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Standing Committee Debates

Draft Television Licensable Content Services Order 2006

The Committee consisted of the following Members:

Chairman: Mr. Martyn Jones
Anderson, Mr. David (Blaydon) (Lab)
Berry, Roger (Kingswood) (Lab)
Bone, Mr. Peter (Wellingborough) (Con)
Brake, Tom (Carshalton and Wallington) (LD)
Burt, Lorely (Solihull) (LD)
Davies, Mr. Quentin (Grantham and Stamford) (Con)
Ellwood, Mr. Tobias (Bournemouth, East) (Con)
Evans, Mr. Nigel (Ribble Valley) (Con)
Field, Mr. Mark (Cities of London and Westminster) (Con)
Follett, Barbara (Stevenage) (Lab)
Irranca-Davies, Huw (Ogmore) (Lab)
Jackson, Glenda (Hampstead and Highgate) (Lab)
Laxton, Mr. Bob (Derby, North) (Lab)
Lepper, David (Brighton, Pavilion) (Lab/Co-op)
Strang, Dr. Gavin (Edinburgh, East) (Lab)
Stringer, Graham (Manchester, Blackley) (Lab)
Woodward, Mr. Shaun (Parliamentary Under-Secretary of State for Culture, Media and Sport)
† attended the Committee
Mark Egan, Committee Clerk
The following also attended, pursuant to Standing Order No. 118:
Whittingdale, Mr. John (Maldon and East Chelmsford) (Con)

Fourth Standing Committee on Delegated Legislation

Thursday 13 July 2006

[Mr. Martyn Jones in the Chair]

Draft Television Licensable Content Services Order 2006

2.30 pm
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr. Shaun Woodward): I beg to move,
That the Committee has considered the draft Television Licensable Content Services Order 2006.
The Chairman: With this it will be convenient to consider the draft Radio Multiplex Services (Required Percentage of Digital Capacity) Order 2006.
Mr. Woodward: I thank the Committee for the opportunity to debate the two orders together this afternoon.
The debate will, unfortunately, involve quite a lot of jargon and, if I am honest, after only eight weeks in the job I am still learning the jargon. I hope that hon. Members will not test me too far. If they do, I shall try to play “University Challenge”, but will probably have to suggest sometimes that I write to hon. Members if they push me too far. None the less, I shall endeavour to work my way through the jargon and, for the benefit of the Committee, will share my understanding of it.
The world of broadcasting has changed enormously. Over the last few years, the growth of the creative industries has been meteoric. The opportunities brought about by technological advances have revolutionised the way in which we look at, listen to and, crucially, interact with broadcast content. We need to keep adapting our rules to enable those opportunities to be realised, both for the growth of the industry and for the UK economy in general.
A multiplex, or mux, is a means of bundling several digital services on to one, single frequency. Those services include TV channels, radio stations and data services. Indeed, a digital radio mux can carry around 10 DAB radio stations, as well as data services such as scrolling text and electronic programme guides. Digital radio multiplexes can cover either national or local areas, depending on the type of licence awarded by the regulator, Ofcom. Currently, a radio multiplex is distinguished by two key restrictions: to carry only digital radio and to use no more than 20 per cent. of its total capacity for data services. It cannot carry television. The aim is to ensure that capacity is reserved for radio and not sacrificed for television.
The orders seek to amend those two key characteristics. First, the draft Television Licensable Content Services Order 2006 proposes to redefine the type of content that digital radio muxes can carry. The change will permit television as well as radio to be carried. Secondly, the draft Radio Multiplex Services (Required Percentage of Digital Capacity) Order 2006 will increase the existing limit on data services from 20 per cent. to 30 per cent. Taken together, the orders will enable digital radio multiplex operators to offer consumers a combined package of television and DAB radio, making the best use of valuable spectrum and utilising the most recent technological developments.
Historically, legislation has sought to protect digital radio by preventing television from being carried on radio muxes. That has protected spectrum for digital radio that could otherwise have been sacrificed for television services. However, we no longer believe that it is in consumers' interests that that limitation should continue. Technological advances in compression techniques—a reduction in the amount of capacity that is needed to carry a service—have meant that television can co-exist with rather then replace radio. We believe that, rather than protecting spectrum for digital radio by restricting use by television, the current legislation now prevents the development of innovative new services and runs the risk of having the opposite effect of that originally intended as a consequence of the technological changes that have taken place since previous legislation. Those services will make digital radio both more accessible and more appealing by allowing it to combine with other services.
In effect, a mobile television and DAB package will further increase the attraction of and demand for digital radio. That was the outcome of a test conducted last year in a pilot by BT Movio, a subsidiary of BT. The pilot allowed 1,000 mobile phone users with specially designed phones to access three live television services and more than 50 digital radio stations. The trial, which was the largest of its kind in Europe, showed that even with the additional services, consumers listened to more DAB radio than television. Additionally, more than 73 percent of users said that they would be prepared to pay for the service on the network. We believe that the obvious customer demand for those services, along with the assurance that the additional services will help to promote DAB radio, make a strong case for a change in the legislation.
Having been convinced of the demand for a combined DAB and TV package, we do not believe that there is a case for preventing development in the industry or, indeed, for restraining consumers from access to that technology. It may be worth sharing with the Committee the fact that the findings from the BT Movio pilot showed that only 11 per cent. of users would want fewer than 5 per cent. of television services. Users expect, as a minimum, dedicated channels for sport, news and music, as well as additional channels for a combination of films, sitcoms, reality TV and soaps. Consequently, BT Movio stated that it cannot sustain a business model with less than five services. This is why we propose to increase the maximum data limit to 30 per cent., thus allowing for five television stations in addition to the existing DAB radio services. Of course, television to mobiles is not a new concept and some operators are already offering mobile television services.
Having put the matter into context, we believe that the orders are a necessary response to the technological changes in this very fast-moving industry. Both the Broadcasting Act 1996 and the Communications Act 2003 recognised and anticipated that technology in broadcasting would change and that we would need to revisit the regulatory regime. We believe that the orders will make possible innovative, converged services that can increase take-up of and listening to DAB services. Not only will more people listen to DAB on new devices but, having got used to those services, they may want all their listening to be on DAB. We hope that that will be the case but, at the very least, we believe that it is right to let consumers decide. I hope that the Committee will approve the draft orders.
2.38 pm
Mr. Mark Field (Cities of London and Westminster) (Con): I thank the Minister for his presentation. I have a few questions.
I entirely agree and recognise that we are living in a fast-changing commercial environment and that digital TV channels should perhaps be broadcast on frequencies that are currently carrying only digital audio and data services. The Minister was candid in suggesting that there may be certain difficulties when those who paid significant sums in the spectrum auction a few years ago see that BT has walked away with what seems, at least in the short term, a commercial advantage.
A broader ranging concern rather than a narrow commercial one—the Minister rightly pointed out that is open to other players to come into the market—is that in this fast-changing world there is a question of whether in the longer term when there may be a further spectrum auction the obvious bidders will be dissuaded from bidding, or bidding at as high a level as the Government of the day would wish, simply because they might think that in a fast-changing world other opportunities will open up within a few years, such as the current opportunity for BT to move forward. I am anxious that there should be a level playing field in a fast-changing world, but I am not suggesting that there are any easy answers. There is a worry that with a spectrum sale over a period, as we had for third-generation licences, there may be an erosion of the advantage that commercial operators bought and that that may prevent a future Government from deriving full value. My hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale) may have something to say about that and other matters.
The Minister touched on the whole issue of BT. With regard to competition, is he satisfied that other organisations have been given sufficient opportunity to put their own bids forward and that if other players in the market want to come forward within a short period there will be sufficient spectrum? Will the current digital audio and data services operators suffer as a result of a diminution of their frequencies? Have there been any thoughts in relation to the consultation? May I also ask whether there is an extension in Government policy on mobile TV and what discussions he has had? I realise that he has been in his job for only a short period and that the matter may be in his in-tray for the months and years ahead.
Turning to radio multiplex services, I note that we have returned within eight years or so to the minimum capacity to be reserved for broadcasting services other than data services. In May 1998, that was raised from 10 per cent. to the current 20 per cent. and we are now looking to raise it again to 30 per cent. Has the Minister given any thought to how soon we may have to return to the matter? What percentage is being used? Are we already reaching the ceiling of 20 per cent. and is there an urgent need for the expansion that is being proposed today? What is his vision for the future?
I note that paragraph 2.5 of the regulatory impact assessment suggests that if the Government do not raise the percentage as proposed today
“a number of innovative services may not be brought to market”.
What is the evidence for that and does the Minister have any particular services in mind that would be prevented from further research and development before coming to the market?
Conservative Members are fairly satisfied that there is a need and a desire to move things forward. I appreciate that some of my questions may have to be subject to correspondence after our sitting, but we are fairly satisfied with the proposals. This is a fast-changing world and it would be regrettable if we had to come here regularly, so I hope that the Minister is satisfied that there will be some commercial certainty, not just for BT but for other players in the years ahead without the matter having to return to the House.
2.44 pm
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Prepared 17 July 2006