Examination of Witnesses (Questions 40-59)
OFCOM
17 APRIL 2007
Q40 Mr Binley: I think the mood music
might be more helpful, but let us move on! Mrs Jones came down
to see her niece in Northampton the other week and expressed some
sizeable concern with respect to the market impact assessment
process; and where it is about allowing stakeholders to access
key documents in sufficient time to give an informed view, what
about concerns that the consultation process itself is too short,
especially when many new services are proposed at the same time?
What rights does Mrs Jones's niece have in that respect, because
she is the customer at the end of the day?
Lord Currie of Marylebone: I think
there are fair questions to be asked about timing on consultations.
The market impact assessment timetable that was given to us was
a tight one, and that constrained the degree of consultation and
the time that people had to input. I think, on the whole, it worked
satisfactorily but I think it is an issue that we may wish to
come back to in terms of future such assessments.
Mr Richards: It is a very, very
tight timescale. We have to put a lot of resource into it very
fast to produce the kind of work that we like to produce of something
that is useful and of a high quality. It is absolutely true to
say that. What we are trying to do there is have a clear picture
of when these market impact assessments are likely to come through
because, frankly, if we had two or three overnight quickly I do
not think we could do a job we would be proud of, and we would
have to call it off. There is a serious issue there about the
phasing of these things and making sure that we can do the job
we have been asked to do properly. I think we did do that—I
hope we did do that—with the i-Player, but it did require
a lot of intensive resources on the project for six to eight weeks.
Lord Currie of Marylebone: To
be clear, these issues are issues that will concern the Trust
as much as it concerns us, and we will be in dialogue with the
Trust, including its new chairman.
Q41 Mr Whittingdale: Have the BBC
given you any indication of how many assessments they expect you
to undertake?
Mr Richards: Yes, they have. There
is a draft schedule, which again is one of these examples of the
problems that David was describing that we have had to work through
with them; because we made clear that we would need a schedule
and we would need a phasing. They have done that. It is of course
likely, I assume, to change in light of the licence fee settlement
and the decisions they make about what they do want to do and
what they do not want to do. I am anticipating it will change,
but we have got an idea at the moment of what the next year or
two will include.
Q42 Mr Whittingdale: How many are
you expecting?
Mr Richards: I think we are expecting
four or five a year. We could confirm that to you in writing.
Q43 Mr Whittingdale: Do you believe
you have the resources to undertake that number?
Mr Richards: We do on condition
that the timing, the phasing, is properly agreed in advance, and
so long as the period between when we receive the proposal and
when we have to produce a piece of analysis on it and then the
consultation period to allow Mrs Jones's niece to input appropriately
is long enough. It is a tight model at the moment.
Lord Currie of Marylebone: The
resource question is really one of if they come together or overlap
then we do not have the resources to allocate to multiple ones
at the same time.
Mr Richards: No, we could not
do that.
Q44 Miss Kirkbride: This morning
we heard on the news that the amount of pornographic material
of children has trebled on the internet. The other day we heard
of a young person who committed suicide; and cases of what we
would consider inappropriate use of the internet mushroom and
we are all worried about children's access to it. Do you think
that the internet service providers are doing enough to try and
block inappropriate material? Could the industry do more? Is it
possible to control the internet?
Lord Currie of Marylebone: I think
that is a key question we have debated and will go on debating
because it is a moving issue. Clearly there is a provision of
quite a lot of content that is inappropriate, and measures for
dealing with that are complex. It is a matter of the ISPs cooperating
with others. The Internet Watch Foundation has done a very good
job in terms of child pornography here in the UK but there are
problems of international access. It is a complex area. Of course
Ofcom itself has no direct powers of regulation of the internet.
Indeed, if there was a thought we might be given it we would have
to think about what was feasible in that area, because it is a
very complex area. It is clearly one of huge public interest and
public concern.
Mr Richards: This will become
a bigger and bigger issue over time. At the moment you are seeing
the difficult, most extreme end of it, child pornography and so
on. As David said, we have got a good model in this country for
takedown. The Internet Watch Foundation is a very effective organisation.
The vast majority of this child pornography which has been identified
is based in other countries particularly, as I understand it,
Russia and the US. Again, the other question which is bound to
emerge here is what can you do on a multi-lateral or international
basis if this is an intrinsically global, international problem,
which I suspect it is. There is a lot we can think about in the
UK. We can always ask ourselves whether we can do more; but there
is an international dimension to this.
Q45 Miss Kirkbride: Is there anything
more you could do with reference to children as opposed to child
pornography and their access to material, blocking of sites? Are
there more powers you would like? Could more be done to protect
children from whatever it is they are accessing that would be
inappropriate? Is there anything you would like to have as a power,
or you would like to see companies do?
Lord Currie of Marylebone: We
clearly have some powers in respect of conventional broadcasting
and television-like things which appear over the internet; but
what we do not have are powers in any way to affect how people,
children or others, access content on the internet. I think it
is a very interesting question about whether the industry can
provide smarter navigational devices of the kind we have in conventional
broadcasting that would actually be effective in the internet.
Google meets SkyPlus with PIN protection, that type of thing.
If one could make that happen, that would be something I am sure
would be very valuable to very many worried parents, because this
is a very concerning issue.
Mr Richards: A very big concern
here is, one of the problems we have is that children are so far
in advance of their parents in understanding the technologies
and what they can do and what they can find, that parents have
got to catch up. One of the issues here is summed up in the phrase
that we use and others use: the term "media literacy",
which is about enabling and encouraging parents, and indeed children,
to be able to use more of the tools that are already available
to protect themselves and their children. One very simple example
of this is the history tab on Internet Explorer which of course
the vast majority of parents do not know how to use. As soon as
you know how to use that you can see exactly where your children
have been. That functionality is there already. There is other
relatively simple technology which can block pornographic images
and so on and so forth. It's not perfect but it is relatively
effective. We have a big challenge here, given the fact that you
cannot un-invent the Internet, nor can you avoid the fact that
people are going to be able to go all over the world to access
sites, video images and so on and so forth. One of the big challenges
we have got is getting the British population to a place where
they are more aware and comfortable with the tools they can already
use and use in the future to protect children.
Q46 Miss Kirkbride: My note here
says that the European Commission are going to have a policy on
this very shortly. I was wondering whether you are engaged in
that policy, and if they have anything more to say than you have
just said now and, therefore, what policy could it possibly be?
You do not have to answer if there is not one.
Lord Currie of Marylebone: We
have been engaged in a debate with the Commission and other European
countries around the whole AVMS Directive, and the revision of
that, where there was a proposal to extend broadcast-type regulation
across into the internet in a way that we felt was impractical.
Those debates have moved on. We now have a very sensible modification
of the AVMS. Whether the Commission has other initiatives in mind
is something we will await with interest.
Mr Richards: I suspect their initiative
will be similar to what we are already doing here. I think it
is likely to be a general promotion of media literacy, awareness,
capability of European citizens to use these kinds of tools.
Lord Currie of Marylebone: As
Ed has said, we have been concerned to emphasise that the approach
we think can work in this area is a co-regulatory approach where
the major players take action of an appropriate kind, and self-regulation
that ultimately it is going to depend on the regulation that the
individual user imposes on the system, and that does require media
literacy to make that happen. We have been arguing that with the
Commission. I think they have taken the point that actually extending
old-fashioned regulation across to this vibrant, wholly new area
with fantastic benefits, but also some real downsides, is just
not practical.
Q47 Philip Davies: I was reading
your Annual Report and one of the themes that comes through it
is this talk of continuing to reduce regulation and minimising
administrative burdens. With regard to the restrictions that you
have imposed on advertising of so-called junk food, which to me
seems like another triumph for the nanny state, how does that
sit with this theme of reducing administrative burdens and easing
regulation?
Lord Currie of Marylebone: Clearly
it is an extension of regulation. There is no question about that.
The duties that Ofcom have been given are complex and many. It
is absolutely right, as we highlight in our Annual Report, to
say that we have a duty to look wherever possible, wherever appropriate,
to reduce the regulatory burden, to withdraw regulation that is
out-of-date and, in general, to modernise whatever regulation
is needed. Food advertising is an issue that has arisen as a major
concern over the last few years. We were asked by the Secretary
of State to look at the question of advertising of certain types
of foods to children. We went through a long process of analysis,
research and consultation, because after all obesity is not a
natural domain for a communications regulator to be concerned
with, and at the end of that process we came out with a set of
regulatory proposals that we think are proportionate given, on
the one hand, the fact that they represent a cost to broadcasters,
and have an impact on broadcasters and what they will be able
to fund on television but, on the other hand, the fact that it
is also a public interest here, a public interest of concern with
obesity. It is a balanced position. You may well disagree with
the position we have ended up with. We are criticised from both
sides: those who think we have not gone far enough; and those
who think we should not have done what we have done.
Q48 Philip Davies: The concern is
childhood obesity. What is the measure of success? How much is
this going to reduce childhood obesity? How can we judge in a
years' time or two years' time whether or not this has been a
great success? How much is childhood obesity going to reduce because
of these measures?
Lord Currie of Marylebone: The
research that we undertook, which is quite detailed and quite
innovative in the way we approached it, suggested that food advertising
to children was one influence amongst many on their patterns of
consumption and their patterns of behaviour. Of course the factors
that influence obesity are multiple. Therefore, this is one influence
amongst many, which is why Government has been pursuing a broader
agenda in this area; but to say in a year or two's time we could
isolate what impact this regulation has on actually the waist
sizes of children I think is not practical.
Q49 Philip Davies: So there is no
measure of success?
Mr Richards: There is.
Q50 Philip Davies: How much is it
going to reduce it by?
Mr Richards: There are two dimensions
to our policy and one is the impact on overall obesity. As David
says, to unpick the precise role of food advertising on that in
the space of one, two or three years is going to be very, very
difficult because it depends on what is happening on school dinners,
on exercise and so on and so forth. However, what we can do and
we will do in about 18 months is identify whether the narrow aim
of the policy itself has been effective or not. We can do that.
In other words, have children been exposed to less advertising
of junk food or not over the course of 18 months? We can measure
that reasonably precisely and we would be able to tell that. If
one's assumption is that it is having a modest direct effect,
which is what the research identified, and then unquantifiable
but existent indirect effects—in other words, is having
a contribution—we will be able to measure in 18 months or
so whether or not the policy has reduced the exposure of children
to that kind of advertising. It is a bigger question about that
role of obesity in general because, as we all know, it is many,
many different factors and this is but one.
Q51 Philip Davies: As someone who
worked in marketing for a food retailer, I can tell you—and
I suspect you know this in your heart of hearts—that this
will not make a blind bit of difference to childhood obesity.
The reason why kids are obese is not because they see an advert
for a Cadbury's bar of chocolate in the middle of Scooby Doo,
it is because they are sat on PlayStation 3 games, sat on the
Internet, are not playing enough sport and are not doing enough
exercise. That is why kids are obese. So, in a couple of years'
time when we have still got a problem of childhood obesity and
you have devastated the commissioning of children's programmes
and you have devastated commercial broadcasting, what is going
to happen? On the one hand I am going to tell you that it is because
this does not make any difference to childhood obesity and it
is a complete waste of time and it is gesture politics, but, of
course, the health fascists and zealots, on the other hand, will
say it is because we have not gone far enough. What are Ofcom
going to do in two years' time when, as everybody knows, this
makes not a blind bit of difference to childhood obesity?
Mr Richards: It is important to
say that we have not devastated children's programming, we have
not devastated commercial broadcasting. In fact the path that
we chose was deliberately designed to weigh both the potential
impact on the reduction of advertising to children with the economic
impact on television companies trying to make programmes, and
our estimation is that the impact will be something like £20
million or so. Had we gone for a pre-9.00 pm watershed ban, which
is the proposal which was being vigorously advocated in many quarters,
that impact would have been in excess of £200 million. The
£20 million impact, in fact, may turn out to be lower because
there may be substitution from other advertising. So we would
absolutely reject the idea that we have devastated commercial
broadcasting or, indeed, children's programming. In answer to
your more general question, we were asked to do a specific task
here and we were asked to do it on the back of evidence which
demonstrated, I think reasonably soundly, that television advertising
was playing a part in the rise of childhood obesity. Our view
is that we were asked to do something about that; we have tried
to do something proportionate about that. Clearly, if nothing
else happens in any other sphere, then it will not have very much
of an effect, but it is likely to have a contributory effect and,
if things happen in the range of other spheres, there may be a
change to childhood obesity. It does not mean necessarily that
childhood obesity will go down; it may not rise as fast as it
would otherwise have done. There are so many different factors
at play here that it is very difficult to be clear precisely and
for there to be any single answer; but I do not think anyone ever
expected us to come up with the silver bullet for this, they expected
to us analyse the contribution that television was making and
respond proportionately in that area.
Q52 Philip Davies: People expected
you to make a commonsense decision not to pander to health fascists
and zealots who will never be satisfied. You still have not answered
the question: when things have not changed, when childhood obesity
has not changed, what are you going to do when it makes no difference?
Is this a done deal then? This is it.
Lord Currie of Marylebone: No,
in 18 months' time we will be reviewing, looking at what has happened,
looking at the policy and seeing whether any adjustments or changes
are required, but that will be an open-minded review. You make
the point that people expected us to do something sensible. I
think it is fair to say that quite a lot of people think that
what we have done is sensible. You may not, but there are other
people on the other side of the debate who would like to have
gone further. On balance, I think we have reached a position that
is sensible. I think in 18 months' time it will be well worth
looking to see what impact it has had, and those impacts could
be quite subtle. One consequence of the restrictions on advertising
could be (and you may well know more about the possibilities of
this than I do) that manufactured foods change in nature, shift
in a more healthy direction to some degree, as a result of the
Nutrient Profiling Scheme that the Food Standards Authority developed
for us in order that this could be put in place. We will need
to look at all of those questions.
Q53 Paul Farrelly: Is there not a
consistency issue here for you as a regulator though? On the one
hand, rightly I think, you showed that you were not going to be
a soft touch in allowing ITV to relax its public service obligations
on children's TV, but on the other hand you are taking the decision
that many people, including ITV, say makes it uneconomic for them
to show those programmes, and Michael Grade, indeed, in front
of us, said in fairly short order, "There is no future for
children's TV on ITV".
Mr Richards: I would not describe
it as a consistency problem, though you could describe it in that
way. I would describe it as the problem of having more than one
objective—it is a multiple objectives problem—but
what you have got here is a situation where we have said very
clearly that we think original British children's programming
is an important part of public service broadcasting, we have said
very clearly that we would like to see that protected and developed
and we have, indeed, got a review going on at the moment which
looks further into the future to try and identify what can be
done to make sure children's programming is at the heart of public
service broadcasting in the future. Equally, we were asked to
recognise and do something about the role of television and its
contribution to rising childhood obesity, and these are pulling
in different directions; so we have to make a judgment about the
two. I think if we had gone for a pre nine p.m. watershed ban,
in our judgment that would have wrought such damage on the ability
of programme-makers to make children's programmes and other programmes
that it would be disproportionate. So that is precisely the kind
of judgment we are trying to make.
Q54 Paul Farrelly: I understand the
answer. Can I move on?
Lord Currie of Marylebone: Can
I add one very quick thing: the fact that children's programming
was under pressure anyway.
Q55 Mr Whittingdale: We will be returning
to this.
Lord Currie of Marylebone: That
some people attribute the decline to advertising is an inappropriate
attribute.
Q56 Paul Farrelly: I would hate you
or the Chairman to think me a mouthpiece for Michael Grade, but
with respect to the big ball and chain shackling ITV, is it not
time now, with the growth of the Internet and advertising on the
Internet, that the Contract Rights Renewal issue was addressed
again and that you recommended to the OFT that it be addressed
right now?
Mr Richards: We are in dialogue
with the OFT about that, but you will understand that that dialogue
needs to remain confidential; it is very market sensitive. It
is true to say that the advertising market has moved on. It is
equally true to say that ITV still has a very, very high market
share. There are a number of different factors to consider and
we have got an important dialogue with the OFT about that topic.
Mr Whittingdale: We could spend a lot
more time on broadcasting, but I am conscious that we have probably
already overrun our time. At this point I am going to hand over
the Chair to our colleague, Peter Luff, and we will move on to
the telecoms side.
Peter Luff was called to the Chair
Q57 Peter Luff: Gentlemen, I think
it is right to say that you are an organisation that has generally
been held in very high regard by the industry concerned, but the
frustration Brian Binley was expressing in his question about
the BBC, where there are legislative burdens, inhibitions I recognise,
reminded me of that advert in the cinemas at present from Orange:
"Come on, you are a watch dog. What do you do all day? Are
you going to bark or are you going to bite?", and I think
the same is being said about the attitude to the regulation of
telecoms in relation to the business sector. There is a sense
I am beginning to get from those in the UK Competitive Telecommunications
Association, for example, you are not just focusing on business
enough. Your Annual Plan reads very much like a document about
consumers as individuals in their homes rather than consumers
as businesses. Do you understand that criticism?
Lord Currie of Marylebone: Actually
I do not, because I think if you look at our Annual Plan and you
look at a number of the detailed areas, there are key issues that
will impact crucially on big business, consumers, users of telecoms.
All the work, for example, on next generation networks, which
is a crucial agenda item going forward, is centrally important
to the delivery of high speed communications on which many crucial
businesses out there depend, and it is absolutely at the heart
of our agenda. Equally, the delivery of broadband to many homes
through our initiative on local loop unbundling has also changed
what businesses can do in terms of delivery to individual customers.
So the impact of the things that we are doing is a very profound
one on the way in which business operates, that is big business,
small business and the ordinary consumer.
Q58 Peter Luff: Do you understand
why the industry may think you began very well, the Strategic
Telecoms Review was very well received, very focused, very detailed
and actually removing the practical obstacles to competition,
and there is a sense that you have now moved away from that, taken
your eye off that ball and moved instead to looking at issues
like convergence in the future, very important issues too, but
in the process you have got rather disengaged from your bread
and butter job.
Lord Currie of Marylebone: I will
allow Ed to respond to that in more detail, but you say the Strategic
Telecoms Review was well received. That is great. We are now in
the process of making sure it happens, making sure that Openreach
does deliver on the undertakings, that actually BT does ensure
that it allows its competitors access to the vital local loop
and to make sure all of that works. There is a hell of a lot of
work going on there which may not hit the press but actually it
is hugely important to delivery of a competitive telecoms sector,
which is our absolute objective. Then, coming down the road at
us is next generation networks where we have to rethink this model
in that new world. That is a big set of agendas that do impact
on business and are absolutely in our sights.
Q59 Peter Luff: Before Ed comes in,
there is a lot of concern that Openreach—. I have been told
by the industry that Openreach is demonstrating signs of last
era obtuseness and unhelpfulness affecting product management,
contracts and commercial negotiations, and I have a list of examples
where Openreach just is not open. Do you understand those concerns?
Mr Richards: May I come to Openreach
in a second.
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