1. In order to increase public understanding of its licensing strategy and procedures when it advertises Independent Local Radio (ILR) licences, and to assist potential applicants, the Authority is now making public in greater detail than before its approach to the task of examining and assessing applications. This should guide those applying for licences in directing their own planning and proposals most fruitfully, and help the wider public understand how the Authority goes about its statutory task of ensuring the provision of a range and diversity of high quality local radio services which appeal to a variety of tastes and interests. The Authority has already made public its procedures for the renewal of Independent National Radio licences.

2. The Authority is conscious that what it is attempting in this statement is not without risks. There is a problem in reducing to cold print a process which - as what follows will seek to demonstrate - has to involve often difficult comparative judgements by a group of Authority Members of varying backgrounds, expertise and perceptions, albeit against an established statutory framework and in accordance with set procedures. A further risk is that of over-influencing the preparation of licence applications, so that they too slavishly follow what are perceived to be the Authority's precepts or preferences, or are 'cloned' from previous applications which have been successful, but possibly in quite different circumstances. For all that, the Authority believes that a point has been reached where the advantages of offering a fuller explanation of its approaches and procedures outweigh the disadvantages.

3. What follows is in two parts. The first part sets the Authority's local licensing function in the context of its statutory framework, and offers some general comments on the Authority's broad strategic approach. The second part gives a detailed account of the Authority's procedures in examining and assessing applications, although circumstances can of course arise which may result in some variation.

LICENSING STRATEGY

4. The starting point for an account of the Authority's licensing work has to be Government and Parliament. The Authority is a creature of statute, and one of a number of bodies which have been brought into being at different times to secure the public interest in one or other aspect of broadcasting. The reason for this is twofold. First, the radio frequencies available for broadcasting have never been, and still are not, sufficient to meet demand; they are in effect a scarce public resource entrusted to Government, and therefore either Government itself, or some
body appointed by it, has to decide how they are best to be used in the public interest. Secondly, the intimate and potentially intrusive character of broadcasting, which makes it such a powerful form of communication, has been seen by successive Governments to be such that some regulation of its output, beyond what the general law provides, is justified.

5. The statutes creating and conferring powers on the Authority, in respect of its licensing and its other functions, set out in considerable detail the framework within which it is to operate. To that extent, the 'strategy' for Independent Radio licensing can be said to be laid down for the Authority by Parliament and not left to it to devise. Nevertheless, the statutory framework leaves the Authority wide discretion within which to decide both matters of general policy and individual cases.

6. Upstream of the actual licensing process, the first matter which has been left to the Authority to decide is its general policy in regard to the frequencies made available to it by the Secretary of State under section 84(4) of the 1990 Act. This was an issue which, for example, came particularly into focus in 1994 when the 105-108 MHz sub-band had been made available by the Secretary of State to the Authority for Independent Radio services. The Authority reviewed a number of options and, after a consultation process involving the radio industry and the public, decided on the mix of 'regional' licences (mainly using frequencies in the 105-106 MHz range), and licences to serve areas usually smaller than 'first generation' ILR areas (mainly in 107-108 MHz), which is still being worked through. The development of the 'regional' licence is in effect a piece of broadcasting policy made by the Authority. More recently there has been consultation on the best use to make of the 'middle MHz' (i.e. 106-107 MHz). The Authority outlined the principles for the use of this spectrum in October last year, favouring a mixture of small-scale and regional services, with further details to be published in the Spring of 1999.

7. Having decided on the broad policy for the use of assigned frequencies, the Authority proceeds to identify the geographical areas where, in its judgement, and taking account of declared expressions of interest and evidence of public demand, best use is likely to be made of additional frequencies. A 'working list' is drawn up and the licence advertisement process is set in motion, as described in detail in the second part of this Paper.

8. A further stage in the licensing process where the Authority's discretion, within the framework laid down by Parliament, comes into play is the award decision. The statutory framework requires the Authority to have regard to a number of factors. Its requirements are summarised here; full texts of the statutory provisions are attached:

1. As general requirements, in carrying out its licensing functions the Authority must do all it can to:
   
   i. secure a range and diversity of local services;
   
   ii. facilitate the provision of services which taken as a whole are of high quality;
   
   iii. facilitate a wide range of programmes calculated to appeal to a variety of tastes and interests; and
   
   iv. ensure fair and effective competition in the provision of services.
   
   
2. In awarding individual local licences, the Authority has to consider:
   
   i. the ability of an applicant to maintain the service for the period of the licence;
   
   ii. how far the proposed service would cater for the tastes and interests, general and/or particular, of those living in the area;
   
   iii. how far the service would broaden the range of programmes available in the area by way of ILR services and in particular serve tastes and interests not already provided for;
   
   iv. the extent of local support for an application.

9. It will be apparent from the above summary that, first, the broad policy framework is laid down for the Authority by statute. Secondly, in deciding individual licence awards within that framework, the Authority's task is to balance a number of different factors which may well not all point to the same conclusion, particularly in the case of a licence which is keenly contested by a number of applicants each of which has much to offer. The statute does not rate its requirements in order of priority. Neither is it practicable for the Authority to do so: the emphasis given to each must vary according to the characteristics of the licence to be awarded and of the applications for it.

10. The Authority's broad aim can therefore be expressed as being to decide individual licence awards within the framework laid down, in such a way as to develop Independent Local Radio in the broad public interest as provided for in the Broadcasting Acts. The following paragraphs seek to put a little flesh on these bones.

11. While the 1990 Act says that the Authority shall do all it can to secure the provision of a wide range and diversity of services in the UK, it does not lay down how it should do this. However, Government statements prior to and at the time of the enactment of the 1990 legislation setting up the Authority made it clear that pushing ahead more briskly with the introduction of new radio services was a key expectation of the new body's role. The Authority has always seen this development task as implicit in the provisions of the statute, and as a proper objective within its spirit and in the broad public interest. The increased pace of local licensing since the Authority was set up, and the development of the successful concepts of the 'regional' and 'small-scale' local licences, are evidence of that commitment.

12. The Authority will always attach much importance to evidence of an applicant's ability to maintain the service - without which, excellence in other respects will be of little avail. The level of confidence which can reasonably be achieved in this respect will vary between licences, according to factors which include the size and other characteristics of the area.

13. Although the service will be maintained, the Authority has no capacity for predicting whether the original licensee will seek to pass the licence on, perhaps quite soon after award. The Authority has repeatedly expressed its concern at this practice and has urged successive Governments to address it, so far without result. Where the selling-on of a licence involves a 'public interest test' under the 1996 Act, the Authority has been and will remain vigilant in protecting in the public interest, so far as it is able, features of the service to which it attached importance when it awarded the licence, or which the public interest consultation identifies as a cause of public concern.

14. The requirements relating to broadening choice and satisfying a range of tastes and interests can involve the Authority in subtle and difficult judgements between music formats or between different portfolios of speech material. A view has also sometimes to be taken as to whether programming proposals which are undoubtedly novel will prove likely to attract sufficient audience to make the service viable and to justify the assignment of a frequency to it. The Authority does not pre-judge the format for a new licence. It looks to applicants to provide convincing arguments that their proposed format will best meet the statutory criteria. Any changes to the proposed format, once a licence has been awarded and issued, may only be agreed by the Authority on the limited basis set out in section 106 of the 1990 Act: that the change does not narrow the range of Independent Radio services in the locality; or that it does not substantially alter the service's character.

15. Localness features prominently in the statutory requirements and, in its various aspects, must be given considerable attention by the Authority when assessing applications for local licences, difficult though the judgements have to be. A view of 'localness' is likely to be of particular importance in the assessment of small-scale licences, since these, operating as they usually do in areas already enjoying ILR services, in some cases a range of such services, may stand or fall by their success in offering listeners material of local relevance. However, considerations of 'localness' may be of relatively less significance when considering the award of regional licences, where 'broadening of choice' by way of the format itself assumes greater prominence.

16. 'Localness' may be reflected in the programming proposals and the impression they convey of the applicants' 'feel' for the local audience. Evidence of 'localness' can take various forms: the make-up and history of the applicant group; its understanding of the local community and market, and its needs; the place of local investors, and local advertisers, in the business plan; and involvement in local life (which may include running trial services under Restricted Service Licences (RSLs), though this is not a pre-requisite of a successful application). Expression of local support is specifically referred to in the legislation.

17. The Authority accepts and, indeed, welcomes consortia which bring together local interests with established operators and/or consultants. At best such groupings can add broadcasting and commercial experience, as well as financial credibility, to the enthusiasm and grass-roots knowledge of a local group. It is very much a matter of looking for the right balance and, for example, the Authority will look for evidence that the external expertise is not merely taking over a local group, and marginalising its members to the extent that the 'localness' benefits might not be sustained. Nor would the Authority see external assistance as in any way a pre-requisite of a successful application. In deciding individual licence awards the Authority has no predisposition either towards or against existing operators; on the one hand it recognises their proven track record, while on the other it believes it to be in the public interest that the ILR door should remain open to new entrants of well-founded promise.

LICENSING PROCEDURES

Advertising a Licence

18. After an area has been identified and included in a 'working list', the process begins with the placing of advertisements in one or more local newspapers and trade press. These give notice of the licence being made available, specifying the closing date for applications and the non-refundable application fee payable, and inviting comments from the general public about the type of radio service required in the area. The advertisement also draws attention to the availability of full details of the licence, including technical parameters, in a separate coverage brief. This coverage brief details the required constraints on coverage and any specific technical limitations to be imposed. If more than one licence is potentially available, the coverage brief also indicates the expected maximum number. This will apply where small-scale 'alternative location' licences ('sallies') are to be offered for one or more locations within a wider area. The coverage brief defines the "licensed area" as required by the Broadcasting Act, taking account both of local affinities and, where appropriate, the pattern of coverage of existing local services. Full details of how to apply are set out in Notes of Guidance issued by the Authority.

19. A few days before the date of advertisement, the Authority seeks to notify any group or individual who has previously expressed an interest, as a prospective applicant, in the licence area. Local Members of Parliament are written to, as are chief executives of local authorities. A press release is issued to local, national and trade press, announcing the licence advertisement and inviting public comment. During the period between the advertisement of the licence and the closing date for applications (typically three to four months), the Authority sends out coverage briefs, Notes of Guidance and application forms on request.

20. When applications are delivered at the Authority's offices, they are checked to ensure that the required number of copies have been submitted and that any supplementary material has been included, that the application fee has been paid, and that a certificate of incorporation has been provided (or is being obtained) if the application is in the name of an incorporated company. The deadline for receipt of applications is 2.00 p.m. on the closing date (normally a Tuesday), and to ensure fairness this deadline is enforced rigidly. Applications received after 2.00 p.m. will be disqualified, although in extreme circumstances entirely beyond its control an applicant may appeal to the Members of the Authority for its application to be reinstated.

21. On the closing date for the submission of applications the Authority issues a press release detailing the names and addresses, and proposed programme formats, of all of the applicants for a licence, and again invites comments from the public. Copies of applications are placed in the reference sections of the main libraries in the major population centres within the licence area, for public scrutiny, and are available also in the Authority's public reading room.

22. As soon as applications are received they are all sent to each Authority Member. Supplementary appendices and detailed research reports, where only one copy needs to be submitted, are retained for staff analysis, but all information is made available to any Authority Member on request. From this point on, contact between Authority Members and those who are controlling shareholders or directors of each applicant group is greatly restricted; the Authority has set itself guidelines usually referred to as 'purdah' and included in its Code of Best Practice for Members and in staff procedures.

23. Authority staff check each applicant's list of investors for existing media interests which may require a public interest determination under Part IV of Schedule 2 of the Broadcasting Act 1996. If necessary, a separate 'public interest test' (see note to paragraph 13) will be set in motion to run concurrently with the assessment process but independently of it, with the outcome to be determined by the Members of the Authority at the same meeting as the licence award, if they are minded to award the licence to the group concerned. Staff also seek to check, as soon as applications are received, whether any applicant is disqualified under the Broadcasting Act 1990 and to ensure compliance with the statutory ownership rules.

Analysis of Applications

24. One Authority Member (or two, where a large number of applications are received) will be identified as the 'nominated Member' for each licence area, to act on behalf of the full Authority to oversee work on the applications. One member of staff in the Authority's Development department will act as the 'project officer' co-ordinating the input from other members of staff, in what is usually an assessment team of at least four staff members. Other members of the team represent each of the Programming, Finance and Engineering departments and assess those sections of the applications respectively.

25. That assessment usually includes follow-up questioning on each aspect of the applicants' proposals. Questioning on section one (General) of the application is usually done by telephone in order to provide a direct contact between the applicant and staff. The interview will be held with the individual identified by the applicant for this purpose and at a time arranged in advance. These interviews are recorded by the Authority, with each interviewee's prior agreement. Questioning on sections two, three and four (Programming, Audience and Support, and Finance) is normally conducted by letter. Questions are intended to amplify and/or to clarify points in the application document. Staff do not routinely ask follow-up questions on the Engineering section of the applications unless there are particular issues that require clarification or correction. In particular, if the assessment of an applicant's proposals indicates that relatively significant restrictions need to be imposed on the planned transmission arrangements proposed in an application, in order to meet the technical requirements set out in the coverage brief, the Authority will contact the group to explain this and seek confirmation that it is willing to proceed with its application with those additional restrictions in place.

26. To supplement their written evaluations of each application, staff also assign scores to sections one to four of the applications, to provide an approximate comparison of different aspects of the applicants' proposals. It cannot however be too strongly stressed that these staff scores (which are not made public) are no more than guidance to assist Members when they come to consider applications; they do not constrain the eventual decision and a lower scored application may and sometimes does emerge as the winner.

27. Within section one of the application, staff look at the credentials, expertise and local roots of the group, and will consider the commitment and experience of its chairman and directors, and its proposed management and staffing arrangements. The clarity and coherence of the programme proposals put forward in section two are examined, and staff will consider the extent to which these are locally relevant and broaden choice. The programme schedule itself will be assessed, together with the resources that are proposed to provide it. In the third section of the application, staff will look at the market analysis and survey research put forward by the applicant, examine the audience projections, and evaluate expressed local support and involvement. The projection of the size of area within which listenership will be measured needs to be consistent with the coverage which may be expected from the proposed transmission arrangements. The business plan forms a basis for the analysis of section four, which covers an examination of cash flow, funding sources and structure, and the reliability of funding, as well as examining the revenue and cost forecasts and their realism.

28. The staff assessment of the applications is discussed in detail with the nominated Member. Ahead of the Authority meeting, staff prepare and circulate a detailed briefing Paper for Authority Members, detailing staff's analysis of the applications and incorporating the assessments. The Paper also briefly describes the licence area itself and the existing and other media provision within the area. This incorporates a commentary on existing ILR and other radio listening patterns within the licence area, based upon published RAJAR audience figures and, where appropriate, augmented by the results of any further analysis of the RAJAR data which staff may commission. The briefing Paper includes a full summary of the views received by the Authority from, for example, MPs, local authorities, local organisations and members of the public, whether as a result of consultative activity by the Authority or the applicants' own activities.

29. The Authority is sometimes asked whether it establishes a 'short list' of applications, in the same way as, for example, applicants for a job may be whittled down before final interviews are conducted. In the sense that every application is made available for study by Members ahead of the meeting, is fully analysed by staff and is still before the Authority for consideration at its meeting, then such a procedure is not adopted. However, in consultation with the nominated Member, staff seek to identify those applications which are the strongest contenders for a licence award and which therefore justify a fuller assessment. The staff analysis of these is presented in the most depth in the staff paper. In some cases, all applicants are identified as strong contenders. At the meeting itself, Members may decide to limit their detailed debate to the applications reported on most fully, or to extend their consideration to others which are always still before the Authority.

30. Thus, in advance of the Authority meeting, Members will have had the opportunity to consider all of the application documents and the staff analysis. At the meeting itself, Members confirm which applications they wish to consider in greater depth. The procedure established by the Broadcasting Act 1990 requires Members to give attention to the statutory criteria and to arrive at a collegiate decision on the basis of those criteria. Members of the Authority, when they come to consider the licence award, consider each section of the licence application in the light of the statutory criteria. They are guided in the weight they give to each by the policy they establish (and periodically review), and which varies according to the size of the licence area. For example, formal audience research is regarded as more significant in larger and more competitive radio markets, whereas direct local involvement and knowledge and community support is given relatively greater weight in smaller areas.

31. Staff do not participate in the decision-making process, which is the sole prerogative of Members, although they present their analysis and may be asked for further information and/or to clarify points. It is customary for the Chairman to invite each Member in turn, usually starting with the nominated Member, to comment on the applications and, if possible, to express a preference or preferences among them. The Chairman gives his views last. After this initial expression of views further debate ensues and works towards a conclusion, usually by consensus though if need be a formal vote is taken (the Chairman, in the event of a tie, having a casting vote here as elsewhere in the Authority's proceedings). If for any reason a conclusion on an award proves particularly difficult to reach, a decision may be postponed to a subsequent meeting, to allow time for further reflection, clarification and/or staff analysis as Members may direct. The Authority reserves the right to hold face-to-face interviews with applicants, but rarely does so.

32. A few days before the Authority meeting, the project officer will have contacted each applicant group by telephone to make arrangements to speak to them after the meeting, to let them know the outcome. Once the licence award decision has been made, applicants are contacted by telephone, usually starting with the winning group(s), and informed of the decision. For the winning group(s), contact details are confirmed for the press release that is issued by the press office later the same day. Where a licence award is regarded as potentially market-sensitive, the announcement will only be made after the London Stock Exchange has closed for the day. Letters are sent to each applicant, formally informing them of the licence award decision. No mechanism exists in the legislation to appeal the Authority's decision. As soon as possible after the announcement, and normally within two weeks, the Authority publishes an assessment of the winning application(s), setting out an appraisal of those features which Members felt to be of particular significance when reaching their decision.

January 1999
STATUTORY FRAMEWORK FOR LICENSING

Section 85 of the Broadcasting Act 1990

• Licensing functions of Authority.
  85.-1) Subject to subsection (2), the Authority may, in accordance with the following provisions of this Part, grant such licences to provide independent radio services as they may determine
  
  
• (2) The Authority shall do all that they can to secure the provision within the United Kingdom of-
  
  a) a diversity of national services each catering for tastes and interests different from those catered for by the others and of which-
  
  (i) one is a service the greater part of which consists in the broadcasting of spoken material, and
  
  (ii) another is a service which consists, wholly or mainly, in the broadcasting of music which, in the opinion of the Authority, is not pop music; and
  
  b) a range and diversity of local services.
  
  
• (3) It shall be the duty of the Authority to discharge their functions as respects the licensing of independent radio services in the manner which they consider is best calculated-
  
  a) to facilitate the provision of licensed services which (taken as a whole) are of high quality and offer a wide range of programmes calculated to appeal to a variety of tastes and interests; and
  
  b) to ensure fair and effective competition in the provision of such services and services connected with them.
  
  
• (4) Subsection (3)(b) shall not be construed as affecting the discharge by the Director General of Fair Trading, the Secretary of State or the Monopolies and Mergers Commission of any of his or their functions in connection with competition.
  
  
• (5) The Secretary of State may by order make such amendments of subsection (2)(a) as he considers appropriate-
  
  a) for including in that provision a requirement that one of the national services there referred to should be a service of a particular description, or
  
  b) for removing such a requirement from that provision;
  and (without prejudice to the generality of section 200(2)(b)) any such order may make such consequential amendments of section 98(l)(b)(iii) as the Secretary of State considers appropriate.
  
  
• (6) In subsection (2)(a)(ii) "pop music" includes rock music and other kinds of modern popular music which are characterised by a strong rhythmic element and a reliance on electronic amplification for their performance (whether or not, in the case of any particular piece of rock or other such music, the music in question enjoys a current popularity as measured by the number of recordings sold).
  
  
• (7) An order shall not be made under subsection (5) unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

Section 105 of the Broadcasting Act 1990

105. Where the Authority have published a notice under section 104(1), they shall, in determining whether, or to whom, to grant the local licence in question, have regard to
the following matters, namely-

a) the ability of each of the applicants for the licence to maintain, throughout the period for which the licence would be in force, the service which he proposes to provide;

b) the extent to which any such proposed service would cater for the tastes and interests of persons living in the area .or locality for which the service would be provided, and, where it is proposed to cater for any particular tastes and interests of such persons, the extent to which the service would cater for those tastes and interests;

c) the extent to which any such proposed service would broaden the range of programmes available by way of local services to persons living in the area or locality for which it would be provided, and, in particular, the extent to which the service would cater for tastes and interests different from those already catered for by local services provided for that area or locality; and

d) the extent to which any application for the licence is supported by persons living in that area or locality.

Special requirements relating to grant of local licences

Section 106 of the Broadcasting Act 1990

Miscellaneous provisions relating to national and local services

• 106. 1) A national or local licence shall include such conditions as appear to the Authority to be appropriate for securing that the character of the licensed service, as proposed by the licence holder when making his application, is maintained during the period for which the licence is in force, except to the extent that the Authority consent to any departure on the grounds-
  
  a) that it would not narrow the range of programmes available by way of independent radio services to persons living in the area or locality for which the service is licensed to be provided, or
  
  b) that it would not substantially alter the character of the service.

• 2) A national or local licence shall include conditions requiring the licence holder to secure that the licensed service serves so much of the area or locality, for which it is licensed to be provided as is for the time being reasonably practicable.
  
  
• 3) A national licence shall include conditions enabling the Authority, where it appears to them to be reasonably practicable for the licensed service to be provided for any additional area falling outside the minimum area determined by them in accordance with section 98(2), to require the licence holder to provide the licensed service for any such additional area.
  
  
• 4) Subject to subsection (5), the Authority may, if they think fit, authorise the holder of a local licence, by means of a variation of his licence to that effect, to provide the licensed service for any additional area or locality adjoining the area or locality for which that service has previously been licensed to be provided.
  Requirements as to character and coverage of national and local
  
  
• 5) The Authority shall only exercise the power conferred on them by subsection (4) if it appears to them that to do so would not result in a substantial increase in the area or locality for which the service in question is licensed to be provided.
  
  
• 6) As soon as practicable after the Authority have exercised that power in relation to any service, they shall publish, in such manner as they consider appropriate, a notice-
  
  a) stating that they have exercised that power in relation to that
  service; and
  
  b) giving details of the additional area or locality for which that
  service is licensed to be provided.

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