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TUESDAY 12 MARCH 2002 __________ Members present: Mr Gerald Kaufman, in the Chair __________ Memoranda submitted by the Department of Culture, Media and Sport and the Department of Trade and Industry Examination of Witnesses RT HON TESSA JOWELL, a Member of the House, Secretary of State, Department of Culture, Media and Sport; RT HON PATRICIA HEWITT, a Member of the House, Secretary of State, and MR ANDREW PINDER, e-Envoy, Department of Trade and Industry, examined. Chairman
(Tessa Jowell) Thank you, Chairman. There are just a few points about the process that I would like to make by way of introduction to help the Committee in terms of the timescale to which the development of this policy is working. As you will be aware, the White Paper, on which you conducted an inquiry, was extensively consulted on; and work has been underway over the last nine months, nearly a year now, on the translation of that policy into the draft legislation. As I think we have indicated already, we hope to be in a position to publish the draft Bill towards the end of April in order that it can then be subjected to a period of pre-legislative scrutiny by both Houses. Concurrently with that, there will be a further consultation with the industry. In the light of both processes of consultation, any further amendments to the draft legislation will be made in the hope that this Bill will find a place in the Queen's Speech and move to second reading some time in November. Part of the policy which has been developed on a separate track is the policy in relation to media ownership and cross-media ownership. We conducted a separate consultation in order to develop the proposals (in fact there were no major proposals in the White Paper) on media ownership. That consultation finished at the end of January. I have been engaged in discussion with a number of those who submitted responses, and we expect that the draft clauses on media ownership and cross-media ownership will not form part of the draft Bill, but that the policy on media ownership will be announced at the time we publish the draft Bill. The draft clauses will then be available to the joint committee and for wider consultation during the consultation period. I hope that helps the Committee in giving an indication of progress and the rate of progress. (Ms Hewitt) Thank you very much, Chairman. Just to add to what Tessa has said, and perhaps just to give a little bit of background here. If it is the first time that two secretaries of state have appeared simultaneously before a select committee then I do think it is entirely appropriate; because what we have done in developing the White Paper and, shortly to be published, the Bill is something of a first. When I became the Commerce Minister I discovered that the DTI was about to start work on a White Paper on telecommunications regulations, and the DCMS was about to start work on a White Paper on broadcasting. It was quite obvious, both to Chris Smith and to myself, that this made no sense whatsoever and that there should be one White Paper on the Government's future policy framework for the communications sector. From that clear view from Chris Smith and myself, we established, first of all, a joint team of officials to carry forward the White Paper, and then of course a joint team to do the actual work on the Bill. It has been a very effective example of cross-departmental working with, instead of DCMS officials advising the Secretary of State for Culture and DTI officials advising their secretary of state, a joint team advising both secretaries of state and our junior ministers simultaneously, which has been very good. Of course, the reason we have done it was not to demonstrate that joined up working is entirely possible; we have done it because the issues of content development and regulation, infrastructure investment and regulation, and spectrum management are now so closely interlinked that we believed we would risk jeopardising the development of this sector in the United Kingdom if we did not create one single consistent regulatory and policy framework. That is precisely what we have set out to do in the White Paper; and in the Bill, as Tessa has said, that will shortly be published ensuring that the issues of economic regulation and content regulation are both given proper attention and that the connections between them can be properly understood and handled. (Ms Hewitt) Our commitment is to establish OFCOM during 2003; so naturally we would be seeking to ensure that the legislative timetable permits us to reach that objective. For reasons you will understand, I cannot pre-empt decisions that have to be made on the timetable. (Ms Hewitt) That is absolutely correct. Miss Kirkbride (Tessa Jowell) The policy remains the policy as set out by Chris Smith, that we are aiming for analogue switch-off between 2006 and 2010. We believe that that is a challenging timescale; we believe it is a realisable timescale, subject to the successful completion that is now underway both across our two Departments, but also engaging with the industry and the broadcasters in order that the issues of respective concern and responsibility in taking them forward can be properly addressed. In relation to your point about the sale of televisions, yes, it is a matter of concern; and one of the actions that will shortly emanate from the Digital Action Plan is consultation on the issue of mandating the sale of integrated televisions; but there are broader issues, obviously of public concern, and that is the issue for the market. As I always say when I am asked about this, I think there is still a major task to be achieved of winning people's hearts and minds, selling the case for digital and people deciding that this is a switch that they personally want to make. That is the challenge but the timescale remains the same. With the concerted and focussed efforts set out in the Digital Action Plan, led by the two Ministers from my Department and from Patricia's Department, working with the industry stakeholders group now in place, we believe that the timetable is achievable with that momentum. (Tessa Jowell) As you rightly say, the end date is still eight years away. As I have indicated, and you have no doubt had an opportunity to study the Digital Action Plan, you will see there the range and technical complexity of many of the tasks that are to be undertaken. It is important that we create as much certainty as possible. The certainty is established by the four-year window, 2006-2010. It will be necessary towards the end of that period - we recognise this - but it is too early to determine the precise nature of the steps to be taken. Of course, it will be necessary then to look at the numbers of people who remain unconvinced and still with their analogue sets to make judgments in light of the numbers, a sort of demographic profile, and to agree action in the light of that. We know what drives digital take-up. What drives digital take-up is good content. The investment very particularly the BBC are making in new services is, we believe, an important contribution towards that. (Ms Hewitt) Chairman, if I may, could I just add to a point Tessa has made on that, because this is another very good example of the connection between content and infrastructure and one driving the other. I do not know, Chairman, if you remember but we previously discussed the question of integrated digital television, and it is frustrating that, with a few exceptions, there are not yet many really easily affordable integrated television sets in favour of DTVs on the market. Of course, it is not only through an integrated set that you will get access to digital television. One of the issues we are addressing in the Action Plan is the availability of cheaper set-top boxes that will give access to the full range of digital services sitting on top of the existing analogue services. We are also doing more particularly with the digital TV logo, and an advertising campaign will soon be launched to ensure that consumers have the information they need and are not misled by thinking that a large and very expensive wide screen television is in fact a digital television, when it is probably nothing of the kind. On the issue of, should the Government be buying out people who have not yet made the switch, it is important to get the timing of that decision right; because, of course, a premature announcement that we are going to be buying out customers who have not switched may have the absolutely perverse effect of slowing down the take-up that would otherwise have happened as a result of developments within the market, strongly assisted by ourselves. (Tessa Jowell) Can I just add one final point, which perhaps will reassure the Committee, to say that our records so far in relation to digital TV ownership is running at more than twice the average rate in Europe. The latest figures show that in the UK digital TV ownership is running at 37 per cent, and in Europe at 16 per cent. (Tessa Jowell) Yes. (Tessa Jowell) Yes. (Tessa Jowell) I think that is one for me. You are right to phrase your question as you did - will the BBC come fully under OFCOM - because you obviously recognise that in parts of its regulatory responsibility OFCOM will be responsible for the BBC; and certainly in relation to the BBC's commercial services, OFCOM will have oversight and will be the regulator in relation to those commercial services. In relation to the BBC more generally, the position that will appear in the draft Bill is the position as set out in the White Paper. It might help the Committee if I just very quickly run through it. It will maintain regulatory responsibility of the governors; and will at the same time, however, and for the first time make all broadcasters accountable to common standards of regulation under the first of the three tiers that will be established by OFCOM. In relation to those standards that apply to all broadcasters covering negative content and so forth, the BBC will be expected to apply the same standards as other broadcasters. In relation to tier two and tier three, again, tier two, dealing with the quantitative aspects of broadcasting, the proportion of independent production, the proportion of UK production, the proportion of regional programming, the BBC will be liable for standards which are the same as those applying to other public service broadcasters, and those standards will be set by OFCOM. Tier three, which is the tier at which broadcasters will be self-regulatory (this is part of the deregulatory thrust of the new regimes as compared to the present time), the BBC will be more heavily regulated than it is our intention to regulate the other public service broadcasters. I am happy to go into that, Mr Chairman, in some detail should you wish me to do so. There are areas of the BBC's operation that will certainly have reference to OFCOM. As I have indicated, the commercial services will be regulated by OFCOM. There will then be other areas like decisions about new BBC services where the decision is taken by the Secretary of State. Once OFCOM is established, OFCOM will have a role in advising the Secretary of State on the marketing impact of new services. To suggest that the regulation of the BBC will be entirely separate from and without reference to OFCOM is simply not the case; but it is our intention, as set out in the White Paper, and in recognition of the unique constitution of the BBC to maintain a dual system of regulation - the governors for the BBC, and OFCOM for the other public service broadcasters and the other commercial broadcasters at tier one. (Tessa Jowell) Yes, I would; but I would take advice in doing that from OFCOM on the very important issue in relation to the wider broadcasting market, and there are very clear standards or tests that the BBC have to meet in submitting bids for new services; they have to be consistent with the public service remit and distinctive. (Tessa Jowell) Not market failing specifically, but they have to be considered in context of the broader impact on the broadcasting market. When I gave approval of the two new children's channels in the autumn, and when I gave approval to BBC4 it was because I was satisfied on those grounds. When I did not approve BBC3 it was on two grounds. Firstly, I was not satisfied that the first submission was sufficiently distinctive and consistent with the public service remit of the BBC in what is a very crowded part of the broadcasting market; and, secondly, I was not satisfied that it would not have an adverse effect on the broader market. (Ms Hewitt) I do want to underline this point, because I have been concerned from the outset to make sure there is a proper system of economic regulation in relation to the BBC. You have given the example at the moment of discussions going on about the commercial news service that is being provided into the transport sector. Particularly when internet usage was relatively new and growing very fast there was concern about the BBC's commercial website and the fact that it was offering services using brands from its public service broadcasting. It is absolutely essential that there is a system of regulation there that applies to the BBC's commercial operation as it would to anybody else's; and which can ensure, for instance, where a brand developed in public service broadcasting is then leveraged on to a commercial internet site, that that is paid for in a proper and transparent fashion. At the moment those issues are dealt with by the Office of Fair Trading. It clearly makes sense under the new arrangements to bring that responsibility primarily within OFCOM, which will have an overview of the entire market. OFCOM will be able, just as OFTEL does where there are disputes between, for instance, British Telecom and commercial competitors, to be the arbitrator between the BBC and commercial competitors in relation to allegations you are referring to about the BBC's commercial services. (Tessa Jowell) Not beyond what you already know, which is that we have signalled our intention to lift the media ownership rule that restricts the creation of ITV by setting a limit on audience share. By lifting that rule, consolidation of ITV would become possible within the context of media ownership rules. Of course, it would be subject to competition rules. In a sense, there are two hurdles: the existing media ownership rule which we intend to remove; but, of course, competition rules would be the key set of judgments that the competition authorities would want to apply. (Tessa Jowell) Again, we signalled in the consultation paper our willingness to look at rebalancing the ownership share in order to increase the investment available. As I indicated, indeed the policy in this area is being finalised and we expect to announce the policy and obviously deal with points like that at the time the Bill is published. Michael Fabricant (Tessa Jowell) The honourable Member is entirely right in saying that the machinery of government changes are matters for the Prime Minister. As Patricia indicated in her opening remarks, I think we are rising to the challenge, which is a challenge for a lot of policy in government now, which is the need to work across departments to find new flexibilities that deal with issues like this where my Department is responsible for content, and Patricia's Department is responsible for making sure content gets to the households; but the only sensible way of developing the policy is on the basis of the seamless team that we have established. You will have to judge whether or not it works well. We are confident it works well, and that it will be a model for ways of tackling other government policy that raises exactly the same kind of challenges. (Ms Hewitt) I completely agree with that and I would simply add, I think there will be real disadvantages in separating telecommunications and economic regulation of communications from other aspects of the DTI's work; because what is happening from the telecommunications and internet end is really an integral part of the impact on information and communication technology right across the economy. I think there would be a real downside in separating that from the DTI's other industry and economic supply side function. Equally, I suspect if you removed broadcasting from the Department of Culture, you would lose synergies on that side. Wherever you put departmental boundaries, you have to join it up in order to ensure there is a proper approach to the communication sector, and I think that is what we are doing. (Ms Hewitt) If I can kick off on this, and Andrew Pinder, our e-Envoy will probably want to develop some of these issues around broadband. Clearly, pushing out broadband, getting high speed internet access to homes and businesses is going to be hugely important if we are, both as individuals and as an economy, to take advantage of the potential of what is happening in the communication and IT sector. Having said that, I think that there is too much readiness in part of the media to simply talk down what has been happening in the United Kingdom and focus only on the fact that so far, and we are looking at a very short space of time, the actual take-up of broadband has been very slow, very slow indeed, compared, particularly, with a country like Korea which is number one in the world, where broadband communication is now something over 10 per cent. This remains very early days. What we have done is to pursue a policy of competition in infrastructure provision, including in broadband. So that we now have not only BT supplying broadband and making broadband available through ADSL technology so it is now accessible to about two-thirds of the population; we also have about 100 internet service providers who are taking BT's wholesale broadband product and retailing it themselves. Alongside that we have the two cable companies, also between them covering about 50 per cent of the population. What we have seen in the last year has been a pretty effective process of competition. We have seen the prices for cable across an area where cable is available falling quite significantly, now amongst the lowest in the world; and of course BT, whom my colleague Douglas Alexander was challenging last autumn to get its broadband prices down, has now (under new leadership) responded to that challenge and announced, a couple of weeks ago, a cut of about £10 a month in broadband offering. Those prices will affect not only BT but also all these ISPs who are using the product. When those new prices come on stream, as they will do next month, and I assume they are all backed up by some fairly significant advertising to the consumers, I think it is reasonable to expect that we will see quite a big increase in broadband take-up. The other point I would make - you absolutely rightly referred to the enormous success we have had in Britain in terms of narrowband internet installation, which is too often overlooked. If you remember we were an early adopter, particularly in Europe, to get flat rate internet dialogue connections very, very cheaply - we are amongst the cheapest in the world for those connections. Ironically, that had a temporary effect of creating such a big price gap between the cheap "eat all you like" dial-up connections we had and the broadband. There was a big price gap there. Whereas in Germany, which does not offer a flat rate subscription for dialogue internet, the only way you could get flat rate subscription was to go straight to broadband, so pricing structures were very different. That problem changed dramatically with the changing in pricing that I referred to; but the fact that we have got this very large installed base of narrowband internet connections means there is a platform of consumers from which companies can now move people directly on to broadband. I was talking last week to Steve Case, who is now the Chairman of AOL TimeWarner, one of the leading exponents of convergence in action, and he was saying he believes that the policy framework in the United Kingdom is absolutely right. He is deeply frustrated about the situation in Germany, with which we are so often adversely compared, where there is no competition whatsoever. It is very difficult for AOL to get to consumers. (Ms Hewitt) We define broadband as moving up from 500 kilobyte/second. There is a whole range of broadband technologies and broadband speeds. The important thing is to give customers real choice here which of course increasingly they are getting, not only as between BT on its own retail suppliers, but also from cable. Different customers are going to want different applications on their broadband, and of course the uses to which DSL technology can be put are growing very rapidly, including the availability of television down DSL. (Mr Pinder) I would like to really just reinforce what Patricia is saying. This is a developing market. We are seeing really a spectrum of services coming through, from flat rate and narrow band through the introduction of relatively slow broadband. I would agree with you that the current broadband, which some would define as going from ISDN at 128K, we would accept this is not as helpful a definition. Gradually those products are dropped; newer products coming on to the market are bringing the speed up. Perhaps in response to BT's price cut we have seen NTL coming on with 1 gigabyte. I am sure as time goes on there will be more and more faster products. We will see products in the 2, 4, 8 and ten meg area, which is really what we need to see. I am sure they will come. Derek Wyatt (Mr Pinder) Personally, I am rather glad I am not a minister sometimes, seeing how they are treated and seeing their workload! No, I think it works perfectly well actually. There is an official sitting in the Cabinet Office able to range very widely indeed, not just around the government but outside government. I am in a very privileged position and can operate, I think, quite effectively in making my voice heard in a wide community and across departments. I have got some pretty impressive back-up. Patricia is responsible for the affairs in Cabinet. We actually do have an e-Minister in Cabinet, and of course the Prime Minister takes an interest in these matters as well. I am not entirely sure that having a minister in this role as well would do anything other than slightly muddy the water. We have a Secretary of State who can shout in Cabinet and me operating at the official level in a fairly flexible manner, which seems to work. (Tessa Jowell) I think in response to Michael Fabricant's earlier question I indicated that, as part of the Digital Action Plan, it is intended to conduct a consultation in the first instance on mandating the production of digital television sets, and that will obviously go ahead. I think this has to be a decision for the market. It also has to be a decision for consumer preference; and the price of digital television sets is beginning to fall, but they are still more expensive than analogue sets. I would say in answer to your question, that we do not at this point have a prediction for the proportion of population at the point of switch-over that we would expect to own a digital television set, rather than to have an analogue television set with a set-top box. There is also, of course, the issue which is always raised about the second, third and fourth sets in families. What I can assure you is that the coalition is now established between the government and industry, particularly on this, but clearly the broadcasters also have a role and the BBC is committed to a digital promotion campaign which we expect them to undertake, that we have to sell the objective and the benefit of digital and there is a hearts and minds argument, I think that the pace of market adaptation will be influenced by the level of public demand. In relation to television sets bought today which are still in perfectly good working order in 2010, I think that by 2010 we will see households with a combination of solutions. Perhaps the main television set will be a fully digital one, but with set-top boxes providing the necessarily digital capacity for the second, third and fourth sets. Chairman (Ms Hewitt) Indeed, Chairman, as Tessa has indicated, we are looking at that with this consultation. We are looking very seriously at the suggestion that we simply mandate digital integration from a certain date; but the price issue is not a trivial one. If you are buying a very expensive thousand pound wide screen television then the additional cost of making that integrated digital is a small proportion of the total price. If you are buying a £50/60/70 portable for a young person in the household to use, or whatever, then at the moment the extra cost of making that digital is quite a significant price increase. I think we are right to consult about that, rather than simply to say, "Yes, that is what we are going to do". Secondly, as far as the point about Europe is concerned, certainly we would have to negotiate with our colleagues in Europe on the question of mandating. Of course, that has important implications for the industry, because they are not making sets purely for the United Kingdom; they are making sets for the European and wider market. We certainly need to look at that. Finally, we are, with the industry, conducting some small scale pilots to look at all these practical questions involved in moving towards digital switch-over, so we can understand what the practicalities are of dealing with all these second and third sets in households and the proliferation of set-top boxes. Derek Wyatt (Tessa Jowell) The answer to that is, as I said when dealing with Julie Kirkbride's first question, there is an eight year time period between now and 2010, the outside boundary of our date for digital switch-off, and policy will develop over that time. Patricia and I are confident that the collaboration between our two Departments, the drive which is now behind the Digital Action Plan, which is a developing set of instructions to government, industry and the broadcasters, will mean that at some point, perhaps in five years' time, we will take stock of the rate of progress on the basis of normal market mechanisms of persuasion and price and so forth, and then have to consider what steps need to be taken in order to make the policy realisable within the time frame; but now is not the time to do that; not at a time when new technology innovations are producing set-top boxes which are cheaper than they have ever been before when, in a sense, the market is driving prices down both in relation to digital televisions and set-top boxes. We should allow that process to drive as far as it can and then there will be a point at which we have to make public policy judgments about further steps in the light of progress which has been achieved, but we are not at that point yet. (Ms Hewitt) If I may just add, the set-top box will not necessarily give you a return path. There are issues here about making sure that consumers themselves can use broadband in both directions, and not simply receive digital into their television, important though that is, and undoubtedly deliver a wider variety of services. (Ms Hewitt) No, I do not agree with that. If you look both at the rate of take-up of digital television where, as Tessa has said, we lead in Europe; if you look at the rate of take-up on internet access, where we are amongst the world leaders; and if you look at the pricing that we have got to the narrowband internet access, where we are world leaders; if you look at the steps we have taken to connect schools to the internet, where we are the world leaders; and if you look at what we are doing though the UK On-line Programme to enable access in communities where there is a very low level of home internet access, because of poverty, and sometimes digital television, we are doing a great deal here to drive this forward. Of course there is still more to do. I think it is a great mistake in this business to think there is a magic wand you can wave here. Singapore, for instance, at not insignificant public expense, has got everybody connected to broadband, but a dearth of interest in content means that nobody uses it. You do have to deal with both the infrastructure and the content and understand the ways you an access this stuff. The fact we have got such vibrant creative content industries gives us another advantage in driving this forward. Ms Shipley (Ms Hewitt) Could I, perhaps, start by commenting on that, Chairman? We are grateful to the Member for her comments. First of all, the broader issue about joined-up working across government. The important thing here, I think, is to embed this, not just in the way that ministers work, because as you rightly indicated ministers come and go, but to embed it in the way that officials work so that it is in the institutional bloodstream, if you like. The work that is being led, I think previously from the Cabinet Office and now from the Office of the e-Envoy, on joining up government electronically - I do not want to give the impression of any complacency but it is actually another world lead. What we are succeeding in doing is making it possible for officials right across government to access information, to build their own community interest and to work much more effectively and much faster across government than, generally, has been possible with paper-based systems. (Ms Hewitt) I think in terms of getting further joined up working, this is very much to do with culture. Technology can enable it but we need a culture change that is led by ministers and by senior civil servants, which then encourages officials to work in a different way and to share information. That, as I say, is happening very effectively. On the policy framework within which Tessa and I work, I think that was set out very much in the White Paper from which the Bill stems. Essentially, what we want to have is one of the most dynamic, creative and content industries in the world, supported and underpinned by one of the most extensive, competitive infrastructures in the world. The big challenge there, as several Members have reflected on, is indeed the challenge of driving up broadband infrastructure in order that it can support a much wider variety of applications. (Ms Hewitt) As we were saying earlier, it is absolutely a matter for the Prime Minister, but it certainly is not causing any problems at the moment. I think the industry and the various groups and individuals who are concerned with this, by and large, do know which department to address, but since we have a joint team of officials working on this it does not really matter if they are addressing their comments to the wrong department. (Tessa Jowell) I think the point about long-term sustainability is a very important one. Arguably, this is the easy stage and we have the excitement of new policy and very visible challenges on which we have to deliver. I think you are right, I think that there will be a degree of reorganisation around the boundary of our two departments, in order to drive this policy forward, because just as the policy development has been underpinned by a very high level of joint working, so the support to OFCOM, particularly in the early stages of its development, will have to be accompanied by a similar degree of integration in the implementation capacity of our two departments. Again, subject to our both being responsible for making that happen, we will turn to that once the legislation is under way. This is - if I may just underline the point - a challenge that has been faced by government across a range of major areas of policy, and I hope that what we achieve will inform that process. Ms Shipley: This is the first time we have had two of you sitting there and we can see the working relationship, I think I am right in saying. So a historic moment. Thank you. Mr Bryant (Tessa Jowell) I will start on that and start by saying that you will be aware that in addition to the 2006/2010 window for switch-off there are conditions which underpin that in relation to the accessibility of digital signal and the affordibility of digital equipment which, I think, relates back to the discussion that we were having a few minutes ago. Those are tests against which progress on the policy will be judged and there are also tests which have to drive and set the impetus for the policy. The second point is you will know that we are very clear in government about the policy of platform neutrality, maintaining the three platforms - cable, terrestrial and satellite - in pursuit of consumer choice but, also, recognising the point that you often make about your own constituency, about the importance of DTT in order to secure universal access. Platform neutrality is an important driver of the universal access that is one of the tests against which switch-over will be judged. Then, within that, dealing with your point about content, yes, I think it is important that as part of the offer there are good, free-to-air packages because not everybody is going to want to pay for the subscription or the premium services which are currently available. A good free-to-air offering should be available and should be available on terms that can be upgraded if people wish but if we can get to a point - which, in relation to Derek Wyatt's opening questions is an important one we do reach - where there are lots of people who do not want 200 to 300 channels but who will be happy with the 19 or 20 free-to-air channels now, and if the only cost beyond the set-top box is the licence fee, then that is a good package and that is a good driver of universal access. So I think there are both issues in relation to universality by the combined contribution of the three platforms, but also there are important issues for the providers to secure what many people want, which is free-to-air with no additional cost beyond the purchase of the set-top box. (Tessa Jowell) There are two issues in relation to digital terrestrial, at the moment. One is, obviously, the position of ITV Digital, which made a statement the week before last. The second is the adequacy of the technology. Here, the actions which are specified in the Digital Action Plan are important in improving the consistency and reliability - the general performance - of the platform. You will be aware of the steps that are being taken in order to improve that. I hope that what we have said persuades you that we are determined to maintain the choice of access to one of three platforms and to ensure that the free-to-air offering justifies the continued payment of the licence fee, albeit linked to the cost involved of purchasing a set-top box. (Ms Hewitt) Before you ask another question, I wonder if I could just expand a little bit more on this, because I think, quite rightly, your concern was not simply about access to digital television. (Ms Hewitt) As in the very disadvantaged estates that I represent, you can have very high take-up of digital television through a Sky subscription with nothing else. That is very important. I know that the National Assembly for Wales is very committed to ensuring that, for instance, the Lifelong Learning network should be accessible in each local authority area. That, if it can be achieved, would not only help to secure, obviously, digital broadband access into the schools but it would also provide a sort of core point of presence within the local authority area that might then be leverage for other users. One of the crucial things we are looking at in the broadband roll-out strategy is how we can bring together all the different bits of public sector procurement at the moment, which are all too often very fragmented, in order that the private sector infrastructure investors can see that it is more likely to be worth their while to make the investment. We are also looking at how, as we do bring the broadband procurement together within one local authority area - or, perhaps, a broader region - we can then not only get it to the schools and the other public sector sites, very few of whom, as you well know, in Wales have got broadband access, but we can start to make it available to small businesses. (Ms Hewitt) Can I turn to Andrew Pinder on this, because it is one reason why we have the e-Envoy and that central office, because joining up all the pieces is complicated. (Mr Pinder) One of the things we are trying to do is make sure that we co-ordinate any public sector procurement in the broadband area to try to maximise our purchasing power and get it into the places where you would not, as it were, ordinarily go - what I call the Heineken test. That is work which is currently going on. Departments are going through the spending round, as you know, so that they have put their bids to the Treasury. Those bids are being analysed. In parallel with that, the Office of Government Commerce is doing some work on looking at the practicalities of how one aggregates both procurement at the national level and, also, local authorities and other public bodies in a particular area to make sure that we do get it out to areas as remote as Rhondda and South Shropshire, which is where I happen to live. Those areas suffer the same issues that you do, but without the coal mines. So we are really looking at everything we can to look at how we provide enough stimulus and enough purchasing power to try to make sure that we maximise the areas we get broadband to. I hope 2006 is an pessimistic assessment of yours. Mr Doran (Tessa Jowell) We have to await the outcome of the process that ITV Digital are currently undertaking. We will continue to take the steps that I outlined in response to Chris Bryant's question to improve the efficiency of the platform, where those steps rely on action by government. Clearly, the difficulties facing the operating companies are a matter for them and the role of government is to ensure that through the regulatory powers that are available and the intervention of the ITC that the sort of issues that diminish the attractiveness of the platform are addressed. One of the problems has been the unreliability of the signal and the inconsistency of reception and that is something that we are addressing. (Ms Hewitt) The Radio Communications Agency has been working very, very hard with the digital terrestrial providers to try and boost the signal and overcome some of the problems, not least the issues that need to be discussed with Ireland in the case of those west coast transmitters, in order to try and ensure that we get more extensive and more reliable coverage. (Tessa Jowell) In relation to NTL, they are restructuring their present debt burden. There are certainly backstop powers for government in relation to the use of the spectrum, but I think it is important to be clear that we have two companies, NTL and Telewest, and ITV Digital, who are addressing the commercial problems that they are facing, and that is a matter for them. It is not for government to get involved in the problems of the operating companies. That said, the position of platform neutrality and our wish to see the continuation of the three platforms remains, and there is a distinct area for government intervention in order to strengthen the viability of those platforms. Patricia has outlined - which is very important in relation to cable - the action in relation to increasing broadband access and I have outlined the action which has been taken to improve the efficiency of the DTT platform. (Ms Hewitt) As you rightly say, Atlantic Telecom had a very serious and immediate impact on the consumers who were served by that company. As you know, both Douglas Alexander and Oftel stepped in very quickly to ensure that, on the telephony side, action was taken, not least to help them ensure that small businesses were not left without telephone lines in the run-up to Easter. We learnt some lessons from that and what has happened as a result is that Oftel have ensured that they have got in place a proper monitoring system so that they are close to the companies and they can see where problems might arise - an early warning system, if you like - and there are proper contingency plans for consumer protection to be put in place if they are needed, and they certainly were in the case of Atlantic Telecom. That will continue to be a responsibility of OFCOM when OFCOM itself is up and running. (Ms Hewitt) They do need to be addressed and, as I say, I do think there were lessons that needed to be learned from the Atlantic Telecom collapse. That is what Oftel is doing - learning those lessons. John Thurso (Tessa Jowell) The high-level objective of the legislation is to deliver a communications industry and a communications regulator to service the ambition of the UK being the most dynamic knowledge economy in the world. There are then, within that, some pretty meaty objectives - on my side of the shop - in relation to the broader broadcasting ecology, ensuring that we do two things: that we preserve the distinctive character of public service broadcasting in a context and in an environment where the market for the commercial broadcasters is one which works effectively. In other words, that the presence of public service broadcasters, with the privileges that public service broadcasters have, do not distort the market and act as a disincentive to investment. If I am talking to my constituents, the second part of that rather than the first part is what they would be interested in. Linked to that, I think, is the point that Patricia has made about making it easier for people, to demystify a lot of both the technology and the opportunities that digital offers, both in terms of entertainment but, also, in terms of access to public service information. I happen to think that in 10 years' time we will look at the quality of public service information which broadband makes possible to deliver to our homes and it will change the pattern of our lives. I think we are looking to a communications system that will service the opportunities for changing people's lives, taking account of Chris Bryant's pre-occupation, which is the pre-occupation of all of us, that this very rapidly accelerating progress does not, in turn, become a major driver for inequality. (Ms Hewitt) Could I just check whether the question was more narrowly focussed on the current Bill rather than the main Bill? (Ms Hewitt) I completely agree with what Tessa said and I do not think I need to elaborate. (Ms Hewitt) Let me comment, first of all, on your starting point about what the market will and will not do. Of course, the cable companies and then BT, when it was putting ADSL into its exchanges, focussed on the areas where they thought they could make some money and there would be enough customers - which is why we have got 55-60 per cent coverage in population terms. I do think the priority, particularly for BT which has made a very, very big investment in ADSL over the last two years, is now, having got its prices down, to get out there and actually advertise and deliver the service, and drive up demand in the areas where ADSL is available. Of course, if that does not happen you then have a knock-on effect and even less incentive to invest beyond the areas where broadband is already available. I am reasonably optimistic about that, but I will be monitoring it very closely as that roll-out starts. That then leaves us with the absolutely crucial issue of the areas where broadband is not commercially available at the moment. Of course, there is a role for government there. There is, I think, an issue perhaps for the regulator to look at which is the cost of leased lines, because when you are talking about your large-scale call-centres and other businesses, at the moment the cost of leased lines, which is the way they will get broadband, is really very high compared to a number of other countries. That is holding back inward investment and other development that will bring employment into rural and other disadvantaged areas. That might be a regulatory issue that we can ask Oftel to look at. More broadly, however, of course there is a role for government and it is both for my department and for the Scottish Parliament and for the Welsh Assembly. To put it at its simplest, there is a choice there: do we think that government should pay for the whole of the costs of getting broadband infrastructure, using whatever technology, into the parts of the country which are not currently reached? In which case, let us be quite clear that we are going to be competing for that investment along with the even more pressing needs of railways, hospitals, schools and everything else, since - particularly in the case of railways - we are dealing with a failure and an inadequacy of infrastructure investment that goes back a couple of decades. Or do we think the role for government is actually to partner with the private sector so that we get a combination of public and private sector investment that can get broadband more rapidly into the areas where currently it is not reaching? What we have been trying for some years is a variety of approaches. Chris Bryant will remember the National Assembly for Wales tried an experiment in a remote part of Wales where it helped to pay for ADSL in a BT exchange that certainly would not have been commercial viable. However, the take-up has been very low, which may have to do with the services that were being offered, it may have to do with the price or it may be a combination of both. A different approach is now being taken in another experiment that is currently being done in Cornwall. I have referred, as Andrew has earlier on, to the way in which we can connect up public sector procurement; use that to get a point of presence for broadband connection into a rural village, possibly because the school or library or some other public sector point is being connected, and then, since you have run, probably, fibre up to that point, off that get some other connections that can be accessed by, particularly, small businesses and people who are self-employed, and then open that up generally. That is what we are doing to try to make this happen. (Ms Hewitt) I think that is right, although I am not quite sure if that particular fibre on the A9 is part of the JANET network or a different network. This matters because the procurement that was done for JANET and now Super-JANET, which is the very, very high-speed academic network, was done on terms - rather favourable terms - that make it rather difficult to start exploiting it for commercial purposes. You can get into some desperately technical and complex legal issues here. These are exactly the issues that we are addressing with our colleagues in Scotland so that we ensure that, as far as we possibly can, we exploit fibre connections that have been paid for publicly and then use them to get the investment and the jobs that those communities need. (Mr Pinder) Obviously there is a follow-up on the Alness issue. I suspect the Member has had dealings with Dounraey. (Mr Pinder) We will follow up and write to you separately, if we may, about that. I think it is easy to overlook the fact that this is, as I said earlier, a very new technology and the market is developing really quite rapidly. There is lots and lots of innovation happening out there, which we sometimes kind of overlook by focussing on ADSL and on cables in the larger cities. We have got some money, as you know, £30 million to fund agencies and there is such a thing as executive cells (?) which are doing innovative things to try to get some innovation in just these very areas of rural communities and so on. The Scottish Executive are sponsoring a scheme to get a wireless network into the - not your constituency - Western Isles to try to improve access to rural communities. They are running a scheme to look at how you might transmit broadband along power lines to reach rural areas, and looking at open access networks where rural communities can access broadband in a central place. There are lots and lots of innovation. On top of all that, of course, there is satellite, and in Scotland and Wales there are pilots running, and I hope those pilots will be extended through to the rest of the UK. So let us not get too focussed on ADSL and cable, even though they are mainstream and will be the main means of delivery. There are, in some of these rural communities, some real opportunities for things to happen through the use of alternative technology, and we need - and I need - to keep up the pressure to make sure that sort of thing happens. Mr Flook (Tessa Jowell) Perhaps I can start with that and say that the RSLs in relation to radios are better established and we have had more progress in that area than we have in relation to television. The key issue is, as you will be aware, about the availability of spectrum. In relation to access radio, the Radio Authority has very much taken the lead in this. In public policy terms, we want to support the development of community radio, and subject to the availability of spectrum (and this, obviously, is a matter which is under consideration in the spectrum review, on which the consultation has only just finished) in principle we would also favour RSLs in relation to television. Very local radio and very local television has the potential for representing otherwise excluded interests, particularly those of ethnic minorities, and has a role in developing a sense of community identity, and may also have a role in providing an outlet for communication at a particular time - Manchester doing for the Commonwealth Games, or something like that. So in broad terms we support the development of RSLs and that support we will look at in the context of the conclusions from the spectrum review. The Radio Authority had given the go-ahead to 15 access radio pilots and a decision about further quantity and scale will rest very heavily on the outcome and success of those. (Tessa Jowell) I am not skirting around it, I am recognising the practical fact that access radio pilots will take less spectrum than will television. I am very happy to look at the particular point that you make about the length of the licence. There are also other issues which I am quite sure you are aware of; there are concerns that the commercial broadcasters have: "Will these distort the market?" "Will they take advertising from the established commercial broadcasters?" All this is material that we want to try to learn from, on the strength of the 15 radio pilots. I am very happy to look at the specific point you raise in relation to your local television station, and perhaps to write to you, Chairman, about the matter of the length of licence. Mr Flook: In particular, because as my colleague earlier said in his first questions, 2006 to 2010 is when you have switch-off for analogue, and that is creating a problem going forward not just for four years but for any investment in local community TV and the need to find a digital platform. Thank you, Chairman. Rosemary McKenna (Ms Hewitt) I am going to ask Andrew to come in on this in a minute, but let me just say that I absolutely share your concern about making sure that everybody has got not just access in a technical sense but has also got the skills and confidence to use the new technology, particularly internet access. One can say there is universal access already because there is universal access to the telephone line, and if you connect the appropriate piece of kit you can get the internet. However, of course, for people actually to use it and benefit from it requires much more, and I am very struck in the very low-income communities in my constituency - and many, many others I have visited - by how much the various community access points - in community centres and libraries and so on - are valued and used, often by people in their 50s, 60 and 70s, who left school with no qualifications at all and whose confidence is transformed by the discovery that they can use this, and then they move on to get a lot of these new skills. So it is hugely important to us as a policy issue. (Mr Pinder) As you know, we have this large number of BT on-line centres to which the libraries make a large contribution. Therefore, when that programme is more or less complete, by the end of the year, all libraries will be on-line and we will have quite dense coverage throughout the UK of open access centres. So, as Patricia said, physical access is there as well. The problem that I foresee is that for many people, particularly socially excluded people, these sorts of places are not necessarily the sorts of places they want to go; they have dropped out of school, perhaps, a little early and the last thing they want to do is go back to something that reminds them of that sort of institution. We have just picked up some work looking at the approachability of UK on-line centres; looking at how we do really focus on these particular groups, who are absolutely our target group. We have got to get hold of these people and get them on-line. We will be publishing that research and getting a discussion going. John Healey (the Minister responsible at DfES for UK on-line centres) and I have been recently talking about this issue and he shares that concern. He is looking at how we might make centres reach out more into the community as well. So we are, as it were, on the case and we do understand the point you are making. Having gone through this initial investment of getting the centres opened, we now need to make sure that those centres, plus other things we can do, really do focus on the disadvantaged. (Ms Hewitt) Can I completely agree with that. Indeed, in my own constituency in the last two weeks I have opened two refurbished community centres where the local authority has put in community learning managers, where there are little IT suites, there is internet access coming and always, when I visit places like that, the most popular course that people are flocking in to sign up for is internet and ICT training. Within the UK online programme we have been doing some really quite imaginative things: internet access in one or two pubs, in a caravan that is part of the travelling fair in the West Midlands, and I suspect we could do more of that. The study that Andrew just referred to has indicated some useful directions. Chairman (Ms Hewitt) Thank you very much. (Tessa Jowell) Thank you. |