Examination of Witnesses (Question numbers
20-39)
OFCOM
1 DECEMBER 2009
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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