Examination of Witnesses (Questions 25-39)
Mr Jeremy Beale and Mr William Brocklehurst
16 OCTOBER 2006
Q25Chairman: Mr Beale and Mr Brocklehurst, you
are most welcome. You have been sitting in, I noticed, on the
previous evidence session, so you will know the sorts of lines
of inquiry that we are taking, although these are very early days
in our inquiry, so we are still at an extremely formative stage,
as a Committee. Is there anything you would like to say by way
of introduction, or are you happy to go straight into the questions?
Mr Beale: I am eager to get on to the questions,
but I would like to say a few words, just briefly. The CBI is
in general agreement with much of what was said by the previous
speakers, and in fact we find ourselves in general agreement with
most of British industry on this matter because there seems to
be a large degree of uniformity in opinion, not just with British
industry but with Ofcom and the Government and even consumer organisations,
in many respects. Of course, we do not have the knowledge of detail
around a lot of these issues but take a broader perspective and
it is that we are most capable of commenting on rather than some
of the details that the other speakers and other representatives
of industry, particularly the sectors, can give you.
Q26 Chairman: Indeed, thank you,
and I think our thrust is going to be on exactly that, on the
rather broader front than the detailed front. On that broader
front, can you see this proposed Directive either tripping over
itself or being tripped over by the E-Commerce Directive?
Mr Beale: I think that is a hard question to
answer; if I can portray it this way. I think this Directive is
adding another layer of regulation on what companies face. Variably,
they will be saying to what extent does this contradict the E-Commerce
Directive, to what extent does it override the E-Commerce Directive,
what exactly is the relationship with the E-Commerce Directive.
Our members who represent legal firms in our discussions and companies
we have talked to are totally unclear about that, so they are
not able really to quite understand the way it will work. That
is one of the problems they have had, that they have felt it is
adding another layer of regulation without it being specified
clearly how the various regulations will interact together.
Q27 Chairman: Mr Beale, should they
get to that miraculous state where they do come to a conclusion,
do you think you could be kind enough to let this Committee know?
That is not a facetious question.
Mr Beale: I think it will take a long time to
work that out, with a lot of legal wrangling in courts, and that
again is the trouble, that will create a lot of expense, to find
those answers.
Q28 Chairman: Do your members think,
therefore, that this proposed Directive is going too far?
Mr Beale: That is where there tends to be uniformity;
they tend to say this is unnecessary and it is adding regulation
which is unnecessary. We are relatively clear about what we have
to do at the moment. We are working out how to meet those requirements
in a new online environment. We cannot see a long way ahead about
how to do it but we are working on an ongoing basis. This adds
confusion because it creates an elaborate new regulatory framework,
consisting largely of linear and non-linear definitions.
Q29 Chairman: Are you happy then
with the proposed attempts to bring the emerging media platforms
into the Directive, or would your members rather see them left
out?
Mr Beale: They would rather see them left out.
Chairman: My apologies, if I led you on that
question, and that is rather what I thought your reply was going
to be. Lord St John: a question on implementation.
Q30 Lord St John of Bletso: What
do you consider the European Commission's and the Government's
and Ofcom's proper role to be in this sector, and what limitations
are there to reliance on a co- or self-regulatory approach in
this sector, and what initiatives do you consider for industry
self-regulation to be sufficient or the most appropriate regulatory
response?
Mr Beale: If I can approach those in reverse
order, as I indicated, many of our members are really struggling
with the issue of how to meet requirements. I do not mean struggling
in the sense that they are finding it terribly difficult but they
are struggling because they are working in a new environment so
it is a challenge to them. There is also though a long tradition,
in this country at least, and a very successful tradition in many
respects, of self-regulation; in other countries that is less
than in the UK. There have also been examples, relatively recently,
of very successful online regulation in this country; the Internet
Watch Foundation. I think the evidence is that child pornography,
for instance, is very low here and much of the success of that
goes through the Internet Watch Foundation and private sector
members that have participated actively in that to make it a success.
I do think there is a real question though about the traditional
forms of self-regulation, which have not been developed in the
online environment, what lessons need to be learned and can be
taken from them and developed in the online environment, and I
think that is still what is being explored. It is still very early
days in the exploration of that issue though. As I said, we have
the Internet Watch Foundation as one example but not a lot of
others. It is an ongoing struggle and I think there are a number
of ways of looking at that question. One is, is it a matter where
really there is a market, where there are very strong brands with
good reputations, where the people involved are very eager to
establish and maintain their reputation in an online environment,
where, frankly, self-regulation can be seen to be achieved very
easily. This may be another area where clearly there are rogue
traders coming in, where maybe it is a matter of identifying how
existing national laws, and European laws, can be better implemented
in the online environment. Then there is maybe a third category,
which is where new models have been appearing and we still have
to do a lot of work on that. In relation to those questions, I
think a much more tentative approach by the European Commission
would have been very helpful indeed to explore that self-regulatory
experience and how it related to traditional forms of regulation
in the European context. How that could help economic growth and
growth of good service development in Europe would have been very
useful and is very much, I think, the role it could play. As I
think one of the earlier speakers said, setting that kind of overall
framework would be traditionally a role of the European Commission
and with the UK Government very much implementing the findings
of that in legislation, some of which might not need new legislation.
Then with Ofcom actually taking a very proactive role, as it actually
is doing, in many cases, about developing consumer education,
industry education, helping the industry to develop those new
concepts online; those would be the sorts of roles. I think you
have to start first with what are the challenges in the self-regulatory
and regulatory areas.
Q31 Lord St John of Bletso: I was
interested in what you said about lessons learned and the initiatives
taken. Could you elaborate on what Government and Ofcom are doing
to foster desirable behaviour amongst industry participants and
consumers, and are these adequate and appropriate?
Mr Beale: I am not sure if you have had evidence
from ATVOD.
Q32 Lord St John of Bletso: We have
had from Ofcom.
Mr Beale: Ofcom, but not ATVOD. Ofcom was instrumental
in the establishment of ATVOD, which is the group of on-demand
television providers and basically they sat down together and
said "How can we create an on-demand environment where parents
have a large degree of control over what is watched and where
people using on-demand television can be clear about what they
are engaging with?" They went and formed that and they talked
about it with Ofcom and I do not know the exact process that happened
but Ofcom gave them support. There is another thing that Ofcom
is doing currently, which is, it chairs a group of existing self-regulatory
bodies in the UK where this precisely is being discussed, what
you need to do in an online environment to ensure safe protection
for consumers and individuals. In terms of consumer education,
Ofcom, as I understand it, receives half a million pounds from
DCMS to develop consumer education programmes, and that is useful,
certainly. I think Ofcom certainly could do more if they had more
money, which is probably one of their major roles in the new environment,
is that consumer education.
Chairman: I would like, if I may, to jump the
order around a bit. I am thinking particularly of questions that
are of a slightly less technical nature, as you said at the beginning,
and rather more general. I wonder if we could go into the Country
of Origin principle, and I know Lord Fearn has got some questions,
and then maybe go to questions five, six and seven, in that order,
then we will see whether time allows us to come back again to
the other ones. We are missing three and four. Lord Fearn, would
you like to have a crack at the CoO?
Q33 Lord Fearn: In your opinion,
has the Country of Origin principle benefited your organisation
and do you consider that it is under threat? Do you consider the
UK to have a different economic interest, as the location of choice
for the majority of content providers, from that of other Member
States?
Mr Beale: The Country of Origin principle, I
think, was well covered by many of the previous speakers, in terms
of its benefits. Obviously, the CBI does not have a particular
benefit that it gains, it just looks at what the benefits are
to British industry.
Q34 Lord Fearn: Your members do;
that is why I asked the question.
Mr Beale: Our members do, yes. I would add to
what the previous speakers said in this regard. The Country of
Origin principle, in many respects, reduces regulation, the need
for regulation; but, of course, it works on the existing situation.
If you had a big effort around standardising at a European level,
that would involve a lot of resources, perhaps resources that
might not prove fruitful in the end. A lot of efforts at European
harmonisation, I am sure this group is aware, more than I am,
the extent to which some of those have been completely unsuccessful,
those attempts, and the Country of Origin principle, I think,
was formulated precisely sort of to say what is a more pragmatic
way of achieving some degree of harmonisation without having to
rewrite the whole rule book at a European level. In that sense,
I think there is a broad interest for British industry, and not
just British industry, European industry, and the principle has
been of major benefit in that regard. It is always under threat,
or under challenge, in many respects, because, of course, there
will be sectors and individual businesses that lose out in the
process of competition at a European level. There will be those
that will try to protect themselves against the entrants or people
and individuals in their markets going to companies located in
other countries to buy goods and services, so there will always
be, I think, a certain resistance to its implementation and effect.
The UK, I think, has benefited to a large extent from it, simply
because it has been one of the strongest proponents of it and
has taken advantage of the opportunities that it has offered.
In relation to content providers, content providers do view the
UK as a very good place to go; they often say to us, "We
go and we invest in those countries where we're wanted, where
the environment does say `You're welcome; please come here'."
I think the investment by content providers in the UK is an indication
of the success of the UK in following the Country of Origin principle.
Q35 Lord Fearn: Do not all countries
say "Yes, we want you"?
Mr Beale: As I understand it, no. There are
countries that say "You can only come here if you do X, Y
and Z, the way we think you should do it," which is, in effect,
discouraging investment.
Chairman: Lord Fyfe, would you like to come
in on access to content.
Q36 Lord Fyfe of Fairfield: In terms
of access to content, would establishing, for example, news access
rights enhance current arrangements and, perhaps more importantly,
most important, benefit the general public?
Mr Beale: I hate to say, I am not exactly sure
what I am being asked here; is this specifically in relation to
news programmes?
Q37 Lord Fyfe of Fairfield: It is,
in part, yes, in the main.
Mr Beale: I am not very capable of answering
a question on that, I am afraid to say.
Q38 Lord Fyfe of Fairfield: Can we
widen this sampler then, because what fascinates me often when
I am looking at items like this, and I confess to being a rank
amateur when it comes to anything connected with technology, is
the public demand for the new facility, apart from the possibility
of commercial gain. Is all of this dictated by commercial gain,
by producers and manufacturers and directors, and so on and so
forth, or is it in response to a perceived public need or public
demand?
Mr Beale: In terms of the new content available
and access to it, I think one of the problems that many of our
members face is, one, generating content that they do not control,
when traditionally they have been used to controlling the content
that is publicly provided. Two, they are never quite sure, when
they do develop the service, that it is going to last very long,
in terms of popularity, so it has to be popular in the first place,
but a lot of them do worry that the train is moving so fast that
they will invest a lot of money in a new form of content provision
which will be popular for a while but within a few years will
no longer be fashionable, and it is because on the Internet people
can move very rapidly. Is that getting towards what you were asking?
Q39 Lord Fyfe of Fairfield: It is.
Let me simplify this, in a way. After last week's meeting I stepped
into a taxi and, lo and behold, the taxi had one of these new-fangled
television sets, with all manner of controls on it, and so on
and so forth. Try as I might, I could not switch this thing off.
The series was about teaching people how to play poker. I do not
play poker and, at my advanced age, I do not want to start to
learn how to play poker. I asked the taxi-driver if he could switch
it off; no, he could not switch it off and obviously he thought
I was a complete idiot for wanting it to be switched off in the
first place anyway. I think to myself, reducing things to their
simplest, I have not been bashing on taxi-drivers' windows for
years, shouting for television sets to be stuck in the taxi-cab
for my amusement or entertainment, or whatever. I then started
to think, who actually creates the demand for this kind of thing?
Mr Beale: If I may answer first, although flippantly,
I presume the taxi-driver did not have to watch it as well?
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