Media Convergence: Communications Committee Report
Lord Inglewood
That this House takes note of the Report of the Select Committee on Communications on Media Convergence (2nd Report, Session 2012–13, HL Paper 154).
Lord Inglewood (Con)
My Lords, we speak at a moment of high drama in the politico-media world. Lord Justice Richards, sitting with Mr Justice Sales, earlier today dismissed PressBoF’s application for a judicial review of the Privy Council’s decision to reject its charter on press self-regulation, and will dismiss its application for an injunction on the Privy Council’s sealing of the alternative all-party charter later today.
Barring any attempts by PressBoF to challenge this decision at the Court of Appeal, I believe that, as things stand, the Privy Council is still due to meet to seal the royal charter on the self-regulation of the press later this afternoon. I dare say that historians of the media will one day find it ironic that at the same time this House met to debate media convergence, a phenomenon which raises the question: for how much longer will the press truly require its own discrete self-regulatory arrangements at all as distinct from those which may yet come to be established in the future, which will have a wider focus and include forms of news media available online, in text, audio or indeed audio-visual form, with which the activities of what we now know as newspapers may have seamlessly merged? It is a coincidence of events that must generate at least a little Schadenfreude.
Of course, until recently, separate media industries were actually distinct. They were easily distinguishable by the way in which they delivered their content; for example, newspaper businesses were newspaper businesses to a great extent because their content reached us on large sheets of thin paper rather than over the spectrum or through the flickering light of a projector at the cinema. Media convergence, however, has changed all this. Alongside their individual traditional delivery mechanisms, content providers increasingly digitise their material and distribute it through the use of internet protocol, known as IP. Conveyed by IP, content, which has been reduced down to packets of data, can be assembled as text, image, video, sound or however else technology permits. This occurs on a growing range of devices, both fixed and mobile.
In turn, this has stimulated media providers of all kinds into a search for new ways of delivering their content, many of which have been straightforwardly borrowed from industries they each used to consider neighbours. This has blurred the boundaries between them. These experiments, in turn, have given audiences all kinds of ways to consume virtually any content, at any time, anywhere and on any device. In some instances, the impact of this revolution is far-reaching and often entirely positive, not just for the regulation of content standards, but also for content creation and competition. Barriers of all kinds are dissolving.
The impact of all this may not be fully felt at once, or even for some time, across the whole population. A recurring theme of our deliberations in this inquiry was the need, therefore, for haste rather than panic. As they say, we were looking for an evolutionary, rather than a revolutionary response. However, equally clear was that some thinking, some preparation and, to some extent, action, is required now to ensure that the evolutionary path is smooth and that we do not allow the regulatory architecture for the media as a whole to become entirely mismatched with the technological and commercial landscape which it oversees. I hope that our report and my remarks will make it clear why.
In our report, we submitted recommendations under three main headings. First, content standards; secondly, content creation and thirdly, competition. I should like to take each briefly in turn.
On content standards, which occupied us the most, it is worth saying that this country’s content standards framework has to date proven remarkably resilient. However, we found that the confidence and trust which the public have grown to enjoy in it will come under increasing pressure in two areas in particular. First, there is news content. Newspapers are not just printed, but are online and they carry video packages with the look and feel of traditional television. Broadcasters publish websites, including text-based articles, similar to online and print. The scheduled news programmes are still broadcast, but are also available on demand, both on digital channels and on a variety of websites. It is tremendously exciting, but potentially rather confusing because the regulatory framework has been left behind.
Broadcast news is required to adhere to the broadcasting code, with its full range of protections relating to accuracy and fairness, as well as an obligation to uphold due impartiality. While the emerging press regulator, with oversight of participating newspapers and websites, may well include some of these protections in its code, it will certainly not include an obligation to uphold due impartiality. It bears saying that this is a good thing. The abiding difference between the balanced, impartial news provided by the broadcasters, and the vigorous, partisan news provided by the press, has helped to create a beneficial tension and a valuable mixed ecology. Nevertheless, the impact of convergence means that the providers of the one will become increasingly difficult to distinguish from the other. The binary distinction between impartial and partisan news will no longer be mirrored in the difference between the news which UK audiences happen to watch and the news which they happen to read. In order to ensure that UK citizens continue to be able to identify and have confidence in the provision of impartial news coverage, and that they can identify and bring accurate expectations to partisan content, these blurred lines should be tidied up.
The second area that will come under increasing pressure is what we might call non-news, audio-visual content—sometimes known as TV and TV-like content. Perhaps the sharpest example of this pressure point can be seen in the content now available to the public through internet-connected televisions. On these, regulated and unregulated content, licensed and unlicensed services, sit side by side on one device. Increasingly, the public will be able to switch seamlessly between them. As the European Commission says in its Green Paper, Preparing for a Fully Converged Audiovisual World: Growth, Creation and Values, from the consumer’s point of view, the difference between linear and non-linear services might blur. Providers under no obligation to observe the watershed, for example, are increasingly only one press of the button away from those that do. The clues which the public might have used to sense that they are entering a different environment, in which different standards are to be expected and to be found, are disappearing. With that comes the risk that regulators will no longer be able to be sure that the public can confidently make sensible decisions about what is suitable for them and their families.
I turn now to our recommendations on content standards and want briefly to make one preliminary point. During the inquiry, we received a number of thoughtful proposals for a complete overhaul of the regulatory framework. These aimed for a new, logically coherent system. While some of the thinking that had gone into the proposals was impressive, we felt that they did not account for one or two important points. For example, the pace of media convergence is contested, and it was put to us repeatedly during the course of the inquiry that traditional services such as linear broadcast television remain hugely popular and resilient. What is more, there are very marked generational differences in the ways that younger groups are using media compared with their older peers. This meant, we felt, that it would not be right, in considering reforms of the content standards framework, to try to set a course for the promised land. Rather, we should look more simply for a framework that enables audiences to make good decisions in the circumstances of the time about the content which suits them and their families. The framework will almost certainly need updating from time to time to the extent that it fails to achieve this, and fails by extension to earn or deserve their trust. To that end, we made two recommendations which could and should be adopted in the short term, and we postulated on a basis, one that is entirely up for debate, around which further change might occur in the medium to longer term.
First, in the shorter term, broadcast licences should be amended to ensure that standards similar to those set out in the Ofcom broadcasting code, amended for the relevant environment, would apply to any service using the same channel name or brand as a licensed broadcast service. It is at present an anomaly that the BBC, to give an example, is required to uphold the broadcasting code when it broadcasts, but not when it makes content available through the iPlayer, and especially in light of the director-general’s recent announcements about online commissions, we feel that this is an important step. Secondly, there is a case for positively encouraging other non-broadcast providers to join the framework in return for some form of public recognition or kitemark. Were such an opportunity to be provided, I suspect that some of them would seize it, not least for their own commercial advantage but equally so that the UK public could build accurate expectations of the standards and character of their products.
We also made a number of recommendations as regards the content standards framework that focus on the medium to long term, but I do not propose to rehearse the detail of these. In a nutshell, we recommend a slight reconfiguration of the regulatory framework involving the establishment of four different approaches to content standards across four clearly defined types of content. The first one is public service broadcasters, the second one would be non-public-service broadcast news providers, the third would be non-news television and television-like content, and the fourth would be the open internet. Some of the impact of this reconfiguration might seem to be a bit striking at first blush. For example, no longer would broadcasters other than public service broadcasters be required to uphold an obligation to due impartiality. In place of the watershed, a standard system of age-based classification would be adopted for TV and TV-like services, providing the public with useful information to take into account in making their own decisions about what they and their family should look at. Ofcom would be given a new proactive role with regard to the content available to UK citizens over the open internet, with a duty to consult on and publish UK citizens’ expectations of the responsibilities of digital intermediaries, and to monitor performance against those expectations.
While we believe that these recommendations point in the right direction, they are entirely up for debate, one that we would welcome and thoroughly encourage. The Government’s response to our report was, as I said at the time, disappointingly thin—albeit that that is probably better than being thick. They deferred the substance of any response to our report to what was at the time a forthcoming policy paper called, Connectivity, Content and Consumers: Britain’s Digital Platform for Growth. However, the Government appear to have avoided the major questions, saying that they will look to industry and regulators to provide clarity on the right approach to content standards and regulation in the digital world. But because we believe that what is required is a reconfiguration of the framework around the media as a whole, there is an important and necessary role for the Government in setting out a view and leading debates that can be orchestrated sensibly only from that particular podium. For example, there are matters of principle: should we, generally speaking, adopt a more libertarian approach in which the public are expected to make their own choices about which media and content to use, informed by appropriate information, or should there be a more paternalistic approach in which regulators impose certain standards and help make those choices on behalf of the public? As our recommendations show, our report tends to lean towards the former over the latter. However, where the line is drawn is an important matter for genuine and legitimate debate.
Secondly, there are matters of process. How can we bring about evolutionary change to a system of regulation which is cemented in statute, and which in recent years has been subject to a slow cycle of change—10-yearly or thereabouts—imposed by the parliamentary timetable as much as anything else? In our report we propose a new approach, including the use of the super-affirmative procedure. We believe that this would avoid the “stop/go” approach, and provide the legislative mechanism to ensure smoother evolutionary change in an era when time for primary legislation is allocated elsewhere. In summary, I urge the Government and the industry to read carefully the thinking behind our recommendations on content standards, and to engage properly with this important set of debates.
I now turn briefly to the two remaining aspects of our report, which address content creation and competition. On content creation, convergence has made it possible for new investors to reach audiences outside the traditional broadcast environment. Your Lordships will be aware that my noble friend Lord Dobbs recently had a great hit on Netflix, entirely funded by that enterprise. Our congratulations go to him. However, investment in content from these new entrants remains dwarfed by the investment from the five public service broadcasters and their spin-off channels, which still represent something like 90% of UK spend on first-run, originated output. This seems very likely to remain the case for some time to come. In that light, it is important to recognise that the ability of the public service broadcasters to continue investing in content depends on their ability to reach large audiences in this country.
We therefore recommend that the Government consider the implications of changes in the way that public service content will be discovered and accessed by viewers on new connected TVs and other converged devices and, specifically, what interventions on prominence and “must carry online” obligations may be appropriate and possible in non-linear environments. In our view, as far as possible the on-demand services offered by public service broadcasters should achieve due prominence on any relevant home screen or guide which directs users to content.
Having said that, the way that the public access content is almost inevitably going to change, and the range of brands they choose to consume is likely to widen. Against that background, convergence can be seen to raise some very important general questions about public investment in content creation. As audiences continue to fragment and models for funding content creation adapt, exactly how public service broadcasting is provided, by whom, and the contestable process of allocating public money to pay for it, are all matters which deserve debate. The issue again is that these questions must be considered from a higher vantage point, and in a manner which is more holistic—to use a word I dislike—than is currently the case.
To date, decisions about each type of public service broadcaster—the BBC, Channel 3, Channel 4 and Channel 5—have largely been made independently of each other. In future, given the paramount importance of sustainable and sensible funding in order to safeguard public service broadcasting, we think that it is crucial for its future to be considered in the round by the Government. However the detail may be configured, a stable and sustainable future is required for the system as a whole, not just for each player within that system.
We believe that the Government would be well advised to get ahead of the curve, rather than waiting for difficulties to arise. Therefore we recommend that as preparation for, and in advance of, the next BBC charter review, the Government consider fundamental strategic questions surrounding the public service broadcasting system as an interconnected whole, and the potential impact on it of convergence. For example, what is the right scale and scope of PSB? What purposes should it serve? How can it best be sustained in a converged world?
On matters relating to competition, it is equally clear that convergence has sharpened long-standing debates over Ofcom’s ability to promote competition across media markets. While we did not have the time to carry out a comprehensive review of broadcasting competition powers, it was clear from the evidence we received that clarification is required of Ofcom’s existing ex ante competition powers for the audio-visual sector. The aim of such clarification should be to enable Ofcom to take effective action where necessary, but also to ensure a high hurdle before any ex ante approach can be adopted. It is important for there to be clarity for all those who might be affected.
In my conclusion, I thank the noble Lords, Lord Bragg and Lord Gordon, both widely knowledgeable and constructively hard-working members of the Communications Committee at the time of this inquiry, who have since left it. Their contributions to our final report were significant. I know that they are both sorely missed at our regular Tuesday afternoon meetings.
Finally, I also thank our specialist adviser, Robin Foster, for his expertise and enthusiasm throughout the inquiry. On a subject of often thorny complexity, Robin’s advice was always forensic, clear and logical, and his easy and droll manner equally helped to make the committee’s whole experience of this inquiry a pleasure.
I look forward to the debate and to the Minister’s response. I beg to move.
Lord Gordon of Strathblane (Lab)
My Lords, it is a great pleasure immediately to follow the noble Lord, Lord Inglewood, and thus be the first to have an opportunity to congratulate him not only on securing this debate but on his skilful chairmanship, navigating us through the undergrowth of a very difficult subject, which could easily have led us off in tangential directions. Instead, we managed to focus on some main issues, which he adumbrated this afternoon.
I am one of those who believe that the invention of the internet may well turn out to be more important in human history than the invention of printing. One known unknown is that we cannot predict the nature of the change that is coming about, any more than people could have forecast that one of the prime uses of mobile phones would be text messaging. One known, however, is that it will all happen very fast. The noble Lord, Lord Inglewood, was right to draw attention to the importance of flexibility in the Government’s response. For that reason, the super-affirmative procedure is probably the best way forward from a legislative point of view. I add a further suggestion: it would be useful if the next communications Act did not try to go into too much detail. After all, we have got by in public service broadcasting for a very long time with the simple words, “inform, educate and entertain”. If we left legislation giving us general objectives and then left it to regulatory authorities to use common sense in applying those in the circumstances of the time, the legislation would stand the test of time rather better.
The Communications Act 2003, to which reference has already been made, did not contain much in the way of references to the internet, although I seconded a successful amendment, tabled by the Earl of Northesk, making it an obligation of Ofcom to ensure widespread access to high-speed data transfer, which is the same thing as broadband. The internet was felt then to be different from broadcasting, in that it was a pull-down rather than a push-out medium. Therefore, both libertarians and others united in thinking that we did not need to regulate the internet. My sense is that that is not the public feeling today; we most certainly do need to regulate it. At a minimum, we all agree that we should not allow child pornography on the internet, or incitement and aid to terrorism. However, if we are able to do it for those two subjects, we could do it for a whole range of others, so the decision is about whether we want to regulate, not whether we are inhibited by the technology from doing so at all.
I would like to concentrate mainly on the main theme of the report, content standards. We would all concede that the main argument for public service broadcasting has lost two of its main pillars of support; scarcity of frequencies does not now apply. But as Professor Tommaso Valletti told the committee during the inquiry, the economic argument has gone, but the BBC is the envy of the world—“Why break it?”. That is very much my feeling. It could also be said that PVRs have reduced the power of programme scheduling to create high-quality programmes and get a large audience for them. Some 45 years ago, I presented a political programme on television which secured a somewhat larger audience than would normally be expected for political programmes. I would like to think that it was the intrinsic quality of the programme; realistically, I think that it had a lot more to do with the fact that it was sandwiched between “News at Ten” and “New York Police Department”, and remote controls had not yet been invented, so people could not be bothered to get out of their armchairs to switch me off.
Public service broadcasting is worth preserving and, indeed, encouraging outwith the traditional sector. How can we do that? One way is charging for spectrum. The report is ambivalent on whether we should do this but draws attention to its difficulty. It would remove more funds from public service broadcasters which could otherwise be concentrated on programming. I firmly think that there should be no charge for spectrum for public service broadcasters. That would provide an incentive for more people to provide public service programming.
The noble Lord, Lord Inglewood, referred to EPG prominence, which is also important. I suggest that getting some payment from the platform provider could be addressed. If the trade-off is that there should no longer be a “must carry” obligation on the part of the platform provider, it would enable us to find out what the real market rate for a programme was. After all, the bulk of viewing on Sky is still of traditional PSB broadcasters. It would not want to do without the BBC. Why should it get a payment from the BBC for broadcasting programmes that are one of its main attractions? It is interesting and somewhat ironic that, in the United States, Fox Television is leading the charge for precisely that—payment from cable providers over there.
We also face new forms of broadcasting, to use that omnibus word, and we will need regulation to ensure prominence in non-linear broadcasting television sets. During a visit to the BBC’s Blue Room, the committee was somewhat taken aback to find what we would regard as a traditional television set on which programmes came fairly well down the line. First, you are exposed to various products of the television manufacturer, gaming, online games and everything else and then, finally, you get through to an EPG programme guide. I think that we have all assumed that television sets are passive; they are not now. We must ensure that broadcasting—public service broadcasting in particular—gets due prominence. That was alluded to by Mr Simon Pitts of ITV, whose remarks were reported in paragraph 163 of the report. That will clearly be an issue.
The noble Lord, Lord Inglewood, also referred to what he called TV-like content: things that are received on the same television set side-by-side with traditional public service broadcasting programmes. I think that most of us would shy away from the idea that they should all be regulated as public service broadcasters, but I think that there was a general sense that it would be a good idea if they aspired to produce good programming. Perhaps the kitemark idea is the best way forward. After all, people have a vested interest in being respected. The advertising industry supports the Advertising Standards Authority. Ofcom ensures that it operates, but the industry does it itself because it is in its self-interest. I do not want to go to a chemist who is unregulated; I do not want to go on holiday with an unregulated travel company. Regulation is in the self-interest of the provider.
The British Board of Film Classification has established age categorisation that has stood the test of time and, I think, could be expanded into other spheres of programming. People will make substantial edits to their film to secure a better classification that will ensure a wider audience. That is a good example of enlightened self-interest.
Moving on to what has been referred to in the report as the wild west of the internet, it might be made a little less unruly if the internet providers—four big companies control 85% of the market—could be persuaded that it was, again, in their self-interest to ensure that the more undesirable aspects of programming were simply not broadcast. Name and shame them if they do not do it and they will come round to the idea. We could make a lot of progress in this way.
Finally, the BBC represents a major market intervention —in general, overwhelmingly for the public good. However, during our visit to the Telegraph Media Group, our attention was drawn to the danger of the BBC crowding out other providers by its expansion on to the web. If the BBC is providing a good free online service, it is increasingly difficult for newspaper publishers to erect paywalls and thus to secure payment for content that is often expensive to provide.
The collection of the licence fee has been greatly aided by a requirement to notify of a purchase of a television set. A licence fee request will then follow. However, television can now be watched on smartphones, laptops and other devices. Requiring anyone who buys a smartphone to buy a television licence would, I think, be unsupportable and could well lead to the loss of the licence fee altogether. The alternative is to find another way of funding the BBC. On that gloomy note, I renew my thanks to the noble Lord, Lord Inglewood.
Lord Clement-Jones (LD)
My Lords, I follow the noble Lord, Lord Gordon, in congratulating my noble friend Lord Inglewood on his lucid introduction and on his excellent chairmanship of our committee. This was an extremely timely report. Even since it was written, digital media in the UK have developed further. Only yesterday, we heard in committee about the growing success of digital regional media.
The tablet that I am holding represents convergence. There are newspapers in digital form delivered over the internet with news clips embedded. There are news and sports apps with clips and text commentary. There are programmes made for television delivered on demand through non-broadcast apps. There are broadcasters’ catch-up services. These are subject to wholly different regulatory regimes: contrast the Ofcom regime over commercial and public service broadcasters with that over newspapers. Incidentally, I welcome today’s judgment on the alternative royal charter.
My noble friend Lord Inglewood is right.The Government’s response was disappointing. It was effectively a holding response. It did however anticipate last July’s White Paper, Connectivity, Content and Consumers: Britain’s Digital Platform for Growth. Much of the focus of both the response and the White Paper was on child safety on the internet and connected television. That is a clearly defined area where action is required. It is a matter of current concern and I commend the Prime Minister and the Secretary of State for their proactive stance and the subsequent actions of ISPs and mobile phone service providers. I commend the Government, too, for the new tax break for animation and high-end television production.
However, the Government’s response to our report promised a holistic strategy for the communications sector. There is little sense in the White Paper of such a strategy in the area of content, despite talk in the White Paper of getting ahead of the curve and despite a long gestation period of more than two years in setting out a strategy. The imperative in an age of converging media—which is common ground between the committee and the Government—is to maintain public trust in the regulatory regime applied to different types of content on the internet, despite the blurring of boundaries. We proposed,
“a new content standards framework”.
The questions are: what content falls into what regulatory regime, and into what regime, if any, should content fall? The Government in their proposals assert that,
“people still expect different standards from their TV, radio, newspapers and social media”.
The committee’s paper examines that proposition extensively. One size certainly does not fit all, and the committee recommended a “graduated approach to regulation”. However, we strongly recommended that research be carried out into public expectations of standards for various media content. Do the Government themselves have plans to do this?
The Government use the phrase “flexible, industry led approach”. I would prefer the initial leadership to be provided by the Government, but either means being clear about what kind of new elements need to be built into a new Bill, even if they need to remain flexible.
The Government promised to outline:
“Targeted updates to our legislative framework”.
However, they do not set out what they believe should be done by primary legislation in a new Bill and what can be done by voluntary action. Indeed, there is clearly some doubt about whether there will be a new communications Bill in the first place. What are the Government’s intentions? Will there be a Bill in the remaining months of this Parliament? I certainly hope that there will be.
There was some discussion of Ofcom’s ex ante competition powers in the White Paper. We are promised a consultation on this, but surely it will be an important part of any Bill. Competition must be able to flourish, and great content to flourish on a plurality of platforms. We need a debate and some certainty about Ofcom’s future role in this area. The committee itself was not convinced that we need to go further than ensuring clarification, rather than extending some powers.
There are other areas where primary legislation may be relevant, on which Ofcom itself gave a useful detailed response in June. These include some of the committee’s recommendations on, as my noble friend Lord Inglewood mentioned, giving the Secretary of State power to vary Ofcom’s powers by super-affirmative resolution so that where appropriate it could introduce a common co-regulatory framework for TV and TV-like content; the guidance that should be given to Ofcom on the establishment of any co-regulation system, and imposing a duty on Ofcom to advise the Secretary of State on the timing of any such order; the whole question of the removal of the duty of impartiality for non-PSB news services; a more proactive role for Ofcom regarding the internet, as the noble Lord, Lord Gordon, has stated; and perhaps the issue of EPG prominence, especially in the light of the kinds of television that we saw, as the noble Lord also mentioned, in the BBC’s Blue Room.
The need for flexibility in legislation is common ground. The landscape is changing rapidly. As the Government rightly point out in the White Paper, YouTube did not exist back in 2003 when the Communications Act was passed. There are, of course, areas where voluntary action may be more appropriate. Clearly, linear viewing will remain strong, certainly in older generations, but, as viewing habits begin to markedly differ, have the Government taken a view on the idea of a common system of age rating classification for on-demand material, which could be by the BBFC, as the noble Lord, Lord Gordon, said?
There are other areas where we need more public debate. Is it not essential, as the committee recommends, that we assess the role of public service broadcasting in the age of convergence? It faces risks and threats but also great opportunities. As we have heard, there are major issues about retransmission for public service broadcasters and the carrying terms for PSB channels. The Government say that they want to see zero net charges—that is, fees cancelling each other out. However, some of the commercial PSBs claim that their investment is being put at risk by an,
“outdated system, which tilts the channel and platform relationship in favour of pay-TV platforms such as Sky and Virgin Media”.
They say that,
“these arrangements require PSB channels to subsidise pay-TV platforms by providing their main PSB channels to pay-TV platforms for no payment, or in the case of Sky to actually pay them to carry them to carry those channels”.
As a result, there is concern that none of the revenue that pay-TV platforms make from these business models reaches the PSBs that make the original investment, or the talent who make our programmes possible. PSBs are the cornerstone of our current broadcasting ecology. Their role is changing rapidly but, rather than welcoming the fact that these reviews by Ofcom take place, the Secretary of State has proposed that Ofcom’s duty to review PSBs every five years should be phased out.
I sense in all this no really coherent strategic intent, and perhaps no real intent at this stage to amend the Communications Act 2003. I look forward to the Minister’s reply but if we are not careful we will bumble along until well after the next general election, and that would be a mistake, as I think the committee’s report clearly shows.
Lord St John of Bletso (CB)
My Lords, I am grateful to the noble Lord, Lord Inglewood, for his able chairmanship of this very topical, broad-ranging and fascinating inquiry. The speed of the technology revolution of the past decade has been nothing less than remarkable and, as the report said:
“Converged devices have become a mass market reality”,
with audiences expecting everything any time and anywhere. The possibilities for multifaceted smart devices with ever-greater interactivity seem limitless. In a very short time we have moved from an analogue to a digital, to an on-demand and now to an interconnected age. The emergence of common standards has meant that we are more connected than ever.
There is no denying that the younger generation are at the vanguard of media convergence. I have to admit that, as the father of four young teenagers, I rather pine for the days when my children were not constantly on their iPads, iPhones and BlackBerrys. The digital evolution with media convergence has presented huge opportunities but, as this report aptly puts it, with a number of major challenges. While the UK market for on-demand services is one of the most advanced in the world, it is reassuring that linear broadcast TV still remains largely popular and resilient with most of the population getting their news from television. I noted in the recent Ofcom report that UK households currently spend less than 10% of their TV viewing time watching on-demand content.
A key observation of this report is that new technologies and behaviours are evolving more quickly than regulatory protections. The Government’s forthcoming White Paper on communications will certainly need to address some of the regulatory challenges on content, content creation and competition. Statute is a blunt instrument and should be used only when totally necessary, but a regulatory framework needs to keep pace with this ever-changing world in an evolutionary manner.
Clearly the competition regime for media markets should seek to promote choice, innovation and competitive pricing. The new platforms to distribute content over the internet and via satellite have allowed UK viewers increasingly to take advantage of international content and businesses to globalise. While this provides opportunities for wider economic growth, it raises the thorny issue of jurisdiction over the content of some of these programmes. This should and could affect a number of areas of regulation and enforcement, particularly as Ofcom has the ability only to regulate services that originate in the United Kingdom. The impact of globalisation on national regulation of media content raises a major challenge.
The noble Lord, Lord Inglewood, gave us an excellent overview of the key findings and recommendations in this report. Without repeating his points, I will touch briefly on the safer internet, which was briefly raised by the noble Lord, Lord Clement-Jones. It was summarised in recommendations 220 to 222. It is essential that adequate protections are put in place to ensure that children’s use of the internet is controlled in a safe manner. I know that the Government are working closely with the UK Council for Child Internet Safety to pursue a self-regulatory approach to keeping children safe online. However, I do not believe that simply installing filters on IP smart devices, including mobile phones, iPads and computers, is sufficient. Parents need to be better educated as to their responsibilities to ensure parental controls on these devices. It is also essential that ISPs, mobile phone operators, device manufacturers and retailers as well as software developers all work together to ensure adequate protections.
One area of the Internet of major concern to me is the “deep web”, sometimes referred to as the “invisible web”, which is accessed through an anonymous network called Tor. This was originally developed by the US Navy, but is currently being used as a hub for illicit activity, including the notorious website Silk Road, which was fortunately shut down by the FBI recently. Sadly, similar websites are cropping up as we speak. The deep web has also been used as a source of child pornography.
Normally, file-sharing and internet browsing can be tracked by law enforcement through each user’s unique IP address, which can be tracked back to individual computers or iPads. The Tor network on the deep web effectively hides the IP address, opening the internet to unsavoury elements. A lot more focus needs to be placed on trying to control this content which is not part of the surface web.
I briefly draw reference to paragraph 155 of the report, where we pointed out that one of the risks of convergence is the fragmentation of audiences and revenues, which could impact adversely on investment in high-production-value content. As ITV pointed out in a recent briefing note, the sustainability of their investment in content depends on their ability to make a viable financial return on their investment and also, obviously, to reach large audiences. I entirely agree with ITV that in a digital age, an effective intellectual property regime is vital. It is essential that any exceptions from intellectual property protection are as narrowly and well defined as possible. Advertising revenues are no longer sufficient to ensure continued investment in world-class drama programmes. I call on the Government to give assurances that a strong intellectual property framework will be incorporated into the forthcoming communications White Paper.
I noted that, in the Government’s response to our report that, while the process of convergence poses a challenge for how we continue to ensure public expectations about content standards, the time is not yet right for convergence of linear and non-linear regulation. There should be no movement to reduce the amazing opportunities that are presented by convergence and the internet more broadly. Regulation should not stand in the way of innovation but, equally, more needs to be done to address the challenges facing media convergence. I agree with the noble Lord, Lord Gordon, that there is a need for some form of regulation of the internet.
In conclusion, there needs to be an evolutionary approach to the regulatory framework to keep pace with this rapidly changing world. I wholeheartedly support the recommendations in this report and hope that many of them will be incorporated into the forthcoming communications White Paper.
Lord Stevenson of Balmacara (Lab)
My Lords, I thank the committee for its excellent report. I probably should say “latest in a range of excellent reports” because in recent years the committee has been doing exemplary work, stalking around the areas to do with communications and the audio-visual sector more generally and bringing forward a range of proposals and ideas which are fantastically useful to those who are interested in this area. Indeed, it confirms the rightness of your Lordships’ House in deciding that the committee should continue; long may it do so. I also thank those who have contributed to the debate today. We are small in number but high in quality. We have certainly given most of the main recommendations in the report a good whirl.
The report starts in relatively easy mode. It takes as its typical reader someone—not unlike myself, I suspect—who does not really understand what exactly they are talking about, and tries to explain what media convergence is. I was okay for the first three or four lines. In fact, I think I could answer a certain number of questions on the first three or four paragraphs. I liked the bit that said that it was a technological phenomenon where the various platforms come together, but that does not really help us get into the question of how, when and on what basis regulatory and other measures might be needed to deal with this brave new world.
I was happy to read the quote from Lara Fielden, who explains in essence what we are talking about:
“Newspapers are not just printed but online and carry video packages with the look and feel of traditional TV; broadcasters publish websites including text-based articles similar to online print offerings; scheduled programmes are broadcast but also available on-demand, on digital channels and a variety of websites; user-generated material vies for online audiences alongside professionally produced content; professional and amateur bloggers share the same debates”.
As the noble Lord, Lord St John of Bletso, said, our kids consume all of this, and more, all the time. I often come home to discover them lounging on a settee watching television, plugged in to an iPod, listening to other music that is playing loudly and also texting and doing other things. How do they do it? Indeed, it occurs to me that the need for regulation is probably in inverse proportion to the number of platforms a person consumes on average. Think about it.
The value of this sector to the UK economy is some £53 billion. The sector is growing, providing jobs and new business opportunities, creating exports and boosting inward investment, generating benefit for the UK. All the signs are that this will continue. As the report recognises, intellectual property is a crucial element in this mix and while the report acknowledges it, it is a pity that the committee has not, so far, dealt with it. I hope that it will return to this topic. That aside, it seems to be generally accepted that convergence has the potential to increase the value that this sector generates even further, allowing new business models to emerge and offer people exciting and innovative new products and services which will bring about great benefits for consumers and businesses alike.
However, I have some sympathy with those who warn that, while technology and consumer behaviours are changing, it is important to remember that the process of convergence is taking place unevenly. Different media are becoming more converged in different ways and at different speeds and we find that audience expectations have not changed as fast as the technology or the markets. It is interesting that audiences have continued to distinguish between content on the basis of where they find it and on what service it is provided. Indeed, in that respect they may be ahead of both this report and the Government.
If I have one concern about the report, it is that it implicitly gives the impression that, other things being equal, more convergence will require more regulation. I can see the arguments for that, but I am not sure that the evidence is there yet. It may be that smarter, different regulation is what is required, but, at least in the interim, I hope that we can all agree that there should be no movement to reduce the amazing opportunities that are presented by convergence and the internet more broadly. I agree with the committee’s assessment that a flexible, industry-led approach will be key to addressing the challenges and making the most of the opportunities of convergence.
The Government say that they have been undertaking a wide-scale review of the sector over the past two years—it seems like a lot longer than that—and it has been good to read that, shortly, they will be publishing their strategy and vision for the sector. Will the Minister enlighten us on the timetable for legislation? Are we to see more publications along the lines of the ones that have already been produced, perhaps even the long-promised White Paper, first referred to in this House in about 2010, but which seems no nearer publication?
We have had a good discussion about the detail and I shall pick up on two points. The committee points out that the process of convergence poses a challenge in ensuring that public expectations about content standards are met. I note that the Government do not believe that the time is yet right for convergence of linear and non-linear regulation. I should be very grateful if the Minister could say more about that because we do need clarity here—indeed it came up as a Question in the House only yesterday. The committee makes good points about news and its imaginative proposals for non-linear news provision have some merit. I hope that its suggestion of legislating early on the principles but holding back on the detail will catch the eye of the Government. It may be that the age-rating system that was referred to during the debate could work, although I have to say that I have my doubts, particularly if the British Board of Film Classification system was to be expanded wholesale.
There are some recommendations for content standards in the section on “A safer internet”. That area has many challenges. Clearly, we need to make sure that children experience the internet in as safe a way as possible. However, their parents have major responsibilities in this area, and it is also important that the internet is open and transparent, in line with the aspirations of its founding parents. At this stage a self-regulatory approach is surely the right one for non-broadcast material. As has been said, securing the engagement of industry and organisations across the whole value chain, from internet service providers, mobile phone operators and device manufacturers, to retailers, software developers and parents, should deliver results. It would be good if the Minister could outline his Government’s expectations on this issue.
The quality and diversity of our content is something for which the UK is admired internationally and UK-originated content is a successful export. Research commissioned by PACT and UKTI shows that the revenue generated from international sales of UK television programming and associated activities grew by 9% between 2010 and 2011. We all want to ensure the continued health of the industry as a whole and continued investment in UK content both by public sector broadcasters and non-public sector broadcasters. That suggests a need for stability and certainty in the sector to avoid any potentially chilling effect on such investment in the longer term.
As my noble friend Lord Gordon noted, the report rightly raises the importance of ensuring that terrestrial television has sufficient spectrum to enable it to compete effectively with other platforms. The report covers the worries that exist in the industry about the long-term future of DTT and makes points about the possible impact of Ofcom’s administered incentive pricing scheme. Again, it would be useful if the Minister could share the emerging thinking on this point.
Finally, before my voice finally deserts me, the committee should be congratulated on an excellent report, and on being so far ahead of the game—so far ahead that it has produced a very limp response from the Government so far. As the noble Lord, Lord Clement-Jones, says, what is the strategy here? I should be grateful if the Minister could enlighten us.
At the start of his remarks the noble Lord, Lord Inglewood, drew attention to the royal charter sealing which was scheduled for about now. He may not know it, but we have been able to find out—by skilful use of devices on a multi-platform basis—that an appeal has now been lodged in the Royal Courts, and so the sealing may be delayed. Nevertheless, that means that we are thoroughly up to date. We are catching up with the committee, which is far ahead of us at all times, but it has left us with a very good report that we hope will stimulate the long-needed debate in this area.
Lord Gardiner of Kimble (Con)
My Lords, I in turn thank my noble friend Lord Inglewood and all members of the committee for their report. The Government very much welcome this second report into media convergence. Noble Lords have asked a number of questions, some of them a shade too technical for me. I hope that they will forgive me if some of the answers come in written form; perhaps they will then get a better response. Like the noble Lord, Lord Stevenson of Balmacara, I congratulate your Lordships on setting out in the report an excellent description of what convergence in the world of media content means. I must say that it was extremely helpful to me.
Each of us enjoys content, be it news or entertainment, and modern technology offers a plethora of ways of accessing that news and entertainment. Only last week I read that viewing of BBC TV programmes on mobiles and tablets accounted for 41% of the 176 million requests for the iPlayer in September of this year. The noble Lord, Lord Gordon of Strathblane, raised the issue of this new technology for so many that is proving so popular. That is why convergence is an exciting prospect and a daunting challenge.
The Government have recently completed a review of the legislative framework that governs the media and telecommunications sectors to ensure that it remains appropriate for the digital age. That culminated in the publication in July this year of our strategy paper, Connectivity, Content and Consumers: Britain’s Digital Platform for Growth. Our discussions with industry, regulators and consumer groups demonstrated that the present framework is broadly working well, is generally working for the consumer, and is supporting economic growth and innovation. I was particularly taken by what a number of your Lordships said about the need for evolutionary rather than revolutionary change. That has been borne out in the discussions that have taken place.
The internet and the growing technology to access it both create advantages. There is the advantage, to which my noble friend Lord Inglewood referred, of being able to move seamlessly from television channels regulated by the broadcasting code to channels streamed directly from the internet. There are also the disadvantages for users confronted with unregulated content that they might not have wanted. I understand that point.
The committee’s valuable report presents a comprehensive overview of the converging media landscape and the opportunities and challenges that it creates. We must look at how best to address those challenges. We know that some issues will need to be discussed on a European or even a global level in the future. However, we are not yet living in a fully converged world, so the Government seek to address issues that can be tackled on a national level to achieve the best outcome for our country. We also seek a safer internet environment by working closely with member states as part of the EU Commission’s Safer Internet programme.
The value of the media sector to the UK and the economy is not to be underestimated. Over the past decade it has gone from strength to strength. It is also crucial to us all as consumers, allowing us to communicate as never before and giving us access to ever more sources of information and content. However, sometimes having more information does not necessarily mean that we receive better information, so we should look at ways in which we can be sure of the reliability of that information.
Convergence has the potential to increase the value that this sector generates even further, allowing new business models to emerge that offer people exciting and innovative new products and services, and bring about great benefits for consumers and business alike. We therefore fully agree with the committee’s view that there should be no movement to reduce the exceptional opportunities presented by convergence and by the internet more broadly.
We have also taken into consideration wider international discussions that will impact on the audiovisual sector—for example, about issues such as copyright—and which are briefly mentioned in the report. I shall take this issue a little further to draw attention to the UK’s support for a comprehensive multilateral treaty that protects the same rights in different technologies, and covers traditional wireless broadcasting, as well as internet broadcasting and rebroadcasting.
As your Lordships’ report states,
“the fluidity of change is uncontested; dramatic developments in media industries and audience behaviour will continue to run on in the wake of convergence”.
While technology and consumer behaviours are changing, it is important to remember that, as noble Lords have already mentioned, different media are converging in different ways and at different speeds. Indeed, people still expect that their television, radio, newspapers and social media will encompass and embrace different opinions, different values and, indeed, different levels of partiality. My noble friend Lord Inglewood also referred to this. What is important is that we should identify the source of the news or content we are accessing, so that we can feel comfortable in applying those expectations.
The Government believe that our basic approach to regulation in this area, through Ofcom and the Authority for Television on Demand, strikes the right balance between the freedom of the internet and the tighter regulation of live broadcast material. It is impossible to predict with any certainty how convergence will continue to develop and at what pace. All noble Lords who have spoken referred to this. We do not want to make the mistake of attempting to predict the course of developments and of inadvertently stifling growth. The noble Lord, Lord Stevenson of Balmacara, hit the nail on the head: we must be careful that we do not choke off desirable advances by seeking to regulate. That is an important feature that we need to study carefully. In many respects convergence has not yet significantly affected consumer behaviour, but predictions for future developments regarding technical development and consumer behaviour are uncertain. That continues to bear out our approach.
The Government therefore favour greater partnership working and collaboration with industry across the media market. Your Lordships’ report reflected comprehensively on the issue of common media standards. We agree that non-broadcast content providers should be positively encouraged to ensure that there is a common framework for media standards in preparation for a more converged future. However, we want industry and regulators to work together on a voluntary basis to achieve this.
The recommendations in the committee’s report for content standards refer to content standards on TV and TV-like services. We agree with the committee’s characterisation of the emerging environment for content standards with the convergence of live and on-demand TV-like content, and the increasing role of the internet in providing content. We are also in agreement with your Lordships’ report that the process of convergence poses a challenge to how we continue to ensure public expectations about content standards are met. However, we believe that the time is not yet right for convergence of broadcast television and television-like content regulation, because, since the process is incomplete, we can only speculate at this moment on how best to manage it.
The noble Lords, Lord St John of Bletso and Lord Stevenson of Balmacara, spoke powerfully about the recommendations on content standards in Chapter 4, headed “A safer internet”. We agree with the committee’s findings about the challenges and opportunities of the internet, and what UK citizens expect in relation to this. The Government have been working through the UK Council for Child Internet Safety and with industry to drive action that will help ensure that parents can keep their children safe while online. My noble friend Lord Clement-Jones rightly referred to the major speech that the Prime Minister made on 22 July, in which he set out a range of measures that he has asked internet service providers, mobile network operators, public wi-fi providers and Ofcom to deliver to ensure the UK stays at the forefront, internationally, of delivering a safer internet.
Much online activity takes place in the home. Providing parents and guardians with easy-to-use and effective tools to help limit the content that children can access is a key aspect of the overall package of measures that should be available. The Government recognise that some parents may be less comfortable using the internet and may feel unsure about how to go about keeping their children safe. That is why we have charged the internet service providers with making the parental control tools they are developing as simple as possible. The noble Lord, Lord St John of Bletso, raised the question of awareness. Internet service providers will run an awareness campaign early next year with advice to help parents become more confident in setting up parental controls tools.
In addition, as part of the Government’s reforms to the national curriculum, we have strengthened the requirements to teach e-safety as part of the changes to the new computing programmes of study. From September next year, e-safety will be taught to pupils at all key stages.
The Government have been working with industry to secure the commitment that, by the end of this year, the four largest internet service providers will provide, free of charge, family-friendly network-level filtering for new customers. This means that, when someone sets up a new broadband account, the settings to install family-friendly filters will be automatically selected and will cover all devices in the home connected to that service.
Internet service providers have also committed to contacting existing customers during next year and providing them with an unavoidable choice on whether to set up filters. The Government believe that working with and through industry is the most effective way in which to increase the safety of children online through securing the engagement of industry and organisations across the whole sector. This is an essentially international situation. I know that the Secretary of State visited America precisely to have discussions on this issue.
Ofcom has been asked to report, by the end of this year, on a number of areas in relation to child internet safety, predominantly around parental awareness of—I hope that that will be endorsed by the noble Lord, Lord St John of Bletso—and confidence in using, the available internet safety tools.
The recommendations on content set out a clear picture of how public service broadcasters—PSBs—have an important and continued role within the wider context of content creation and commissioning in the UK. I listened very carefully to what the noble Lord, Lord Gordon of Strathblane, said. Indeed, the Government are about to update existing regulation on PSB prominence. The quality and diversity of our content is something for which the UK is admired internationally, and the PSBs are central to this success. I applaud all the channels that work so hard and are so much part of our creative industries. They invested £2.8 billion last year in UK content. Non-PSBs have also increased the amount they invest in UK content. In addition, UK-originated content is a successful export. Research commissioned by the Producers Alliance for Cinema and Television and UKTI shows that the revenue generated from international sales of UK television programming and associated activities grew by 9% between 2010 and 2011 to a figure of £1.475 billion.
We want to ensure the continued health of the industry as a whole, and continued investment in UK content both by PSBs and by non-PSBs. Further, we are mindful of the need for stability and certainty in the sector, to avoid any potentially chilling effect on such investment in the medium to longer term. Again, the noble Lord, Lord Stevenson of Balmacara, referred to that. We need sometimes to be cautious. That is why we have set out the outcomes that we want to see, and the action that we will be taking in working in partnership with the industry.
All noble Lords asked about legislation and consultation. The Government will consult on a range of issues. There will be a consultation on broadcasting competition, to which my noble friend Lord Clement-Jones referred, and if necessary, legislation may follow. We will also consult on electronic programme guides and the level of payments. We intend to legislate on nuisance calls, spectrum, switching the bundles, R18 video on demand content and premium-rate services. The Government believe that the right way forward is to legislate on the key areas of concern and not have—I think the committee’s report endorses this—new and radical root and branch new legislation that would be unhelpful to the sector.
A dynamic and competitive broadcasting industry is essential to boost growth, encourage creativity and innovation and improve consumer choice. We recognise that the current competition regime is not perfect, particularly in a converged world. This reflects the thrust of the committee’s report in this area. We are looking at how we can improve it for the benefit of consumers and industry. We committed to consult on broadcasting competition, as I have said, in our paper, Connectivity, Content and Consumers. We will keep the legislative framework under review, but we do not consider that wholesale changes, either at national or EU level, are necessary or appropriate. It is important that EU regulation in this area could be a negative if it were to stifle growth. We need, again, to be careful and cautious on that.
In considering how best to address the challenges and, indeed the issues of regulation, I believe that there is no single bullet. Technology is constantly changing, as the noble Lord, Lord Gordon of Strathblane, said. I agree entirely with him that legislation should be less complex and more understandable, but there are occasions when the draftsmen defeat us all. I believe that we should avoid legislation with a short shelf life, particularly in a changing environment. We must, however, have a framework in which the industry can grow and in which consumers—most important of all—are protected. Various strands of ongoing work are in place that aim to address many issues set out in the committee’s report, and there are still further developments to consider all the time as convergence evolves.
The noble Lord, Lord Stevenson of Balmacara, challenged me on what might be called the strategic priorities for the Government. That is why the paper was produced. The Government wish to establish world-class connectivity throughout the UK, to support the production of world-beating, innovative content and services that originate in this country, and to ensure consumer safety in an increasingly online world. We also wish to keep the cost of living down by ensuring that consumers have choice.
I assure noble Lords that we have discussed both the committee’s report and the paper, Connectivity, Content and Consumers with colleagues and officials. The Select Committee’s report has given great insight into many issues with which we are all having to wrestle during this continuing process. I assure your Lordships that we think that much of what the committee proposes should be developed further. I renew my thanks to all who have worked on this report and acknowledge it as a valuable resource that has indeed helped enormously in addressing the challenges that undoubtedly lie ahead.
Lord Inglewood
My Lords, I thank all those who have taken part in this debate. I hoped that we might have been slightly more numerous, but I know that the particular circumstances today have meant that a number of noble Lords who would have liked to take part have been unable to do so. I begin by thanking all those, in addition to the Minister, who took part. They endorsed and underscored the approach of the committee, pointing out, as I said, that the issue is complicated and not straightforward. Wider implications are involved and nothing is clear.
I turn specifically to the Minister. It is true that, in my opening remarks, I commented on the physiognomy of the initial response. Rest assured, we did not write the report in order that we might get a clap on the back from the Government. We wrote it, and believe it is important, because the kind of things that I and other Members of your Lordships’ House described are going to happen. That has huge implications for the country, and we need to respond to the changes, working with the Government to bring about the best for the country.
I will make one point in response to something that the noble Lord, Lord Stevenson, said. There is a difference between regulation and the regulatory framework surrounding this sector. We are not necessarily keen on seeing more regulation; we believe that the regulatory framework within which this sector operates will have to adapt. If we have made a positive contribution —as I believe we have, from what the Minister said—towards trying to bring about an evolving policy that is sensible, realistic, workable and effective, we will feel that we have done a constructive job. I beg to move.