UK: "Boldness Be My Friend"...Or A Motif For The Next Communications Act

Last Updated: 5 October 2011
Article by Paul Herbert

DCMS Secretary, Jeremy Hunt, used this Shakespearian adage to introduce his shopping list for the next Communications Act at the recent RTS Convention.   The rationale? That in business the cautious option is often the highest risk.  Applied to the media and communications sphere this means boldness in local TV, in broadband, mobile and regulation of public service broadcasting, plurality in competition, and content across all platforms.

In fact, local TV is unlikely to feature in any new Communications Act because, as the Secretary of State was keen to emphasise, he has already taken a number of important steps to ensure its introduction, despite significant reservations being expressed by the industry as to its commercial viability.  In a characteristically bold move, Hunt announced in August that Ofcom would be awarding up to 65 local TV licenses over the next 2 years.  Self-evidently these have been designed to operate on a highly localised basis which is intended to reduce the running costs to those of a local newspaper.

Likewise, the Secretary of State confirmed his bold move to deliver 90% coverage for superfast broadband in the UK, the ambition being that Britain should have the best superfast broadband network in Europe by 2015.

But the main emphasis of Mr Hunt's speech was directed to the next Communications Act.  He was, however, at pains to emphasise that since DCMS has not yet published a Green Paper, it was not his intention to outline a draft bill but rather a direction of travel.  Allied to his injunction to be bold, was the overriding principle that the next Act should promote growth for the UK's media and communications industries.  In this respect he helpfully reminded the audience that the UK is the world's second largest producer of digital content, next to the USA.  It has the largest per capita e-commerce market in the world, worth 60% of that of the USA despite representing only 20% of its population.  It is also the fifth largest advertising market in the world despite being only 22nd in terms of population.

Allied to his zeal to secure a superfast broadband network, Mr Hunt is equally keen to encourage a superfast mobile network.  Thus he will be encouraging the industry to move on as quickly as possible with the 4G auction and cultivate more spectrum trading and the availability of licence exempt spectrum.  He is also keen to facilitate the delivery of TV to mobile, noting that to date this has been conspicuous by its absence.  Many would point out that this is not necessarily due to any regulatory or spectrum obstacles but rather a lack of demand from users. 

He also lamented the relative lack of m-commerce activity when compared to the UK's booming e-commerce market.  This will require effective and trustworthy non-cash micro payment systems to be utilised.  Facilities which, he pointed out, are readily available in countries such as Kenya. 

Good news for public service broadcasters:  Mr Hunt celebrated its enduring appeal, reminding us that it still accounts for 70% of all viewing.  However, he recognised that as we are on the verge of completing analogue switch-off, the historic justifications for PSB regulation have significantly diminished.  There will continue to be a clear commitment to PSB but broadcasters can look forward to a lessening of the more detailed regulatory obligations.  No further details were disclosed but it would not be fanciful to imagine a relaxation of regional programming commitments particularly in the news arena where local TV services would be well placed to fill this gap - subject of course to adequate funding. 

Next came the topic of media plurality where his recent spell in the hot seat in the News Corp/Sky takeover has clearly informed his views as to how this should be managed in the future.  In the first instance there is an obvious need to adopt a cross-platform approach to the assessment of media plurality.  He even went so far as to suggest that it might not be appropriate in the future to set absolute limits on news market share.  But unless a percentage cap or threshold is applied, it is very difficult to see how in practice this would work.  This is also an area which is likely to be affected by the findings of the Leveson enquiry which, as one questioner pointed out, could significantly affect the likely timescale for the introduction of the Bill. 

Many commentators will applaud Mr Hunt's forlorn observation that under the current system the issue of plurality can only be examined when it arises in the context of a specific transaction.  He left the audience in no doubt that he believes that the regulatory authorities should be able to commence investigations at any time, not necessarily in connection with a corporate transaction.  And if further evidence were needed of the chastening nature of the News Corp/Sky experience, was his admission that he did not think it appropriate for politicians to have the final say in such decisions - they should be dealt with like any other corporate transaction i.e. by the Competition Commission. 

Clearly no discussion of future media regulation could ignore the weaknesses and shortcomings revealed by the phone hacking scandal.  A system of robust independent regulation with credible sanction making power is now required.  This is another area in which any new Act is contingent on the findings of the Leveson enquiry.   However, the Secretary of State did reveal from the outset two apparent concessions in favour of the press: the first that material published by the press across different platforms should be subject to one single regulatory regime.  This would avoid a situation where three different regulators could be involved in regulating press content: news print via the PCC (or its successor); on demand services via ATVOD; and IPTV services by Ofcom.  Instead, there should be a single regulator (notably not Ofcom) whose remit applied across all of these platforms.  The carrot of a voluntary regulatory system still exists provided it is independent and carries the confidence of consumers.  The challenge is upon the press industry to devise an appropriate model which meets these objectives.

And what of the consumer? Here he drew a distinction between the need to protect consumers from offensive content and the need to outlaw unlawful content.   In the linear world it is clear that the watershed is here to stay and he is not prepared to consider any watering down of existing protections.  But what of the non-linear world where no such concept applies?  Here Mr Hunt introduced a level of specificity: he will consider including in the new Act an obligation on ISPs to ensure that all their customers make an active choice about parental controls, either at the point of purchase or the point of account activation. 

Life for distributors of unlawful content is likely to become a lot more difficult.  Allied to the need to liberalise our copyright laws to ensure they are fit for purpose in the digital (consistent with the Hargreaves Report) is the need to subject transgressors to the same lack of tolerance that applies in the physical world.  This was another area where Mr Hunt introduced specifics: that the process of actioning infringements be streamlined; and that obligations be placed on ISPs to take steps to deny access to illegal sites.  Perhaps more controversially is the suggestion that advertisers be required to remove their advertisements from offending sites and likewise credit card companies and banks to remove their services from them.  

No specific reference was made to the Digital Economy Act, but it is clear that it is unlikely to survive in its present form the implementation of the next Communications Act.  Neither was mention made of Terms of Trade for independent producers, regulation of EPGs across platforms or the vexed question of net neutrality.  A notable postscript is that the audience at the RTS Convention was asked to vote on whether or not it supported the need for a new overarching Communications Act.  Not a single hand was raised in support of the motion.  Admittedly, this may have been due to a literal interpretation of the question and the delegates did not feel the need for any "overarching" legislation but it was, nevertheless, not the answer that the Secretary of State would have hoped for or expected.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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