Memorandum submitted by the BBC
1.1 The BBC supports the Government's broad
policy objectives for the broadcasting marketin particular:
To promote a vibrant economy which
To promote the provision of a wide
range of diverse services, meeting the needs of consumers, including
high quality public services
To ensure access to plural sources
of information, supporting democracy
To make rapid progress towards analogue
1.2 Achieving these objectives requires
a careful regulatory balance to be struck. In its comments below,
the BBC considers how successful the Government has been in striking
that balance in particular policy areas, and what more might need
to be done to ensure that the UK enjoys the full potential benefits
of the expanding and converging communications market.
2. PUBLIC SERVICE
2.1 The public service broadcasters have
a vital role to play in delivering broader public interest objectives
for broadcasting, which the market alone cannot do. The BBC welcomes
the Government's commitment to strong and diverse public service
2.2 As the Government has said, in the hierarchy
of public service requirements, the BBC has the greatest responsibilities.
The BBC welcomes this, but must have effective regulatory backing
in two important respects if it is to be able to deliver what
is expected of it in the wider communications marketplace:
Within the common regulatory framework
the Board of Governors must be free to safeguard the public interest
in the delivery of the BBC's remit, independent of commercial
and other interests (see section 3 below).
The Government and regulators must
make sure that the BBC's services can be delivered universally,
free at the point of delivery, to the whole audience (see section
2.3 The BBC will rise to the challenge of
continuing to deliver core public service benefits in the modern
media marketplace, but the Government must will the means as well
as the ends.
3.1 The BBC supports a common regulatory
framework for all broadcasters, but one which takes account of
their differences and creates a hierarchy of obligations. The
BBC welcomes the opportunity to work with OFCOM, and to be under
its jurisdiction in many respects, in order to achieve a healthy
public service broadcasting ecology in the UK. The BBC agrees
that it is right that it will be placed "under OFCOM"
in the following respects: competition policy, fair trading and
economic regulation; basic content standards; quotas and targets
for original, independent and regional output; and appeals by
complainants. In all of these important matters, it is appropriate
that the BBC should be treated similarly to commercial broadcasters.
3.2 This leaves the BBC's public service
remit. On this, the BBC believes that its role and objectives
are distinct from most other broadcasters. The Boards of commercial
broadcasters are charged with the duty of representing their shareholders,
not the public. Therefore it is appropriate that the public interest
is safeguarded by the external regulator, OFCOM. For the BBC,
the public and the shareholders are one and the same, so the Board
of Governors faces no conflict of interest similar to that of
commercial broadcasters. It is right that the back-stop powers
in these matters of public interest should lie with the Secretary
of State, not with OFCOM, a body which has been designed primarily
as a light touch regulator of commercial activities. The BBC strongly
believes that it would be a mistake to shift these back-stop powers
to OFCOM. This would amount to double regulation, which would
hamstring the BBC, and seriously handicap its ability to serve
its audiences in the public interest. The BBC notes that the ITC,
in its oral evidence to the Joint Scrutiny Committee, supported
the continuation of the Board of Governors' responsibility for
the BBC's public service remit.
3.3 In view of its unique public service
remit, in addition to being subject to the common regulatory framework,
it is right that the BBC should be subject to specific additional
A Board of Governors with specific
responsibility to ensure the delivery of its unique, detailed
remit in the public interest. The Board has listened carefully
to criticisms of its role in these respects, and has responded
by strengthening its governance and accountability structures
and processes, including clarifying the distinction between the
respective roles of the Board of Governors and the Executive.
This, and other recent reforms, will underpin the Board's delivery
of its unique responsibility.
A requirement to consult the public
on new service proposals and obtain the Secretary of State's approval
for their launch.
A requirement that all new services
are reviewed by DCMS after three years.
Decennial review of the BBC, in the
Charter renewal process.
We now turn to more detailed comment on each
of these matters.
Tier 1basic content standards
3.4 The BBC accepts that basic content standards
should apply across the industry and be regulated by OFCOM. The
BBC's Board of Governors will continue to set standards for the
BBC which will at least match, and in many cases exceed, the requirements
of OFCOM's codes.
3.5 The BBC believes that broadcasters should
usually be the first port of call for complaints about programmes,
but complainants should have a right of appeal to OFCOM. The Board
of Governors takes seriously its responsibility to ensure proper
handling of complaints, including ensuring that effective remedial
action has been taken by management against offenders. The recent
changes to governance and accountability structures and processes
within the BBC, have underpinned that continuing role. The BBC's
Programme Complaints Unit, which considers serious complaints
on behalf of management, will more clearly be separated from the
responsibility of the Governors' Programme Complaints Committee,
to monitor the effectiveness of complaints handling and to hear
appeals on individual complaints. In carrying out this function,
the Governors' Committee will for the first time have access to
external advice on editorial matters if they require it.
3.6 The Government is consulting on whether
OFCOM should be able to fine the BBC. For commercial companies,
fines provide a disincentive to break the rules, since they reduce
the value of the company involved. The same consideration does
not apply to the BBC where any fine would effectively penalise
licence payers, not the BBC.
Tier 2measurable aspects of public service
3.7 The BBC accepts that certain public
service obligations, expected of each of the public service broadcasters,
are readily quantifiable. The BBC is content that in these cases
the Board of Governors should propose quotas and targets to OFCOM
for agreement, and be held to them by OFCOM with a formal report
3.8 The BBC's current Charter and Agreement
already include a number of specific requirements about such aspects
of its service, and the Governors currently set objectives and
targets in relation to them. The BBC welcomes the clarification
of its remit, by making these requirement subject to specific
quotas, subject to external monitoring, and by including new obligations
on the proportions of original programming, the provision of news
and current affairs in peak time, and the carriage of party political
3.9 The BBC is committed to ensuring that
its services reflect the needs and interests of audiences through
the UKin Scotland, Wales, Northern Ireland and in the different
regions of Englandboth in the types of programmes provided
for audiences in the nations and regions and in the range of programmes
which are commissioned for a UK-wide audience from programme makers
throughout the UK. This BBC has recently significantly increased
its investment in the nations and regions. This longstanding commitment
will be underpinned by the new requirement to publish agreed quotas
for these areas of programme output, and to account for performance
Tier 3self-regulation of public service
3.10 Analogue terrestrial broadcasters continue
to occupy an influential position even in multi-channel homes
and enjoy regulatory privileges such as the requirement that they
be carried on cable networks. They should also therefore continue
to be required to deliver public service benefits.
3.11 Where ITV companies are concerned,
however, a balance has to be struck if they are to be able to
compete effectively and attract investment. The reduction of detailed
prescriptive requirements on ITV is therefore welcome.
3.12 The BBC endorses the self-regulation
of remits by all the public service broadcasters, through Statements
of Programme Policy. Backstop powers (exercised by OFCOM for its
licensees and the Secretary of State for the BBC) should only
apply where self-regulation clearly has not worked.
3.13 The delivery of the BBC's own public
service has to be guaranteed by a body wholly focussed upon the
public interest in the BBC. That is the key role of the Board
of Governors. Light touch regulation by an external regulator,
of the kind envisaged for the commercial broadcasters, is not
sufficient. In preparing for OFCOM taking on its broader regulatory
role, therefore, the Board of Governors will focus their attention
on the BBC's public service remit more than ever before. To support
this, the BBC is introducing a new framework for setting objectives
within the BBC and for monitoring their delivery.
3.14 The BBC agrees that OFCOM should review
the whole public service broadcasting ecology including the BBC
every three years and will pay attention to its findings. However,
in the interest of all public service broadcasters this must not
undermine the self-regulatory nature of Tier 3: OFCOM should not
be drawn into second-guessing details of the public service provision
by individual broadcasters. In the BBC's case, where the Board
of Governors has specifically been charged with delivering the
remit, detailed involvement by OFCOM would amount to double-regulation,
and would be unworkable.
4.1 The BBC welcomes the Government's stated
commitment to ensuring access for the public service broadcasters
to audiences via all platforms, both before and after digital
switchover. However, the Government needs to ensure that this
commitment is translated into effective legislative measures in
the draft Bill. The BBC is concerned that in a number of key respects,
what is proposed falls short of what is required in practice.
Must offer/must carry on DSat
4.2 Public service broadcasters are effectively
obliged to provide their services via DSat ("must offer")
for which the platform operator levies charges. This creates an
unequal negotiating position between the broadcaster and the platform
operator, BSkyB. At present, the problems this raises are not
addressed effectively through regulation by Oftel, which provides
too great a degree of price flexibility for the BSkyB. In particular:
The public broadcasters are charged
for use of a proprietary Conditional Access system as if they
were pay channels using it to collect subscriptions, rather than
being obliged to purchase conditional access primarily to meet
their obligations to provide regional services.
The BBC currently pays an annual
charge for smartcards for satellite viewers who do not subscribe
to Sky pay services. The Government's ongoing aim is that smartcards
should be provided, at switchover, to free-to-air viewers with
access to no other digital system. However, if this aim is to
be realised, there needs to be a review of current charges for
free-to-air smartcards, and an assessment of who should meet such
a charge and how second and third sets would be treated after
4.3 "Must offer" should be matched
by "must carry": an obligation on BSkyB to carry the
services and to make available, on terms which reflect their public
service status, all facilities required to ensure that audiences
4.4 The Government's current proposals do
not deliver "must carry" until after digital switchover.
The BBC does not understand the logic of this: switchover will
not be achieved in practice unless consumers have the confidence
that they will have ready accessand will continue to have
accessto free to air digital public services, whatever
digital platform they choose. Must carry is therefore an issue
of central importance to achieving switchover, not just an issue
Must carry on DCable
4.5 The BBC welcomes the obligation on the
cable companies to carry all public services. but is concerned
at the mention of "remuneration" if it were to imply
that broadcasters might have to pay for access. Currently, the
cable companies pay nothing for the public services provided,
nor do the public broadcasters pay the cable companies for being
present on the platform. As with satellite, money paid to platform
operators by the BBC (along with C4 and S4C), beyond what is required
to cover marginal costs after taking account of the value of the
broadcasters' offering to the platform, means less money going
into the programmes and services which will drive digital switchover.
Electronic Programme Guides (EPGs)
4.6 EPGs are an increasingly significant
gateway: without due prominence for public services, they can
effectively be inaccessible to audiences. The BBC therefore welcomes
the commitment to due prominence for public service television
channels but is disappointed that this does not yet cover radio.
Millions of people access digital radio via DSat and DCable. It
is essential that radio stations paid for by licence payers are
readily accessible to them.
4.7 Public service broadcasters are required
to use terrestrial spectrum to deliver signals to the whole country
and must therefore have access to enough spectrum to meet this
4.8 The BBC shares the Government's aim
of ensuring the efficient use of spectrum. The greatest opportunity
for improving spectrum efficiency is digital switchover, and all
concerned must work together to achieve this.
4.9 The BBC is concerned that the suggestion
of charging broadcasters for the spectrum they use would run counter
to that objective. It is more likely to delay rather than accelerate
the switch to digital, by diverting investment away from new services
and transmitter roll-out.
4.10 In practice, broadcasters have little
or no flexibility to release spectrum. Pricing "incentives"
would simply become an unavoidable, punitive tax. Access to spectrum
is essential, not optional, if public service broadcasters are
to deliver what is expected of them. Again, the Government must
will the means as well as the ends.
5. OFCOM'S STRUCTURE
5.1 OFCOM as envisaged in the draft Bill
should be able to make a positive contribution to the delivery
of public objectives:
The BBC particularly welcomes OFCOM's
central objective of safeguarding the interests of consumers in
broadcasting, but believes that the interests of citizens throughout
the UK should also be central to OFCOM.
A Consumer Panel focussed on service
delivery should make a valuable contribution to the achievement
of this objective, so long as it properly reflects the range of
The objective of the Content Board
should be to deal effectively, fairly and quickly with issues
concerning standards and complaints in relation to Tier 1 standards.
5.2 The BBC welcomes the proposal that both
the Consumer Panel and the Content Board should include representation
from England, Scotland, Wales, Northern Ireland, ensuring that
OFCOM is aware of the needs of consumers and citizens throughout
the UK. The BBC will continue to draw upon its National Broadcasting
Councils in Scotland, Wales and Northern Ireland, as well as its
Regional Advisory Councils throughout England, to ensure that
the Board of Governors is supported in its own responsibilities
for setting objectives for the BBC which meet the needs and interests
of all its audiences.
6. MEDIA OWNERSHIP
6.1 The BBC agrees that the broadcasting
market cannot be completely deregulated if it is to deliver the
full range of public benefits. The Government is right to leave
in place controls to safeguard plurality and diversity.
6.2 However, the BBC is concerned that there
may be some significant consequences for the health of the UK's
broadcasting ecology as a whole resulting from the changes which
have been proposed. We are particularly concerned at the effect
that the liberalisation of controls on ownership of ITV and Channel
5 licences, may have on the UK's content market.
6.3 The BBC is also concerned about the
effect that some of the proposed relaxations to ownership rules
could have on the diversity of content available to audiences,
especially access to original UK content, and the impact this
could have on broadcasting's ability to play a critical role in
the social, democratic, cultural and economic life of the UK.
6.4 There is a significant risk that the
ensuing consolidation and cross-media holdings might curtail competition
for sports rights, for particular content rights, and for talent.
The consequence of this would ultimately be to restrict universal,
free-to-air access to some types of programming which consumers
currently enjoy across a range of channels. We therefore suggest
that in the case of consolidated groups over a certain size, which
have cross media holdings in a number of sectors, OFCOM should
be empowered to impose conditions restricting their scope to purchase
key rights bundled togethersuch as free to air and pay
rights for TV.
6.5 While there are benefits to be gained
from global investment in the UK media sector, it must be recognised
that it will be impossible for UK companies to become global players
in key markets until they have achieved comparable open access
to that which the Government proposes for the UK. In pre-empting
this, there is a risk that UK companies will be permanently disadvantaged
6.6 The BBC therefore believes that there
is a case for arguing that the Bill should provide that foreign
ownership restrictions should only be lifted where reciprocal
arrangements are in place.