Speech
given at the
SMF Conference on the Future of Public Service Broadcasting
Good morning. It is a pleasure to be asked to speak at this event organised
by the Social Market Foundation 聳 not least because I am a director
of this non partisan organisation.
This
morning I will argue that the 主播大秀 has much to offer in the digital age.
Developments in the marketplace will strengthen, not undermine, the
fundamental case for the 主播大秀. But we recognise that public ownership
and our system of funding bring with them major responsibilities as
well as advantages. We are ready to meet them.
First,
I shall offer an assessment of how the 主播大秀 has reacted to the digital
revolution so far. Second, I will comment on the 主播大秀聮s role in
the much longer term, in the context of the exciting opportunities which
new technologies can offer to every citizen. Third, I will explain why
the 主播大秀 believes that the success of the DTT is crucial to grasping
this opportunity. And fourth I shall argue that some strengthening of
the draft Communications Bill is needed if the role of public service
broadcasting (PSB) is to be safeguarded in the digital age.
First,
let's look at the digital revolution up to now.
In
thinking about this, I could easily see why the subject of public service
broadcasting has been a recent focus of the SMF. Ever since its foundation,
people have asked whether it is possible for the SMF to pursue a coherent
research agenda which has both a "social" and a "market"
orientation.
Well聟.
I will leave it to others to decide whether the SMF is managing successfully
to square this particular circle. But what I would like to say - and
Tim has just argued this - is that we at the 主播大秀 face a similar challenge.
Our sole purpose is one of public service 聳 to provide distinctive
and ambitious programming for all the people of Britain. But we have
to provide this public service in the context of a rapidly developing
and competitive market-place. If it ever could, the 主播大秀 can no longer
ignore the disciplines and challenges of the market when it comes to
fulfilling its public purpose.
Some
of the disciplines usually associated with the market are obvious, and
are now common ground. The 主播大秀 must continue its drive towards greater
efficiency 聳 and on this I am pleased to report that we have raised
the percentage of income spent on content from 76% to 85% since Greg
Dyke became Director General 聳 thus hitting our target two years
early.
In practical
terms, this means the 主播大秀, by becoming more efficient, is spending around
拢250m more on programmes and services now than two years ago.
We must also make the best commercial use out of our programme archive
聳 with the sole purpose of ploughing the benefits directly back
into public service content for the licence payer.
But apart from recognising these simple market disciplines, we must
also continue to modernise our services so that they complement, rather
than duplicate, the rapid developments taking place in the private sector.
With vastly increased competition, it is even more crucial than in the
past that the 主播大秀 should remain both ambitious and distinctive.
Sometimes, the 主播大秀 is even now portrayed by its competitors as a lumbering
giant which is becoming ever more dominant in the broadcasting and online
markets. But actually the truth is entirely different. Far from being
larger than ever before, the 主播大秀 is in fact, in relative terms, smaller
than ever before 聳 not because it has been failing its audiences,
but because it faces far more competitors than ever in its history.
The long-term trend of the 主播大秀 receiving a declining share of industry
revenues continues.
The consumer has reaped the benefits from competition between the 主播大秀
and the private sector. A mixed broadcasting ecology, in which the 主播大秀
and the private sector all thrive, is the best hope of offering genuine
choice to the consumer.
This extra competition will present the 主播大秀 with many new challenges
聳 and I believe we are ready to meet them.
A few years ago, it was fashionable to argue that the 主播大秀 would have
nothing unique to offer in a world of multi-channel television. Everything
would, quite soon, be provided by the private sector. But so far, this
has been proved wrong. Looking across the broadcasting landscape today,
I do not see a large number of organisations with the resources and
ambition to make programmes like The Blue Planet , The History of Britain,
Stephen Poliakoff聮s drama series Perfect Strangers, or the current
documentary series on The Hunt for Britain's Paedophiles.
And how many other broadcasters would have the expertise, (and possibly
the nerve) to stage a rock concert in the Queen's back garden as a way
of marking the Jubilee?
I
was enormously proud of our contribution to the Jubilee celebrations,
a fantastic example of what the 主播大秀 is capable of:
- Over
half of the population saw one of our three key broadcast over the Jubilee
Weekend
- About 1.3m people attended 160 live music events staged and produced
by the 主播大秀 around the country, with a further million gathering on the
Mall for the fireworks which followed the Buckingham Palace rock concert.
We did what we've always been there to do - we created a public space
and reflected a shared experience for people across the nation, bringing
communities closer together and Britain closer to the world.
Similarly, when big events occur - whether the September 11 attacks,
the foot and mouth crisis or the World Cup, it is still the 主播大秀 people
turn to in the greatest numbers. Despite the proliferation of alternative
news and information sources, almost two-thirds of the population turned
to 主播大秀 news on September 11.
So I believe that the 主播大秀 can prove itself to those who said that the
arrival of digital technology would sound its death knell. As competition
from the private sector has expanded, we have continued to provide distinctive
services which are different from those that the market alone can offer.
We have continued to address a clear market failure.
But what about the longer term 聳 my second topic?
We are still only in the early stages of the digital revolution. I have
little doubt that the private sector will continue to provide increasing
numbers of radio and television channels, funded by advertising or subscription.
One day, it may be possible for consumers to purchase programmes, one
by one, from content libraries over the web. I often read that, once
this is possible, then everything can safely be left to the private
sector 聳 there will be no market failure for a public corporation
like the 主播大秀 to address.
All this is a very long way off. But I am determined to ensure that
the 主播大秀 will once again prove to be resilient to these challenges. While
the impact of technological change is clear in terms of quantity, it
is far from clear what the long term effects, particularly coupled with
a largely deregulated market, will be on quality. The traditional 主播大秀
view has been that more players in the market 聳 ITV and then Channel
4 聳 drove up the quality of programmes as well as increasing the
number of services on offer.
I fear this may be more difficult in the digital world. Cut-throat competition
could easily reduce the amount spent on original programmes by the commercial
sector.
If these fears prove justified, then the 主播大秀's role as a setter of standards,
and a provider of original, British, quality programmes, could become
more important, not less.
Furthermore, even when most people are able to pay for programmes via
subscription or over the web, the nature of the product and of its cost
structure means that the free market will not deliver an optimal outcome.
There is
an economic explanation for this - brilliantly set out in a recent essay
by the SMF Chairman David Lipsey. Essentially, the argument follows
from the fact that once a programme is produced, the marginal costs
of broadcasting it are effectively zero.
Consider The Blue Planet as an example. Making one copy of this series
was an expensive and risky undertaking but, once the first copy had
been put in the can, it could be shown to limitless numbers of viewers
for virtually zero extra cost. The same is true of all forms of broadcasting,
and of much of the content of the web.
Selling the Blue Planet at a price higher than zero would have the effect
of deterring many people from benefiting from the product, even though
the cost of showing it to them is effectively zero. This would be a
clear failure of the free market.
So now we come to the conundrum 聳 how can we pay for programmes
like the Blue Planet if it is inefficient to charge a subscription for
them? One answer would be to fund the programmes by advertising 聳
but there is much experience throughout the world to suggest that advertising
funding does not necessarily ensure quality and distinctiveness.
Furthermore,
in a world of Tivo boxes and personal video recorders, which enable
the audience to skip the "ads", the basis for advertising-funded
television is becoming less certain.
This leaves us with only one alternative which will provide an efficient
market outcome 聳 public funding, probably through a licence fee.
So even after Adam Smith's invisible hand is free to roam throughout
the broadcasting landscape, the structure of costs in the new economy
is therefore likely to mean that market failure persists.
One more word on this. Broadcasting and media industries have a very
definite tendency to develop quickly towards the absolute dominance
of a tiny number of players, or towards an outright monopoly. It follows
that a public entity like the 主播大秀 聳 which exists to promote diversity,
distinctiveness and choice 聳 will remain very badly needed to combat
this.
For the long term future, I therefore see a role for the 主播大秀 in producing
an efficient market solution, and in guaranteeing quality and choice
for British citizens. And here I am talking about the 主播大秀 as a total
package, not a 主播大秀 which is unbundled into an artificial notion of public
service components versus rest.
We have
always existed to make the good popular and to make the popular good.
To try artificially to separate the two into distinct channels would
be difficult and damaging 聳 for example, would the Rock Concert
at Buckingham Palace count as public service, or entertainment? And
if the latter, how many would have watched on a subscription channel?
After all, only 40% of households now have digital, and even after switchover,
we expect that many millions of households will still not have access
to pay channels. Would they simply be barred from watching the 主播大秀聮s
entertainment and sports offerings?
What about the World Cup? Four fifths of viewers have freely chosen
to watch England matches on the advertising-free 主播大秀. Would they now
have to pay a subscription for this privilege? What about drama? Should
"Crime and Punishment" be relegated to a subscription channel?
Our concern is that if you attempt to unbundle the 主播大秀 into two distinct
parts, you might marginalise the public service channels thus losing
mass audiences for national events, and for public service high points
like Blue Planet and the the History of Britain. And we doubt whether
subscription entertainment channels, even if run by the 主播大秀, could conceivably
provide the high quality drama and entertainment which we currently
provide. For example, on Sky One, only 6% of programmes are original
UK production, and over 80% are acquired from overseas. This is determined
by the fundamental economics of subscription television.
If we get these issues right, the eventual destination of the digital
revolution could be an immensely exciting one.
This brings me to my third topic, the future of DTT.
New technologies are bringing with them the possibility of hugely enhanced
choices for everyone. The 40% of households which already have access
to digital television tend to readily accept this is the case. But in
my travels around the country, I have found that this is not always
recognised by the rest of the population. Many people who have not yet
gone digital apparently see very little advantage in doing so. They
are not interested in subscription channels for movies and sport. They
have not yet been persuaded to buy expensive new equipment to access
digital free-to-air channels. And 聳 a very major factor 聳
they are totally confused about what is available, and how much they
need to pay for it.
The 主播大秀 has a crucial role to play here too. We have our familiar responsibility
to provide content which can drive digital take-up. Our portfolio of
digital radio and television channels is designed to do just this. They
have made a strong start. 主播大秀 Four, Radio 6 Music, Cbeebies and other
new channels are winning critical acclaim, and are building audiences.
Moreover the 主播大秀's interactive services are leading the way, whether
to enhance enjoyment of watching England playing in the World Cup or
to fulfil the learning potential of Walking with Beasts. We still hope
to get permission to launch 主播大秀 Three, a new public service television
channel for young adults.
But even the very best content will be irrelevant if people are unable
to access it. Up to now, those who have not wished to pay for subscription
services via satellite, and who are not covered by cable, have faced
difficulties in accessing digital services. DTT 聳 digital television
through your aerial 聳 has not been a success, partly because of
technical problems, and partly because the subscription package offered
by ITV digital did not win sufficient subscribers.
Yet DTT remains vital if we are to attract the resistant half of the
population towards the benefits of digital choice. The 主播大秀 believes
that at least three requirements must be fulfilled if DTT is to succeed
in future:
First, the way DTT is broadcast needs to be changed so that many more
households can access the services on a plug-and-play basis, or with
a simple aerial up-grade. This now seems to be common ground, but it
does limit the number of channels that can be successfully carried on
the platform.
Second,
set-top boxes are needed in the market at a reasonable price 聳
initially at less than 拢100, subsequently a good deal less. Again,
this now seems to be on the cards.
Third,
the line-up of channels must offer a compelling proposition to those
who do not wish to subscribe for additional services. This means that
the free-to-view package 聳 whether in the form of new public service
channels, or interactive services (like Wimbledon interactive) on existing
channels 聳 must be strong enough to persuade people to buy the
boxes. It must also be simple enough to cut through the confusion which
is currently rife in this arena.
The 主播大秀 has formed a non-profit making consortium with Crown Castle
to bid for the three ITC multiplex licences which have become available
following the failure of ITV Digital. BSkyB has committed to provide
channels to one of the multiplexes. The Consortium aims to provide a
free-to-view package, focusing on a selected range of quality services,
provided by many of the valued broadcasters which the public already
trusts. Crucially, these services will be made available through a terrestrial
platform which is radically improved on past practice and is therefore
far more reliable.
Our aim is to provide digital services for everyone focused. We believe
that a simple and compelling proposition, which focuses on an enhanced
set of free-to-air television and radio services, can attract several
million households to DTT in the next few years and therefore serve
the public interest. It offers a completely new start for the platform,
something it badly needs.
The success of the DTT platform is important, but will not be sufficient.
This brings me to my fourth topic 聳 regulation.
It is crucial to ensure that PSBs have access on fair and equal terms
to all platforms if the principle of public choice is to be preserved.
The Government has recognised this need in the draft Communications
Bill but there are some areas where the proposals need to be strengthened
if the public rather than the commercial interest is to prevail.
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