Select Committee on European Union Written Evidence

Memorandum by the British Broadcasting Corporation (BBC)

  There is now widespread agreement that the convergence of telecoms, IT and broadcasting and the delivery of online services at increasing bandwidths has the capacity to revolutionise our economy and to provide substantial social and cultural benefits. The "global space" of information and transactions emanating from the US now represents a level of activity equal to that of the fifth largest economy in the world.

  We believe Europe faces two particular challenges:

    —  to develop its own new media sector to exploit the economic and learning potential of these new forms of communication; and

    —  to ensure the benefits are available to all within Member States and not just the better off and those likely to access new services through employment.

  Television has a key role to play in meeting this challenge. Digital TV, and receivers linked via a return path to online services, are likely to reach the 50 per cent to 60 per cent of the population in Europe unlikely to have access to PCs in the short to medium term. Televisions or set-top receivers are ubiquitous, relatively inexpensive and familiar. They offer a short cut to the e-society for the population at large.

  Public service broadcasters have a real opportunity to popularise new services at home and to take advantage of them abroad. The BBC's series, Computers Don't Bite and Webwise, reached 17 million people in the UK and a quarter of a million took up the opportunity to try out their skills in free sessions offered by local institutions in partnership with the BBC. The Net will develop as a global delivery mechanism for European content. Already BBC News online is building a worldwide presence likely to be equivalent in the new century to that of the World Service in the last.

  If television is to play this role in enabling Europe to meet the US challenge in new media, it is vital that we learn the lessons of past telecoms deregulation.

  Telecoms and the growth of the Internet have been characterised by any-to-any connectivity and high levels of interoperability. Digital TV is the only converging technology with neither. Platform operators are developing systems with incompatible computer operating systems, so that a digital satellite receiver will not operate fully with terrestrial services and vice versa. The costs are likely to be very great both for consumers and for effective competition. This must reduce penetration. Few people would buy a mobile phone that only worked with others on that particular network. As a result fewer interactive and e-commerce services will be delivered through the digital TV than might otherwise be the case. Consumers will be restricted in the services they can access and there is a real risk of the digital TV exacerbating, rather than overcoming, the information rich/information poor divide.

  Currently the single most successful digital TV based interactive service in the UK—Open—only offers access to a walled garden rather than the full Internet. So whereas the consumer with an Internet-connected PC can shop around for the best deal, those dependent on e-commerce through the TV set top box will have less choice and consequently pay higher prices than those who can afford a PC.

  It is understandable that large, vertically integrated distribution and content organisations prefer to limit, as far as possible, the services on their system to their own intellectual property. It is undoubtedly in their short-term commercial interest to do so. However, we believe it will not be in their interests in the medium term, since it will limit take-up of their services, and it is certainly not in the interests of the economy as a whole.

  As far as consumers are concerned, it is possible that they will subscribe to a particular platform (satellite or cable) only to find that they cannot access particular content (a range of TV and on-demand services) or download product (such as music) because it is produced by a different television company or recording studio.

  We believe that several policy solutions are required at both the national and the EU level to open up access to new platforms and services.

  1.  Effective rules are needed to ensure fair, reasonable and non-discriminatory access through new and existing digital gateways, both for traditional TV and for interactive and e-commerce services delivered to the TV.

    —  The EU 1999 Communications Review seems to be moving in this direction but it has made the obligation to grant fair third party access dependent on the market power of the gateway controller. We believe that anyone that controls a significant gateway should be required to grant fair, reasonable and non-discriminatory access.

  2.  Access guarantees are needed to ensure the universal availability of key public services. With guaranteed access, citizens will be certain that whichever digital system they use, they will be certain to have access to the information—which might include government online, public broadcasting and online tax returns—that their Member State judges to be essential to a well-informed society. Measures to achieve this might include:

    —  "Must carry" rules on cable systems.

    —  "Must access" rules on other major distribution systems and to memory in receivers where that forms a significant gateway.

    —  "Due prominence" rules to ensure that public service content and channels can be easily found on proprietary electronic programme guides.

  3.  Finally, regulatory measures will be required to promote interoperability between the networks and devices that will be used to access digital TV, e-commerce and interactive services. Achieving interoperability through imposing standards in a fast moving market would be inappropriate. However, interoperability can be achieved through declaration and licensing of those key standards, interfaces and authoring tools necessary to reach the end user. Proper payment for access to those licences will ensure that owners of intellectual property are properly rewarded and have a continuing incentive to innovate. This less intrusive approach to interoperability will only succeed if third parties are granted access to the essential information at the same time as the gateway owners' own services.

  This short note outlines what the BBC believes are first steps in ensuring Europe derives immediate benefits from the communications revolution and is not simply exploited by US based, vertically integrated, global operators.

  We would suggest, further, that the Commission should:

    —  explore how world class public service content is being disseminated via the web;

    —  conduct an audit of barriers to public/private partnerships in parallel with the Communications Review; and

    —  attach a high priority to facilitating the global businesses that Europe's public service broadcasters can build on the foundation of their national services.

  I hope this outline of our thinking in this area is useful to you. We would of course be very happy to give you any further information that you might find useful.

13 April 2000

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