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Lord Thomson of Monifieth: The noble Viscount puts a reasoned and reasonable case to the Minister on the question of conditional access in relation to analogue broadcasts. I await with optimism the Minister's response to the arguments.

I spoke at length on the general arguments in favour of conditional access to both digital and analogue broadcasts earlier in the Committee stage and I shall not repeat those arguments. However, I shall say a word about one matter the noble Viscount mentioned, namely, the position of the Director General of Telecommunications under the amendment as against the position of the ITC.

There is a problem which would still need to be examined if the Minister were prepared to accept the general thrust of the noble Viscount's amendment. It applies in particular to subsection (9)(b) of the proposed Section 191A of the amendment. The subsection includes the phrase,

There is a real issue of conflicting responsibilities between the ITC, which is the regulator of programme standards in this country, and the Director General of Telecommunications.

The noble Viscount raises the general issue of having a licensing system for analogue broadcasting. In Committee on 8th February, Hansard reports me as having said that I was "battered" by the Minister's refusal to do for analogue what he was ready to do for

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digital. The Minister would never use the verb "to batter" in his arguments. He is too courteous and reasonable. The word that I used was "baffled". I am bound to say that I shall remain baffled if he does not accede to the persuasive arguments put to him.

I am reinforced by a piece of evidence from the managing director of General Cable, who wrote to my noble friend Lord Ezra. Mr. Philippe Galteau said, and I quote him directly because I believe that it is relevant to the issue:

    "Experience has shown that BSkyB has been able to create a de facto monopoly, which it abuses, by developing a proprietary encryption and conditional access system, called Videocrypt.

    "Some 3 million Videocrypt decoders have been purchased by customers who can receive Direct to Home (DTH) satellite TV.

    "Programmers attracted by the UK market have to deal either with BSkyB on BSkyB's conditions or sell their services to cable operators, who presently gather 1 million TV customers.

    "This enables BSkyB to impose its conditions on both programmers and cable operators, and to customers ultimately. As an example, the price was increased by about 20% in October 1995, and customers have to buy the full basic package before they can access the pay channels of their choice, movies or sports".

I put that on the record as evidence that there is a problem to be dealt with.

I note that The Times reports--as the noble Viscount mentioned--that the OFT is investigating industry complaints that BSkyB is abusing its dominance of the pay TV market. I note the point that the noble Viscount made: that that investigation is almost bound to run for a longer period than the processes of the Bill in this House and another place. The argument for doing something about conditional access in relation to analogue is now very strong. The noble Viscount quoted the noble Lord, Lord Donoughue in saying that the system will last for another 10 or 15 years. It will last, I think, well into the next century. There is a real need to regulate now. Having had some opportunity to meditate on these matters since my earlier approach, I hope that the Minister will give us a favourable reply.

5 p.m.

Lord Donoughue: I believe--it is the view of this side in this House and in another place--that this is one of perhaps the three most important issues in the Bill. The issue will not go away for the Government; it will keep coming back unless the Minister feels able to do the sensible thing and move a little closer to our position.

It is absolutely crucial to regulate the control gateway--the black box decoding system. There are two aspects involved. First, the general need to fill what one might call the analogue gap until digital arrives; and, secondly, related to that issue, the more specific problem that Sky is both the black box controller and the programme provider. That gives scope for abuse which needs regulating now. The noble Lord, Lord Thomson, cited one example. We know that there are others.

That is the heart of our concern. It is a serious concern. There is a real problem. However, I am bewildered--I do not say that I am baffled as there are problems with that word--because the Government

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have provided us with an excellent solution for licensing digital which is attached to the Bill. We are all happy with the solution but it applies to the dim, distant and perhaps murky future. We do not ask the Government to make different provision. We ask them to make the same excellent provision for analogue now, when the real problems exist, that they have suggested for the future.

Having observed what an intelligent and flexible man the Minister is, I cannot believe that he is personally associated with this blind inflexibility to the suggestion of his noble friend his predecessor, who in his years in the job learned a great deal about the situation. That is why on this side we were happy to rally behind the noble Viscount although we did so less often when he was at the Dispatch Box.

I suspect that the Department of Industry is behind this aspect. It has all the "sniffy" waffle and lack of clarity that has characterised that department through history before the present Administration. I should like to give the Minister a little support, and a little nudge to strengthen him if he has to deal with those people. If so, all my sympathy is with him.

I shall not delay the Committee longer because we started the debate late and we have spoken on the matter previously. However, I believe that it is a most critical issue. There is a clear solution. The solution has been devised by the Government. All that is needed is for the Government to apply to analogue what they are doing for digital. I support totally what the noble Viscount, Lord Astor, suggested. As I said, the issue will not go away.

Lord Chalfont: I am sure that the Committee will agree with the description of the Minister. He has virtually acquired angelic status in the House since the Bill began. It is also true to say that we all realise that he is not entirely master in this context. However, the arguments that impressed me in favour of the amendment are those about the uncertainty of the development of a digital regime. Those have been well put. Digital will be expensive. It will suffer from the chicken-and-egg argument about whether the manufacturers will build the sets so that the broadcasters can broadcast to them or whether those people will delay the building of the sets until they see an effective broadcast system. That will lead to delay.

Other issues will lead to delay. We have only to consider what happened when the format of video cassettes changed, or when we moved from tapes to compact discs. Those technical changes take time. I am impressed by the argument that we do not know when the digital regime will be fully implemented. Therefore, as the noble Viscount, Lord Astor, and the noble Lord, Lord Donoughue, said, careful consideration must be given to what happens in the gap, so to speak. I hope very much that the Minister will persuade his right honourable friend and his colleagues that the matter needs to be considered seriously.

Viscount Caldecote: I regret having to speak against the amendment proposed by my noble friend Lord

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Astor, particularly since he has been extremely helpful and constructive in the discussions that some of us have had on other provisions in Part IV of the Bill.

While there may not be anything very bad or wrong about the amendment, there is no need for it. It is a good principle of legislation that one has the minimum of legislation. If we tried to pass laws that would cover all possible contingencies--all the nasty things that might happen in the future--we would be in an unhappy state.

Videocrypt was developed by BSkyB, which owns it. However, it has never refused any applicant who has asked to be allowed to use the system. Only 10 out of the 30 encrypted channels are owned by BSkyB. There is plenty of room for others. If a monopoly or unfair trading situation arose in the future, it could be dealt with by the legislation under the Monopolies and Mergers Commission and the Office of Fair Trading. There is nothing wrong with the amendment. It is just totally unnecessary and will produce more bureaucracy and red tape. It is also hardly in line with the Government's excellent policy of deregulation.

Lord Donoughue: Before the noble Viscount sits down, perhaps he will help me on one point. If the approach in the amendment is not necessary for the analogue system, why is it necessary for digital, as the Government propose? Will the noble Viscount assure the House that he will oppose the Government introducing it for digital?

Viscount Caldecote: I shall certainly not oppose that because it is in the future. As many noble Lords, including the noble Lord, Lord Chalfont, have said, a big new world has been brought about by digital technology. It is for the future and we need to be careful about it. The clauses dealing with it are fully justified because we are moving into an unknown area, with an enormous number of new channels available. In opposition to the amendment, we have experience of what has happened in the past few years. There has been no abuse and therefore the amendment is unnecessary.

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