Select Committee on BBC Charter Review Minutes of Evidence


Examination of Witnesses (Questions 1460 - 1479)

WEDNESDAY 14 DECEMBER 2005

Lord Currie of Marylebone and Mr Tim Suter

  Q1460  Lord King of Bridgwater: We are back to the point I tried to make in a speech on Friday. It is average coverage. We will have the same coverage, you think on average, as we have at the moment when we do the digital switchover but there will be different people. Some people do not get any reception at the moment and some people will not get any reception in the future.

  Lord Currie of Marylebone: The vast majority of people who do not get digital reception at the moment will get it once you have digital switchover. The great advantage or one of the many advantages in terms of increased choice and one of the key merits of it is that it will not be until the analogue signal is switched off that the digital signal can be boosted to reach the vast majority of the country.

  Q1461  Lord King of Bridgwater: You use the phrase "the vast majority". If Parliament has a role, it is also to defend minorities. I am interested in the administration of it. You said you were going to take the decision or you might take the decision to impose effectively a fine on the BBC because they have been slow but they might have taken the decision to be slow because they thought a minority otherwise would lose out.

  Lord Currie of Marylebone: We have done a very detailed analysis of the costs and benefits of digital switchover because of all the issues potentially that could be raised against the process around state aid. Our analysis supported the view that it would be appropriate to match the analogue coverage, 98.5 per cent of the country, but not to go the extra margin just as we have not as a government or as a country felt it appropriate to boost the analogue signal to 100 per cent. We have lived with that position ever since the beginning of television.

  Q1462  Lord King of Bridgwater: Obviously every possible care has been taken but from the evidence we have had people are not quite sure how it is going to pan out until it happens. Who do they then turn to? We seem now to have three bodies: yourself, Digital UK and DCMS and maybe even the BBC.

  Lord Currie of Marylebone: I would argue that the creation of Digital UK was precisely to avoid that muddle. Digital UK is the body that has responsibility for managing this process and delivering it operationally. You say that people are unclear. They are at this point but we have to remember that it is barely three months since the decision was taken. Digital UK has since come into being and is starting the process of communication. It has some very active plans in that direction.

  Q1463  Baroness Howe of Idlicote: There are about four bodies involved in the whole switchover but you say it is Digital UK who are overseeing it. Is the consumer sufficiently represented on that body?

  Mr Suter: In the end, the issue is whether the public have confidence in the representation that is around the table. Government, having constituted that body, believe that it has sufficient representations from those with a direct interest in making this work, which are the broadcasters, the consumer groups and the manufacturers.

  Q1464  Baroness Howe of Idlicote: In other words, you are saying consumer groups are represented?

  Mr Suter: Yes.

  Q1465  Baroness Howe of Idlicote: In what proportion?

  Mr Suter: I am afraid I do not have the precise constitution of Digital UK.

  Q1466  Baroness Howe of Idlicote: You referred previously to your public service publisher idea. I was wondering about the independence of your views on that because if you are going to decide whether to charge for spectrum you might be slightly inclined to charge if some of that money was going to one of your ideas.

  Lord Currie of Marylebone: That would not be a consideration. It could not be since it is entirely a matter for the Treasury how it uses its spectrum receipts.

  Q1467  Chairman: Lord King raised some interesting points. The House of Commons Select Committee is looking at these points as well. We will probably try to keep to our role at the moment although the two do intertwine. To sum up on the spectrum tax, I do not see how you can describe it as anything else. What would happen is that the person who pays the licence fee would pay more and that more would go to the Treasury in receipts.

  Lord Currie of Marylebone: I think that is a fair description.

  Q1468  Chairman: That is what you are going to be consulting on?

  Lord Currie of Marylebone: Indeed. We have no preconceived view as to which way we will go on that question, except we are conducting that review in the context of the broader reform of spectrum pricing.

  Q1469  Chairman: When do you expect your consultation paper to go out?

  Mr Suter: We are just scoping out that project now and I suspect it will be some point during next year. I will confirm the date.

  Q1470  Chairman: Some point during next year is even more imprecise than the average government minister.

  Mr Suter: Forgive me but we have our own different bits of responsibility and that bit is not mine.

  Lord Currie of Marylebone: We could provide that answer to you.

  Chairman: We might give you some free advice.

  Q1471  Lord Holme of Cheltenham: Would you envisage in your consultation paper saying whether Ofcom should be paid for effectively acting as a collection agent for the Chancellor?

  Lord Currie of Marylebone: Ofcom's income streams fall into different buckets. We are able to offset the administrative costs of all our spectrum work against the receipts for the money which comes from spectrum. The spectrum work includes not just the collection, the licensing and so on, but also the enforcement of stopping interference in spectrum and keeping spectrum clean as a major part of our field work which goes on around the country. However, we are not looking to increase those costs. Over time, we have been quite effective in reducing costs and we are considerably increasing the efficiency with which we license in the whole spectrum area.

  Q1472  Chairman: You will take into account that the Treasury will then be receiving money from what is a regressive tax?

  Lord Currie of Marylebone: Those will be considerations that no doubt will be very thoroughly explored in the consultation.

  Q1473  Baroness Bonham-Carter of Yarnbury: You have been asked a lot of intellectual questions about the role of the Treasury. I am going to ask you a very crude one. Can you tell us what value you think the money that you say is going to the Treasury will be? Can Ofcom estimate the value of spectrum to the government after analogue switch-off?

  Lord Currie of Marylebone: It is not easy to have a precise estimate. The lesson we have from the 3G auction is that timing is everything in terms of valuation. It is prime spectrum we are talking about. The analogue spectrum is very useful and in quantitative terms it is about two thirds of the quantity that was auctioned at the 3G. I am not suggesting you will get two thirds of 22.5 billion. That would be nonsense.

  Q1474  Baroness Bonham-Carter of Yarnbury: What figure would you put on it?

  Lord Currie of Marylebone: I do not think we could put an estimate on it.

  Q1475  Baroness Bonham-Carter of Yarnbury: A range?

  Lord Currie of Marylebone: I would be very happy to undertake to come back to the Committee to see whether we could answer that question but estimates in this area are exceedingly imprecise.

  Q1476  Baroness Bonham-Carter of Yarnbury: You said at the beginning that there was no charge for analogue spectrum. That is the situation now.

  Lord Currie of Marylebone: And continuing until switchover.

  Q1477  Baroness Bonham-Carter of Yarnbury: One of the things I think we can agree on here is that it is very important that Channel 4 remains a strong player in the PSB market. Do you think the government should consider allocating free digital spectrum to Channel 4? They, as you know, have access to analogue spectrum.

  Lord Currie of Marylebone: As we made clear in the PSB report, we think the question of maintaining the strength of Channel 4 as a public service broadcaster is very important. We want to strengthen PSB but we also want to maintain diversity and even expand diversity. Therefore, the question of the future of Channel 4 is important. Today we have published our annual plan for next year. One of the streams of work that we have flowing out of our public service broadcasting review is a review of the position of Channel 4 because it is something that we want to keep closely monitored, to consider whether there will in the future need to be ways of helping Channel 4 which could involve the gifting of spectrum or grant in aid. There might be a number of different mechanisms.

  Q1478  Baroness Bonham-Carter of Yarnbury: Coming back to the BBC, as I understand it, high definition television is very spectrum greedy. Do you support the BBC's pursuit of HDF?

  Mr Suter: The question of high definition, how much spectrum it will use and therefore what that will do to other potential users of spectrum, both within the public service multiplexes and elsewhere, is an important consideration for that review going forward. Clearly, we are looking at the most efficient use of spectrum going into the digital age. That will balance consumer issues, the desire to have an enhanced service which will be appropriate for some kinds of service but not necessarily for all, against citizen issues, ensuring that there is a plurality and diversity of services being made available. That is an important issue that we will need to address. Lord Currie has said we are looking at the next set of implications for public service broadcasting. A year ago we finished our public service broadcasting review. There are continuing implications in there for how public service broadcasting will develop. Among those is how will public service broadcasters, conventional broadcasters, be able and want to make themselves available in future and what kinds of services will they be, alongside what other kinds of public service content should be made available and what demand might that have on other kinds of spectrum or distribution. We have to ask those questions and the question of Channel 4 is clearly an important one. Possibly the answer to the question about the consultation will be contained in our draft annual plan for you, so we may be able to get that to you even quicker.

  Q1479  Chairman: You were very kind to say, Lord Currie, that you would try to give us an estimate on the sale of analogue and how much that could raise. When do you think you could do that by?

  Lord Currie of Marylebone: Fairly quickly. High definition brings huge benefits. It is stunning to watch television with high definition, but that is one area where the consideration of the costs of spectrum and the whole question of the pricing of that into the decision is pretty central because it is also very greedy of very valuable spectrum.


 
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