education.
There are some people around who believe—and, having looked
at it, I believe they are correct—that it is an aggressive
push into the online commercial market. There are fears around
that you may be heavily subsidising that push, which means that
you could end up being the monopoly supplier in the digital curriculum
market.
(Mr Dyke) We are totally subsidising it. Effectively
one of the first things I did when I was Director General Designate
was to announce that in this period I hoped we would expand on
our educational services. I also said that day that I hoped we
would be able to create the digital GCSE curriculum online. When
the Secretary of State approved the licence fee increase two years
ago, there were four criteria that were put down on which we hoped
the money would be spent and one of them was education. Actually
when I made the speech I got a letter from both the Secretaries
of State for Education and Culture, both saying, "We welcome
this initiative." In the last 18 months we have been through
what some of us have found quite a frustrating period of trying
to get agreement with the relevant Government department and the
industry in terms of building the digital curriculum. We will
only build the content. Fifty per cent of that content will be
built outside of the BBC but funded by the BBC. We have set aside
£150 million over the next five years to do that but the
way that content then is distributed to the schools the Department
of Education will take responsibility for and not us; in other
words, they are looking at that. They, alongside that, have also
put up some additional money for those in the commercial sector
in education actually to bid for. So there will be the opportunity
to bid. Half of our money basically will go to the commercial
sector, will go to people who make software outside the BBC, and
the Government, I think, put up £40 million for this year
and they have said they will look again at the end of the year.
It is a very difficult situation. What is clear is that there
is no-one on the market who wishes to do the complete digital
curriculum. Everybody would like to do maths and science and English
but nobody wants to do some of the less popular subjects because
they might not be marketable. We have done this because we think
it is an initiative that has real value in this society: it is
one of the things the BBC should be doing. The BBC has a long
history in education and in terms of the digital curriculum, we
saw that as the logical next stage.
29. Could it not be seen as an inappropriate
use of State aid?
(Mr Dyke) Obviously, which is one of the reasons why
we are represented in Brussels, if you are taking public money
there are all sorts of discussions always about what is and what
is not an appropriate use of public money in State aid. Our advice
is that this is not, but we will see. The Government announced
quite recently the whole initiative but we are still in discussions
about the details. We then have to take the proposals to DCMS,
because it is a new service, and get the Secretary of State's
permission, and the Secretary of State will look at the whole
issue of whether or not this is State aid.
(Mr Davies) I think at the end of the day, Mr Flook,
it will be surprising if the BBC makes more than one-third of
the total content. I would expect at least two-thirds to be made
by private companies. Your original fear that we were going to
monopolise this, I think is not true.
(Ms Thomson) This is a service which will be available
free at the point of use in the way that every other BBC service
is. It is not one that we are seeking to make money out of and
in that sense is a completely logical extension of the work which
BBC schools programmes, the video programmes, have done for many
years: 90 per cent of schools use our video programmes. Now they
are moving online, it is the next step forward. So in that sense
it is not competing with raising revenue.
30. It does have an impact on the commercial
viability of a number of other organisations which will provide
choice.
(Mr Davies) I think the other thing to bear in mind
here though is that without the BBC doing some of the core curriculum
and getting the sort of backbone under way, it may have been difficult
for private companies to have done it on their own. I actually
think that this process will generate a market place which otherwise
might not have existed and certainly will bring earlier into being
a marketplace which otherwise might have taken longer.
Miss Kirkbride
31. Is it not true that schools would pay to
go online?
(Mr Dyke) That would be up to the Government. That
would be up to the Department of Education to decide.
32. So it is not free.
(Mr Dyke) No, we are making the content, the content
is free. The Government will then decide how they fund the distribution
system. They are going to have, as I understand it, a competition
for that, for how the distribution system is installed in those
schools. But actually schools pay to go online at the moment.
33. So therefore it is not free for schools
in the same way as the airwaves are.
(Mr Dyke) No, in the sense that they are going to
have to pay a telephone system but it is fairly cheap. But then
that is true of—
34. Of all your Internet services.
(Mr Dyke)—all Internet services. You have got
to pay for them, you have to pay a telephone call.
(Mr Davies) I think we should point out as well that
it will be free to homes. Households will be able to access this
via broadband for nothing.
(Mr Dyke) Well, no additional cost.
35. The crucial thing, just to be clear on what
I was saying, is that there is no BBC subscription charge either
at home or school from the BBC. That is to be expected, bearing
in mind £2.5 million of public subsidy.
(Mr Davies) Exactly.
(Mr Dyke) Absolutely.
36. But nevertheless it is not strictly speaking
free.
(Mr Dyke) They also have to buy a television set.
It was never free. If you did not have a television set, you could
not receive our schools programming in schools.
37. It is an additional charge.
(Mr Dyke) Yes, and as I understand it I am not sure
whether the school is going to pay or the Department of Education
is going to have to.
38. When you did your report three years ago,
you very much stressed market failure. You have just said how
the market was providing perfectly good curriculum services in
the more popular subjects. Why is the BBC not just doing things
like Greek or Latin where the market does not provide rather than
getting into the market where the market does provide.
(Mr Davies) I actually do not think the market was
doing a perfectly good job in providing broadband digital curriculum
services. In fact, there are not any, are there?
(Ms Thomson) No.
(Mr Davies) There are not any. The judgment that I
think we had to make was whether we could essentially kick-start
this process by providing a backbone content which others could
then build around. It is hopefully going to be a partnership between
public money, freely accessible by households and schools and
an enormous amount to private enterprise as well. I think that
is a good way of doing it actually.
39. Can you tell me why in answer to Ms McKenna's
question are you so squeamish about a £100 digital box for
people when you ask people to pay £109 every year to provide
your services.
(Mr Davies) I am not sure we were squeamish about
the £100 digital box. I think we were saying we hoped that
would be seen as value for money—by several million people,
Greg said. So I do not think there was a squeamishness there.
I am certainly concerned, with £109 that we collect from
every household, to ensure that we give them as much value for
money as we possibly can squeeze out of that £109. It is
one of our main responsibilities to do that. That is why when
Mr Fabricant earlier was perhaps hinting that we still were wasting
money in some areas of the BBC I am concerned to ensure that that
does not happen. One of Greg's prime targets is to substantially
reduce the amount of money that goes on anything except programmes
and we have made terrific progress, since he became Director General,
in that direction.
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