The Communications White Paper

On December 12, 2000, the Government issued its Communications White Paper (the "White Paper"), which set out the Government’s ‘vision and objectives’ for the communications industry in the 21^st Century. It seeks to foster a competitive, innovative communications environment in the UK which will make it a global media market leader. To achieve this, a new regulatory regime will be established, which aims to:

• protect consumer interests in terms of choice, price and quality;
• maintain standards of diversity, plurality, quality and choice;
• safeguard consumer interests by maintaining community standards in content and encourage competition;
• balance freedom of speech against the need to protect against offensive or harmful material, whilst protecting fairness and privacy.

The following requirements would also need to be considered:

• the protection of children and vulnerable persons;
• the prevention of crime and public disorder;
• the special needs of those with disabilities, the elderly, low-income households;
• the promotion of efficiency and innovation.

Written responses to the Paper were accepted until 12 February 2001. The Culture, Media and Sport Committee heard oral evidence from 25 organisations and published its Report on 7 March 2001 (the "Report").

The centrepiece of the White Paper is the creation of a single, independent regulatory body for the communications and media industry – an Office of Communications (‘OFCOM’). OFCOM will replace the current media and communications sector regulators, namely the Independent Television Commission, Oftel, Broadcasting Standards Commission, the Radio Communications Agency and the Radio Authority.

Concurrent powers will be held by OFCOM and the Office of Fair Trading to exercise Competition Act powers for the communications sector. The Committee Report supports granting the new regulator sector-specific powers and concurrent Competition Act powers with the Office of Fair Trading.

OFCOM will operate within broad guiding principles established by statute to regulate telecommunications, television and radio in full consultation with industry and consumer representatives. Its remit will cover both content and communications networks. It will reduce the regulatory burden on communications operators by using general authorisations rather than individual licences wherever possible.

The Report supports the White Paper's proposed new, unified regulator (OFCOM) and new regulatory framework, but the Committee recommends that the converged regulator be called the "Communications Regulation Commission" rather than OFCOM. Its internal structure should be set out in legislation. A separate Department of Communications with its own Secretary of State would assume the relevant responsibilities currently in the Department of Culture, Media and Sport, the Department of Trade and Industry, the Cabinet Office and the Home Office.

The Report supports the White Paper proposal that an independently appointed consumer panel representing general consumer interests advise OFCOM on consumer views. A greater lay involvement in content regulation rather than in competition regulation is contemplated.

The Report recommends that the regulator should specifically ensure its accountability to Parliament and meet publicly, unless the need for commercial confidentiality outweighs the need for public disclosure.

To encourage investment and promote its regulatory goals, the White Paper proposes a new regulatory framework which is ‘robust and firm’ and ‘flexible and innovative’ enough to permit sudden or unforeseen developments in the rapidly changing communications market.

OFCOM will not only promote co-regulation and self-regulation where these will best achieve regulatory objectives, it will also have sector-specific powers to cover so-called "essential issues" such as consumer protection, access and interconnection.

In essence, the White Paper envisages a simpler, more flexible and ‘light touch’ system of regulation, whereby OFCOM would be obliged to keep regulation at the ‘minimum necessary level, rolling back regulation where increasing competition renders it unnecessary’.

The regulatory structure will incorporate full consultation procedures together with a transparent and effective appeals process extending existing appeals procedures in the telecoms field to cover the whole sector. Following EC directives regarding communications networks and services, the courts will have the power to review errors of fact, law and the decision-making procedure. In the case of appeals concerning content, appropriate internal review procedures will be backed up by an appeal of final resort to the High Court.

The Government envisages a key role for public service broadcasting in the digital future. The BBC's and S4C's current roles will remain and Channel 4's remit will be reviewed to make it a more positively focused and innovative source of programming. ITV will continue as the main commercial provider of public service broadcasting both before and after digital switchover but Channel 5's role will be reviewed as the take-up of digital TV grows.

In particular, the Government intends to:

• retain public service broadcasters' independent production obligations;
• strengthen regional production targets for public service broadcasters.

Public service broadcasting ("PSB") is important economically, democratically and culturally. To endure, the Government believes that it must adapt. In response to the White Paper, the Report proposes three guiding principles for future provision of public service broadcasting:

• "privileged broadcasters" (BBC, ITV, Channels 4 and 5) should continue producing public service content, not necessarily synonymous with PSB;
• the costs of the "privileged broadcasters" should be balanced against other means of achieving the desired public service content objectives;
• the focus should be on appropriate sources of PSB content, not the protection of broadcaster privileges.

Subsidised broadcasters should continue to meet programming requirements and subtitling obligations which should be widened to include digital services. OFCOM should promote appropriate training expenditure by certain licensed broadcasters, reflecting their public service obligations and privileges.

The Report recommends the implementation of pilot schemes to expand community radio projects along with the establishment of a permanent and publicly funded UK community radio sector.

The White Paper proposes the regulation of the BBC by the Secretary of State. The BBC Board of Governors will still retain their supervisory role in relation to the BBC’s compliance with its public service remit. OFCOM is envisaged as playing a purely advisory role. However, the Report (echoing the opinions of other UK broadcasters) recommends transferring BBC regulation directly to OFCOM, which is perceived to be better placed to assess the BBC's impact on the market and ensure that it competes fairly.

In order to ensure more cohesive regulation of all the broadcasters, the White Paper has proposed a new three-tier regulatory structure, with the first tier supporting standards across all services and further tiers to apply to PSB’s. The first two tiers will be OFCOM regulated; the third will be self-regulatory. The new system seeks to balance ‘law, formal regulation and self-regulation’.

First-tier regulation will apply to all broadcasters, who will be subject to:

• relevant codes establishing minimum content standards set by OFCOM;
• advertising and sponsorship rules and the requirement to provide impartial, accurate news;
• compliance with EC quotas (e.g. those on European and independent productions);
• the Competition Act.

Second-tier regulation will ensure:

• compliance with quotas for independent productions;
• targets are set for public service obligations such as regional productions and programming;
• availability of news and current affairs during peak time;
• regulation of commercial radio.

Third-tier regulation will:

• encourage the self-regulation of broadcasters;
• expect broadcasters to provide annual reports and deliver their remits;
• require PSB’s to develop programme policy statements and self-regulatory mechanisms.

Below the three tiers, the White Paper refers to ‘tier zero’, regulation aimed at broadcast material on the Internet and via telephony, which will effectively self-regulate. However, OFCOM will seek to promote ratings and filter systems that help internet users control the content which can be accessed at home.

The Report endorses the White Paper’s proposals for no new forms of internet regulation. It recommends internet self-regulation, with no regulation beyond the principle that the general law should apply online as it does offline. In its view, legislation should prevent OFCOM from imposing internet content obligations and spectrum scarcity powers should not be used for back door internet regulation.

Further, the Report concludes that increasing use of the internet as a broadcast medium will provide an alternative to the licensed broadcasters, making universal negative content regulation impossible. Consequently, the regulation of licensed broadcasters should reflect this by being more flexible.

A reassessment of media ownership is envisaged: the White Paper invites comment on reform of the cross-media ownership rules and proposes a ‘lighter touch’ approach with regard to newspaper mergers. The government will also consider:

• replacing the current 15% limit on share of TV audience to allow further consolidation of ITV;
• revoking the rule prohibiting single ownership of the two London TV licences;
• simplifying the radio ownership system;
• relaxing the current 20% limit on ownership of the nominated news provider (e.g. ITN);
• amending some of the general disqualifications regarding broadcasting licence ownership.

The Report considers that the current cross-media ownership rules are unnecessary in the current, more competitive market, preferring competition law, sector-specific powers and regulation by licensing.

It views ownership restrictions based on "share of voice" as impractical. The Report concludes that any new legislation concerning media ownership is of sufficient public importance to warrant primary legislation.

In addition, the Report recommends the retention of the separate licences for each ITV region, notwithstanding the proposed removal of specific barriers to further ITV consolidation. Finally, all specific restrictions on radio ownership at a national level should be removed.

The main White Paper proposals concerning universal access by citizens include:

• ensuring public service TV channels are carried on all delivery platforms through the introduction of "must carry" and "must offer" provisions;
• continued support of the universal availability of BBC radio and the widest access to commercial radio channels;
• aiming to achieve universal Internet access by 2005;
• promotion of widespread access to higher bandwidth services and the development of a broadband strategy;
• universal, affordable access to phone services.

Broadcasting and communications traditionally provide universal services, vital in unifying British society and the economy, which must be continued in the digital era. The Government expects to perform "analogue switch off" when digital TV services are universally available and affordable (between 2006 and 2010). All options assisting early switch-off should be considered and the Competitiveness White Paper (13 February 2001) announces Government initiatives to promote digital TV.

In response to the above White Paper stated aims, the Report finds that broadband services in their current form are not universally available and states that Government should review the case for requiring universally available higher bandwidth services.

In furtherance of universal digital access, the Report recommends that the Government should:

• establish a scheme for "kite-marking" integrated digital TV sets no later than October 2001;
• run a national public information campaign about digital television on all free-to-air channels;
• nationally distribute a public information leaflet informing consumers about the limited life span of analogue TV sets due to the anticipated analogue switch-off.

Raised consumer awareness that internet access is possible through digital TV could make both universal internet access and the analogue switch-off achievable. To ensure universal access to the internet by 2005, the Report recommends that OFCOM should oblige the market to prioritise the delivery of a range of competitive packages for unmetered internet access.

The Report calls for the Government to express its views in relation to the connection between the development and regulation of new services in the communications market and the electronic delivery of public services. The delivery of these services direct to citizens' homes must be central to public policy in this area and the Report finds insufficient signs of such centrality in the White Paper.

The White Paper proposals aim to go where no Government anywhere has gone before – to regulate for convergence. A difficult brief. Many of the proposals are sensible and long over-due. The new regulator, OFCOM, will be charged to promote competition and access to both services and networks in the digital age. At the same time, PSB remains entrenched as one of the cornerstones of the new communications era.

In order to monitor compliance with the Government's stated aim to make the UK "the most dynamic and competitive communications market in the world" the Report recommends that OFCOM should be charged with a statutory duty to conduct and lay before Parliament an annual audit of performance.

The Report also recommends setting specific objectives for regulating consumer protection and promoting open and competitive markets. It also recommends that the new regulator prioritise its different regulatory aims according to clear Government policy guidelines.

Despite the Government and the White Paper’s advanced approach to regulation, the Report fears that the UK may find itself trailing Europe in terms of actual convergence. Consequently, the Report recommends that the Government respond adequately to its obligations to provide high bandwidth digital services and is disappointed that the Government's broadband development strategy is being undertaken in isolation from the public and consumer needs created by analogue switch-off.

The general election will interrupt the introduction of legislation, but a detailed document, in the form of detailed policy papers or a draft bill, is expected from the Government by July 2001. A further round of consultation will be initiated, with the introduction of legislation into Parliament anticipated at year-end or early 2002. In the meantime, the Government expects to work with current regulators to ensure that greater co-ordination and integration of operations shall be in place before the new legislation is implemented.