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Westminster Hall

Thursday 6 July 2006

[Sir John Butterfill in the Chair]

Analogue Switch-off

Motion made, and Question proposed, That the sitting be now adjourned.—[Jonathan Shaw.]

2.30 pm

Mr. John Whittingdale (Maldon and East Chelmsford) (Con): I welcome the opportunity that this debate provides to consider both the Select Committee on Culture, Media and Sport report into analogue switch-off and the wider subject of analogue switch-off, which has not received as much attention in the House as it merits.

Analogue switch-off is a huge undertaking. It will affect almost every household in the land, and for that reason the Committee, which I chair, chose to examine it as our first subject of investigation at the beginning of this Parliament. During the course of our inquiry we received 54 submissions and took evidence from 41 witnesses. The Committee visited Berlin, which is the one place on the globe that has so far switched off its analogue transmission, to see what lessons we could learn from the experience there. I also visited Sandy Heath, which is one of the large transmitters operated by Arqiva, to see at first hand what switch-off entails.

Switching off analogue transmission is a vast task—particularly in this country, where television viewers are more dependent on analogue than in many others, where there is wider penetration of cable and satellite. It will require hugely complicated organisation. The Secretary of State has compared the task of switch-off to decimalisation, and one witness to our inquiry, David Elstein, said that switch-off had

Mr. Alan Beith (Berwick-upon-Tweed) (LD): I ask the hon. Gentleman to cast his mind back to North sea gas conversion, although he is probably not old enough for that, whereas I am. The model then was that everybody’s appliances were changed by a system that did not require them to do anything except admit the authorised people at the right time. The whole task was carried out for them in a way that is not going to happen this time.

Mr. Whittingdale: There are parallels, but they can be taken only so far. It would not be practical to expect the Government to send out a converter to every household, because the cost of doing so would be astronomical—it will be quite considerable as it is. That gives an indication of the scale of the undertaking on which the Government have embarked, and the first question that my Committee addressed was therefore why we are doing it.

Much of the justification given for switch-off is based on the benefits of digital television. I need no
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persuasion. My life was transformed when I installed my Sky box and had access to multi-channel television. It was transformed again when Sky plus came along and offered personal video recorder capability, and I look forward to a third transformation, when high-definition boxes eventually reach the shelves. Digital television offers huge advantages, particularly for watching 24-hour news channels—[Interruption.] Perhaps not the movie channels, to which my hon. Friend the Member for Ribble Valley (Mr. Evans) is devoted.

Digital television has been available to everyone who has wanted it for a considerable time. Anyone who wishes to have access to digital TV can install a Sky dish. In large parts of the country, they can obtain it through cable and in about 70 per cent. of the country through freeview. The question is why we are compelling people to switch to digital, particularly as other means of distribution are coming on stream. There is already freesat from Sky, the possibility of freesat offerings from the BBC and ITV in due course, and IPTV—internet protocol television—through broadband connections, which is a real possibility in the near future, with BT Vision intending to launch in October. So why are we forcing the pace and removing choice from people who say that they are content with their existing analogue service and do not see why they should have any more services?

Mr. David Drew (Stroud) (Lab/Co-op): Does the hon. Gentleman agree that one problem is that it is uncertain whether the technology will reach all people after switchover? The complaints that I have heard are twofold. First, people object, as he rightly pointed out, to being railroaded into making a decision prior to switchover. Secondly, constituents are concerned that they might still be ineligible for those services in the new wave of television that the hon. Gentleman described. Does he agree that that is a concern, particularly for older people?

Mr. Whittingdale: I agree in part and shall come to extending freeview to universal coverage, which is one of the potential advantages of switchover. The chances are that his constituents will benefit and will have access to freeview once switchover takes place. However, a small number of people might still be unable to receive freeview. I shall come back to that group, because it is deserving of help.

To return to the case that has been made, the Government first advanced an economic cost-benefit analysis. The cost of switchover is relatively easy to quantify, although the figures range considerably, depending mainly on what is thrown into the pot as part of the cost. The Government have said that the cost will be of the order of £5 billion, whereas Mr. Elstein told us that it would be about £13 billion, although he included the public service publisher idea of Ofcom and the power costs of the additional boxes. The Sunday Times told us that the switchover would cost £23 billion but, on examination, that included providing every household with a plasma screen, which might have pushed up the cost a little.

The one thing that everyone would accept, however, is that we are talking about a considerable sum of money. The cost is likely to be borne by almost every
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household, because the consequence of switchover is that every television receiver will have to be digitally enabled. That will probably require at least one set-top box, and perhaps another for analogue recorders, such as video cassette recorders. Switchover will also require new wiring and perhaps new aerials to be fitted in a number of households, so for each household quite a considerable cost is attached.

Mr. Nigel Evans (Ribble Valley) (Con): Although there will be some help for the very needy, it will be provided through a funding arrangement, via the BBC TV licence. While my hon. Friend is discussing costs, does he not agree that there must be a better way of funding that help? Because the TV licence is set at a flat rate and regressive, the nearly poor will be paying for the very poor.

Mr. Whittingdale: I agree and shall come to that argument, but I welcome the fact that the Government have recognised that they have a responsibility to help those who are most vulnerable and likely to find the process most difficult by providing an assistance package. However, it was the Committee’s view—not only the Committee’s, but almost every outside commentator’s—that that is a welfare action and should therefore be funded by the Exchequer, not the BBC.

Janet Anderson (Rossendale and Darwen) (Lab): Is the hon. Gentleman aware that the BBC is perfectly happy with the suggestion that that help should be funded out of the licence fee?

Mr. Whittingdale: At this moment, when it is looking to the Government for assistance in the licence fee settlement, the BBC probably regards it as highly unwise to express anything other than enthusiasm, although I am not sure that it would necessarily say the same thing in private. In a sense, it is immaterial whether the BBC is happy with the arrangement. My view and that of many others is that the cost should have been picked up by the Exchequer. I was just completing the list of costs attached to the process. The other two considerable costs will be the conversion of transmitters and the necessary marketing exercise to inform everybody that that is taking place. If all the costs are added up, the £5 billion estimate may be about right.

Some of the benefits that will flow from switchover are more theoretical. The Government have argued that a monetary value can be attached to the benefit of the new services that will become available to people receiving digital terrestrial television. My argument is in part that if people attached a considerable value to those services, they would have obtained them already and would not be waiting to be compelled to get them.

The Government have come up with a curious concept that they call the imputed consumer benefit of compulsory migration, which the Committee regarded with a degree of scepticism. Nevertheless, there are concrete and quantifiable benefits. There will obviously be a saving to the broadcasters, because they will no
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longer have to transmit programmes both in analogue and digital. In addition, the spectrum released as a result of the analogue signal switch-off will have a value. When that was first discussed, people got a little bit carried away with memories of the amount of money raised by the 3G auction, but I do not think that we will see such sums again. The return on the spectrum that is released will depend on the use to which it is put.

The Government concluded that there was a net present value benefit to the process of between £1 billion and £2 billion, about which we were not wholly persuaded. We are talking not about a cost-benefit analysis but a decision taken on stronger grounds. There are two main reasons for the analogue switch-off, including to extend the coverage of freeview. However, I have received complaints from some of my constituents who cannot get freeview. I was amused by what I imagine was the look of horror that passed across the face of the chief executive of Digital UK, when he checked the current freeview coverage for each Committee member’s constituency and found that mine is one of the worst in Britain.

Another benefit of switchover is that it should allow the power of the digital terrestrial signal to be boosted to enable almost universal coverage of digital terrestrial television. That will extend choice to almost every household, which is a benefit that will restore an element of fairness.

Mr. Roger Williams (Brecon and Radnorshire) (LD): The hon. Gentleman mentioned the number of constituencies in which there is difficulty receiving freeview that might be enhanced by the digital changeover. I understand that 1.5 per cent. of households do not currently get analogue reception and after the change 1.5 per cent. will still not get it—but it may not be the same 1.5 per cent. That will cause a certain amount of aggravation and even chaos for the people involved.

Mr. Whittingdale: The hon. Gentleman is right. We were particularly concerned about that 1.5 per cent. That may sound like a small proportion, but it represents a large number of households. Part of the problem is that we do not entirely know who they are, so identifying them should be a priority.

The Committee was also concerned in that although we recognise that it is beneficial to make the DTT signal available throughout the country, DTT technology already looks primitive when compared with some of the alternatives becoming available. Freeview boxes, for instance, are mainly based on MPEG-2 technology, which limits the number of channels that can be transmitted and makes it impossible, for example, to receive HDTV. In time, we may migrate to MPEG-4, but that will require a new generation of boxes to be fitted. DTT will always be subject to some capacity constraints, particularly when compared with the alternatives of satellite reception or internet-provided television. Therefore, we wondered whether it was sensible to promote a technology that might become obsolete. The lifespan of DTT may be no more than 10 years, by which time most people will be more demanding and will want better quality, more choice and interactivity, and something like BT Vision, or its equivalents in IPTV services, will be taking hold.
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At that point, we may have to consider “Switch-off 2” to shut off the DTT signal and release that spectrum for more valuable uses.

Switching off the analogue signal will release a chunk of spectrum. One of the big questions facing the Government is what they will do with it. The Committee heard about a number of different applications, including wireless broadband and mobile television. The broadcasters are keen to reoccupy the spectrum for HDTV, having only just given up analogue transmission.

Mr. Evans: Just before my hon. Friend leaves the subject of freeview, does he agree that some people, who are as yet undecided, may need repairs done or a brand new aerial installed? The Committee is still concerned that there may not be sufficient aerial contractors available, and with so many installations or repairs being necessary, this may be the beginning of a cowboy’s charter for a small group of people, who may rip off unsuspecting individuals with exorbitant charges.

Mr. Whittingdale: My hon. Friend is right; that was a considerable concern for the Committee, and the Government are moving to address it. I agree that there is a risk that the most vulnerable people may be exploited by the unscrupulous.

I return to the allocation of the released spectrum and Ofcom’s task as part of the digital dividend review. Traditionally, the Government have decided the general use of a band of spectrum. For instance, it was decided that a particular part of the spectrum should be used for mobile applications in respect of the 3G auction, and a market mechanism—an auction—determined which operators were able to take advantage of it. There has been a suggestion that the entire thing should be done this time through the market and a bidding process, but I am not sure whether that is sensible. Different arguments are already being advanced. Understandably, the broadcasters said, “Look, if we are to continue to offer a choice to viewers, it is important that HDTV be available on freeview as well as satellite.”

I declare to the House that last week I received through the post, slightly to my surprise, a set-top box to allow me to have access to the BBC’s current HDTV trial, run from Crystal Palace. I was told that I was one of 450 viewers who have been selected to participate. [Interruption.] The hon. Member for Bath (Mr. Foster) indicates that he too was fortunate enough to be selected as one of those 450 viewers. We are clearly both very lucky.

Mr. Don Foster (Bath) (LD): I did not request the box; it came without any explanation. I have discovered that I can use it neither in my flat in London nor my home in Bath, because of the configuration that I have.

Mr. Whittingdale: I have not yet discovered whether it will operate in my home, but I will report back to the House.

More seriously, the decision about what use the released spectrum should be put to carries some urgency. Arqiva made the point to the Committee that
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it is having to order the equipment to fit on transmitters now and that there is a three-year lead time in terms of antennae and equipment to be fitted on transmitter masts. Therefore, unless decisions are taken very soon, there is a danger that its people will have to go up the masts twice: first, to fit the equipment for the digital terrestrial signal, to boost coverage, and then a second time to deal with potential use of the released spectrum. That obviously has considerable cost implications, which may affect the economics, so I hope that the Minister can confirm that now that the radio regional conference has determined the frequency allocations, we will move swiftly to a decision on what the released spectrum should be used for.

I think that the main concern of the Select Committee, having accepted that the decision on digital switchover has been taken and that it will go ahead, is that we address the difficulties that it poses—the practical problems that must be overcome if the task is to be completed successfully. Digital UK has been given the task of leading the process, and the Committee has been impressed by the work that it has done so far, but there was some concern about resourcing and the authority that Digital UK would have in the event of disputes, particularly between broadcasters and others. Considering that Digital UK is owned by the broadcasters, we had some concern about whether it would be able to bang heads together, if that became necessary, when its board members were the people whose heads needed banging. We were also worried that there was some confusion about where responsibility lay in Government and that not necessarily enough attention was being paid to the issue in the higher levels of Government.

At our final evidence session, we had before us the then Minister for Industry and the Regions, the right hon. Member for Cardiff, South and Penarth (Alun Michael), and the then Under-Secretary of State for Culture, Media and Sport who is now the Minister for Pensions Reform, neither of whom was willing to say that he was ultimately responsible for the process. They suggested that it was somehow shared between them, which I think the Committee regarded as unsatisfactory, in that essentially it meant that responsibility did not lie with either of them.

I have been encouraged by the fact that when the hon. Member for St. Helens, South (Mr. Woodward) took up the post of Under-Secretary of State for Culture, Media and Sport, he was described as Minister for switchover, and although the Government have not formally accepted our recommendation in their response, he does seem to have been given the task of taking a grip of the whole process. We would very much welcome that. I hope that he will pay close attention to the process to ensure that it proceeds smoothly.

On awareness of digital switchover, which is the first requirement, there appears to be encouraging progress. The latest tracker survey, which I was shown by Digital UK, shows that awareness is up to 71 per cent. and understanding of the process at 66 per cent. There were one or two interesting figures in the survey. Slightly surprisingly, it showed that the least aware group was the youngest age group rather than the oldest, which we would not necessarily have anticipated. The survey
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also showed that ethnic minorities were more unaware of the process than other groups. With regard to support for the process, it showed that roughly one quarter of those questioned were fairly enthusiastic about switchover; one quarter were not enthusiastic and indeed were negative about it; and half were fairly resigned to the process. Clearly, a considerable task remains to explain to people what will happen and to persuade them that it is a good thing that it is happening.

The Government have frequently cited the figure for digital penetration—the number of households that have converted to digital—which has reached almost 75 per cent., but it would be a great mistake to think that we need not worry about those households, because every single household that has a digital set in the main room almost certainly has analogue sets in the kitchen, in the bedroom and in the children’s rooms. Therefore, the process will affect them as much as anyone else. Although 75 per cent. of households have gone digital, 60 per cent. of televisions are still analogue. There are 37 million televisions out there that will have to be converted. It is also estimated that 25 million aerials will need to be replaced. That poses very serious problems in terms of the supply chain.

We were concerned when we took evidence from, for instance, DSG International plc, which now owns Dixons, that unless there was a steady migration, there was a danger that there could be a last-minute rush to convert, in the last few weeks before switchover. We were concerned that people would go into the shops on their local high street only to discover that the shelves were empty and that the supply chain simply could not cope with a huge last-minute surge in demand from people wanting to convert in time for switchover day. It is therefore extremely important that we persuade people that they need to act early. That will be harder when we are expecting people in the areas that cannot get freeview at the moment to fit equipment that will not work until switchover takes place. We will be expecting them to make the leap of faith that it will work when switchover does take place. There are real concerns about the supply chain.

Another issue, which my hon. Friend the Member for Ribble Valley mentioned, is the replacement of aerials. Some 25 million may need to be replaced. The Confederation of Aerial Industries told us that it thought that replacement would happen in any case because every time there is a bad winter, aerials are blown off roofs and people replace them. That ongoing process of replacement should mean that there will be far more aerials that are compatible and ready for digital reception than there are now, as a result of the natural course of events.

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