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Lord Howell: My Lords, I am very grateful to my noble friend--if I may describe him as such--for allowing me to intervene. Does he realise that millions of householders--about 40 million people--will be deprived of access to live sport by monopolies unless we protect their interests? I am sure that the noble Viscount would not want to deprive those millions of people of access to sport on television.

Viscount Astor: My Lords, nor would I wish to deprive sport of the very large revenues which the sale of broadcasting rights have brought to the game. I gave the noble Lord one example in the debate last week when he mentioned the Ryder Cup. We would never have seen the whole of the Ryder Cup if it had been on BBC. It was broadcast on satellite television. I accept that lots of people could not see it, but that is the kind of decision that sporting authorities must make. It is a subject that we shall no doubt discuss in greater detail, and I look forward to debating it with the noble Lord, Lord Howell.

As I said earlier, I welcome the Bill. However, I hope that the Government will not lose sight of the longer-term goal of a simpler system for regulating the media market. That was proposed in the White Paper

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published last year, in which I played a small part. Although the media industry could not agree on the basis of media measurement, there was agreement that it was the right direction in which to move.

I believe that it is vital that we move to a simple, flexible and coherent system of regulation. We should not try, as was done in the past, to regulate each piece of the jigsaw separately. What happens in this fast-changing world is that those with new technology come along and steal a march on the rest as existing operators cannot, by law, compete. What we must have in this country is open competition subject to fair trading and monopoly provisions.

I believe that the Bill goes a very long way to achieving that goal, and I hope that during its passage your Lordships will consider amendments to improve it.

9.1 p.m.

Lord Desai: My Lords, as the last speaker from the Back Benches I have the very pleasant task of being brief. Your Lordships will be pleased to hear that I shall not speak on Channel 4 nor on S4C although when I heard the noble Lord, Lord Elis-Thomas, recount the results of the survey on S4C and how watching television encouraged people to learn the language I thought what a happy Principality it is. In England we say that people should switch off the television so that children can learn the language whereas in Wales they switch the television on so that children can learn the language.

I want to say something about independent local radio. Happily, much of what I wanted to say has been said much better by the noble Lord, Lord Dixon-Smith, so I shall only make a few additional remarks. It is true that in the Bill the Government are treating radio very differently from television. I do not understand the logic. As some noble Lords pointed out, we have very good independent local radio stations. My noble friend Lady Smith of Gilmorehill said in her excellent maiden speech that most broadcasters, in both television and radio, have a tradition of public service. As a Londoner--someone has to stand up for the region--I am pleased that Capital Radio provides many public services. It runs the Help a London Child charity and provides flatshare and jobfinding services. Local radio companies such as Capital Radio should not be prevented from having two FM stations. If television companies or newspapers can own independent local radio stations why do we have to have a rule that independent local radio companies cannot have two FM stations? That point must be emphasised.

Secondly, in terms of digital audio broadcasting I do not understand why we are repeating the same structure as applies to television. The problems are very different. There is no need to set up an extra layer of multiplex authorities to supervise the system whereby a local radio station has to get together with partners and present a bouquet of services before it can have a multiplex licence. Why not leave it to the Radio Authority or run an auction for licences subject to conditions as to what bidders may offer?

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There is a lack of consistency of logic between the radio and television aspects of the Bill. If the logic in relation to television is correct, as I believe it is--we want strong companies which can take on competition from other strong, well-funded companies--we also want radio to have an equal chance of fielding strong players. I do not believe that we should revert to a cottage industry logic for radio having just abandoned it for television.

I was very impressed by the point that my noble friend Lord Donoughue raised concerning sports broadcasting, which has just been mentioned in the debate between the noble Viscount, Lord Astor, and my noble friend Lord Howell. I shall propose a solution to the problem. It is merely a first attempt at a solution. No doubt the Government will hire distinguished management consultants and pay them £100 million to make it slightly better. I do not think that one could do better than what I am about to propose.

There are three players. We do not want the sporting authorities, be they the Lawn Tennis Association, the FA or whatever it might be, to lose any money that they receive from the bidding process. I do not believe that that competitive bidding process should be stopped. At the same time we want almost universal live broadcasting of certain sporting events throughout the year. However, the company which wins the auction should retain some residual advantage for having won the auction.

My proposal is as follows. The bidding should proceed and once the price has been decided the broadcasters who have lost the auction but still want to transmit the sport should pay half the price of the bid to the winner. Let us suppose that Sky pays £50 million to televise the FA Cup Final. I do not know what the amount is. Having won the bid, for £25 million it will allow ITV and the BBC simultaneously to broadcast the event live, but will retain all the residual rights--repeats, video recordings and all those matters. There is some value in the repeat rights. Therefore the winner of the auction has won a bundle of rights. We are "unbundling" them.

From the public welfare point of view we are anxious about the live broadcasting of certain sporting events. But there is a price. The BBC and ITV were bidding, so they have some reservation price. So payment may perhaps be equally split. The figure could be 50 per cent. or 60 per cent.; that is a matter of detail. Your £100 million consultant will sort that out. But the principle is simple. With such an auction one will have public broadcasting of important sporting events. The winner of the auction will gain the residual rights, and the sporting authority will not lose money. My proposal preserves competition. It preserves freedom, and it preserves the public service aspect of sports broadcasting.

9.9 p.m.

Baroness Dean of Thornton-le-Fylde: My Lords, we are concluding a Second Reading debate about a very innovative industry. My noble friend Lord Desai has proposed an innovative idea. Whether it is acceptable is probably another matter.

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The Minister set the tone for the debate in his opening address when he said that this was by no means a perfect Bill--I think that we all know that--and that amendments were needed. I hope that in saying that the Minister also accepted that amendments will not necessarily all come from the Minister's side, and that there will be quite a number, as has been made clear in the debate.

I was particularly pleased today that my noble friend Lady Smith of Gilmorehill made her maiden address. It is, if you like, my maiden address at this stage of the debate at the Dispatch Box. I was particularly pleased to join her company. Her maiden address, in my view, reflected strongly how much in touch with public opinion she is and how much her views reflect two feet on the ground. Our debate today was all the better for her contribution on this important subject.

The House should know that I have no direct interest to declare, although I was previously a member of the BBC General Advisory Council and later a member of the Broadcasting Complaints Commission. However, I wish to indicate that my husband is associated with a company which advises in the field of broadcasting.

During the debate there has been tremendous agreement on all sides of the House. That is encouraging at this stage of a Bill. The noble Viscount, Lord Astor, stated that it was a major industry. He is so right. In television we are talking about 40,000 people, plus a further 20,000, and those figures do not include radio or the wider media that we are considering.

We are also agreed that broadcasting is a major centre of our lives. Television and radio, more than many developments in this century, have had a profound effect on the nature of our society. We all have our nostalgic memories. One of mine is as a nine year-old, crammed into the living room of our two-up, two-down house in Lancashire with what seemed like half the street watching the Coronation on a little nine-inch Rediffusion black and white television screen. Only two or three houses in a street of about 50 had a television set. How times have changed. This morning I worked on my participation in this important debate on a lap-top computer with a colour screen the same size as that television set. We no longer ask each other whether we have a television or radio but, "What did you watch last night? What are your favourite programmes?". We assume that we all have access to radio and television. That, I suggest, is because of the public policy decisions taken by legislators when broadcasting first got off the ground. It made clear the crucial importance to our community of universal access.

I accept readily that nostalgia might be good for memories. But for broadcasting to maintain its pioneering role, and to continue to be that important information, education and entertainment provider that we have all come to expect, it is essential that we provide the right framework to serve the public interest well and at the same time encourage the necessary investment and competition. Those two--investment and competition--are not incompatible with the public interest.

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As we have heard in this debate, digital broadcasting provides tremendous opportunities for diversity, increased choice and quality of reception. I for one will be delighted if it provides better reception on FM radio than at present. Much of the Bill is to be welcomed. It will gather general support across the Chamber. For example, the decision to leave open the date on which we switch fully from analogue to digital was taken by the Government, and we welcome it. They are right to have taken the decision to review the situation within five years or when there is more than a 50 per cent. take-up of digital services. The public response to digital is not known, nor is the take-up of the multiplexers. The ability and willingness of manufacturers to respond and what levels of investment they are prepared to put in are not known. There the Government may have an important role to fulfill. In any review of the switch from analogue to digital we would expect the public interest to come first. That would include the universal availability in the UK of reception of the services.

However, despite general acceptance of much of the Bill, there are many key concerns which we will pursue in Committee. Conditional access is one; a number of Members of the House have spoken on it. The noble Lord, Lord Thomson of Monifieth, was absolutely right in what he said, as were the noble Earl, Lord Stockton, my noble friend Lord Howell and the noble Viscount, Lord Chandos. The White Paper last August covered that and referred to the EC directive on television standards. I am aware of the press release from the DTI yesterday announcing that there would be two class licence amendments. I fully accept the apology which the Minister put forward for our not receiving the document on this side of the House. We totally accept that it was not intended. The Minister has been extremely co-operative and helpful in giving information and briefing us on the Bill. It derives from the EC directive of July last year.

However, the point was made a few minutes ago by the noble Viscount, Lord Astor, that we are talking about the future covered by the DTI statement. He was absolutely correct: it will not rectify the problems that we have in regard to present television availability. The EC directive requires and facilitates consumers being able to receive all digital TV through one box. It also provides that manufacturers will be obliged to incorporate an open interface socket on all TVs larger than 42 centimetres. The Government's White Paper said that it would be expensive, unpopular with consumers and inefficient for each broadcaster to have his own encryption system. We agree. Yet there is nothing in the Bill to deal with that. It is a subject to which we shall return because it is central to universal access.

There are a number of issues affecting regional broadcasting which we will want to take up at Committee stage. As the Minister said, the coverage of the multiplexers will be from 60 per cent. to 90 per cent. With universal access we would want to see that improved. It cannot be done through the Bill but it can be done with encouragement when we see how the licences are taken up by the multiplexers.

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Regional broadcasting and the ownership provisions in the Bill are of concern to a handful of small but significant companies in regional TV. The noble Earl, Lord Arran, is a West Country-man and I also come from the West Country--not originally but I do now. I too share some of his anxieties.

S4C in Wales has been mentioned and the change in its funding from the present 3.2 per cent. of advertising revenue to the set figure in 1997 plus an RPI increase. It is worrying and I know we shall discuss it at the Committee stage of the Bill.

After much debate in this House the Broadcasting Act 1990 provided a quality threshold in the granting of licences. That quality threshold requirement has not been extended in the granting of multiplexer licences. We do not understand why. We believe that it makes sense and it should be a requirement on the ITC to take it as a central condition. It should be in the Bill.

We tend sometimes to forget radio, but it has not been forgotten in this debate I am pleased to say. There too we should be looking at a quality threshold. It is not covered by the Bill and we would like to see it covered. The issue of sport on free-to-view TV has been an interesting dimension in the debate; interesting, but not unexpected. We merely need to read the newspapers and talk to people on the street to learn of the worries that people have. That has been put very vocally by my noble friends Lord Howell and Lord Donoughue in opening the debate. Their contributions were added to by other Members. Unbundling is a matter that needs to be addressed, as well as revisiting and reviewing the ring-fencing of events in regulations under the 1990 Act.

There is general agreement that developments in broadcasting present tremendous opportunities, not only analogue but also digital. The achievements of analogue broadcasting for people with disabilities are to be applauded. Digital broadcasting, particularly in this area, presents tremendous opportunities--to see a signer on television without too much interference with the screen; to help people with sight difficulties and those who are deaf and hard-of-hearing. That subject was covered by my noble friend Lord Ashley and the noble Lord, Lord Elis-Thomas. It is a subject to which we shall return.

My last point concerns the merger of the Broadcasting Complaints Commission, of which I was a member until last year, and the Broadcasting Standards Council. We welcome the merging of those two bodies. However, we have a number of anxieties. My noble friends Lady Jay of Paddington and Lord Dubs mentioned a number of them, as did the noble Viscount, Lord Caldecote, who also raised this issue last week in the debate on the BBC Charter. Our concerns are certainly very strong, and right. I have a couple more.

Previously, there was an indication that the newly merged body could conduct research over the whole area of its remit. That provision is not now in the Bill. It is not clear whether the new Broadcasting Standards Commission will have authority to conduct research on fairness, an area of individual complaints previously covered by the Broadcasting Complaints Commission. The complaints process has been ring-fenced. It seems

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to me that in the Bill it has been ring-fenced in a way that seems to place the chairman of the new commission in a no-go area. What is the role of the chairman? Is the Minister considering amendments in this area? If not, it certainly needs looking at.

The noble Lord, Lord Chalfont, rightly mentioned anxieties about the very narrow area of direct interest that is necessary before a complaint can be lodged. That needs to be addressed. What is a direct interest and what is not? Is a group a direct interest? The noble Lord was right to cover this point in his presentation. We need to debate the matter, and probably to amend the Bill.

It was rightly said time and again in this debate that digital broadcasting will present many tremendously exciting and as yet unknown opportunities. But it will bring those advantages to us as a community across a wide and diverse range only if this Bill is changed to provide the framework to ensure that.

So far, terrestrial television has been universally available. That does not mean that I am speaking against pay-for television, be it pay-to-view, subscription or single-drop charge for videos. It does not mean that we oppose those. It means that this Bill needs to end in an Act that will ensure that the high standards of quality and access, and the central role that broadcasting has come to play in our lives in Britain, remain in the developments that take place in the future.

9.23 p.m.

Lord Inglewood: My Lords, noble Lords who attended last week's debate on the BBC Charter and Agreement will know the breadth and range of expertise that this House is able to bring to bear on important issues. The debate this evening has confirmed that. I am sure that all who took part and listened will have seen the important role of this House underscored by our discussion. Inevitably there have been differences of opinion and emphasis. That is a reflection of the healthy plurality that this Bill seeks to achieve.

The Government will continue to listen to the arguments, as we have done throughout the Bill's preparation. The much greater scope offered to existing broadcasters on digital TV, the revised arrangements for digital Channel 4 in Wales, the removal of the two-licence limit from Channels 3 and 5, the greater freedom for local newspapers to acquire local radio licences and the provision giving the ITC new powers to protect regional programming are all examples of that. We are prepared to consider carefully the well-reasoned case for further change.

I began my speech this afternoon by setting out the four principles underlying the Bill: safeguarding and encouraging plurality and diversity; the maintenance of public service broadcasting in a time of rapid change; fostering competitiveness; and maintaining standards. Those will be the touchstone for our considerations. Striking the right balance is a difficult turn, but I believe that we have managed to do so.

Many noble Lords commented on specific aspects of our proposals. I shall now respond to some of the points raised and in so doing expand on some of the remarks I

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made in opening. I cannot respond to every point and to every noble Lord by name. There is quite simply not enough time. I shall respond in writing to those points that I fail to answer. If any noble Lords feel that I have failed to do that, I hope that they will be in touch with me. I also know that a number of points raised by noble Lords were raised in order to flag them up for later in the course of the Bill.

I propose to divide my comments into groups: those relating to the digital section of the Bill and those relating to ownership matters. In response to the noble Viscount, Lord Chandos, I can confirm that the provisions that we are discussing in the cross-media ownership parts of the Bill are subordinate to competition policy matters. I also confirm that we do not seek to exclude anyone from these rules. We merely intend to ensure that diversity of voice is guaranteed.

One of the concerns most frequently expressed was anxiety about quality. That was a point made by the noble Baroness, Lady Smith of Gilmorehill, in a distinguished maiden speech. For my part, I have not previously heard her speak, unlike, I imagine, many of those on the Benches opposite; but, of course, I know well and recognise the very distinguished contribution to public life made by her husband. Having heard the noble Baroness, I know that she will, in her own right, make a major contribution to your Lordships' House. From these Benches I congratulate her on a splendid speech and welcome her to this House. We look forward to further contributions from her. Finally, speaking as I do from the Dispatch Box at the Government Front Bench, I apologise for the noises-over during her speech, but I have always preferred a song with an accompaniment because it sounds so much better.

When thinking about quality, it is important to be clear that it is an essential element of our proposals that the existing public service broadcasters--I apologise to the noble Lord, Lord Chalfont, for using those words, but I use them, as I did in my opening remarks, in a strict and wide sense--should transfer to digital. That has two consequences. First, the quality criteria that define those channels' standards will come with them. Secondly, access to them will, we trust, be widely available because they will continue to be free to air. Our proposals for granting multiplex licences include measures to encourage take-up of necessary new equipment.

As I explained, the offer of guarantees to existing broadcasters, all of whom have particular quality requirements placed upon them, will ensure that public service programming of high quality will continue. But in any case the viewing public will not choose to watch rubbish. In order to ensure commercial viability, broadcasters will need to produce programmes of the appropriate quality. I do not therefore see the need to extend quality thresholds to the new programme services which will come on stream. They will be regulated in much the same way as existing cable and satellite channels--subject, that is, to the scrutiny and oversight of the ITC exercising its statutory functions.

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With digital transmission there is not the extreme scarcity of channels which justified the specific arrangements under the existing analogue system. However, since the number of digital terrestrial channels will still be limited, we want to ensure that the increased number of channels increases diversity of choice for viewers. That is why the variety of programme services proposed is one of the criteria against which the ITC will be required to consider applications for multiplex licences.

Once licences are granted, multiplex providers and broadcasters will need to adhere to the proposals included in the multiplex providers' application, especially with regard to the nature of the programme services offered. There will be financial penalties and possible revocation of licence for failure to comply with those requirements. In addition, the ITC's general duty set down in the 1990 Act to ensure the provision of high quality services across television as a whole will apply to digital as it does to analogue.

A number of your Lordships, including the noble Lords, Lord Donoughue and Lord Thomson, raised the question of conditional access, to which point the noble Baroness, Lady Dean, returned in her concluding remarks. That, of course, is crucial to the availability and accessibility of the new broadcasting systems. As I mentioned in opening, we published a consultation document on the regulation of conditional access services for digital television. I am grateful to the noble Baroness for her remarks. I had hoped and intended that she and her colleagues on the Liberal Benches would have received the document. My plans went awry; I do not know whether I am to blame, but I am certainly responsible.

As I said in my opening speech, we are determined that providers of conditional access services should not be able to abuse their position as gatekeepers. That is why the Government supported the European Community Television Standards Directive and that is why, as I mentioned, we published a paper outlining our proposals under the Telecommunications Act 1984. That will ensure across all types of digital television that broadcasters, multiplex providers and, most important of all, viewers are treated fairly by conditional access providers and by those offering subscription management services.

The noble Lord, Lord Dubs, raised the question of the cost of the various pieces of equipment that may be involved in the digital revolution.

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