Ofcom Annual Plan 2009-10 - Business, Innovation and Skills Committee Contents

Examination of Witnesses (Question numbers 20-39)



  Q20  Mr Hall: You must have an opinion. We are to inform Parliament on this and your views will be very important.

  Mr Richards: I do not believe that Ofcom extracting huge fines from the BBC is what particularly motivates good behaviour. An organisation like the BBC is concerned primarily about the embarrassment and damage to its reputation in circumstances in which Ofcom finds it to be in breach of the broadcasting code. Quite rightly, the BBC is the gold standard in broadcasting. Given that it is purely publicly funded we would expect it to achieve the highest standards in adhering to the broadcasting code. You can raise the money and speculate on whether or not it would focus greater attention in Broadcasting House, but its main concern is the embarrassment of breach of the broadcasting code. In relation to other broadcasters the position is very different: money talks and you need a fine that is meaningful.

  Q21  Mr Hall: I turn to the latest controversy you have looked at: the Jedward twins and the 3,000 complaints you have received about the programme reaching a stalemate and a public vote. Is it right that Ofcom either decided it did not have the power or it was not in its interests to investigate that matter?

  Mr Richards: We have had all sorts of different complaints about X Factor. I am tempted to say that we get complaints about X Factor every single week, but it varies. We have had at least three or four different complaints. The one on which we have ruled most recently was the complaint about Dannii Minogue's comments which we found were not in breach. We have had other complaints about the handling of contestants on the X Factor and complaints about the Jedward situation. I am not sure we have ruled on that yet and so I would not want to go any further.

  Q22  Mr Hall: This is about content. Do you have any grounds to intervene?

  Mr Richards: That is what we shall be looking at. In these sorts of situations we must always look at that question first. Sometimes the answer is no. Often the answer is yes but we find it not in breach and the Dannii Minogue case was an example of that.

  Dr Bowe: A minute ago you asked whether the level of complaints was telling us something about standards of compliance in the industry. I just wonder whether it does. As my colleague has just indicated, we tend to get a lot of complaints about things like that where somebody says something in a live television show, not cases where a broadcaster has decided to test the boundaries of the broadcasting code. That was what happened in the case of Dannii Minogue. In another case very close to my heart during the FA Cup match between Everton and Liverpool a crucial goal was not shown because the broadcaster cut to the ad break.

  Q23  Mr Hall: I remember it well.

  Dr Bowe: We could talk about it outside the meeting, but it was a bad moment and we received a very large number of complaints about it as you would expect. Quite often what triggers complaints is something that just happens rather than a deliberate attempt to test the boundaries. I think there is a discussion to be had about testing the boundaries. I am not sure that our complaints records tell you much about that. What they tell you is that somebody said something on the X Factor to which people took huge exception.

  Q24  Mr Hall: Are you still considering whether or not there are any grounds to intervene? I suppose that one ground for intervention would be if this was seen as trying to manipulate the number of telephone calls to the programme which generates income.

  Mr Richards: That is exactly the problem. We can come back to you to report progress on this one. We receive thousands of these kinds of complaints every single week and we have a very well-established procedure. The team looks at them and there is an escalation process and we make a decision. By and large they are well handled and we make good judgements which are appealable. If you wish we can get back to you on that specific case.

  Q25  Mr Whittingdale: I am not sure the Committee wishes Ofcom to determine the winner of X Factor. I ask you about another very recent case. You referred to the extremely tough compliance regime that has been put in place since recent episodes in the BBC and ITV. In particular we remember the furore when it was revealed that production companies were passing off family or staff members as members of the public. Yesterday we discovered a case where the BBC did exactly that with its production company's Sun, Sea and Bargain Spotting. Does it not suggest to you that they have learned nothing?

  Mr Richards: That case is extremely concerning. It has not fallen to us to deal with it given the boundary between ourselves and the BBC Trust. The BBC Trust has dealt with it. But all of the issues raised a year ago and beyond were concerned with deception of the public. That was very much at the heart of the concerns. We held some events and discussions with the broadcasters to try to put in place measures that would prevent any further instances of that kind. Clearly, it is of great concern that there has been another one. I think it demonstrates clearly that it remains a work in progress and even with public service broadcasters we are not at a point where we can be confident that the issue has gone away.

  Q26  Mr Whittingdale: But you do not see it as something for Ofcom to look into?

  Mr Richards: It is simply not part of our remit; it is an issue that has been dealt with by the trust under accuracy and impartiality. The boundary between ourselves and the trust in this area is that we will deal with harm and offence, and if an issue causes harm and offence, which it could be argued this one does, we will deal with it only if it involves a competition or appeal to the public to be directly involved. This one did not do that and therefore we had no locus. It has been dealt with purely by the trust, but it is very much a reflection and an echo of the kind of concern we have seen in the past two or three years.

  Q27  Mr Whittingdale: Are you surprised that the BBC is continuing to commission from that particular production company?

  Mr Richards: I do not know whether they are or are not. Clearly, if the BBC had just exposed this problem I would expect them to be thinking extremely carefully about any further relationship with that organisation, but that is a matter for them.

  Q28  Mr Watson: Dr Bowe, you have already won me over by your comments on children's television. I think the message is: more Iggle Piggle and less Ben 10. I should like to refer to the Digital Economy Bill. How confident are you that the current Bill is the legislative expression of the Digital Britain Report?

  Mr Richards: That is a very interesting question. The answer is that it is not in totality because there are certain elements of the Digital Britain Report that are outwith the Bill. The most obvious example is the universal service commitment for broadband which will be done through other mechanisms. I do not believe the government even requires legislation to do that. Therefore, a very important element of that kind sits outside the Bill; so, too, does the money-raising mechanism for the final third for superfast broadband which is the proposed 50p levy. Therefore, there are elements outside. I believe that the Bill very much focuses on the elements for which legislation is needed.

  Q29  Mr Watson: In your view is there anything missing from the Bill?

  Mr Richards: You can always argue that some things are missing from the Bill. In this circumstance clearly the government has a time horizon and has been selective about what it wants to include in the Bill. If you offered us an alternative proposition in which time was less scarce and a longer Bill was possible we would argue that other things should be considered for reform. Time has moved on since 2003. Neither we nor anybody else believes that the Communications Act from that period is still perfect. The history of these things is well known. History tells us that legislation in this area, which is technologically fast-moving because markets change rapidly and consumer behaviour adapts all the time, becomes out of date quite quickly. There is a range of things we currently have to do under legislation where if the opportunity was there to consider whether we needed to change something we would come back with a small shopping list.

  Q30  Mr Watson: I am trying to tease out your shopping list.

  Dr Bowe: Perhaps I may make a small comment while my colleague ponders his shopping list. I think you are inviting us to say whether there are things we want to see in the Digital Economy Bill, ie new stuff. I believe my colleague is saying we should hang on a minute and if we really are to do it we should cast our mind back to what most of the people in this room were thinking about in 2002. One would have another look at how the markets are working and might be saying less about adding stuff for Ofcom to do and what one could now take out because it is seven years since Parliament thought about it. Therefore, I believe my colleague is about to come out with a negative shopping list, if you like, and talk about stuff that he would like to stop doing, unless I have completely understood what he is about to say.

  Mr Richards: That is exactly the point. The Digital Economy Bill proposes new duties for us. Obviously, it is for Parliament to agree or not. In one or two areas additional areas of activity are involved. The two most obvious areas are, first, the production of a report on UK communications infrastructure where we would have to access new information and, second, much more significantly, peer-to-peer file sharing and infringement of copyright. My colleague is absolutely right. If we were given a free hand we would say that, frankly, there are other areas on which we would say we do not need to do this any more and we would question whether we can deregulate or remove some regulation. That is a very honest answer to the Chairman's initial question about mission creep. There are some things in respect of which we can happily say we can move beyond them and get rid of them. The area I highlight for that kind of treatment is detailed regulation in some areas of broadcasting. In respect of one or two elements of that we would say that it is time to move on. I give a couple of examples. Every year we go through a process of reviewing of what is called the statement of programme policy. The public service broadcasters tell us what their programme policy will be. We have a conversation with them about it, but we now have no effective powers to change it and they tell us how good it will be. We do not regard that as an effective use of our time or regulatory purposes. Another example is detailed regulation in terms of quotas for ITV and Five particularly relevant for Five, that is done on a line-by-line—sometimes genre-by-genre—basis. Our proposal in this area is that ITV and Five need to be freed up to be strong commercial networks, but we still do some detailed regulation in that area that we would rather not do; we would rather allow them to be free to be strong commercial networks and address public service broadcasting issues on a wider basis. Therefore, in that area as well we would say that probably the time has come to move on, but at the moment we still have to do it.

  Q31  Mr Watson: Let me tease you on one of the new powers that we are to give you in relation to peer-to-peer stuff. How confident are you that the system of warning letters and so-called educational measures in the Bill will reduce peer-to-peer and illicit file sharing by 70%?

  Mr Richards: Nobody knows the answer to that. How confident are we that it will have an effect? The evidence we have seen from experiments and pilots around the world, which is limited, is that it should have an effect. It certainly will not deal with 100% of the problem and I think the question is whether it deals with 10% or 80%. One would expect intuitively that it would deal with some of it. No doubt there are teenagers up and down the country who are illegally downloading and their parents are unaware of it. A letter to parents will have some effect. Little Johnnie will be told to stop that activity or the family broadband will go. So I think it will have an effect. What we do not know is how illegal downloading activity will adapt, respond and find new ways to do it. It is unclear how effective those measures as a first phase will be for what people describe as the hard core of file sharers, some of whom it is clear regard this sort of intervention as a challenge, in the same way that the computer hacking community sometimes consider encryption of software as a challenge to overcome. Those are the big uncertainties. If the legislation is passed we will have to examine that and report quickly on whether or not it has been effective.

  Q32  Mr Watson: How will you measure it?

  Mr Richards: We have measures that we can establish working with ISPs on the amount of illegal peer-to-peer file sharing. It is imperfect but you can do it. One of our concerns in this area is that clearly that measurement is relatively straightforward when it is easy to track. If significant, complex encryption is used in illegal file-sharing it may become much more difficult for us to track it, in which case we will face a challenge in that area.

  Q33  Mr Watson: You are not certain about the technical measures. Are you concerned that people may move to encrypted peer-to-peer as a result of the legislation?

  Mr Richards: Nobody quite knows what the reaction will be because nobody quite knows the motivations of the group of users will be, so I do want to be definitive about it; I do not believe anybody in the world can be.

  Q34  Mr Watson: The legislation is quite definitive, is it not? The problem for you is that you do not know the outcome and there is not a lot of empirical evidence as to the scale of peer-to-peer and yet Parliament is placing an obligation on you to reduce it by 70%?

  Mr Richards: We do not know the outcome. Depending on the final form of the legislation, to some degree we will all live and learn in the next two or three years. I cannot be certain about it any more than anyone else can be. If you ask me whether I think these measures will make a difference the answer is that it must do; we just do not know how much difference.

  Q35  Mr Watson: Obviously, Lord Mandelson is listening to your cry; he does not want you to have the onerous burden of reforming copyright law. I cannot remember the particular clause in the Bill but there is a proposal that under delegated powers he will have the right to amend the Copyright, Designs and Patents Act 1988 by statutory instrument following consultation and approval. Is that the right way to go about amending copyright in the United Kingdom?

  Mr Richards: I think we have reached the edge of what it is sensible for us to say on this. We have deliberately kept one step away from these issues in terms of policy. This is a very controversial political issue. We have said it is right and proper for the government to propose legislation and for Parliament to make a decision. We have tried to keep one step away from becoming directly involved in the policy decision. I believe that the proposal for the power in relation to the Copyright, Designs and Patents Act falls four square into that category.

  Q36  Mr Watson: But if Parliament decides that it is not the job of the secretary of state and there should be some form of regulatory body to deal with that would that sort of thing nestle well with Ofcom or would you feel more comfortable with a separate body to do that?

  Mr Richards: Our instinct is that if we are dealing with a significant issue in the context of electronic communications networks and services over those networks and Parliament judges that there is a significant issue requiring some kind of regulation or oversight to make the framework work well then we are the logical body to do that. Whether or not that is the case is a matter for you.

  Q37  Mr Sanders: One of the new functions that the Bill proposes you should be given is that of appointing and funding providers of local and regional news. In relation to local news could that include community radio?

  Mr Richards: I think the Bill intends something else in this area but I stand to be corrected on that. We are huge supporters of community radio. It was a creation of the 2003 Act and it has been a run-away success. We have licensed over 200 community radio stations. I visited a number of these stations myself and by and large they are inspiring places to visit. They are based on volunteers, in some cases hundreds of them, and they find young and old people with a passion and interest in radio broadcasting. Goodness knows what kind of talent will be unearthed as a result of them. I very much hope we can promote the community radio programme in future. I am not sure whether that specific element of the Bill is part of the story.

  Q38  Mr Sanders: Given the existing demand for community radio, what are you doing in terms of talking to government to ensure that that demand can be met? There appear to be a lot of people who want to become involved in this activity and have a long wait.

  Mr Richards: The fundamental problem takes us back to something that I am sure we will discuss in another circumstance, namely there is only so much spectrum. There is a shortage of spectrum and we can license it only where it is available. Our engineers are looking for more efficient ways to use the spectrum and models by which we can squeeze in a little more such that we can license community radio all over the country. That is an ongoing programme. We have just been able to do some more. We are doing everything we can in that area. In the longer term the big opportunity is around digital audio broadcasting and the Digital Britain proposals to move towards a digital radio environment.

  Q39  Mr Sanders: That is not until 2015 although the demand already exists.

  Mr Richards: Indeed; it is a longer-term horizon. When we began community radio only a few years ago quite a number of people said there would be no demand at all. We are delighted that there is a demand and we are doing everything we can to meet it, but because spectrum is now so intensively used and everybody wants it for all sorts of different services we must examine it very carefully with detailed engineering, testing and interrogation. We have to allocate it for those kinds of purposes very carefully in case it causes interference with other existing users, but we want to do so and that programme of work is under way.

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