There are four things I want to do this morning before we enter into a debate:

• first: to explain why I am here at all; my first time talking to yourselves.
• second to outline my view of some of what is reshaping the broadcasting landscape
• to give some examples of the specific issues which are high on my list of priorities, and how I am tackling them
• And lastly, a little about how I see my role and how I work with other regulators.

Why am I here?

With my Citizen Cruickshank hat on, and because I have a background in the media business – the communications industry is an industry where Britain is genuinely world-class – and because I value the importance of this industry to both the economic life of the country and to its political and cultural life.

However I am here mainly with my Director General of Telecommunications hat on, my responsibilities have long included regulation of the cable industry and terrestrial broadcast transmission – this includes setting the controls on the prices charged to the BBC, ITV, Channel 4 and S4C for transmission of their programmes. Very quiet. In the background. I don’t suppose anyone has really noticed.

Recently that has changed. Oftel has been thrust into the limelight since the Government gave me responsibility for the regulation of access to networks for digital television services.

I hope those of you whose primary interest is in radio will forgive me, therefore, if my speech is largely concerned with television rather than radio. That just reflects the way that things are unfolding. Rightly or wrongly it is the future of television, and pay television in particular, that is seen as the key issue of today.

The fact that the issue of viewers’ access to programmes has become such a very prominent and controversial question reflects some really quite deep changes in the industry. What we now see as the ‘old’ broadcasting world was characterised by:

• limits, either physical or politically-determined, on the amount of available spectrum, and
• the lack of alternative means of transmission but on the other hand
• all broadcasting was free-to-air and all broadcasters had, by law, direct access to 99% of homes.

Already – this is not the future we are talking about – many of those features have changed:

• already, a quarter of UK television homes are now hooked up to cable or satellite television networks;

and, very shortly,

Most of this will come from growth of subscription services. Subscriptions for pay-TV have already overtaken the BBC licence fee as a source of revenue. That trend will continue, and pay television will increasingly be joined by other forms of information and transaction services to form a larger marketplace in paid-for services received and viewed over a variety of networks. It is likely, for example, that if BSkyB and BT go ahead with their joint venture, this will not only give access to TV but also to a form of the Internet and to transaction services. That is the market we are talking about, not just broadcasting.

What makes pay television distinct from advertising or licence fee funded free-to-air television is that pay-TV is able to harness the very simple fact that many people (of whom I am one) are willing and able to pay for what they want especially sports events and interactive services. Those who provide these services therefore have a huge advantage in bidding for, say, sports rights in that the costs of that programming can be passed on very precisely to a self-selected audience.

Part of the technology that makes it possible for me to hook up to precisely the television I want, is called conditional access. This whole subject is full of baffling and intimidating jargon and ‘conditional access’ is a particularly unlovely example and I would dearly love to find an alternative. The technology is complex involving the black arts of encryption algorithms and software engineering and the like. But the idea is a simple one: “you can have access if you meet the conditions”; or “if you don’t buy the ticket you can’t get in”. That’s what we’re talking about. In even more simple terms, the conditional access device is an electronic turnstile.

So with spectrum capacity no longer a constraint on broadcasters, new gateways such as the electronic turnstile have emerged as important. Worryingly, whoever controls these turnstiles could seek to determine the range of choices available to the viewer as well as which broadcasters can gain access viewers. It is absolutely crucial that such power is not abused, not just for the sake of consumer choice and competition – which would be true in any market place – but in broadcasting because of the wider importance of plurality and diversity in an industry which is so important to society.

Therefore, the key rule is that all broadcasters should be able to use the conditional access system on a fair reasonable and non-discriminatory basis. It is the determination of what is meant by ‘fair, reasonable, and non-discriminatory’ that my job lies. The objective is to ensure that a broadcaster who may control the conditional access system cannot use that control to prevent competitors entering the market, or to distort or restrict competition in other ways – and, I may say, we look at this very much from the consumer or viewer’s perspective.

Enforcing this rule is very like the job we have been doing in the rest of the telecommunications market since 1984. To ensure access to networks on fair and non-discriminatory terms – so that other network providers – such as the cable companies in the telephone market – can interconnect with BT’s network and service providers can compete with BT to offer services over its network.

The result is that customers are free to go to competitors of BT – it doesn’t cost them anything – and will know that they can still receive calls from and make calls to any customer of BT or any other operator. Getting to that point has involved resolving many problems very like the ones we’re about to face in the broadcasting sector. We’ve done that for telephone users I’m confident that we can achieve the same for viewers so that they can get access to the services they want and broadcasters can deliver those services to them in an economic way.

On to specific issues

Oftel recently published revised guidelines on the regulation of conditional access. This followed consultation with broadcasters and with other organisations including consumer organisations. And may I say how grateful I am for the contributions from yourselves as well as those from the Consumers Association and National Consumer Council.

The discussions on the guidelines have raised a number of important issues. I would like to briefly touch on some of them.

Right up front is: how to ensure that consumers have what I call hassle-free choice in both the services they receive and how they receive them? That means removing unnecessary barriers to choice.

The UK is among the leading countries in the launch of digital television services. Satellite and digital terrestrial by 1998. The cable industry is rapidly constructing some of the most modern, soon to be digital, networks in the world – scheduled to pass over half the homes in the country by the end of this year. When digital services are launched many UK viewers will be able to choose between digital satellite, digital cable and digital terrestrial – and an upgraded telephone system is also likely to have a role.

However, if UK customers are really to benefit from that range of choice of networks it must be possible for customers to move between networks without having to throw away their equipment and start from scratch. I believe that this is essential for the ultimate success of digital television. If the majority of consumers are to be persuaded to exchange their trusted television set for the digital successor they have to be confident that it will be capable of working with all the available networks with the minimum of additional equipment – and preferably none. This has to be our aim.

This has been a particular issue in relation to digital terrestrial television where many have been concerned that DTT would fail if viewers with digital satellite boxes were unable to receive easily digital terrestrial services if they so wished. I am pleased to say that there are hopeful signs that a consensus is emerging among the leading players to enable consumers to connect additional tuners to the set top box ie a relatively hassle-free choice. It makes economic sense and that is the main driver for the parties concerned, but they also know that if they don’t they will have regulatory battles they can’t win.

That’s a useful step forward: but it’s early days, and I am monitoring progress with the interests of consumers very much in mind.

Of course viewers couldn’t care less how services get to them. What they are really interested in is the range of services available to them, not how it gets to them. Part of “hassle-free choice” means easy access to comprehensive information about the range of services available. Our discussions have thus highlighted the pivotal role of the electronic programme guide. Digital technology means that any given frequency will be shared by a group of services; there will be no automatic association between a frequency and a channel. The electronic programme guide is the piece of software which the viewer will need to select the service you wish to see – and remember that we are talking not just about broadcast television services but other services as well.

But it will also go much further than that, it will:

• provide you with details of what is on the other channels at the moment;
• tell you what is on next on that channel;
• tell you about future programmes;
• allow you to order a pay-per-view movie;
• and, quite likely provide a gateway to online and interactive services.

The electronic programme guide is the perfect example of the opportunities as well as the risks new technology brings. On the one hand it will be an indispensable aid to the viewer – providing a really comprehensive source of information so that viewers can make informed choices about the services they want to use. But on the other hand it could be a powerful means of distorting competition.

Oftel will be working very closely with the ITC on the issues raised by the electronic programme guides, in thrashing out a joint policy and in drawing up a joint Code of Conduct.

One of the most powerful features of the programme guide will be its ability to sort and present programme information in a variety of ways: eg by day, by time, by type of programme. So for example you will be able to find out what wildlife documentaries are on that evening or that week.

It may change the way we use television. In my view it is likely that today’s channels will wither away to be replaced by channel brands. The question is what brands will people trust?

Perhaps in the future today’s channel identities will become one of a number of broadcasting brands which viewers will use to make choices: for example to watch a Screen on Four film or a BBC wildlife documentary.

No one knows what the broadcasting map of the future will look like. This is one of the difficulties regulators face in an era of new technology and rapidly-changing markets. So it’s back to first principles and the viewers preferences.

My firm view is that the technology is there to assist the viewer and should present the information in whatever way is most helpful to the viewer: whether that is in terms of existing channels or by type of programme, or start time, or whatever criteria are most relevant to the viewer.

That translates in regulatory speak as the challenge to ensure that all broadcasters have access to the electronic programme guide on fair, reasonable and non-discriminatory terms – and that the electronic programme guide should operate in a competitively neutral way. It would not be acceptable for the broadcaster which controlled the electronic programme guide to give undue emphasis or preference to its channels and services.

One of the major issues that the BBC and other free-to-air broadcasters have raised is the treatment of their services in the electronic programme guide. We have set out a couple of key principles here:

These are the broad principles we have set out: they can be met in a number of ways: what we have not sought to do is to mandate any one approach – detailed prescriptive rules risk becoming out of date and inappropriate as technology and viewers preferences change. The problem we have is on the one hand we don’t yet know how the technology will work and on the other we don’t know how viewers will want to use it.

Working with other regulators

There are a number of regulators with responsibilities in broadcasting and the wider communications market. Indeed, to some observers and particularly to many in the industry itself, there appears to be a bewildering array of regulators. It might therefore be helpful to explain how I see my remit within the broader picture.

Oftel’s goal is the best deal for the customer in terms of quality, choice and value-for-money

That translates into a number of objectives for us, including:

These objectives have their parallels in the historical objectives of broadcasting policy, including in particular ensuring :

I see my work in support of these wider objectives as pursuing the best deal for the consumer, promoting competition and ensuring access to networks. That’s what we are about. I would emphasise that I see my job in ensuring fair and non-discriminatory access as a necessary condition for ensuring plurality and diversity, but it is not a sufficient condition. Other regulators have to play their role here and indeed, I see my role as that of a supporting actor.

I am sure that the debate on the future of the regulatory framework will continue. These are issues for government and for Parliament. It is not for me to comment directly on that debate. What I have said to a succession of Select Committees is that the task is first and foremost to decide what the public policy objectives should be and what you want regulation to achieve. Only then should you turn to the tools and institutional arrangements. I am not at all sure that we as a society are clear on what we want from regulation, so any talk of institutional arrangements is very premature.

In the meantime my job is to get on with making the system work in the interests of viewers. In doing that I am following the advice of the young Theodore Roosevelt, who when he was in the US Army in Cuba, told his men to ‘Do what you can, with what you have, where you are’.

The electronic programme guide straddles current regulatory jurisdictions. It is a device which uses information broadcast from the satellite, software resident in the box, and a modem using the telephone network. It is at once both an electronic Radio Times and an electronic turnstile. It will be a gateway not only to television but to online information and transactions. So what if Oftel and the ITC have to share the job? Frankly, it’s so complicated that it needs the energy and expertise of both the ITC and Oftel. Oftel can bring to bear its expertise in regulating access to networks and other related competition issues but as, I said earlier, the tasks go well beyond that and the ITC’s functions and expertise are essential. Our focus, to echo Roosevelt, has to be on what needs to be done not on who is going to do it.

Conclusions

The developments we are discussing today are driven by very, very, powerful technological and commercial forces. These are essentially the same forces which have made information technology ubiquitous and have revolutionised telecommunications. I believe they are set to transform the broadcasting landscape – bringing down the costs of transmission, making more efficient use of capacity and thus opening the way to much greater choice and decision making by individual viewers – if they want it.

We cannot stop these changes. Nor can we avoid them. They will not go away. The potential benefits are in any case too great for us to want to do that. The challenge will be to make the most of this opportunity while finding new ways to secure valued policy objectives of plurality and diversity with high quality and continued public service obligations.

And being an essentially economic regulator let me end with the observation that there are very few industries in which the UK is world class. Programme making and the creative industry is one. Telecommunications is another Jobs and our economic well-being in the 21st century will depend on letting those industries harness the technological changes. That may be uncomfortable for some in this room but I promise you it will be worth it.