Examination of Witnesses (Questions 560
- 579)
TUESDAY 26 OCTOBER 2004
OFCOM
Q560 Mr Doran: I still find it difficult
to understand the comments in there, for a number of reasons.
One is, the whole history of ITV is about regional broadcasting.
I have been involved in very heavy battles with my local television
company to try to retain that. I certainly got a lot of popular
support for it. It also seems to me that is where there is the
potential to make a lot of money and distinguish themselves from
the other rather bland commercial competitors—and I exclude
Channel 4 and Five from that. When we get into the digital world
the competition will not just be the BBC—it is a much wider
competition. The idea we could be moving towards a situation where
Channel 3 loses even in the digital age that quite distinguishing
feature strikes me as being something I would want to avoid.
Mr Stoller: I think there will
be a shift when we are actually in the digital era between what
is imposed upon any television company, Channel 3/ITV, and what
they choose to do themselves. There is an article in the Financial
Times today—
Q561 Mr Doran: But we are told they
are lobbying you quite heavily to reduce—
Mr Stoller: There is an argument
that the distinctiveness of the channel will actually take broadcasters
towards doing more regional or less regional. Our concern is not
with that—it cannot be because that is what would happen
post-digital—it is what happens in the meantime to the existing
statutory obligations, and how we move from where we are now to
where we will be post-digital when we will not have the ability
to impose this sort of obligation. There are certain things we
think are essential and central and should be reinforced in this
interim period. One of those is regional news. We are recommending
the strengthening of the quotas for the production of programmes
for the network outside London in the regions and in the nations;
but there is one area of programming which is non-news regional
programming in England outside peak time which we know is expensive.
Our research and our analysis show us it is not hugely valued
by viewers when they are asked, and their behaviour reinforces
that because they do not watch it. Therefore, in this new compelling
commercial circumstance which we know we and the operators are
going to find ourselves in, it seems to us that to reinforce the
importance of regional news, to reinforce and indeed lift
the obligations to produce network programming outside London,
balanced by a reduction in non-peak time, non-news regional programming,
is a way of managing the transition.
Q562 Mr Doran: It is difficult to
escape the interpretation that all of the major responsibility,
the statutory responsibility, perhaps eventually will be shoved
onto a much more worthy BBC?
Mr Carter: Not now, not in the
next two years, not in the next three years but it is inescapable
than in 10 years' time, which is broadly the potential period
of the BBC Charter Review, the direct-able public service broadcasters,
if one looks at today's provision, are the BBC and Channel 4.
Q563 Alan Keen: During Frank's questioning
Stephen Carter said "we do not have a specific remit"
so it will have to be a personal view. One of the nice things
about this inquiry is because we are asking all the witnesses
who come before us about the BBC—and ITV have no remit or
responsibility for the BBC—we have been able to ask people
for their personal views. Can I free you now from the Ofcom remit?
One of the tasks we have got is to look at the changing pattern
of broadcasting, and one thing which has been particularly interesting
is the absolute certainty that we are changing from what I would
describe as the "theatre" aspect of TV, sitting in front
of the fire with the TV on a Saturday night watching whatever
programmes come in front of us; this is definitely going to change,
we are told, so people will select programmes, probably programmes
that were originally shown on the previous Thursday night and
watched on a Saturday night. Can you paint a picture of what you
think TV will be like? We have to look ahead because of this 10-year
period we keep talking about to 2016. How do you see it changing?
Lord Currie of Marylebone: In
the Fleming Lecture which I gave a few weeks ago, which has been
referred to, I did a bit of crystal ball gazing. Firstly, it is
a very dynamic scene. Secondly, I think a lot of patterns will
remain the same for quite a lot of people; but I think we will
observe very different behaviour amongst young people, who will
very rapidly start to exploit the new technologies that are available—what
I describe as the "collision between broadband and broadcast".
I think in that area there will be very major changes in behaviour;
perhaps the whole concept of a channel will soon be eroded—already
with PBR and Sky+ that concept is eroding—I think it could
be a very different scene; which is why we painted the idea of
a public service publisher spanning these two different spaces
that are coming together; because I think it is very important,
looking forward, that if the purposes of public service broadcasting
are to be delivered in this new age, we rethink the forms of delivery
in order that those purposes are achieved.
Q564 Alan Keen: We have always known
that the BBC has an effect on keeping the quality high comparing
this country with the United States, for instance, where you can
sit in a hotel room and go through the channels and not find anything
worth watching at all. With people being able to select programmes,
can you paint a picture of how the BBC will be in 10 years' time?
Will there just be a publisher, a producer of programmes, with
channels that people will select themselves, and obviously other
channels with the BBC and ITV as well if people get a satellite
delivery of their television? What will the BBC look like in 10
years' time? What will the change be from now in 10 years' time?
Mr Carter: We really are into
crystal ball gazing.
Q565 Alan Keen: You are the experts.
Mr Carter: Not at crystal ball
gazing!
Q566 Alan Keen: You have focused
all your working life on broadcasting. It is fascinating to get
people in front of us like you and be able to draw on their experience.
Mr Carter: Part of the answer
to the question, we strongly believe, depends upon your report
and Parliament's decision on the length of the Charter and the
level of funding. If you look at it from a basic level there is
£3 billion worth of public money that goes into this form
of market intervention. I happen to share David's view that the
future in 10 years' time is a fantastically exciting future. I
share your view that the BBC has been a significant contributor
to quality, but I also happen to think that we as a nation are
very good at this stuff. We produce outstanding content. We are
very good at the creative industries. Part of the reason why we
recommended the public service publisher is because it seemed
to us we have a track record (partly contributed to by the BBC
but partly contributed to by skills, training, education, culture
and language) to be good at creative content and the distribution
of it. The opportunity it seems to us is to be a leading nation
in digital provision and broadband take-up; to have a strong role
for the BBC, but to liberate the opportunities for other providers
of content and to allow people to make more free choices about
what they wish to watch and when they wish to watch it. That does
not seem to us to be threatening to the BBC, which is why we said
we thought there was an important role for the BBC to be appropriately
funded over that time period so that it could continue to make
a strong contribution. I suspect it will be less channel-driven.
I suspect it will have to get into more and new forms of content
distribution. I suspect its schedule construct will be unrecognisable
in 10 years' time. Its investment in applications and services,
rather than programmes and channels, I suspect will be quantum
by comparison to where it is today.
Q567 Alan Keen: The print media spends
an awful lot of money setting out TV schedules and the programmes
that are available from the minority channels. Radio is the poor
sector. With the wealth of stuff which is on the radio how in
the future will we know what we are missing if we do not find
out what is on? How will radio fit in?
Mr Stoller: I am very happy to
step back to radio for a moment, although it is not directly my
remit any more.
Q568 Alan Keen: You are already freed
from the remit.
Mr Stoller: One of the interesting
factors is that radio has tended to lead convergence; and that
actually the movement of radio, the initiative of radio which
the industry and the BBC have taken in the area of digital radio,
the extent to which digital radio has spread beyond DAB onto a
range of other digital platforms means that radio is in some ways
pioneering a number of these issues. One of the things that radio
discovered a long time ago and is reinforced by its digital experience
is that the communication of listings, and therefore the ability
to identify individual programmes, is very difficult in streamed
channels. One of the advantages which digital technology brings
to radio, and also to television, is the ability to identify on-screen
or on an accompanying screen what is being broadcast and what
is being broadcast next. One of the interesting things, looking
at digital television, for new adopters (and I am a fairly new
adopter) is when you press the digital button to move from analogue
to digital you get printed information or lettered information
on the screen; and that I think is one of the things that radio
has learned and is exploiting with digital and, as television
moves into a more fluid stance, may well apply there as well.
In addition, the role of the electronic programme guide—for
television, radio and for the converged thing that emerges between
them and the other communications technologies—becomes increasingly
important.
Q569 Alan Keen: I was thinking about
being in the motor car, and presumably what we will do when we
are at home is to ask to be told when astronomy is on the radio,
and for the car radio to switch on or for the mobile phone to
remind us to switch on at 5.05 when we are driving along. Going
back to the BBC, I asked them last week about democracy, because
we are all shareholders of the BBC and they have done a magnificent
job by making us feel that it is our BBC; but there is little
effort put into the democracy. The BBC said they are going to
do something about listening to the people who pay for them. What
thoughts have you had on introducing some democracy into the BBC
to those people who pay for it; rather than some nice good people
being appointed by DCMS to sit on the Board of the BBC with no
real connection with the people who pay their money every week?
Lord Currie of Marylebone: I am
not sure Ofcom as such has thought about that issue and deliberated
on it.
Q570 Alan Keen: Just as individuals.
I have already freed you from the Ofcom remit. Do you think that
the licence fee payer should have some direct influence on who
is on the BBC Board of Governors?
Lord Currie of Marylebone: Direct
representative mechanisms can be rather difficult to make work.
I think what is crucial—and this is true as much for Ofcom
as it is for the BBC—is that the BBC understands its viewers
and listeners; that it understands the people it is seeking to
reach. Just as we need to fulfil our functions, we absolutely
have to have very good research which tells us what ordinary consumers
and ordinary citizens think about what is happening to the communications
industry. Being extremely well informed seems to be absolutely
at the heart of what we are doing and what the BBC has to do.
Q571 Alan Keen: I used the word last
week, should we be looking somewhere between a Tesco democracy
where Tescos provide the food that people keep on buying and,
therefore, they know that is what people want, which is what you
are talking about. Has Tony, for instance, given any thought as
to whether the licence payer should have any direct input into
elected representatives?
Mr Stoller: I think it is noticeable
that the public processes which arose post-Nolan have tended to
place on boards a rather different spectrum of people than would
have applied previously. That seems to me to be extremely important.
There should be a clear public process followed. As David said,
actually arranging representative mechanisms which go beyond the
representative mechanism which exists here is very tricky indeed.
It does seem to me that your scrutiny brings that universal
representation, in a way in which any other mechanism would be,
to a degree, a pale imitation.
Q572 Mr Flook: What element of the
BBC's £2.6 billion is public service broadcasting in your
minds?
Lord Currie of Marylebone: I think
we have indicated that in doing a Phase 1 report we looked at
how well the public service broadcasters were delivering against
their remit. I think we came to the conclusion that they were
broadly doing so but there were aspects that could well be enhanced
and sharpened. Have we done that calculation?
Mr Carter: It is a powerful question,
and I think the answer is: no-one could tell you the answer; and
that is part of the problem. What we are saying is, going forward
that does not seem to be a good place for anyone to be, including
the BBC. I am sure that is part of the thinking behind the public
value test. One would hope that the public value test, if it ends
up being a reality and is a useable mechanism, would allow that
question to be answered. What we have said is that we believe
all of the BBC's programmes and services should to some degree
contribute to the purposes and characteristics of public service
broadcasting.
Q573 Mr Flook: So that is an aspiration
and not a prediction? My next question was going to be: do you
see that ratio or that percentage increasing as we move towards
a digital age of what is public service broadcasting?
Mr Carter: If you look at the
fragmentation association with digital take-up, what that serves
to do in relation to the BBC is to show into much sharper focus
its contribution to the purposes and characteristics of public
service broadcasting; because it will be more evidently different
in its provision than the multiplicity of other providers; whereas
when it was essentially a duopoly that sharper focus was not so
visible. I think inevitably the direction you paint will happen.
Q574 Mr Flook: I should have prefaced
my remarks by saying I really like the idea of a public service
publisher. I think that is very clever and very innovative. You
put a value, which I think we can easily come to, of £400
million as ITV and Five's analogue broadcasting ability; that
is eroded. You then come up with a figure that the public service
publisher would have to play with of £300 million. How did
you get to £300 million? Keep in mind in your answer, will
that be enough if the BBC's, on your own say so, public sector
element increases, which was an aspiration and not a prediction.
Mr Carter: We do not know is the
answer at this point. We undoubtedly derive the £300 million
number in part from the £400 million current provision, as
you rightly say. We judged £300 million to be a sensible
funding sum to put out in the initial proposal, because it seemed
to us to provide the necessary level of reach and scale without
being so distorted to the market. Part of what we are doing at
the moment is consulting on the entire idea, including the funding
level. It may well be that it is the wrong number or, indeed,
it needs to be judged differently depending upon the source of
the funds.
Q575 Mr Flook: I note in our notes
(and I think you may well have provided it) the expected growth
in households over the next few years will give the BBC roughly
an extra 10% in income or an extra £260 million, but that
is going to make it even bigger so your £300 million in itself
how will that grow in real terms?
Mr Carter: I think these are all
questions to be answered and in part will be answered, assuming
the idea has merit and flies, by the funding mechanism. If, for
example, the chosen funding mechanism for the PSB was the augmented
and enhanced licence fee then inherent in that would be a benefit
associated with growth in the absolute number of households. If,
however, you chose the funding method of hypothecation of spectrum
receipts then you might need to find either a retail prices mechanism
or some other mechanism to keep pace both with the cost of doing
business—
Q576 Mr Flook: An X-plus rather than
an X-minus?
Mr Carter: Indeed. I think it
will in part be determined by the source of funding.
Q577 Rosemary McKenna: Good morning,
gentlemen. I am very much of the view that the BBC Charter
Renewal should include a 10-year programme, because I believe
with what you described as broadcast versus broadband it is absolutely
essential the BBC are in there providing high quality programmes.
It is quite clear from particularly the young people we have spoken
to—and we went and spoke to a school and college to find
out how young people view and listen to the radio and watch television—that
they will choose, and the way they view in the future will be
very much a matter of choice. They will not sit down and watch
right through an evening's broadcasting, it will be a matter of
choice. Would you agree that it is essential that the BBC Charter
Renewal must include a total and absolute commitment to high
quality production of all types of entertainment, as well as news?
Lord Currie of Marylebone: I think
that is in broad terms what we have said in our report. The point
you make is a powerful one, that it is the behaviour of young
people which has provided the indicator of the way things are
changing. It is very important that broadcasters retain the loyalty
viewing of that young cohort of people.
Q578 Rosemary McKenna: How then would
you protect the range of provision, because clearly what is going
to happen is when young people watch commercial television they
are going to fast-forward and skip through the advertising, and
if they do not get advertising revenue then they are not going
to be able to provide the quality that is going to provide real
choice against the BBC? How would you, as Ofcom, protect that?
Mr Carter: I am not sure that
is in our gift and I am not sure it should be. Clearly one means
of protecting it is providing an alternative provider of high
quality content which takes us back to our public service publisher
idea. Clearly another source of provision of more directed content
is the remit, range and role of Channel 4 which, whilst it is
an advertiser-funded broadcaster it is a not-for-profit advertiser-funded
broadcaster and, therefore, in that sense more directable. Partly
it goes back again to the earlier question about the level of
obligations levelled on the commercial shareholder-funded broadcasters
which are obligations they would not choose to execute if it was
solely for the market to provide this. There are some judgments
involved there which we are currently consulting on. Fundamentally,
if you look over the time period of your question, some of those
things will come to pass or not.
Q579 Rosemary McKenna: You cannot
do anything to ensure real choice and competition for the BBC?
Mr Carter: We have put an idea
out which we think has the potential to provide choice and competition.
I am not sure I share your cataclysmic view of the quality of
the alternative provision in the market. If I look at the television
market for 2004 by comparison to 1984 overall does it provide
more choice, more variety, more control, more interesting things,
more investment, more innovation? Yes, it does.
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