House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport Fourth Report

Content regulation

106. There are technical barriers to the transmission of high quality audio-visual material over the Internet, but these are diminishing and show signs of all but disappearing. The relationship between the regulation of Internet content and that of broadcasting of a more traditional kind will thus be of growing importance. The Government's approach to Internet regulation is to encourage voluntary action backed up by the full force of the existing law, based on the application of the general law on-line as off-line.[289] Thus, the Obscene Publications Act applies to the producer of a web-site in the same way as it does to other forms of publication. Self-regulation is being taken forward by the Internet Watch Foundation, funded by the United Kingdom Internet service provider industry, whose Chief Executive, Mr David Kerr, submitted evidence. Self-regulation can take two main forms: the creation of hotlines so that users can alert Internet service providers to offensive material; and systems for content rating or filtering, so that users can either block or be forewarned about what might be regarded by some as objectionable content.[290]

107. Mr Kerr pointed out that the Internet Watch Foundation's approach depended on the reporting of material and was developed for static material. It could not easily be applied to transitory audio-visual material. Legal regulation would only be viable if broadcasters were required to keep a record of their output. This in turn would require licensing. The number of potential licensees was immense, indeed incalculable. Mr Colin Donald, Director of Futurescape, was also deeply sceptical about the prospect of regulating content originators, drawing attention to the ambiguities of ownership and publication on web-sites.[291] The Radio Authority, while accepting that access regulation was inappropriate for Internet radio, favoured new legislation so that legal responsibility for content bore upon the distributor/publisher equally with the originator of prohibited material.[292] Others were sceptical about this notion, drawing attention to the sheer scale of material placed on the Internet without the Internet service provider's knowledge.[293] Mr Kerr argued that liability could only apply where the service provider was aware of the content and could reasonably have acted upon that knowledge. This would be extraordinarily difficult to apply to live sound and video broadcasts over the Internet.[294]

108. By its very nature, the Internet is international. It is at least theoretically possible to imagine a satellite service provider with a satellite return path escaping the entire national infrastructure and thus national regulation.[295] The Government laid stress on international co-operation with regard to Internet regulation.[296] In Brussels we discussed the proposal of Commissioner Bangemann for an International Communications Charter as a political agreement on issues such as: the definition of illegal or harmful content; the determination of liability for content; the principles of Internet taxation; the protection of intellectual property rights; and security and identification. Progress with such international initiatives is likely to have an important bearing on decisions about the nature of any national regulation of the Internet. The question is whether such attempts at regulation can be anything more than optimistically indicative rather than genuinely effective.

(ii) Television

109. Digital technology, the consequent capacity of different networks to carry different kinds of services and the Internet's rapid development are beginning to erode television's distinctive character as a medium. So far, this erosion has been slow, almost imperceptible. We received much evidence emphasising the continuing distinctiveness and importance of broadcasting. The Broadcasting Standards Commission (BSC) observed that broadcasting was pervasive; it was a medium of influence; it was a cultural good. Lady Howe, Chairman of the BSC, told us that its research showed that people felt strongly about "what is beamed into their homes". The public did not expect standards to diminish, even in a multi-channel environment.[297] The ITVA and the ITC also stressed the popular demand for regulation, including the protection of minors.[298]

110. The public expects and is entitled to expect a basic level of "negative" regulation—preventing the transmission of undesirable material—so far as this is possible. It also has continuing expectations concerning "positive regulation"—the requirement to produce programming of a certain character.[299] The case for public service broadcasting is as strong now as in the past. Channel 4 pointed to the continuing case for regulation to concern itself with the range and quality of programming.[300] There was less agreement about the precise application of positive programming requirements to particular types of service.

111. Mr Mike Cook of Hughes Olivetti Telecom argued that there was "a fundamental difference, from a regulatory point of view, between that content which is 'pushed' to the consumer by a service provider ... and that which is 'pulled' by the consumer". In the case of "pull" services, the subscriber would be in control.[301] This concept could be considered to apply to on-demand services, certain interactive television services and, of course, the Internet. Dr Richard Collins of the London School of Economics drew attention to the comparable distinction in the Williams Committee Report of 1979 on Obscenity—based on the principle that people had a legitimate interest in not being voluntarily offended—between items to which people were involuntarily exposed and material which they sought out.[302] The ITVA argued the importance of the regulatory distinction between scheduled and non-scheduled services.[303]

112. A number of witnesses also pointed to the importance of the distinction between free-to-air television and subscription television.[304] Lady Howe considered that this distinction was widely understood.[305] To some extent, this division already represents the border between negative regulation alone and positive programming requirements.[306] BSkyB felt that the distinction had continuing validity since satellite and cable broadcasters had no privileged access, had smaller audiences and operated conditional access controls.[307] The SCBG argued that the sector's regulation was still too oriented towards the traditions of terrestrial broadcasting and the era of spectrum scarcity.[308] In contrast, the ITVA contended that the growing penetration of satellite and cable rendered some regulatory differences between terrestrial and non-terrestrial (regarding sponsorship and advertising) difficult to justify.[309]

113. For free-to-air broadcasting, the crucial issue is the extent to which positive programming requirements will remain viable. No case was made for any sudden change to the public service remit of the BBC.[310] Channel 4 also saw merit in its specific programming remit.[311] Oftel argued that the application of a public service mandate to ITV and Channel 5 would be unsustainable within the medium term: "Within the next five years it is likely that competition from unconstrained content suppliers may mean that Channel 3 and Channel 5 are unable to reconcile compliance with positive programming requirements and their commercial interests".[312] While acknowledging a case for a continuing trend towards "light touch" regulation, existing free-to-air broadcasters, the ITC and the Government saw no case for a sudden abandonment of positive programming requirements.[313] The ITVA did consider it important, however, for the ITC to "constantly re-evaluate its approach, in order to reflect the current commercial realities of the market".[314]

(iii) Conclusions

114. The Internet will become increasingly a platform for audio-visual content barely distinguishable from broadcast content. This does not mean it can be subject to regulation comparable to broadcasting. Self-regulation through service providers is in its early stages and should be encouraged. We are far from persuaded that any particular legislative provision for regulation for Internet content (as opposed to legislation to clarify the application of the current general law to the Internet) is viable. This is first of all a matter of scale. Second, it is a matter of means of access: an audio-visual transmission over the Internet could be one of millions of one-to-one transactions, over which there can be no legislative control. Third, it is a function of the Internet's economic and social potential. The potential of the Internet as an engine of economic growth and social progress is enormous; it would be an act of self-indulgence to purport to jeopardise this unique opportunity by means of a virtually unenforceable law. Finally, the Internet is international; any framework for its regulation must equally be international. From our discussions in Brussels, we were impressed by the realism with which the European Commission is approaching the Internet, its impact on broadcasting and an international framework for its operation. We recommend that the Government pursues a strategy for the Internet on the basic principles of: (i) active and accelerated promotion of the Internet as a vital engine of social and economic development; (ii) promotion of self-regulation within a framework of existing general legal provisions; (iii) absence of licensing or restrictions on freedom of individual access as producer or consumer; (iv) support for an agreed global framework for the Internet.

115. Digital technology, which multiplies the content which can reach the home, should also enhance the prospects for individual self-regulation within the home. Rating systems already operate in a number of ways for television broadcasts and are being developed for the Internet. Filtering mechanisms for preventing unwanted material entering the home should also increasingly be feasible. Electronic Programme Guides and on-demand services increasingly have built into them requirements for personal identification which should facilitate parental control.[315] These changes will provide an opportunity for a fundamental shift in regulatory responsibility from statutory regulators towards the individual household.[316] This is already affecting regulatory approaches—so that the ITC does not operate the "watershed" where adequate personal identification systems exist[317]—and should continue to do so as the quality and ease of use of such technology improves. After all, protection of children from unsavoury material is, in the end, the parents' responsibility.

116. Notwithstanding the justifiably different approach to the Internet and a growing emphasis on control within the home, the case for retaining content regulation on broadcasting remains, so long as this continues to be feasible. Technology will not have any immediate impact on popular expectations about the maintenance of certain standards in broadcasting, particularly in order to protect children. Within a basic framework of standards and decency, we would expect content regulation to fall into four main tiers:

transaction or non-scheduled services, subject to requirements for rating and compliance with filtering standards, but otherwise subject to limited content regulation;

scheduled non-terrestrial services provided as part of subscription television subject to minimal positive programming requirements;

scheduled, free-to-air services of a predominantly commercial nature subject to broad programming requirements;

scheduled, free-to-air services of a predominantly public service nature subject to detailed programming requirements.

This tiering system is necessarily simplified, perhaps over-simplified. The development of many free-to-air services on all digital platforms will increasingly blur the distinction of terrestrial and non-terrestrial services which underpins much of the current regulatory approach. This makes it all the more important for content regulation to be based on clearly enunciated principles, for distinctions between different levels of regulation to be transparent and for the precise level of content requirements to be adaptable.

117. Over time, public sector regulation of content will become increasingly difficult; technology will erode the State's capacity to intervene.[318] In the long-term, the distinctiveness of mass-audience broadcasting might be eroded and to an extent replaced by niche programming; the audio-visual market might become more like the specialist magazine market.[319] The capacity for comprehensive negative regulation will slip away, but the desirability of positive regulation will still remain.

Universal access

(i) The principle of universal access

118. One of the most important values underpinning public service broadcasting in this country is that free-to-air terrestrial broadcasting should be universally available.[320] The same principle is extended in legislation requiring that certain sporting events ("listed" events) should be carried on these universally available channels.[321] Comparable provisions apply in the field of telecommunications under which BT is required to provide a universal service including basic telephony services, as well as directory inquiries and emergency services.[322]

119. There is a likelihood that, as more and more communication, information and entertainment services move to digital technology, the benefits of universal access will be lost, creating "information have-nots".[323] These have-nots would, of course, be those on low incomes, pensions or benefits. Their deprivation might arise for several reasons. First, almost all digital technologies require new equipment which the consumer must either purchase or rent; the costs might prove beyond many low income families and individuals.[324] Second, many of the benefits of an expanding range of digital services depend on the availability of adequate broadband transmission systems, but some developing transmission networks are less economic in outlying or (in the case of terrestrial transmission) hilly areas; this could lead to a growing urban-rural divide.[325] Third, as PressWise and the Community Media Association point out in their memorandum, commercial and market development might fail to provide the diversity which is considered socially or politically desirable.[326]

120. At the same time, new technologies carry with them the potential greatly to improve provision for those with special needs. BT told us about a number of services it was developing for the elderly and those with disabilities.[327] Interactive services through television have the potential greatly to assist the housebound.[328] Digital technology should make it possible to increase the provision of programmes with sign language interpretation or subtitling for those with hearing loss and the ITC demonstrated to us advances in animated signing. Many of these services should be developed by socially responsible businesses, but, as the Royal National Institute for Deaf People's concern about regulatory inconsistencies with regard to subtitling demonstrates, there is also a need for public action.[329]

121. But the potentialities are even greater. Far from creating a world of information haves and have-nots, the new technologies have the capability of empowering today's have-nots in a way never possible before. Job-seekers can be matched speedily to jobs that suit them. Applicants for public sector rented housing can be matched to the property that best suits them. Those seeking benefit can sort out problems relating to their eligibility. Difficulties involving income tax or council tax can be solved "face-to-face". Such facilities can be made available at public contact points or in the home.

122. Mrs Barbara Roche told us that "you cannot have truly an information society unless everybody participates in it".[330] We agree. Universal service provision in the past did not arise by accident; it resulted from government and regulatory action. As technology changes, so the understanding of universal service changes. Oftel observed that this might justify including a richer set of essential services in the universal service concept.[331] As the National Consumer Council point out, this is a matter on which the Government should take the lead.[332]

(ii) Analogue switch-off

123. The importance of government action with regard to universal service is demonstrated by the case of "analogue switch-off". This means the time or times at which analogue terrestrial transmission of free-to-air television services will cease, leaving only digital transmission.[333] Analogue switch-off will free part of the spectrum for the provision of other services, although, in the case of some services, use would only be possible with international agreement, which might take some time if the United Kingdom remains in advance of other countries in the promotion of digital terrestrial television.[334] The value of the spectrum made available depends to a considerable extent on the method of allocation and the services provided. The auction value of the far more limited spectrum made available under the Wireless Telegraphy Act 1998 is estimated by the Government at between £500 million and £1.5 billion. The Government was reluctant to place a sale value on the analogue television part of the spectrum, being keener to stress the even greater value of the economic activity which spectrum release unlocked. This economic impact was being tracked and an estimate would be published every two years.[335]

124. The Government has stated that it will not realise this value through switch-off of analogue terrestrial transmission "until the overwhelming majority of the United Kingdom population have access to digital reception via one delivery platform or another". In other words, the concept of universal access to television will be maintained into the digital era.[336] The first barrier to universal digital provision is that digital terrestrial transmission will at best cover only 90 to 95 per cent of the population and the extension of coverage towards 100 per cent is unlikely to be an economic use of the spectrum.[337] This creates what Dr Brian Evans termed a situation "reminiscent of Catch 22": digital frequencies cannot be found for universal provision through terrestrial transmission without analogue switch-off; analogue switch-off cannot take place without universal provision.[338] The solution to this dilemma is likely to lie in use of some of the transmission technologies we considered earlier—DSL, cable, MVDS and satellite. The NERA study commissioned by the Government on analogue switch-off was sceptical about the widespread use of the first two, but proposed support for the wider development of MVDS other than by cable franchise holders and for the wider use of satellite.[339]

125. The second barrier is that all digital television transmission systems require investment by or for the consumer in new technology. Initially, this will be the set-top box; thereafter, it is likely to be the integrated television or the PC/TV which we earlier termed "The Screen". Regardless of the precise form, every television set in every home will need to be replaced or supplemented either by an integrated receiver or a set-top box, though already, on average, television sets are replaced every eight years.[340] Investment will also be required by the consumer in video recorders which function with digital television.[341] NERA's Report considered that the move to new equipment could be facilitated if the Government made "an early, credible announcement committing to switch-off over a clearly understood timescale". It also speculated on possible forms of support and subsidy for the move to digital-compatible equipment.[342]

126. The Government issued a consultation document along with NERA's Report in February 1998, requesting comments by September.[343] In evidence, Mr Smith accepted that a clear timetable for switch-off would stimulate the development of digital television, but saw no case for making an announcement until the take-up rate of digital terrestrial television in one or two years' time was known.[344] The US authorities have already set a date for analogue switch-off of 2006; this is now hedged about with conditions, most notably a requirement for 85 per cent penetration of digital receivers or set-top boxes prior to switch-off in a particular market, which could lead to switch-off much later. NERA described the US approach as "an example of how not to do it". Mr Smith considered the US action "foolish". Mr Jim Norton, Chief Executive of the Radiocommunications Agency, termed it "extremely brave", surely one of the most damning phrases in the British civil servant's lexicon.[345]

127. Witnesses were divided on the timing of and preparations for analogue switch-off. BDB felt that "an early announcement by the Government" of a switch-off date would "play a central role in accelerating the take-up of digital terrestrial television".[346] Mr Elstein, in contrast, felt that "premature announcement of analogue switch-off may ... have a counter-productive effect, if it serves to spread alarm and anger amongst the potentially disenfranchised".[347] With regard to switch-off itself, the ITC felt that 2010 was the earliest likely date.[348] BREMA, drawing on its current experience of televisions being purchased every eight years, considered 2013 or 2014 a reasonable target.[349]

128. We are concerned that the recent debate on analogue switch-off has been too narrow. Thus, for example, Mr Smith referred to the rate of take-up of digital terrestrial television, rather than digital services of all kinds, as a crucial determinant for the timing, and NERA's Report considers equipment take-up in the context of past television experience and the prospective development of integrated televisions. Such an approach seems to ignore the imminence of convergence. It is apparent from our earlier consideration of changing technologies that digital terrestrial television will be but one—and far from the most important—of many new services available to the consumer; the impact of information technology and computer power on the television market could well increase dramatically the take-up of digital compatible reception equipment. This will not necessarily, of course, obviate the problems relating to universal availability either of a digital signal or of reception equipment. We consider that the issue of analogue switch-off should be taken forward not in isolation but in the wider context of the future of universal access to which we now turn.

(iii) Universal access in the digital age

129. The very essence of convergence is the technological capacity of different network platforms to convey similar services in digital form. This opens up many new avenues for competition. One barrier to such competition has been deliberately erected in statute: the provisions under the Telecommunications Act 1984 and the Broadcasting Act 1990 which prevent public telecommunications operators from conveying or providing entertainment services nationally to homes.[350] The National Heritage Committee considered these restrictions last year. It argued that the policy of the then Government not to lift these restrictions prior to 2001 placed BT at a great disadvantage as technology changed. It recommended that BT should be free to offer broadcasting services to any of its subscribers in any areas not covered by cable licences and, in return, that BT should consider offering free telephone connection to any house wishing it.[351] During this inquiry we were told by BT that the coming of broadcasting over the Internet had already rendered the rules "obsolescent". BT was theoretically in breach of the "broadcast ban" when more than one viewer watched the same broadcast over the Internet.[352] As ADSL technology stood, BT did not expect to use its existing copper network for the mass delivery of digital broadcast television services, but it stressed the need for clarity about its position, enabling it to invest with confidence in enhancing this capacity.[353] The CCA said that they would not be concerned by implementation of our predecessor Committee's recommendation (of lifting the ban in areas not covered by cable licences), although they had concerns about the effect on investor confidence.[354] The Government has stated that the uncertainty over when and how the restrictions "might be lifted has affected the investment plans of all operators, including cable". It has acknowledged that transmission of broadcast material over the Internet "may technically cause a breach of the conveyance restrictions for the public telecommunications operators providing the physical infrastructure", but felt that this did not impact on the original purpose of the restrictions, provided the capacity was not exploited specifically to provide broadcast television services.[355]

130. On 23 April the Government announced its decision, based on the principle that "operators' choice of technologies to employ should not be artificially constrained", to allow BT and others immediately to have the option to compete in the provision of broadcast entertainment to the 17 per cent of homes currently outside cable franchise areas. It further proposed to allow BT and others to compete in the provision of broadcast services, if they so wish, throughout the whole country from 1 January 2001. The Government estimated that BT would not be in a position to provide broadcast services to homes across the whole country substantially before

this point, so the restriction will not serve as a constraint on technological development.[356] We welcome the Government's announcement as a belated implementation of a recommendation of the National Heritage Committee and recognition of broadening technological possibilities.

131. In the USA, one of the factors that has fuelled the growth of the Internet has been the relatively low cost of connection via the telecommunications network: a 1997 OECD report stated that 20 hours of Internet use there cost $29, compared with $64 in this country.[357] Just as importantly, the charges in the USA do not relate specifically to level of use, since there is no individual charge for local telephone calls.[358] We considered the possible introduction of such a system in this country to stimulate the development of the Internet and interactive services.[359] BT considered the absence of an incremental charge for time using telephone lines for local calls in the USA to be "a considerable abuse of resource", which had created problems in the telephony network there, to which other witnesses also pointed.[360] Mr Cruickshank also argued that such charges represented an undesirable subsidy of those who used the Internet by those who did not.[361] On the other hand, the more who use the Internet, the less the subsidy from those who do not.

132. CCA noted that a "rebalancing" was taking place in telecommunications pricing, with increased prices for access and call charges reduced; certain cable companies already offered free cable-to-cable calls off-peak.[362] BT expected their own prices to fall in response to this competition.[363] Mrs Roche saw increased competition resulting from liberalisation as the key to future development.[364] Mr Cruickshank expected banded tariffs to emerge not based on the itemising of calls but on overall level of use and the cost to "come tumbling down". He saw no need to impose a flat-rate requirement on the market to support the Internet, not least because of the growing strength of competing networks for higher speed Internet services such as satellite.[365]

133. High-speed Internet services, by satellite and soon by cable or other means, are but one example of the extent to which new digital services are tending increasingly to be delivered through broadband systems. In 1996 a House of Lords Select Committee observed that, "unlike other countries who are leading the way in developing the Information Superhighways, we have no national targets for the installation of broadband infrastructure and no timescale for Government-led action".[366] Since then, there have been a number of important developments. First, as has already been noted, the Government has placed emphasis on the development of access to the Internet in key public institutions, for example in libraries.[367] Dr Clark thought that, as part of "the inclusive society", there should be a common card to enable government services to be obtained by individuals in such places as well as at home or in government offices or post offices or commercial premises; such a card could be used for the renewal of vehicle tax or receipt of social security payments.[368]

134. Second, Dr Howells told us that the Government has set a target for all schools to be connected to the Internet by 2002, a target it expects to be achieved with the assistance of the cable industry and BT.[369] Initially, this target relates to narrowband provision, but the Government has acknowledged that much educational material, including that of an audio-visual nature, requires a higher bandwidth.[370] Third, the Government has set a target of ensuring that, where practicable, all public libraries should be connected to the National Grid for Learning—and trained to use it—by 2002, a target to be supported by £50 million of National Lottery funds.[371] Fourth, the Government is also committed to spending £150 million to connect every GP surgery and hospital to NHSnet, the NHS's own information superhighway, by the same year.[372]

135. Libraries; schools; hospitals and GPs' surgeries: there is an excellent case for the use of the Internet and broadband services in all of these. There is also a danger that the requisite systems will be developed separately by different Departments, each of which is concerned principally with the content rather than the delivery infrastructure. Dr Howells agreed that the National Grid for Learning could eventually become part of a wider "National Grid": "Why should we have all sorts of different systems operating when in fact we could be cutting down hugely on the costs of public administration by using dedicated lines in this way?".[373]

136. When we asked Mrs Barbara Roche about the development of broadband infrastructure by BT and the cable companies, she replied: "I do not think we see it as the Government's role to choose one technology above another or one particular infrastructure development above another. What is important is that you have competition in all of these things ...".[374] We agree about the importance of competition. We also agree about the need not to be wedded or glued to one particular delivery system in a rapidly changing market.[375] However, Government policy must deal with far more than competition issues. It must take into account the potential social divisions and rural/urban divide which might emerge from an incomplete development of broadband technology.[376] It must bear in mind that the delivery of a broadband infrastructure is fundamental to this country's social and economic development over the next decade. It must bear in mind that this will affect many aspects of public policy: the development of the Internet as a fundamental tool for education; the prospect for universal availability of public services to everyone through the Internet; the guarantee of universal free-to-air digital television. It must bear in mind that the ultimate objective is to make such services available not just for public services, but in private homes.

137. The Government has stated that it "is committed to encouraging the rapid roll-out of broader-band networks throughout the country". It has also raised the issue of "whether and how BT, as a dominant operator in local access networks, should be required, if it chooses to provide broadcast capability in its network, to perform the necessary upgrade according to a defined programme of milestones and throughout the whole country".[377] The broadband infrastructure might take many forms: the upgrading of the capacity of BT's copper network; the extension of cable networks; the use of MVDS; satellite provision for outlying areas; terrestrial transmission. In many areas, an interactive network might require complementary developments. Technologies will emerge which have yet been barely considered. It is nevertheless essential that their development is not simply the product of commercial and competitive priorities. The Government must seek to ensure development which maximises the social and geographical availability of broadband networks. This should be designed to ensure that the benefits of the Internet, of new interactive services and the capacity of the citizen to conduct business with Government electronically are available throughout the United Kingdom. We welcome the Government's commitment to encouraging the rapid development of broadband networks, but believe that this should be bolstered by a clear target. Accordingly we recommend that, without commitment to any one delivery system, the Government establish as a strategic objective for the first decade of the new millennium the development of a universal broadband infrastructure (including an adequate return path capacity) available to every home in the United Kingdom. We expect there to be several important staging posts in the pursuit of this objective, including,

the delivery of the Internet to all schools, libraries, hospitals and GPs' surgeries by 2002;

the evolution of a policy for the availability of the Internet in every home, perhaps initially on the basis of a flat rate charge for a narrowband service for a limited period of time each week;

the development of a secure card for the citizen's transactions with Government;

and measures to ensure the widest possible availability of the necessary receiving equipment.

Achievement of this objective should be a priority not only for the Government, but for communications infrastructure regulators. Its achievement should make possible analogue switch-off, with its consequent economic benefits, and we recommend that the same date should be set for both meeting the strategic objective and analogue switch-off. We envisage this date being no later than 2010. This date should be announced before the end of 1998, as delay in the announcement causes uncertainty.

289 Q 1038. Back

290 Evidence, pp 527-529. Back

291 Evidence, pp 529, 500-501. Back

292 Evidence, p 298. Back

293 QQ 37, 607; Evidence, p 500. Back

294 Evidence, pp 528-529. Back

295 See QQ 590-592. Back

296 QQ 1007, 1040. Back

297 Evidence, p 127; QQ 393, 397. See also Q 394. Back

298 QQ 800, 874. Back

299 Q 35. Back

300 Evidence, p 222. Back