Examination of Witnesses (Questions 225
- 239)
TUESDAY 29 JUNE 2004
FLEXTECH, TELEWEST
AND NTL
Chairman: Lady and gentlemen, thank you
very much indeed for coming to see us. Could I just make a point
that what is going on on the floor of the House later on this
morning, within the next few minutes, is going to affect attendance.
It is not in any way a reflection on you it is just the way in
which our beloved House of Commons organises itself these days.
Chris Bryant: Thank you, Chairman, and
I apologise that that is partly referring to me; I am going to
have to go and do something in a couple of minutes. Can I just
ask one very narrow question, first, which is to NTL, about NTL
Westminster. When is it going to be digital?
Chairman: I am sorry, Chris, relate it
to BBC charter renewal.
Q225 Chris Bryant: Bearing in mind
that BBC3 and BBC4 are channels which are only available in digital,
when do you think it will be possible for NTL Westminster viewers
to be able to see these channels?
Dr Upton: It is a fairly short
answer, I am afraid, in that we do not have a planned date for
the upgrade of the Westminster network. We do have a substantial
amount of work going on in other areas of London, however, to
bring both digital television and broadband services where they
are not currently available, but just at the moment Westminster
is not part of that programme.
Q226 Chris Bryant: I raise the question
because, obviously, access to BBC channels is a significant issue
as we look forward into the future. Do you think the BBC, as part
of its charter, should spend more time, energy and money on getting
programmes to people? Should they be sharing in some of this investment
that you are talking about, or should they be spending as much
of their money as possible on production?
Mr Watson: I think that is an
interesting question in the sense that where does the licence
fee money go, in terms of the various elements of the BBC? I think
the point that you are picking up on, which is ensuring that all
of the population has access to the digital media by whatever
means, is an area that does warrant further looking at. I think
what is clear is that there is a variety of digital platforms
available and so there is a choice for consumers, and I think
it would be wrong to look at large sweeping ways of subsidising
one platform versus another. I think that looking at where investment
could be directed and ways of increasing for the UK the availability
of digital is something that is certainly worthy of government
as a whole.
Q227 Chris Bryant: Let me just tease
that out. Does that mean that you think that the Government should
insist, by the charter, that part of what has to be guaranteed
is a choice of digital platforms for every household? Or is that
just not achievable because some people live in areas where they
are never going to have cable?
Mr Watson: I think that will come,
ultimately, as a consequence of the market. I think attempting
to regulate to insist upon that is not necessarily the best method
to do that.
Q228 Chris Bryant: Will it come?
You are not going to roll out new cables over anywhere else in
the country, are you?
Mr Watson: We have talked about
free satellite with Sky, and the reach of digital terrestrial
continues to increase. There are certain technological limitations
which may never be overcome there, and I think there are also
the other media by which digital content will be consumed, for
example broadband, and certainly if you look at the availability
of broadband to the UK population that has increased dramatically
over the last three years.
Q229 Chris Bryant: How do you think
the BBC should be funded?
Mr Watson: I think we feel that
the existing method of funding has worked and is right going forward.
I think the key point—and I think if Derek was here he would
ask the question—is how long should the charter be renewed
for? I think we, certainly, are of the opinion, from what we have
seen, that technology is absolutely moving so quickly that the
adage from Bill Gates—which is that it is really hard to
see a change in a year but you are always absolutely amazed at
what happens in ten years—is absolutely true for this industry,
and I do think, as a result of that, some review after five years,
particularly as that will be shortly, hopefully, before the analogue
switch off time—
Q230 Chris Bryant: I wonder about
that argument. I used to write speeches for Greg Dyke and John
Birt and they used to predict all sorts of things were going to
change—the whole world was going to change—and actually
things are remarkably similar to what they were five years ago.
The pace of change has not been as dramatic. You could use your
argument, if there is going to be change, to say that the charter
should be a very thin document, that really just states the basic
principles of what the BBC should be about rather than anything
that is too prescriptive. I suspect most people are urging the
Chancellor to be rather more prescriptive.
Mr Watson: My experience is the
world has changed dramatically in five years. Five years ago I
would not have had a house with five mobile phones in it, one
for each individual; I would not have been using a personal video
recorder and, potentially, watching Eastenders three times
in an evening for different members of the family. So I think
that pace of change has been dramatic over the past five years.
Whether that means you should have a less prescriptive or more
prescriptive charter, I am not sure. I think the important point
is to have, as I said earlier, a review earlier than ten years,
so that at least you can take stock of what may have changed over
that period.
Q231 Rosemary McKenna: Can I ask
the question I asked the previous group: there is a common thread
running through all the submissions by both the carriers and the
producers, which is that the BBC is crucial, must be funded properly
and must continue. Is that, to be cynical, because they set high
standards or is it because they do a lot of the training?
Ms Opie: I think without a doubt
they do provide a great deal of training into the industry, and
that is beyond dispute and we should appreciate them for doing
that. I think there are a growing number of other broadcasters
that provide a very different kind and a very valuable source
of training as well, and I would say that within Flextech and
Multichanel there is a very specific and distinct kind of broadcaster
being developed and taught, and an ability to multi-skill and
take a very broad view of the market that on-going will be very
valuable. I think the value of the BBC and the need for it to
continue to provide quality content is because it effectively
lifts the bar for all other broadcasters in the market, and I
think that can only be a good thing as far as the consumer, the
viewer and the citizen is concerned, and also provides a very
important contribution to our standards. I think we would all
agree with that.
Q232 Rosemary McKenna: Why have you
concerns, then, about the amount of "must carry" that
you have to provide?
Dr Monserrat: I think the issue
comes down to the fact that the tradition has been that the BBC
has got to its customers through the ether and the technology
is blurring all that and a lot of the BBC content can go through
cable. What you are trying to do then, in that circumstance, is
have a definition for what is public sector broadcasting. In that
circumstance we would be delighted to carry that because it is
part of the nation's heritage, it is part of the nation's life
and we would carry that. Where the BBC—and I refer to the
comments made by Derek Wyatt—begins to move into areas which
are more niche or are more specialised, then in that circumstance
the model that we would like to see then is to carry that which
we must carry because it is part of the nation's life, and when
it is a more commercial activity there should be a conversation
on how do you fund the carriage of that content.
Q233 Rosemary McKenna: What you are
saying is it takes up too much of the band width.
Dr Monserrat: It does take up
band width. There is an economic case to be discussed.
Q234 Rosemary McKenna: Yet in certain
circumstances, and I know this because of where I live and the
access I have, I can have every single BBC television and radio
channel at the flick of a switch, including BBC Radio Gale in
Scotland. It is nice to be able to watch BBC television in the
morning and find out what is going on, but do you do that easily
and provide that generally?
Dr Monserrat: Can I introduce
something slightly different, which is there is a phrase that
has been used which is that there is the "lean forward"
type of information and there is the "lean back" type
of information, so when you want to be entertained in the way
you have just talked about you are leaning back, it is a community
experience, you are receiving information. If, however, in that
circumstance, where you are now receiving specific information,
niche information, you are learning forward to receive it, it
is a different method of receiving it and in that circumstance
what you are receiving is information on public service, on government
services, and if the BBC is delivering that under its charter
as a "must-carry" obligation, then the volume of that
information is going to change dramatically and that will have
an economic impact on how much we carry. So in this blurred world
of information going to the customer or the consumer, be it entertainment
or information for life, then there needs to be a consideration
of that which is in the interests of the nation and that which
is the information that the individual requires.
Q235 Rosemary McKenna: You are only
interested in doing it where you have a huge number of consumers?
There are areas throughout the country where you do not provide
any access at all.
Dr Monserrat: Currently, and I
will speak now for NTL specifically, we will deliver that kind
of service—"on net" is the jargon we use—but
the aspiration is to try and provide that on a national basis,
but that is where Local Loop Unbundling, which comes under the
BT and the Ofcom remit, becomes so crucial for us, and the nature
of the playing field becomes so important.
Q236 Rosemary McKenna: You cannot
carry the BBC to those areas until that is—
Dr Upton: Yes, that is right.
The extent of the current cable network is about two-thirds of
the homes that we were licensed to build a network to, and clearly
as you move out of the more densely populated areas the costs
of providing dedicated infrastructure for that can escalate significantly.
The current opportunities to run those services across BT's network
are really restricted to broadband internet access, and running
television services across a BT-managed infrastructure is not
really technically possible today. The vehicle to do that would
be unbundled BT local loops. The previous kind of regulatory regime
really did not make that an economically possible opportunity.
What we are looking at now are some of the recent BT announcements
about unbundled open loops to try and explore whether that does
provide us with a vehicle to provide some further geographic coverage
and, therefore, provide the sort of services that we are talking
about.
Q237 Michael Fabricant: I just want
to pursue, if I may, the line of questioning that Chris Bryant
was asking. Chris Bryant was saying that in his view there had
not been huge amounts of change in five years, and in some respects
I agree with him. Although Mr Howard Watson said he had seen a
lot of changes—and of course from a technology point of
view there have been huge changes—the actual manner by which
people watch television has not changed much over five years.
So, in connection with the licence renewal, I just wonder whether
you see a convergence, if you like, over the coming years of the
platform by which BBC television and indeed other broadcasters
will be received.
Mr Watson: I think with that clarification,
in the sense that I think the way in which we view television
has not changed in the sense that we lean back in front of a piece
of glass that we call the television and we have not yet seen
viewing of TV by leaning forward in front of a personal computer
or, indeed, on a mobile phone or an iPod—
Q238 Michael Fabricant: Can I just
ask? That is technically possible, but do you think it will ever
happen? For years Casio have had a little two-inches by one-inch
television screen, and the reason why it has never been that popular
(no doubt I will get letters from Casio if I say something that
is wrong) is because we are human beings and human beings find
it quite a strain looking at something quite close for any length
of time. Can I put it to you—and please correct me if I
am getting it wrong—that the ergonomics of a human being
mean that yes, you use a computer close up just as you write close
up, but for relaxed entertainment you need something where your
eyes are more focused on infinity, so something has to be about
eight or 10 feet away. Will that not always be the case, whatever
the technology?
Mr Watson: I think we are actually
in agreement on this point. Newspapers are still here, we still
read books and we still listen to the radio despite predictions
centuries ago. I think what we will see is just a continued divergence
in the range of possible ways of receiving digital content, and
I think it is very difficult to sit here and predict that in 2017
we shall be the most dominant means by which we get that. I think
it goes back to the point the Chairman was making earlier, which
is as viewing in a family fragments to being more of an individual
experience, rather than a collective experience for the family,
and if we really believe that that trend is happening then I do
think the "lean-forward-look-at-your-mobile-phone" type
of viewing may indeed increase. I personally would not see it
taking over from the television as the main viewing or broadcast
media in the home.
Q239 Michael Fabricant: I was reading
that NRK, a former client of mine, in Norway are now providing
stream television to Norwegian mobile handsets. The interesting
thing will be whether people actually watch it. Given that you
have got satellite, which can produce some degree of interactivity,
cable—which certainly brings interactivity—and it
was mentioned that Local Loop Unbundling is now becoming cheaper
and cheaper, do you think solutions like Video Networks, who we
are going to be speaking to later on, is going to be the answer
by which people watch television? It will all be television on
demand?
Mr Watson: I think that will radically
change over the coming five to 10 years. We have just heard that
in homes of a PVR 38% of viewing is done from the content that
is stored on the PVR. The key point about that is that you have
had to plan in most cases to record that content, so it has required
you to look through the schedule, decide "I want to watch
that" and, potentially, series link it, so it records each
time. One of the advantages that on demand TV gives you is if
you have missed something. There is this water-cooler phrase,
whereby you are chatting in the office by the water-cooler, "Did
you see the episode of X last night?", and you have then
got the opportunity of on demand television to go home and catch
up with that. I think that type of change to the way we view,
recent life television, we will see as on demand and Video On
Demand type technologies go wider.
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