Memorandum submitted by the Federation
of the Electronics Industry (FEI)
The New Inquiry on Communications by the House
of Commons Select Committee on Culture, Media and Sport is welcome
and well-timed to examine the prospects for a draft Bill on Communications
and a range of related issues. FEI is keen to give oral evidence
on all aspects of the Inquiry.
FEI represents the UK IT, Communications and
Electronics Industries and with the incorporation of BREMA in
the Federation in July 2001, now includes the Consumer Electronics
manufacturers. FEI's interests in this Inquiry therefore cover
the roll-out of Broadband, the Regulation of a future converged
communications environment and the switchover to Digital Television.
Our comments cover these three topics.
FEI has been a leading participant in the Broadband
Stakeholders Group (BSG) Executive. Indeed we recommended to the
government that a Strategy should be developed based on the original
reports from the four BSG working groups and as a result, FEI
drafted the final BSG report, which was delivered to the E-Minister
in early December. We of course strongly support the BSG recommendations.
It would be wrong for FEI to submit a separate
Broadband document from the BSG. We have recommended that the
BSG submit its own evidence. The Committee will receive that shortly.
The debate surrounding OFCOM is complex. Our
belief is that OFCOM must be shaped according to the following
five principles, which have been agreed and discussed at length
with our members. They arise from our belief that the market must
and will be the driving force behind the delivery of the government's
objectives. We commend them to the Select Committee.
OFCOM must have a clear and distinct obligation
to promote an open and internationally competitive communications
market in the UK.
OFCOM should be technology neutral in terms
of its structure and the policies that it promotes. OFCOM's structure
must not perpetuate the current split between broadcasting and
OFCOM must ensure that long-term infrastructure
investment is not stifled by unbalanced consumer driven regulation.
OFCOM will have to address many high profile content issues without
downgrading infrastructure issues.
The Government's "Five Better Regulation
Principles" (transparency, accountability, proportionality,
consistency and targeting) should be written into the Communications
Bill. This will help to achieve "appropriate" regulation
and open dialogue with industry.
OFCOM's regulatory regime should reflect the
full impact of convergence. Increased choice (in terms of content)
means increased consumer responsibility and fewer sector specific
rules. This will require a mature dialogue between consumers,
Government and industry.
We support the UK Government's objective of
switching over from analogue to digital television between 2006
and 2010. Such a major Project affecting every home in the UK
requires Government ownership, the wholehearted commitment of
all industry sectors, and a thoroughly professional approach to
the leadership and management of a Project extending over many
years. The successful achievement of Switchover by 2010 will mark
a key step in revolutionising the UK's communications infrastructure.
The publication of the Government's Digital
Television Action Plan in December 2001 is a very significant
step forward. It establishes a framework of working groups under
the direction of a Steering Board co-chaired by Ministers from
the DTI and DCMS. This is a partnership between Government, Industry
and Consumer Groups that can build on the success of the last
three years in which the UK has established a world lead in digital
Industry places the greatest emphasis on the
Digital TV Action Plan and the working Groups established as the
means to achieving Switchover by 2010. There is a whole range
of issues to be addressed, including those affecting receiving
equipment. The pace of technological change means that many of
them are critically dependent on the timing of switchover. The
need for clarity is especially important for the semi-conductor
industry without which the plans for consumer electronics companies
to introduce new television receiver products will be delayed.
Receiver manufacturers and their suppliers of
components and semi-conductors are international companies that
do not rely on any one market to be commercially successful. The
success of the deployment of digital television in the UK and
the current lead in the technology has focused our country as
a priority for manufacturers. This could quickly change and the
UK could be by-passed by manufacturers in favour of continental
European markets, especially Germany. If we can maintain our UK
edge in digital television technology then other European markets
will follow our lead. This will expand the market for consumer
electronics manufacturers bringing the benefits of economies of
scale reducing costs and therefore prices to UK consumers.
The vast majority of digital television receivers
currently are set-top-boxes. About 120,000 integrated digital
television (iDTV) receivers were sold in UK in 2001. We hope that
the re-launch of the BBC's digital services and a public information
campaign will help to boost iDTV receiver popularity. iDTV receivers
are in many ways the logical replacement for analogue television
receivers and can greatly assist in attracting non-subscriber
households to migrate to digital television. Also crucial to the
success of digital television are open standards to allow equipment
to be upgraded and provide interoperability between service providers;
they are needed now.
The connection of some 8.5 million UK homes
to digital Pay-TV in three years is a remarkable achievement but
we believe that around 40 per cent of homes are likely to be strongly
opposed to subscribing to Pay-TV. Such homes, almost all of whom
receive their television by terrestrial means, will have to be
persuaded to move to digital television at the minimum inconvenience
in the normal cycle of replacing their televisions sets, and through
the attraction of high quality digital free-to-air services.
The Public Service Broadcasters led by the BBC
have a major role in persuading the non-subscriber homes to choose
digital television. The rollout of the BBC's revised digital services
in Spring 2002 should provide a powerful demonstration of the
attractions of free-to-air digital television. Also, public awareness
of the full range of benefits of digital television needs to be
raised and confusion dispelled, particularly the misconception
that digital television is equated with Pay-TV.
One of the criteria which have to be met before
analogue terrestrial television can be switched off is for 99.4
per cent of the population to be covered by digital transmissions.
Arguably this target should relate to digital terrestrial alone,
thus ensuring that all viewers have access to a basic free-to-air
terrestrial service including public service broadcasting. On
current plans it is likely that the coverage of free-to-air terrestrial
channels could reach about 84 per cent but this will require considerable
investment and still falls short of what is ideally needed.
Given that a substantial minority of households
will not wish to subscribe (they will strongly oppose the imposition
of digital satellite or digital cable) and at present receive
television through analogue terrestrial means, there is a need
for Government to recognise the importance of extending DTT coverage
for public service broadcasting to at least 95 per cent.
It is the Government's stated policy to use
interactive digital television (iDTV) as a channel for e-Government
Services and to enable universal utilisation of the Internetparticularly
from home. iDTV is currently possible using satellite, digital
terrestrial and cable delivery, with a telephone line or cable
return path. Given the ubiquity of television in the home, the
key attraction of iDTV is that it is a way of putting the Internet
on television and bringing the benefits of connectivity to a broader
range of people than PC users.
We fully support the Government's objective
of providing universal access to the Internet by 2005. Currently
digital television's interactive Internet-like features are restricted,
either through a "walled garden" or by difficulties
in viewing standard-format information and services. Digital television-based
alternatives to computer-based services are being developed and
should be given every encouragement.
FEI companies represent a very wide range of
interests and the Federation is well qualified therefore to provide
an industry perspective on the challenges and opportunities we
face in revolutionising our communications infrastructure during
the next 10 years. We would be very pleased to give oral evidence
to the Committee and also to provide more detailed written advice.
24 January 2002