Examination of Witnesses (Questions 100-116)
LORD CARTER
OF BARNES
CBE
10 MARCH 2009
Q100 Chairman: They have been lobbied
for by industry.
Lord Carter of Barnes: They have
been lobbied for but they have been lobbied for during a period
when there was a surplus in the advertising cash flow and we had
the large-scale intervention of the BBC. Many people say that
we cannot have just one provider; we have got to have more than
one provider, and advertising incomes only look like they are
going in one direction. It does not make the case for it but it
sharpens the case for it.
Q101 Chairman: The Rights Agency
which you put forward in the document has not met with universal
approbation, even from the providers, and the software industry
is unhappy with the music industry's approach to rights. There
are tensions on the providers' side, are there not? Where are
we with the Rights Agency?
Lord Carter of Barnes: I think
we may have achieved a Nirvana of proposing an idea that no-one
is entirely happy with, which may mean that it is a good idea.
We are about to publish, possibly this week, a straw man to put
some more flesh around the bones of how we think the Rights Agency
might work as a structure. I remain of the view that we have not
put enough detail around it for people to genuinely have a view.
Our position is that we clearly need some legislative backstop
for the protection of rights. We have said in the interim report
that we are willing to do that. In addition, we need a mechanism
for the providers and the distributors and the rights' owners
to work out new business models for how rights gets priced and
accessed in a digital world, and today's dispute between YouTube
and Google is a real-time example of how difficult that is to
do.
Q102 Chairman: We are going to get
more detail later. Will it be part of Ofcom? How will it be funded?
Those are the issues this document addresses?
Lord Carter of Barnes: Exactly
right. What are its enforcement powers? What does it do on rights
registration? What does it do on shared technical standards? These
will all be part of the proposal that will hopefully come out
this week.
Chairman: I want to get to some of the
illegality issues. Brian, did you want to come in?
Q103 Mr Binley: Back to this issue
about the network neutrality and the principle that internet users
should be in control of what content they view. I am generally
very sympathetic to that, however, I think we are all concerned
about vulnerable members of society. We have seen the suicide
sites and we have seen a number of sites that we feel are outside
the remit of a decent and good society. Where do you think that
is going to go? Is there any thought in your circle in that respect?
Lord Carter of Barnes: Lots of
thought. Actually there is a lot of good work going on across
the industry in getting to sensible self-regulatory structures
about age usage, what is acceptable, what is not acceptable, filtering,
default settings on social networking sites, and how people can
and cannot access information and profiles. There is much going
on in this area. My comment from earlier was not that I think
we need a wholesale introduction of statutory rules; in fact,
I think a wholesale introduction of statutory rules would be a
bad idea because they are just not flexible enough to deal with
the reality of the user experience, but that we definitely are
getting to a point where we need clearly agreed and clearly understood
frameworks that internet service providers, social networking
sites and other distributors agree to and effectively police and
deliver.
Q104 Mr Binley: So we are looking
for a voluntary code which has some real effect but still remains
in the hands of the internet users rather than in the hands of
officialdom in that respect?
Lord Carter of Barnes: There are
an awful lot of existing voluntary codes and agreements.
Q105 Mr Binley: I understand that.
Lord Carter of Barnes: I am not
sure, given the distributive and international nature of the internet,
that it would be possible for us to say here is the determinative,
single, unitary code that all providers and users will work to.
I just do not think that is the reality of the internet and I
do not think that is the way it works. What I think there can
be are some basic principles that people sign up to, and then
some clarity that works depending upon which service or application
you are talking about. Social networking sites, for example, which
is an area of current significant concern, I think only last week
the European Union published a joint document with all of the
major social networking sites agreeing seven principles of operation
to be used by all these sites. I do think that is an area where
Europe works very effectively because what these operators do
not want to have is 27 separate agreements.
Q106 Mr Binley: I understand.
Lord Carter of Barnes: It is madness.
Mr Binley: It is not quite there but
I think it is enough.
Q107 Chairman: Two last areas of
questions from me. First of all, illegal file sharing, which is
obviously a really important issue. The British Phonographic Industry
sent a note to the Committee saying that your proposals in the
consultation document, the interim report, represent a significant
climb-down from the Government's previously stated position. Meanwhile
the ISPs of course are saying that, "It is all too difficult,
we cannot control this, please, it is all too difficult."
How will internet service providers actually collect information
on illegal file sharing in your world? When descriptions of that
as "snooping" have been offered, do you see that as
a fair criticism, or do you think that is the price you have to
pay to make sure that content is properly protected and indeed
the service funded?
Lord Carter of Barnes: I think
you are right to say that at the moment we do not have an outbreak
of peace and harmony between the rights' holders and the ISPs,
although, interestingly, we are seeing an increasing number of
individual commercial arrangements being done by individual ISPs
and individual rights' holders, so time is a great healer in these
things, and I am more optimistic about this than perhaps I would
have been a year ago. What we said in the interim report the proposals
on the legislative rules around peer-to-peer file sharing, slightly
going back to your earlier question, is that they needed to be
seen as sister and brother with the Rights Agency. In other words,
what we are proposing is a twin approach which says that we will
have an underpinning of basic legislative protection that says
that there are examples of illegal activity which we will codify
as illegal activity in primary legislation, but because the nature
of this activity changes literally on a week-by-week, let alone
a month-by-month or a year-by-year basis, so encryption methods
change, the way in which people who are doing things that are
undesirable morph or move, either geographically or in form, if
you tried to write a piece of legislation that was coherent to
deal with all of those things, it would either be legion or it
would be out-of-date, hence the reason for the Rights Agency which
is designed to say to industry, both rights' holders and ISPs
and others, why do you not come together in a co-regulatory structure
backed by statute that says how do we agree some common standards
and approaches to how rights get registered, valued and then accessed
in a digital world. On your snooping point, I am not sure that
these discussions benefit from that slightly more colourful use
of the English language because people understandably get nervous
about these things, and they are right to. Digital security, as
I would call it, and providing a necessary framework, seems to
me to be common sense. The previous question was about things
that we can all agree on. We can probably all agree that child
pornography is a terrible thing. We can probably all agree that
race hate-induced activity is a terrible thing. But as you move
up the dial, you get into slightly more grey areas about where
should there be rules and where should there not. If this is going
to be a universally distributed activity that everyone is going
to be doing in multiple ways, we have to have some basic frameworks
or else it will just not work.
Q108 Chairman: In terms of actual
infringement of rights, it strikes me that there are three categories
of people broadly. There are the villains who know that what they
are doing is wrong and systematically are ripping off films and
music, and they deserve everything they get. There are people
in between who half know it is wrong but do not really think there
is a victim so they know they are probably breaking a law but
it is not a terribly important law (they are wrong of course).
Then there are the people who do not quite appreciate that what
they are doing is illegal. I wonder whether we could not find
somewhere else in the ISPs to put some "electronic speed
humps" in the way of certain content saying, "Do you
realise if you copy this you are breaking the law?"
Lord Carter of Barnes: I think
that is a very memorable description. I would say there is another
category, which maybe is your second, which is people who, in
truth, kind of know this is illegal but the reason why they are
doing it is because there is a resentment or resistance to what
you might call the traditional rules of access to content. In
other words, many people are now not willing to wait until a film
or a piece of music is released in the territory. They are not
willing to wait until it moves through the windowing structure
of the rights' owners. They are not willing not to be able to
share it in an easy-to-access way. There is a reality of what
the new technology allows that is forcing a dramatic re-think
of the traditional analogue business models. That should not,
in our view, either accept or tolerate illegality, but it is putting
pressure on those business models to offer users simpler, quicker,
easier and, let us be honest, considerably lower cost ways of
accessing that content. I might be willing to pay a small amount
of money, a per pence amount of money, to be able to share or
transfer or distribute content, but if that is not available to
me then maybe I end up doing things that I kind of know are illegal
but it is an activity driven by frustration. That does not make
it acceptable. Part of what you are trying to do is move both
sides. To your electronic speed humps, that is really what we
think the notification structure is, it is an electronic speed
hump. Once you draw it to people's attention it does have the
effect of changing their behaviour.
Q109 Chairman: After their behaviour,
not before they actually commit it?
Lord Carter of Barnes: No, what
we are proposing is the ISPs would only be required to hand over
information on the basis of evidence provided by the rights' holders,
and there would only be a requirement to hand over personal data
when it had been the subject of a court order, so the snooping
accusation is colourful but it is not real.
Q110 Chairman: I will not labour
the point now but I think the speed humps could come in before
the offence is committed rather than after it. Some parts of the
industry are quite worried because action 13 which deals with
notices is quite a weak power. It is only going to affect the
worst offenders. It looks like a dilution of what you originally
proposed. Do you understand that criticism?
Lord Carter of Barnes: I do understand
that criticism. I make two comments on that. What was previously
proposed was an MoU, (Memorandum of Understanding), and what we
are proposing here is primary legislation, and I do not need to
draw this Committee's attention to the difference between those
two things. Secondly, as I said earlier, we are going to put out
a straw man this week which tries to cast the Rights Agency alongside
the legislative proposals, and if the response to that is that
the dilution of one or the over-reliance on the other is out of
synch, then we will re-look at it.
Q111 Chairman: One last area of questions
from me, unless my colleagues have more questions, and I am riding
a hobby-horse here with which you will be familiar. The digital
dividend and the programme makers of special events, PMSE. Ofcom
have moved hugely in their consideration of this issue and we
are much closer to a solution. We are talking about radio microphones,
some outside broadcasts, referees on football pitches, pop concerts,
musicals and so on, which looked at risk at one stage in the original
proposals. It does come back to the point about the balance between
public policy and economic regulation. Ofcom have had to take
a public policy decision. Where we are now apparently is that
Channel 69 will be vacated as part of the pan-European Channel
61-69. That is tolerable but it will be a lot of cost for a lot
of people, some of them in the commercial sector, some of them
in the voluntary sector, and some in the amateur sector, as channels
switch, Channel 38 for example. This is going to cause a lot of
uncertainty and a lot of difficulty for the manufacturers, who
will not know what stuff to make when and for whom, and a lot
of funding challenges. It seems to me that if you are evicting
people who have what are called grandfather rights from spectrum,
then you have got to help them establish their new rights in the
new spectrum to which they were not actually asking to move. I
think Ofcom understands the need to pay some kind of money to
this sector but who is going to make that payment?
Lord Carter of Barnes: I am aware
of the Chairman's hobby-horse and. if I am allowed to say so,
a very effectively prosecuted hobby-horse it is, if you can prosecute
horses.
Q112 Chairman: I should declare an
interest: my son is in the industry.
Lord Carter of Barnes: That does
not make it an invalid interest. As you rightly say, Ofcom's position
has moved and the Government is very supportive of that. You are
right, this is a trade-off of public policy interest because,
on the one hand, we do want to have harmonisation, going back
to the question that was asked earlier about next generation mobile,
and we do want to have harmonisation across Europe because that
will be of benefit to everyone including PMSE users but, equally,
it does create change and it creates uncertainty and it creates
cost. I think at this stage all I can say is that the Government
is supportive of Ofcom's desire to find (a) an alternative channel,
(b) a transition mechanism that works, (c) a funding source that
compensates for the net on cost, and (d) that those things get
taken into account in advance rather than afterwards.
Q113 Chairman: Exactly. One of the
issues is if the new licensees are to pay for it, spectrum auctions
will not have taken place and the money will not be available
at the time the change is actually to be paid for.
Lord Carter of Barnes: There is
a time value of money, I agree with you. You can imagine a scenario
where the spectrum auction is concluded but the money is not today
and yet the cost is today.
Q114 Chairman: Exactly.
Lord Carter of Barnes: And that
is an issue that will have to be addressed.
Q115 Chairman: I am encouraged by
those answers. I might take you up in some detail but I will not
labour them with the Committee at this stage because that would
be unfair. Lord Carter, is there anything else that you would
like to say to us by way of summation? Do you feel that we have
covered the ground as you expected or is there anything we failed
to ask that you would like to put on the record?
Lord Carter of Barnes: No, I think
it has been a thorough grilling, as they say.
Q116 Chairman: Thank you very much
indeed. We are very grateful to you and we look forward to seeing
your final report.
Lord Carter of Barnes: Thank you
very much.
| 
