Small-scale Radio Multiplex and Community Digital Radio Order 2019

Lord Kirkhope of Harrogate Excerpts

Tuesday 23rd July 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, the order that we are debating today will facilitate a new approach to open up broadcasting on terrestrial digital radio to more than 300 existing community stations and smaller commercial services. It will also offer an opportunity for new entrants who wish to launch new services.

There has been a marked change in listening habits over the past decade, with a significant shift towards consuming radio via various digital platforms. The latest RAJAR audience listening figures, published in May 2019, show that digital radio now accounts for 56.4% of all radio listening; 10 years ago, it was just 20.1%. This shift has significant implications for around 300 existing community stations and small commercial radio stations that are currently broadcasting to local audiences only on FM or AM. For most of these small stations, a move to digital by broadcasting on their existing local digital radio multiplex is not an option, because many local multiplexes have insufficient capacity available for carrying additional stations and the cost of carriage for an individual station is too high. Smaller stations recognise that they will increasingly be at a disadvantage in retaining their audience as digital becomes the default mode.

To address this issue, the Government supported the development of an innovative approach known as small-scale DAB. Small-scale DAB is digital radio. It uses advances in technology to provide a flexible and cheap approach to digital transmission which performs well in localised geographical areas. DCMS funded a programme of work by Ofcom to examine the feasibility of small-scale DAB technology. This included 10 successful technical trials in towns and cities across the country. However, the trials licences were issued under temporary licensing arrangements and we concluded that these arrangements would not be appropriate for the longer term.

The existing legislation is more than 20 years old and places a number of burdens on radio multiplex operators that are not necessary or appropriate for small-scale radio multiplex services. Importantly, the existing legislation does not allow Ofcom to reserve capacity for community radio stations or enforce restrictions on ownership; both are essential if smaller stations are to have a viable opportunity to broadcast on DAB. To enable the necessary legislative changes to be made, DCMS supported a Private Member’s Bill sponsored in your Lordships’ House by my noble friend Lady Bloomfield of Hinton Waldrist, which received cross-party support; I extend my thanks to her.

The Broadcasting (Radio Multiplex Services) Act 2017 amended the Communications Act 2003 to provide a power to modify, through secondary legislation, the rules for radio multiplex licensing set out in Part 2 of the Broadcasting Act 1996. In 2018, the Government consulted stakeholders about detailed proposals on new arrangements for licensing new small-scale radio multiplexes, and we received 87 mainly detailed responses, including from commercial and community radio operators. Overall, there was strong support for the proposals, but there were representations, including from the Community Media Association—the CMA—on whether we had got the balance right between protecting the legitimate interests of the community radio sector and allowing the commercial sector to be involved. We have reflected all these points in drawing up the order. The order secures important protections for community radio and small commercial stations which want to use these networks while ensuring that only minimum, necessary burdens are placed on new operators.

The issue that attracted the most attention during the consultation was who could hold a small-scale radio multiplex licence and the proposed limits to the number of licences that could be held. The CMA proposed strict rules that limited licences to not-for-profit entities and to holding a single licence. However, we were not attracted to this approach as it would have excluded many of the existing operators of the successful small-scale trials.

We think it is important to have a mixed economy, and for commercial entities to be involved and apply their skills and investment to develop small-scale DAB. This will help ensure that there is interest in taking up licences—something that will actually benefit community stations that would otherwise find it difficult to run a small-scale multiplex service. None the less, we recognise that some restrictions on ownership are necessary to avoid a potential concentration of ownership, and we consulted on this basis. Since the consultation, we have listened and made a small number of changes to the original proposals to strengthen the protections for community radio.

The order ensures that capacity reserved for community stations on a small-scale multiplex is a firm reservation; in other words, it must be maintained for use by community digital radio stations—C-DSP licence holders —and not by temporary commercial services. This removes an incentive for operators to seek to overcharge community radio stations. The order requires Ofcom to ensure that small-scale radio multiplex licence holders publish information about the carriage fees charged. This will allow fees to be compared and benchmarked, which will also help to limit charges. Finally, the order requires Ofcom to consider the extent of involvement of community radio in a particular application when awarding a small-scale radio multiplex licence. In other words, an application supported by local community services, for example as consortium partners, will have a greater chance of success.

In addition to these measures, the order sets out the other elements of the new licensing framework for small-scale radio multiplex services. Taken together, these measures will help to ensure that community radio’s interests will be protected. The key elements are as follows. First, they require Ofcom to reserve capacity on small-scale multiplexes for community digital radio stations. There must be a minimum of three slots available, with a variable upper limit set by Ofcom based on an assessment of local need. Ofcom will be able to review the reservation at the point of renewal.

Secondly, they create a new C-DSP category of licence for community stations broadcasting on digital. C-DSP licensees will need to commit to the same social value requirements that apply to existing community stations. Thirdly, they restrict the total number of small-scale radio multiplex licences that can be held by one company at a given time. They also place much stricter restrictions on the number of small-scale radio multiplex licences that existing national operators can be involved with and require them to do so in consortia with other partners.

The order also contains a small but important provision relating to community radio licensing. Community radio has been a major success story, with more than 280 services on air. But the licence terms for the first stations launched in 2005 are due to expire in 2020. We want community stations to continue to focus on what they are doing well—serving their local communities—rather than being concerned about the renewal of licences during a period when stations will need to think about digital radio carriage on new, small-scale multiplexes. Therefore, the order will also allow for a further extension of analogue community radio licences for a fourth five-year term, up to a maximum of 20 years. This avoids the need for Ofcom to readvertise the first wave of community radio licences, which it would need to do later this year. This proposal has strong support from the CMA.

We believe that small-scale DAB has the potential to revolutionise radio in the UK. This order will facilitate a clear pathway to digital for over 300 existing community and small commercial radio stations, as well as providing an opening for new entrants. The extensive technical trials have demonstrated that small-scale DAB provides a low-cost, viable option for smaller stations to broadcast on a terrestrial digital platform. I beg to move.

[Lord Kirkhope of Harrogate (Con)]

My Lords, I will make just a short intervention. I declare my interest as someone who has been involved in commercial radio since about 1972, first with the White Paper at the time and then, with the emergence of commercial radio, as an applicant for one of the first commercial radio licences, which I did not get. Subsequently, I have been very much involved in the hospital radio movement—and am to this day.

I very much welcome the general tenor of the order, and the nature of it has been very much to do with realising the importance of the community in radio broadcasting. I think all of us agree that radio, as opposed to TV and online services, is still absolutely indispensable to vast numbers of people all over the country—in particular in localities where they can have local information that they could not otherwise get quickly and immediately to their benefit.

My concern over many years has been that the original ideas behind what was then the Independent Broadcasting Authority, which granted the original licences to commercial stations, required in the criteria a considerable level of local input. Over the years, as I think my noble friend will acknowledge, the way in which our commercial broadcasting and radio have developed in this country has been more towards monopolistic situations, combining radio stations, wherever they may be located, in a way that has taken from them the importance of that local interest. Therefore, it has to some extent been up to the new community broadcasters, of which there are many now, mostly broadcasting in analogue on AM or FM frequencies, to provide local input.