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Baroness Dean of Thornton-le-Fylde: My Lords, I thank the Minister for giving the background to the department's thinking on the issue. It is the first time that I have heard that explanation. It has left me with a number of questions. Channel 5 is a public service broadcaster. Teletext Limited put in its application for coverage on Channels 3 and 4 services against the background which prevailed at the time. It is now confronted with a new channel going on air next year in respect of which the teletext provision could cherry-pick the services that it provides. That is unfair competition and does not allow the kind of level playing field that one would expect in the commercial field.

I heard what the Minister said and, clearly, I need to think about it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 174 to 176 not moved.]

6.30 p.m.

Baroness Smith of Gilmorehill moved Amendment No. 177:

After Clause 70, insert the following new clause--

Award of national sound broadcasting licences

("After section 100(1) of the 1990 Act insert--
"(1A) For an existing licensee, the Authority shall not proceed to award a licence for a further term to that applicant even if he submitted the highest bid if in the opinion of the Authority it appears to them that any of the following apply--
(a) that the existing service has not proved to be of broad appeal, having failed to provide a diversity of programming calculated to appeal to a variety of tastes and interests: or
(b) that the level and nature of upheld complaints about programming or advertising or both exceeds acceptable levels for the licence currently in force; or
(c) that the character of the licensed service, as proposed by the licence holder when making his application for the licence currently in force has not been maintained throughout the period for which the licence has been in force.
(1B) For an existing or a new licensee, the Authority shall not proceed to award a licence to the applicant who submitted the highest cash bid if in the opinion of the Authority any of the following apply--
(a) that he would not be able to maintain the proposed service to a satisfactory standard throughout the period for which the licence would be in force; or

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(b) that there is not sufficient evidence that the format proposed would continue to be of broad appeal throughout the period for which the new licence would be in force; or
(c) that the applicant's proposals submitted under section 98(3) do not consist of a diversity of programmes calculated to appeal to a variety of tastes and interests".").

The noble Baroness said: My Lords, this remains an important amendment, even though its precise wording may now need changing in view of Amendment No. 170, which was put down after Amendment No. 177.

Our concern is simple and it reflects views expressed in all parts of the House throughout the debates on the Broadcasting Bill. It is the need to introduce a quality-of-performance yardstick in the licensing of national commercial radio stations rather than merely relying upon the highest cash bid and the operation of the market.

Perhaps I may speak first about the general principle which the amendment addresses. I will then deal with its importance for the renewal of analogue licences granted by the earlier amendment to those companies committing to the digital option. At present, commercial radio licences must be awarded by the Radio Authority to the highest cash bidder unless there are exceptional circumstances. That carries great risks, as the early months of Talk Radio UK illustrate only too well. Had it not been for the firm actions taken by the Radio Authority and the response by the changed owners of that radio licence, the effect of the 1990 legislation would have been to give a national licence to an unacceptable radio service.

As things stand now, when national licences come up for rebid the same difficulties could arise. Furthermore, there is no way in which to take into account the past performance of an existing licensee which is seeking to win back its licence. It is possible to imagine a situation in which there is a national commercial radio licensee whose performance is very much less than satisfactory, although not bad enough for a licence to be revoked. Despite its unsatisfactory performance, if it reapplies for its licence and is the highest cash bidder it will get the licence back. I cannot believe that the Government would be content for such a situation to exist without safeguards.

This amendment provides those safeguards. It would establish a performance threshold which the highest bidder would have to cross before the Radio Authority could award a licence to it. The amendment is drawn to allow such a threshold to be applied both to existing bidders reapplying for their licences and to new applicants. It is an eminently sensible safety net and I hope that the Government can see their way to adopting it or an equivalent provision.

We have now seen the Government's plans to allow national commercial radio licensees to enjoy an automatic extension of their licences if they take up the digital option. But the performance issue still remains. Would the Government really think it in the public interest that an existing licensee should enjoy that automatic extension even if its broadcasts are

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unsatisfactory, there is a high level of complaint against it or it fails to broadcast the format for which the licence was originally granted?

Of course, sanctions remain to the Radio Authority to deal with individual aspects of performance, but those are ongoing and do not deal with what could be an obvious injustice at the time of licence renewal. The performance thresholds that we are proposing provide an important safeguard in that respect too. I hope the Minister will see the value of adding such a provision to the new Section 103A. I beg to move.

Lord Inglewood: My Lords, the noble Baroness, Lady Smith, has fairly and clearly explained the purpose of her amendment. We do not accept the need for the amendment, which cuts across both the workings of the 1990 Act and the Government's own provision for the renewal of independent national radio licences contained in the Government's Amendment No. 170, which we have already passed.

In my confusion with my papers I did not speak to that amendment and, trustingly, your Lordships approved it. It is an important amendment and I hope that your Lordships will permit me to explain a little about it in order to put on the record what it deals with.

The Government announced on publication of the Bill that we would be bringing forward an amendment to provide for the existing independent national radio stations to be given the chance to renew their analogue licences, provided that they took up their guaranteed places on digital. I apologise to your Lordships that it was not possible to bring it forward sooner. The new clause in Amendment No. 170 is based upon Section 20 of the 1990 Act, which permits Channel 3 television companies to renew their licences, but there are three important differences to which I would draw your Lordships' attention. Before doing so I should like to remind your Lordships of the rationale for this provision.

Digital broadcasting will be a considerable and risky venture for the three independent national radio stations. We believe that their involvement is important to the overall success of DAB, and it is of course vital that their established services be available on DAB if, in the future, we are to be able to reclaim the analogue spectrum. That is why we have offered the guarantees. But it is clear that the return from investment in DAB will not be realised overnight. Providing a one-off option for renewal will give the INR stations greater security from which to mount their venture into DAB.

I return to the three differences from the arrangements for television which I mentioned earlier. First, the new clause will permit renewal on one occasion only. We have no desire to provide the incumbent operators with licences in perpetuity. There is little frequency spectrum available for such services--even digital techniques will provide an increase only from three to six independent national radio services. So the spectrum is a valuable resource and there is always competition for its use. And new radio stations can begin operation more easily than new television services, where, for example, the start-up costs are considerably higher.

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The second difference is that application for renewal may be made up to three years before the analogue licence is due to expire rather than four years, as provided for Channel 3. This is because radio licences run for eight years and not 10.

Thirdly, the Channel 3 television licensees need to meet performance requirements to qualify for renewal of their licences. This criterion will not apply to the independent national radio stations since the authority is not currently required to monitor performance and it would be inappropriate to add this further layer of regulation in a deregulatory Bill. Also, the licences will roll over only once, whereas Channel 3 licences can be rolled forward in perpetuity. That has a direct bearing on the amendment that we are considering.

I would also like to reassure your Lordships that the requirements in the clause relating to a starting date for digital broadcasting are not an attempt to rush the radio operators into precipitous action or otherwise cause them difficulty. The intention is to avoid any applicants obtaining renewal of their analogue licences by false pretences. But there may be situations beyond their control in which, for instance, the multiplex provider may be experiencing technical difficulty in beginning his service or it simply may not have been possible to finalise all of the arrangements between the broadcaster and the multiplex provider by the time the renewal must be determined. The new clause accordingly requires the radio station to make all reasonable endeavours to begin a digital service and to agree a date with the authority when broadcasting will start.

We want to encourage the independent national radio stations to invest in digital audio broadcasting and believe that they will find the offer of an eight-year extension to their analogue licences, subject to their taking up their guaranteed places on the digital multiplex, to be a real incentive.

Before concluding these remarks about independent national radio licence renewal, I ought to offer an apology to your Lordships that the clauses relating to independent local radio are not yet ready for consideration. However, as I have indicated previously during the passage of the Bill, we will also be making provision for independent local radio renewals. In addition, it is the intention to bring forward an amendment to clarify the circumstances in which the Radio Authority need not re-advertise an expiring independent local radio licence under Section 104(5) of the 1990 Act. That will provide for the authority to invite expressions of interest in an expiring independent local radio licence and for such parties to demonstrate their firm interest with a financial bond. Those amendments will be introduced at Third Reading.

As I have already mentioned, the Radio Authority is not required under the 1990 Act to monitor closely the performance of the independent national radio stations but reacts to complaints and concerns expressed to it by members of the public or other interested parties. Amendment No. 177 seeks to lay a heavier burden on the authority, which, in turn, would also add to the Radio Authority's regulatory costs. Since the authority is funded by its licensees, this would increase the

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financial burden on the independent national stations at a time when we hope they will be investing in digital technology.

I have referred on a number of occasions during the passage of this Bill to the Government's commitment, where appropriate, to a light regulatory touch. The Radio Authority does an excellent job and is a fine example of that light touch in practice. With only 32 staff, it polices the independent sector most effectively, paying proper attention to the needs of the public at both a local and national level.

I understand that the amendment is intended to protect listeners, ensuring the maintenance of the quality and diversity of programme material broadcast by the independent national radio stations through the licensing system. This is a worthy objective and is an aspiration which the Government share. However, this amendment proceeds by introducing additional subjective tests for the Radio Authority to carry out via licensing. Such a process cuts across the well proven competitive tender procedure, which provides a more open and objective means of allocating licences, as part of a system which is committed to delivering a range of programmes of different varieties and which has served the public well.

This amendment could also in the medium term harm the move to digital audio broadcasting by adding a further burden to those very national radio licensees who will have their analogue licences rolled for a further period of eight years only if they take up their guaranteed digital place. The proposals accepted by your Lordships in our amendment earlier this afternoon, which I have just described, will enable the current licensees to continue to provide their services on analogue for which they have a licence while at the same time it offers them the incentive to invest in digital.

I am sure that the noble Baroness supports the movement towards digital broadcasting and would agree that it would be a great mistake at this point to make a provision which might risk slowing down the impetus towards that. I wish also to add that we would regard much of the new subsection (1B) in the amendment as an unnecessary duplication of the provisions already contained in Section 99 of the 1990 Act, whereby the Radio Authority in considering a licence application must have regard to diversity and the ability to maintain a service throughout the period of the licence.

I crave forgiveness for having gone on so long but I hope that I have explained our position on this to your Lordships and the noble Baroness.

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