Kate Bulkley, Media Analyst.

Tessa Jowell, UK Secretary for Media, Culture and Sport

For Digital News March 26, 2003.

By Kate Bulkley

Kate: How important is the Communications Bill to the cause of analogue switch-off?

Tessa Jowell: Clearly the Communications Bill is important in many respects. Liberalising the ownership of television, promoting investment, defining and regulating the high standards of public service broadcasting and also the promotion of digital radio and digital TV (are all important). So yes, of the many steps that we need to achieve digital switch-off, the passage of the Communications Bill is one.

Kate: There are quite a few who believe that opening up the UK market in such a way to outside, non-European investors, like Disney and AOL Time Warner, puts British content at risk. As you know, Lord Puttnam and many others in the Lords have stated their objections and want safeguards put up especially for Channel 5, the latest of which is when Channel 5 gets to 10% audience share (from 6% today) Ofcom will be able to mandate more local production.

Jowell: There is no 10% (audience share level mentioned) in the Bill.

Kate: No, but there has been a lot of talk about this.

Jowell: Yes, there has been a lot of talk.

Kate: Would you endorse some kind of amendment to the Communications Bill that would assuage the concerns of Lord Puttnam about Channel 5 in particular and the percentage level of local content that should be preserved if and when it reaches a greater share of the UK TV audience?

Jowell: No, I wouldnít. And I think that now Lord Puttnam is much less concerned about this particular issue because he now understands. You know he is a highly intelligent person and a person very experienced in the broadcasting and media industry. He understands the risk of creating a perverse incentive. If you put on the face of the Bill the audience share at which Channel 5 would become liable to more onerous regulation in order to preserve distinctive PSB content, then the incentive is always to stay just below that. Thatís whatís we want to avoid. So the Bill is deliberately drafted to be more vague at the level at which the requirement for tougher public service obligations and a nominated news provider would kick in. A lot depends on the relativity (of audience share) between ITV and Channel Five.

Kate: The BBC has made a bold announcement that it will break away from Skyís conditional access system and offer a free to air satellite package of its channels thereby saving it 85 million pounds a yearÖ.

Jowell: Well, first of all the BBC would not save 85 million a year. It depends on how many of the other broadcasters come in with them. The BBC will not save 85 million a year, they will probably save 85 to 100 million over five years.

Kate: How enthusiastic are you about the BBCís move?

Jowell: I think it is potentially very important indeed because it extends the possibility of satellite to people who want only public service broadcasting, (that is) who want free to air satellite broadcasting. And it also addresses the problem of DTT coverage which is at the moment running at about 70%. There are some parts of the country where the transmission of DTT will always be a problem. And clearly in those circumstances satellite is the answer. And in order to meet consumer demand, satellite which offers free to view, free to air channels will be popular with many consumers.

Kate: So this neatly solves the problem of delivering to those areas of the country not covered by DTT and yet not having to use the pay satellite service of Sky. So you are pretty enthusiastic about this move?

Jowell: Itís a proposition. Now we have to make sure it works in practice.

Kate: Would you like to see Channel 4 and Channel 5 and perhaps ITV go the same way (i.e. free to air off satellite)?

Jowell: Thatís a matter for them. This is clearly a commercial negotiation where the BBC has led the way. I welcome the steps they have taken and Iíve run through me reasons why and now itís important to ensure it will work in practice.

Kate: As you know Sky is saying that the BBC will lose its EPG positions (at 001 and 002) if they go free to air and refuse to use and pay for Skyís conditional access system. Is this an area where the government would be willing to step in and ensure that the BBC retains its key channels positions so that people will continue to be able to easily find the BBC channels?

Jowell: The EPG technology is obviously developing all the time and there is an obligation to give due prominence to public service broadcasters. I think as we speak this is a matter between Sky and the BBC to negotiate within the regulatory framework that currently applies which is due prominence.

Kate: But you have in the final version of the Bill put increased powers for the government to step into carriage negotiations between Sky and the PBS channels if need be. So wouldnít this be a similar need with EPG positions as well because, like carriage negotiations, the EPG issue is quite important to the BBC.

Jowell: There is at the moment a regulatory requirement. I can check this and we will give you a call back. There is a regulatory requirement that the PSBs have due prominence. We havenít put (more than) that in the Bill. The regulatory framework appears adequate.

Kate: Would you encourage Ofcom to encourage must carry for the PBS channels on cable because this could get expensive for cable companies which have more limited bandwidth than satellite?

Jowell: There is a provision in the Bill for must carry and must offer should the present arrangements break down. I see no sign that the present arrangements are going to break down. I welcome that. The provision is there as a safeguard but only as a fallback, only as a safeguard.

Kate: Now, a question about the impending merger of Carlton and Granada into one big ITVÖ.

Jowell: No. No discussion on that. I canít because it would be improper for me to express a view on the merger.

Kate: Well, let me ask you this then. If the merger goes through this could threaten regional television as ITV becomes more centralised. Would the government be interested in freeing up some regional or local digital TV frequencies to create truly local TV in the UK, which could help drive digital take-up?

Jowell: Kate, let me come back to you on that. If I get advice that it is fine in the present competition commission role to give you an answer to that, then I will.

(Jowell's Office did not add anything to her above response)

Kate: Freeview has already signed up quite a few more subscribers faster that many had predictedÖ

Jowell: It Ďs been a huge success. It has surpassed all expectations. Itís giving people what they want and itís a great driver for digital take-up because it is giving viewers what they want. You know, greater channel choice without having to pay any more than the cost of a set top box.

Kate: Do you think that between Freeview and what might be called Free Sat that the government may not have to even get into the business of subsidising set top boxes?

Jowell: We are a long way away from making any judgement about that.

Kate: But only three years away from a Charter renewal for the BBC (in 2006). Does that time frame influence your thinking about how to spur digital switchover as well as how you think about the funding future for the BBC?

Jowell: I think in any major decision in broadcasting at the moment is connected to another. They are all interconnected. It is very difficult to look at these things in isolation. I welcome the roll that the BBC is playing in promoting digital and providing the incentive for more people to take up the benefits of digital. Analogue switch off is something that has to be achieved by the enthusiasm of current analogue viewers who decide that they want a digital future.



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