Examination of Witnesses (Questions 100-111)
15 SEPTEMBER 2004
BBC
Q100 Mr Allan: But in terms of thinking
about future funding of terrestrial TV, if we were to move to
a subscription model the millions of people who bought the Freeview
boxes would all have to change those boxes.
Ms Fairbairn: If they wanted a
subscription, they would have to change their box, yes.
Q101 Mr Allan: Or if government wanted
subscription instead of licence fees it would have to change everyone's
boxes.
Ms Fairbairn: Yes, that is right.
Sorry; exactly right.
Q102 Mr Allan: In terms of the satellite
free to air can you confirm again that BSkyB are not guaranteeing
that is free to air for ever and that that is a platform which
can take subscription services, so there is quite a fundamental
difference?
Ms Fairbairn: It is a fundamental
difference.
Q103 Mr Allan: So the scope for you to
develop a free-to-air satellite service is not removed by the
BSkyB offering.
Ms Fairbairn: Exactly right.
Q104 Mr Allan: The second point is going
back to these costs. You referred earlier to the cost of delivering
the various platforms. One of the other things we like on this
Committee is notes on things. I wonder whether it is possible
to have a note on the cost of delivering your BBC services over
the different platforms now and also how that changes in the future
as you move towards universal DTT coverage; your best estimates
at the moment. It is helpful to understand whether it is better
value for money to upgrade the terrestrial platform or to encourage
the satellite, for example. Those are the kinds of things we like
looking at.
Ms Fairbairn: Very happy to do
that.[4]
Q105 Mr Williams: One observation before
I come onto an entirely Celtic question, away from the other subject.
I was encouraged by Mr Thompson's point about him wanting to set
up value for money studies where he felt them appropriate, but
I would put this to him. I do not want an answer; I just put it
to him to consider. To us the important difference between you
setting it up and the NAO setting it up is that if it comes out
with an adverse result the BBC can dust it under a carpet and
the licence payers will never get to know about it. The important
thing about here is that we represent the licence payers. Coming
to my Celtic question, which you can well anticipate, because
we have to keep an eye on the Scots very closely, Wales, in Table
27, has 66 households in 100 covered by Freeview, whereas in Scotland
it is 86 in 100, 20 more. Considering the vast areas of countryside
covered in Scotland, why is it that there is this big gap between
the two countries?
Ms Fairbairn: I am afraid it all
comes back to the mixture of the engineering and the topography.
We have pushed as far as we can; we have gone from 66% to 73%
coverage through power increases and we are now at the limit.
I am sorry to say that it is simply the differences between the
terrain and the engineering configurations in those two countries.
Q106 Mr Williams: Is it purely then a
technical thing? Will you let us have an indication of the investment
which has gone into Wales and into Scotland, if that is differentiable,
to make this service available so we can see whether it could
be an investment factor rather than just a technical factor? A
note on that would be sufficient.
Ms Fairbairn: Certainly.[5]
Q107 Mr Davidson: May I just follow up
a point raised by Mr Williams on the investigations into value
for money which you are raising? You have agreed that you are
going to give us a list of the areas which are going to be examined,
but I was presuming that these would in fact be published at some
stage and be publicly available, whereas Alan seemed to think
that they might be swept under the carpet.
Mr Gleeson: No, no. All the external
reports on behalf of the BBC's audit committee will be published
and we will certainly publish the outcomes of the other studies.
Mr Thompson: The confusion may
well be my fault. Quite separately from that, as an incoming chief
executive, I am conducting my own review of the BBC's value for
money and its efficiency to try to improve it. I would not suggest
for a moment that my management actions should in any way be seen
as a substitution for all of the external ways in which we look.
The governors, the audit committee, external advisers, these new
NAO investigations, these are all absolutely to ensure that I
and the rest of the BBC management are doing our jobs properly
and driving up value for money. They are two different things.
Q108 Mr Davidson: One of the issues which
concerns us all about some of this is that you are operating in
a competitive environment and there is the issue about commercial
confidentiality and material being produced which would be of
use to others and so on. How is the line drawn in these circumstances
and who makes these sorts of judgments about what it is appropriate
to release and what not for commercial reasons?
Mr Gleeson: On the commercial
front the line is drawn pragmatically and it is a matter of consultation
between the governors on the audit committee and the finance director
and other senior officials.
Q109 Jon Trickett: A note might suffice
to understand the nature of the agreement with BSkyB which I understand
was entered into and I understand the reasons why it was entered
into from paragraph 2.5. [6]It
states that there has to be unanimity in terms of the company
which was established and in which BBC and Sky are partners. The
way that unanimity is expressed is that no change can be imposed
upon the BBC which it does not want, but that can be expressed
as a negative too. It strikes me that if the BBC wanted to introduce
change, Sky then have a veto. It might well be used by BSkyB for
their own commercial advantage. At the same time BSkyB have then
established their own subscription free digital terrestrial service
over which you presumably have no veto. I understand that there
is a complex interaction relationship between yourselves and BSkyB
and there is a mutual interest in rolling this thing out. Have
they not outsmarted you though?
Ms Fairbairn: I do not think so.
The first point to make is that this small company, DTVSL, is
only a marketing vehicle, so the only kind of control it has is
over marketing. It has no say over our channels, over the roll-out
of DTT, any of those things. First point. The second point is
that actually the three-way split between Crown Castle, Sky and
ourselves has meant that we have never actually found that we
have got into this kind of deadlock position.
Mr Gleeson: I think the Report
actually says that the manner in which this problem has been handled
is the optimum one.
Mr Thompson: It is rolling out
10 times more quickly.
Q110 Chairman: If you look at Figure
5 on page 12, you will see there, particularly in the last bullet
point, that satellite offers near universal coverage which Freeview
does not. It offers subscription-free access to your digital channels,
so why are you promoting digital terrestrial television, given
the unequal access to all licence fee payers?
Mr Gleeson: We believe that at
this time it is in the interests of licence fee payers and consumers
that they are offered a range of distribution options. We also
know from our market research that for many people digital services
received through an aerial is very much their preferred option
on the grounds of cost, on the grounds of practicality. It is
so much easier to plug in a box than install the satellite equipment.
Mr Thompson: Not everyone wants
a dish on their house.
Mr Gleeson: Somebody mocked me
when I said there were esthetic issues, but actually you will
find that a lot of your constituents do not want to put dishes
on their walls. As the success of Freeview has shown, there is
a considerable appetite for the Freeview option and we think at
this stage in a rapidly evolving new market consumers ought to
be allowed to exercise their preferences. We are driven in this
context by a desire to give licence fee payers a range of choices.
Q111 Chairman: This programme is being
broadcast and the BBC Parliament programme is part of Freeview,
also available on cable and satellite. I understand that it will
be shown some time on Sunday evening, but nobody knows that it
will be shown. It is not advertised anywhere and I understand
that the editor of the Radio Times, over whom I believe
you have some control, Mr Thompson, refuses to make any listings
of Parliamentary Select Committees which are shown over the weekends.
As you are going to all the expense of broadcasting this hearing,
do you not think the editor of your in-house magazine might be
constrained to make a listing of it?
Mr Thompson: We are hoping this
programme will transform weekend entertainment on the BBC. I do
think we should look at the listing of this and other select committees.
Chairman: Thank you very much. This has
been an historic hearing. I think it has been right in our very
first hearing that we should pursue the compromise agreement,
but as this process settles down I think you will find that this
process can only help you in your work in delivering good value
for money and we hope so. Thank you very much for what has been
a very enjoyable, entertaining and useful hearing. Thank you.
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