Advancing the National Broadcaster
London,
24 June 2002
Printable version
Speech given to the
Institute of Economic Affairs Conference on The Future of Broadcasting
Good
Morning and thank you for inviting me here today. I'm pleased to be
a guest of the Institute of Economic Affairs - an organisation which
was founded in 1955 - which also happened to be a very significant year
for television in Britain. 1955 saw the birth of ITV Β– for the
first time viewers had choice. Competition in the market was born.
Since
then, weΒ’ve gone from two television channels to two hundred, with
approaching half of all homes now enjoying the benefits of multichannel
television. The same is now happening in radio.
So
- as if you need me to tell you this - we live in changing times. And
who could doubt, looking at today's broadcasting environment, that the
pace of that change is faster than ever.
The
Βι¶ΉΤΌΕΔ alone now offers you eight television channels, up to 14 national
radio networks and one of the most popular online offerings in the world.
And
if that wasn't enough, the government is about to deregulate the UK
market even further - urging us all to speed ahead in the drive towards
a fully digital Britain.
So as the
landscape changes, so too must broadcasters if they want to survive.
And that includes the Βι¶ΉΤΌΕΔ.
I'll start
by saying today what I have said many times since I became Director
General Β– the Βι¶ΉΤΌΕΔ has no God-given right to exist. A glorious history
doesnΒ’t guarantee a glorious future. The Βι¶ΉΤΌΕΔ has to stay relevant
in a fast changing world if it is to deserve the privilege of public
funding.
There are
some things which I hope we'd all agree make broadcasting important:
- TV and
radio is where people get most of their information about what's going
on in the world.
- Its where
most of us turn to be entertained or to unite to celebrate a shared
sense of Britishness. You only have to see the audience figures for
Βι¶ΉΤΌΕΔ Jubilee coverage Β–15m for the rock concert Β– or the World
Cup matches to see that.
- And it's
where we turn at times of crisis - almost two-thirds of people turned
to Βι¶ΉΤΌΕΔ services on September 11.
Quality
broadcasting enriches people's lives and plays a vital role in the democratic
health of the nation.
Back
in 1955 the arrival of ITV was undoubtedly a rude awakening for the
Βι¶ΉΤΌΕΔ. But once it had recovered from the shock, which took about five
years, the injection of competition galvanised it to work harder for
viewers and listeners, developing successful shows on both television
and radio. In fact, what many people believe to be the golden era of
the Βι¶ΉΤΌΕΔ Β– the sixties Β– came as a direct response to the arrival
of competition.
Competition
undoubtedly improved the quality, creativity and choice offered by British
broadcasting, a process which continued with the more recent arrival
of Channels 4, 5 and BSkyB.
Now
we have hundreds of channels and thousands of programmes for viewers
to choose from every day.
Some
people say that this explosion of choice makes the Βι¶ΉΤΌΕΔ less important
than it used to be. Indeed some question its role altogether.
Some
argue the Βι¶ΉΤΌΕΔ should be stopped from competing against commercial operators.
Others
that we should stick to just plugging gaps left uncovered by the market
Β…Or
maybe that the licence fee should be scrapped altogether.
Only last week the Shadow Secretary of State Tim Yeo raised these issues
in an important speech in which he argued for cuts in the licence fee
and for the Βι¶ΉΤΌΕΔ's publicly funded role to be restricted. Of course he
is perfectly entitled to do so. It is important that in the run-up to
the next Βι¶ΉΤΌΕΔ Charter in 2006 we have an open and honest debate about
the value of the Βι¶ΉΤΌΕΔ to Britain in the digital age.
However
I'm sure it won't surprise you when I say I disagree with these arguments.
In fact I'd go further to say that I believe the role of the Βι¶ΉΤΌΕΔ in
our society will be more important in a decade's time than it is today.
The digital
age does not signal the end of the Βι¶ΉΤΌΕΔ's ability to inform, to educate
and to entertain people - something it has done successfully for the
last 70 years. On the contrary, there is a need to fulfill that role
more than ever in a rapidly fragmenting media world.
I don't
deny that the market has a vital role to play in the digital age but
leaving broadcasting to the market alone would be a terrible mistake.
Surely what we have all learnt in recent years is that in many areas
of economic activity the market alone will not suffice.
Crucially,
the Communications Bill sets out something we all know instinctively
- that the UK's mix of broadcasters are all there to do different things
while all retaining a public service core. The Bill sends a clear signal
that the Βι¶ΉΤΌΕΔ is there to do something special - to be the heart and
soul of public service broadcasting - or the "venture capital"
for the whole industry as Tessa Jowell put it - with a distinctive remit
which quite rightly is more demanding than for other broadcasters.
So if the
Βι¶ΉΤΌΕΔ is to help define public service broadcasting - what should we be
aiming to deliver in the digital age?
Quite simply
- great programmes and services which are available to everyone. Programmes
and services which celebrate modern British life and culture and invest
in British talent and creativity. My fear is if the Βι¶ΉΤΌΕΔ doesnΒ’t
carry out this role the amount of British programming will be significantly
reduced.
I expressed
concern two years ago in the McTaggart lecture at the Edinburgh Television
Festival that, as the market and audiences fragment, we could not be
certain that the commercial channels will be able to invest in the whole
range of quality British programming which they have in the past.
I explained
then that if you lost share year in and year out as had happened in
the USA and was now happening in Britain the commercial networks would
have to fundamentally change their cost base or they would fall off
the cliff. That inevitably means less original programming. Events since
then have proved just how right I was.
Now with
the laws on ownership about to change, potentially enabling large American
media companies to own ITV, I think more people share those fears.
While the Βι¶ΉΤΌΕΔ is funded by a licence fee we will always be able to invest
in creativity and take risks. I suspect the brute pressure of the market
will make it increasingly difficult for commercial operators to do likewise
in such uncertain times.
So while all the public service broadcasters may provide some similar
things, in the future the Βι¶ΉΤΌΕΔ will stand out for our determination to
pursue the public, rather than the commercial, interest.
For example:
- the market
will deliver coverage of big events such as the jubilee but there is
no commercial model which would allow any broadcaster to pay to stage
those amazing concerts at the Palace - something I am very proud of.
- the market
will provide football coverage - but not the giant Βι¶ΉΤΌΕΔ screens in nine
towns and cities which have brought thousands of people together to
share the excitement of the World Cup.
- There
is no way the market would have paid for the quality and quantity of
the Βι¶ΉΤΌΕΔ's coverage of the last Olympics Β– a Games held at an unattractive
time for broadcasters funded by advertising
- The market
may deliver broadband - we'll have to wait and see - but in the meantime,
the Βι¶ΉΤΌΕΔ is investing in a major trial of services in Hull - Britain's
first broadband city - to explore the possibilities for a new kind of
public service broadcasting. One thing I'm already certain of is that
there are many exciting opportunities for using broadband to unite local
communities which the market will not fund
- The market
will deliver radio but cannot begin to match the range and quality of
Βι¶ΉΤΌΕΔ radio largely because the potential commercial income isn't large
enough to do what the Βι¶ΉΤΌΕΔ does.
- And we
have created Europe's number one content site on the web. Having witnessed
the bursting of the dot com bubble and the deep downturn in advertising,
there can be no doubt that the commercial online sector would not, and
could not, have done what the Βι¶ΉΤΌΕΔ has done on-line. It is classic public
service.
- And in
news the Βι¶ΉΤΌΕΔ is now the biggest international collector of broadcast
news in the world. Why? Because at a time when the American networks
can no longer afford to do it the Βι¶ΉΤΌΕΔ can, precisely because we are
not reliant on the market.
Now our
remit is to serve everyone in the UK. Everyone pays for the Βι¶ΉΤΌΕΔ - everyone
should enjoy some of the services. Now if you believe this, as I do,
it means having successful, mass appeal channels such as Βι¶ΉΤΌΕΔ ONE alongside
a range of other channels and services aimed at more specialist sections
of the market.
Some argue
that the very success of Βι¶ΉΤΌΕΔ ONE puts into question its place in a public
service portfolio. They argue the public should pay for it by subscription.
If this
were to happen I think this would signal the end for the Βι¶ΉΤΌΕΔ. What matters
about the Βι¶ΉΤΌΕΔ is that it is universally available, that it is there
for everyone, rich or poor, northerner or southerner, black or white.
It is part of the glue which binds the UK together. As I said earlier
it is the place people turn to at moments of great national joy or sadness
be it the World Cup, The Queen Mother's funeral or the Jubilee. All
that would be lost if the Βι¶ΉΤΌΕΔ's output were to be restricted or narrowed,
if anything likely to be popular was to be put on subscription television.
That old adage that it was the Βι¶ΉΤΌΕΔ's role to try to make the good popular
and the popular good stands as much today as it did 10, 20 or 30 years
ago.
So to sum
up this part of my speech: in the years ahead a fragmented commercial
broadcasting market will not provide the British public with what they
want, what they need and what they expect. And that is why I have every
confidence that the Βι¶ΉΤΌΕΔ, funded by a licence fee, will be here for a
lot longer yet.
For the
second part of my speech today I'd like to turn to the topic of the
month - Digital Terrestrial Television. It's clear that the survival
of DTT hangs in the balance.
Some industries
can withstand massive failure because the sunk costs are so great. The
assets get sold to someone else and the business carries on. I call
it the Canary Wharf effect. The railways were built like this, and the
UK cable industry may be heading the same way.
But DTT
is not like the railways. After the catastrophic failure of ITV Digital,
it is very close to disappearing for good. If it did, some other important
things would disappear too.
In the nearer term, consumers would lose the option of a low-cost, easy
way to take the leap to digital.
But more
importantly in the longer term, analogue switch off and digital switchover
would simply not be possible Β– and remember this is not just a
government policy, but a policy supported by all the main political
parties.
So I'd
like to take a few minutes on what needs to happen to give DTT a second
chance.
Ten days
ago, the Βι¶ΉΤΌΕΔ with Crown Castle put in a bid to the ITC to take over
the DTT capacity freed-up by the failure of ITV Digital.
Our proposal
is simple. DTT would become a free-to-view only platform offering 24
channels.
Consumers
would buy a free to view box for under Β£100, take it home, plug
it in and receive 19 new digital channels, in addition to the 5 traditional
ones. They would also have access to proper interactivity and up to
16 new radio services.
Most important
of all Β– there'd be no subscription, no monthly payments.
And it
would work - poor reception problems would largely be fixed by reducing
the number of channels on the platform from over 40 to 24.
So why
do we think our idea will work where ITV Digital failed?
There are
4 main reasons.
First,
it's offering something people want Β– more free-to-view television,
easy to make work, no catch.
Βι¶ΉΤΌΕΔ research
shows that around 6 million households actively reject pay television,
and a further 4 million are simply turned off by the complexity.
However,
they do like the idea of more free-to-view television - they see it
as a welcome extension to normal television.
But many
people are suspicious Β– they want to know "where's the catch?"
They expect free-to-view television to be a Trojan Horse for pay services.
Any hint of pay on the platform puts them off.
Second,
our idea for DTT is simple - which is essential if we're going to cut
through the confusion for the 15 million homes which haven't yet got
digital TV. And they are confused. At the moment people think pay TV
and digital TV are the same thing.
Third,
we're committed to putting together the best possible line-up for consumers.
In the Βι¶ΉΤΌΕΔ's plans there will be four spare channel slots and anyone
is invited to apply for them Β– including ITV. The Βι¶ΉΤΌΕΔ and Sky have
less than half the channels on the platform Β– and no power to block
new ones.
This is
vital. Unless DTT has the channels and programmes people most want to
watch, consumers will go to a platform with better ones or, more likely,
stick with 5 channels.
The fourth
reason has to do with know-how and commitment. What the Βι¶ΉΤΌΕΔ can bring
is its content Β– over Β£200 million investment in channels
and interactivity.
The new
Βι¶ΉΤΌΕΔ FOUR, the two new children's channels, interactivity around events
like Wimbledon and the World Cup, new ways of learning. All this can
be available on DTT.
The Βι¶ΉΤΌΕΔ
is ready to mount the biggest on-air promotional campaign it has ever
done. We won't just promote our channels. WeΒ’ll promote the whole
free-to-view 24-channel line up.
Some people
have asked Β– why involve BSkyB in this? Well, if there's another
operator with nearly 6 million satisfied digital customers and one of
the best customer service operations around, then weΒ’ll involve
them instead.
BSkyB know
about making digital platforms work.
So we think
that this combination of simplicity, quality channels, and real know-how
can give DTT the fresh start it so badly needs.
It starts
with what will work for consumers, not what's in the interests of broadcasters.
The prize,
we believe, could be around 5 million DTT households within 6 years
and a chance of analogue switch-off in this decade.
But why
is the Βι¶ΉΤΌΕΔ doing this at all? Why don't we stick to content?
Well, the
answer is that we don't have to do it. If another bid could give DTT
a secure future, we'd back it. But it would have to meet four criteria:
First,
it must offer a strong and simple free-to-view proposition to consumers.
In future those wanting pay digital would go to BSkyB or cable. Those
wanting free-to-air digital would go to DTT.
Second,
the technology must be fixed so it works for most people. Remember ITV
Digital failed mainly because the technology didn't work. Less than
40% could actually receive the service and of those half had interference
when you opened the fridge door or a bus or lorry went past. There is
no doubt Carlton and Granada were sold a technological pup.
Third,
the platform must be open and competitive. No-one should be able to
block new channels coming onto DTT to protect the share of channels
they already have on the platform. It's not in the Βι¶ΉΤΌΕΔ's interest to
have Sky News on the platform and yet we are welcoming it on.
Fourth,
it must be financially secure. The worst thing would be another high
profile failure. We can't afford a bid funded by a bunch of venture
capitalists who'll run a mile if the going gets rough.
If another
bid wins without meeting them, and therefore has a high chance of resulting
in the failure of DTT, it's hard to see how the Βι¶ΉΤΌΕΔ could justify spending
even more money on DTT.
We will,
of course, continue to broadcast our channels, but we're already spending
around Β£20 million a year on DTT to reach around a million people
Β– this is not good value for licence fee money. WeΒ’d have
to think very hard before spending extra money on transmission and marketing
or giving it extra on-air promotion if we couldn't see it pulling through.
So Β–
there is only one last chance for DTT. This is not a time for splitting
differences, backroom politics or settling old scores.
Ladies
and gentlemen, every citizen of the UK has a right to reap the rewards
on offer from digital technology. Thank you.
