Broadcasting (Radio Multiplex Services) Bill

David Nuttall Excerpts

2nd reading: House of Commons
Friday 13th January 2017 Commons Chamber

[Kevin Foster]

My hon. Friend is right to point out that geography and topography have a large impact on what radio and TV signals people can receive. The Bill is targeted at radio infrastructure and could provide options, which I will touch on later, to provide a service where digital radio currently does not exist or where choice is limited owing to an area’s topography. The current licensing system has not kept pace with the development of technology, so a different option is needed for smaller-scale radio stations. The situation with analogue was similar. Only a small number of analogue stations were broadcasting when the technology was extremely expensive. As the costs fell, increasing numbers of stations were created, including community stations. Now that digital technology is becoming cheaper, we need to look at creating a legislative process and a licensing system to allow community stations a chance to move to digital.

As I have touched on already, one issue with community stations and the current multiplex system is that many of the areas they cover are just too large, meaning that stations might be providing content that is irrelevant to many. For example, if a community station wanted to cover Torbay, which is perfectly reasonable under an FM licence, it would have to broadcast over a much wider area, leading to problems with sponsorship and rendering local discussions and contributions from local groups meaningless to much of the theoretical audience. That is why the Bill seeks to create smaller multiplexes that can cover defined areas in the same way as a community FM licence.

The fact that there are such wide areas to be covered means that there is a large jump in the cost of access that is not necessary if someone is looking to use analogue and get a community licence. For a station that might be broadcasting from someone’s bedroom or over the internet from a small studio, the jump to digital radio can involve a fee of £100,000, meaning that it would have to generate revenue of some £1 million a year to provide a DAB service through the local multiplex. Would that be tolerated in any other industry? There is in effect a shelf that stifles the natural growth of a business from a bedroom or of the amateur operation moving to internet broadcasting, then through to a small-scale broadcasting operation and then to who knows where. Large companies have literally been developed in people’s bedrooms. Microsoft, for example, started out as a group of students drinking Coca-Cola to keep them awake all night while they created code and is now one of the biggest companies in the world.

[Mr David Nuttall (Bury North) (Con)]

It is all very well my hon. Friend referencing commercial operations, but will he confirm whether the Bill would allow commercial radio stations to operate, or is it limited to non-commercial operations?

[Kevin Foster]

My hon. Friend will have read the Bill, and he will have seen that subsection (4)(c) of proposed new section 258A of the Communications Act 2003 states that Ofcom may

“require small-scale radio multiplex services to be provided on a non-commercial basis”.

The main thrust of my argument is that we would have a shelf—meaning that a service that is trying to grow has to jump immediately from a very cheap internet, almost market stall-style, operation to a £1 million a year turnover operation—which exists in very few other industries.

My intention is that such multiplexes will mainly focus on community radio and will be the main focus of Ofcom licensing, although I emphasise that if the Bill were to become law there would need to be detailed consultation with the industry on its operation. It is possible to provide very small-scale services through such multiplexes but, fundamentally, we are looking at non-commercial services. My hon. Friend will see that non-commercial does not necessarily mean a totally non-profit or charitable operation—we should be clear about that. The Bill provides for infrastructure that allows digital radio to be broadcast into a certain area, and that infrastructure may carry some for-profit stations. If the Bill gets its Second Reading today, it will be interesting to explore in Committee how to refine it to ensure that its target is clear and absolute.

I make it clear that the Bill would not put any new requirements on existing multiplex operators, nor is it intended to provide a way of bypassing licensing regimes. An operator would not be able to have multiple small-scale licenses to avoid going through the current Ofcom licensing procedure for clearly large-scale commercial operations. I use the analogy of a retailer—either charitable or any other form of retailer—that grows from a market stall. Imagine if the only options that a retailer had were either a market stall or a large department store.

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[Mr Nuttall]

Can my hon. Friend explain the status of the 70 unique radio stations that, apparently, have sprung up, most of them being new? What would be their status if the Bill did not proceed? What is their status now, without this Bill? How can they be operating?

[Kevin Foster]

At the moment, they are, in effect, operating under a trial basis that Ofcom has created. If the Bill did not proceed, I suspect that they would be able to continue on a trial basis, although I have seen indications that they might not be able to do so, because it is a trial. To be blunt, if the current system is reinforced by the failure of the Bill, with Parliament deciding that it would rather stick with having the national operators and the current 58 local areas and that it did not wish to see things on a smaller scale, at some point those radio broadcasts would need to be brought to an end. My guess is that some might move purely to internet broadcasting, restricting their audience, and others might seek to switch to a community FM licence. This could be one of the few examples of this Parliament saying, “We can see a new technology breeding, coming on and creating new opportunities, and creating more diversity of media, but we would rather you all went back to just FM only, with the national operators the only ones able to take advantage of this.” In other debates we sometimes get a misleading picture presented that people in this country get their news from only one source, which is palpable nonsense when we think about the number of options that exist. If we do not want to create the type of opportunities this provides, having seen what they are, that would be a negative step. I see the Minister indicating agreement with that element of my comments. I am sure he will wish to comment on the future for those stations if we do not seek to create a permanent structure of small-scale multiplex licensing. It is safe to say that the future would be rather grim.

We know that the technology works, and we know the operators who did this succeeded and created new services. So the technology is there and the gap in the licensing is there, so the next thing to address is whether the demand exists.

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[Pauline Latham]

It is disappointing, but of course there are never that many Members here on a Friday; traditionally, it is the day we spend in our constituencies—

[Mr Nuttall]

Parliament is sitting.

[Pauline Latham]

Would my hon. Friend like to intervene?

[Mr Nuttall]

I would just like my hon. Friend to reflect on the fact that Parliament is sitting. There is no such thing as a “constituency Friday.” As far as I am concerned, Members of Parliament, if at all possible, should be in Parliament when it is sitting.

[Pauline Latham]

I know that my hon. Friend is usually here on a Friday, and I have to say that I am guilty, as are many other Members, of normally spending Fridays in my constituency. However, I am delighted to be here today to support my hon. Friend the Member for Torbay.

I said at the beginning of my speech that my hon. Friend has brought forward a Bill on an important subject. Those words of praise are often said out of polite custom in this place, but on this occasion they could not be more deserved, as he actually slept in Parliament overnight in order to secure the opportunity to introduce the Bill, such was his passion. As he pointed out afterwards, the reality of sleeping in a royal palace is far less glamorous than it sounds. I hope for his sake that he has had a better night’s sleep before Second Reading than he did on that occasion. I do not know how he passed the hours while waiting to submit his Bill, but it would have been extremely apt if he had listened to a digital radio to keep him company.

As in so many sectors across the UK, digital has become hugely important for radio. In the third quarter of 2016, just under half of all radio listening—45.5%—was on a digital platform, and that figure will increase. The radio industry predicts that if current trends continue, the number will be 50% by the end of 2017—I think that is a fairly conservative view. Small-scale DAB—the kind of digital radio that the Bill deals with—is especially important. Industry data show that 60% of UK homes today have at least one DAB radio, and the DAB terrestrial platform accounts for about three quarters of all digital radio listening. These figures underline the growing importance of the area and make it more important than ever that small-scale digital radio becomes a viable option for as many stations as possible.

I recently listened to Radio Derby on the digital platform, and it does have a better signal than I used to get, so I am pleased that it has been able to move to that platform and continue on FM. Unfortunately, small radio stations currently face a major disadvantage when it comes to digital radio. At present, the costs and the licensing scheme are not conducive to allowing small-scale radio services access to the DAB radio network. As with anything, costs vary, but digital specialists estimate that the cost of carriage for a mono service on a non-London multiplex is between £3,500 and £5,000 per month. That could mean £60,000 a year. Needless to say, that is a pretty hefty sum for a small station, with the consequence that it is priced out of the market. Contrast that with Ofcom’s estimate that using small-scale DAB could allow stations to access the digital market from just £9,000. That is a huge difference, and it would make the market much more accessible for smaller stations.

Alongside cost, the current climate creates a number of other key problems for smaller stations. County-sized local DAB multiplexes exist and are used effectively by several stations, such as Radio Derby, which covers not only the county of Derbyshire but part of east Staffordshire. However, their large coverage area means that they are not suitable for smaller stations that want to transition to DAB but cannot do so. Even if local DAB multiplexes could be used in theory, stations encounter problems in practice as there is not always sufficient capacity for them to operate.

Providers are very aware of the fact that they face dwindling audience numbers and the fall in advertising revenue that comes with that as digital listening by default becomes the norm. Quite understandably, they want to change that. Ofcom trials have proved that there is major demand for change and that appropriate legislation would be followed up with action. In a research report from September 2016, Ofcom states that

“there is a significant level of demand from smaller radio stations for small scale DAB, and that a wider roll-out of additional small scale services into more geographic areas would be both technically possible and commercially sustainable”.

That statement was made after a trial in which 100 small commercial and community radio stations successfully broadcast on terrestrial DAB for the first time. Those stations came from a wide range of different backgrounds, from new entrants to established companies, which provides an even more compelling case that all small stations could make a success of using digital radio.

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[Mr David Nuttall (Bury North) (Con)]

It is a great pleasure, as always, to follow my hon. Friend the Member for Mid Derbyshire (Pauline Latham). I congratulate my hon. Friend the Member for Torbay (Kevin Foster) on the very assured way in which he introduced the debate on quite a technical subject, which has the capacity to be quite dry but which he brought to life in an entertaining way while dealing with all the technical aspects in a confident manner.

I venture to suggest that this Bill is ideally suited for the private Members’ Bill procedure. It does not seek to impose any cost on the taxpayer and deals with a relatively narrow area of the law, dealing with a problem that has arisen that could not really have been foreseen when the original legislation was drafted because of the developments in technology, the advances in software and the reduction in the price of the equipment, which I will come to. All those developments have left a gap in the legislation that the Bill seeks to fill.

[Wendy Morton]

Does my hon. Friend think that another opportunity for the provisions in this Bill would have been the Digital Economy Bill?

[Mr Nuttall]

It would seem that the nature of what is in this Bill could have been included in the Digital Economy Bill—maybe the Minister will explain why it was not when he addresses us—given that the matter undoubtedly needs to be addressed.

I rise to support the Bill and I have no wish to try to scupper it. I do have some concerns about the precise detail, which I will come to but, in broad principle I agree that the Bill is needed.

[Kevin Foster]

Does my hon. Friend agree that the bonus of this aspect of the law being dealt with via the private Members’ Bill route, rather than having been part of the Government’s Digital Economy Bill, is that it makes clear that this Bill purely focuses on resolving the issue for community radio stations, rather than being linked to any wider changes in broadcasting or media regulation?

[Mr Nuttall]

My view is that the matter could have been dealt with, without any undue side effects, in the Digital Economy Bill. But we are where we are, and we now have this separate Bill.

The Bill is what we might politely call an enabling Bill. It will be of no benefit to anyone unless, once it becomes an Act and reaches the statute book, it is driven forward by the Minister, who I am sure will want to take advantage of the powers by making an order and doing something about it. The Bill will not help anybody, as I am sure my hon. Friend the Member for Torbay would agree.

[Kevin Foster]

It is an enabling Bill.

[Mr Nuttall]

It is. For it to be of any use at all to man or beast, the Minister and his team at the Department need to bring forward the appropriate order—as soon as possible, I hope, if this Bill reaches the statute book—to cover all the various aspects set out in clause 1. The Department will need to give those powers to Ofcom so that it can set about licensing new broadcasters, in order that they can enjoy what some of those who have taken part in the trials have already benefited from.

Basically, the Bill is about making it easier to broadcast digital radio. At the time the original Act was passed, digital radio was very new, and it was thought that it could be dealt with only on a large scale—a national or county-wide scale. However, since the Act was passed, it has become possible through advances in technology for smaller-scale multiplexes to operate and to provide opportunities for community radio stations and small-scale commercial stations to operate.

Incidentally, I should declare an interest at the outset, in that I am an avid user of my digital radio. In fact, I carry it with me everywhere—at this very moment, it is in my coat pocket—and I rarely go anywhere without it. [Interruption.] We are not allowed to use props, as the hon. Member for Caerphilly (Wayne David) knows. My digital radio is a wonderful thing. In fact, it is my second one—the first one broke, having had an unfortunate incident.

[Rebecca Pow]

My hon. Friend has sparked my interest. Will he share with us what sort of radio stations he listens to and whether there are any local and community stations among his favourites?

[Mr Nuttall]

Well, I will be honest: it is usually Radio 4, Radio 5 or Radio 5 live sports extra, particularly when it is carrying the cricket commentary.

[The Minister for Digital and Culture (Matt Hancock)]

Does my hon. Friend not think that many people also carry digital radios with them wherever they go not least so that, on a Friday, they can listen to his wonderful speeches in Parliament?

[Mr Nuttall]

I am sure that is not the case.

In her most recent intervention, my hon. Friend the Member for Taunton Deane (Rebecca Pow) asked whether I use digital radio to listen to community radio stations. Of course, there are very few of those operating, but if the Bill reaches the statute book and is followed up by an order and some activity from commercial radio stations, it will enable me to have even more stations on my little digital radio than there are already—and there are already plenty on there from around the country.

Incidentally, I made sure that my last car, which I bought a few years ago, had a digital radio. I understand that virtually all cars now have digital radio as standard. At that time, it was an option, and people had to pay a little extra if they wanted it—I wanted it mainly because “Test Match Special” was no longer broadcast on long wave, and to reach it I had to get Radio 5 live sports extra.

[Kevin Foster]

Does my hon. Friend agree that one of the biggest changes that has happened since Parliament last substantively looked at broadcasting regulations is the spread of DAB radio into the car? Like him, I was one of the early adopters—I got a digital radio back in 2003, which I have at home. However, digital radio is now in most new cars coming on the market, which means there is a need to create an opportunity for community radio stations to be there, as well as the larger operations.

[Mr Nuttall]

My hon. Friend, the promoter of the Bill, is absolutely right: there has been an enormous increase in the use of digital radio over the past few years. While I fully understand the concerns of those who operate on the FM frequencies, radio seems to be moving inexorably—just as television did—towards a situation where it will operate in the digital space in years to come. As Members will be aware—it has been on the news this week, and it was touched on earlier—Norway is apparently planning over the next few months to become the first nation to move its radio stations on to an entirely digital platform.

These things will take many years, and I hope we proceed very cautiously, because I am conscious of the fact that lots of elderly people, in particular, do not have access to modern equipment. However, we managed it with television, and it would not be beyond the wit of man for us to manage it in due course with radio. However, we will need to proceed carefully and to make sure that all the technical research is properly done. To be fair, Ofcom is dealing with this, and if I have time I will touch briefly on the fact that the report it issued last year specifically refers to the feasibility of accommodating on DAB commercial and community stations that currently transmit on analogue.

One concern I do have about the Bill relates to clause 1(4)(c), which states that an order would

“require small-scale radio multiplex services to be provided on a non-commercial basis”.

I see no reason why we should try to restrict this to non-commercial services. As my hon. Friend the Member for Torbay said in his opening speech, the cost of moving straight to the larger multiplexes could be prohibitive for a start-up operation. I want to see more competition and to see the costs of entry reduced, so that the barriers to entry are as low as possible. Restricting things through a reference to non-commercial services only is not necessary, and if the Bill proceeds I will look at that further.

[Kevin Foster]

What I would emphasise—I am sure my hon. Friend looked at this in reading the Bill—is that the clause starts with the words:

“An order under this section may in particular”.

Although it alludes to the fact that there “may” be a requirement for services to be provided on a non-commercial basis, that is not a “must”.

[Mr Nuttall]

I accept that. In making that intervention, my hon. Friend draws attention to another point I was going to make about the Bill, which is that, in many ways, it raises more questions than it answers. Because of its use of words such as “may”, it does not make it clear what will actually happen. When we hear from my right hon. Friend the Minister, I hope he will give us more clarity about exactly how this will play out. There are competing interests, and I can understand that the commercial interests of the larger operators mean they will not want it to be made easier for new competitors to join the market, but that is no reason not to allow new entrants to the market, and more competition would be a good thing for the larger operators.

I particularly support the Bill because I want my area to be able to benefit from the possibility of having its own commercial or non-commercial radio station—a community station. There is, or has been in the past, something called Project 29 radio operating in Bury, and I appeared on it from time to time. It was a very small-scale operation, operating from the centre of Bury with a very small staff, who worked on a volunteer basis, and running community programmes. That sort of small-scale community radio station will be able to benefit if the Bill goes ahead and it is made easier for small operators to be given a digital licence, to operate with modern equipment, which, by definition, would be the latest available, and to broadcast over a relatively small area—smaller, for example, than the whole of Greater Manchester or the whole of Lancashire.

I am conscious of the fact that many Members want to give their time to this debate, so I do not want to extend my remarks unduly, but I do want to refer to the trials that were allowed last year by Ofcom. My hon. Friend the Member for Torbay touched on this. Three different types of trial were allowed, covering different sorts of equipment at different levels of cost. I will not go into all the detail, but the cost of the equipment involved ranged from £9,000, to £17,000, to £19,000. Different licensees were given the different types of equipment to try it out and to see how efficiently it operated. The results are all set out in Ofcom’s report. It is a lengthy document that it would take some time to read all the way through, but it is worth while for those who are interested to study it, because it sets out the detail of the nature of the equipment and how successful it was.

More importantly, perhaps, the end of the report covers the technical scope for the wider roll-out of DAB. In essence, although we can solve the problem of the legislative framework and create a licensing regime, there is an underlying problem about the frequency blocks that DAB operates on. The bands are fixed, and there is not much we can do about that. At the moment, DAB transmitters in the UK use the VHS band 3 frequency blocks, which range from approximately 211 MHz to 229 MHz, known as blocks 10 to 13. Those frequencies provide the spectrum to support the existing three national DAB multiplexes and the 58 local commercial DAB multiplexes.

When Ofcom looked at the prospects for small-scale DAB trials, it was clear right from the outset that further spectrum would be required. Because DAB radio receivers can also tune into lower frequencies than those currently used in the UK, Ofcom examined the availability of frequencies below 211 MHz for use during the trials. It also carried out an initial study looking at whether it would be technically feasible to develop a future frequency plan for small-scale DAB that might provide an opportunity for small commercial and community stations, which currently transmit only on analogue radio, to be carried on DAB. This goes back to the argument about whether we can ever transfer everything on to DAB, because we need the frequencies available to be able to do so, not just the legislative framework. The study says that

“in most areas of the UK, it should be technically possible to develop a frequency plan for small scale DAB which might accommodate those stations”,

so the position is not completely clear-cut, even for Ofcom. It concludes:

“However much more detailed planning and optimisation work would be required to develop a frequency plan which could be implemented in practice.”

[David Morris]

Does my hon. Friend agree that the whole point of this Bill is to enable smaller multiplexes to be set up, creating the network across the country that Ofcom would like to see?

[Mr Nuttall]

Yes, I do agree—that is exactly what the Bill seeks to do. However, as I said, the Bill, of itself, will not achieve that—it will need to be followed up with action from the Department. I hope the Minister can assure the House that if this Bill reaches the statute book, his Department will act speedily in bringing forward the appropriate order to make use of it. I wish the Bill well as it proceeds and hope it receives a Second Reading.