Examination of Witnesses (Questions 120-139)
Mr Alex Blowers
25 OCTOBER 2006
Q120 Lord Haskel: The whole thing
about this inquiry is it could be defined as the scope and I wonder
if we could hear from you what your thoughts are. The proposal
attempts to bring the merging media platforms, specifically the
internet, under the existing regulatory framework for broadcasting.
Perhaps you could tell us if you consider this attempt to be appropriate
and what are the advantages and disadvantages that this regulatory
approach might have?
Mr Blowers: That is a very good question. It
is worth saying from our perspective that we would define "appropriate"
from an Ofcom perspective in a particular way which is an area
that we could regulate effectively. We could deliver on the underlying
public policy aims of the Directive in a way that was effective;
effective in protecting citizens and consumers, but also could
be done in a way that was proportionate and to the extent that
that would be appropriate so that other people, including no doubt
government, will talk about the economic impact of these proposals.
I can certainly give you our views on that, but our primary focus
in this area has really been can we arrive at a directive that
we, as the regulator, could implement in a way that was satisfactory.
The concern that we had really right from the outset when the
Commission first started talking about a revision of the Directive
was that they seemed to be going a lot wider than we felt was
really appropriate in terms of the scope of the proposal. The
system that we have inherited from the Communications Act is very
clear that we apply some very strict rules to broadcasting and
that, in our view, is the right approach that broadcasting has
a special duty and a special set of considerations because it
is a pervasive medium. It is in everybody's home, it has been
shown to be a medium that can cause great harm and offence, so
it is right that we have a system which carefully calibrates the
acceptable conduct of broadcasters. That goes way beyond what
we apply in the UK, for instance, under general law to print media
or to other forms of media expression. Where we would start in
a proposal of this kind is does the proposed extension of the
scope strike an appropriate balance or does it simply choose or
aim to extend broadcast-type controls to things which cannot really
be regulated in the same way that broadcasting can. That was the
concern we had from the outset that the kinds of things which
would appear to be caught by the Commission were the sorts of
things that really are much more appropriately dealt with in the
same intellectual and legal framework that we apply to other forms
of media expression which are not broadcasting. The debate really
has been in two parts: the first part was getting anybody to agree
with us that the scope was not what we thought it was. As veterans
of European legislation you will know that it is important to
play the ball rather than the man in the sense that it is important
to address the content of what is written on the Directive and
not simply the spin or the aspiration that accompanies it. What
we certainly feared was that many internet-type services, webblogs
containing video content, online gaming, for instance, would be
caught by this proposal and it was almost as if nobody had thought
that that might be the implication. We were very clear that those
things should not be caught by this proposal because they are
nothing like broadcasting. They do not have any of the characteristics
of broadcasting that we would think would be appropriate to regulate
in the same way as broadcasting. There is a kernel of new services
which will look and feel more like traditional TV. Some of us
already have video-on-demand services delivered to our TV set
and that will typically be delivering Hollywood movies, sports,
comedy programmes, documentaries, drama, formats already established
and quite often programmes that have simply been re-purposed for
a video-on-demand platform. There the case for some form of TV-like
regulation is clearly a lot stronger. People watching this content
via their TV it is content which, in many cases, has been originally
designed for TV and has simply been re-purposed or it is in formats
which people are used to from the TV environment. Our argument
from the outset was TV-like services—perhaps there is a
sub-category there of video-on-demand, TV-like services which
might be appropriately dealt with under this Directive—but
all the other things, the true internet content, the things which
individuals are putting up in the privacy of their own homes onto
their personal webblogs or whatever it might be, those sorts of
things we should leave outside of the scope. Our view of that
has not changed since the outset of negotiations.
Q121 Lord Haskel: Could you say how
you would wish the non-linear broadcasting to be defined in the
Directive?
Mr Blowers: The non-linear tier needs to be
defined as essentially, as I described it, TV-like services and
there are now words floating around in the system in the Council
Working Group and also in parliament that will go a long way towards
addressing that particular requirement. We will explicitly say
that what we are regulating is a subset of audiovisual media services,
a subset of non-linear and that subset is those things where consumers
might reasonably expect TV-type regulation because it is a TV-type
service.
Q122 Lord Haskel: Do you think that
Ofcom should have no regulatory powers at all on the other things
apart from what you call the broadcasting-like services?
Mr Blowers: What we require is a different kind
of oversight for those other types of services. This is an important
point to emphasise because certainly we are not asking and I do
not think anyone else that you will meet is saying there should
be a free-for-all as far as services not caught by this Directive
is concerned, but there are a range of existing legal powers,
legal instruments, which already regulate other forms of non-linear
content and we think those are more appropriate for the things
which are not TV-like; it is more appropriate that they be dealt
with under those other instruments. That is a combination of the
criminal law for the most heinous forms of content, if I can put
it in those terms, and the e-commerce Directive which already
provides a statutory legal framework around things like the identification
of services and that already applies to many other things that
will be caught by this Directive. Even at European level there
is already a pre-existing framework that deals with many of these
things. It is particularly important that we play a role in guiding
and assisting the industry to develop effective co-regulatory
systems for that extended range of services. That is something
that we have been doing actively and will continue to do, so it
is not a free-for-all. What we are saying is that that broadcast-type
regulation cannot sensibly be applied outside of those things
that I have described.
Q123 Lord Haskel: How would Ofcom
keep the public informed as to where they consider types of activity
to be linear or non-linear? We heard from Orange, for instance,
on Monday. They said that the industry is moving so quickly it
is a moving target. How would we know what kind of regulation
would apply?
Mr Blowers: As always when Ofcom is involved
there would need to be at least one consultation and possibly
several consultations. We are famous for our appetite for consultations.
We would expect as part of the implementation process to produce
quite a lot of guidance as to what services we felt fell into
the category that was caught and what did not. The fast-moving
nature of the industry is a real problem here and it is a lot
easier to deal with that through reissuing guidance and working
with the industry to develop our approach in real time alongside
the industry than it is to set very tightly circumscribed legal
categories now. One of the other things we see as an advantage
of moving away from some of the Commission's proposals on scope
and the definitions that it is using is that we create an appropriate
degree of flexibility so that our rules can actually evolve over
time. For instance, it seemed to us quite possible that over time
the TV-like nature of services may actually diminish, but potentially
could increase, so consumers appetite for a particular form of
protection could change over time and we need to be able to respond
to that.
Q124 Lord Haskel: You may, in fact,
review your regulatory activities as the thing develops.
Mr Blowers: I have every expectation that we
will be regularly reviewing this area for the next several years
because things are moving so fast. Certainly up until the point
of digital switchover it is very, very difficult to say what the
mature form of the industry will be.
Q125 Lord Haskel: So rather than
just leave it alone because it is moving so fast you would just
review the regulation as quickly as the industry is moving?
Mr Blowers: Yes, exactly.
Q126Lord Haskel: Do you think you could do that?
Mr Blowers: The other thing that we will be
looking to do is to—this is one of the recurring themes
that comes out from the transcripts of the evidence that I have
seen already so I will not labour the point—the important
role of the industry working with the regulator through what we
term "co-regulation" it is very, very important that
we have a process to sit down with the industry and work through
these problems with the industry in real-time. A lot of responsibility
here will be on the industry itself. If they know that they are
launching new services and new products which are likely to cause
new modes of behaviour and new expectations amongst consumers
and that at the point they are actually developing and launching
services what are the regulatory implications of this? I do think
that we are moving away from a traditional model where the regulator
opines intermittently on the importance of particular things and
the industry reacts to one where we are actually working with
the industry in an initiative process as they develop those services
Q127 Lord Haskel: What is the difference
between that and self-regulation? We seem to be getting awfully
close to it.
Mr Blowers: The important thing is that we recognise
the appropriate role both for the regulator and for government
to have some oversight in the overall integrity of the system.
Self-regulation works very well but certainly many people that
we have spoken to in the industry have made the point themselves
that it is important to have the parameters within which self-regulation
operates clearly set out by the public institutions. There is
a reluctance to take on functions of policy-making on behalf of
the government and that is not what we aim to do. We are not looking
to privatise our responsibilities. It is about finding that balance
between the two respective roles.
Q128 Lord Roper: On the question
of scope, Mr Blowers, could I ask your views on two matters: first
of all, in your answer to Lord Haskel you talked about the development
at a parliamentary level. There was of course the report from
the Culture Committee bringing together reports from the other
committees which was considered in Brussels on Monday. Do you
feel that is going in the right direction as far as its concept
of the scope and non-linear are concerned?
Mr Blowers: We are in much better place at this
date than we were six months ago, both in the Council Working
Group from what I understand the process there and also in parliament.
I have to say that our watchword is really continued vigilance
as far as that is concerned because we have seen in other directives
that the apparent emergence of breakout of commonsense in parliament
does not necessarily lead to a good outcome when the decision
goes back into the plenary and there are many stages in both parliament
and the council I suspect before we arrive at the final settlement
here. I am cautiously pleased at what we have seen but I still
think there is quite a bit more to do there.
Q129 Lord Roper: My second question
is I understand that Ofcom recently commissioned a study from
around Europe on two particular non-linear sectors: online games
and mobile multimedia. Would you like to say something about that
and whether that is in the public domain and whether those are
two sectors which you feel should certainly be outside of the
scope of the Directive?
Mr Blowers: First of all, let me explain why
we asked them to do that particular study very briefly. We were
concerned that the Commission impact assessment process had missed
a potentially very important impact which was the indirect effect
on the business behaviour of introducing these rules at a time
when this industry is taking off, and we were concerned that in
a very portable global world companies would respond to heavy
regulation in Europe simply to up sticks and carry out the activity
in a different jurisdiction. We asked Rand to look particularly
at that set of issues and the conclusion was very clear. Both
we and Rand felt that the online gaming industry should simply
be left outside of these proposals all together. It is a highly
portable industry. It is one where there are great opportunities
potentially for Europe, but at the moment we are second-fiddle
to other parts of the world, and it is the kind of sector where
people have a discussion where they will say we are bored with
being in the UK; why do we not all ship out to California? How
would that be? That was an area where we felt the right approach
was simply to exclude. Mobile multimedia is a little different.
There is no doubt that our mobile companies will be generating
exciting new content. Of course we want to get the rules around
that light touch but there is more scope there to work with industry
on the kind of model that I have been describing, a co-regulatory
model. I do not see it as critical to exclude mobile from the
scope of this Directive, although the mobile companies may feel
differently.
Q130 Chairman: We will come back
to the question of self-regulation later on. I have a couple of
supplementary questions on that. You have said that there was
some merit in having some non-linear audiovisual media services
included in the structure and then you went on to say that what
you meant by that was "television-like service". I have
to say that does not seem to be the kind of definition that would
hold up in a court of law. If I was in the industry I would be
totally baffled if I had to interpret that. I have heard it said
that you use words, for example, like films-on-demand or video-on-demand.
Is this not regulators struggling to find a way of defining something
so that it can regulate it? That seems totally anti-liberal and
pro-regulation at all costs. Not you, but it sounds to me like
someone is trying to justify regulating something.
Mr Blowers: Let me take the definition of problems
first. If we did not feel it was possible to come up with a workable
and vigorous proposal then we would be where we were at the outset
which was let us not extend this Directive at all; let us simply
tidy up the definitions of "broadcaster" and leave it
at that and all these other new services we will leave to be addressed
at a future time. We think that a combination of different definitional
elements within the Directive, not just the TV-like language that
I referred to, but a number of other important elements like references
to editorial responsibility—who has editorial responsibility
defines who is responsible for the service—in combination
can create a definition which the industry will work with. We
have had quite extensive discussions with UK and European stakeholders
about whether a text along the lines that is now emerging is something
that people would be prepared to live with. I do not know what
industry stakeholders would say to this Committee but I do know
that in those discussions we have gone a long way in building
a consensus that the kind of language and the kind of text that
we are supporting is one which actually is a workable basis on
which to go forward. On the question of whether this is a regulation
looking for a problem—
Q131 Chairman: A regulator looking
for a problem?
Mr Blowers: In our case we have taken a very
consciously deregulatory approach in a number of areas; deregulatory
in the sense that we are trying to find an appropriate level of
regulation for the issues that we are being asked to regulate.
Generally speaking, in Europe there is much more of a cultural
tendency to regulate unless there is a very good reason not to.
If you are asking could we have lived with the current UK position
of no regulation in this area, although with some reserved powers
the Communications Act could be extended, as an aside that is
where we are at the moment on video-on-demand. The position is
that the scope of the Communications Act would be extended to
catch video-on- demand, but because there is an existing industry
self-regulatory scheme there is no requirement to trigger provision.
That seems to me to have been a perfectly acceptable basis on
which to go forward. We are where we are. We have to find a common
ground with 25 Member States and Ofcom's advice to the Government
has been the kind of text that we are describing is something
that we could live with that might attract sufficient support
amongst our peers in Europe and will not have the over-regulatory
effects that we have identified as being potentially dangerous.
Q132 Chairman: It is creeping regulation.
To help the Committee go on to the next stage of questions,
what would be the effect of the Directive upon non-linear services;
that is your television-like audiovisual media services? What
would be the current proposal and your view of what it should
be?
Mr Blowers: The way that we unmodified the Commission
proposal would have required that we introduce some form of licensing
system for any service that was caught. We did a very rough calculation
of how many licensable entities we thought that might involve
and when we got to about 50,000 we decided to stop counting. We
moved from a situation where we had 750-800 licensable content
service providers to a situation where we would have had 50,000,
hence our concern about the extension of scope. If the Commission
were here they would say that reflects a particular UK preoccupation
with licensing systems. We did look at other alternatives but
we felt that if you were forced to extend the scope, probably
some system of licensing would be the least onerous way of doing
it. These are difficult matters to leave just to the courts. That
is why the initial proposal did not butter any parsnips, if I
may use that expression, in Ofcom. What we think the effect of
the kind of text that is now emerging—obviously this is
a moving target so it is quite difficult—if we got what
we are looking for, a cut-down extension of scope only to TV-like
services and an agreement that we could have a co-regulatory system
of implementation, what we would then expect to happen is that
we would work with industry to set up appropriate co-regulatory
schemes which look very much like the existing self-regulatory
initiatives but they would be underpinned in some way by Ofcom
and the Government. We would give them their marching orders and
we would say these are the parameters of the scheme that we would
like you to put in place.
Q133 Chairman: I am trying to help
the Committee to go on to the next stage. I do not want you to
expand on each part but there would be certain controls/regulations
of linear services—real television services—I am trying
to make this distinction between "like" and "not
like". Real television services would be subject to certain
regulation. Like television services would be subject to somewhat
different regulation. What would be the difference? Just the headlines
because we are going to go into more detail later.
Mr Blowers: Essentially the difference would
be that, as now, the linear broadcasters we would regulate through
a licence and that licence would require compliance with certain
things like a broadcasting code and an advertising code and set
out detailed rules that the licensee has to comply with. What
we hoped to achieve in the non-linear tier would be very much
the same substantively in terms of codes that would implement
the key requirements of the Directive, but instead of having a
licensing system we would have a system of endorsing a co-regulatory
scheme that the industry itself would put together, so that would
be the difference. Going back to the point that Lord Haskel raised,
that is a system that is more flexible to deal with the real time
change in the industry and it also places the onus on the industry
to work with us to find the right solutions.
Q134 Lord Roper: On quotas I wonder
whether you would like to say something about that? Quotas are
obviously proposed to be extended but do you consider that they
are at all an appropriate mechanism for promoting production of
European works?
Mr Blowers: The specific question here has been
whether the language in relation to support for European works
in the non-linear tier is unduly onerous or not. That is definitely
an area that is a moving target because, as you can imagine, there
are some people in the Council Working Group who would like to
raise the bar as far as quotas are concerned and there are others
arguing for a much lighter touch. Our view is that the wording
that the Commission has proposed in this area is acceptable. It
would leave it primarily to the Government rather than Ofcom to
determine the appropriate means of implementation here in the
UK. That is an issue that no doubt you will raise with the Minister.
Our view would be that it would certainly be appropriate to adopt
a light touch regime in this area. An attempt to impose a very
heavy quotas regime on new emerging services for me would feel
like a mistake.
Q135 Lord Roper: You do not think
that the extension which is proposed by the Commission to the
online services is particularly onerous at the moment?
Mr Blowers: Not provided we retain that flexibility
as to how we implement it in the UK. Small changes in language
here could have a big effect and that is one of the things that
we all need to keep a very close eye on in negotiation.
Q136 Chairman: Non-linear services
would be subject to regulation, however light touch, on proportion
of European content.
Mr Blowers: What the actual requirement of the
Directive is is that Member States have to report on what measures
they have introduced to promote European works in relation to
the non-linear tier. Promotion of European works could mean an
array of different things: it could mean financial support; it
could mean the specific tasking of particular bodies with the
creation of European works; it does not necessarily mean a quota
system. That is an important point here. That is why I am saying
the choice of language is all important. It does not necessarily
have to be a specific proportion of the catalogue.
Q137 Chairman: There would be no
expectation of a proportionate quota of European content henceforth
in the television or television-like services?
Mr Blowers: I am trying very hard not to duck
the question but it is an issue that government will have to take
a view on in due course when they implement the Directive.
Q138 Chairman: It is not in the draft
Directive.
Mr Blowers: Assuming the wording stays the same
as it is at the moment in the Commission's original proposal there
would be an obligation on the Government to look into this area
and to decide what measures were appropriate and it would then
have to report on what measures it had introduced within a set
timescale; I think it is three years. That is what we are being
asked to do at the moment. We are not being told to put in place
a quota system.
Q139 Baroness Eccles of Moulton: I
am puzzled about this. It seems to me that the linear tier is
relatively easily defined. When you get into the non-linear tier
it seems to be multi-tiered. When one talks about the possible
imposition of quotas are in any way an obligation on the Government
to report back about what it is doing about the non-linear tier,
it cannot be meaning everything that is within that tier because,
for some of it, it would be completely inappropriate. Once again,
we are in grave difficulty of definition, are we not?
Mr Blowers: Let me answer that in two ways that
may be helpful to the Committee. First of all, that is why I think
this flexibility for national governments to determine how we
implement this provision is very important. We should not lose
sight of the importance of that provision in the negotiation.
The second point to make is that in other European countries this
debate feels entirely different. If you spoke, for instance, to
our peers in France they would say that they absolutely intend
to impose quotas on video-on-demand catalogues. They would not
try and impose quotas on video blogs but they would definitely
try and impose quotas on video-on-demand catalogues. I suspect
that the only way that that particular circle is going to be squared
is to give Member States some freedom as to how they choose to
implement this. That is my sense of the raw politics around that
particular provision.
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