FOURTH REPORT
The Culture, Media and Sport Committee
has agreed to the following Report:
COMMUNICATIONS
I SUMMARY
1. The electronic communications sector is always
described as "fast-moving". Technological innovation,
relative market strength and consumer take up of new products
can transform the sector radically in a mater of months. Perhaps
the only certainty is uncertainty. The pace of development is
swift but shifts in direction seem even quicker: for example the
sudden explosion in text-messaging in the UK and the disappearance
of WAP[1] into a technological
cul-de-sac. Today's confidently predicted next stage is tomorrow's
forgotten catch-phrase.
2. Against this background our Report looks at the
progress of the Government's key plans for the communications
sector: most especially its plans for a new regulator, the Office
of Communications; the promotion of digital broadcasting (with
switch-off of the analogue signal as the ultimate goal); and support
for the roll-out of broadband—higher speed Internet services.
Regulatory reform, in the full establishment of the Office of
Communications (OFCOM) is intended to play a pivotal role in achieving
further progress with the switch-over to digital TV and the roll-out
of broadband. A draft Bill defining the duties and powers of OFCOM[2]
is expected shortly, early May 2002, and more consultation and
scrutiny will be then be undertaken. Unless the legislation
setting out the duties and powers of OFCOM is to be out-of-date
before Royal Assent, it must not seek to codify rigidly the sector,
but must concentrate on identifying firm principles and objectives
and offering a pragmatic and flexible approach to implementing
them.
3. We set out below a list of the other key conclusions
and recommendations appearing in the main body of this Report.
Progress
- Unless the legislation setting out the duties
and powers of OFCOM is to be out-of-date before Royal Assent,
it must not seek to codify rigidly the sector, but must concentrate
on identifying firm principles and objectives and offering a pragmatic
and flexible approach to implementing them. (Paragraph 2).
- We look forward to the publication of the draft
of the substantive Communications Bill in line with the Government's
revised timetable. It would be extremely damaging to the sector's
interests for this timetable to slip any further. In similar vein,
we look forward to the early publication of the promised draft
clauses on media ownership so that thorough pre-legislative scrutiny
can take place of the Government's decisions on these important
issues. (Paragraph 18)
OFCOM
- We note that, under the provisions of the Office
of Telecommunications Act 2002, the Secretary of State has the
freedom to increase the size of the OFCOM board to allow regional,
national and sectoral representation. We believe it could be a
mistake to do this. The experience of the US Federal Communications
Commission, whose senior staff we met in Washington during the
course of this inquiry, suggests that a small executive body functions
most effectively. (Paragraph 24)
- We agree that OFCOM, as a matter of course, must
be able to call upon appropriate expertise; but we believe that
a convergent sector needs a regulator with a genuinely integrated
decisionmaking body at its head. (Paragraph 25)
- We regard the proposed Communications Consumer
Panel as an important "plug" which may need a designated
"socket" on the OFCOM board in the form of one or more
members with special responsibility to represent the interests
of all consumers (including those with disabilities). In addition
to particular representation on the OFCOM Board we agree with
the National Consumer Council that the Office should have a dedicated
consumer affairs unit to pursue the consumer agenda within the
organisation. (Paragraph 27)
- We recommend that the final Communications Bill
sets out specific requirements with regard to the openness and
transparency of the conduct of OFCOM, including that its board
should meet in public unless issues of commercial confidentiality
make this inappropriate. (Paragraph 28)
- We recommend that OFCOM be under a statutory
duty regularly to review its rules, regulations and its requirements
for statistical returns from businesses, with a view to deregulation
where possible. (Paragraph 29)
- We recommend that the final Communications Bill
contains a duty on the Chairman of the OFCOM Board to submit an
annual report on OFCOM's activities, expenditure and achievements
to Parliament. The Chairman and Chief Executive of OFCOM would
then be subject to the same examination by this Committee, on
the basis of that report, as has become the practice with the
Chairman and Director-General of the BBC and that Corporation's
report and accounts. (Paragraph 31)
The BBC
- We recommend that, in addition to the other reforms
in train, the BBC Governors hold their meetings in public and
that their openness and transparency be equivalent to the approach
we have suggested for OFCOM. (Paragraph 38)
- We are seriously dissatisfied with the present
procedures for approving new BBC services. We therefore recommend
that the approval of such services should be the subject of published
statutory advice from OFCOM to Ministers. (Paragraph 42)
- We believe that the final Communications Bill
will need to make provision for clear ex ante rules ensuring
genuinely open access to ensure genuinely open competition in
the sector. In particular we believe that rules establishing must-carry
status for the free-to-air public service broadcasters on satellite,
as well as full, timely and open disclosure of the technical standards
in all set-top boxes, will be important. (Paragraph 50)
- We believe that consideration should now be given
to the Government conducting analyses of the costs and benefits,
and market impact, of providing free digital set-top boxes to
enable analogue switch-off to be achieved. (Paragraph 56)
- While we would welcome the wide availability
of such boxes—as it would mean that television viewers can
view free-to-air digital channels without having to pay subscription
fees for other services that they do not wish to take up—we
are concerned, as we set out below, that the potential for the
provision of digital television and Internet access to converge
is not lost. (Paragraph 57)
- In the light of the recent offer for sale of
ITV Digital by its administrators it is the responsibility of
Government to act to ensure that availability of the free-to-air
channels on a digital terrestrial platform. This is the result
of the importance Government attaches to healthy competition between
the three existing digital platforms to achieve progress towards
digital switch-over in the time-scale envisaged. We look to the
Government to accept this responsibility and to take speedily
whatever action is necessary. We believe that there are significant
lessons to be learned from this episode and we will return to
it. (Paragraph 60)
- We believe that local and community TV and radio
has the potential to contribute to the social, economic and political
development of local areas. Our predecessors referred to the opportunity
to exploit the potential offered by local television based on
a more imaginative approach to public service broadcasting.[3]
We reiterate that view. (Paragraph 62).
- In its reply to this report the Government must
set out its conclusions on the outturn of the Access Radio pilot
schemes for a tier of notforprofit community radio
services (and provide detail on what has happened to them in the
interim between initial licence and new legislation). (Paragraph
63)
- We recommend that the Government assess the Community
Media Association's scheme for two tiers of licence for local
broadcasting (not-for-profit and commercial) and set out its conclusions
in its reply to this report. This must be accompanied by a statement
of its policy on the provision of secure and commercially viable
licences for the development of digital broadcasting of local
and community services and their place, if any, within the ecology
of public service broadcasting across the UK. (Paragraph 64)
- As we have discussed above, the Government has
a stated aim of ensuring universal access to the Internet by 2005.
The potential for interactive digital TV to be used to gain access
to the Internet would be a major boost in meeting this target.
However, it is not at all plain sailing. We have already witnessed
the failure of the much heralded WAP technology for mobile phones,
delays to the development of 3G services (the third generation
of mobile telephone technology). If the take up of digital television
does falter as a result of ITV Digital's failure, and a cheaper
and non-interactive set-top box comes into vogue, then a major
opportunity to achieve progress with an important Government target
may have been wasted. (Paragraph 66)
- We urge the Government to seek early incorporation
of the EU Copyright Directive into UK law. (Paragraph 70)
- We recommend that Oftel, and OFCOM when it takes
over the responsibilities of Oftel in due course, should take
serious note of criticisms of its effectiveness in establishing
a competitive UK market for broadband and follow up with remedial
action—taking account of the proposal to require BT's network
to stand on its own as a distinct business. (Paragraph 74)
- We believe that the case for particular restrictions
on media, or crossmedia, ownership in any sector is now
outdated. We would be happy to rest on the developing competition
regime and the vast amount of information and the many voices
available through the Internet. (Paragraph 84)
1 Wireless Application Protocol (see Glossary of Terms
annexed to this Report) for connecting mobile telephones to the
Internet. Back
2
The Office of Communications (OFCOM) was established as a shell
organisation in March 2002 by paving legislation: The Office of
Communications Act 2002. Back
3
CWP, paragraph 106 Back
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