Appendix 2 - Reply from the Office of
Communications (Ofcom)
3. We firmly support Ofcom's engagement with wider
communities throughout the United Kingdom, and hope this will
continue without any unnecessary replication of function. (Paragraph
40)
Ofcom welcomes the Committee's recognition of Ofcom
efforts to engage with stakeholder communities. Ofcom is determined
to ensure that an integrated approach is adopted when carrying
out its many duties across the UK and that the interests of all
nations in the UK are considered. We have established national
offices in Scotland, Wales, England and Northern Ireland. Advisory
committees for England, Scotland, Wales and Northern Ireland have
also been appointed. Ofcom has appointed the Chairman for the
Advisory Committee on Older and Disabled People and recruitment
for members of the advisory committee will soon be completed.
A key challenge for Ofcom is to ensure that we engage with the
whole range of stakeholders, especially the hardest to reach groups
and those who might not automatically respond to consultation
requests. Ofcom will strive to devise ways of effective and powerful
mechanisms of consultation.
4. While recognising that high quality regulation,
even "light touch" regulation, comes at a price, Ofcom
needs to ensure it delivers good value for money. The Committee
will scrutinise Ofcom's annual reports to assess the degree to
which this is achieved. (Paragraph 43)
Improving efficiency for the benefit of stakeholders
is one of the main objectives of Ofcom's draft Annual Plan for
2004/5. On 31 March Ofcom committed to stakeholders that it would
have a rolling programme to cut costs by 5 per cent each year
for the next two years. This was in addition to the 5% savings
delivered already from the first stage of merging the five legacy
regulators.
5. To ensure maximum transparency in regulatory
decisions, and to provide a further safeguard against regulatory
capture, Ofcom should hold hearings and meetings, including board
meetings, in public with full minutes published promptly. Publicly
funded, and theoretically publicly accountable, bodies should
not operate in secrecy. (Paragraph 47)
Ofcom will always strive to be transparent in how
decisions are reached. We have recently held open meetings in
London, Cardiff, Glasgow and Belfast as part of our Annual Plan
consultation and will hold further public meetings in future consultations
where appropriate. However, Ofcom believes that the Board should
continue to meet in private and that this will not compromise
our goal of effective accountability or our commitment to transparency.
Notes of the Ofcom Board meetings and other advisory committees
are always published on the Ofcom website. Ofcom believes that
holding Board meetings in public will inhibit the free interchange
of ideas and opinion necessary for collective Board responsibility.
Ofcom notes that the Federal Communications Commission which is
required to hold all hearings in public does not have collective
responsibility and indeed frequently divides on party political
lines. Commercial confidentiality also presents particular difficulties
in allowing Board meetings to be held in public.
8. The protection and maintenance of regional
commitments by Channel 3 licensees will be the first major test
for Ofcom. It is essential that it pass this test, since faith
in its decisions will otherwise be undermined. Furthermore, we
see no reason why this process should not be conducted in public.
(Paragraph 58)
As required under section 351 of the Communications
Act, Ofcom is conducting a thorough review of the effects of the
changes of control brought about by the ITV merger.
9. We welcome the draft Community Radio Order,
allowed for by Section 262 of the 2003 Act, while drawing attention
to the provision for grants made in Section 359. These offer the
opportunity to turn into facts Stephen Carter's "warm noises"
that community radio is a "good thing". (Paragraph 59)
Ofcom welcomes the opportunity to introduce this
new tier of radio in the UK. Our consultation on licensing community
radio was published in February and the consultation period ends
on 20 April. We aim to be in a position to commence advertising
licences as soon as possible after the Community Radio Order becomes
law. The feedback to the consultation so far, from potential applicants
for community radio licences, has been enthusiastic.
Earlier this month the Secretary of State announced
that her department is giving a grant of half a million pounds
to a fund for community radio broadcasters. Ofcom has set up a
radio licensing system which will also administer this fund.
10. We are concerned that the BBC has chosen to
quibble over technical standards and that ITV has argued that
its regional programming prevents any audio description. We look
to Ofcom to promote the development of television services for
deaf and visually impaired people across all broadcast platforms,
in line with the requirements of the Communications Act. In particular,
we recommend that BBC and ITV networked programmes are made available
with suitable audio description via digital satellite for the
500,000 Sky subscribers who are blind or partially sighted. (Paragraph
60)
Ofcom takes seriously its responsibility to implement
the requirements of the Communications Act in relation to access
services for people who are deaf or blind, or who have visual
or hearing impairment, or both. To this end, we made progress
on this an early priority and published a draft code for consultation
in December 2003. The draft code includes an expectation that
broadcasters will use reasonable endeavours to ensure that subtitling,
signing and audio description can be accessed by the greatest
number of viewers possible, whether they receive their services
by terrestrial signal, satellite or cable. We expect that the
BBC and ITV will move forward on extending access to audio described
programmes in the near future. Given the low quotas for audio
description set by Parliament, Ofcom considers that the BBC and
ITV would maximise the benefit to blind and partially-sighted
viewers if they concentrated provision on network rather than
regional programmes.
11. We believe there is no justification for delay
in securing responsible food and drink advertising aimed at children.
A precautionary approach is justified, regardless of the desirability
of further research into the effects of food promotion to children.
(Paragraph 65)
Ofcom is an evidence-based regulator and is charged
to ensure that its regulatory interventions are reasonable, proportionate
to the problem and take account of all relevant interests. Its
review of food advertising is well under way and will be completed
in time to incorporate nutritional definitions being developed
by the Food Standards Agency.
The original timetable to complete the review "during
the first half of 2004" has had to be extended by one month
because Ofcom has commissioned a large, but very urgent, research
programme. Ofcom and the Food Standards Agency have been in regular
contact since publication of the Hastings Report and have agreed
that this work indicates that advertising has a modest direct
effect on children's behaviour and attitudes in relation to food.
Ofcom's current research is very practically focussed on what
benefits children might reap from a range of possible rules on
the scheduling or content of advertising. (For example, to investigate
whether the timing restrictions which have been proposed would
produce a significant reduction in the levels of child viewing
of the advertising). This research will dovetail with the work
currently being undertaken by the FSA to determine the metrics
of healthy and less healthy food stuffs.
While it may be possible for regulation to produce
some benefits for children's health, Ofcom will also support as
far as it can any efforts by the food and drink industry itself
to ensure responsible advertising.
12. More generally, Ofcom ought to adopt a robust
stance in ensuring the spirit as well as the letter of all existing
public service commitments is maintained. In the longer term,
the welcome adoption of light touch regulation must not be allowed
to result in denying citizens the option to watch high quality
public service television. (Paragraph 66)
As stated in Ofcom's regulatory principles, we will
operate with a bias against intervention but with a willingness
to intervene firmly, promptly and effectively where required by
the legislation. Effective regulation is only one of the pre-requisites
for achieving high quality television. The broadcasters themselves
also need to have the means and motivation to provide it, and
programme makers the creative freedom to make the best possible
use of their talents. Ofcom is also very conscious of the requirement
as part of our Statutory Review of Public Service Television Broadcasting
to make recommendations "with a view to maintaining and strengthening
quality" of PSB television.
13. We believe Ofcom should attach priority to
ensuring its regulatory decisions are consistent with the promotion
of an expeditious switchover to digital broadcasting. (Paragraph
69)
This issue has been addressed in full in Ofcom's
report on Progress Towards Digital Switchover which has been recently
submitted to the Secretary of State and copies of which have already
been sent to members of the Select Committee.
14. Since this service was closed to new customers
at the end of 2003, we believe that the twin issues of universal
access to, and social exclusion from, free-to-air digital television
services must remain an important issue. We recommend that Ofcom
address itself to this as a matter of urgency. (Paragraph 70)
Ofcom's report on Progress towards Digital Switchover
recognises that the question of access to free-to-air digital
satellite television services needs to be revisited well before
switchover. Ofcom will need to determine where, on what basis
and what terms the public service broadcasters' statutory "must
provide" obligations on satellite are triggered.
15. Ofcom should monitor closely the effect a
merged ITV has on the wider broadcast advertising market, ensuring
smaller commercial TV companies, including but not restricted
to other Channel 3 licensees, are not disadvantaged. (Paragraph
83)
Under the terms of the Contract Rights Renewal (CRR)
remedy imposed on Channel 3 following the investigation of the
Competition Commission into the Granada/Carlton merger the Adjudicator
is required to report to Ofcom quarterly on the operation of the
undertakings. Ofcom will study this report carefully, alongside
the OFT, and will ensure that amendments to the undertakings are
sought if smaller commercial televisions companies are being disadvantaged.
In addition, the Commission suggested in its report that Ofcom
should undertake a full review of the television advertising market.
We intend to carry this out early next year, after giving the
market time to settle. After two full advertising sales deal rounds
(i.e. for 2003 and 2004) we should be in a position to assess
fully the effectiveness of CRR.
16. We believe that quotas for regional production
for the network are essential to conform with the spirit of the
legislation, that there should be sufficient investment in regional
production centres of excellence, and that Ofcom should be alert
to this need. (Paragraph 91)
Interim quotas for regional production have been
set by Ofcom pending the PSB Review. In the case of Channel 3
at least 30% of network programme hours and 40% of expenditure
on such programmes must consist of programmes made outside the
M25. We have recently announced a new common definition of "made
outside the M25".
For the first time, there will now be a single definition
for regional production which will apply to all broadcasters.
This will help to ensure that the important new statutory requirements
in this area are applied fairly, consistently and effectively,
leading to genuine investment in regional programme making.
The definitions were agreed following the formal
consultation Ofcom held in December 2003.
A 'regional production' will have to meet at least
two of the following criteria:
The production company must have a substantive
business and production based outside the M25
At least 70% of the production budget must be spent
outside the M25
At least 50% of the production staff should be
working outside the M25
We note the suggestion from BECTU that Ofcom should
require each ITV region to produce a certain amount of programmes
for the network. There is a requirement in the legislation for
"a range" of production centres outside the M25 to be
used to supply network programmes. However, we are not interpreting
this to mean that there should be quotas for individual ITV companies.
Such quotas would be inconsistent with the networking arrangements
which are based on the fundamental principle that suppliers, both
independent producers and ITV companies, must compete on equal
terms to win programme commissions from the network centre. However,
we will be assessing the geographical distribution of network
supply using 2002 as a broad benchmark, and looking for a better
spread across different macro-regions over time.
17. The Committee fully acknowledges and welcomes
the possibilities that new digital technologies offer broadcasters.
At the same time, broadcasting is about people communicating with
people. This communication should be facilitated throughout the
regions and reflect cultural diversity at both a regional and
national level. It needs broadcasters and their supporting facilities
to be in situ. Section 286 of the Communications Act refers to
a suitable range of Channel 3 programme production centres; we
look to Ofcom to ensure these powers are used appropriately to
provide for a thriving regional programme production sector. (Paragraph
101)
We comment above on how Ofcom is interpreting the
requirement for a range of production centres for the supply of
network programmes. Section 286 of the Act does not require
that the production centres must belong to Channel 3. There is,
in fact, considerable over-capacity within Channel 3 at present
in this area. This is partly a result of increased use of independent
producers and partly due to changes in the way programmes are
made. Some rationalisation is inevitable and arguably overdue.
However, there will still be a strong regional influence in the
network schedule allowing the regions to communicate to each other
and to the nation.
In terms of regional programmes it is a pre-requisite
for the delivery of high quality that each licensee maintains
a significant presence in each region. (We use the term "region"
here to include the nations where these equate with ITV regions
i.e. Wales and Northern Ireland.) There is in any case a separate
quota (currently set at 90%) for the proportion of regional programmes
on ITV which must be made in each region.
19. Plans to downgrade production facilities,
for example in the Meridian franchise, have proceeded apace with,
to say the least, scant consultation with the trade unions. This
situation must be rectified over the coming year, and Ofcom must
ensure that any negotiations with ITV are conducted in an open
and transparent manner. (Paragraph 108)
Ofcom's role in relation to ITV is to ensure that
the changes in the Meridian and Central licence areas do not put
the licensees in breach of their licence obligations. It is important
to recognise that under the 2003 Act the licensees do not need
to obtain Ofcom's prior approval for the changes. There was such
a requirement under the 1990 Broadcasting Act arising from the
ITC's control over changes to "core proposals" in licence
applications which included proposals for studios and facilities
in the regions, but this has now been repealed. Even so, Ofcom
has sought information from the licensees, particularly in relation
to the changes affecting regional programmes, and they have been
willing to provide this. We understand the concern that the quality
and localness of the "sub-regional" news services provided
by Meridian in the South East and Central in the East Midlands
will be adversely affected by the changes which have been announced.
Both Meridian and Central will continue to have a significant
presence in these "sub-regions". While the news studio
and presenters will move to centralised facilities in Southampton
and Birmingham, news reporters, editors, camera crews and other
staff will be based in new news centres in the "sub-regions"
which will be equipped with the latest technology. This type of
arrangement has been shown to work well elsewhere such as in the
Meridian West "sub-region".
That is not to suggest that the changes are not significant.
Clearly they are. However, the redundancies which have been announced
affect network supply where there is significant over-capacity
within ITV at present, more than the regional or "sub-regional"
services. We have examined the proposals put forward by Meridian
in some detail to check that they are consistent with the requirement
in the Act for high quality and will do the same for Central.
If we find that there is any inconsistency with statutory obligations
we shall address that.
We have attempted to respond to letters from staff,
unions, MPs and others in an open and transparent manner. We have
also held a meeting with union representatives to discuss Meridian's
proposals and will be happy to do the same for Central's.
20. Clive Jones told us he did not see the plans
for Meridian as amounting to a diminution within the region, but
that they were rather a consequence of modernisation and the wish
to embrace new technology. We are concerned that both the ITC
and Ofcom appear to have accepted this glib attempted justification.
We are far from reassured in respect of programming both for the
Meridian region and for the ITV Network, and believe that Ofcom
should be much more vigilant on this issue. (Paragraph 109)
Our comments above have a bearing on this. There
will certainly be "a diminution within the region" in
terms of Meridian's facilities for supplying network programmes.
However, Ofcom will still be looking to ITV to source a proportion
of network programmes from the South of England macro region.
On the regional side there will be some movement of facilities
from Maidstone to Southampton but Meridian will still have a significant
presence in the South East sub-region as well as in the region
overall notwithstanding the reduction in staff arising from the
introduction of new technology and more efficient working practices.
21. The Committee looks to Ofcom to monitor the
situation closely, and to take steps to safeguard the present
high quality of programming in all sub-regions across the whole
country. The potential threat posed by over-consolidation of regional
and sub-regional news production centres will provide an early,
major and crucial test for the credibility of Ofcom. (Paragraph
113)
We are very aware of the importance which viewers
attach to regional news. We agree that this needs to be produced
by people who live and work in the communities they are serving
and we understand that this will, to a very large extent, still
be the case under the proposed changes affecting the South East
and East Midlands. If we believe that over-consolidation is threatening
Channel 3's ability to deliver high quality regional services,
we shall address that.
22. We deplore Ofcom's endorsement of the ITC
decision to allow a down-grading of the news service offered by
ITV during peak time, and urge them to reconsider their position
on this issue during the forthcoming re-licensing of Channel 3
services. (Paragraph 117)
Ofcom shares the concern to see a substantial and
high quality national and international news service maintained
on ITV, reflecting the important point made by the Committee that
half of all households remain dependent on analogue TV.
Since 1967 ITV has provided a half hour programme
of news in peak time (6.00 - 10.30 pm) each weekday. This was
a requirement set by the ITC for those bidding for licences in
1991, and remains the requirement now. Since 1999 the main programme
has been scheduled at 6.30 pm, having moved from 10.00 pm. A second,
20 minute programme, which before 1999 was shown at 5.40 pm, now
appears at 10.30 pm. Ofcom shares the widespread view that it
was a mistake on ITV's part to move News at Ten and lose its
"appointment to view" status. However, once that
change had been made, Ofcom has no statutory power to impose a
new licence condition on ITV beyond the requirement to provide
a half hour programme of news in peak time, which requirement
ITV currently meets. The combined available audience at 6.30 and
10.30 is fractionally greater than that at 5.40 and 10.00.
The only period when ITV has provided more than one
main programme in peak time was from 2001 to 2003 when, in addition
to 6.30, a bulletin was shown for three nights per week at 10.00
(and at different non-peak times on other nights). However, Ofcom
believes that the regular commitment to 10.30 is an advance on
that arrangement.
23. A merged and thus more powerful ITV shows
little interest in maintaining news coverage beyond the bare minimum
imposed by legislation and laxly interpreted by the ITC and Ofcom.
The Communications Act 2003 provides some flexibility in the regulatory
regime for news provision on public service television and we
recognise that the news environment has evolved considerably,
including 24-hour provision on digital platforms. However, with
half the population still relying on analogue services, Ofcom
should seek to reinstate on Channel 3 two substantial news bulletins
within peak time — 6pm to 10.30pm. (Paragraph 119)
There is no question of "interpretation"
of the legislation "lax" or otherwise. The legislation
is unambiguous. Ofcom has powers under the 2003 Communications
Act to set a quota for the amount of news broadcast by ITV in
peak time (currently discharged by ITV's longstanding licence
commitment to provide a half hour programme of news during peak
time), and to ensure that news is broadcast at intervals throughout
the day. Beyond that, it has no power over detailed scheduling
matters. Whether any change should be made to the quota for ITV
will be considered in our review of public service broadcasting,
the conclusions of which will be published before the end of the
year.
April 2004
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