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Home > Media and Analysts > Speeches and Presentations > 2007 > Jun > 27|06|07


27|06|07

IEA Broadcasting Speech - "Developing successful regulation to support the future of British Broadcasting"

Ed Richards, Ofcom Chief Executive

1 Introduction

Thank you for inviting me to give the keynote address today.

It's a pleasure to be here.

I guess the good news for me today is that I can say exactly what I want safe in the knowledge that I will not be grabbing the headlines from events down the road in Westminster.

No doubt many of your blackberries and 3g phones will be furiously buzzing over the next few hours and I am sure that the corridors will be full of chatter in the breaks and at lunch today about what the new cabinet looks like and in particular whether there is a new face at the top of DCMS.

Leaving aside events taking place at the other end of The Strand, this is a very important conference at a very important time.

The media industry is evolving rapidly, driven by consumer demand for greater control, more mobility and the ability to participate. That evolution is bringing new challenges, new threats and new opportunities in equal measures, many of which you will be focusing on at this conference over the next two days.

To tackle these changes, we need to develop a digital media vision for 2012 and beyond, which is based on the best of the 20th century model but not slavishly tied to it.

And critical to that will be a regulatory framework which supports the future of British broadcasting:

2 UK Broadcasting is a success story

We are starting from a strong base.

The UK's multi channel environment is one of the most successful and competitive in the world:

We also see great range and diversity in the content available to consumers. A quick glance down the Sky EPG will reveal something like 130 entertainment channels, 23 documentary channels, 14 news channels and many others including music, movies, arts and culture. Freeview offers over 40 channels covering all genres. Cable over 125.

That's quite a change from the 4 channels available in the late 80's.

And some of those channels; the History Channel, Sky Arts, Discovery, Sky News and others, are providing programming which certainly contributes to the purposes of public service broadcasting. I will return to that later.

Digital switchover, which begins with the Whitehaven flagship project later this year, will roll digital television out across the country ensuring that the whole UK population can enjoy the range and diversity of channels that digital TV brings.

And alongside that process more and more people are moving online for their information and entertainment, where they can share pictures, videos, thoughts and ideas globally in seconds or create social networks of thousands in just a few clicks of a button.

I think it was Groucho Marx that said:

"I find television very educating. Every time somebody turns on the set, I go into the other room and read a book."

Well, for a younger generation today they go into another room and instant message, surf and chat on Bebo, MySpace or Facebook.

3 This change is also bringing new problems

These changes present new challenges and new problems.

This conference is devoted to the commercial impact of these changes, the threats to traditional revenue models and the new opportunities emerging. These are very real and I am sure for many of you your primary concern as you sit here today.

My challenge is effecting a sensible regulatory transition from analogue to digital, whilst recognising the variable speed of conversion by consumers, which promotes competition and innovation and does not hinder it.

Let me focus on just a few of the challenges I think we face making that transition.

Firstly, standards in broadcasting.

Let me start by saying very clearly that contrary to the view of some this issue is still very relevant in a range of different ways.

For example, at Ofcom we have spent a lot of time this year dealing with problems around participation and in particular Quiz TV.

There can be little doubt that the problems of Quiz TV have strained the trust between broadcasters and viewers and it is essential that industry acts quickly to ensure high standards of governance and accountability to retain public confidence.

Yesterday we imposed our first fine in relation to Quiz TV, fining Five £300,000 for breaches of the Broadcasting Code in the transmission of the quiz programme Brainteaser. We found that Brainteaser had on three occasions entered fake names as competition winners and on two occasions production staff posed, on air, as ‘winners’. Further, this was part of an established process which went back to 2003.

This is the largest financial penalty ever imposed on a public service broadcaster by Ofcom- it shows that we take these issues extremely seriously and will not hesitate to protect viewers’ interests.

Every broadcaster needs to take very careful note of this decision.

There are further decisions to come over the coming weeks. And we will also publish shortly the Ayre inquiry into the use of premium rate telecoms services ( PRS) in television programmes and l look forward to its findings.

But I think there is also a growing debate emerging about the wider standards in broadcasting, which in turn is part of a larger debate about the changing nature of the media in modern Britain.

This is a debate that public broadcasters need to pay particular attention to if they are to retain the trust and loyalty of their viewers.

From a regulator's perspective, this debate will also influence our thinking on the model of content regulation we want for a digital world.

Today it's day 29 in the Big Brother house.

Big Brother is a series which can have an important role to play in demonstrating how freedom of expression can raise matters of social importance, leading to legitimate public debate.

But it can only achieve that with appropriate checks and balances in place and by avoiding the serious editorial misjudgements we saw early this year in the Shilpa Shetty case.

Big Brother is also a great example of the range and variety of content available today and the problem that causes for content regulation:-

It's not easy being Big Brother's big brother:

It is quite a challenge trying to explain this logic to an average member of the general public.

So, as far as content regulation is concerned I see the recent agreement on the AVMS directive as a sensible evolution of the current model.

But it’s likely to be only a stepping stone on a journey, because it’s far from clear that the current settlement represents a long term sustainable solution to the future of content regulation.

As the lines between different technologies blur further, the calls for a regulatory system which adapts to the emerging digital reality may well grow stronger.

Secondly, the future of public service broadcasting.

The UK has a public service tradition which is unrivalled in the world:

It is also a system which faces serious long-term pressures which we cannot ignore.

As you know, Ofcom has a responsibility periodically to review and report on how to maintain and strengthen the quality of public service broadcasting in the UK.

These reviews give Ofcom the opportunity to be at the forefront of the debate about the future of public service broadcasting, leading discussion and thinking creatively about how to tackle the challenges ahead.

We intended to start our next Review in 2008, but I have decided to bring it forward.

There are clear reasons for bringing this review forward.

Firstly, the Government has already stated its intention to conduct a wide review of the case for distributing public funding beyond the BBC and to do so as soon as Ofcom has concluded its next PSB Review.

I want them to have the full benefit of our analysis when they undertake this review and I want them to have it as soon as possible.

Secondly, we need to be aware that the institutions that currently deliver public services face considerable uncertainty during this transition period.

LEK's independent assessment of Channel 4 made clear that the Group is likely to be loss making beyond 2010 and may increasingly be forced to decide between commercial health and the delivery of public service content in commissioning.

So we need to act quickly to assess future options for Channel 4 and remove uncertainty so that it can start planning for the future.

This means beginning work to evaluate potential approaches to Channel 4's long term future now.

At the same time existing commercial PSB providers will need to decide whether and how they want to continue to play a part in the provision of public service broadcasting. We will be doing likewise as we weigh up the options for a new approach to public service broadcasting, or in indeed public service content for the post switchover digital age.

4 Ofcom's next PSB Review

And we need to assess the full range of options post 2010 as part of this Review, because this is a unique opportunity to revisit and revise our system of broadcasting and to make it sure it serves us as well for the next 20 years as the previous system has served us for the last twenty.

Of course, not all of the questions raised in this Review will be for Ofcom to answer. Many are likely to fall to the Government in their Review as they consider what public service broadcasting system they want for a digital age. I am sure our Review will give them a strong analysis of their options.

So, let me set out what I see as some of the key questions for our next review of public service broadcasting.

Firstly, the PSB purposes and characteristics.

I believe that the purposes and characteristics we set out in our first Review remain strong. So, I do not think we need to go back to first principles. The value to viewers, to consumers and citizens across the UK remains clear.

But it may be possible that the digital world demands a slight revision or updating to the core purposes and characteristics of PSB which reflect the changes that the new world brings.

And of course we will need to ask ourselves whether there is still a clear rationale for intervention to deliver these purposes and characteristics?

And if so, whether the current intervention is at the right level or whether for example, the intervention should be made at a different point, such as the content creation level.

Secondly, and closely linked to this, is what we mean by plurality, or what we often call competition for quality, in a digital world.

There are some difficult questions here:

Let me make one or two brief comments on these points.

First, whether we need competition for quality across all genres is a critical question in relation to the future of childrens programming. As the research which we published earlier this year showed very clearly, the BBC has become increasingly dominant as a supplier of original British childrens programmes as ITV retreats from this role.

Second, does public service broadcasting need in reality to be public service content in a digital age – and in this context what is the role of competition for quality online as well as for linear television?

Certainly, the responses we received to our discussion document on the PSP suggested broad support in principle for the idea of intervention to support public service content in digital interactive media, although the level of funding and the scale of that intervention needs more discussion.

In thinking about what will create a sustainable model for long term plurality, competition for quality, I think we must recognise that there is a difference between institutions which have the purposes and characteristics of public service broadcasting written into their reason for existence and those whose incentive for delivering this type of content is constantly straining against an overriding purpose of maximising returns to shareholders.

Thirdly, how do we fund a new PSB system?

And finally, we need to ask what the reach and impact of public service broadcasting needs to be in order to deliver its purposes effectively and to deliver good value for money?

And how successfully that can be achieved in a more fragmented media age in which people’s time is split between linear and on demand, between tv, pc and in due course mobile devices.

5 Intimately linked to this is the debate about in what formats public service content should be available.

Of course, intimately linked to the question of reach and impact is future delivery formats for public service content.

I know for some of you, on your agenda today will be the future of HD services on Freeview.

And I also know some of you may hold the view that Ofcom is in some way indifferent to high definition television in general and Freeview in particular.

In fact, nothing could be further from the truth.

On the contrary, we think high definition is a very exciting development:

We have no wish artificially to advantage or disadvantage any one platform. We want viewers to have the widest possible choice. We remain platform neutral but also pro-competition.

And we are enthusiastic supporters of the wide availability of exciting new services such as HD – and that absolutely includes Freeview.

So where does that leave us?

Firstly, we continue to believe in a market based approach to spectrum, driving forward spectrum liberalisation, releasing more spectrum, encouraging spectrum trading and overall a more efficient use of spectrum across the whole economy.

Secondly, as of today, we are not yet persuaded by the case, argued predominantly by the ‘High Definition for All’ campaign, that the best and only way to maximise the economic and social benefit of the spectrum released by digital switchover is simply to gift some or all of it to the broadcasters for high definition broadcasts for free.

Nor are we alone in this. For example, Parliament’s Culture, Media and Sport Select Committee were also not persuaded by the case as it has so far been articulated.

So, we will continue to weigh up the 750 responses we received to our Digital Dividend Review consultation, which made compelling cases for a range of services this spectrum could be used for, services such as mobile TV and wireless broadband.

Thirdly, we will continue working hard to identify the best that can be achieved in the two thirds of the spectrum released by digital switchover which has already been pre-assigned by Government for broadcasting on the DTT platform.

And we are making progress on that front.

At the technical level, there is much less difference than has been rumoured between Ofcom and the broadcasters about what is technically feasible as a result of adopting new coding and transmission standards.

The best advice that we have is that Freeview could get up to four universal coverage high definition terrestrial channels from 2012, with the possibility of a more limited set of services being available in some parts of the country from as early as 2009-10, just by using the existing spectrum.

This is a prize well worth aiming for. It’s in the interests of broadcasters, in the interests of viewers and in the interests of competition. So we will do everything we can to make it happen.

Where we and the broadcasters are in full agreement is that converting what is technically feasible into a practical proposition is far from straightforward. But a lot of things in life are not straightforward – and in this case there is a really valuable prize on offer.

There will need to be some additional transmitter building costs to deliver HD services on Freeview. However, this cost is significantly less than the cost of a new 7 th Multiplex using released spectrum and very significantly below the opportunity cost likely to be associated with this spectrum.

There will of course need to be some rearrangement of who sits where within the DTT platform, which will require a concerted effort between us, broadcasters, multiplex operators and Government.

But let me make clear today that we are ready to do everything we can to help the broadcasters create a high definition presence on the DTT platform using existing spectrum today.

We are ready to hold the ring to help ensure that the practical issues are addressed objectively and equitably so that the viewers will gain from the evolution of the platform and from the more efficient use of the spectrum that is possible.

I hope that the broadcasters and multiplex operators will reflect on this opportunity carefully. It is important to demonstrate to the general public that every effort is being made to make the best of what is available today, rather than merely defaulting to asking for more of a scarce national resource. I believe that by working together, we can secure the all-platform high definition future that many of us would like to see.

Thank you.


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