Examination of Witnesses (Questions 40-58)
Mr Jeremy Beale and Mr William Brocklehurst
16 OCTOBER 2006
Q40 Lord Fyfe of Fairfield: No, he
did not; he was too busy talking.
Mr Beale: I sympathise with your situation.
I do not think it is particularly peculiar to audiovisual delivery
though. We do not have choice in many regards, about billboard
advertising being put up, or much of the world we live in there
is that. I think that is a general problem of modern society.
It is also something maybe which could be addressed more specifically
in other forms of legislation. I do not know that this Directive
actually would deal with that issue, per se.
Lord Fyfe of Fairfield: You have been very tolerant,
My Lord Chairman. I have slipped from the point, actually, but
I am happy with the answer.
Chairman: Lord Swinfen, would you like to continue?
Q41 Lord Swinfen: Thank you, My Lord
Chairman. I know you have already given us some written evidence
on this point, but does the imposition of quotas for European
works and independent production continue to make sense in the
emerging environment?
Mr Beale: Generally, I would say, no. In an
on-demand world, it is very hard to see how providers can determine
what percentage of any content is going to be consumed. Also,
even more so when consumers themselves are able to put content
onto a site it is very hard to see, it will create a real dilemma,
how would they measure that over time? How would they determine,
say, if there was more of non-European content that was being
put on than European content, what would they do, block certain
people who were putting on non-European content, would they have
to buy in a certain amount of European content to counterbalance
it? It is actually difficult to see how it would work. Having
said that, that is taking an extreme image of the online world;
of course, the online world consists now of a variety of different
media, in effect, and the totally interactive is where the problem
is most extreme, and that is the one I have just outlined. I think
there is some relevance of the demands, in terms of the traditional
linear broadcasting environment, which, of course, many people
still live, but you do not need a revision of the Television Without
Frontiers Directive to achieve that in that media, because that
is already covered. It is only when you get into the more interactive
and online environment that there is this problem, which is why
we think that the extension to that more interactive online environment
is inappropriate.
Q42 Lord Haskel: As I explained previously,
those of us who are uninformed depend a lot on the impact assessment
and you who know an awful lot about this could tell us perhaps
whether the Commission have adequately considered the impact of
this proposal and the impact that it is likely to have on the
sector, whether the impact assessment, in fact, gives a true picture?
The other speakers and yourself have indicated that it is impossible
to predict the costs and benefits of the proposal with some reliability,
and so should the impact assessment just ignore this and go for
a precautionary approach to regulation, even though it might suggest
different proposals for change?
Mr Beale: That is a very interesting question,
because, in many respects, as the representatives of the BBC pointed
out earlier, the Commission and other bodies have done a number
of impact assessments and there have been quite a lot. On the
other hand, it does not seem to have changed the basic thrust
of what the Commission is saying and proposing. I have had, over
the years, not just at the CBI but in other places I have worked,
quite a lot of experience of consultations and impact assessments
done, and often the way they are constructed is that they construct
one extreme alternative, another extreme alternative and then
give the middle. Of course, usually the argument is that the middle
one is the right one, because everyone wants to be sensible, because
the other ones look so extreme, and in many cases I think this
is what happens with Commission consultations and impact assessments
and the sensible one seems to be the Commission one. I think that
is very much what is happening in this case. What I would say
is that there have been descriptions of what is going on, but
I would agree also with the statement that, one is, they have
not been tentative enough. As I have been saying, I think this
is a very, very complex and fast-moving environment and it would
have been useful if more exploratory work had been done, ones
that sincerely wanted to find out what was going on rather than
ones that wanted to justify getting to a certain place. I would
say also, and this has been expressed very, very strongly by members
of ours, that they felt that the exercise of consultation and
discussion was not genuine; that, though views can be expressed,
only certain views were listened to and that there was this clear
view really of where the Commission wanted to be and that has
not changed, irrespective of what has been said.
Q43 Lord Haskel: Thank you for that,
and I agree with many of your points. I just wonder whether one
of the impacts which perhaps has not been assessed is the value
of this for increasing media literacy. I think what you showed
is a world which is divided into two parts, those who understand
these things and those who do not, and the majority do not, and
in your very interesting submission you did refer to this. You
say: " ... the value of media literacy as a tool for up-skilling
individuals, an area in which Ofcom has been making significant
progress." Do you think that this is an important part of
the impact assessment which will be left out and that we ought
to pay more attention to it?
Mr Beale: That is a difficult question to answer,
simply because, I think, part of the media education that needs
to go on has to be about those things that are developing.
Q44 Lord Haskel: Those are?
Mr Beale: Those means of self-regulation, of
individual control; the education needs to be about those and
those are still developing. Actually, the education needs to be
about what is going on. An impact assessment would not be able
to, in advance, tell you what effect that would be and what is
developing. I think what would be useful would be, as I think
I mentioned earlier, if we had analysis of the sorts of trends
that are going on. Then, instead of the Commission having said,
"Right, there's a dangerous territory out there, it's very
difficult, let's put some regulation on it, or extend traditional
regulation which we all understand into this difficult area, and
that way we'll be safer," they had actually developed thinking
analysis and made some proposals about how media education could
be developed more extensively, how the Internet itself could be
used to help consumers and individuals learn about the environment
in which they exist, how companies could be supported to develop
technologies, because all of these things are still in their infancy.
That kind of supportive approach, I think, would have been, and
would be, much more helpful.
Q45 Lord Haskel: If that support
is there, do you think that the impact on society will be that
we will all become more literate and use these technologies more
effectively?
Mr Beale: Absolutely. I think the evidence so
far, and I pointed to the Internet Watch Foundation as one example,
the Internet Watch Foundation works with our members who are using
the Internet, to understand better how individuals are using the
Internet, so what advice they can give. Also they are using the
Internet to understand how people who want to cause harm to individuals
are using it. It is very successful when that effort and the resources
are brought to bear.
Q46 Lord Haskel: Do you think this
will be a legitimate part of an impact assessment, or do you think
it is extraneous?
Mr Beale: An ongoing impact assessment would
be very valuable to identify where successes have been achieved,
and honestly there are still weaknesses and also failures. I am
certainly not saying everything will be successful, but improving
that understanding would be very valuable, but on an ongoing basis.
Q47 Lord St John of Bletso: If I
can touch on illegal or harmful content, do effective mechanisms
exist to control the types of illegal content identified in the
proposal, for example, race hatred, and is the proposal likely
substantially to enhance restrictions on freedom of expression?
Finally, should the right of reply be extended in the manner provided
for in the proposal or be limited to traditional television programmes?
I know it is not your particular niche, that last question; that
is more appropriate to the BBC earlier on.
Mr Beale: I am afraid, I do not think I can
comment on the last one. I do not know enough about how the right
of reply would work and what work is being done in that regard,
so if you will excuse me I will miss that one. In terms of illegal
and harmful content, it is a very, very difficult issue, because
obviously it varies from culture to culture what is considered
harmful and also obviously, to a certain extent, what is illegal.
It is also very hard for online providers to control in advance
the posting of such material. I would support, in that sense,
the comments made by one of the earlier speakers, who said that
really it is a matter of adapting existing instruments, such as
notice and takedown, improving the speed by which individuals
can notify the service providers that there is harmful or illegal
content. There are others ways that can be achieved, too. For
instance, if you were a member of a self-regulatory body that
did notify about content, you would have certain protection against
liability compared with if you showed you did not care and did
not join that regulatory body; that would speed up the process
of notification, too, things like that. Again, I think there is
a lot of work that could be done on improving such measures. Specifying
it in regulation, the trouble with that can be that you have a
particular image in mind when you put a piece of legislation or
regulation in place and the law applies to that. If the environment
changes rapidly, the legal response cannot deal with that new
environment very easily, but self-regulatory bodies do have that
greater flexibility if they are clear what they are going for
and they have got the full support of those people participating.
Q48 Lord St John of Bletso: It does
appear to be, right across all mediums, the one common thread
is the fight against paedophilia; it is the one area where it
does appear to be considered by all, to fight this menace?
Mr Beale: The argument sometimes is used that
the Internet has facilitated paedophilia enormously, and we see
evidence of so much of it around. You can also though put the
other argument, that the Internet has been one of the most incredible
means of identifying and tracking down paedophiles that we have
ever known. That is why I am saying that what we need to try to
focus on is developing those positive uses of the Internet, and
that is where the effort should go, rather than simply sort of
trying to say restrict or lay regulation on the Internet as a
way of trying to stop these practices occurring.
Q49 Chairman: Just one point of clarification,
in your written evidence, and I read it four times and could not
work out what you were trying to say, it was such a short reply.
The question was what controls should be imposed on non-linear
services in respect of illegal and harmful material, such as the
granting of a "right of reply"; to which your reply
was "No reply." Does that mean you did not want to reply,
or you do not think there should be a right of reply?
Mr Beale: I am sorry. I apologise for that.
It meant that we did not feel we were in a position to reply.
Q50 Chairman: It was not your brief.
I was slightly confused because it could have meant you did not
go for that.
Mr Beale: I apologise for that.
Chairman: Baroness Eccles, on the minimum
content rules.
Q51 Baroness Eccles of Moulton: I
am sure that the whole question of advertising must be of great
concern to your members, because technological advances mean that
it is much easier just not to watch it. On the basis of that,
do the proposed rules adequately address the emerging business
models for content provision over the new platforms, in your view?
Mr Beale: Obviously, advertising is important
to many, many CBI members, both those that are hosting the advertising
and those who want to advertise. Again, it is a very fast-moving
environment, as I am sure you have seen from the papers, the Internet
advertising is growing very rapidly and very rapidly in relation
to growth in non-Internet advertising; having said that, it is
also starting from a very small base, compared with existing forms
of advertising. What I think many of our members are really trying
to understand is what is the balance, because I think it is a
balance. It is not that Internet advertising is going to wipe
out traditional advertising, because it just adds another way
of getting to your customers, of being able to communicate with
them. You will still want to be able to communicate in more traditional
forms. It does throw up certain challenges; again, it is much
more interactive. I think also a very important phenomenon that
is developing, that our members find, in many respects, very,
very useful, is that their relationship with their customers is
changing. In the traditional model you developed a product in-house
and then you advertised it, in an arm's length relationship to
your customers. The interactive nature of the Internet means that
they are brought much, much more closely into the product development
stage. I think that throws up lots of challenges for traditional
consumer protection legislation. I do not mean it undermines it,
necessarily, and says it is a bad thing, but what it does say
is how relevant is it when consumers have actually been involved
in that product development process. I do not think that the Directive
gets to grips with that issue. One of the things that we do support
about the Directive and find that it is helpful is its relaxation
on restrictions on product placement. I think we mention in the
submission that this is happening globally anyway so it is actually
allowing European producers to be able to be competitive. I think
also it throws up an interesting challenge to the overall structure
of the Directive, or the proposed changes to the Directive, which
is that if you allow product placement to occur in a sophisticated
way, obviously not in a crude way but in a sophisticated way,
it becomes increasingly hard to distinguish between editorial
and advertising content. As result, it becomes very difficult
to draw where the line is between a commercial service and a non-commercial
service. On the other hand, that is something that the Directive
seems to assume is still going to be very clear, because it says
this is about commercial audiovisual media services. I would ask
what would be the difference between something that we would think
of as a traditional media programme, say, a film, where there
is embedded product placement of a sophisticated kind, on the
one hand, and, on the other hand, a commercial offering that actually
had a lot of entertainment engaged in it. We were trying to give
one example in our submission, where you can imagine a James Bond
film where there is a very sporty car being driven which is advertising
the product itself but it is part of the entertainment. You would
have what would be the determining line between that kind of a
programme and a car manufacturer who was putting information on
its website and has entertaining aspects to that. The Commission
says this will not apply to the latter kind of service. We are
saying that, if they are successful in what they are doing in
one part of it, it would apply to another part, which makes it
very hard for companies to see how they deal with this in an efficient
and economic manner.
Q52 Baroness Eccles of Moulton: The
commercial linear media are dependent upon advertising revenue
in order to exist?
Mr Beale: Absolutely, which is why we think
that the relaxation on product placement rules makes a lot of
sense, that is why we say that is good, but it is the extension
of scope to non-linear services that creates the problem. This
is why, in many respects, we support the UK Government's proposed
amendment, which is, it eventually keeps it to traditional broadcasting,
in terms of its scope, but it would also encompass that reduction
in product placement restrictions.
Q53 Lord Walpole: Then are you suggesting,
in fact, that the teleshopping channels should no longer be subject
to controls under this regime?
Mr Beale: Traditional teleshopping channels
will continue to be regulated, would they not, because they are
traditional linear services.
Q54 Lord Walpole: Should they be,
or not?
Mr Beale: The relaxation that is proposed in
the Directive, as it applies to them, would be appropriate, but
I would probably hold off from going much further than that because
I am not representative of that industry and do not know enough
about the particular way regulation applies to them.
Q55 Lord Walpole: Are there any other
restrictions on marketing or advertising that you would consider
necessary?
Mr Beale: There are existing restrictions already
on advertising.
Q56 Lord Walpole: You are quite happy
about this?
Mr Beale: Apart from in this Directive, there
are, and those are the ones that our companies are familiar with,
are used to, already do either obey the law or attempt to obey
the law in that regard. I am not sure those restrictions proposed
for this Directive add anything useful.
Q57 Chairman: Can I come back to
the more general topic of the scope of the proposal, which, in
the interests of time, we did not give much airing to, and I am
still not quite sure where the CBI or where your members stand
on this. In your written evidence you say, quite clearly: "...
there is a need not to regulate emerging services under new regulation
until such time as they are well established with a defined market
structure and profitable business models." When I asked you,
right at the beginning, I think I heard you say that you would
rather have the regime restricted to, dare I say, the TV-like
services and not go into the emerging services, and that would
tie in with your written evidence. Are those emerging services
going to be completely regulatory-free, or are they going to have
a bonanza until such time as they get, in your words, well established?
I am being deliberately extreme.
Mr Beale: That is quite alright. It clarifies
things. This is where that continuum, I think I mentioned earlier,
between the new developing services on the Internet, which are
highly interactive, comes into play, and those with traditional
broadcasting. There is an in-between group, I think, of new emerging
services, and if we take examples of this it would be Internet
TV, some mobile TV, which, in many cases, at the moment, are very
much really like TV as we know it but they are being delivered
on new platforms. In terms of the content that you get on them,
they are still much closer to traditional television than the
new Internet-based services, and that is the sort of broad distinction
we are drawing. We are saying about that middle group, these are
still new and emerging services, so before we impose a whole framework
of restrictions on them let us find out how they themselves might
deal with the issues, and I gave the example of ATVOD earlier,
which is to do with pay-TV, where they themselves have developed
a self-regulatory approach. It would seem to me unnecessary to
apply regulation to a group of services where they are already
self-regulating in ways in which the ends might be achieved better.
A lot of people say, "Well, TV's regulated in this way, so
why shouldn't that form of regulation be applied to the Internet
where similar things are developing?" Actually, I think it
is a different picture. It is actually that TV regulation has
been changing over time to take account of the proliferation of
channels, of the more interactive nature of television, the way
with digital television you can click on that red button to order
things or to find out more. That is a restricted version of what
actually exists on the Internet. We had a member recently who
described the Internet as like pay-TV on steroids; everything
is much more extreme. What we were trying to do and what we said
was, there is this extreme, which is the pure online environment;
that seems to us to be inappropriate for this form of regulation.
There is the traditional TV-like broadcasting and then there are
these ones in the middle that have more interactive elements but
are still small, in terms of their market development. Before
you impose regulation on those, why not see how they manage and
what they become like.
Q58 Chairman: The final question
then, and you have led me very nicely into it, and you heard me
ask the previous witnesses the same thing. Do you consider that
these proposals are sufficiently technology-neutral, do you consider
they are future-proofed, the speed with which the whole industry
is moving is absolutely terrifying, and if the answer is `no'
to either of those, or even if it is `yes' to either of those,
come to think of it, is this the right time to be amending the
regulatory framework anyway? If things are moving that fast, is
this the right time to do it?
Mr Beale: As you might expect, my answer is
that it would have been the right time to amend regulations, in
terms of removing or reducing regulation; it is not the appropriate
time to impose new regulation. Things are moving very fast and
that will mean, I think, that any regulations that are introduced
now, in many cases, will already be ineffective, because we are
dealing now, in many cases, in many circumstances, in the online
world, with an international market-place and environment. What
will happen is that, if Europe imposes a regulatory environment
that is restrictive, consumers will just go to services based
outside the EU, but, even more so, in a few years' time, the regulations
that are imposed will be irrelevant. What will happen in the meantime
is that UK and European industry will fall behind, it will mean
that good service development, where value added is being built,
where we know from informed public debate are these good, do they
help consumers, do they protect consumers, do they give them the
good things in life rather than the bad things, we will miss out
on all of that because we will have gone through a stunted development
of new services compared with the rest of the world.
Chairman: Mr Beale, thank you very much
indeed. Mr Brocklehurst, thank you for giving up so much of your
time. Whether you have learned anything I do not know, that is
entirely between you and Mr Beale; but we are very grateful to
you both for your written evidence and, more particularly, for
spending the time this afternoon. Thank you very much.
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