Digital Economy Bill

Lord Wood of Anfield Excerpts

Report: 3rd sitting (Hansard): House of Lords
Wednesday 29th March 2017 Lords Chamber

[Viscount Waverley (CB)]

My Lords, I observe only that if you wish to access the BBC on iPlayer, for example, when you live outside the United Kingdom, you are asked whether you have a television licence. If you do not, you cannot access it. That seems an opportunity for revenue for the BBC to consider in the future.

[Lord Wood of Anfield (Lab)]

My Lords, I express the support of these Benches for the amendments of the noble Lord, Lord Best. I also support the intention behind the amendment of the noble Lord, Lord Lester.

It sounds obvious that the process of negotiating a charter and the process of setting a licence fee should be separated so that the licence fee is set at a level to ensure the BBC has the resources to do what the charter asks of it. However, those of us who have had some involvement in the process in the past know that this is not quite how it works. The connection between the two processes is indirect and shrouded in political pressures. As a result, the process of setting the licence fee is far too little about matching the funding of the BBC to its functions in the charter, and far too much about balancing a range of other considerations: the politics around the licence fee rate, interests of other broadcasters, and the temptation to smuggle government policy on to the BBC’s books—midnight raids et cetera. Governments of all varieties—Labour, Conservative, whatever—like to play the game of pumping up the tasks that go into the charter and clamping down on the licence fee needed to fund it. The result of all this is bad not just for the BBC but for all parties concerned. It is a bad deal for the BBC because it faces increasingly intolerable pressures to deliver what is expected of it, and threats to its operational autonomy and independence. It is bad for the Government because of a growing suspicion of unwarranted political interference in the BBC, and it is bad for licence fee payers because the process of allocating funds to charter functions is surrounded in opaqueness and devoid of transparency.

Therefore, we support the amendments of the noble Lord, Lord Best. We think they are based on sound principles—the independence of the process, consultation with the public, transparency of the contents of the deal and requiring the Secretary of State to be accountable for turning his back on or challenging the express will that comes out of consultation. We think this is a way of restoring the functionality and transparency of the licence fee setting process, and ensuring that the BBC can be funded to do what we all expect the foremost public service broadcaster to do.

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

My Lords, we return to an issue that I know interests a great many noble Lords: the funding of the BBC. I take this opportunity to remind noble Lords of what the Government have already committed to do to increase the transparency of the process whereby the funding of the BBC is decided. The BBC’s new charter regularises, for the first time, the timing of the BBC’s next financial settlement, which will be in five years’ time. The BBC has certainty over its funding for the next five years, having agreed a settlement with the Government whereby the licence fee will rise with inflation each and every year for the next five years.

On the amendment in the name of the noble Lord, Lord Best—in answer to his question, I accept that Amendments 32B and 32C are, if not consequential, linked—I make clear to the House how grateful the Government are for the contribution of the noble Lord and of your Lordships’ Communications Committee, which he chairs, throughout the charter review. Indeed, the Government accepted most of the committee’s recommendations for the new charter, such as making the next charter for a period of 11 years and the scope of the mid-term review.

The charter states that, in determining the funding settlement, the Secretary of State must assess the level of funding required for the effective fulfilment of the BBC’s mission and promotion of its public purposes, consider an assessment of the BBC’s commercial income and activities, and consult the BBC. For its part, the BBC is required to provide information and assistance to the Secretary of State ahead of the next licence fee settlement to inform the Secretary of State’s determination of that settlement. It is therefore explicit that the BBC will be able to make its case and the Government of the day will have to consider that case.

However, the Government also stated in their White Paper, published last May, that they would consider taking independent advice at the next settlement should it be appropriate. While that will be a matter for the Government of the day, the sentiment behind it is right and sensible. In answer to the noble Lord, Lord Maxton, the licence fee itself may well be a question for the next charter renewal—in which I think I can say I will not be involved. Taking independent advice is an important factor, and I take this opportunity to set out what this may include. The Government may, for example, wish to seek independent advice to inform their assessment of the data the BBC will provide. They may commission experts to consider the BBC’s likely commercial income for the coming years; the effect of population growth on licence fee revenue; the impact of sector changes on BBC funding needs; and, in turn, the impact of BBC funding on the wider sector.

The noble Lord, Lord Best, suggests that there should be a BBC licence fee commission. This is a departure from his amendment in Committee, which sought to give Ofcom a similar power, and I appreciate the thought he and other noble Lords have given this. However, at the risk of repeating myself, the licence fee is a tax, and the Government do not seek advice in this way for any other type of taxation. On the question of the licence fee being a tax, I know that not all noble Lords like this designation. However, we rely on the definition provided by the European System of Accounts, which is the system of national accounts used by the European Union. I will spare your Lordships more detail on this, which I could give. I reiterate that taxation is a matter for the elected Government. Only the Government have oversight of the balance of taxes from different sources; rates of tax are set, taking into consideration a range of factors, including wider economic considerations and spending decisions. It would therefore not be possible for an independent body to have oversight of the interaction between this tax rate and other tax burdens that the same group face.

Next, on public consultation on the appropriate level of funding for the BBC, I have already made my reservations clear on this aspect of the noble Lord’s amendments in Committee. Funding a public service is not a straightforward topic for public consultation. The BBC’s funding needs are a complicated and technical issue, as we have seen at every licence fee settlement—

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[Lord Borwick (Con)]

My Lords, I thank the noble Lord, Lord Clement-Jones, for his comments on the amendment I moved in Committee. The trouble with his amendment is in the meaning of “proportionate”. There will be quite a lot of consultation between all the parties about what will be required before the regulations are finally drafted, and adding “proportionate” would effectively add an extra layer of consultation in which people argue with each other about exactly what “proportionate” means in these circumstances. It would be much better if the clause was left as it is to make certain that, whatever the rules are, they are clear, having been discussed in the consultation. I must express my thanks to the originator of this clause as it came from a Labour Party proposal in another place, but we all support the right idea here, and I am sure it will help deaf people and blind people understand what is on television. This amendment, although no doubt worthy, is not necessary and will in practice get in the way of getting this change into law.

[Lord Wood of Anfield]

My Lords, I shall focus briefly on the principles shared by the amendments proposed by noble Lords and those suggested by the Government. They take a long-standing commitment to ensure accessibility and update the relevant rules for an age in which on-demand services are becoming more essential to viewers. It is an approach we can all endorse, and I am sure the Government will be keen to take these principles forward when it comes to other issues, such as ensuring PSB prominence in on-demand services, which is in the next group.

I turn to another element of this group, which is the Government’s concession on listed events, Amendments 33ZH and 36. This is another example of taking a long-standing commitment to ensuring access and taking steps to update regulations to respond to changing viewing habits. We are delighted that the Government have responded to the concerns we and other noble Lords raised in Committee. Lowering the threshold for qualification for screening listed events below the current standard is crucial if we are to prevent the development of the extraordinary situation forecast by all PSB broadcasters of not one channel qualifying on existing criteria in the listed events regime by the end of this Parliament. Giving the Secretary of State power to respond seems a very sensible move to allow the Government to respond in the light of the evidence in a quick and minimally disruptive way.

Without being churlish, I hope the Government will bear two considerations in mind as they think further about how to develop the new criteria for the existing regime. First, we need to bear in mind that the threshold must be lowered enough to enable channels to continue to qualify, but not so much as to threaten the idea that events that bring the country together should be available to as wide an audience as possible. Secondly, I hope the Government remain open to the idea discussed extensively in Committee that alternative measures of reach and access may be appropriate in an age in which increasing numbers of viewers access programmes online. Having an open mind about regulatory flexibility in this area, as in other areas, is crucial to achieve the purpose of the listed events rules, which are supported by us all.

[Lord Addington (LD)]

I shall be very brief. I thank the Government about listed events. They are important for sporting culture and sharing sport. Taking that on board and making sure that we maintain the link in a manageable way is important, not only because it builds a sense of community but because it is an important link with the casual observer of sport, which helps in encouraging people to take part, mass participation and all those things. It is an important link in that chain, and if we lose it, we will damage part of our sporting culture.

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Moved by

[Lord Wood of Anfield]

33ZG: After Clause 86, insert the following new Clause—
“Public sector broadcasting prominence
(1) The Communications Act 2003 is amended as follows.(2) In the title of section 232, at end insert “and “electronic programme guide””.(3) After section 232(5) insert—“(5A) In this section “electronic programme guide” means a service which consists of a—(a) linear electronic programme guide; or(b) qualifying connected electronic programme guide.”(4) In section 232(6) before “electronic” insert “linear”.(5) In section 232(6)(b) after “for” insert “finding, selecting or”.(6) After section 232(6) insert— “(7) In this section “qualifying connected electronic programme guide” means a “connected electronic programming guide” which is used by a significant number of its intended audiences as a means of receiving television programmes or TV-like content.(8) In this section “connected electronic programming guide” means a service which consists of—(a) the listing or promotion, or both the listing and the promotion, of some or all of the programmes included in any one or more programme services the providers of which are or include persons other than the provider of the guide; and(b) the listing or promotion, or both the listing and the promotion, of—(i) some or all of the programmes included in any one or more on-demand programme services, or(ii) some or all of the on-demand programme services, the providers of which are or include persons other than the provider of the guide; and(c) the facility for finding, selecting or obtaining access, in whole or in part, to the programme service or services and the on-demand programme service or services listed or promoted in the guide.(9) The Secretary of State may by order amend the definition of an electronic programme guide in this section.(10) Before making an order under subsection 9 the Secretary of State must consult OFCOM.”(7) In section 310(1) for “from time to time” substitute “on 1 December 2017 and at intervals of no more than three years thereafter”.(8) In section 310(2) omit “such degree of” and “as OFCOM consider appropriate”.(9) In section 310(4)(a) after “BBC” insert “, including on-demand programme services,”.(10) After section 310(4)(h) insert—“(i) any on-demand programme service provided by a public service broadcaster.(4A) A service is an on-demand programme service provided by a public service broadcaster for the purposes of subsection (4)(i) if it —(a) is provided by any of the following—(i) a person licensed under Part 1 of the 1990 Act to provide a Channel 3 service;(ii) the Channel 4 Corporation;(iii) a person licensed under Part 1 of the 1990 Act to provide Channel 5;(iv) the Welsh Authority; and(b) provides access to programmes broadcast on a licensed public service channel.”(11) In section 310(5)(a) after first “service” insert “, including on-demand programme services,”.(12) After section 310(5) insert—“(5A) In making any order under subsection (5) the Secretary of State must have regard to the desirability of investment in original productions.(5B) In this section “original productions” means programmes commissioned by or for the provider of a service for the purposes of subsection (5) with a view to their first showing on television in the United Kingdom on that service.”(13) After section 310(7)(a) insert—“(b) if the service is a public service channel dedicated to children, persons under the age of 16;”.(14) For section 310(8)substitute— “(8) In this section “electronic programme guide” means a service which consists of the programme service or services listed or promoted in the guide.”(15) In section 311(2) for “310” substitute “232(5A)”.”

[Lord Wood of Anfield]

My Lords, Amendment 33ZG has a simple purpose: to ensure that high-quality public service broadcasting content, paid for by licence fee payers, continues to be accessible and prominent to viewers as viewing habits change. PSB programming is not only a staple of cultural life in our country but one of the jewels of our world-leading creative industries. A crucial component of the regime surrounding PSB is the regulations to ensure that these programmes are widely available and easy to find. The current rules, established over a decade ago in a code of practice, ensure this by requiring that the main PSB channels—BBC1, BBC2, ITV1, Channel 4 and Channel 5—appear at the top of channel listings or electronic programme guides, EPGs, on all TV platforms. The code works well for traditional TV viewing, where it is watched in real time, but we live in a world in which viewing habits are rapidly changing and the platforms for providing programmes to viewers are multiplying and diversifying.

In the past decade, digital channels have proliferated, and viewing habits have moved on towards on-demand and online viewing. Three-quarters of adults now watch programmes through catch-up services, and about 16% of all programme watching is now time shifted rather than in real time. The problem is that in the face of this behavioural and technological change, it is becoming much harder to find the PSB content that viewers both like and pay for. On-demand players such as BBC iPlayer and All 4 are outside the scope of the prominence rules. New means for accessing these programmes apart from traditional channel listings, such as menus for catch-up and on-demand TV, are also not covered by the rules. In newer TV platforms, the prominence of PSB channels is being marginalised by new graphics and menus. On the new Sky box, Sky Q, you are greeted, when you turn your telly on, by a large box advertising top picks chosen by Sky, more than three-quarters of which is content broadcast by Sky channels.

What is the result of this failure of regulation surrounding PSB prominence to keep up with changing technological developments and viewer behaviour? It means that programmes such as Welsh and Gaelic language programmes are hidden in the digital weeds, often requiring many more than 10 clicks and a sophisticated knowledge of online platforms to reach. It means that the world-leading BBC children’s channels, CBeebies and CBBC, are now below 12 US channels in the channel listing of the leading pay-TV platform, Sky. It means that viewers are increasingly being led to programmes whose prominence is paid for by commercial competitors to PSB channels rather than to PSB content.

Yet viewers’ preference for PSB remains incredibly strong. Ten times more viewers want the TV guide at the top of their screen, in which PSB has preferred prominence, rather than the recommendations of the platform operator. More and more, viewers are not getting what they want.

There is widespread recognition that the rules need updating. In its 2015 PSB review, Ofcom concluded unambiguously:

“The current rules on schedule prominence for the PSBs were designed for an analogue broadcasting era. They need to be reformed to match changes in technology and ensure that public service content remains available and easy to find, in whatever way it is viewed”.


This House’s Communications Committee suggested extending the prominence rules to on-demand services and online menus. The TV licensing laws have already been updated to cover BBC on-demand services; the amendment simply demands that the same work be done for PSB prominence rules.

The amendment responds to the holes in the code in four ways: first, by adding PSB on-demand services to the list of services entitled to prominence; secondly, by extending the definition of an EPG beyond traditional channel listings to include connected and on-demand menus used by a significant number of consumers to access TV content. Note that the concept of “a significant number” is a robust one already in use under the 2003 Act, serving as a threshold test applying to Ofcom’s powers under the must-carry regime, so it has precedent, it is workable and means that it would apply to a few major platforms and not serve as an impediment to emerging innovators in the TV platform market.

Thirdly, it strengthens the requirement for prominence of PSB children’s channels specifically, so that parents and children can find the content they like and trust the most more easily, however they watch television. Fourthly, rather than seeking a legislative definition of prominence, it enables Ofcom to set prominence principles which the platforms would adapt as appropriate to their EPGs.

Some have argued that this proposal is unnecessary because the programmes and on-demand platforms that carry them prominently, such as BBC iPlayer, are thriving. This would be complacency of a high order, as well as ignoring the evidence of changes over time. Usage of iPlayer is indeed growing, but iPlayer’s market share is reducing: Netflix and YouTube are now the market leaders. Pressure on iPlayer and All 4 will increase in line with the amount that US companies are increasingly prepared to pay to support prominence for their commercial product on UK TV platforms. Similarly, children’s PSB programmes are indeed trusted and popular, but we know that platforms that display them prominently generate greater audiences than those, such as Sky, that do so less, so ensuring that the prominence rules cover those platforms is crucial to their sustainability.

What is at stake with the amendment is not an optional add-on to the regulatory regime around PSB, it is an updating of the prominence rules that is indispensable to the long-term sustainability of PSB in the face of changing technology. It is not just what consumers want, it is doing justice to the millions spent by licence fee payers on quality programming, to ensure that these programmes are not just made but watched.

Public service broadcasting cannot fulfil a public service if it is impossible to find or if it is crowded out by the sponsored content of wealthy and powerful commercial rivals. The amendment extends a principle that enjoys universal support for traditional TV viewing of the 2003 era, when the most recent Communications Act was written, to the more exciting, varied and complex world of TV viewing of 2017 and the years ahead. If we want PSB to flourish and remain at the centre of our national cultural life, rather than withering on the vine, we should support the amendment. I beg to move.

[Baroness Bonham-Carter of Yarnbury]

I support this important amendment. In Committee, the Minister rejected the need for change. He said,

“we have not seen compelling evidence of harm to PSBs to date”.—[Official Report, 8/2/17; col. 1783.]

“To date”: key words. What is needed is for them to be made up to date, to ensure that public service content will continue to be available and easy to find in whatever way it is viewed in a future-proofed way. The current rules on the prominence of PSBs have not kept pace with technological and market development. I shall be very brief because, as usual, the noble Lord, Lord Wood, has said all that I was going to say, and I do not want to be a parrot. The impact of PSB depends not just on producing high-quality, distinctive UK content but on providing easy access for people to consume it. It is still the case, as mentioned by the noble Viscount, Lord Colville, that the main and most trusted source of news is on TV. Given the rise of fake news, PSB content—impartial, well regulated, fact based—is more important than ever.

Prominence is one of the few sources of regulatory benefit to PSB providers, and we believe that in an increasingly complicated and fragmented digital world, its importance increases. As viewing habits change, reform is critical to preserve PSB in a digital age and sustain the creative powerhouse and global success that is UK broadcasting.

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[Lord Ashton of Hyde]

My Lords, public service broadcasting prominence on the EPG is an issue that has come up at every stage of the Bill in this House, and Amendment 33ZG does so for this stage. The Government recognise the high-quality programming of our PSBs and their importance for maintaining the thriving and healthy UK broadcasting sector. We also recognise the strength of a mixed broadcasting ecology that features commercial broadcasters as well as commercial and non-commercial PSBs. We are showing our support for them in two ways that we have already debated: first, in the government amendment on listed events and, secondly, in our support of the noble Baroness, Lady Benjamin, in respect of children’s television. Thirdly, although this is not in the Bill, we have announced that Channel 4 will not be privatised.

Our clear policy of supporting PSBs is why the Government gave considerable thought to the issue of the EPG prominence regime during the balance of payments consultation, the response to which was published last year, before this Bill reached this House. Our conclusion was that we had not seen compelling evidence of harm to PSBs to date and we decided not to extend the EPG prominence regime for PSBs to their on-demand services. This absolutely remains our view, and is supported by evidence, such as the success and continued growth in the popularity of the BBC iPlayer, which has no prominence at all and saw a record 304.2 million requests for TV programmes in January 2017—double the rate of five years ago. After the iPlayer, what are the most watched on-demand services in the UK? The answer is the ITV Hub and All 4, neither of which are currently subject to prominence requirements.

Additionally, PSB on-demand players already occupy the most prominent positions in the on-demand sections of major TV platforms such as Sky and Virgin. Why is that? Platforms make them prominent because they need to react to viewers’ preferences. It takes, for example, a mere four clicks to get to the iPlayer from Sky Q’s home page. As I stated during the last debate, when PSBs make excellent content, audiences will find it, whether it be catch-up or live content. A good example is children’s PSB channels, of which many noble Lords have spoken. CBeebies and CBBC are the most watched children’s channels by a considerable distance—which shows that there are no problems for audiences in finding these channels. The content is easily accessible on demand within the iPlayer itself.

Micromanagement of how audiences need to be guided through menus and sub-menus cannot be the answer when the technological landscape is shifting quickly. The fact is that platform operators respond to consumer feedback and needs in developing their products; therefore future developments in the EPG will be customer driven, not driven through legislative change. Further, it has been suggested by technology companies that, if this requirement was enforced, it would create a need for bespoke products in the UK. For example, smart TV manufacturers’ user interfaces are developed with a global market in mind, but a separate product would need to be developed for the UK market.

Rather perversely, the amendment goes far beyond the prominence which Parliament has afforded to linear PSB channels, because it would give prominence to the PSBs’ on-demand programme services, which include not only PSB content from commercial PSBs but also content originating from their non-PSB portfolio channels. We do not think that that is justifiable.

I confirm to noble Lords and to viewers who have found the BBC Parliament channel—the noble Viscount, Lord Colville, mentioned this, too—that, if this amendment is not agreed, the existing PSB regime will remain as it is today. People will still be able to switch on their ordinary TVs and find BBC1 and BBC2 at the top. But, if it is agreed by the House, it will remove Ofcom’s discretion to require the prominence it considers appropriate for the linear regime; it will micromanage Ofcom’s guidance; it will extend PSB privileges to non-PSB content; and it will affect worldwide manufacturers, many of whom operate in the UK, putting up prices for UK consumers—all against a background where iPlayer, ITV Hub and All 4 are already the most watched on-demand services. I therefore hope that the noble Lord will withdraw his amendment.

[Lord Wood of Anfield]

I thank all noble Lords for an excellent short debate; I will respond very briefly. I thank the Minister for his response but I am afraid that it has made me even more determined to push this amendment through, because his response seemed to be based on the premise that supporting prominence for traditional linear TV watching is a principle that the Government support more strongly than ever, but that somehow the principle falls into abeyance when viewing habits and technology change; and that, in the new future, there will be no need for further prominence rules because the choice of consumers will somehow magically replace the need for the current PSB protections in the prominence rules for linear TV.

I do not understand why the emphasis on prominence, which has been a cross-party principle for a long time, is suddenly thrown out of the window when on-demand and more sophisticated technologies develop. So I am afraid that I do not find the Minister’s response at all satisfactory—and nor do I think that the threat of losing Ofcom’s existing powers has any empirical basis whatever, by the way. So I would like to test the opinion of the House.