APPENDIX 33
Memorandum submitted by Channel M
A FUTURE FOR LOCAL DIGITAL TELEVISION?
Since 1997 the restricted service licence (RSL)
created by the 1996 Broadcasting Act has provided invaluable experience
for considering how local digital television services could develop
in future.
There has been considerable demand for RSLs—65
local licences have been issued or are pending. New local channels
have been introduced—12 are currently on air. Channel M
has been broadcasting to parts of Manchester since February 2000,
and other channels are located in Oxford, Leicester, Portsmouth,
Taunton, Londonderry and the Isle of Wight.
However, it is extremely difficult to operate
a viable local television service in the face of the inflexible
regulatory attitude towards RSLs.
New digital licences would enable local television
channels to offer a viable local alternative to existing regional
services from ITV and the BBC—as such this would introduce
a fresh dimension to UK public service broadcasting.
While we would not want to see any reduction
in ITV regional output, we feel that a committed local channel
can supplement such programming with local services of real value.
This approach was endorsed by the ITC's recent
Citizens' Jury in Leeds which recommended that in future "regional
TV stays on ITV1 and a network of RSLs should develop across the
country".
THE ANALOGUE
RESTRICTED SERVICE
LICENCE IS
HOLDING BACK
LOCAL TELEVISION
The Restricted Service Licence was introduced
under the 1996 Broadcasting Act after proposals for a city-based
Channel 5 were ruled out by the ITC—the RSL would be able
to use "spare" frequencies identified in planning for
Channel 5.
From the outset the ITC took a cautious view
of the potential of RSLs. An initial consultative document following
the 1996 legislation was so limiting, it would have been impossible
to operate an effective local television service.
Following representations, the terms of the
RSL licence were amended to a two year period—it was pointed
out at that time that this would not be viable, but nonetheless
the ITC allowed a first round of applications in 1997.
Subsequently two more rounds were held—each
of which attracted more applicants than the last. However the
ITC has since indicated that it has no plans for a fourth round
of applications, any more, citing the problems of frequency availability.
Channel M applied in 1997 for a licence to broadcast
to "students and young people" in Manchester—the
channel is backed financially by the Manchester Evening News and
University of Salford is the educational partner. All parties
involved knew that this would be a pioneering form of broadcasting,
dependent on advertising revenue to fund new local services.
It took until February 2000 for Channel M to
go on air—one reason was the caution of frequency planners
who were concerned that RSLs generally would hinder their ability
to plan for digital terrestrial television which at that stage
had not been launched.
However since our launch, the major problem
encountered by Channel M is the failure of frequency planning
to reveal that the quality of reception from our channel would
be sub-standard.
The channel is broadcasting on an "out
of band" frequency—that is, the aerials used by viewers
in Manchester are not the right ones to receive our channel. Consequently
their reception is far worse than that for other channels.
Three months after launch we approached the
ITC for an alternative frequency, as it was apparent that viewers
were unable to receive an adequate picture and advertisers would
not advertise because "no-one can see it". With lower
revenue than anticipated we run an extremely cost-effective operation,
but nonetheless incur a substantial loss.
Despite frequent representations to the ITC
and meetings with Ministers and officials at the Department of
Culture, Media and Sport, no satisfactory solution has been identified.
At the moment further frequency planning work
has been commissioned, but we continue to meet a fundamental objection
to our proposals that it is essential for the local channel to
operate with an "in band" channel which viewers are
able to watch.
We have been refused access to an in-band frequency
for the following reasons:
The best available frequency is dedicated to
radio microphones currently being used by Granada TV for the programme
Stars in their Eyes.
Two streets next to Manchester City football
club are using the frequency to improve their signal—our
use of it would cause interference to these viewers.
We may cause interference to a number of viewers
using digital TV in the Saddleworth area.
THE EDUCATIONAL
AND COMMUNITY
BENEFITS OF
A CHANNEL
M
Education and Community involvement
A local channel such as Channel M has considerable
potential to do good for the community. Channel M is unique among
RSLs because it has a formal public-private partnership with the
Faculty of Media at Salford University.
The channel is funded and operated by the Manchester
Evening News—the University is the educational partner,
with a shareholding in the channel and a guarantee that its students'
programmes will be broadcast as part of the overall commercial
schedule.
The University is able to train its students
in television production knowing that these programmes will be
seen and judged by viewers.
This encourages higher standards—a university
documentary programmes made for Channel M in 2001 has recently
won an award at the Royal Television Society North West Awards,
beating competition from BBC1 and Sky 1.
The university also produces a weekly discussion
programme, tackling issues such as student debt, as well as wider
concerns, such as civil liberties. In total, the university provides
Channel M with three programmes a week during term time.
Students' involvement in the channel also counts
towards their degrees. Further, students leaving the University
have subsequently found full-time work with the channel, and other
trainees have gone on to work for broadcasters and production
companies in Manchester.
At the wider community level, Channel M is a
local partner in the Commedia Millennium Awards operated by the
Community Media Association enabling members of the public to
make programmes on subjects such as mental health.
Local programmes, news and the Commonwealth Games
Channel M's local programmes also reflect a
real commitment to the city.
The police in Manchester have used Channel M
in recruitment campaigns, and Channel M programmes have featured
campaigns to make the city centre a safer place.
Our interview programme, The Future of Manchester,
provides a platform for local politicians to discuss the key issues—housing,
transport and so on—which face the city.
Our regular magazine programme, Manchester 365
reflects the cultural life of the city, from theatre to local
cultural festivals.
Our ethnic programme strand has featured different
ethnic groups in Manchester—a celebration of Ramadan, programmes
dedicated to the Chinese, Jewish and Somali communities, and a
celebration of young black achievers.
Channel M provides viewers in Manchester with
six hours a day of national and international news from the ITN
News Channel—for many viewers without cable or satellite,
this service would not otherwise be available.
We are firmly convinced that viewers in Manchester
would appreciate a regular news service and the introduction of
local news for Manchester is a strategic objective for Channel
M. However, until our business can generate sufficient revenue
to afford the capital and operating costs of a news service, this
remains out of our reach.
This year Manchester hosts the Commonwealth
Games, a unique opportunity for our channel to celebrate the city
of Manchester and its achievements.
However, unless we are able to secure a new
frequency before July, the opportunity will be lost because in
many areas of Manchester there is no adequate reception for Channel
M.
FREQUENCY PLANNING—LOW
PRIORITY UNDERMINES
VIABILITY OF
LOCAL CHANNELS
Because RSLs have been allocated "spare
frequencies"—and because most frequencies have already
been allocated to other users, the local channel is seen as a
poor quality channel compared with BBC or ITV.
Many RSLs will encounter similar problems to
Channel M and will need to be re-planned. Until a more positive
approach to frequency planning for local channels is adopted the
potential of the sector will be curtailed.
Better frequencies could be allocated to RSLs—the
priority currently given to RSLs was determined in 1997 by the
DCMS in setting frequency planning guidelines which gave the RSLs
lowest possible priority.
Because RSLs come last on this list planners
can ignore the RSL if they feel there may be a future digital
requirement, or even if radio microphones wish to use the frequency.
Likewise if a handful of viewers want the frequency for a self-help
scheme. All of these reasons have been used to prevent Channel
M broadcasting to the coverage area for which it has been licenced.
The local channel is in effect the sixth terrestrial
channel and should have the same frequency priority as that given
to Channel 5—if this were the case, then the scope for real
advances in new local public broadcasting would be considerable.
Amending the priority given to RSLs is a matter
of urgency—without better frequencies, few local channels
can expect to operate a viable service.
NEW FORMS
OF LOCAL
AND COMMUNITY
CONTENT TO
SUPPLEMENT EXISTING
REGIONAL BROADCASTING
The ITC recently consulted about the future
of RSLs and included the proposal that 60 per cent of the channels
output should be local content.
Contrast our position with that of Granada TV
in the North West, where it is required to make less than 10 hours
a week of regional programmes—for which it secures massive
advertising revenues.
By contrast, the ITC proposal would have required
Channel M to provide eight hours a day local programming—and
we have minimal income. Why would the ITC think this appropriate?
Likewise contrast the proposal for local content
quotas with the relaxed attitude the ITC takes towards local cable
channel provision.
For instance, the "local" cable service
from NTL in Manchester features no local content and appears to
originate in Norwich. Why would the ITC expect a fledgling analogue
terrestrial service to dedicate three-fifths of its output to
local content when the ITC does not oblige cable companies to
meet any local content promises?
Why has the ITC not intervened to ensure that
cable operators do not refuse to carry the RSL on their service?
The ITC's view of local channels seems to be
coloured by its determination to prevent them becoming mini-ITV
companies—when in practice, it is impossible to succeed
at the most modest local level, due to the restrictions caused
by poor reception.
THE ANALOGUE
SWITCH-OFF
Following a unanimously negative reaction to
its proposals, the ITC this week (9 January) announced it had
postponed its plans to tighten the regulatory requirements for
RSLs.
The ITC added that it is concerned about the
economic problems facing local broadcasters.
Yet all it has done is to withdraw its ill-conceived
proposals—which would have made life more difficult for
RSLs.
Despite representations from Channel M and other
RSLs, the ITC decided no tangible measures are required to help
local television at this difficult time.
The ITC instead looks towards the forthcoming
Communications Bill and states:
"Progress will depend on a place being found
for local television services in digital planning beyond analogue
switchover, and on an appropriate regime being provided in forthcoming
legislation."
The ITC is saying that those channels which
are currently operating must wait until after analogue switch-over
before they can gain access to the security of a digital channel.
The uncertainty of the analogue switch-over
timetable means that this is far in the future—far enough
away as to be almost irrelevant to anyone operating a local service
today.
This paper seeks to explain why it is essential
that an earlier date is found for new digital local services and
that regulation of such services needs be undertaken within a
more positive policy framework to encourage local television.
DURATION OF
LICENCE—UNREALISTIC
LICENSING DETERS
INVESTMENT IN
LOCAL CHANNELS
The ITC has consistently under-estimated the
length of time required to operate a local channel if investors
are to see a return on their investment. Very few media operations
are expected to be viable in two years—nor operate on the
basis that their licence could be revoked through no fault of
their own within that time. Yet the ITC thought this appropriate
for RSLs in 1997 and has only grudgingly made concessions since
then.
The change to a four year licence was regarded
as a compromise by the ITC—it has turned down requests by
Channel M and other channels that eight years is a more appropriate
timescale within which to establish a new service and build sufficient
revenues to justify the costs of operating the licence.
In local radio, eight years is the duration
of the small-scale licence offered by the Radio Authority.
FUTURE REGULATION
OF LOCAL
CHANNELS—A MORE
POSITIVE APPROACH
The Communications Bill brings forward a prospect
of discussing a more positive regulatory framework for local broadcasting—the
government has made a commitment to a plan for local digital licences
within the Communications White Paper.
The ITC does not really understand the peculiar
challenge that local television represents.
Consequently, we would like Ofcom to be structured
to accommodate the interests of local television channels more
effectively than has been the case with the ITC.
We do not see this as primarily a matter of
content regulation, but rather one of market regulation—the
barriers to entry into local television broadcasting are far too
high (frequency priorities in relation to other spectrum users;
costs of transmission; refusal of cable carriage).
These are the issues that the new regulator
should consider in order to determine to what extent unfair competition
is responsible for the lack of progress of local broadcasting
in the UK.
The Communications Bill needs to lay the foundations
for a third tier of local television channels.
Such channels will only thrive if they can develop
from today's limited analogue services into channels which make
the most of a variety of distribution platforms—broadband
Internet, digital cable, digital terrestrial, and so on.
To do so does not require a moratorium on licensing
until after analogue switch-off, as seems to be envisaged by the
ITC.
Current regulations could become lighter, so
that those channels which have launched will be able to survive
until a digital licence is available—consequently transitional
arrangements need to be in place.
A LOCAL DIGITAL
LICENCE IN
THE COMMUNICATIONS
BILL
We would urge the committee to consider the
compelling case for licencing new local digital television services
in advance of analogue switch-off.
For instance, assuming legislation is enacted
in 2003-04, it would be possible for local analogue services to
apply for new local digital licences to run in tandem with any
extension to the existing analogue service, thereby providing
for a viable long-term plan for such services.
We believe that new digital television services
will play a significant role in persuading viewers to adopt digital
television.
In the multi-channel home of today, there is
often a complaint that no matter how many new channels are offered,
there is nothing to watch—yet we can guarantee that our
service will stand out from all other channels, simply because
no-one has offered a service exclusively for cities and towns.
Newspapers and radio thrive at a local level—so
would television if it were given the chance.
We would expect our proposal to be rejected
by frequency planners on the grounds that it is essential to provide
better coverage for existing national digital services than to
create opportunities for new and unproven local services.
We would disagree with this fundamentally—that
a vibrant and informative local channel for Manchester, or other
towns and cities in the UK, is a more effective use of digital
capacity than, say, yet more tepid national channels offering
yet more youth programming about holiday reps behaving badly in
Ibiza.
Channel M's proposals
As a matter of urgency, the RSL licence to be
extended by the ITC to eight years so that a viable business plan
can be developed by existing services.
Likewise the DCMS to amend its frequency priority
list so that RSL licences are given equal status with the other
analogue public service broadcasters.
The ITC to undertake a fourth round of applications
for RSLs based on these amendments.
The above provisions would underpin a sector
which is currently struggling—the following measures would
provide for a future for this embryonic form of public service
broadcasting by introducing provisions within the Communications
Bill in order to:
— implement new local digital licences—prior
to analogue switch-off.
— introduce local channel must-carry
rules for digital cable operators and prevent cable operators
from offering such services themselves.
These proposals could ensure that the pioneering
work of the first wave of local television is assisted at this
critical stage in its development. If local services can be helped
to flourish new local services can add a new dimension to British
public service television, as well as stimulate local interest
in digital television.
We hope that the committee will agree that if
RSLs could be turned into a more securely based third tier of
broadcasting in the UK, then it would be to the general benefit
of viewers and citizens in the UK.
10 April 2002
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