Draft Small-scale Radio Multiplex and Community Digital Radio Order 2019

Nigel Mills Excerpts

Tuesday 16th July 2019 General Committees

[The Minister for Digital and the Creative Industries (Margot James)]

I beg to move,

That the Committee has considered the draft Small-scale Radio Multiplex and Community Digital Radio Order 2019.

It is a pleasure to serve under your chairmanship, Mr Robertson. The Government are a passionate supporter of radio, whether it is from the BBC, the commercial sector or the growing community radio sector. Today, we are debating a new approach that will open up digital radio to the smaller commercial and community stations.

Radio is a very popular medium. The latest industry figures from RAJAR—Radio Joint Audience Research—indicate that more than 89% of UK adults, or almost 49 million people, still listen to radio each week. Although radio’s popularity has been stable over recent years, radio is changing, and listeners’ habits are changing too. Audience listening figures published by RAJAR a few months ago highlight the continued strong take-up of digital radio, which now accounts for 56.4% of all radio listening. A key driver has been the installation of digital radio in new cars. According to the Society of Motor Manufacturers and Traders, 93% of all new cars sold now have digital radio receivers as standard, up from less than 5% a decade ago, and more than a third of in-car listening is now on digital radio.

The radio and automotive industries expect the long-term shift to digital to continue. It has important implications for approximately 300 small community and commercial radio stations that are currently broadcasting on FM and AM frequencies but not on digital radio, owing to insufficient capacity available on the mainly county-sized local radio multiplexes, especially those serving urban areas. The costs of carriage on those local radio multiplexes can also be too high for some small local stations, while the coverage area that they provide may be too large for small stations in comparison with their own core FM/AM transmission areas.

Small stations recognise the risk that they will lose prominence with local audiences as digital radio becomes increasingly the default mode of listening, so they have lobbied strongly for an affordable route to broadcast via terrestrial digital radio. To address the issue and provide small stations with a viable route to broadcast on a digital platform, we supported the development of a brand-new approach to digital radio transmission, known as small-scale digital audio broadcasting.

Small-scale DAB is digital radio. It uses advancements in software and new transmission techniques to provide a flexible and cheap approach to digital transmission that performs well in localised geographical areas. With funding provided by my Department, Ofcom successfully tested the viability of small-scale DAB technology in 10 technical trials in various locations around the country. However, the temporary licensing arrangements used for those trials was not appropriate for the long-term licensing of small-scale radio multiplexes.

The existing legislative framework set out in part II of the Broadcasting Act 1996 places a number of burdens on radio multiplex operators that are not necessary or appropriate for small-scale radio multiplex services. Crucially, it does not allow Ofcom to reserve capacity for the community radio stations or enforce restrictions on ownership, both of which are essential if smaller stations are to be on a fair playing field.

To address the issue, the Department for Digital, Culture, Media and Sport supported the private Member’s Bill successfully taken through the House by my hon. Friend the Member for Torbay (Kevin Foster), which received cross-party support. That legislation, 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 II of the Broadcasting Act. I place on the record my thanks to my hon. Friend for his skill and energy in getting that legislation through the House.

Following that, we consulted the radio industry early last year on detailed proposals for a new, lighter-touch licensing framework and received 87 responses. We published our response to those responses last October. Overall, there was strong support for the proposals, but there were representations on whether we had got the balance right between protecting the legitimate interests of the community radio sector and allowing the commercial sector some involvement. We have reflected those points in drawing up the framework and have worked closely with Ofcom during the preparation.

The order seeks to protect the interests of community radio and small commercial stations, while ensuring that only the minimum necessary burdens are placed on organisations that want to operate a small-scale radio multiplex service. The order exercises powers under new section 258A of the 2003 Act to introduce a lighter-touch framework for licensing small-scale radio multiplex services. It also uses the pre-existing power under section 262 of the 2003 Act to provide for the creation of community digital sound programme services, known as C-DSPs.

The issue that attracted the most attention during the consultation was focused on who could hold a small-scale radio multiplex licence and the proposed limits to the number of those licences that could be held by one player. The Community Media Association wanted strict rules that limited licences just to not-for-profit entities and limited them to holding a single licence. However, we were concerned that that approach would exclude many of the existing operators of the successful small-scale trials. We think it important to have a mixed economy —for commercial entities to be involved and apply their skills and investment to develop small-scale DAB. None the less, we recognise that restrictions on ownership are necessary to avoid a potential concentration of ownership —that would undermine the ability of community radio—and to promote diversity of ownership of small-scale radio multiplex services. The provisions in the order seek to strike the right balance between those aims.

As part of the consultation, and following further discussions with the Competition and Markets Authority and Radiocentre, we have made a number of changes to the original proposals to strengthen the protections for community radio. The order ensures that the spectrum capacity reserved for community radio on a small-scale radio multiplex is a firm reservation. In other words, it must be maintained for use by community digital radio stations—C-DSP licence holders. The order requires Ofcom to place a condition in the licence that requires a small-scale radio multiplex licence holder to publish information about the carriage fees charged. Finally, the order requires Ofcom, when awarding a small-scale radio multiplex licence, to consider the extent of involvement of community radio in a particular application.

In addition to those measures, the order sets out the detailed framework that will allow Ofcom to license small-scale radio multiplex services.

[Nigel Mills (Amber Valley) (Con)]

I look forward to hearing the excellent Amber Sound if it gets to move on to DAB in the future. Can the Minister confirm that the restrictions on ownership will apply not just at the start of a licence but throughout, so that if someone tried to consolidate and produce some sort of national or regional network via the back door, that would invalidate their licences and those would be freed up again for community radio stations, so that we do not end up with what has happened on the FM or existing networks when what we thought were regional stations had become a national one by the back door?

[Margot James]

I thank my hon. Friend for raising a very valid point. A duty will be placed on Ofcom to ensure that what he fears cannot come about. There is quite a complex array of conditions. For example, no station can own more than 20% of the entire number of licences that are issued under the new format. I think that my hon. Friend will be reassured by the various measures that we have in place to ensure that a concentration of ownership and a national channel by the back door do not come about. I will go through a few of those restrictions and conditions.

We will require Ofcom to reserve capacity on small-scale radio multiplexes for community digital radio stations. A minimum of three slots must be available, with a variable upper limit set by Ofcom based on its assessment of local need. We will create a new community digital sound programme 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.

We will restrict the total number of small-scale radio multiplex licences that one company can hold at any time; I hope that that allays my hon. Friend’s concerns. We will also place restrictions on the number of small-scale radio multiplex licences that existing national operators can be involved with, and require them to exercise their involvement in consortium with other partners.

We will give Ofcom the flexibility to determine the size of small-scale multiplexes, but with a policy target to set a maximum based on 40% of the population served by any overlapping local radio multiplex. If there is no overlapping multiplex, the draft order sets a limit of 7,500 sq km.

The draft order contains a small but important provision in relation to community radio licensing. Community radio has been a major success, with more than 280 services on air. 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 be concerned about the renewal of licences at a time when they will need to think about digital radio carriage on new small-scale multiplexes. The order will therefore allow for a further extension of analogue community radio licences for a fourth five-year term, bringing the maximum total up to 20 years. That will avoid the need for Ofcom to re-advertise the first wave of community radio licences, which it would have needed to do later this year.

We believe that small-scale DAB has the potential to revolutionise community radio in the UK, and radio overall. The draft order will facilitate a more appropriate structure of licensing and will provide an opportunity for the 300 existing community radio stations—such as Black Country Radio, which is owned by a community interest company in my constituency of Stourbridge—and for small commercial radio stations, as well as for new entrants. The extensive technical trials have demonstrated that small-scale DAB provides a low-cost and viable option for smaller stations to broadcast on a terrestrial digital platform. I commend the draft order to the Committee.