Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 400-415)



  400. Do you think there should be something parallel for satellite?
  (Mr Singer) Yes. We have to carry, satellite does not have to carry; satellite can charge, we cannot. That is iniquitous.

Alan Keen

  401. I want to talk about the future, and I am as fascinated as you are, and we have to move forward as quickly as we can; but, before getting on to that major issue, somebody said to me, when we started this, I should dial Telewest and we would not have got through before you were having a cup of coffee somewhere else on the way back to your office. With all the technology you have got and the knowledge, and the fact that we are talking about moving into the future, you must be doing it on purpose, that is all I can think, because it is dreadfully difficult to get through on the telephone?
  (Mr Singer) A fair comment. Let me tell you what we have done. I will be the first to admit, having been involved in the UK cable industry, in one form or another, since 1983, that we have not been exactly stellar, in terms of providing the right kind of service to our customers; absolutely true. One of the reasons for that is, when you spend all your capital digging up the streets, then actually finding the capital, you have a tendency to get focused on engineering rather than customer service; we are now moving out of that. Your point about our ability to answer the `phone is certainly a fair criticism of a few months ago; a few months ago we were able to answer about 60 per cent of our telephone calls within 30 seconds, we can now answer 90 per cent of our `phone calls within 30 seconds. If it is for helpline, on our high-speed Internet, it does take longer. We have spent considerable amounts of money on training, increasing our staff levels, we are the only cable company that is increasing its staff levels actually to meet customer needs, and it has got better. Do we still let down individuals, yes, we still let down individuals; are we a bit better than we were, yes, we are.

  402. I cannot contradict you, because I gave up trying to `phone months and months and months ago, and so I cannot contradict you. I am sure that you must be improving, you must be, because you cannot really have been doing it on purpose, can you?
  (Mr Watson) I think the other thing I would add is that the digital TV technology, when we launched that at the start, or finished rolling out in 2001, was complicated, and, if you look now, the number of problems our customers have is a quarter of what it was 12 months ago. So we have made significant improvements over 2001, which has meant that that call-answer rate has got better in the last couple of months.

  403. Coming on to the big issue, and I speak as somebody who worked as a systems analyst in the early seventies, and the idea of putting information in once and losing it a thousand times, and this is what broadband is about, talking about the Health Service and those sorts of things; have you put a cost/benefit analysis to Government, because it should be staring them in the face that it is worth investing in it, and, as you say, the market is not going to provide what we want quickly enough, saving on transport, for one thing, must be so evident?
  (Mr Singer) It took us six months to get an appointment to see the Minister at DCMS; it actually takes a long time to get in to make these statements. But, you are absolutely right, and we can present this; it is how does one talk, how does one promote dialogue. We are perfectly happy to say to Government, "We've built the network; come and experiment on it, use it, we're not going to charge you, just try it to see what works." We are happy to do those kinds of things. And one of the questions which has to be asked also about the cost/benefit analysis, just going back to an earlier question, vis-a"-vis BT, is, you have to ask yourself not only what does it take to repay on the current service, but also what is their capacity to deliver extra speed in the future, because, actually, we are just at the beginning of this. So they are going to be delivering 512, we deliver 512; the real question is, as you start to go forward, who is capable of delivering 4 megabits, who is capable of delivering 8 megabits, and that is going to be where the real interesting character of questions lies. That is a small aside, that is a question for you to ask BT.

  404. One final question, really, before the Chairman moves on to somebody else. We have got to write a report, and we are enthusiasts for what you would like to provide; in two sentences, what would you like us to put in the report, from your point of view, not from Telewest, but for the nation's good?
  (Mr Singer) I think that is right, and the whole thrust of our argument, what we are arguing for, is not Telewest-specific, it is actually broadband for all, it has to be for everybody. And the one thing I would like to see is the Government encourage every Department actually to get to understand the technology, go and play with it and come up with products which they can use to get across to the citizen about what is going on. The whole point about broadband is, at 55k it takes for ever to download a photograph; at 1 megabit then, suddenly, wading your way through a digitised museum collection, sorry to go back but that was just a useful, simple example, becomes easy.


  405. Before I call Mr Fabricant, following on the very final question that Mr Keen put to you, and really I was trying to put this to you as a leading question, but, nevertheless, could you say what damage, if any, is being done to the nation's economy by the failure of Government to have a focused approach on this issue, if there is such a failure?
  (Mr Singer) It is remarkably hard to quantify; one is aware, and you will know the numbers as well as I, of other countries beginning to streak ahead. The real point is that the quicker you have ubiquity of take-up of broadband the quicker you have new businesses developing for it, the quicker people see the advantage for it; it is how you actually create this as a backbone culture. And the slowness is just slowing our ability. It is a transport revolution; railways were a transport revolution, `planes were, cars were, this is another transport revolution, and we are not moving in it quickly enough.

Michael Fabricant

  406. I appreciate how you welcome there being an OFCOM set up, so that there can be a more integrated approach to this whole problem, and it is a problem, because, as you quite rightly said, neither Government, nor Ministers, nor Civil Service, really understand the technology they are playing with, and they do not understand, as you quite rightly said, what broadband is, because some broadbands are more broad than others, and some are distinctly narrowband. But do you think it is a disadvantage that OFCOM, as I understand it, is going to be integrated but not integrated as far as its responsibilities are concerned; i.e., it is going to be responsible to both the Department for Culture, Media and Sport and DTI? What is your view on that? Where do you see the division should be; ought there to be a division?
  (Mr Taylor) I think we have taken the view consistently that it should have a single line of report to Government. It does not seem appropriate at all for a regulator, that ultimately has got to regulate the whole supply chain, to have potentially different masters, in terms of policy. How that can be resolved under the current situation really is down to the management of OFCOM, once it is formed. But I think one of the things that we have also pushed for is that it should start to be very conscious of the impact of its decisions; we have certainly in-put into reports, such as the Haskins Report on Better Regulation, looking at the whole issue of regulatory impact assessment, not just on the target for that regulation but for the impact upon the whole market, or the whole supply chain. Now that, I believe, is a very important point to be built into the responsibilities of OFCOM, going forward. Certainly, it should not be silos, with potentially different masters.

  407. Yes, and, you see, I was quite shocked when you said it took six months to see the Secretary of State for Culture, Media and Sport; in six months things move on technologically, and, of course, in the market it moves on. So would I be right in saying that you would rather be under the auspices, or via OFCOM, vicariously, of DTI, rather than DCMS?
  (Mr Singer) Yes.

  408. Now, tell me, let us talk about platforms; yourselves, NTL and, to a degree as well, BT, have invested a huge amount of capital in setting up this pipeline, if you like, to provide broadband services throughout the United Kingdom, and it is eventually throughout the United Kingdom, but technology moves on, because not everyone has to wait six months for appointments, and scientists meet, and maybe cable is not the long-term solution. What is your view on that; what about new technologies, like low earth orbit satellites, where there are two-way communications, where people, like in the Rhondda, for example, who are not cabled up could have access? Is this going to mean that in five or six years' time cable is going to be something of the past?
  (Mr Watson) LEOS, low earth orbiting satellites, were an idea of a couple of years ago, as were barrage-balloons and aeroplanes, that orbits continuously above the earth. I think all of those have had their day, and, with the current capital markets, have struggled to get off the ground; no serious pun intended there. I think the value of cable is, literally, we put a fibre-optic cable down to a cluster of 500 homes, and the ability to do that, and when we have switched off analogue within our own private band-width, we will be able to deliver up to 30 megabits down to an individual home.

  409. Can I just ask you about this; you say up to 30 megabits, which is a lot, but one thing that I have been understanding through this inquiry, because although I understand the physics I do not understand the way it is actually being organised, if you like, one thing I learned from a previous session was, I think it was NTL that we were interviewing, I cannot recall, when you say up to 30 megabits, if everybody is on line at the same time that drops rather dramatically. Could you explain how the Telewest system will operate?
  (Mr Watson) Yes. What we have done, in that, the assumptions behind that 30 megabit number are that we have 50 per cent penetration of the homes that we pass, so, within that 500-home area, 250 homes; also, we have assumed there that up to 1 in 4 customers could be on simultaneously. Now, today, network experience tells us that, if you take 500 customers, only 50, 1 in 10, will ever use it at the same time.

  410. Even in prime time?
  (Mr Watson) Purely bookable, on-demand type services, inter-active type services. Broadcast and linear channels, I believe, will be retained, in a small number, for prime time, major, public, broadcast events; but outside of that, with non-linear television and technologies that video-on-demand start to enable, then really we are pushing towards that 30 megabit capability.

  411. Can I just move on to the BBC, which is something you mentioned earlier on, particularly the spawning of all these digital channels. As you know, the BBC does not come fully under the auspices of OFCOM; what is your view on that?
  (Mr Singer) I think our view is, we cannot understand why there should not be one regulator for all.

  412. What about the argument that the BBC would present, and that is, "We're a public service broadcaster, we're not like the others, we're special, we're funded by the licence fee, that's what makes us special;" that is what they would argue?
  (Mr Singer) I do not think it is really for us to argue either for or against the BBC, in this current position. I think you are going to see the interesting challenge, that any broadcaster faces and the BBC will face, that, as everybody becomes a multi-channel home, major channels like ITV/BBC will drop down, and they are going to be looking at, tops, 15 per cent share. And the question to the BBC is going to be very much how do you achieve utilisation of signal to justify a licence, and they, too, will start to have to look at how you provide more broadband services, as well as classic linear television, actually to provide that justification. So I suspect that is the way the argument goes, and once you start going down that route you may as well be under one regulator; but that is a personal opinion.

  413. Do you have no comfort though that it is up to the Department for Culture, Media and Sport and the Secretary of State who can determine precisely how many BBC digital channels there will be?
  (Mr Singer) The question for any organisation, and my comments apply to us as much as the BBC, is that all of us have only got so much money, how far do you want to play the game in depth or in breadth; and that is the issue that they face and we face.


  414. Could I ask you one final question, I have asked it of your counterparts on an earlier occasion. Twenty years ago, the assumption was that cable would lead all of these developments; what has gone wrong in those 20 years?
  (Mr Singer) I think I am one of the few people who actually was here, I actually joined the cable industry when the Bill went through in November 1983 to allow it, so I have seen these failed hopes up close. Originally, there was a lot of over-promise for cable; essentially, it was seen as a device for delivering multi-channel television, then it became a device for delivering telephone. Actually, it has finally found its raison d'être, the raison d'être was to provide megabittage, vast quantities of megabittage; previously, when you were providing limited band-width you just could not get enough return on that limited band-width really to make it work. Now that you can provide lots of band-width, clearly, the opportunities to get greater return increase through the sheer amount of band-width you have, and thus it starts to make sense.
  (Mr Taylor) I think it is worth mentioning, I have heard the use of the 20-year period, and no achievement over that period, several times, but, if I look back at the statistics, only ten years ago there were fewer than one million homes passed by cable, there were only 2,000 people taking telephone lines from cable and fewer than 200,000 taking television service; that was in 1991. We had the duopoly review, we had the opening up of the market to foreign investment, and we saw, between 1992/3 and about 1998, the massive spend; so all of the real growth has taken place in a much more restricted duration rather than the 20-year period. So I think that is one point that is worth making, an awful lot of growth in the mid 1990s, basically.
  (Mr Singer) And UK cable is the only cable industry in the world which has gone into a market, taken on the dominant incumbent BT and taken away a third of its customer base; we have achieved that.

Mr Bryant

  415. And in relation to television, you have also had the monopolistic practices of Sky, which have meant that, effectively, public service broadcasters, because of the `must carry' regulation for you, which does not apply to Sky, are subsidising set-top box roll-out, for them but not for you; is that right?
  (Mr Singer) I think that is a very good summary.

  Chairman: On that note of harmony, we will close this session. Thank you very much indeed.

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