TEMPLATE

Cardiff Communications Summit

Tuesday 12 June 2001

Tony Stoller

Chief Executive, The Radio Authority

Good afternoon. Let me begin by offering my congratulations to Ian Hargreaves and his team here in Cardiff for organising this Summit. That is not just for arranging to have these significant issues talked about other than in London, although that provides a valuable perspective on what is all too often a metropolitan discussion. But my real satisfaction on seeing the programme came from the fact that I was invited to speak in a 'radio' session, and not in a session entitled 'converged regulation'. Although the Radio Authority is one of the 5 regulators who are to be melded into Ofcom, the distinction that Ian has drawn in preparing today's programme is exactly the one that I want to expand upon over the next fifteen minutes or so. That is to say, why is radio important, why is it different and how should it be treated within Ofcom?

The fact that radio is still an important medium nearly a century after its inception should surprise no one. The wireless, the steam radio or whatever you choose to call it has shown a remarkable capacity to reinvent itself in the face of a whole series of challenges from new technologies. Nevertheless, there are still those who - in a rush of enthusiasm for the potential of telephony based services - have declared radio as old fashioned and on the way out. Not a bit of it!

Remarkably among electronic media, radio listening continues to rise, now exceeding 1 billion hours a week. Radio has been by common consent the commercial medium of the 1990s, and with a share of advertising now well in the excess of 6 percent of the UK-wide spend, is set fair to continue that progress. Do not read too much into the 'correction' which is going on with radio shares on the stock market: this remains a profitable, vibrant and successful medium. Commercial radio stations have brought to the listener diversity, choice, entertainment value and – in many parts of the country – local community involvement, especially for the 'commercial radio generation'.

Nor is progress only on the commercial side. The BBC (I would like to say stimulated by fresh commercial competition) has shown renewed interest in radio over recent years, with a new UK-wide service and investment across a wide range, including Radio Wales and Radio Cymru. In addition to the new 250 local commercial radio stations, Independent National Radio and all of the BBC analogue services, digital radio services are increasingly widely available. The Radio Authority has already licensed 27 multiplexes, carrying 137 separate programme services. The investment by the commercial radio companies, and the BBC, in the prospect of digital radio, especially at a time when economic prospects look a little uncertain, is evidence of everyone's commitment to the future of radio.

Whatever may be the reality on the ground of convergence between telecommunications and television, it is clear that, insofar as convergence affects radio, it is doing so in a very different way. There is a natural symbiosis between radio and the net. The first gives impact, the second provides bandwidth. From a commercial point of view, it is already evident that radio stations are able to exploit this relationship to offer text by way of back-up to radio commercials. The BBC has invested expensively in online services, but still needs the sign-posting of radio to give them impact. If you doubt that, try and listen to any of the BBCs UK-wide services for more than 15 minutes without hearing a URL being plugged.

However, this inter-relationship does not fit with the classic description of technical convergence, that is to say all services being available on all platforms equally. It is hardly imaginable that this can ever apply to radio. Radio is a mass and portable medium. At 8 o'clock in the morning some 13 million people are tuned in to one breakfast show or another. It is inconceivable that that level of patronage can be accommodated on telephony based services without enormous investment and disproportionate dominance of capacity. To make that listening mobile and portable on that scale at any affordable price seems utterly improbable.

Even if it could be done, it makes no sense. The economics of radio are ideally suited to terrestrial broadcasting. No matter how many people are listening to a radio transmission, the costs of such a broadcast remain the same. For a telephony delivered service however, each additional listener means an additional cost. We have been told by the BBC that their capacity for simultaneous listeners to BBC Radio on the web is one of the highest in the world, and it amounts to 25,000. Compare that with the 13 million figure I have just quoted, and you will see the point.

So the question is: how to accommodate this significant but essentially non-converging medium into regulation whose fundamental purpose is to deal with a converged world?

It is not of course a new experience for commercial radio to be subject to a converged regulator. From the beginning of ILR in 1973 until the Broadcasting Act 1990, independent radio (as it was insistently called) was subject to the IBA's regulation. Whilst that Authority did all that it could, it is commonly accepted that radio was something of a Friday afternoon job. As a consequence, ILR laboured under a restrictive regime which was designed to match a television model. Even the very expansion of new services in the 1980s was held back because the IBA, which was then the transmission provider, was not satisfied with the cash flow forecasts! It became clear then that radio problems needed radio solutions, and it was with the break-up of the IBA, and the establishment of a separate sectoral regulator in the form of the Radio Authority, that commercial radio was given the scope to grow and flourish to its present remarkable level. And if that applied in a body looking after just commercial television and commercial radio, think how much more radio is threatened within an organisation which has responsibility for all electronic media and telecommunications.

Do not think this is a problem only for the commercial side. The BBC's experiment with bi-medialism, which I notice is now being quietly dismantled, meant in effect that radio interests were almost always subordinated to those of television. Investment in online at the expense of digital radio was just one recent example of how this can cause damage at a structural level. Operationally, instances were daily or more. We have to conclude that radio does not do well when it has to wait for crumbs that fall from the fashionable dinner of those more concerned with television. Yet we know that, freed from such limitations, it can do stunningly well. How can we achieve this same freedom for radio within Ofcom?

The Commercial Radio Companies Association has argued that the "regulation of radio should be administered by a unique department or organisation within a single over-arching regulator, and should not be coupled to regulation of television broadcasting". The Association stresses the experience of the Financial Services Authority which has found it beneficial to regulate most services on a vertical basis. The Communications White Paper has recognised that "at least in the short term, some of Ofcom's work, such as spectrum management and the regulation of distinct media like radio, will require different approaches and expertise". (Paragraph 8.6.2) CRCA goes further, saying that "even in the medium term we do not believe that regulatory convergence necessitates blurring the distinction between media and telecommunications sectors".

In our own submission to Government in June of last year, we argued for what we described as "thin Ofcom". We envisaged that this would take the form of an over-arching Commission, which would ensure proper co-ordination and common standards, overseeing necessary sectoral regulation through a series of integrated bodies. That still seems to us to be a good working model, even though the debate and discussion about Ofcom has moved on considerably. In any event, we believe that it is necessary for Ofcom to have a distinct Radio Bureau as a vertical unit within whatever horizontal structures may apply. Without that, we greatly fear for the ability of the new regulatory body to find those radio solutions when problems or issues arise for our medium.

In the particular circumstances of Wales, and the other home nations, flexibility of structure in the new converged regulator will be of the greatest help in meeting the wide range of aspirations. Under the Radio Authority, commercial and independent radio has developed in very different ways in the four home nations. The nature of co-regulation allows for very different services to operate under the same regulatory regime. Radio Ceredigion in Aberystwyth, Radio Maldwyn in Newtown, Valleys Radio in Ebbw Vale, reflect the diverse needs of Wales just as much as Red Dragon in its splendid new studios in Cardiff Bay and Real Radio across the region. Ofcom needs to be able to achieve the same trick, to enable the nations to express themselves through radio, in probably a wholly different way from television.

That need is all the greater since radio alone among the major media is still in a development phase. Despite the large number of new analogue and digital services which have been introduced in recent years, the licensing programme is far from complete. On the frequency space currently available to us, we would be continuing analogue licensing for the next 5 or 6 years and digital licensing for much the same period. If Ofcom is successful in achieving an effective review of the use of the FM spectrum, and gaining additional frequency space in Band III and L-band, then new digital licensing will continue for much longer. And the Authority's proposal for a new third tier of Access Radio creates further licensing tasks well into the future. I should add, rather more than just in passing, that Access Radio offer opportunities for neighbourhoods in Wales which go even beyond the potential for further small-scale ILR services. This unique continuing licensing role means that, in Wales as elsewhere, the status quo is not in any sense yet the final destination for independent radio.

Any dedicated radio ownership regime, designed to retain the plurality of ownership and diversity of local output, will need specialist and experienced attention. Add to these duties the unique system of format regulation for radio, then you have clear functions which will need to be undertaken by a separate bureau, to the benefit of listeners and the industry alike. Although we do not expect these matters to be dealt with on the face of the Bill, it seems to all of us in radio essential that Government, industry and the existing regulators establish clearly, and well in advance of being asked awkward questions in Parliament, how the benefits which radio has gained through separate regulation can be sustained in the new regulatory environment.

And then there is the position of the BBC. The Radio Authority is making no bids to regulate BBC radio, but we remain adamant "that it is axiomatic that, in highly competitive markets, major operators must not be both players and regulators. For this reason if no other, external regulation of the BBC is required. As the BBC moves further into radio services and related audio output which have commercial implications, those need the equivalent regulation to that which applies to commercial broadcasters." (Radio Regulation for the 21^st Century Paragraph 9.5)

It seems increasingly clear that, now that the sensitivities of the General Election period are out of the way, Government will spread Ofcom to encompass more of an oversight role for BBC services. That is how it should be, although we can rely upon the BBC and its Governors properly to fight fiercely to ensure the continued independence of the Corporation. But within Ofcom, to gain the benefits of greater converged regulation it will be necessary for there to be a clear focus for such radio responsibilities in respect of the BBC as the new regulator is given.

One of the most obvious of these is in the planning of the use of radio spectrum. At the moment, two separate and often competing teams are responsible for planning what I might call the radio broadcast spectrum. That duplicates, it is wasteful and it produces less than optimum efficiency for the listeners. This is especially obvious in Wales, where difficult spectrum planning issues can be much better tackled by a single planning team. Here, as in so many other areas, standardisation of regulation is in the interest of the medium as a whole.

In summary therefore, radio remains in the 21^st Century a major and significant medium. It is on a high, and well placed to maintain its salience even amid the increasingly problematic new media. The major threat to that achievement would come from an unthinking lumping in of radio into television and telecommunication structures, simply for the sake of administrative neatness. It is essential that Ofcom identifies at an early stage a way of giving radio the separate sectoral regulation under which it can flourish.

Tony Stoller

12 June 2001