One of the main functions of the ITC under the Broadcasting Act 1990 and the Broadcasting Act 1996 is the licensing of all UK commercial television services, including terrestrial (except for S4C in Wales), satellite, cable and local delivery services whether broadcast by analogue or digital means. Providers of commercial television services must be authorised to do so by licences granted by the ITC. Each licence is subject to certain conditions and penalties including, as a last resort, revocation.
The Acts set out in detail the steps which must be undertaken in advertising and assessing applications and awarding the various licences but leaves the ITC some discretion on how those functions are discharged. The ITC must carry out its licensing functions in the manner which ensures that a wide range of services is available throughout the UK and that there is fair and effective competition in the provision of such services and services connected with them.
Invitation to Apply
The ITC issued an invitation to apply for Channel 3, Channel 5, public teletext, commercial additional services, teletext on Channel 5 and digital multiplex licences. The document provides all relevant information for prospective applicants.
Award of Licences
The Channel 3 (ITV) licences replaced the ITV contracts which were due for renewal at the end of 1992. They were awarded in 1991 and the services started on 1 January 1993. Applicants for licences had initially to pass a “quality threshold”. This meant that it must appear to the ITC that the proposed service would achieve certain standards in relation to programme content and quality, technical quality and that there were adequate resources to finance the proposed service throughout the licence period. Only applicants who passed this test had their cash bids for the licence considered.
The general principle was that the applicant who passed the quality threshold and who submitted the highest cash bid for a given licence would be awarded the licence. The ITC did, however, have the discretion to award the licence to an applicant other than the highest bidder in “exceptional circumstances”; this would include the case where a lower bidder offered an exceptionally high quality of service which was substantially higher than that proposed by the highest bidder. The ITC had also to be satisfied that the applicant was a `fit and proper' person to hold the licence.
On 15 May 1991, 37 applications for the 15 regional licences and three for the National Breakfast-Time licence were submitted to the ITC. The licences were awarded on 16 October 1991. Four of the incumbent ITV companies were not awarded licences; eight of the 16 licences were not awarded to the highest bidders and the ITC did not invoke ‘exceptional circumstances’.
Channel 4 ceased being a subsidiary of the ITC at the end of 1992 and was established as statutory corporation, licensed by the ITC, from 1 Jan 1993 as a consequence of the Broadcasting Act 1990. Channel 4 is licensed and regulated by the ITC, although the licence was not subject to competitive tender.
Channel 5. The Broadcasting Act 1990 made provision for licensing a new terrestrial television service, Channel 5, a national channel whose licence is subject to a quality threshold and awarded by competitive tender. The ITC received four applications for Channel 5 by the closing date of 2 May 1995 and awarded the licence, on 27 October 1995, to Channel 5 Broadcasting Ltd. The service was launched on Sunday 30 March 1997.
Public teletext. Applicants had to satisfy the Commission (and other licensing authorities in the case of their technical plan) in terms of a quality threshold and business plan. The licence was awarded to the highest qualified bidder; the ‘exceptional circumstances’ provision was not invoked. There were five applications and the 10-year licence, which was awarded to Teletext UK Ltd in April 1992, came into force on 1 January 1993. On Channel 3 capacity, this licence was renewed from 1 January 2002.
Commercial additional services (CAS). Using spare capacity on Channels 3 and 4, these are available on a ‘closed user’ or subscription user basis. They are subject to content requirements where the service is a teletext service. Business and technical plans were approved by the ITC. A single bid was received for the C3 licence and awarded to DBI in April 1992. DBI’s licence was renewed from 30 September 2001. In October 1994 SimpleActive Limited was awarded the licence for C4/S4C. Renewal of this licence is currently under consideration.
Teletext on C5. The ITC invited applications for the C5 teletext service in the Autumn of 1996. The licence was awarded to the highest bidder, Sky Five Text Ltd, on 13 October 1997. The licence was surrendered at the end of 2001 and after further applications were invited was awarded in May 2002 to Teletext Limited.
Cable & satellite programme services. Unlike terrestrial television, the licensing approach for cable and satellite programme services is based on the premise that, in practical terms, there is no finite number of outlets for such services and so there is no reason why the number of licences granted should be limited. Against this background, the ITC grants licences except in cases where an applicant is prohibited by law from holding a licence or the ITC considers that the applicant is not a fit and proper person to do so, an application may only be turned down on the grounds that the proposed service would appear to the ITC to contravene the provisions of Section 6 of the Act which refer to taste, decency, offence, impartiality and accuracy. The ITC does not specify the nature of the service or any elements of its content.
Local delivery services. The ITC must be satisfied that the technical system proposed to be used, is acceptable to the telecommunications licensing authorities at Oftel, the DTI and, where necessary, the Radiocommunications Agency. The applicant must be in a position to maintain the service throughout the licence period. From April 1998, all new licences are awarded on a non-exclusive basis, with existing licences becoming non-exclusive from 1 January 2001 in accordance with the Government’s paper, Broadband Britain – A Fresh Look at the Broadcast Entertainment Restrictions.
Digital multiplex services. Under the Broadcasting Act 1996, the ITC has a duty to license and regulate digital television. For details of this process see ITC note: Digital Television (40). The first digital multiplex licences were granted to British Digital Broadcasting Ltd (later ITV digital) and Digital 3 & 4 Ltd. on 19 December 1997. A digital multiplex licence was granted to SDN on 26 May 1998. With the collapse of ITV digital in 2002, the ITC awarded the licence to a consortium consisting of Crown Castle and the BBC.
Digital programme services and additional services: see ITC note: Digital Television (40).
Restricted services. The Broadcasting Act 1996 provides for the ITC to license a ‘restricted service’, a Television service using broadcasting frequencies for a particular location or event restricted either in time or space: see ITC note: Restricted service licences (43).
Licence Conditions
Channel 3(ITV), C5 and public teletext. Each licence contains detailed conditions reflecting legislative requirements about the nature of the service and the way it is to be provided and includes conditions ensuring that the service accords with the proposals submitted by the licence holder in its original application.
Channel 4. The licence contains a Statement of Programme Policy, setting out aims and principles which are additional to statutory requirements. This is provided by Channel 4 and approved by the Commission. In accordance with the licence, the service provided by the Channel Four Corporation must be consistent with the terms of the Statement.
Digital multiplex services. Each licence contains detailed conditions reflecting legislative requirements about the service and incorporating proposals submitted by the licence holder in its original application (see ITC note: Digital Television (40)).
Other licences. These contain the same provisions as those issued to Channel 3, Channel 4 and Channel 5 with respect to consumer protection and adherence to the ITC codes.
Ownership of Licences
Details of the rules on the ownership of ITC licences are included in ITC Note: Ownership (7).
Variations to Licences
Variations in licence conditions, related to the provision and content of the service may be made after consultation between the licensee and the ITC. The ITC has made it clear that it would not expect such variations to be frequent. Nor would it be able to agree to a variation without evidence, for instance, related to a change in viewer preference or where the result would be an overall decline in the quality of the service to viewers. Variations to multiplex licences will be granted unless by so doing the capacity of the programme services broadcast under the licence to appeal to a variety of tastes and interests would be unacceptability diminished.
Renewal of Licences
The earliest date for renewal of a Channel 3 licence was 1 January 1999 (i.e. four years before the end of the 10-year licence period). At the time of renewal the ITC set new financial terms by specifying a different percentage of qualifying revenue and reconsidered the amount of the cash bid (see ITC Factsheet on Channel 3 licence renewal). The new 10-year term of the licence runs from the date renewal is granted. Of the 16 Channel 3 licensees, eight were renewed for a further ten years from 1 January 1999, one was renewed from January 2001 and the remainder renewed from 1 April 2001.
The Channel 4 licence is awarded for a period of 10 years from 1 January 1993 and may be renewed by the ITC on one or more occasions for a period of 10 years beginning with the date of renewal. The Channel 5 licence is awarded for a period of 10 years, renewal may be made no earlier than four years before the end of the licence. Local delivery licences are similarly renewable 10 years into the 15-year licence. Digital multiplex service licences are for a period of 12 years, renewable no earlier than four years before the end of the 12-year licence period.
BBC Services
The Broadcasting Act 1996 empowers the ITC to license and regulate commercial services of BBC and S4C subsidiaries. These would then be subject to the ITC’s consumer protection regulation.
Note: Copies of ITC licences are available from the ITC’s Viewer Relations Unit. Terrestrial service licences (£10); local delivery licences, satellite television service licences, licensable programme service licences and restricted services licences (£7), digital multiplex service licences (£10).
Further References
Broadcasting Acts 1990 and 1996. London: HMSO.
ITC Notes: 2-38 covers all aspects of the ITC’s functions and activities April 2003
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