Examination of Witnesses (Questions 20-39)|
25 MAY 2004
Q20 Chairman: I find what you say about
this particularly interesting because it does demonstrate that
people do adapt themselves to technology in a way they would not
think they could. You have people, friends of mine, for example,
who shy away from anything to do with a computer, but they sit
in front of their television set operating a computer once they
go into any kind of interactivity. It seems to me that we should
not operate on the basis that we have a static technological readiness
to access because people will conform to what they need to do
if they are determined to get their entertainment and information.
Mr Elstein: You have techno-freaks
and techno-fear. Techno-freaks love every last aspect of every
last new gismo. Mr Wyatt is famous for being at the cutting edge
of everything and giving poor old Nokia a hard time if they have
not invented the next thing straight after the last one. Techno-fear
sounds like a psychological ailment; it is just lack of familiarity.
I suspect the vast majority of people who have mobile phones only
understand about 10% of their functionality. Likewise with computers.
Most people who buy thousand pound computers probably have mastery
of about 2 or 3% of their functionality; their children may have
30 to 50. We just slowly familiarise ourselves and the key issue
hereand one of the great successes of Sky-Plusis
that it has a limited number of functions and they are relatively
straightforward to use. It does crash and it is expensive to call
out an engineer if it does crash and you cannot re-start it, but
it is not even cutting edge technology, it is just very well modulated
to how the consumer behaves in the home. That is the key to how
to bring together the technological opportunities and consumer
behaviour: close attention to the way consumers behave.
Mr Cooke: I think technology will
change the way we view that content. It has to be easy, simple
and intuitive. However, that content will also be tailored towards
different screens: the TV, the computer, the mobile phone. Nobody
will watch a full length feature film on a mobile phone, but that
content will be tailored to a five or 10 minute video clip, for
example, designed for a smaller screen. I think there will be
a gradual change. It may be that the family will still sit in
the living room watching the TV, but there will also be that time
delay when you can watch that content when you choose to because
it is on your PVR or your VC or your mobile device. Slowly it
Dr Tambini: I would hope that
we would not get too technology driven in this argument. In the
Ofcom review of public service television we can begin to see
evidence for the genres of good old fashioned TV that do hold
up well in terms of what the audience continues to watch, for
example current affairs. The desire on the part of the public
for what you might call "water cooler TV" is still very
Q21 Alan Keen: Can you explain what you
mean by "water cooler TV"?
Dr Tambini: Water cooler TV is,
I guess, an industry term for the kind of TV that you talk to
friends or colleagues about the next day in front of the water
cooler or the teapot or whatever. The fear, however, is that it
may be the case that a more fragmented market would have more
difficulty in actually delivering those kinds of social benefits
and those kinds of collective experiences. I would refer the Committee
to the recent report, funded I think by the BBC, on social capital
and television and also the work of the French economist Pierre
Larouche on the economics of broadcasting markets and the positive
externalities of providing these kinds of collective experiences
and the extent to which the market might not provide them.
Professor Tait: Although clearly
change is going to happen and has been a constant in the past
10 years in the broadcasting industry, I was struck by how well
some things have held up. Television news bulletins, for example;
the Ofcom report shows that what people most value from public
service television is impartial television news. All the research
that has been done on trust shows that although the BBC has had
its ups and downs with the political parties and governments it
is still trusted as a source of impartial news in a period where
an awful lot of journalismquite properly in a free societyis
partisan. That is an absolute value which Ofcom recognised as
one of the most important things that public service broadcasting
brings into the digital age. If you look at the audience figures
for the last two or three years, you will find that what you are
talking aboutpeople sitting down and watching television
together, perhaps watching a news bulletinhas held up very
well. When the news channels started there was the thought that
as you get into multi-channel television the bulletin would die
because people would see the convenience of being able to watch
news whenever they wanted it; with interactivity they could drill
down deeper. Those benefits are there and a growing number of
people are using them, but not the 17 or 18 million people who
watched BBC1 and ITV last night for a fixed fix of news, if you
like. As well as looking at the technology and the market changes
that are taking place and will continue to take place, we should
not forget there is still currently a core value in what the BBC
and ITV does, which is providing that fixed point each day where
people can get a pretty good take on what is going on in the world
without overtly being told what to believe. I think that is a
very important value going forward, even though it will be put
under pressure by the things we have all talked about.
Professor Naughton: Returning
to Mr Keen's original question, one of the things that I think
is now very noticeable is that audienceswhether they are
radio audiences or TV audienceswant to have more control
over the way they, quote, "consume" media. The observations
that Mr Elstein made about time shifting of television watching
using Sky-Plus or other technology, is just part of a wider story.
The truth is that we grew up in an era where, for example, scheduling
was a really important and black art in all television broadcasters.
They created the schedule and then under the broadcast model the
population, so to speak, consumed the television according to
that schedule. I believe that that model is breaking down and
it is breaking down largely because of changes in society and
people's expectations and having more control. If you want illustrations
of it you do not just have the statistics for Sky-Plus, there
are other things. For example, when the BBC on BBC radio introduced
its Listen Again featurethat is to say a technology
where if you missed Mr Kaufman being interviewed on the Today
programme by John Humphries on the divisions within the BBC and
you wished you had heard it but you were making toast at the time,
you can go to the BBC website and listen to it again. They do
that for The Archers and for other things. What they have
discovered is that the audience for The Archers has increased
quite a lot, not because people are listening to it live but because
they are listening to it later. That is an important long term
change, I think, which effects how the media environment will
work in the future.
Q22 Alan Keen: It is true that when you
record something you no longer want to watch it. A lot of people
might record a film, but once they have recorded it, it is not
the same as when they could have watched it live on television.
There is something, is there not, about this immediacy of watching
on TV and once you have the thing in the library it is not the
same as when you sit down with your toast and your cup of tea
and watch it.
Mr Elstein: The evidence is to
the contrary, unfortunately. Certainly with the old video recorder,
the vast majority of what was recorded was never viewed. That
was mostly a function of inaccessibility. In other words, you
were recording on tape sequentially and finding the programme
you wanted to watch was a relatively laborious job and on the
whole people did not bother to watch unless somebody told them
to watch it. What Sky have established with Sky-Plus is that there
is a very high rate of viewing of recorded programming, not least
because it is instantly accessible because it is on a hard disc
and you can find exactly the programme you want within a couple
of seconds, and therefore you do not have any of the inefficiencies.
You can also pause, rewind, come back to it, do whatever you like.
That is why there is such a huge difference between the proportion
of recorded material watched in Sky-Plus homes. There is no reduction
in total viewership, but just a major shift as between watching
live and recording. If you think about it, how long do we all
live? If you can compress last night's three episodes of Coronation
Street down to 24 minutes each and watch them all in 72 minutes
rather than an hour and a half, you have recaptured 18 minutes
of your life and you have lost nothing other than some commercial
messages that you are likely to pick up in some other programme.
There is quite a powerful incentive to optimise your viewing hours
and do a bit of digital compression of your viewing experience
so that even if you allocate the same proportion of your life
to viewing you are getting more out of it.
Q23 Alan Keen: I would rather save all
the time and not watch any television. Is it not people like Derek
Wyatt who are the ones who buy Sky? I would not pay more money
for Sky because I do not watch television like that.
Mr Elstein: It does not cost you
Q24 Alan Keen: It does cost me.
Mr Elstein: If you are a subscriber
to Sky anyway you get a Sky-Plus box thrown in. They used to charge
£10 a month but that has gone now.
Q25 Alan Keen: I would not spend £10
a month because I do not think it is worth it. There must be a
high proportion of people who watch recorded programmes because
they think it is worth buying it, but there are people like me
who do not think it is worth buying because they like to see the
immediacy of it. I think the percentage you are giving is a false
one at the moment; it may be right in the long term.
Professor Tait: I think one of
the crucial issues of this session is emerging, which is: how
far is the fact that something can be done mean that it is going
to happen for the whole population? None of us know the answer
to that because it is in the future, but there clearly is currently
quite a lot of evidence of people who do not want to go that far
down this road; they are a diminishing group but they are quite
a big group and they are not all poor people, although a lot of
them are poor people who do not want to buy the technology and
are quite happy with free to air terrestrial television as it
is currently. They do watch news programmes and sports programmes;
television is still a shared experience; they are a group who
will be quite difficult to transfer to a wholly interactive world.
They may just be quite happy to sit down and watch the BBC news
at 10 o'clock. Another focus of the BBC is to ensure that that
news is of extremely high quality and meets their requirements
as well as providing for the interactive future for a growing
number of people. One hopes with affluence more and more people
will be able to afford it. We know there are a number of people
who would take your view. By the time they have paid their licence
fee they have paid enough for entertainment and they have other
things they want to spend their money on. I think it is quite
a difficult balance how one mixes the old world which does provide
a lot of public goods free to air in a fairly straightforward
way, and the new technology which is going to provide a wonderful
richness of content and richness of formats but at a price.
Q26 Ms Shipley: I am interested in going
back to exploring the public service broadcasting because I really
want to know what the BBC's unique selling point is going to be.
Professor Tait, you said that news is holding up well, the BBC
is doing really well with the news bulletins, then you said: "and
ITV". Then we had current affairs: BBC is doing very well
on current affairs, "and ITV". What exactly is special
about the BBC as a public service broadcaster?
Professor Tait: We can guarantee
that the BBC will continue to do it. In the current environment
it is quite clear from the Ofcom report that they are pointing
to a world in which ITV and the other terrestrial commercial channels
will say, whether they are right or not: "We cannot afford
to do this any more".
Q27 Ms Shipley: I think it is well worth
having that on record, that we can guarantee that the BBC will
produce high quality, unbiased news and current affairs and so
on. However, how can we guarantee that? How can we guarantee the
high quality? We are all agreed that the governorship is problematic.
Professor Tait: There are two
issues here. One is resources. Take Patricia Hodgson who used
to run the ITC, she said last year that during the previous 10
years ITV had halved their spending on news in real terms. At
the same time the audience of their main evening news programme
had halved. That is before you get the sort of commercial pressures
which are going forward which we can see with multi-channel television
becoming even more popular. The first issue is resources and as
a former news editor who worked for both organisations, I have
great admiration for the professionalism of both groups of people,
but the reality is that you need resources to do high quality
Q28 Ms Shipley: Or you need a much tougher
watchdogtougher than Patricia Hodgson wasthat can
require it otherwise you do not give them licences and so on.
Professor Tait: Yes, but you do
need the resources. There may come a point where ITV can say,
hand on heart, that they cannot afford to do it. Already they
are spending far less than the BBC and that gap is widening. I
think the first issue going forward is that the BBC has to be
properly resourced to do proper news and current affairs well,
and it has to spend the money it has been given by the public
on that and not on other things. In terms of its priorities it
has to make that its key priority. The second issue is that you
have to have a very clear regulatory management regime to ensure
that it does news to the highest possible standard and lives up
to what it currently has, which is a very public esteem. If you
look at polls, the BBC News is regarded as being a benchmark of
impartiality, accuracy and truthfulness, and the organisation
has to ensure that it lives up to that reputation and continues
to do that, and if there any problems they need to be sorted out
Dr Tambini: On this issue of guaranteeing
quality, we are back to the regulatory question and I agree with
David Elstein in fact that it was a mistake for the Government
not to take up the Beveridge Committee's recommendations from
1949 and remove the governors physically from the BBC, give them
more powers and more control over their own budget. I think there
are a number of improvements to the transparency of the appointments
process which would beef up and make much more legitimate the
regulation of the governors. In terms of regulating news, there
is particular sensitivity about independence and I think a separate
argument for regulatory pluralism in a sense that there may be
an advantage in having more than one authority responsible for
this very sensitive issue. In terms of giving a regulator teeth,
I think that is certainly possible byto use the jargon
of the timesdeveloping a co-regulatory structure analogous
to ICSTIS, the premium-rate telephony regulator, which is able
to levy fines but it has a relationship with Ofcom which enables
Ofcom as the person who gives permission to network operators
to develop premium rate services, Ofcom could in a sense be involved
in terms of receiving reports from the BBC governors as the self-regulatory
body and making decisions about whether the BBC purposes have
been exceeded or whether the BBC is doing something it should
Q29 Ms Shipley: Presumably none of you
would think that the BBC should only be a news and current affairs
channel so could I take the opportunity to ask you what else should
be brought into the public service broadcasting round? What constitutes
public service apart from news and current affairs?
Professor Naughton: Essentially
anything that market driven organisations cannot or will not provide
which society, viewed broadly, regards as important.
Q30 Ms Shipley: Such as?
Professor Naughton: For example,
the experimental programmes, high quality serious drama, challenging
intellectual material. The kind of stuff that, in a commercial
world, would be seen immediately as depressing ratings. The central
issue we have in a lot of these areas is that free and open societies
need high quality availability of ideas in the public domain.
In some cases I do not think the market is disposed to provide
that. Societies have to make some arrangements for ensuring that
there is that kind of rich culture and it includes difficult broadcasting,
it includes challenging material and it includes, not least, unbiased,
impartial and thorough news coverage. The difficulty we have with
news right through the broadcasting systemand this applies
increasingly in the United States, for exampleis although
broadcasters regard the provision of high quality news as a major
responsibility, nevertheless in market driven organisations there
is always a pressure to provide news that the market is interested
Q31 Ms Shipley: What you have just done,
Professor, is to construct a really powerful argument as to why
the BBC should be protected for its uniqueness.
Professor Naughton: With respect,
I would suggest we should make a distinction between what and
how. I feel we are talking this morning about "what".
The BBC is one particular "how" for doing these things;
it may not be the only one.
Q32 Ms Shipley: Your whole premise was
based on the commercial ventures could not provide these things;
this is what the BBC could do because the other ones could not
Professor Naughton: I would say
that the record up to now has not been promising, especially since
the Thatcher reforms of the broadcasting system changed the ITV
network out of all recognition. The record isnot 100% but
on balancethat market driven organisations do not have
an incentive to do some things that are difficult and do not attract
large audiences. That is perfectly understandable.
Mr Elstein: It would be a mistake
to think that there was some exclusive quality about the BBC in
terms of delivery of high quality content. Channel Four is a non-profit
distributing publicly owned public service broadcaster which has
a remit to provide challenging, innovative programming and, indeed,
high quality news. Despite what Professor Tait has said, I should
point out that there is a long body of ITC research into public
opinion about impartiality in programme services and the BBC has
been consistently behind ITV, Channel Four and even Sky News in
terms of public view of who is least biased in terms of delivery
and impartiality. There is not an exclusive, genetic component
inside the BBC that ensures that you get every aspect of high
quality content. I think it is also important to recognise that
we have this kind of funding confusion. The biggest single utilisation
of the BBC licence fee is on BBC One; roughly half of all BBC
content spend is on BBC One. I would not like to put an exact
figure on it, but something like 90% of everything that BBC One
transmits is perfectly ordinary entertainment, hard to differentiate
from what you would find in commercial services. That is why the
Broadcasting Policy Group, when it looked at these issues, concluded
that the broadcasters collectively had been failing public service
broadcasting because, under the pressure of audience fragmentation,
they had all marginalised certain types of public service content
or stopped investing in it, or, as Professor Tait just said in
terms of ITV, simply walked away from news and regional programming
and allow their audiences to decline and use that as an excuse
for no longer investing in them. The view that the Broadcasting
Policy Group came to was that we would probably be better off
with a distinctive fund for non-market content (as Professor Naughton
has described it), that which the market cannot or will not provide,
provided by a variety of broadcasters. Again, the Ofcom review
emphasised the importance of having competition in supply of public
Q33 Ms Shipley: So you do not think the
BBC has a unique selling point, then?
Mr Elstein: No. The BBC is a very
effective but extremely expensive organisation and it has a very
inefficient method of funding, it gives you very little transparency
and accountability and the kind of news, current affairs9%
of BBC expenditureis used to justify the other 91% which
you think to yourself, hang on a minute, in a properly functioning
consumer market place anyone can supply Eastenders or Ground
Force. You do not have to threaten people with jail in order
to make sure it gets funded, which is what we do at the moment.
Because we have inherited a funding system which has long term
historic justificationand may continue to have some justificationwe
tend to miss the point about what is distinctive about public
service content. I think the Ofcom review tentatively moving away
from genres and towards what I call applehoodin other words,
all nice things, motherhood and apple pie and would it not be
nice if we could end poverty in the Congo as well through public
service televisionall these kind of unquantifiable, immeasurable
undeliverable characteristics of public service broadcasting,
those are in the end not going to get us very far. Public service
broadcasting is simply how we, as a society, choose to correct
a gap; how much we want to spend, what are the categories and
year by year it may change. Year by year we may say that what
we actually need is more arts programming of a particular type
or more regional programming.
Q34 Ms Shipley: Who is the "we"?
Mr Elstein: "We" is
the people of Britain as represented by you.
Q35 Ms Shipley: Yes, but year by year
you consume whatever is given to you, do you not?
Mr Elstein: If you look at the
Public Service Television Review that Ofcom has just published
there are some very interesting gaps between what the public sees
as important and what the public sees as being delivered. If you
ask them what they think is important and then ask them what they
think the public service system has delivered, you will find gaps
like 57% between what they think is important85% say Xand
what they think has been achieved. Year by year a good regulator
is able to say, "We have tested the system and this what
is missing, therefore if we are going to correct what is missing,
this is what we think ought to be spent and this is what we think
it ought to be spent on". It is not rocket science but equally
it is not a very precise outcome.
Q36 Chairman: I would just like to follow
up what Mr Elstein said about this business of threatening people
with jail. Can you imagine not simply Lord Reith but Hugh Carleton-Greene
countenancing a licence campaign which said, "Get one or
Mr Elstein: I think they would
improve the grammar and maybe the sentiment, but there was a far
stronger public justification in terms of spectrum scarcity and
allocation of national resources in Reith's day and in Carleton-Greene's
day than there is now. Our problem is that if the licence fee
is not large it is actually even more inefficient because it costs
£150 million a year to collect, with evasion rates of around
7%. If you cut the licence fee down and the evasion rate stays
the same and the cost of collection stayed the same, it would
become even more inefficient. We are stuck in a bit of a trap
in terms of how to fund (a) the BBC and, what we thought was rather
more important (b) public service content which is not identical
to the BBC.
Q37 Ms Shipley: I would also like to
touch on the notion of the BBC as a promoter of UK plc. I take
it you all know what I mean by that. Is that a valid thing for
a public service broadcaster to do? Is that something that Britain
wants its broadcasting to do?
Professor Naughton: Yes and no.
Yes, indirectly; no, directly. If I can illustrate that, a few
weeks ago I had an American guest and we were listening to a radio
programme on Radio Four after nine o'clock in which Clive Anderson
was discussing with a very senior law lord and some distinguished
and experienced lawyers the concept of sovereign immunity which
is actually quite an important issue for the public to understand
in relation to Iraq and other issues. It was an extremely demanding,
high IQ conversation which made no concessions at all to popularity,
but it was deeply interesting and deeply enlightening and deeply
helpful. At the end of it my friend said, "That would be
inconceivable in the United States". I think he was right.
That is the kind of thing, in my opinion, that public service
broadcasting exists to do.
Q38 Ms Shipley: What I am asking you
about is UK plc, actually selling Britain in the wider arena if
you like as a certain image, a certain way of thinking about Britain.
Professor Naughton: That was the
point of my anecdote, which was that what happens is in a sense
a reflection that a society that can produce and sustain something
as good as this has something going for it.
Mr Elstein: UK plc is, I am sorry
to say, a bit of a distraction. UK quality content will find audiences
overseas whether the BBC exists or does not exist.
Q39 Ms Shipley: Apparently not, though.
Mr Elstein: How you fund that
content is an issue, but audiences will find that content without
the intermediary of BBC Worldwide distributing it. Independent
producers are meant to supplybut they do not25%
of BBC broadcasting. Those producers are real people who do not
belong to the BBC. The programmes they make will find an audience.
BBC America incorporates a lot of programmes not made by the BBC.
We should not confuse the existence of the BBC with the existence
of a thriving, creative community, if properly funded, capable
of generating high quality content.
Mr Cooke: One of the other wider
issues is Digital Britain and getting everybody connected and
keeping us competitive in terms of our use of digital technology
whether it is wired or wireless. I think the BBC will have a strong
role in persuading the mass market to adopt internet, mobile,
digital TV et cetera. I think the BBC will have a role in Digital
Britain. I think that is a wider issue also.
Chairman: Gentlemen, I cannot imagine
a better start to our Inquiry than what you have provided for
us today. We are very grateful to you. Thank you.