BREMA's Comments on DTI's "Communications Reform White paper"

Mrs Diana Kahn
Head of Broadcasting Policy Division
Department for Culture, Media & Sport
2 – 4 Cockspur Street
LONDON
SW1Y 5DH

Mr David Lumley
Director UK Communications Policy
Department of Trade & Industry
Room 285
151 Buckingham Palace Road
LONDON
SW1W 9SS

1. Thank you for inviting BREMA to provide comments on what the White Paper should propose for Communications Reform.

2. BREMA represents companies manufacturing consumer electronics products in the UK. Almost a quarter of television production in the European Union is from UK factories. Over half the production is exported. 3.7 million television sets were produced in the UK in 1999 and a positive trade balance of £115 million was achieved.

3. The successful launch and development of digital television in the UK and the world first in launching digital terrestrial television broadcasting, have given all UK based interests a unique leadership opportunity. Nevertheless this is only part of a broader thrust by UK Government to be at the forefront of the exploitation of the Internet and the increasing versatility of mobile telecommunications.

4. BREMA member companies have a direct and immediate interest in the development of digital television, which is clearly seen as a major focal point for the convergence of broadcasting, telecommunications and information technology. A number of BREMA member companies are equally active in the production of TV, VCR, mobile ‘phones and a range of telecommunications and IT products. This response recognises that breadth of interests.

6. A review of this nature is an essential next step. That the timeframe for consideration is "over the next ten years" in "this converging digital environment" sets the scene for reform.

7. Of crucial importance is that regulation must provide management tools to assist the successful introduction and running of new services for consumers and business customers; and enable the timely transition from analogue to digital television broadcasting to be completed by 2010.

8. Although broadcasting is but a part of the whole process of introducing an information society, the ubiquity of television in the home makes it a critical factor. Further, in the current broadcasting environment with a TV Licence Fee for Free-To-Air services, it will be a matter of personal choice for UK households to move to digital television.

9. The welcome success of digital Pay-TV so far masks the fact that as many as 40% of UK households may not wish to subscribe to Pay-TV but only want Free-To-Air television. This emphasises the need for additional good quality programmes/services on digital television (especially Free-To-Air programmes) and affordable receiver equipment. Our response concentrates primarily on the specific questions posed as to the needs and demands of consumers.

10. A number of the subjects on which the DCMS/DTI invite comment are covered in the current discussions of the European Commission on a common regulatory framework for electronic communications. The consumer electronics industry, via EACEM (our European Trade Association), has responded at the European level and this document is attached.

11. In responding to the DTI/DCMS Consultation BREMA draws attention to the issues which need to be addressed in planning the development of digital television, which has to be a central aspect of the proposed White Paper. However, there have already been some important changes characterised by much closer working relationships between Government Departments and Regulators. It seems well-established already that reform should retain and build on current experience and expertise and thus have the confidence to introduce radical solutions where they are needed.

12. The report "Mapping the Future of Convergence and Spectrum Management" published by the Small Business and E-Commerce Minister on 8^th June 2000, is the latest and probably the most comprehensive statement of the possible future world of Communications and E-Commerce. It requires much more study before detailed comment is made but will be a major input to the Communications Reform White Paper

13. Information Services and products will continue to develop at an accelerating rate. The main services will be entertainment, communication, general services eg. financial and banking, national and local government and shopping. Platforms will include terrestrial broadcasting, satellite broadcasting, cable, the Internet and mobile telephones; these may be used in combinations and will provide return paths if necessary.

14. Technologies to support these are developing rapidly and in many cases will be platform agile. The recent sale of spectrum has suggested that mobile ‘phones will play a key role in bringing these together. However, there is some doubt that there is a mass market for sophisticated multi-function mobile ‘phones, as there are inherent restrictions due to the small size of the product and the environment in which it is used. Mobile personal assistants may prove more effective in this respect.

15. The government and others have identified that the most likely candidate for multi-service access is digital television. This does not necessarily mean that every television will provide all services. Rather that television offers the most flexible consumer friendly interface with the consumer. A number of technologies are developing to provide radio or cable connection of products within the home. These will permit communication, monitoring and control functions throughout the domestic environment.

16. Each consumer has individual needs and for digital TV these are covered in the Annex. In general, it makes economic sense for service providers to maximise their revenue through the choice of platforms and lowering the cost of the consumer "terminal". This requires maximum system flexibility, maximum interoperability, maximum standards compatibility and maximum component commonality. It is likely that synergies will arise that are unforeseen at the moment.

17. The overriding factor in the success of any service is attractiveness to the consumer and cost.

18. The objective of economic regulation must be to facilitate entry into the market of new services providers and hence increase competition; therefore economic regulation should foster this but control market domination which would operate against the interests of the consumer. However, there needs to be regulation and enforcement to maximise interoperability and platform access.

19. Content in general should not be regulated. The exception is public service broadcasting because of its ubiquity and the need for high standards to retain public support. However, in all services that are accessible to the public there needs to be identification of material that might offend. But it must be for the individual to decide what control technology he wishes to purchase and how and when to use it.

20. The Public Service Broadcasters especially the BBC, have a key role to persuade consumers to move to digital television. If digital television is to be a success and switchover achieved, there must be additional high quality Free-To-Air services available on digital television. Public service broadcasters are the cornerstone to the successful migration from analogue to digital television. In turn the success of digital television is central to the development of many new communications markets.

21. It seems logical that content regulation for public service broadcasters should be administered by one independent body.

22. Given that Public Service Broadcasters have a critical role in analogue/digital switchover, their long term future needs to be reviewed in light of the increasing competitive pressures which they will face by the end of this decade. The ITC Consultation Paper published on 31^st May 2000 sets out many of the issues.

23. The provision of revenue through spectrum management should be subordinate to enabling maximum access to services in the most efficient way. Efficiency includes maximum international co-operation to provide the largest market for product and hence achieve economies of scale.

24. Much of the current analogue television spectrum may well be needed to maximise digital terrestrial television coverage. The remainder should be reserved for the needs of more advanced television services, including High Definition Television. The introduction of higher resolution large display devices may well require this.

25. From our perspective as manufacturers it is essential that regulators have sufficient powers, particularly with respect to extending digital terrestrial television coverage and to ensuring interoperability and programme quality. It is for the regulators to consider whether they have sufficient powers, particularly in light of their experience during the last few years. Certain areas will require strong regulation to ensure fair competition.

26. The European Commission proposes a common regulatory framework for electronic communications. However, managing the transition from analogue to digital television during this decade may best be achieved through an interim structure which allows evolution from the current multi-headed approach, aiming for a unified Communications Agency as the ultimate solution.

27. Such an approach would bring together the current Departments and Agencies who are responsible for the regulation of content, content distribution, broadcasting, telecommunications and spectrum management. Strong management from the centre of Government will be required to achieve coherent policies and co-ordinated execution.

28. Europe is a single market, therefore national policies should be within the policies and regulations established by the EU. The UK is, of course, party to developing these and should promote the above principles. Over-regulation at the European level will inhibit development. Under-regulation will lead to chaos and the ultimate dominance of vertical operators. The middle path must promote new services and products whilst protecting the interests of the individual. It is noted that the Commission is currently developing directives for communications regulation.

29. There will be significant implications for the development of digital services when the European Copyright Directive is adopted by the European Parliament later this year. These implications need to be addressed early by all sides of industry and Government as the national legislation is prepared to implement the Directive.

30. The opportunities and challenges of the fast developing services in information technology, telecommunications and broadcasting, clearly require strong management from the centre. Within the time frame of the next ten years regulatory structures will need to address this. There are a number of centres of excellence with invaluable experience which should be fully utilised. Nevertheless, there needs to be overall co-ordination of the many interests involved. Such co-ordination must be backed by executive power.