Broadcasting (Radio Multiplex Services) Bill

Baroness Buscombe Excerpts

2nd reading (Hansard) : House of Lords
Friday 24th February 2017 Lords Chamber

[Baroness Buscombe (Con)]

My Lords, I first take this opportunity to thank my noble friend Lady Bloomfield for introducing the Broadcasting (Radio Multiplex) Services Bill before your Lordships’ House. I also pay tribute to my honourable friend in another place, Kevin Foster, MP for Torbay, who worked so hard to make the Bill happen.

I say to the noble Lord, Lord Stevenson, straightaway —and as a lawyer—that this is indeed absolutely light-touch. The whole purpose is to be light-touch so that we do not put people off taking the opportunities that the Bill will present. I like his reference to the plurality of voices. The plurality of voices and content is absolutely critical, and the Bill will enable that to be supported.

The Government support the Bill because its objective is to create an appropriate framework for licensing the transmission of digital radio on a small scale. At present, many small local and community radio stations do not have a viable option of broadcasting on digital. The Bill will enable the creation of a tier of small-scale digital networks and address that issue.

Radio continues to be a popular medium. The latest industry figures indicate that 90% of adults in the UK listen to radio each week for an average of 21.5 hours, consuming in total over 1 billion hours every week. Although radio’s popularity has been stable over recent years, it is changing. Listening on digital radio continues to grow steadily and is declining on analogue. Currently, digital radio’s share is 45.2% of all radio listening, and 57% of homes own a DAB radio. The radio industry expects that this long-term shift in listeners’ habits will continue, which means that digital will overtake analogue as the default listening mode in the near future.

Noble Lords have made some important points about the key role played by their local radio stations—small commercial and community radio stations—in continuing to provide an important means of informing and engaging with their communities as well as providing entertaining, popular and lively programming. I pay tribute to my noble friend Lord Trefgarne for all the work he has done over the years in connection with this and I appreciate his support for the Bill. The Government also recognise the important role that smaller stations play in supporting the local communities they serve, and the importance of transmission in rural areas, which is indeed very much in the minds of those who have developed the Bill.

Before I move on to the Bill, it may be helpful if I provide noble Lords with more background about the characteristics of digital radio and digital radio transmission services. There are three “layers” of commercial and independent radio in the UK—national, local and community radio stations—and the BBC provides its own national and local radio services. On digital, three national multiplexes transmit national services: Digital One and Sound Digital, which are operated by commercial radio, and the BBC’s National DAB service, which currently broadcast between 10 and 19 stations each. These national services are available to up to 97% of the UK population in the case of the most extensive network. There are also 55 local commercial digital—DAB—multiplexes, which transmit local radio services, covering approximately county-sized areas. Each local multiplex broadcasts up to 14 commercial radio stations, as well the relevant BBC local station for the area. As a result of the programme to upgrade and expand this local tier, around 90% of UK households should be able to receive a local multiplex.

However, there are currently around 200 smaller commercial radio stations—covering small markets—and 244 community radio stations transmitting on mainly FM and MW analogue frequencies which are not broadcasting on digital radio. This is due to a combination of factors. There is insufficient capacity available on some of the 55 county-sized local DAB multiplexes across the UK, especially those serving urban areas. The costs of carriage on these networks can often be too high for many small local stations. Some of the costs are due to larger stations needing and wanting active monitoring, high-quality service standards and the provision of backup equipment to maintain broadcasting of services. Also, multiplex coverage area provided by county-level local DAB multiplexes may be too large for smaller stations compared to their own “core” FM transmission areas. But these smaller stations are concerned that they may lose prominence with local audiences and advertisers as digital radio listening increasingly becomes the default. The majority would like more options for broadcasting digitally and to have the option to broadcast on a terrestrial DAB platform to the localities they currently serve if a practical solution were available and if it could be done in a cost-effective way.

That brings us to the small-scale DAB trial led by Ofcom. Ofcom has been at the forefront of the development of a brand new approach to small-scale DAB transmission using open-source software to multiplex and encode signals and to distribute programme content in a much more cost-effective way. This opens the way for small stations to have alternative options to be carried on terrestrial DAB for the first time.

In December 2013, following a successful pilot in the Brighton area, the DCMS announced funding for two years—from April 2014 to March 2016—for a programme of work by Ofcom to examine the potential of the new software in real-life trials. I know that the noble Lord, Lord Stevenson, wanted more information on this. The programme of work by Ofcom looked at spectrum planning issues, technology testing, small-scale network design and options for licensing small-scale DAB multiplexes. As the main part of the programme, Ofcom licensed 10 technical field trials of small-scale DAB multiplexes in cities and towns across the country. These trials were designed to test the viability of small-scale DAB technology and eventually involved more than 100 small commercial and community radio stations, including some new services, broadcasting on terrestrial DAB for the first time.

Ofcom published a technical evaluation of the trials in September 2016. The report concludes that the trials were generally highly successful and achieved their three objectives. The trials showed that the small-scale approach to DAB transmission is technically sound, and they helped Ofcom, those involved in the trials and the wider industry to understand the practical requirements for successfully sustaining DAB radio transmissions using the small-scale approach. I know that the noble Lord was concerned about the possibility of this being extended to urban areas. Although the trials were run mainly in urban areas, we are reassured that the technology would work equally well in rural areas. Indeed, the areas to be served by small-scale multiplexes are likely to be wider in rural areas which are not currently covered by local multiplexes, such as Cumbria.

The work by Ofcom has shown that small-scale mini-multiplexes work and that they can lower the cost barrier for smaller stations to broadcast on a terrestrial DAB platform. They open up a pathway for these types of radio services to transmit to small geographic areas, as they currently do on FM and AM. Ofcom also considered spectrum needs for new services as part of the trial. The conclusion here was that there should be sufficient spectrum to license small-scale multiplexes across most of the UK.

As a result of the trial, there is strong support from most parts of the radio industry for these trial small-scale DAB multiplex services to be put on a proper, permanent basis and for small-scale DAB services to be rolled out more widely. However, the trial arrangements for the 10 areas have been set up under the Wireless Telegraphy Act 2006 and we have concluded that these arrangements are not a suitable basis for the long-term licensing of small-scale DAB multiplexes. The current legislative framework for the licensing of radio multiplexes is set out in Part 2 of the Broadcasting Act 1996. However, the legislation is not suitable for licensing small-scale DAB multiplexes because it is restrictive and places on multiplex operators large burdens which, while appropriate for national and county-level multiplex transmission, are disproportionate for low-cost, small-scale radio multiplexes.

Given the success of the technical trials of small-scale DAB multiplex technology and the widespread support in the radio industry, particularly from smaller stations, the Government fully support the Bill. Its purpose, which was set out by my noble friend, is to allow for the modification of the requirements for licensing digital radio networks in the 1996 Act in order to create a new, lighter-touch regulatory framework that is appropriate for the licensing of small-scale digital radio multiplexes.

At present, the construction of the 1996 legislation means that all the same procedures, rules and requirements that apply to local and national multiplexes have to apply to small scale. Ofcom has no discretion to adapt the requirements in the legislation to take account of the size and audience share for radio station services targeted at smaller localities—that is, at sub-county level.

Similarly, there is no power for the Secretary of State to adapt or change the requirements to reflect changing circumstances. Under the Bill the Secretary of State will be able, by order, to modify legislation that sets out the licensing framework for radio multiplex services. Some of the requirements set out in Part 2 of the 1996 Act will continue to be important, but other requirements are unnecessary or will have to be applied in a way that is likely to be overly burdensome for smaller stations wanting to work together as consortium to bid for a licence to develop and run a small-scale DAB radio multiplex service. The proposed measure in the Bill will allow for the provisions of the 1996 Act to be modified for small-scale multiplexes, rather than replacing them with entirely new licensing arrangements, enabling a modified licensing regime that will take account of the different needs of smaller stations that will seek carriage on the small-scale radio multiplexes. This approach of modifying broadcasting legislation by statutory instrument follows the precedents used successfully for community radio and for local television—Sections 262 and 242 respectively of the Communications Act 2003.

However, as my noble friend Lady Bloomfield has said, there is more work to do to develop the detailed structure of the licensing regime with Ofcom. Furthermore, an in-depth consultation with industry stakeholders will be needed to thrash out the detail of the new regulatory regime that will apply.

The detail of an order made under this power is likely to be used in the following ways: to allow licence periods for small-scale DAB multiplexes to be set according to the needs of small stations rather than for a fixed period of 12 years, which is inappropriate given the much smaller capital outlay needed to set up small-scale DAB multiplex services; to remove the necessity for small-scale DAB multiplex licensees to provide reserved capacity on the multiplex to the BBC; to set clearer requirements on small-scale DAB multiplex licensees to start broadcasting within a fixed period following the award of the licence from Ofcom; and to restrict the ability of small-scale DAB multiplex operators to overcharge digital sound programme services for carriage on the multiplex. It will also be used to set eligibility requirements for the holding of small-scale multiplex licences—for example, to exclude organisations with any existing interests in either national or local radio multiplexes, mainly large commercial groups, and possibly organisations holding a licence in a national station, from holding small-scale DAB multiplex licences or to require that small-scale multiplex licences can be awarded only to “non-commercial” entities. I hope that answers to some degree one of the questions posed by the noble Lord, Lord Stevenson. Also, to allow Ofcom the discretion to reserve capacity on the multiplex for community radio services, in some or all cases, and to make changes to the definition of “digital simulcasting” for independent local commercial radio stations that have taken carriage on a small-scale multiplex.

There are two areas where more thinking is needed, requiring consultation with industry. One, whether the small-scale licences should be held by a non-commercial vehicle or whether corporate entities should also be able to bid for and hold small-scale DAB licences. Related to this is the question of how Ofcom should decide between different consortia and whether holders or those with an interest in existing national or local multiplexes should be excluded from holding small-scale licences. We will need to consider both questions as part of a consultation on the detail and will need to take further comments from industry. The key point, however, is that it is useful that the Bill highlights these two areas as something that the modified requirements will need to cover.

The noble Lord, Lord Stevenson, asked about spectrum. The response to that has been very positive from Ofcom and work is continuing. However, that is very much dependent on this Bill.

On the question of “may” or “must”, the point of the Bill is to set out what the order to be made using this power is capable of doing, not what it must or will do; hence the wording of the Bill enables the provision on this issue but does not require it do so or to follow a particular policy option.

I want to make it clear that what this Bill provides for is not in the Digital Economy Bill. Put simply, as the Minister in another place, Mr Hancock, said, DCMS needed to see the conclusions of the Ofcom trials before legislating. Ofcom published the evaluation in 2016, several months after the introduction of the Digital Economy Bill.

The Government’s position on a switchover decision remains the same. A decision about the timetable for a future switchover will be considered only once the listening and coverage criteria have been met—that is, when 50% of all listening to digital and national DAB coverage is comparable to FM, and local DAB reaches 90% of homes.

Good progress is being made and we are very much in listening mode about this. I can reassure the noble Lord, Lord Stevenson, that it is not just about the number of cars sold. This Bill and other measures will contribute to when that decision will be made. Digital’s radio share of listening continues to grow steadily—it now stands at 45.2%—and the radio industry expects this trend to continue. Therefore, with the funding by DCMS and the expansion of local DAB coverage, along with the BBC and commercial radio sector building 182 new transmitters across the UK and making technical modifications to 49 other sites, the programme will expand local DAB network coverage from around 75% of UK homes in 2013 to 91%, which is about 4 million extra, and from 56% to 77%, an extra 4,400 miles of major roads, by early 2017. So we are well on the way to considering when switchover can take place.

A key success of the small DAB trials has been the strong support from smaller stations, including community radio. The majority of trials of small-scale multiplexes are full or nearly full. Overall, based on the trials and other work, Ofcom believes that there is a significant level of demand from smaller community stations and commercial radio stations for carriage on small-scale DAB multiplexes and that a wider rollout of additional small-scale services into more geographic areas would be both technically possible and commercially sustainable.

This Bill will provide the vehicle to create an appropriate and lighter touch licensing and regulatory framework, which is a necessary prerequisite to facilitating the development of a tier of new small-scale DAB multiplexes across the UK, and for that reason the Government are fully supportive of it.