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Lord Brooke of Sutton Mandeville: I echo what has been said by the noble Lord, Lord Gordon. When I was in the private sector, I recall a dispute between our world-wide auditors and our German subsidiary. It was perfectly clear that there had been a total breakdown in communication between them. I

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intervened personally because it was obvious that, while intelligent people were corresponding on both sides, in fact they were paying no attention to the letters they were receiving from the other side. That appears very much on a par with what has been said by the noble Lord, Lord Gordon, about the misrepresentation of the parties concerned.

This is an important issue. While I do not seek remotely to put myself in the position of Ofcom in regulating the dispute in Germany many years ago, I know that it is important that the power should exist so that good sense can prevail.

Lord Lipsey: We should not think that Ministers are granted a monopoly on opposing amendments. I am afraid that I oppose this amendment, although I do not oppose some of those appearing later on the Marshalled List such as Amendment No. 250A whereby the BBC seeks to address the same problem.

We have discussed the issue before. My noble friend Lord Gordon and the noble Lord, Lord Brooke, have described the problem well. We have here the BBC trying to get Sky to provide it with a lot for a little, and Sky trying to get a lot for providing a little; it is a stand-off situation. We experienced much the same last year when the BBC was trying to persuade Sky to carry all its services for practically nothing. Of course the correct thing ultimately took place. After looking at all the facts, Oftel gave a considered ruling and determined what the appropriate price would be—and that was the end of it.

In this case, there are two substantial matters of fact on which the parties disagree. The first is whether the software upgrade is as simple as the BBC insists. Or is it not? I do not know whether the noble Baroness, Lady Howe, and the noble Lord, Lord Avebury, have examined the software in detail and are able to answer that question for the Committee. Personally, I have nothing like the technical knowledge to do so. Secondly, what kind of pricing regime would be fair? Simply to say "cost/plus" is not sufficient. Is the BBC to borrow Sky's technicians and decide what is the appropriate cost for such a technician and then decide what is the appropriate plus? Is it to be decided by Parliament without examination by means of this kind of amendment? That is not the approach we need.

What has to take place and what is the sensible approach is for the two parties to enter into negotiations. If they cannot agree, then it will go to Ofcom to resolve. Indeed, some of the later amendments will make clear the kind of conditions under which Ofcom should resolve such a dispute. Furthermore, let us not doubt that Ofcom has the power to resolve it. It would be wrong for this Committee to reach a technical decision on the technology or a decision on the appropriate pricing regime by supporting this amendment. I hope that we shall find a way of helping to resolve the situation, but this amendment ain't it.

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7 p.m.

Viscount Astor: Existing legislation already gives guarantees on both conditional access and EPGs that there should be fair, reasonable and non-discriminatory terms. The regulators already have that power and Ofcom will have it as well. I hope the Minister will be able to confirm that. I believe that the regulator will have the tools required, as it were, if it is necessary to intervene in this dispute.

While I am in one sense sympathetic to the BBC case, I cannot agree with this amendment. However, later amendments concerning due prominence, mentioned by the noble Lord, Lord Lipsey, may have greater validity. Have the Government looked at the arguments on either side? Most of us do not have the technical knowledge to give us any idea of whether the satellite footprint of the proposal will cover Ireland and, therefore, affect the RTE service, preventing the BBC, if it broadcasts in the clear, from having slots one or two. Have the Government asked the ITC for its advice?

In the same way, as the noble Lord, Lord Lipsey, says, I do not think that any of us have any idea about software upgrades. All I know is that, usually, when someone upgrades my software, it never works as well afterwards—definitely not for the first month. It is wildly optimistic of the BBC to say that it knows about someone else's software and that it can be upgraded easily. The important point is that the regulator seems to have the necessary power. I question whether we should insert in the Bill such an amendment, which seems to go too far.

Lord McNally: I do not share the complacency of either the noble Lord, Lord Lipsey, or the noble Viscount, Lord Astor, about the present powers of the regulator and the powers that the Bill gives Ofcom. I see real problems. It is difficult to tell whether the amendment addresses it properly, as we are only at Committee stage. By the time the Bill is enacted, I hope that we have proper powers. In my experience over the years, when great corporations have the choice between trying to score short-term advantages off one another or acting in the public interest, all too often they go for short-term, petty victories. In Tony Ball and Greg Dyke we are not dealing with men who have gone through the Lucie Clayton charm school. I fear that we are in for some macho corporate mud-wrestling between the BBC and Sky. But it will be the consumer who ends up dirty and dishevelled.

Of course we do not know all the technology involved. The Government and Ofcom need to obtain proper advice. As the noble Lord, Lord Gordon, said, I have been heavily lobbied by both Sky and the BBC. I have told both broadcasters that if they keep on playing for a 100 per cent victory they will irritate Parliament and end up with legislation that they do not like at all. They will deserve what they get. The noble Viscount, Lord Astor, says that we should let the broadcasters get on with negotiating, and that we have provision in the Bill. That is a recipe for chaos and

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dissatisfied consumers five years down the road. We may not have got it perfect this time, but we are only in Committee stage—

Viscount Astor: Does the noble Lord agree that the current regulators and Ofcom have the powers to regulate both conditional access and EPG services?

Lord McNally: Having looked at the industry over the past few years, one of my concerns is just how long. It is not a question of the broad powers written into the Bill, but how effective the regulation will be. I am attracted by the fact that the amendment deals with a specific problem that needs to be addressed. I do not want it to be caught up with some general powers that the lawyers will take away year after year. When it is claimed that that cannot happen, I say that they have already done it. Part of my concern is that previous practice in this area involving disputes has involved long "lawyerfests" rather than quick resolution in favour of the consumer; and that is what we should be trying to achieve in this Bill.

Lord Lipsey: The noble Lord says with great wisdom that we should not go 100 per cent BBC or 100 per cent Sky. Why, then, is he putting his weight behind an amendment that is, in drafting and content, 100 per cent BBC? Why does he not suggest an amendment that balances the two?

Lord McNally: I did not say whether I would go 100 per cent BBC. I have not come to a decision yet. What I am saying and what I have made clear to Sky is that, because of a chapter of historical accidents, it has ended up with a monopoly. That does not mean that Sky should be on the gravy train, able to milk public broadcasters for whatever it can get for as long as it can. If it tries to do that, Parliament will intervene. That is the friendly warning that I gave Sky and to Sky friends such as the noble Lord, Lord Lipsey. I see that the noble Lord is unprovokable—

Lord Lipsey: The noble Lord knows me better than that. I am neither on Sky's side nor the BBC's side. I said earlier that I supported some of the later BBC amendments, as does the noble Viscount, Lord Astor. It is the noble Lord, Lord McNally, who is on one side. This is the BBC's amendment and gives the BBC 100 per cent of what it wants, which is why it would be so unwise to accept it.

Lord McNally: I shall finish by reminding the noble Lord, Lord Lipsey, of some advice I received from Ian Mikardo MP many years ago. He said, "Tom, if you stand in the middle of the road, you get hit by the traffic going both ways".

Baroness O'Cathain: I intervene briefly in the debate, although I have a terrible sense of deja-vu, having been knocked about on the issue in debates on the 1996 Broadcasting Bill.

In all our discussions about the BBC and Sky and how the two are locking horns, we should not forget about the customer or consumer. I support the

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amendment because I want to make sure that viewers have easy access to public service channels. We should not forget that we are talking about public service broadcasting, and consumers should have easy access to it. I am sure that we will have a long debate on this again on Report.

Baroness Buscombe: It would be remiss of me not to say something on behalf on Her Majesty's Loyal Opposition on such an emotive subject.

Noble Lords in all parts of the Committee have made clear how tough the situation is. We have all been strenuously lobbied by both sides. Some of us were fortunate enough to attend a debate on these matters chaired by the noble Baroness, Lady Howe of Idlicote. As a result of that debate, having heard all sides of the arguments made by the BBC, Sky and others from the platform, I became convinced that the issue should not be subject to primary legislation.

That said, I agree with Carolyn Fairbairn of the BBC that, if we continue to believe in the value of public service broadcasting, we must ensure that public service broadcasting channels can be easily found. That is not the subject of the amendment; it is a subject for a later debate. The pricing and technological issues are difficult, and most of us would agree that we do not necessarily understand them entirely, having been given different stories by the BBC and Sky. Surely, however, the reason why the Bill is before us is to set up the regulator, Ofcom, and to give it powers to deal with such issues. Those issues will arise, and they are important, but we should not try to confront them in primary legislation.

I must defend the noble Lord, Lord Lipsey, and my noble friend Lord Astor. Their contributions did not show complacency about what the Bill can provide for or the powers that will be given to Ofcom to deal with such issues. We are all waiting to hear the Government's response on the issue.

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