Examination of Witnesses (Questions 240-259)
Mr Hamish MacLeod and Mr Dario Betti
30 OCTOBER 2006
Q240 Lord Walpole: How do you know
it is a minor and not someone using his father's mobile?
Mr MacLeod: We do have processes in place to
try and stop that happening but we are in a similar position to
a supermarket that sells a bottle of whisky to an adult who then
irresponsibly gives it to a minor. We try and prevent that through
our processes but it is not ultimately completely preventable.
Q241 Lord Walpole: Ultimately, I
do not think you can stop them.
Mr MacLeod: I think that is right.
Mr Betti: It is an active process as well, if
I understand correctly. You have to voluntarily say that you want
your phone to be activated for receiving things, so your phone,
even if you are 18, would not automatically receive adult content.
It is a two-step process.
Mr MacLeod: Your question is not a silly one.
It gets at the nub of the problem. If you can access content over
the internet through the basic connectivity given to you by your
internet service provider or your mobile as an internet service
provider, there is very little that is going to stop you.
Q242 Lord Walpole: This may be an
even sillier question: how many of your mobile members are actually
using the thing at the same time? Are there hundreds of thousands
of things going on at the same time that your clients are accessing
through broadband?
Mr MacLeod: We like to think so, yes. The first
20 years of mobile has all been about communications, about voice
and text message, and the next 20 years will be about developing
it as an information and entertainment device. So it is all fairly
young.
Q243 Lord Walpole: Yes, but one knows
even with a mobile phone that the station you are trying to get
into is sometimes full, very often full. If you are coming across
the Channel for instance, the Isle of Wight gets totally jammed,
as you probably know. I hope it is not one of yours. It is just
that the quantity of stuff is inconceivable, is it not?
Mr Betti: Currently it is probably manageable
by new networks but over the long term, you are right. We are
already looking at alternative ways of delivering broadcasting-like
services to users.
Q244 Lord St John of Bletso: A very
brief question, that is not really within the scope of what you
have given evidence on but what has been the take-up of 3G so
far?
Mr MacLeod: The published numbers are just under
5 million subscribers in the UK, I believe.
Q245 Lord St John of Bletso: Because
obviously, as the take-up increases, the threat increases of more
content being downloaded which is of an improper nature.
Mr MacLeod: The opportunity, yes.
Q246 Chairman: Can I turn to the
most positive side of things. These are fundamental questions.
The theme running through your evidence and that of others is
that in some way, if this Directive was got wrong and the draft
Directive as initially published was, in your view, wrong in some
regard, this could do two things. It could stifle a nascent industry,
and a very important one, and secondly, it could drive the industry
offshore, outside of the European Union. We can understand those
as general propositions but I cannot quite understand what it
is about the draft Directive that could have such Draconian consequences.
What is the draft Directive as it stands proposing that would
threaten this nascent media services industry? What specifically?
Some people might say you were crying wolf about this. What no-one
has actually said is "This is the threat." What is it?
Mr MacLeod: It is very dangerous, obviously,
to cry wolf, and I think the Commission to a certain extent think
we did that the last time. Let me just take two things. I will
treat linear and non-linear separately, however we choose to define
them. If we say linear is traditional broadcast, some mobile services
will fall within the definition of linear because they will be
very comparable to what is produced by BBC and ITV. There are
a few measures in there that we think should be relaxed, and we
have referred to them already really. The advertising rules I
think could be relaxed. The second aspect is the quotas. There
are quotas of European works and quotas of independent production
and that sort of thing, which, when the Directive was first introduced,
Member States were given time to build up to the quota levels,
whereas as the Directive is currently drafted, any linear service
will be expected to meet the quota requirements from the outset.
I think that it is a bit disproportionate to expect mobile linear
services, which are only just starting in the market, to have
to worry about quotas. The same goes for the advertising quota
on the linear side. On the non-linear side of life, are we all
going to relocate to the Bahamas, etc? It all depends on the implementation
rather than the Directive itself, I think, because the terms of
the Directive are quite specific: national regulators shall ensure
that services are not made available in a way that might harm
children. They are very specific on that. But at the moment it
is really too early to say what will be required of national regulators
in order to do that, or how indeed they will go about fulfilling
that obligation, and how indeed the European Commission will go
about enforcing those requirements on Member States. It is much
too early to say but there is no doubt about it; the potential
is there to be damaging and we are saying: is this a risk that
you need to take? Is this the right approach?
Chairman: That leads us into the question
of the original impact assessment by the Commission.
Q247 Lord Fearn: Mine could be rolled
up into three questions, I think, on impact assessment. Has the
Commission adequately considered the impact that this proposal
is likely to have on the sector? Is it even possible to predict
the likely costs and benefits of this proposal with sufficient
reliability to support the proposed changes in the Directive?
Thirdly, would a precautionary approach to regulation suggest
different proposals for change?
Mr Betti: We have seen four impact assessments,
I believe, so far, within which the effect on mobile especially
mobile linear services—was not covered as much. Some of
these implications we have spoken of are the quotas. We have seen
the impact assessments from Ofcom, RAND, the DCMS and the Commission
itself.
Q248 Chairman: Could you discuss
the Commission's impact assessment first?
Mr Betti: I believe the Commission did not analyse
very closely the impact on the mobile elements. We would like
to have a chance to comment on some of the generic assumptions.
One of them, I believe, is that there is an overall net neutral
effect, which we might disagree with. The assumption right now
is that the overall business case for the mobile TV or mobile
video services are very solid and possibly not affected by changes
in advertising rules or quotas, and actually that might not be
the case. We still think, as we have said, it is a very new market.
Every year important things change in terms of our understanding
of how it is going to develop, and definitely over the last year
and a half we have had more insight into what could be. But it
is still a bit too early to say that we have looked at them in
detail for the mobile-specific side. We have seen so far the one
study that looks more closely at the mobile-specific aspects,
I believe was the Ofcom one, but even there were elements that
were not covered, such as the non-linear.
Q249 Lord Fearn: What about the likely
costs and benefits?
Mr MacLeod: It is very difficult to assess those.
They did not put any numbers to them, or even particularly attempt
to put numbers to them, and we would struggle to too. I must admit,
that is a big task to quantify these. You can really only point
to where are the potential pluses, where are the potential minuses,
which is actually an approach the Government took. Honestly, it
is difficult to say where the potential pluses are. There are
some minuses, which have been alluded to. We do not know how big
they are. The pluses are more questionable, I am saying that,
on the balance of probabilities, it would come out negative.
Q250 Baroness Eccles of Moulton:
If you are confronted with an impact assessment based on a draft
Directive and it does not contain any numbers, therefore you cannot
calculate the cost benefit, does that not say something rather
worrying?
Mr MacLeod: Yes, I think that is a very fair
comment, but then I do recognise how difficult these impact assessments
are to do, because they are dealing with so many unquantifiable
issues.
Q251 Baroness Eccles of Moulton:
This is something that could possibly become law.
Mr MacLeod: I recognise that.
Q252 Chairman: Lord Fearn, I assume
with that in mind, asked whether a precautionary approach to regulation
would have suggested different proposals. With a precautionary
approach, as I understand it, you say "Look, be very careful.
Don't do something that might lead to problems if you are not
sure about it." You would be careful about it. You would
do the minimum required. You appear to be saying to us that the
Commission did an impact assessment, put out proposals on the
basis of that that you are unhappy with, and you say you could
not put numbers to them. Does that not suggest to you the Commission
should have been very much more careful about what it proposed?
Mr MacLeod: I think we would agree with that,
certainly.
Q253 Chairman: Were you consulted
by the Commission?
Mr MacLeod: Not specifically, no. Obviously,
we have had an opportunity to give input now, but way back, when
they did the original thinking about this revision, no, we were
not directly consulted.
Q254 Chairman: Why do you think that
is the case?
Mr MacLeod: I do not think we were really on
the radar at that time. The whole market has changed considerably.
When they originally thought about this, it was all about television
and services like television that you were going to get through
the internet. It was not about mobile or user-generated content
or anything like that.
Q255 Lord Geddes: Following that
up, things moving at the speed they are, is this Directive, whatever
form it may take, going to be out of date before it is printed?
Mr MacLeod: I think there is a good chance of
that, yes.
Chairman: Which then suggests a precautionary
approach.
Lord Roper: Is there a European body
which brings together bodies like yours from other Member States?
If so, are you co-operating with them and do you have a common
position on this?
Q256 Chairman: If you can finish,
we have two or three minutes before we need to go and vote.
Mr MacLeod: All my members are also members
of the GSM Association.
Q257 Lord Swinfen: I am just wondering
if your members have tried to cost the impact assessment, because
it could have an effect on their future plans.
Mr MacLeod: Yes, and the answer is no, we have
not come up with a pounds, shillings and pence number, but what
we have tried to assess is what is going to be positive here and
what is going to be negative, and the balance seems to be negative.
How negative is very hard to say.
Q258 Lord Haskel: My question is
very similar to Lord Swinfen's question. Have you made an assessment
of what effect this Directive will have on the business of your
various members?
Mr MacLeod: Yes, we have, and that is why we
are taking a huge interest in the development of it.
Q259 Lord Haskel: What would that
effect be?
Mr MacLeod: The best case outcome is that there
will be no impact because, as I mentioned earlier, we have our
code in place, it is very successful, and if the final implementation
requires us not to make any changes to that code, and we have
a very low cost of regulation, etc, we could have a reasonably
liveable outcome, but we do not see any better position than that.
We can only see a downside.
Chairman: Mr MacLeod and Mr Betti, this
is most unusual, but it was so near the end, thank you very much
indeed. You have been patient and willing to give us answers to
a lot of questions, and you have put up with this division bell
to finish off the meeting. Thank you very much indeed. We will
now adjourn for the division and we will take the next witnesses
after the division. Thank you very much.
The Committee suspended from 5.29 pm to
5.41 for a division in the House
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