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Home > Media and Analysts > Speeches and Presentations > 2007 > Jan > IPPR Media Convention


18|01|07

IPPR Media Convention

Ed Richards, Chief Executive, Ofcom

Introduction

Thank you very much for the opportunity to speak to you today.

I have been attending this conference for some years. It is a very important conference which plays no small part in setting the policy agenda for the year to come.

So it is a real privilege to have the opportunity today to give the opening keynote speech. The IPPR has a habit of being able to time its convention very well – and has certainly managed it this year. Understandably people are very interested in Celebrity Big Brother, which I am not going to talk about in my speech, but also I hope, just as interested in the Licence Fee settlement and its implication.

The Licence Fee settlement is a watershed, as licence fee settlements always are. But a watershed which should now allow us to lift our sights and begin a thoughtful conversation about the future of the communications and media sector.

And as someone very closely involved with the drafting of the 2003 Communications Act, the subsequent creation of Ofcom and who now has the privilege of leading Ofcom through its next stage of development, I’m very glad to have the opportunity to share my own thoughts with you today.

What I want to set out today is a vision, not a brand new, breathless vision. But, if you like, a re-assessment of the vision which led to the Communications Act, asking the questions: what’s next? Is the work of the converged regulator nearly done? Or is a new chapter opening? And if so, what’s the outline of that chapter?

It’s easy to assume that the arguments about converged digital media are now all over bar the shouting, but believe me, they’re not.

Take just two very recent perspectives:

First, the political debate about the BBC licence fee and the anticipated decision, to fund the BBC in the next decade in a way which constrains some of the corporation’s ambitions and which subjects the licence fee regime itself to a mid-term review in about 2010.

Second, the position of the News Corporation, which hasn’t really changed in the two decades that Sky has emerged as such a powerful force in UK electronic media. We heard the vision re-stated by James Murdoch just before Christmas at Ofcom's international conference when he made it very clear that his idea of the future of regulation is a room full of blank computers and empty desks. An intriguing image even for me.

Rupert Murdoch, to be fair, has always argued that television would relatively quickly become as unregulated and unregulatable as books and newspapers.

The fact that the UK is home to two such powerfully differentiated voices as the BBC and Sky guarantees that the regulatory debate will remain contested.

What has been the vision which frames these mighty competing views? It is still very much, in my view, the vision of the Communications Act, which identifies the parallel importance of the claims of the citizen and the consumer. Which specifies that competition not regulation or intervention is the right answer in most situations, but not all.

It is a vision designed to ensure that the public realm maintains an appropriate place alongside the private.

It is a vision which seeks to ensure that our media and communications polity is vigorous and competitive, but also rounded and well balanced. It is a vision in which there is room for hugely diverse organisations to prosper alongside each other. Organisations like Sky and theBBC, BT and Skype, Vodafone and Virgin. We know that the UK’s communications industries are in rude, if sometimes turbulent health.

At such a moment, it is tempting to declare victory in the communications revolution and move on.

But that would be a big mistake. What we have in the UK digital media scene is a piece of work which is not so much half done as probably never likely to be completed.

If citizens are to have their interests represented alongside the private consumer, then we need vigilance, an enquiring and a sceptical eye, and we need a willingness to review and, from time to time, reinvent.

Today I want to focus on one particular aspect of that agenda and think about some key elements that will need to be part of the digital media vision for 2010 and beyond.

Convergence: setting the scene for the future

These are exciting times, full of opportunity.

Opportunity created by what is possible in distribution and in creativity for viewers, listeners, surfers.

In 2006 alone, we have seen:

All fuelled by the raw materials which underpin convergence. In broadband, entry speed of 2 Megabits, with up to 8 Mbps becoming commonplace as thousands more homes become part of the audio and video capable broadband platform.

This will be fuelled by future developments. Wireless services will flourish - Ofcom will release three times the amount of spectrum released for 3G. New wireless standards like HSDPA and DVB create new and better uses of that spectrum, especially for mobile services.

Just before Christmas we published our consultation on the Digital Dividend Review, looking at the reallocation of the spectrum freed up by digital switchover. Some had argued that spectrum scarcity was a thing of the past and that there was not going to be much interest in this spectrum.

In fact, the striking thing about the DDR has been just how much interest there has been and how diverse that interest has been:

All this has changed the environment for broadcasters and telecommunications companies fundamentally.

Of course, we face the ever-present questions of how to create compelling content and how to distribute it as widely and effectively as possible. But in addition to that, I would characterise the evolution we are now seeing as having four relatively simple phenomena at its heart.

The demand for greater control, mobility, participation, and the inevitable disruption that all this will create.

1 CONTROL

One of the clear themes emerging is the desire for control.

This is not new. The first manifestation was the introduction of the remote control. Many of you will not be old enough to remember how revolutionary it was to be able to control the television from the comfort of your sofa, albeit usually with only two buttons: one to flick between the four channels and one to turn the television off.

The 1980's brought multi-channel television to the UK bringing consumers more choice and control about what they watched than ever before.

So you could describe today as the third wave of delivering control to the viewer.

Technologies and services exemplified by PVRs and by broadband on-demand services offer this third wave of viewer control.

It is a move from scheduler to viewer, from company to consumer.

2 MOBILITY

Similarly, today's consumer wants mobility of services on an unprecedented scale.

In the early 1980s we saw the untethering of voice through the introduction of mobile phones in the UK: No-one accurately predicted the astonishing impact of wireless cellular services.

Voice communication was followed by data , in particular the global phenomenon of texting which resulted in a staggering 40 billion text messages being sent in the UK alone last year; and of course email.

Today, companies can combine storage and wireless distribution to offer mobility:

3 PARTICIPATION

Thirdly participation.

In the past viewers and consumers were largely passive recipients of media. Millions of today's audiences will not be so.

They want to be part of the story. They want to help write the story, report the story or even be the story themselves.

Today I can be a producer, presenter or director if I wish, in my own home using my own technology.

I can share pictures, videos, thoughts and ideas globally in seconds, creating social networks of thousands of others like me in just a few clicks of a button.

And just as it will remain a central part of our needs to be entertained, to sit back and enjoy the wonderful creativity of others - so too is involvement, a desire to participate ourselves, a central feature of basic human needs. But only now, do electronic communications make that possible on a meaningful scale.

4 DISRUPTION

Amidst these exciting changes, we are witnessing significant disruption to our established sense of how businesses earn profits in the communications sector.

Look at just a few examples:

This will be a period of opportunity but also of disruption - commercial disruption as business strive to reinvent themselves for a new landscape.

But at the same time there is something else happening: We are seeing the means of achieving public purposes disrupted, as the existing levers for achieving public purposes are eroded by technological and market developments.

It is here where we need the vigilance and review which allows us to ensure we keep the citizen interest and the consumer interest in step and in balance.

In content regulation the traditional regulatory approach which worked so successfully for a national linear broadcasting model is simply not designed for a multi-platform world of global information.

Take as a sharp, contemporary example the mobile phone video of Saddam Hussein’s execution, which flashed around the world in minutes.

Graphic images of user-generated content appearing in differentially-regulated media.

In that context our current model of binary regulation - tv regulated, internet not - is being stretched to the limit.

We are dealing now in continuums. Audiences have different expectations if they are watching BBC, Fox TV, or YouTube. Content regulation needs to evolve to address legitimate areas of public interest while also reflecting these different shades of expectation.

Against that backdrop, some big strides have already been made in the Brussels negotiations on the scope of the Audiovisual Media Services Directive. It looks to be coming out in a sensible place; and with a sensible emphasis, beyond the traditional broadcast environment, on effective self- and co regulation.

This is progress, but will only work if it is not seen as a static ‘solution’ to content regulation, but rather as the bridge to an evolving approach for the next ten years. This is an important area, where the time is ripe for a wider public debate on the way forward. We will be contributing to that debate during the course of this year.

But it is the second disruption to the balancing interests of citizen and consumer that I would like to spend a little more time on this morning. Disruption to the traditional model for the creation and distribution of public service content - the public service broadcasting system.

Why now?

When we undertook our Public Service Broadcasting review in 2004 and started getting to grips with the likely pace and implications of digital switchover, some people said we were jumping the gun. In fact, all the major changes we forecast have occurred far quicker than we predicted.

The Licence Fee settlement is an important moment in time. I think we can safely say that the Government will not make further direct intervention during the period of this Licence Fee settlement.

That may seem like a long time. But three years ago people doubted DSO would actually happen. At this very convention, if I am not mistaken, people predicted that it would grind to a halt amidst popular resentment and political fear. But in 18 months or so from now, the first main regional transmitters will switch off analogue television.

So let's think about it another way. Let me ask you to look forward, and then work backwards from 2012 to identify the task for today.

2012 is a big year. Not just because of the Olympics. It will also mark the end of the switchover process and if the reports are accurate, will be the last settled year of the current licence fee settlement.

The Government has already confirmed its policy will be to conduct a review of the case for distributing public funding - including licence fee money- more widely beyond the BBC. They expect to do this toward the end of switchover. By then the value of ITV’s analogue spectrum privileges will be minimal if not zero; their digital privileges a few tens of millions and their incentives to provide public service programming correspondingly small.

Any debate on the future funding of PSB will need to be informed by Ofcom's next PSB Review. So any proposals made in that review which are going to be relevant for the 2012 PSB debate will need Parliamentary scrutiny in 2010 or 2011.

That means our Review reporting in 2009 to allow debate and decision, which means starting in 2008.

Which means our Review starting in 2008.

So suddenly 2007 seems like a crucial year to be developing ideas. And the year of decision - 2010 or 2011 – seems not very far off at all.

Elements of a New Digital Media Vision

So, if we seek to sketch out a vision for digital media looking ahead to 2012 what is its outline?

First, we need to recognise that tomorrow’s digital media vision will sit in a global context, as citizens and consumers increasingly browse around the world for their audio visual information and entertainment.

Second it means building on the successful mixed economy we have today and Britain's real achievement in balancing public and private, citizen and consumer in its media polity.

We need to recognise that the market will provide a great deal: in particular innovation, risk taking and profitable content and distribution.

We need to realise that much of what citizens and consumers want and need will be delivered by the market, if the market has the confidence to take risks and to innovate.

So thirdly, it means that any public intervention needs to be transparent and accountable but it also needs to be bounded, bounded both in the level of funding and by mechanisms which place limits on scope and expansion.

The Market Impact Assessments and Public Value Test of new BBC services are a start in that direction

Fourthly, the digital vision will need to have original production and creativity at its heart, stretching those that deliver it with ambitious purposes and objectives, including innovation, quality and engagement.

Fifthly, we need to identify the right way to give this new meaning, by ensuring that we have an approach which is accessible to all, plural in character, diverse in content and responsive to the audience need of this century, not the last.

Let me pick up a couple of these ideas.

a) Investment in original production

First, future investment in original production.

I referred earlier to James Murdoch’s speech, in this he argued that the market left to itself will provide sufficient levels of investment in high quality original content.

It would be fine if this was true, but it flies in the face of the evidence to date. After 20 or so years of multi-channel television, we are still in a position where the PSB broadcasters invest over two billion pounds a year in original production in the UK.

In contrast, non-PSB broadcasters invest less than £100 million a year.

Original production remains the core of the Communications Act’s rationale for public service intervention. Even in a fully commercial world, post 2012, ITV and Five will continue to have the incentive to invest and - to the extent that they continue to be able to attract sizeable audiences - the ability to invest in original production. But that investment may be less than in the current environment and across a narrower range.

Well before that date there are some heartland PSB genres which the commercial PSBs have provided in significant quantity alongside the BBC - regional output, news and children’s television - but for which the commercial rationale is getting harder to justify. In these areas we need to ask the hard questions: what is the audience benefit? What is the relationship between plurality of supply and diversity of output? Because the one does not necessarily lead to the other. In commercial radio it has been argued that insistence on plurality has fragmented supply and actually reduced diversity.

So we have brought forward our planned reviews on children’s television and news provision.

Let me say a few words about news, which is the subject of one of the break-out sessions later this morning; and my colleague [Alison Preston] will outline some of the results of our initial research.

This research highlights two headline issues.

Firstly, the drift away from news consumption, whether in broadcast or print media appears to be a secular trend that is accelerating, particularly among certain groups. Many get their news from other sources - notably online.

But are they also changing the way that they absorb news? In other words, getting specific information about single issues that interest them as consumers rather than following news more widely as citizens. If so, how far does this matter for a healthy civic society?

Secondly, the current framework has delivered quantity and plurality in news output, but is it providing sufficient diversity? And is that lack of diversity itself contributing to the drift away from news consumption?

The regulatory framework may help generate the high levels of popular trust in broadcast news compared with other outlets. But the impartiality rules which underpin that trust may come at the price of constraining diversity of viewpoint.

b) Plurality and diversity

The second big question is how do we achieve plurality and diversity in the post switchover world?

First, let me address the role of Channel 4.

Channel 4 today provides us with some wonderful programming: The Motorcycle Diaries, Road to Guantanamo, Fighting the Taliban and Longford to name but a few - and of course some more colourful not to say controversial programming.

On this day of all days, it is important to see beyond the morning headlines and to say that there is no question that Channel 4 brings real diversity and plurality to the public service landscape.

We have commissioned an independent financial review of Channel 4 to provide a really thorough assessment of Channel 4's future financial challenges and their likely impact on its ability to deliver its public service remit. It will be a tough and rigorous review.

It is too soon to know what it will conclude. However their work to date has helped to clarify the issues that we need to understand in order to assess the true sustainability of Channel 4’s contribution to plurality in public service broadcasting in a digital environment.

And three questions have emerged:

First, to what extent, if at all, will Channel 4’s unique blend of public service and commercial broadcasting become unprofitable in future? Its core public service channel has generated substantial returns in recent years. But the market is becoming more competitive, the advertising market is in a decline which may be cyclical or structural. But, as you know, it was Ofcom that identified the structural pressures on Channel 4 arising from the switch to digital TV.

Second, if the core channel’s funding model is threatened, to what extent will its digital off-shoots fill the gap?

Third, are there new investments that Channel 4 could make to help fill any remaining funding gap?

We expect to be able to publish the report’s findings towards the end of March.

Our digital media vision of plurality and diversity will also need to be realistic about how the public service content of the future will be delivered – responsive to the audience’s needs, not of the twentieth century, but of the twenty first century.

So, not only does content need to be original, innovative and of high quality, but it will also need to be mobile, on-demand and participative.

The delivery channels for public service content are going to change and if public service content is going to be made available to future generations, this means using the tools, the technology, the form and the culture of digital media.

This does not mean simply a series of alternative distribution models for the same linear content, because new types of content have characteristics that make them go far beyond traditional broadcasting.

In particular, it is user participation that is one defining quality that separates successful networked content from traditional broadcast media. And rather than abandoning the concept of Public Service as the broadcast model changes, the shift to participative, interactive media offers us the opportunity to revitalise our idea of Public Service for new and active citizens and consumers, as well as the passive viewing which will remain attractive and valued.

The PSP

So we believe that it is worth debating the case for a new provider of public service content which has its centre of gravity firmly in new media, and with a remit specifically designed for new forms of content provision.

Next week we will publish a discussion document on the Public Service Publisher - an idea we floated in the PSB Review as one way in which we could address the decline of the analogue model.

At the same time as we publish our developing ideas a website will be launched containing the output of the PSP creative forum, chaired by Andrew Chitty and Anthony Lilley, who were commissioned by Ofcom to explore what a public service new media entity could do create.

The website discusses both existing online content which meets public purposes and puts forward a number of speculative creative ideas that would be possible in the near future.

As an open media network focused on what can be achieved with the full range of new media rather than broadcasting, the PSP could be a bold approach to public service content delivery in the digital environment.

Should it be a new institution? We remain open minded. There are very good arguments for attaching the PSP to an existing PSB institution.

On the other hand, history also tells us that new institutions bring energy and new and exciting market and creative change:

One can reflect back on the debate that followed Lord Annan's report on over whether or not Channel 4 should be a stand alone institution or a second ITV channel.

Of course, what we ended up with was a new institution - Channel 4, initially funded by a levy on ITV companies who in return sold Channel 4 airtime.

A very innovative funding structure for its day.

We need similar imagination for our digital media vision for 2012. We look forward to elaborating our thinking on the PSP, on Channel 4, on children’s TV, news and regional production in the months ahead.

Conclusion

The world has changed since Ofcom was created, and will continue to change very fast in the next few years.

So we need a Digital Media Vision to guide us into the future. As in the past, creating that vision will require imagination, innovation and boldness as well as analysis and rigour.

A new digital media settlement will not just emerge from the ashes of the old, it will take hard thinking and reflection, timely intervention and the courage to let the market take its course, where that is the right approach, but also the courage to reinvent the valuable role of the public realm.

We need to be inspired by the legacy of British broadcasting in the last century, but we cannot afford to be trapped or constrained by its history and its conventions.

The 20th Century approach delivered a vital counterweight to the national press in news; it created domestically originated cultural reference points for generations of children and adults; it nurtured an outstanding creative community in drama, comedy and popular entertainment; it also allowed the emergence of one of the world’s leading satellite broadcasters, a cable industry, an independent production sector and successful commercial networks.

This legacy was built by institutions which were right for their time and which have evolved as the broadcasting landscape has changed, against a shifting pattern of regulation. It is not perfect, but it’s pretty good.

Our goal now must be to ensure that the UK and its people do as well in the digital 21st century as it did in the analogue 20th.

Thank you very much.


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