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31|03|04

Ofcom urges action on digital switchover in television

Government and industry cannot rely on market forces alone to deliver near-universal switchover from analogue to digital broadcasting in television, Ofcom Chief Executive Stephen Carter has warned.

In a speech to the Westminster Media Forum, Mr Carter revealed some of the key findings of Ofcom’s report to the Secretary of State for Culture, Media and Sport on the prospects for digital switchover. The full report has now been presented to DCMS and will be published next week.

Mr Carter said: "Digital television in Britain has been one of the most successful market-led technologies ever. Our assessment is that the market alone will deliver somewhere between 75-85% penetration. However, if unaided, it will then stall."

The report will conclude that switchover is both desirable and achievable, provided that Government is in a position to give greater certainty over the timing of switchover. Its key recommendations will include:

• Greater progress towards cross-party political support for digital switchover.
• The creation of a new autonomous body, a "SwitchCo" with representation from Government, industry and regulator but independent of all parties, with responsibility for achieving switchover by a specified date.
• The BBC Charter Review process should be used as an opportunity to put the BBC’s formal commitment to digital switchover on the same footing as other terrestrial broadcasters.
• The BBC’s commitment to digital switchover should be platform-neutral.
• Access to free-to-view digital TV through satellite should be improved to encourage take-up of digital services prior to switchover.

In a wide-ranging speech looking back at the first 100 days of Ofcom’s existence as the new communications regulator, Mr Carter also addressed a number of other key policy areas.

He announced that Ofcom will publish the outcome of Phase 1 of its Strategic Telecoms Review at the end of April. In parallel, Ofcom will also publish a full overview of its plans for regulation of the broadband market, together with details of its decision on the migration charge payable by operators to BT when moving broadband customers onto BT’s wholesale Datastream product.

In mid-May Ofcom will publish its analysis of the Wholesale Broadband Market and will also set out the principles it will follow in its Market Review of Local Loop Unbundling. Finally, at the end of May, Ofcom will publish details of the retail minus margin in the Wholesale Broadband Access market, intended to enable other network operators to compete more effectively against BT.

Mr Carter also confirmed that Ofcom had launched an own-initiative investigation under the Competition Act into BT’s planned changes to its package of residential voice call tariffs and line rental charges. This was announced separately earlier today.

Addressing stakeholder concerns about the increase in the cost of regulation under Ofcom, Mr Carter pointed out the Government’s requirement that the industry fund, through an increase in licence fees, the repayment of the loan required to set up Ofcom.

Whilst the regulator has already cut headcount by 25% and like-for-like running costs by 5%, the addition of 130 new statutory duties under the Communications Act, a requirement to pay VAT (which did not apply to two of Ofcom’s predecessors, Oftel and the Radiocommunications Agency) and the requirement for industry to repay the set-up costs for Ofcom meant a net increase in licence fees for 2004-05.

In response, Mr Carter announced that Ofcom would be committing to a rolling 5% per annum reduction in Ofcom’s costs over the next two years. By April 2006, Ofcom intended to have absorbed the additional costs of VAT, the additional costs of the new statutory duties, and taken Ofcom’s costs below the baseline inherited from the legacy regulators.

Ends.

Notes for editors and CSEs

Ofcom is the independent regulator for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services.

Our duties include:

• The promotion of choice, quality and value in electronic communications services, where appropriate by encouraging competition between the providers of those services
• Ensuring the most efficient use of the radiocommunications spectrum – the airwaves used for the transmission of all non-military wireless communications services
• Ensuring a wide range of electronic communications services, including broadband, is available across the UK
• Ensuring a wide range of TV and radio programmes of high quality and wide appeal
• Maintaining plurality in the media by ensuring a sufficiently broad range of ownership
• The protection of audiences against offensive or harmful material, unfairness or the infringement of privacy on TV and radio

For further details please visit www.ofcom.org.uk

Contact

Ofcom Media Office

mediaoffice@ofcom.org.uk

(+44) (0)20 7981 3033

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