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Baroness O'Cathain moved Amendment No. 4:

After Clause 5, insert the following new clause--

Local delivery service: conditions for granting future licences

(" .--(1) The Commission shall ensure that any licence granted after the coming into force of this section to a person for the provision of a local delivery service under section 73 of the 1990 Act contains conditions which require that person to include, by the reception and immediate re-transmission of the broadcasts, each of the relevant television broadcasting services for reception in the area for which the local delivery service licence is granted or for reception within the United Kingdom as a whole.
(2) For the purposes of this section "relevant television broadcasting services" means
(a) the television broadcasting services provided by the BBC which are funded from the licence fee; and
(b) the Channel 3 service, the Channel 4 service and, in Wales, the S4C service.

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(3) The Secretary of State may, after consultation with the appropriate regulatory authority, by order make such transitional arrangements for existing local delivery services in respect of the requirement in subsection (1) above as he considers appropriate.
(4) In exercising the power in subsection (3) the Secretary of State shall have regard to whether or not the local delivery service is delivered by analogue or digital means.
(5) The copyright in any broadcast is not infringed by reason only of the compliance by any person providing a local delivery service with the requirements of this section or any regulations made under it and it shall not be an infringement of copyright for any other person who is statutorily obliged to provide a relevant television broadcasting service as described in subsection (2) to broadcast those services whether encrypted or not.").

The noble Baroness said: My Lords, in this amendment I return again to an issue of great significance for our public service broadcasters as we enter the new age of digital broadcasting. My noble friend the Minister has progressively recognised, as the weeks have passed, that protecting quality public service broadcasting is fundamental to guaranteeing that the digital opportunities created by the Bill are not frittered away on disappointing and low-level programming which could dominate a multi-channel future.

As we know, in Britain we have a uniquely successful broadcasting system. Viewers have the option to see programmes such as "Pride and Prejudice", "People's Century", "The House", "Inspector Morse" and "Correspondent" on BBC2, bringing exceptional current affairs to TV as well as radio and an endless host of other entertainments, arts and educational programmes which the public relish and which, by and large, reflect our greatly valued culture.

Just last week the nation was united in common grief following the horrific events in Dunblane. We rely on our public service broadcasters to express our common anguish as much as our common joy. Our commemorations of VE Day and VJ Day are still very much in our minds. But all that comes with a price: the availability of quality public service broadcasting to all--I stress "to all"--supported by a licence fee which allows unique investment in programmes of outstanding quality. That investment depends on universal reach and availability. That is the nub of the amendment.

The amendment relates to "must carry". "Must carry" regulations are essential to protect viewers who pay a licence fee for television services and so that they can continue to receive those services which they value and want. Increasingly, viewers may choose to access their television services from cable providers. Indeed, industry predictions suggest that something like 40 per cent. of all homes will be linked to cable by 2005. The cable companies currently carry mainstream terrestrial public service broadcasting services; namely, BBC1, BBC2, ITV, Channel 4 and S4C, where relevant. It is a good deal. Cable subscribers want those services and the cable providers know that viewers' access to mainstream services is an essential component for securing subscriptions--the carrot, in effect, to encourage investment in what the cable providers are offering.

However, there is no requirement for that situation to continue and with an increased number of digital cable services, each pressing providers for priority space on

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the cable networks, commercial considerations could and will increasingly threaten the position of existing mainstream services once a significant number of the population have selected cable as their sole means of receiving television.

Let us face it: people do not like roof-top aerials. I always call them an "aesthetic nightmare". Increasingly, not just in flats but on new housing estates, cable is seen as the delivery system not only for television and radio, but also for phone calls, with interactive shopping potential, and games. If there is no requirement to carry any public service broadcasting, the public could find that the services for which they pay through the licence fee are not easily available to them. Amendment No. 4 seeks to correct that anomaly.

It is a commonsense amendment, which takes account of the realities of how commercial pressures could threaten public service channels. The regulatory authorities could, of course, challenge the cable operators if there were complaints from viewers denied access to the mainstream services of BBC1, BBC2, ITV, Channel 4 and S4C, but viewers are unlikely to be happy with either the hassle or the delay that such a challenge would involve. Resolving the situation now secures viewer access well into the digital future.

The Government's response to date has not been wholly satisfactory, despite the fact that my noble friend the Minister has been more than willing to listen to my advocacy. However, the Government have not given the cable industry the guarantee that it will be able to carry new public service channels without charge, nor have they given the viewers the guarantee that they will always be able to receive public service channels on cable systems.

Consumers cannot rely on the Government's argument on Report that:

    "any such case of a monopoly franchisee abusing its dominant position to deprive customers of services they want to receive ... having attracted custom on the basis that it would offer those services, would swiftly attract the attention of the fair trading authorities".--[Official Report, 5/3/96; col. 203.]
Although welcome in principle, that statement is not correct in practice. The terms of a typical cable contract state that the cable company is able to change the services it offers to the consumer. Indeed, on two occasions a satellite company changed the terms of my contract, reducing the service but not the price.

It is possible that a large number of viewers might sign on to cable knowing that the BBC is available. Eventually that analogue terrestrial will be switched off and if the BBC, ITV, Channel 4 or S4C are withdrawn viewers will have no other way of obtaining those services.

I believe that viewers will always want to watch public service channels. The question is whether cable companies will always want their viewers to be able to do so. The greater popularity of a public service channel could be seen by some cable service operators as a threat to the greater profitability of pay channels, particularly if those cable operators are in turn owned by pay-TV companies.

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Nor is it true that the amendment would be unnecessary regulation. At present in negotiations between public service broadcasters and cable companies one party's right to contract is regulated but the other's is not. I stress that the BBC cannot refuse to provide its service to cable companies but cable companies can refuse to carry the BBC services. There is already regulation on carriage of public service channels on cable. All the amendment will do is to ensure that that regulation is fair and even-handed.

Perhaps I may explain briefly what the amendment does. The aim of the amendment is to guarantee viewers access to public service channels in the digital age by ensuring that cable companies must carry public service channels. There are at present two types of cable licence; those granted under the Cable and Broadcasting Act 1984 and those granted under the Broadcasting Act 1990. As I stated previously, holders of 1984 licences had to carry the BBC's publicly funded services and the ITV and Channel 4 services, but the 1990 Act removed that obligation. Eventually, all cable franchisees will have to apply for a 1990 Act licence; in other words, all cable franchisees could stop distributing the public service channels, even those which currently have a licence under the 1984 Act.

The amendment would extend the "must carry" obligation to the 1990 Act licences, ensuring that all cable companies carry the publicly funded services and public service broadcasting. Of course, there is a difference. In return for that "must carry" obligation, the cable companies get "free carry". The Copyright, Design and Patents Act 1988 gives the cable companies an exemption from copyright law when retransmitting public service channels which are neither encrypted nor broadcast by satellite. With digital broadcasting, encryption would be more common.

The amendment as worded would ensure that the exemption would not apply to many future public service channels, thereby eliminating the fear that, if the amendment were accepted, public service broadcasting could overload the systems. The response of the Cable Communications Association to the White Paper on digital broadcasting specifically requested that the Copyright, Design and Patents Act should be amended to allow the free carriage of new digital public service channels whether or not they are encrypted. Subsection (5) of the amendment grants the cable companies an exemption from copyright when carrying out their "must carry" obligations.

Your Lordships will have noticed that although the amendment deals with local delivery services, which would encompass both cable and satellite, I have in the main referred to cable. Under conditional access it seems that satellite would be covered; but if it is not, I would wish it to be covered. I must also ask why, if satellite is covered, cable is not covered.

In conclusion, the provisions in the amendment, which carry support from all sides of the House, are fair and just and are a simple guarantee that, in the uncertain future of digital broadcasting, we can be sure that our quality public service channels are available to all

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without discrimination. Failure to bring this measure into the Bill could undermine the entire concept of a universal licence fee and cut away the benchmark of quality that we have become used to as the standard-bearer in world broadcasting. I beg to move.

4.45 p.m.

Lord Thomson of Monifieth: My Lords, we on these Benches strongly support the amendment so clearly moved by the noble Baroness. She has dealt fully with the arguments and I have nothing to add beyond emphasising the fact that probably this is the last major broadcasting Bill before the turn of the century. It will take us into the digital age, as it is meant to. While it is now possible to rely on the self-interest of cable operators to carry the public service channels, once we get into pay-to-view television there may well be situations in which the companies decide that it is in their financial interest to go for those rather than carrying the public service channels. It is important to return to the provision of the 1984 Act in order to create certainty that the cable operators have an obligation to carry the public service channels.

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