Examination of Witnesses (Questions 100-111)
LORD CURRIE
OF MARYLEBONE
AND MR
ED RICHARDS
22 APRIL 2008
Q100 Chairman: Why is it not 5% of
the total yield of licence fee? That would send them a message.
Lord Currie of Marylebone: That
is a question we could put to parliamentary colleagues. We are
not suggesting that would be appropriate.
Q101 Chairman: You list as one of
your priorities for the year promoting competition in the pay
TV market which suggests to me that you currently think there
is not sufficient competition in the pay TV market. It is something
you are looking at. Can you tell us whether you have reached any
conclusions as to whether or not there is a serious competition
issue needing to be addressed here?
Mr Richards: We have not reached
that conclusion yet. We are looking at the issue still. We expect
to publish something on that before the summer. As you know it
is an extremely complex set of issues. We have had an enormous
response to this question. It is linked of course to the question
of Sky's application to go onto DTT. We had over 400 responses
to that application alone. We have had very substantial responses
to our market investigation on pay TV; some of those have only
just come in which has caused us to be a few weeks behind (we
have literally only just received them). However we do intend
to publish something on that and make clear where we stand before
the summer.
Q102 Chairman: Is your examination
simply going to concentrate on the Picnic proposal of Sky or are
you going to be looking at the wider position of Sky within the
market and possibly even consider recommending some changes to
the structure of the company rather as you did with BT?
Mr Richards: There are two issues
we are looking at. There is the specific issue about Sky's proposal
to go on DTT. There is a separate market investigation into pay
TV much more widely. In reality of course the two are connected
and need to be considered closely together, but they are technically
separate questions. We have to treat the application to go on
DTT as a specific question which we need to answer. Of course
we are looking at them in the round; we are looking at a broader
view on this but we also need to deal with the specific DTT application
within that broader context.
Q103 Chairman: That could ultimately
lead to an Enterprise Act reference.
Mr Richards: It could indeed;
that is one possible outcome.
Q104 Chairman: When do you expect
to come forward with your conclusions?
Mr Richards: We would hope to
do the next step before the summer. There may be further steps
after that but we would certainly expect to say something before
the summer.
Q105 Chairman: In terms of competition,
do you have any concerns about the Kangaroo proposal of the BBC,
Channel 4 and ITV all coming together to provide a single seller
of archive TV programmes?
Mr Richards: That is an interesting
question. We have not had any complaints or concerns expressed
to us about that yet.
Q106 Chairman: You will have.
Mr Richards: It is possible that
we will. We have to look at which economic market it is relating
to and whether that economic market is actually very, very broad,
in which case you might be less concerned about it and also look
at the arrangements made between the parties. We are aware of
the issue, we are aware of the question; we have not actually
had any complaints in relation to it yet.
Q107 Chairman: If you received a
complaint you would do something about it.
Mr Richards: Whenever we receive
complaints about things of that nature we would have a look at
it, we may not take it any further or we may do. We certainly
respond and think carefully about any issues of that kind that
are raised.
Q108 Mr Luff: I have a concern that
economic regulators like you and Ofgem quite often end up making
policy rather than simply being regulators. What I am curious
to know is whether this is because you want to make policy or
because the Government leaves a vacuum which you are obliged to
fill. One thinks about the questions of children's programmes
and advertising; one thinks about some of the issues around the
PMSE sector, and convergence itself is raising a host of new questions
about the way we regulate the various platforms. You say that
regulatory approaches may need to be adjusted to reflect the new
delivery mechanisms and ways of consuming communication services.
The Government takes the decision that it is the regulatory mechanisms
that should be changed and not the regulators. It is a public
policy matter. You are not actually on the Convergence Think Tank
but you contribute to its work as I understand it and that is
good. Do you think that the establishment of the Convergence Think
Tank was a shot across your bows for being too ambitious as a
regulator, grabbing policy for yourself, or is it a helpful way
of actually relieving you of a burden you do not want?
Lord Currie of Marylebone: We
certainly regard it as a useful thing that the Government has
done in creating that. We, as a regulator, have a set of clear
duties given to us by Parliament in the Communications Act. Translating
that into regulatory action requires one to think through the
mechanisms and it requires one to think through how those mechanisms
need to adjust in the light of the market developments. The issues
you allude to I think are a perfectly legitimate part of what
we are doing in pursuit of the duties given to us as an independent
regulator by Parliament. There are some other issues which are
outside those regulatory duties where government has to act. We
touched on some of them today: the possible continuance of plurality
in public service broadcasting which will need a funding mechanism
which is not to do with us. Digital switchover is another case
where it is a government action and we work closely with government
on those issues. We hope our analysis helps to guide government
in its policy decisions. There is a very clear distinction between
those areas where government has to take the lead because it is
its responsibility and us pursuing our regulatory duties given
to us by Parliament.
Q109 Mr Luff: There is a clear conceptual
distinction; I accept that. In practice it often gets muddier
than that.
Lord Currie of Marylebone: You
have to be pragmatic in that interpretation. I hope you are not
suggesting that Ofcom is overstepping the mark in trying to do
things which are beyond the very broad remit that Parliament has
given to us.
Mr Richards: It is a question
of judgment but we try very carefully to err on the side of caution
in this. I think we recognise the line and the difference that
you are describing. I think the discussion we had about public
service broadcasting earlier is a good example. We will not say
that the answer is X because we think that that is what government
and Parliament should do. We see our job as setting out the range
of options, helping wherever we can to bring evidence and research
to that, the pros and cons and so on, but the decision in that
area is not a policy decision for Ofcom, it is a policy decision
for government and Parliament. We are very, very clear about that.
In some cases Parliament has given us the decision making authority
(the economic regulation of mobile call termination rates is an
example). Where that is the case we clearly have to discharge
that duty.
Q110 Mr Luff: To maximise the revenue
for digital dividend review and secure full broadcasting of the
2012 Olympics there may be a public policy decision you are actually
being asked to take as a regulator.
Mr Richards: In that case we are
very clear. We do not have a duty to raise revenue from the auction
of spectrum. We have a duty to optimise efficient use of spectrum
which is why I made the remarks I did about bringing it into use
as quickly as possible. The Government retains a right to direct
us in relation to spectrum matters and could always do that, but
it is not our job to raise revenue for the Treasury or anybody
else; it is our job to bring it into efficient use.
Q111 Chairman: I think we have covered
all the ground we intended. Can I, on behalf of both Committees,
thank you very much.
Lord Currie of Marylebone: Can
I express our thanks also. We do find these sessions stimulating
but also useful. It is very good to hear your concerns and to
have the opportunity to discuss in this way.
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