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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