Memorandum by Ofcom
The Office of Communications (Ofcom) submitted
an initial memorandum of evidence to the Select Committee and
gave oral evidence in April 2005. Following the extension of the
Committee's inquiry, Ofcom would now like to submit supplementary
evidence on two particular issues that fall within our remit;
broadcasting in the nations and regions and the BBC as commissioner
Ofcom embarked on its first statutory review
of public service broadcasting (PSB) in late 2003. We are charged
by the Communications Act with assessing the effectiveness of
the designated public service broadcasters (BBC, Channel 3, Channel
4, Five, S4C and Teletext), taken together, in delivering the
public service purposes set out in the Act. We are also charged
with reporting on how the quality of public service broadcasting
can be maintained and strengthened in future.
One of our main conclusions from the review
of public service broadcasting was that, as a society, we demand
a wider range of high quality UK content than would be provided
by the marketeven in a more effectively competitive environment.
We value trustworthy and independent news, programmes which increase
our knowledge of the world, and content which reflects the different
parts of the UK, and informs our cultural identity.
Ofcom believes the BBC, funded by the licence
fee model, should remain as the cornerstone of PSB, with a special
responsibility to invest in distinctive content which strives
always to meet public service purposes and characteristics. However,
we also believe that the BBC should strive to ensure that all
its programmes, not just its services, reflect the purposes and
characteristics of PSB to some degree.
One of the most challenging issues for the future
is securing the effective provision of PSB in the Nations, regions
and localities of the UK. For the commercial PSBs, this programming
has a high cost of provision and is most at risk as competition
increases. Viewers tell us that their priorities are regional
news and current affairs, delivered by more than one provider,
although many viewers would like the news to be more locally relevant
than that currently provided. Viewers also like to see their own
nation or region reflected on network television. The distinctive
circumstances of the devolved Nations mean that meeting the needs
of audiences in those Nations requires both more, and a greater
range of programming specifically for each nation than is the
case in the English Regions. We therefore believe an increasingly
important role for the BBC in the provision of news and a range
of other programming for both the Nations, and the English Regions.
The BBC's role in the Nations and Regions
Ofcom set out its recommendations for the BBC's
role in broadcasting in the Nations and Regions in Phases 2 and
3 of its Review of Public Service Television Broadcasting, published
in September 2004 and February 2005 respectively.
In the context of the inevitable decline of
ITV1's regional service as switchover approaches, we proposed
that the BBC should adopt an enhanced role in meeting the needs
of the UK's nations and regions (in line with its own proposals),
particularly in the English regions, where its non-news output
has historically been more limited than in the devolved Nations.
This should not involve the BBC providing a direct replacement
of programming no longer available on ITV1. Nonetheless Ofcom
considered that the BBC should be asked to develop new proposals
of its own, which go beyond the use of local new media, to help
provide more well-funded television programming for the English
Regions in addition to its ongoing activity in the Nations. In
adopting any new regional commitments, we suggested the BBC should
undertake to support a plurality of regional producers.
We noted in our final Statement on Programming
for the Nations and Regions, published in June 2005, that the
BBC agrees that it will need to take the lead in providing programming
for the Nations and English regions, as ITV1's presence and obligations
are reduced. We welcomed its commitment to developing plans for
further regional output in England including current affairs,
targeted regional programmes and regional inserts in network output.
So far, the BBC's development of its English regional services
has been mainly in the form of programming associated with major
network projects, such as British Isles: A Natural History. A
more extensive response could be looked for.
Production outside the M25
Most UK network production still comes from
companies based in London, although all five main channels have
some level of out-of-London production quota. In 2003, 33 per
cent of network originations across the five main channels combined
came from outside the M25, accounting for 37 per cent of total
Viewers tell us that they value representation
of their Nation or Region on network TV, although audiences in
the Nations are sometimes concerned about misrepresentation, and
some feel that their local accent or culture is often portrayed
in an atypical or awkward way on network TV.
The BBC has an important role to play in reflecting
the Nations and Regions of the UK on its networks. In the early
1990s, the BBC set itself a target to increase the proportion
of network programming made outside London from a fifth to broadly
a third. In 2003, 31 per cent of its produced hours were made
outside London, accounting for 33 per cent of its network production
spend. The Governors' Review of Services for 2003-04 stated their
particular concern that not enough material from the BBC Nations
is shown on network television.
We intend to consult with the BBC about increasing
its out-of-London production quota, as part of the follow-up to
Charter Review. We believe it is reasonable to expect the BBC
over time to achieve a similar position to ITV150 per cent
of network production made outside London, measured by both volume
and spend, across BBC One, BBC Two and its digital services.
We expect that the changes announced by the
BBC in December 2004, which proposed a significant move of production
and commissioning responsibility to Manchester, would represent
a significant contribution towards this increase, and welcome
this proposal. However, further steps may be worth considering,
in particular increasing the BBC's representation of the Nations
and Regions in its network drama, entertainment and factual output.
The BBC might also be able to complete the Manchester relocation
programme faster than currently envisaged to help meet our proposed
Ofcom is the licensing authority for existing
local TV services, broadcasting on analogue to particular areas
around the UK. There are currently 11 services on air.
Looking to the future, we believe digital local
services have the potential to create significant new value for
citizens and consumers and be a source of innovation in the UK
broadcasting sector. In the PSB Review we identified digital local
TV as a potentially important element of the future PSB mix, serving
audience needs that are not fully met by the current blend of
national and regional broadcasting.
However we recognise that the economic viability
of local services has not yet been established and that audience
demand for them has not been adequately assessed. We are currently
carrying out further work on the prospects for digital local content
services as part of our follow-up to the PSB Review.
We welcome the BBC's interest in "ultra-local"
television news services for 50-60 cities and counties across
the UK, initially on broadband (and satellite in its West Midlands
pilot), and its offer to share its evaluation data with Ofcom
to contribute to our own ongoing work in this area.
We note that "ultra-local" is something
of a misnomer for the BBC's plans, given that the initial intention
is to base coverage areas on existing local radio service areas.
In many cases these are not particularly local, and are not the
kind of community-level services that some local TV stakeholders
Nonetheless we recognise there are concerns
from the local press and from some commercial and not-for-profit
local TV operators about the potential impact of the BBC's plans
on their markets and potential audiences.
It is difficult to reach a firm view about the
relationship between the BBC's plans and the prospects for alternative
providers without more information about the likely future development
of the BBC's services. However the growth of digital platforms
offers substantial growth opportunities to commercial and not-for-profit
local TV operators and there is a risk that the BBC's early entry
to this field could discourage potential investment in this market,
closing it off before commercial and community providers have
had a chance to explore fully the emerging opportunities.
We therefore suggest that the BBC's detailed
plans, and any future extensions to them, should be carefully
assessed with respect to their public value and their impact on
both existing and potential future markets before they proceed
beyond the current pilot in the West Midlands.
One option that may be worth further assessment
is for the BBC to develop partnerships with other local operators,
including both commercial and community providers. However, a
significant disadvantage of this is that if other stakeholders
join with the BBC in sole operations in particular areas, this
may have the effect of stifling not only commercial but also creative
and editorial competition.
Our detailed work on the future of digital local
content services, including an assessment of the possible role
of the BBC, is now underway, and is being carried out collaboratively
with DCMS. We will set out the full range of options that we believe
deserve consideration in our initial report, which we currently
plan to publish by the end of the year. We would suggest that
no further decisions on the BBC's plans should be taken until
this research is complete.
In addition to the issues covered above, the
aspect of broadcasting in the Nations and Regions in which the
role of the BBC is critical is the delivery of indigenous language
services. Although not specifically covered by the Committee's
questions, we include a summary of our proposals in this area
in case the Committee should wish to address these important issues.
In the short term, the key issues to be resolved
S4C's relationship with the BBC in
in Scotland, the creation of a Gaelic
digital channel with the support of the BBC and provision of Gaelic
programmes on ITV1; and
the extended transmission of TG4
in Northern Ireland and the role of the BBC in serving the needs
of Irish language speakers.
The BBC and S4C should develop a new relationship
driven by three core principles: transparency, financial commitment
and editorial control. We welcome the constructive steps already
taken by both broadcasters to develop such a relationship, and
support the BBC's proposals to establish a new Strategic Partnership
between itself and the S4C Authority.
However in certain respects we feel that more
could be done to ensure that S4C has effective control over the
nature of its service, its programme strategy and the direction
The overarching goal should be to ensure that
accountability for the S4C service, and the powers needed to carry
out its strategy, clearly rest with the S4C Authority. Our Statement
on Programming in the Nations and Regions contains more detailed
proposals that we would be happy to make available to the Committee
if that would be useful.
Longer term, consideration should be given to
alternative funding models for Welsh broadcasting based on contestability,
including a review of the possibility of a Welsh Public Service
Publisher funded partly by a transfer of the portion of licence
fee revenues spent by the BBC on Welsh broadcasting.
In Scotland, sufficient funding and in-kind
support for a Gaelic digital channel could now be secured from
a number of sources. We recognise the BBC's vital role in supporting
the Gaelic language over many years and believe that it would
be the preferred broadcast partner for any new channel.
Looking further ahead, we recognise that other
delivery mechanisms (broadband, DTT, interactive Web services,
mobile, digital radio) might represent a rich and powerful way
of engaging the Gaelic audience, particularly younger people.
In order to most effectively exploit these new
opportunities, one option would be to introduce creative competition
into the provision of Gaelic through a contestable funding mechanism.
This could either be achieved by channelling funding to a single
body after a competitive tender process, or by awarding contracts
to a range of providers providing different aspects of a broader
We believe that this could help generate a new
wave of creative thinking about ways of reaching the largest possible
audience, and exploit the best ideas from all those with an interest
in supporting the development of the Gaelic language. Ultimately,
of course, this is a matter for Government.
The ultimate goal for Irish language speakers
should be a dedicated digital service broadcasting to all viewers
in Northern Ireland. The main Irish language public service channel
in the Republic of Ireland, TG4, would currently appear to be
the obvious vehicle for such a service. Consideration needs to
be given as to whether and how it might be possible for TG4 to
continue to be broadcast in Northern Ireland after switchover.
However it is not appropriate for the provision
of services from the Republic of Ireland to be the whole of the
solution to Irish language broadcasting in Northern Ireland. The
matter most often raised with us by respondents from Northern
Ireland in the final phase of the PSB Review was the absence of
statutory provision and of sufficient funding via the licence
fee for dedicated programming in Irish, with content produced
in and about Northern Ireland. They pointed to a perceived lack
of equity in the treatment of Irish compared to that accorded
Welsh and Scots Gaelic.
It is true that Irish language speakers continue
to be under-served by UK broadcasters compared to speakers of
other indigenous languages. We believe that Charter Review should
provide sufficient funding for BBC Northern Ireland to continue
and expand its commitment to Irish language television broadcasting.
However, enhanced funding raises further questions
about where and how new programming should be broadcast. We have
argued that provision through dedicated services and the exploitation
of new media are more attractive than opt-outs on the main channels,
and the BBC has said in its response to our consultation that
in scheduling Irish language programmes it "must take into
account the potential `deprivation' factor for the monolingual
Therefore other options should be examined,
including an enhanced relationship between the BBC in Northern
Ireland and TG4, for example involving greater use of co-productions.
There may also be scope for enhanced new media services, especially
those relating to news and current affairs, pre-school children,
school pupils and drama.
THE BBC AS
The UK television industry generates annual
revenues exceeding £9 billion, and spends almost £5
billion on programmingof this, around £2.4 billion
4 billion represents spending on original programming by the five
main terrestrial broadcasters. This means that UK television viewers
enjoy one of the highest levels of domestically originated programming
in the world.
UK programming is delivered by a production
sector comprising programme-making activity both within the main
broadcasters (in-house production) and without (independent and
external production). This part of the industry has been and remains
an integral part of UK television.
Ofcom is conducting a review of the television
production sector. This review commenced in May 2005, and is expected
to be completed by April 2006. This submission to the Lords Charter
Review Committee summarises the key issues being addressed by
Ofcom is conducting this review since we are
looking to secure the delivery of high quality television content.
More specifically, this review is being carried
out in the light of our statutory duties set out in the Communications
To secure the availability throughout
the UK of a wide range of television and radio services which,
taken as a whole, are both of high quality and calculated to appeal
to a variety of tastes and interests
The maintenance of a sufficient plurality
of providers of different television and radio services.
This means that the interests of viewers are
at the heart of Ofcom's work on the television production sector.
In order to meet this overall objective, Ofcom
has a number of responsibilities which relate directly, or at
least indirectly, to the television production sector. These include:
The setting of quotas regarding original
production on the main terrestrial channels, designated as public
service broadcasters (PSBs) under the terms of the Communications
Setting out-of-London production
quotas for the PSBs.
Recommending quotas for the commissioning
by the PSBs and other channels of programming sourced from independent
Monitoring the operation of codes
of practice for dealing with independent producers.
In addition to its formal powers,
Ofcom needs to take account of the impact on the overall production
sector of proposals made in the context of the Review of the BBC's
The last major review of the sector was conducted
by the Independent Television Commission (ITC) in 2002. As well
as reviewing existing quotas, the ITC's review recommended that
new codes of practice should be put in place between independent
producers and existing public service broadcasters. These have
since been implemented by the broadcasters, based on guidance
issued by Ofcom.
The sector was also considered as part of Ofcom's
recent review of public service television broadcasting (PSB)
in 2004. In the PSB Phase 2 report,
Ofcom suggested that the new codes of practice should be given
time to work before any detailed assessment of them could take
place. Ofcom therefore concluded that it would be sensible to
wait for 12 months before conducting a further review of the production
The current review
Overall, Ofcom's review concerns essential aspects
of the relationship between television broadcasters (including,
but not limited to the BBC) and the production sectorfocusing
in particular on the key production quotas, and the operation
of the commissioning system between producers and broadcasters.
Our overall objective is to define the appropriate nature and
scope of intervention that is necessary in order to secure the
highest quality content for viewers.
Intervention in the production sector has been
an important contributor to the sector's development. Ofcom is
using this review to re-examine the case for this intervention.
We are considering whether changes to existing regulations are
necessary, and assessing the continuing need for intervention
in the sector.
More specifically, the review is covering:
The economic and public policy arguments
for intervention in the production sector.
The effectiveness of existing quotas
on origination, independent production, and production outside
The extent to which the new codes
of practice have helped the market to function more effectively.
Issues surrounding the exploitation
of programming rights on new distribution platforms.
The transparency of the commissioning
The case for further action or for
alternative solutions, which if required may mean investigation
The appropriate definition of an independent
producer, and of qualifying programmes.
The appropriate level of the independent
production quota, and whether it should be defined by volume or
value of programming.
The circumstances that might result
in the relaxation or withdrawal of intervention.
This review comes at a critical time for the
UK television broadcasting sector in general, and for the production
sector in particular. For instance, the Government's review of
the BBC's Royal Charter is now well underway. The recent Green
indicated that the future of independent production is a key issue,
and the Paper also highlighted the need to give detailed consideration
to the BBC's plans for the reform of its commissioning system
(including the proposed Window of Creative Competition).
The BBC's proposals are intended to enhance
creative competition for access to the BBC's commissioning structureand
so aim to ensure that the best possible ideas reach viewers' television
screens. This is therefore an important issue for Ofcom's review.
1 Section 3(2) of the Communications Act 2003. Back
Ofcom review of public service television broadcasting, Phase
2-Meeting the digital challenge ("PSB2"). Published
on 30 September 2004. Back
Review of the BBC's Royal Charter: A strong BBC, independent
of Government. Published on 2 March 2005. Back