The first part of the year was taken up with an exhaustive examination of the digital terrestrial television (DTT) applications, particularly those from BDB and DTN which were competitive, supported by a major public consultation exercise in which over 500 members of the public submitted their views. In June, the Commission announced that BDB were to be awarded the three contested licences. This was, however, on condition that BSkyB, for competition reasons, relinquished its shareholding in that consortium. It was only after the respective parties consented to this change that the Commission announced its award. The formal grant of the three licences took much longer, as the agreement of the European authorities was needed and they had a formal complaint about the award of the licence to contend with. In the event, however, their assessment of the digital applications was very similar to our own.
Now digital terrestrial television can proceed. We are confident that those to whom licences have been granted have the necessary skills and commitment to bring this innovative technology into being.
But while the Commission was looking to the future in its licensing of digital terrestrial television, it was also supporting Channel 5 in starting the last free-to-air terrestrial service of the analogue age. Before the Commission allowed Channel 5 to start broadcasting, it had to be satisfied that 90 per cent of those whose television equipment would otherwise suffer statutory interference had been retuned. Channel 5 mounted a massive complex operation to ensure that this target was met and the ITC was involved in monitoring its performance. A perfect outcome was never a possibility but I believe that the Channel performed very creditably and I was delighted to tell its Chief Executive, David Elstein, some two weeks before the proposed launch date, that we were satisfied that its statutory obligations had been met and that broadcasting could start. We were, of course, aware from the outset that the terrestrial coverage of this Channel would not be complete but we are working with Channel 5 to increase its coverage wherever possible. However, the UK spectrum is now very crowded and it will be impossible to achieve nationwide coverage. The ability of digital terrestrial transmission to free up the spectrum admittedly in many years time is an important benefit of the new digital services.
We have also been active in our regulation of other free-to-air services. We were pleased that the Secretary of State for Culture, Media and Sport accepted our advice to end the system by which a substantial part of the revenue earned by Channel 4 was paid to Channel 3. We readily accepted the Secretary of State's suggestion that consequential changes should be made to the Channel 4 licence to develop still further its special statutory public service broadcasting remit. We have had constructive discussions with the Channel on how best this should be achieved and we received input from the public during our consultation period. As a result the Channel's remit has been widened, so as to provide an alternative and complementary service not just to ITV but more widely, as befits a multi-channel society.
For Channel 3, we have embarked upon the lengthy and complex process of licence renewal. From the end of 1998, existing licence holders can apply to renew their licences for a further period of 10 years on financial terms to be determined by the ITC. The Act requires the ITC to set the terms which it judges would be obtained were the licences to be put out to public tender. In the second half of 1997, we undertook a full public consultation outlining how we proposed to go about this task. We must ensure that ITV companies pay a proper sum for their near universal access to viewers' homes, but at the same time they are not left short of funds in a way which would compromise the range and quality of their programming. We believe that our final methodology, published in January 1998, strikes this balance.
Meanwhile, we have also seen an increase in innovation and original commissions from cable and satellite programmers. United Kingdom viewers in multi-channel homes have enthusiastically taken up themed services, especially sport and films.
Given the changes which are affecting the broadcasting industry at present, it would be suprising if legislators did not feel the need to conduct their own reviews. A European Union Green Paper has been issued and will soon be followed by one from the UK Government. The Select Committee on Culture, Media and Sport started its own enquiry of the implications of convergence for, amongst other things, the regulation of television. The ITC has long held that broadcasting is a form of communication in which a balance must be struck between cultural and economic considerations. Any regulatory arrangement which overlooks this will not serve viewers well. Even though technology is changing at a rapid rate, we must remember that broadcasting still has a special and influential place in viewers' lives. This must be reflected in any statutory changes which are eventually made.
During the course of 1997, we bade farewell to two long-standing members of the Management Board. Clare Mulholland had worked at the ITC and the Independent Broadcasting Authority (IBA) since 1971.
As Director of Programmes, her name became synonymous with quality television and the warmth of the farewell given to her by representatives from all parts of television broadcasting and production was testimony to how well she discharged her duties, and how well her work was respected. I am particularly grateful for her support during her 18 months as my Deputy Chief Executive.
Don Horn was a survivor of the Independent Television Authority (ITA), never mind the IBA, having taken temporary employment with the ITA in 1965! As Director of Administration, he played a major part in dividing the IBA between the ITC, NTL and the Radio Authority, and moved the ITC from Brompton Road to Foley Street and, in Winchester, from Crawley Court to Kings Worthy Court. We wish them both a long and happy retirement.
PETER ROGERS
Chief Executive
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