Memorandum submitted by Channel 4
INTRODUCTION
Channel 4 is a national not-for-profit broadcaster
operating in the UK. It was established in 1982 as a publisher-broadcaster
required to commission originated content from the independent
production sector. Its core public service channel, Channel 4,
is a free-to-air service funded predominantly by advertising and
sponsorship. It also operates a number of other services, including
the free-to-air digital television channels E4, FilmFour and More4;
and an expanding range of online services at channel4.com, including
the broadband documentary service 4Docs.
Until recently, Channel 4 also operated a dedicated
Call TV quiz channel, Quiz Call, through a subsidiary Ostrich
Media. However, it recently disposed of its stake in Quiz Call
due to increasing competition in the market for quiz channels.
The information provided below is therefore based on Channel 4's
prior involvement in Quiz Call. Channel 4 does not seek to answer
on behalf of Quiz Call or Ostrich Media as they currently operate.
Channel 4's involvement with Call TV/quiz channels
was prompted by a need to explore potential ways of generating
new, additional revenues as our core revenue stream—free
to air advertising—comes under increasing pressure through
increased competition and audience fragmentation. As a commercially-funded
public service broadcaster, Channel 4 has been encouraged to find
ways of helping itself to adapt to the challenges of the changing
marketplace. When Quiz Call was launched there was a prospect
of generating significant surpluses that could be ploughed back
in to the core Channel 4 business in order to sustain the Channel's
public service remit. However, as competition in this marketplace
increased it became clear that this operation would not generate
sufficient returns to warrant Channel 4 continuing with it. This
prompted our recent decision to withdraw from the Call TV market.
During our involvement with this sector, Channel
4 always sought to adopt the highest possible regulatory and self
regulatory standards. We worked with other Call TV providers,
Ofcom and ICSTIS to develop cross-industry policies to ensure
that consumers have the information they need to participate in
these games with confidence and, in particular, to ensure that
vulnerable consumers are protected.
Although we have withdrawn from the Call TV
market, Channel 4, like other broadcasters, continues to run a
number of premium rate telephony services within its general programming,
for example in Deal or No Deal, Paul O'Grady, and Richard and
Judy, all of which contain competitions using premium rate entry
mechanisms. Channel 4 understands the key focus of this inquiry
to be on dedicated Call TV quiz shows and channels and has restricted
its remarks to these. However, we would be happy to provide further
information on the competitions operated on our core Channel on
request.
We respond to the specific consultation issues
below.
(i) The procedures for handling calls from
viewers
The following are the procedures that were implemented
during Channel 4's ownership of the Call TV channel, Quiz Call.
These procedures were set up when Quiz Call first broadcast in
August 2005 and were devised with the various legal and regulatory
frameworks in mind, including the Lotteries and Amusement Act
1976, ICSTIS and Ofcom.
As Channel 4 has now disposed of its stake in
Quiz Call, operator Ostrich Media is making a separate submission
to the Select Committee. Our understanding is that Ostrich Media
has continued to follow the processes set out in this paper since
Channel 4's involvement in Quiz Call ended at the beginning of
November.
Quiz Call participants could enter in three
ways:
(a) Free Route of Entry, available by logging
on to www.quizcall.co.uk
(b) Phone entry route, which costs 75 pence from
a BT Landline.
(c) SMS entry, which costs 75 pence, plus the
cost of a standard text message.
Entrants from the pool of all entries (free
route, phone and SMS) were randomly selected by a computer to
be placed through to the studio.
Callers would either be played a message that
they have not been successful or would be played a message to
indicate that they may be put through to studio. Those callers
who were told that they may be passed to the studio were then
either subsequently put through to the studio or played a message
that they have not been successful. Once through to the studio,
if the correct answer was given live on air, callers would win
the cash prize as displayed on-screen. Selection was random and
in proportion to the number of entries from each entry method.
The number of callers selected to go through
to the studio varied with such elements as the type of game, its
difficulty and the type of round being played (for example: speed
rounds, where a caller is taken every ten seconds; or double money
rounds or two answer rounds, when every successful participant
could state two answers for the price of one).
On average, Quiz Call took a caller once every
75 seconds.
(ii) Information provided to viewers on the
costs of calls and their chances of participating and winning
All Channel 4's premium rate activity is regulated
by ICSTIS's Code of Practice. Specifically for Quiz Call, price
information was provided in line with ICSTIS's Statement of Expectations
for Quiz TV Call Services. A scrolling bar detailed the costs
and rules at all times and reads as follows:
"Full Terms and Conditions and FREE WEB
ENTRY are available at www.quizcall.co.uk.
Calls cost 75p from a BT Landline, Call costs
from other networks and mobiles may vary.
All calls are charged whether or not you get
through to the studio"
The scrolling bar slowed to a stop on the words
FREE WEB ENTRY (at www.QuizCall.co.uk) so as to come to the attention
of all viewers.
Again, the last line of the scrolling bar "All
calls are charged whether or not you get through to the studio"
brought attention to the fact that only some callers were selected
to be transferred to the studio.Above and beyond this, Channel
4 always required presenters to routinely remind viewers of the
Free Route of Entry option, the call costs, that participants
needed to be over 18 years of age and that participants also needed
the bill payer's permission to enter.
(iii) The role of Call TV quiz shows in raising
income for broadcasters
The proliferation of digital channels and growth
of new media platforms has led to fragmentation of television
audiences, which in turn puts increasing pressure on the advertising
revenues of commercially-funded broadcasters. In particular, for
Channel 4 as a public service broadcaster, this makes it ever
harder for us to fund the programmes necessary for us to fulfill
our public service remit. Ofcom is currently addressing these
issues as part of its Financial Review of Channel 4, and considering
whether some additional form of regulatory intervention will be
needed in the future to enable the Channel to continue to fulfill
its remit.
Channel 4 was an early entrant into the Call
TV market. Having been encouraged by Ofcom in its earlier Review
of Public Service Television Broadcasting to seek commercial revenues
as self-help measures to future proof the corporation's revenue
streams, this market looked like it might initially have enabled
us to generate significant surpluses to support the core Channel
4 services. However, as noted above, Channel 4 recently disposed
of its stake in the Call TV quiz channel Quiz Call, due to an
increase in competition for quiz channels in the market, which
made the business case for this channel less attractive going
forward.
(iv) The impact, financial or otherwise,
of participation on viewers
As part of the legal and compliance procedures
set up within Quiz Call at its inception, presenters were trained
to periodically prompt viewers to set themselves a budget and
to stick to that budget so as not to spend more than they can
afford.
When a call was taken by the automated telephony
system, it would inform callers at the beginning of the call that
the call had cost them 75 pence. This information was stated at
the beginning of each call made. For every text message SMS entry
received, a return SMS was delivered by Quiz Call, informing the
sender that he/she had been charged 75 pence.
Additionally, the automated telephony system
informed callers when they had made numerous calls; this took
place after 40, 70, 100 and 120 calls in a day. This is standard
practice throughout the industry.
The average number of calls made by callers
was 13.4 calls per customer per month; or the equivalent of £10.05
per month.
(v) Whether further regulation of Call TV
quiz shows is required
When Channel 4 was first involved in the arrangements
for Quiz Call, it was instrumental in ensuring that detailed legal
and compliance guidelines and processes were set up in conjunction
with the editorial staff at the production company. The guidelines
were comprehensive, covering the Ofcom and ICSTIS compliance issues,
as well as legal factors. Once developed, training sessions were
held regularly for all the on-screen presenters, as well as the
behind the scenes production staff. Channel 4 editorial staff,
together with colleagues from the Legal and Compliance department
at the Channel, were central to this process. Detailed advice
was also taken from specialist leading counsel on the legal issues
involved, and the advice received was scrupulously followed, particularly
as regards the free route of entry. Once the channel was broadcasting,
staff from the Legal and Compliance department would regularly
monitor the output and feed back any points for future reference
to the producers and to the presenters.
As mentioned above, Call TV operations are currently
either regulated by or being reviewed by a number of organisations:
— ICSTIS. At present ICSTIS,
the Independent Committee for the Supervision of Standards of
Telephone Information Services, regulates any promotion and use
of premium rate telephone or text facilities in connection with
games. In the past, Quiz Call has supplied ICSTIS with call volume
and call revenue and free web statistical data to demonstrate
that it operates within their strict Code of Practice and subsequent
annex, the Statement of Expectations for Quiz TV Call Services
— Ofcom. The Office of Communications
liaises with the public and is responsible via its Programme Code
for overseeing the fairness and accuracy of the games played,
their solutions and methodology.
It is also important to note that Channel 4 and
Ostrich Media implemented a framework of self-regulation in the
form of a dedicated Approvals and Compliance Department at Quiz
Call, which vetted every game and provided compliance training
to producers and presenters. This ensured that games were run
within the regulatory framework of the Ofcom Code and that viewers
are treated fairly.
— Gambling Act. The new Gambling
Act will be in force in approximately nine months, and sets out
the legal framework within which Quiz Call operates. During the
period of Channel 4's involvement with Quiz Call, it always operated
lawfully under both current and future legislation. Channel Four
and Quiz Call submitted their comments to the Gambling Commission
on its recent Issues Paper inviting views on whether Call TV services
and other TV competitions should be treated by the Government
as either simple or complex lotteries. Channel 4 argued that it
did not operate any competitions on the Quiz Call channel that
would be defined as complex lotteries. We also argued that all
of our TV competitions offered either an appropriate skill element
or prominent free route of entry, and that they would qualify
as prize competitions or free draws and not as lotteries.
CONCLUSION
Channel 4 believes that, in general, TV competitions—whether
on dedicated Call TV channels or competitions included in programming
on general entertainment channels -are generally enjoyed by viewers
and can enhance the viewer experience. Clearly, and more particularly
in the case of dedicated Call TV services, there needs to be clear
and effective regulation and self-regulation of TV competitions
to ensure that all broadcasters provide appropriately clear and
prominent communications to viewers as to how games work and the
cost of participation, along with suitable safeguards to protect
potentially vulnerable participants. Channel 4 does not believe
that there is a case for additional regulation. Instead, we believe
that any specific concerns about the relatively new phenomenon
of dedicated Call TV channels can be addressed by ensuring that
the existing rules are adequately enforced in all cases and on
all providers.
16 November 2006
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