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New Electronic Media

12.30 pm

Michael Fabricant (Lichfield) (Con): I am delighted to have secured this debate. Most discussions so far about broadband Britain have focused on technical infrastructure, and more attention must now be paid to the content that will fill the new high-capacity pipes.

First, it is important to set the scene. We can be proud that broadband is available to 99.6 per cent. of the population of the United Kingdom—the highest coverage in any G7 country. However, that does not mean that the task of constructing the infrastructure is complete. Most broadband users can access speeds of only 512 kilobits per second. That is not true broadband, but it is a darn sight faster and broader—10 times faster, in fact—than dial-up. True broadband should have the ability to stream moving images, and that requires a stable data transfer rate of at least 2    megabits, perhaps 4 megabits, per second. The challenge that faces the Government and the telecoms companies already involved in development is to make such feeds widely available.

The ability to access still and moving images is one of the key advantages of true high-speed broadband, and I want to focus on the audiovisual content. Hollywood movies, soap operas and high-level sport will continue to play a large role, but the potential of broadband networks will not be fully realised if they are used simply as an additional platform for the distribution of traditional television channels, or as an alternative to the video rental shop.

By a happy coincidence, at the same time as broadband is cutting audiovisual distribution costs, the costs of professional-quality AV production are also falling. Some of the digital video cameras on sale in the high street are equivalent to the BBC's most sophisticated colour equipment of only a few years ago. Furthermore, the podcasting phenomenon has already demonstrated that there is a large public appetite for do-it-yourself content, produced by individuals outside the mainstream media. There is, therefore, good reason to expect the audiovisual markets of the future to be very different from those with which we are familiar. It is feasible to anticipate the development of a rich ecosystem of niche content providers serving local communities and minority interests, rather than the mass national audiences that we have today—and even those have shrunk, thanks to the diversity of TV channels now available.

That development represents a particular opportunity for the UK economy. We already have a strong creative sector that accounts for more than 8 per cent. of gross domestic product. In addition to the economic benefits, it has huge potential to enrich individuals' quality of life. However, the European Commission plans to regulate all audiovisual services, and that is a matter for concern. Specifically, it will shortly present proposals for the revision of the so-called television without frontiers directive. The legislation will establish an effective single market for traditional TV services by forbidding any member state to block the reception or retransmission of broadcasts made in conformity with the law of all the other member states. So far, so good. However, in pursuit of that
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objective, the Commission will lay down minimum standards for national legislation in a number of areas, the three most significant of which are advertising, protection of minors and European content quotas.

The Commissioner responsible for the rules, Mrs. Viviane Reding, has announced her intention to amend their scope so that they apply to all services that involve the delivery of moving images to the general public across electronic networks. As we move to a world in which every citizen is a potential content provider, the plan presents huge scope for unnecessary constraints and unintended consequences. That is inevitable, as the regulation is happening to an industry that—for all practical purposes—does not yet exist. Nobody knows what successful business models will look like in that fast-moving sector. The Commission is nevertheless suggesting a leap in the dark.

Such a leap is, in fact, completely unnecessary. None of the justifications that Mrs. Reding has advanced for additional EU regulation stand up to scrutiny. Let me take three points. First, there is no need for EU action to ensure that there is a level playing field between traditional broadcasters and providers of new on-demand services. All European countries agree on the need to prevent children from having access to unsuitable material, and to avoid exposing consumers to untruthful advertising. In other words, they will try to ensure that new on-demand services respect the same public policy objectives as traditional services, whether or not they are forced to do so by European Union legislation.

In most EU member states, on-demand services are already subject to some form of control. In the UK, for example, a successful self-regulatory regime—the Association for Television on Demand—has already been established by the industry in question, and the internet is not excluded from the jurisdiction of the Advertising Standards Authority. If any gaps are revealed as the sector develops, they can easily be filled by national legislation, which is better able to accept rapidly evolving circumstances than inflexible EU regulation. I think that that is what is called subsidiarity.

Secondly, although underlying public policy objectives need to be the same in both areas, the principle of technological neutrality demands that traditional broadcasters and providers of on-demand services are not regulated in the same way. By definition, the latter offer greater opportunities for user choice and parental control. Password controls can be used to ensure that children are protected. Such protections are unavailable on traditional TV. The 9 o'clock watershed is almost irrelevant as younger children stay up later. And what protection is that? Has anyone here seen the latest episode of "Rome"? Consequently, it is far from self-evident that on-demand services should be subjected to requirements designed for a world where user choice was limited to a small number of licensed broadcasters, where the broadcasters rather than the viewers decided what their audience would watch, and where a large part of the population watched the same thing at the same time.

Thirdly, there is the freedom to provide services across borders, which should be the Commission's central concern. That freedom is already guaranteed for on-demand services by another piece of EU legislation, the so-called e-commerce directive. Mrs. Reding argues
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that that guarantee is not firm enough; member states may still block foreign services in certain circumstances. However, no amount of Brussels harmonisation will remove the need for service providers to continue to tailor audiovisual services to national languages and cultural preferences. The guarantees provided by the e-commerce directive are therefore proportionate to the foreseeable scope for cross-border trade in services.

In fact, the only argument in favour of the Commission's proposals appears to be bureaucratic neatness; it looks untidy if EU rules apply to one type of audiovisual content but another escapes. Although that argument may appeal to some of the more Cartesian controlling minds in Brussels, I should like to enter a plea for good old Anglo-Saxon pragmatism: "If it ain't broke, don't fix it." That viewpoint is shared by practically all the UK organisations that would be affected by an extension in the scope of EU legislation—and many of their European counterparts. In the UK the broadband stakeholders' group, the ICT trade association Intellect, the Internet Service Providers Association and ATVOD, the self-regulatory body that I mentioned earlier, are united in their opposition to    such a move. In the EU, the European Telecommunications Network Operators Association and the European Competitive Telecommunications Association also oppose it.

It has therefore been gratifying to note the Government's response to the final round of consultations conducted by the European Commission prior to the adoption of its proposal. In short, the Government appear to concur that Mrs. Reding's plans are completely superfluous. Does the Minister agree with that summary? Does he further agree that those plans stand in direct contradiction to President Barroso's better regulation agenda, which requires new EU legislation to respond to a clearly defined need, to be proportionate and to be accompanied by a reliable impact assessment? Will he provide an assurance than the UK will maintain robust opposition to the extended scope of EU legislation when the proposals are discussed at the Council of Ministers, which he will attend?

Sometimes we can see bad legislation only with the benefit of hindsight, but in this instance we can it coming like an express train. I hope that the Minister can reassure me, the telecoms industry and future users of this new medium that he will stop this bad legislation in its tracks.

12.41 pm

The Minister for Industry and the Regions (Alun Michael) : I am grateful to the hon. Member for Lichfield (Michael Fabricant) for the way in which he introduced this interesting debate on a challenging policy issue. I am particularly pleased that he acknowledged at the start the enormous success that we have had in recent years in moving from the rear of the pack in the broadband race to pole position. Broadband is now available to 99.6 per cent. of the UK population—the highest level of any G7 country. We can both celebrate that development.
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The hon. Gentleman said much that was positive and much with which I can agree. He also said a great deal about ambition, which fits with the work being led by my colleagues at the Department for Culture, Media and Sport and with the ambitions of the Government's digital strategy, on which I am the lead Minister. For those reasons, I shall focus on the way in which we need to revise European legislation on this issue, and I hope that my comments will command the hon. Gentleman's support.

Essentially, we need converged light-touch regulation fit for a converged world, but I suspect that we are unlikely to reach that stage in one leap. Indeed, when the pace of change is so fast, it might turn out to be a leap in the dark. Let me explain. Since it was last revised in 1997, the television without frontiers directive has delivered significant economic and cultural benefits to consumers and producers. Europe has benefited from a single market in TV services—however imperfect—and that has also enabled the industry to prosper. Consumers have benefited from an increased range and variety of programming and from the various protections under the directive.

However, times have changed. Over the lifetime of the directive, we have seen massive technological advances and the convergence of different media and technologies. In the light of that, and of the fact that parts of the directive are getting on for 20 years old, the European legislative framework for broadcasting needs to change. We would have had to reassess it anyway to see how well it was standing up against the requirements of the television industry and consumers. However, because of the acceleration of technological change and the major challenge of convergence, it is not enough to ask whether the directive is achieving its goals of promoting trans-frontier broadcasting in tandem with cultural diversity and the development of the European programme industry. We have to go much further—a point on which the hon. Gentleman and I also clearly agree. We have to look 10 years ahead and persuade politicians across Europe, and—this is sometimes an even bigger challenge—administrations across Europe, to understand and anticipate a world that they can hardly imagine in their wildest dreams, and to ensure that our European legislation will be fit for purpose then, not just in the present era.

We therefore welcome the re-examination of the directive. We want a flexible and proportionate directive that adheres to the better regulation principles being propounded by President Barroso, as the hon. Gentleman said. That will allow e-industry to grow and ensure that the regulations are future-proofed as far as possible. That task is not easy, and it is made risky by the enormous pace of change in the technological base of the industry.

The preamble to the 1997 revision of the television without frontiers directive actually mentions

in the audiovisual sector

But the difference between 1997 and 2005 is that we were then predicting convergence in a general sort of way, whereas today we are in the middle of the reality of convergence and, as both the hon. Gentleman and I have said, we can see that pace increasing rather than
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decreasing. In today's world, television and on-demand services can be delivered down telephone lines, and viewers can have access to TV over the internet. The development of both fixed and mobile telephony is accelerating those changes. We can therefore be clear about one thing: convergence and the blurring of boundaries between previously separate media will continue and will produce new challenges—almost daily, probably.

Those challenges go to the core of the way in which broadcasting is regulated. What do we mean when we talk about broadcasting? What distinguishes broadcasting from other forms of communication? In the UK, we have tried to cope with that by having a technology-neutral definition of what a television service is, and have tried to make it future-proof by providing flexibility in the Communications Act 2003 to amend the definition should technological change require it.

Defining the scope of future regulation is at the heart of this issue. The Commission proposes that a revised directive should be underpinned by the new concept of "audiovisual content services", with different regulation for what are termed linear and non-linear services. Linear services are conventional TV-like services, whereas non-linear services are those pulled down by viewers, such as video on demand.

I see the key objectives of television without frontiers as to secure a genuine single market, to drive enterprise and to protect consumers and cultural diversity. In order to design changes that will work, we have to ask ourselves certain questions. I hope that many of the hon. Gentleman's concerns will be answered by the reassurance that we are asking the right questions, as that is the only way to get the right answers.

We should be asking the following questions. Can the distinction between linear and non-linear be made, or has it already been overtaken by technological change and new business models? Can we bridge the clear differences of view between traditional broadcasters and the providers of new services? There are some opportunities here. The hon. Gentleman mentioned Commissioner Viviane Reding; she and I co-hosted an event in July for the chief executives of a variety of organisations across Europe, at which there was an exciting debate in which it became clear that leading figures in the industry not only see the impact of convergence, but are starting to engage with issues of content. That goes across the scope of television, mobile telephony and the internet. The question that I posed—can we bridge the clear differences of view between traditional broadcasters and the providers of new services?—remains a challenging one for them as well as for us.

My third question is: should we—indeed, can we—level regulation down rather than up? We are keen on the model of light regulation and proportionate regulation, but it takes a good deal of effort at the design stage. I might return to this issue if provoked.

My fourth question is: can we design a system of co-regulation and self-regulation that achieves virtue with the minimum of red tape for the good guys while coming down heavily on the small minority of bad guys? In other words, can we create a system with the light-touch effectiveness of the antisocial behaviour order instead of
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the pedantic and expensive bureaucracy of the traditional court system? I dare say that I might get into trouble with the lawyers by making that point, but that is the way in which we should proceed. My fifth question is: can co-regulation and self-regulation bridge the divide between traditional broadcasters and the providers of new services?

Finally, given that the ultimate in self-regulation is the use of the off switch, we must consider how far we should regulate for protection and how far we should provide audiences with the tools to control what they want to watch, what they do not want to watch, and what they do not want their children to watch. I am sure from the hon. Gentleman's introductory remarks that he will agree that that question must be part of our approach.

In considering those questions, part of my answer is to point to examples of success. One of the best examples is what we have done in the UK to prevent access to child abuse and child pornography. The hon. Gentleman mentioned that, and said that it was an issue on which we could all agree. It is, but agreeing that one wishes to eradicate something is not the same as doing so. In this area, the strength of legislation often flies in the face of Edward Gibbon's advice that legislation often fails to prevent what it forbids.

This is not a case of the industry saying, "It can't be done," although one would have to go back only a short time to find the industry and those who had a particular interest in the internet saying that it could not and should not be done. We do not want the Government to produce heavy legislation under pressure from child protection non-governmental organisations and Members of Parliament, who are frequently swift to call for light regulation or no regulation until it comes to something they do not like, in which case they demand immediate legislation

Instead, the industry, the NGOs and the Government have worked with the police to produce a light-touch example of effective co-operative action that has achieved more in a year without legislation then we could have achieved in five years with it. I can confirm that that is the approach that we will be arguing for in the Council of Ministers. Clearly, it has limitations, but it has much to commend it. In a market that is moving very rapidly that approach has even more to commend it, because the time that it takes to produce national legislation—never mind European legislation—means that the industry and the technology is likely to have moved on a considerable distance by the time of implementation.

It is not for me to say much about the potential challenges for advertiser-funded broadcasting. The potential impact of personal video recorders has led to a great amount of debate among providers of free-to-air broadcasting. On one hand, there is the question of whether some of the rather detailed quantitative rules in the directive might be relaxed; on the other hand, there are divided views on the acceptability of new product placement techniques. I am sure that the latter issue should be thoroughly considered as part of the process.
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One strength of the current directive is the clear and distinct difference between programming and commercial promotions, so that audiences know when they are being sold something, and when they are receiving an independent communication. That separation maintains the confidence of consumers in the editorial integrity of programmes. One major challenge is to maintain that distinction in any new arrangements, given the range of questions and complications that we have already spelt out in the course of this short debate.

We must also examine costs and benefits. As the hon. Gentleman said earlier, with any new regulatory instrument it is important to weigh up the benefits against the costs and burdens, so we will have to scrutinize carefully the Commission's promised full regulatory impact assessment of its forthcoming proposal. Just as we apply that sort of impact assessment to our legislation in an increasingly stringent and professional way, we wish to see that become ever more effective with European legislation.

New legislation must be effective and enforceable. However, if we are to deliver the Lisbon agenda, it must also be flexible to encourage the growth of European businesses and markets. I have frequently made the point that the growth of our GDP across Europe has been some 40 per cent. dependent on information and communication technologies in recent years. However, the level in the United States is some 80 per cent. I suspect that if we could find a UK figure—these are figures from the Organisation for Economic Co-operation and Development—we would come somewhere between the two. That shows the benefits of our more open market and greater competitiveness—although that is still not at the level seen in the United States and some of our competitor countries in the far east and elsewhere. There is a big
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challenge to ensure an effective focus on the Lisbon agenda—which was, incidentally, the focus of debate in the European Telecommunications Council that I chaired last week.

If we fail to ensure that regulation has a light touch where possible, is fit for purpose and addresses the realities of technology and industry, we will fail Europe, and Europe will live in the past instead of competing dynamically with economies such as the USA, never mind China, India, Korea and Japan. There is still some way to go in resolving the detail of the directive, but when the Commission has published the draft we shall be in a better position to consult stakeholders, respond properly to the proposals and debate the issue properly, thoroughly and in detail with parliamentarians.

In areas such as i2010, the policy that we agreed last week, and which Viviane Reding, the Commissioner, has actively promoted during the UK presidency, I found her to be extremely forward-looking, and to have real vision about being ambitious for Europe. I am sure that we will be able to persuade her that the process of revising the television without frontiers directive must be dynamic, forward-looking and imaginative, and must find new and non-bureaucratic ways of achieving appropriate regulation and avoiding inappropriate regulation and bureaucracy. That can be achieved if we use our strengths and talents to the full across the different sectors.

In the short period since I took on this brief, I have been impressed by the amount and quality of the engagement between officials in the Department of Trade and Industry and the Department for Culture, Media and Sport with industry leaders in this important and challenging area of policy. I share some of the hon. Gentleman's concerns, but I am optimistic that we will be able to deliver the type of legislation that he seeks, and I look forward to debating the issues with him over the months to come.
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