Broadcasting (Amendment) (EU Exit) Regulations 2019

Lord Foster of Bath Excerpts

Wednesday 6th February 2019 Lords Chamber

To conclude, I believe that the draft regulations are necessary to ensure that the UK statute book works on exit and that audiences are protected from harm, and I commend them to the House.

[Lord Foster of Bath (LD)]

My Lords, the Minister will be pleased to hear that it is not my intention to oppose to this instrument. As he indicated, in the event of a no-deal Brexit, we need to ensure that those companies that provide at least linear television services in the UK are properly licensed—whether they are based here or elsewhere—and that viewers are protected. However, I take a very different view from the Minister in describing this instrument, particularly the description we find in the Explanatory Memorandum. Paragraph 12.3, for example, explains and justifies the lack of an impact assessment on the grounds that,

“the instrument will maintain the status quo as far as possible”.

It also suggests that the only inconvenience broadcasters with services available in the UK will face is the,

“need to familiarise themselves with new licensing system and guidance as proposed by Ofcom”.

Both lines show significant complacency on the part of the Government and are a massive oversimplification of what will happen if the instrument is needed.

The Explanatory Memorandum states explicitly that,

“no, or no significant, impact”,

on the private or voluntary sector is foreseen. Frankly, this is nonsense. When this instrument was debated in the other place on 29 January, the Minister there, Margot James, was forced to admit that at least 50 or 60 channels will for the first time be required to be licensed by Ofcom—hardly evidence of no, or no significant, impact.

Even more significantly, the Minister appeared to acknowledge that the loss of involvement with the AVMS directive regime, including the country of origin principle, should be of concern to us in this country, noting that the UK currently has a sizeable share of the entire European television market. As noble Lords will be well aware, we have something like 1,200 of the 3,000 channels across the whole of the EU. She said:

“A sector that grows at 25% more than the average rate of the economy is certainly a success. In part, that success is indeed down to the very beneficial regime, the AVMSD”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 29/1/19; col. 7.]


So the loss of that “very beneficial regime” can surely be expected to have rather more than,

“no, or no significant, impact”.

The reason, of course, is that owners of the 600 or so channels currently licensed in this country but shown in other EU countries will now need to make new arrangements, not least by seeking licences elsewhere in the European Union. As I am sure noble Lords are well aware, to achieve that, they will either have to move their headquarters from the UK to another EU 27 country, or at the very least move some of their editorial staff to ensure that they have what is known as a “meaningful presence” in a different European country.

We already know that Sony is moving its headquarters to the Netherlands. We have already heard about Discovery Channel, Turner and NBC planning the movement of staff. Even the BBC is planning the movement of staff. Hardly surprisingly, Ireland, Germany and the Benelux countries—Belgium, the Netherlands and Luxembourg—are all actively targeting UK-based companies to persuade them to move to their country so that they can benefit from the AVMS directive and the current country of origin regime.

Given that we do not know yet which companies are likely to move their headquarters or their staff, and we do not know where they are likely to go, or how many staff are likely to go with them, it is difficult to be clear about precisely what the impact will be. However, I would argue strongly that there should have been a detailed assessment of the likely impact. We should have had, for example, detailed discussions with each of the potential receiving countries about what is meant in their country by a “meaningful presence” to ensure that a company would be allowed a licence in that country. Indeed, it is somewhat unclear what a meaningful presence in this country would be. Could the Minister give us a definition of what would amount to a meaningful presence here, enabling a company to get a licence here?

We know that some UK-based companies already have staff in other countries. I am not suggesting that there will be a total flood of people leaving, which would be catastrophic for the industry, but it will certainly make a significant dent in our world-beating broadcasting sector. Does the Minister believe the words in the Explanatory Memorandum—that there will be,

“no, or no significant, impact”?

Can he justify why we have not had an impact assessment for this instrument?

I am aware that when the Minister responds to my query he may refer to the convention on transfrontier television—the ECTT. He may argue, just as the instrument does, that implementing the ECTT—which, as he rightly pointed out, we signed and ratified as far back as 1993—provides a similar system of freedom of reception and transmission between the parties to the convention as the AVMS does between EU members. If the Minister uses that to justify the claim that,

“the instrument will maintain the status quo as far as possible”,

I suspect he will be in significant difficulty, because there are major problems in making that claim.

The Minister said that “only seven” of the EU member states are not members of the ECTT. However, only seven is more than 25% of the EU 27, so that means that UK companies that wish to have their channels shown in Belgium, Denmark, Greece, Luxembourg, Sweden or—especially important in this regard—the Netherlands or Ireland, will have no choice but to move HQ, as I said, or at least to move some staff, to another EU country. So will he acknowledge that describing the ECTT as a “similar system” is not a widely shared view?

Indeed, PACT—a trade organisation representing, among others, UK television companies—notes that the enforcement regime of the ECTT has nothing like the same ultimate recourse to a body such as the EU Court of Justice. COBA, the Commercial Broadcasters Association, describes the ECTT as having significant limitations. Our own House of Lords EU Select Committee, in HL Paper 135, said that,

“neither the Transfrontier Television Convention nor coproduction treaties are viable alternatives for trade”.

In the other place, the House of Commons DCMS Select Committee concluded just last month that the ECTT was “severely limited”.

Even the former Digital Minister, Mr Matt Hancock, was forced to admit when giving evidence to the EU Select Committee, that the ECTT was agreed in 1993, and that,

“in this space, that is a long time ago”.

No doubt because of that huge distance, another difference appears, in relation to how the ECTT handles advertising, compared with the AVMS directive.

If the Minister needs any further convincing, he should surely note what the creators of the ECTT itself said. What did the Council of Europe say about it? It published a paper very recently—its 2018 report, Brexit: The Impact on the Audiovisual Sector—which says:

“In the absence of the COO principle, UK-based companies would face new barriers when broadcasting to Europe and could choose to relocate their headquarters to another member state, with the consequent direct negative effects on employment in the UK, and additional indirect losses for the UK creative economy”.


Even the creators of the ECTT do not appear to think of it as the solution to the problem. Faced with all this, does the Minister stick to the view that the ECTT is a similar system to the AVMS directive, that if we implement it there will be no, or no significant, impact, and that the status quo is being maintained? Surely he cannot agree with any of that.

I turn now to another aspect of the instrument that definitely does not meet the Government’s claim to be maintaining the status quo. By waiving any UK licence or notification requirements for on-demand services other than UK-based ones, they will intensify rather than mitigate the already uneven playing field between linear and the increasingly popular on-demand services. It is already bizarre that, in relation to non-EU so-called third countries, we rely on the host country’s regulator to provide a licence, and no UK licence is required, even if the services are being made available here in the UK.

Of course, I am prepared to admit that, in a sense, under the AVMS directive that is also true for on-demand service providers coming from the other EU 27 countries. But there is a major proviso: there is no formal legal dispute mechanism through the European Commission in the alternative arrangements. We will suddenly deny ourselves any formal dispute mechanism, at least for on-demand services coming to the UK from the EU 27 countries.

--- Later in debate ---

[Lord Ashton of Hyde]

I take that point, although I would not bet on it myself. On that point, I emphasise that the ministerial round tables took place not just once but regularly between August 2016 and March 2017, led by the Secretary of State, and in March and July in 2018, led by the Minister. But I take the point about explaining that. The difference between this and the SI we talked about the other day is the commercial sensitivity of the decisions that have to be made in moving head offices, the effect on the workforce, and so on.

I will address the general issue of whether we are being complacent about relying on the ECTT. We acknowledge that it might be possible that some services will require two licences—one for the purposes of the AVMSD, and one for Ofcom—because this is the case for services which are available in both ECTT and non-ECTT countries. In the way that these services are received—by satellite—it is difficult to exclude some countries from the distribution. There are about 500 Europe-facing services out of the 1,200 that Ofcom currently licenses. To date, we are aware of about 130 licences moving. It is fair to say that broadcasters are concerned about the risk of dual regulation, and are reluctant to rely on the ECTT—it is considered an untested convention, as EU law has been in place for so long. Nevertheless, I am sure noble Lords would agree that we should not ignore conventions and international agreements that we have signed up to, nor should the other countries which have signed them.

[Lord Foster of Bath]

If we follow the Minister’s logic, he said earlier that there are about 50 or 60 channels that are currently not EEA members but which are based there, and which will need a licence. They will get a six-month period, a point raised by the noble Lord, Lord Pannick. In view of what the Minister is saying, is it not quite likely that the number of channels that are in EEA EU countries will themselves decide to get an Ofcom licence? What assessment has he made of the number that may well choose to do that, and in considering that, is he aware that the latest information I have received is that only one company is considering basing all of its planning on the ECTT? Following from that, presumably there will potentially be a large number of people wanting licences from Ofcom, so can he also tell us how long it will take Ofcom to deal with each licence and whether it will be able to get through the requisite number in the six-month period?

[Lord Ashton of Hyde]

I do not agree with that premise. We have said that we will apply the ECTT, and in fact, this SI brings it into law.

[Lord Foster of Bath]

That was not the point I was making. The point is that I understand that it is quite likely that a number of companies that are providing services to the UK, which could rely on the ECTT to not require a licence, will, none the less, make the decision that it is in the best interests of their protection to seek such a licence from Ofcom. Presumably, they will be required to do it within the same six-month period, so there is a potential problem with the number of licences that Ofcom can handle.

[Lord Ashton of Hyde]

I am still not clear why, given that we have explained that we will accept ECTT countries, they think they should have to take the precautionary approach of getting a licence as well.

[Lord Foster of Bath]

I will give a specific example: it could be in relation to the differences that exist in the advertising regime, to pick up the point I raised earlier in my initial contribution about any changes that we might make. Given that there is not a formal legal redress system under the ECTT, they may feel it better to have a licence here and simply stick to the rules that we impose.